Month: December 2009

Source: ForexYard

With a slow trading day expected today, investors will likely keep there eyes on the U.S. Dollar and whether it can maintain its recent upswing going into the New Year. Set to be released later today, the U.S. Consumer Confidence report should give traders a good idea about the general direction of the greenback as 2009 draws to a close.

Economic News

USD – Consumer Confidence Report Likely to Impact Greenback

Light trading on Monday, mainly due to low liquidity in the market, gave the Dollar a slight advantage over its major counterparts. After breaching the 1.4400 level against the Dollar yesterday, the Euro subsequently fell and is currently trading at the 1.4365 level. Against the Yen, the greenback advanced slightly, and is now trading around the 91.75 level.

Traders should note that most analysts do not see these Dollar increases as signs of a continued trend. With many investors on vacation for the holidays, USD gains may have just been a result of low liquidity and a slow news day on Monday. Traders will want to pay attention to the U.S. Consumer Confidence report set to be released at 15:00 GMT today.

A higher number then last month is forecasted for the report, which if indeed comes true, will likely support the Dollar. Most analysts are saying that the American people are slowly regaining faith in the U.S. economy. If the consumer confidence figure reflects that sentiment, it could be an early sign as to where the Dollar is headed in 2010.

EUR – Euro Slips against Major Currencies

The U.S. Dollar was not the only currency to see gains against the Euro in the last 24 hours. The Canadian Dollar rallied against the Euro in early morning trading and even hit its highest level since November 2008, at 1.4977. The pair has since corrected itself and has currently returned to its normal levels of around 1.4990. Still, traders may want to keep an eye out for any unusual activity from this pair. It appears that exciting things can happen on the market despite slow trading.

Despite a predicted slow news day for the Euro today, there are still a few things that may inject some volatility into the market. Chief among these is the German Prelim CPI, the Euro-Zone’s earliest consumer inflation report. Consumer inflation can play a direct role in interest rate levels which directly impact currency values. With a forecasted increase of 0.6%, the Euro may receive a much needed boost providing the predictions are correct.

Traders may want to take into account the results of the German Prelim CPI when looking at the U.S. Consumer Confidence report. If both come out as predicted, the EUR/USD pair may take some interesting turns in trading today.

JPY – Yen Sinks against Dollar

Early morning trading saw the Yen drop to a 5-day low against the U.S. Dollar, reaching 91.79. The Dollar appears to be finishing 2009 with a 1% gain against the Yen, a far cry from the roughly 19% loss recorded in 2009. The greenback may see further gains against the Yen in trading today, providing that U.S. consumer confidence increases as expected. If not, the JPY may be able to reverse some of its recent losses.

With no major news events coming out of Japan for the rest of the week, the Yen’s value will likely be influenced by news from America and Europe. The relatively slow trading ahead of the New Year appears to be negatively impacting the Yen, but traders should note that any negative economic indicator to come out of Europe or the U.S. will likely result in Yen gains.

Crude Oil – Oil Prices Up Ahead of New Year

Crude oil prices rose to a near 5-week high on Monday, trading at $78.73 at the close of the market amid optimism of the global economic recovery. Prices have since dropped to around $78.45, but could easily gain traction again after the release of the U.S. Consumer Confidence report. A positive figure from the report would likely increase investor confidence, thereby boosting prices.

Several other news events may also be impacting oil prices. Political unrest in Iran, the world’s second largest Oil producer, appears to have driven prices up. Furthermore, severe winter weather in the U.S., the world’s largest Oil consumer, has caused Oil consumption to rise, which has also caused prices to rise. With a slow trading week for currencies, it appears that Crude Oil may be injecting some much desired volatility in the market.

Technical News

EUR/USD

The daily chart’s RSI is floating in the oversold territory with the MACD exhibiting an impending bullish cross. Going long for the day may be advised.

GBP/USD

The pair seems to be exhibiting some mixed signals with the 2 hour RSI floating in the overbought territory and the 4 hour’s Slow Stochastic is showing a bearish cross. However, the daily RSI is floating in the oversold territory. Going short with tight stops might be advised for today.

USD/JPY

The pair may experience a downward correction today as the hourly, 2 hour and 4 hour RSI is floating in the overbought territory, with the daily chart’s Slow Stochastic exhibiting a bearish cross. Going short for the day may be advised.

USD/CHF

It appears as the pair’s downward trend is likely to continue as the 2 hour chart’s Slow Stochastic as well as the daily MACD are exhibiting fresh bearish crosses. Going short for the day may be advised.

The Wild Card – GBP/CAD

The pair’s recent bearish trend may be experiencing a correction soon as the 8 hour and daily RSI is floating in the oversold territory and the daily chart’s Slow Stochastic is exhibiting a bullish cross. The 8 hour MACD is also exhibit an impending bullish cross. Forex traders may be advised to go long for the day.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Housing Prices could be an eye opener

Housing data in the U.S could add to the holiday spirits this week, as house prices are expected to drop by -7.10%, compared to a previous -9.36%. Even though parts of the housing market are now showing minor improvement – housing starts recently increased, showing impressive figures, other results such as New-Home Sales have sharply declined. Single-family homes declined 11.4% in November to a seasonally adjusted annual rate of 355,000 units.

One must note that recent improvement in leading parts of the economy have been fueling the Dollar rally, driving it to higher levels against counterparts, but as mixed signals continue to show a fragile housing market, investors will scrutinize the upcoming data, as a worse than expected figure could put pressure on the Greenback.

Consumer confidence is on the rise

In addition U.S consumer confidence is expected show a 52.7 figure, compared to a previous 49.5. Usually released on the last Tuesday of the month, investors watch this number closely as increasing confidence, often leads to personal consumption. Recent figures have been bouncing around the 50 mark, as Main Street remains dubious about the recent recovery. A higher than expected reading is normally considered to be bullish for the USD.

Technical Analysis – A Possible Trade Opportunity

USD/JPY- Daily Chart

Bullish Scenario – A Break above trend line resistance could present the start of a new bullish trend.

Target A – 93.6

Target B – 94.5

Bearish Scenario – A Bounce off resistance could lead to a drop to prior support around

Target A – 89.60

Target B – 88.0

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Written by ForexCycle.com

USDJPY might be forming a short term cycle top at 91.86 level on 4-hour chart. Pullback towards the lower border of the rising price channel would more likely be seen later today. Resistance is located at 91.86, only rise above this level could indicate that the uptrend from 87.37 has resumed, then further rally could be seen to re-test 92.32 (Oct 27 high) resistance.

By Yan Petters – Now that Christmas is behind us, and New Years Eve is only at the end of the week, we have plenty of time to end this year with a big smile on our faces. Two thing happened last week that we can actually use this week:

1. The Dollar failed to extend its bullish trend against the Euro. Currently, the EUR/USD pair is testing the 1.4420 level. In case this level will be breached, the pair has the potential to jump up sharply. However, if the pair won’t manage to cross through this level, the EUR/USD could be on its way to the 1.4250 level again.

2. Crude Oil is climbing rapidly. After dropping below $73 a barrel crude oil then rose sharply and reached over $78 a barrel; marking a 3-week record. The reason for oil’s recovery is the positive data from the U.S. economy. This is creating optimism regarding global recovery, which of course means higher demand for energy products. A continuation of positive publications has the potential to boost crude oil further; potentially towards $80 a barrel.

Also to take note of is the thin trading we should experience this week. Since some national banks will be closed due to the holidays, we will probably see a level of choppy trading from the lack of liquidity. Traders should be aware of this and place orders with caution. Make sure you don’t forget your Stops and Limits in this week’s trading.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

Last week’s most significant event was the halt of the Dollar’s bullish trend against the Euro. After the EUR/USD pair dropped over 900 pips, it seems that the bearish correction could be limited. The main question now is whether the Dollar will manage to rise against the Euro again, this year.

Economic News

USD – Dollar’s Strengthening Halts against the Euro

The Dollar continued to climb against most of the major currencies during last week’s trading session, except for the Euro. The Dollar strengthened against the Pound and rose over 100 pips against the Yen. However, the Dollar failed to extend its bullish trend vs. the Euro, and the EUR/USD pair even rose a bit towards the 1.44 levels.

The Optimism regarding the U.S. economy, which strengthened the Dollar, especially during the beginning of last week, was due to the positive Existing Home Sales publication. The report showed that 6.54M residential buildings were sold during November, well above expectations for a 6.29M figure. This result led investors to gain confidence that the U.S. economy is indeed recovering. Due to the fact that the cause of the economic crisis was the deterioration of the U.S. housing sector, such a positive result, created a sentiment that a full recovery may take place sooner than expected.

However, the main reason that the Dollar’s appreciation was halted, and even followed by a bearish correction vs. the Euro, was another housing sector publication – the New Home Sales. This report measured the number of new single-family homes that were sold during November. While analysts expected a 442,000 figure, the end result was quite disappointing, as merely 355,000 new homes were sold. Naturally, this had the exact opposite effect on the Dollar. The unfortunate figure created pessimism that the U.S. housing sector isn’t doing so well after all. The Dollar promptly dropped against the Euro as a result.

As for the week ahead, several interesting publications are expected from the U.S. economy. The data which is likely to impact the most on the market this week is the U.S. Consumer Confidence scheduled for Tuesday. The Consumer Confidence is a survey of about 5,000 households which are asked to rate the level of current and future economic conditions. A positive end result is likely to support the Dollar.

EUR – Euro Rises on All Fronts

The Euro saw an extremely bullish session during last week’s trading. The Euro rose close to 200 pips against the Pound and over 200 pips against the Yen. In addition, the Euro even managed to climb against the Dollar, as the EUR/USD pair reached above the 1.4400 level.

The Euro’s bullish trend from last week wasn’t caused by an extraordinary economic data from the Euro-Zone. The most significant positive publication from the Euro-Zone was the German Import Prices report. The report showed that the price of imported goods purchased domestically rose by 0.4% during November. A rising inflation in Germany, which holds the strongest economy within the Euro-Zone, usually has a positive impact on the Euro, as investors interpret it as a sign that the economic recovery is in place.

In Addition, it seems that the strengthening of the Euro was a reaction to the weak currencies. The main reason for the Euro’s appreciation was the negative housing data from the U.S. It seems that for as long that the U.S. economy will provide disappointing data, the Euro is likely to strengthen a result.

Looking ahead to this week, many impacting news events are expected from the Euro-Zone. Traders are advised to focus on the M3 Money Supply, scheduled for Tuesday 09:00 GMT. The report shows the change in the total quantity of domestic currency in circulation and deposited in banks during November. If the end result will show that this indicator continues to rise, it could strengthen the Euro further.

JPY – Yen Continues to Slide

The Yen’s bearish trend continued last week. The Yen dropped close to 200 pips against the Dollar as the USD/JPY pair rose above the 91.80 level. The Yen also dropped over 200 pips against the Euro.

The Yen’s falling trend is a combination of 2 leading factors. The first one is an instable economic data which shows that the Japanese economy is yet to pull out of recession. The second one is the Bank of Japan, which keeps it as its main interest to weaken the Yen, in order to support the Japanese export. The Mixed results from the Japanese economy continued last week; one hand, the Trade Balance, which measures the difference in value between imported and exported goods and services rose to 0.49T during November, on the other hand, the Tokyo Core Consumer Price Index, a leading gauge for inflation, dropped by 1.9% during December. This shows that Japanese consumers did not regain their confidence regarding their financial security, and thus prefer to avoid expenses at the moment.

As for this week, not many economic publications are expected from Japan, as Japanese banks won’t work during most of the week. Traders are advised to follow the leading publications from the U.S. economy and Euro-Zone, as they are likely to impact the Yen this week.

Crude Oil – Could Crude Oil Reach $80 a Barrel?

Crude Oil continued to rise during last week’s trading session. Crude Oil began last week’s trading with a falling trend, as a barrel of crude oil was traded for less than $73. However later on the trend reversed and crude oil reached over $78 a barrel for the first time in over 3 weeks.

Oil continues to rise following positive economic data from the U.S. The number of U.S. individuals who filed for unemployment insurance for the first time during the past week, dropped to 452,000, the lowest level since September 2008. This has increased speculations for global recovery. The optimism tends to boost crude oil prices, as it is believed that an economic improvement should increase demand for energy. Currently it seems that for as long that positive data from the U.S. economy is likely to support oil prices.

As for the week ahead, traders should follow the leading economic news evens from the U.S. economy and the Euro-Zone as they are likely to impact the value of Oil. In addition, traders should also follow the Crude Oil Inventories on Wednesday, as this report proven to have an immediate impact on the market.

Technical News

EUR/USD

A fresh bearish cross is evident on the 8 hour Slow Stochastic with the 4 hour RSI is floating in the overbought territory. Going short on the day with tight stops may be advised

GBP/USD

The pair’s recent bearish trend may see some reversal today as the daily and 8 hour RSI are floating in the oversold territory and with the daily chart’s Slow Stochastic and hourly MACD exhibiting a fresh bullish cross. Going long for the day may be advised.

USD/JPY

The daily and 8 hour RSI are floating in the overbought territory, while the daily chart’s Slow Stochastic and 8 hour MACD show a fresh bearish cross. Going short for the day may be advised.

USD/CHF

The pair seems to be exhibiting mixed signals with the daily MACD exhibiting a fresh bearish cross while the 4 hour RSI is floating in the oversold territory. Waiting for a clearer direction may be advised for the day.

The Wild Card – GBP/NZD

The pair’s bearish trend may experience a correction today as the hourly, 2 hour and 4 hour RSI are floating in the oversold territory. Furthermore, the hourly and 8 hour Slow Stochastic are exhibiting a bullish cross while a breach of the lower Bollinger Band is evident on the 2 hour and 8 hour charts. Forex traders may be advised to go long on the day to benefit the forming trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The Christmas rally began a little early with the markets finishing the holiday shortened week on a strong note. The S&P 500 finished the week above resistance closing with a weekly gain of 2.18%.  Global equity markets made new highs for 2009 with the Nasdaq composite leading the charge finishing the week up 3.4%.  The dollar index started the week off on a positive note, but retraced much of its gains on Wednesday and Thursday.

Movement started on Tuesday as the National Association of Realtors said that sales of existing homes rose 7.4% in November from October to a seasonally adjusted annual rate of 6.54 million units, which is the highest rate since February 2007. Buoyed by a tax credit for buyers and low interest rates, sales were 44% above November 2008’s figure, when fears over bank failures were near their peak.  The median sales price last month was on existing homes was $172,600, up from $172,200 in October, the first monthly increase since June.  Also of note was the release of final 3^rd quarter GDP in the US.   The government revised downward its earlier estimate of the economy’s third-quarter growth rate to a lackluster annualized rate of 2.2% from the earlier estimate of 2.8%. Inventories were drawn down faster than previously believed, could mean more robust growth in the current 4^th quarter.

Despite the better than expected housing data, one must note that the sector is still showing mixed signals. On one hand, prices have firmed up mainly for middle class homes in areas with short commutes, where investors and first time buyers are scrapping for bargains on foreclosed houses.  On the other hand, prices of higher end homes are likely to keep falling, because of a glut in supply and greater difficulty of getting loans for such properties.

Another closely watched measure of home prices, the S&P/Case-Shiller Home Price Index, also is improving. Its national index rose in the third quarter of 2009 from the prior quarter, its second consecutive quarterly increase. That index is down about 28% from its peak in the second quarter of 2006.

Across the Atlantic, the Office for National Statistics reported that the British economy contracted a greater than expected 0.2% in the third quarter, showing that the economy is still in dire straits. The outcome thwarted expectations of a more favorable revision to the third-quarter output number, and came as a disappointment for Prime Minister Gordon Brown’s government. To date, he is looking for a solid economic bounce to help him at the upcoming elections.  The data also signaled that that the British economy has contracted for six straight quarters, even after most other industrialized economies have returned to growth.  In its final estimate of third quarter gross domestic product, the ONS also said the savings ratio rose to 8.6%, its highest level since the first quarter of 1998 – a clear indication of caution among consumers, who tend to save during a recession.

On Wednesday, the minutes of the  Bank of England’s Monetary Policy Committee showed a unanimous vote to leave interest rates at a record low and press on with its previously announced £200 billion ($319.52 billion) bond-buying program. The results, which were in line with economists’ expectations, suggest there is unlikely to be any change in the bank’s policy stance until February when it presents its next quarterly inflation report.  While the inflation rate would probably rise in the near term, there was a substantial degree of spare capacity in the economy, it said. However, the bank said there were “exceptional uncertainties” over the outlook for inflation and activity growth.  The BOE left its benchmark Bank Rate at 0.5% for a tenth consecutive month on Dec. 10 and said it was sticking to its £200 billion bond-buying target, a process known as quantitative easing. The BOE aims to anchor annual inflation at 2% over the medium term.

Back in the U.S, the Commerce Department reported Wednesday that personal income increased 0.4% while spending last month increased by 0.5%.  A key gauge of prices suggested inflation wasn’t yet threatening.  Also on Wednesday, New home sales plunged to their lowest in seven months during November, a bigger than expected drop and a sign the housing market recovery will be rocky. Sales of single-family homes decreased 11.3% to a seasonally adjusted annual rate of 355,000, according to the Commerce Department.  The level was the lowest since 345,000 in April. The plunge wiped out much of the gain made in the new home market since the January bottom.  Economists surveyed by Dow Jones Newswires estimated a 1.2% drop to a 425,000 annual rate for November.  New home sales, unlike sales of existing homes, are recorded with the signing of a sales contract and not the closing.

Forex

After being pounded, the EUR/USD managed to find stability last week, despite additional news from Greece. Moody’s official noted that “We put Greece under negative outlook, which means that over the next 12 to 18 months, there is a more than 50% probability that we’ll downgrade them again.”    European bonds initially sold off on the downgrade as well as the Euro. Towards the second half of the week, the EUR/USD bounced off its 200 day moving average and began to potentially create a bottom.

New Zealand showed a much weaker GDP figure, coming out at 0.2% q/q, half the expected 0.4%. This underscores the notion that the RBNZ will not be hiking aggressively this year, as the NZ recovery is clearly lagging that of Australia.  From a technical point of view, the NZD/USD is still in correction mode, and is trading above is secondary trend line support.

The week ahead

Next week is a relatively light week, but one must note that historically the markets tend to move 2% on light volume.  On Tuesday market participants with be watching Japanese Industrial Production.  On Wednesday, the main release is U.S Consumer Confidence, and on Thursday traders will keep an eye on Chicago PMI, prior to the New Years Day Holiday on Friday.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Now that Christmas is behind us, and New Years Eve is only at the end of the week, we have plenty of time to end this year with a big smile on our faces. Two thing happened last week that we can actually use this week:

1. The Dollar failed to extend its bullish trend against the Euro. Currently, the EUR/USD pair is testing the 1.4420 level. In case this level will be breached, the pair has the potential to jump up sharply. However, if the pair won’t manage to cross through this level, the EUR/USD could be on its way to the 1.4250 level again.

2. Crude Oil is climbing rapidly. After dropping below $73 a barrel crude oil then rose sharply and reached over $78 a barrel; marking a 3-week record. The reason for oil’s recovery is the positive data from the U.S. economy. This is creating optimism regarding global recovery, which of course means higher demand for energy products. A continuation of positive publications has the potential to boost crude oil further; potentially towards $80 a barrel.

Also to take note of is the thin trading we should experience this week. Since some national banks will be closed due to the holidays, we will probably see a level of choppy trading from the lack of liquidity. Traders should be aware of this and place orders with caution. Make sure you don’t forget your Stops and Limits in this week’s trading.

Written by ForexCycle.com

EURUSD broke above the falling trend line on 4-hour chart, suggesting that a short term cycle bottom has been formed at 1.4218 level. Range trading between 1.4218 and 1.4500 is expected in a couple of days. Critical resistance is located at 1.4500, as long as this level holds, the rise from 1.4218 could be treated as minor consolidation of downtrend from 1.5144, and another fall towards 1.4000-1.4100 is still possible after consolidation. However, a break above 1.4500 will indicate lengthier consolidation of downtrend is underway and further rally could be seen to 1.4700-1.4750 area.

EURUSD dropped sharply from 1.5144 and the fall extended to as low as 1.4218 level. The subsequent rebound is more likely minor consolidation of downtrend. Resistance is now located at 1.4480, as long as this level holds, another fall could still be seen and next target would be at 1.4000-1.4050 area. However, above 1.4480 could indicate that a cycle bottom has been formed at 1.4218 and the fall from 1.5144 has completed, then the following uptrend could bring price back to 1.4600 or even higher.

For long term analysis, EURUSD has formed a cycle top at 1.5144 level on weekly chart. Pullback towards 1.4000 area to reach next cycle bottom is expected in next several weeks.

Weekly Forex Analysis

By CountingPips.com

Economic news out of the U.S. on Christmas Eve day showed that durable goods orders increased by less than expected in the month of November. Durable goods orders in the United States rose by 0.2 percent in November to a total of $166.9 billion according to news released by the U.S. Commerce Department today. November’s total marks the second increase in the last three months and follows a revised decrease of 0.6 percent from October.

Durable goods are products manufactured in the U.S. and considered to last more than three years.

Market forecasts had been expecting that durable goods orders would increase by approximately 0.5 percent for the month.

New orders for durable goods excluding transportation increased by 2.0 percent in November following a revised decrease of 0.7 percent in October. Market forecasts were predicting an increase of 1.0 percent for durables minus transportation.

November’s results for shipments of durable goods increased by 0.3 percent and gained for the third straight month. Unfilled orders decreased for the fourteenth straight month by 1.3 percent while durable good inventories decreased 0.2 percent in November. November nondefense orders for new goods fell by 1.9 percent while defense orders for capital goods increased by 8.5 percent.

Weekly Jobless Claims fall by 28,000.

A separate government release by the U.S. Labor Department showed that weekly U.S. jobless claims decreased in the week that ended on December 19th. New jobless claims fell to a total of 452,000 unemployed workers, a decrease over the prior week by 28,000 workers. A 4-week moving average of unemployed workers declined by 2,750 from the prior week to a total of 465,250.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending December 12th also decreased for the week. Continuing claims fell by 127,000 workers to a total of 5,076,000 unemployed workers. A four week moving average of continuing claims dropped by 90,000 to 5,233,000.

US Dollar showing mixed results in forex trading.

The U.S. dollar has been mixed in forex trading today against the major currencies in light holiday trading. The dollar has edged up versus the British pound and the Japanese yen while falling against the euro, Australian dollar, Canadian dollar, Swiss franc  and New Zealand dollar according to currency data by Oanda at 10:29 am EDT.

The US stock markets have traded higher today with the Dow Jones gaining by over 35 points, the Nasdaq increasing over 8 points and the S&P 500 advancing by over 3 points at the time of writing.  Oil has traded higher to around $77.19 while gold has gained by almost $10.00 to trading around the $1,103.20 per ounce level.

EUR/USD 4-Hour Chart – The Euro gaining today versus the US Dollar in Forex Trading for the second day in a row and breaking out from its downward price channel. The EUR/USD pair found support around the 1.4200 level after a steep decline from its recent high at 1.5141 on December 3rd.