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The EUR/USD fell from its three-week high yesterday, sinking downwards of 1.4340 before flattening out in today’s morning session. A technical barrier that was triggered near 1.4450 ended up pushing the pair lower yesterday and a downgrade of Greece’s bond rating by Moody’s Investor Services added insult to injury. Bearish sentiment appears to be winning out as of this morning.
The US dollar (USD) halted its resurgence against most currencies yesterday as traders sought safety following a downgrade of Greece by Moody’s Investor Services. Positive news regarding Greece’s debt woes helped the euro (EUR) initially hold its ground against the USD’s resurgence Tuesday but yesterday’s news has pushed the pair back to 1.4350 from its 3-week high of 1.4458.
The shift into safe-haven assets like the Swiss franc (CHF) and Japanese yen (JPY) carries an ill wind for global growth assessments which have begun anticipating faster growth in the second half of 2011. Weak fundamentals out of the US and other leading economies have some analysts a bit skeptical nowadays, especially with ADP’s non-farm employment change report yesterday showing sluggishness.
Today, the United States is scheduled to release a series of significant data sets. The most impactful figure being published will be the weekly unemployment claims report, set to be released at 13:30 GMT. With a week focused on employment in the United States, this report may transfer over to recent consumer sentiment, but traders are also in a holding pattern ahead of tomorrow’s NFP report. Forex traders may be withholding funds today ahead of such important economic news as a result.
The EUR/USD fell from its three-week high yesterday, sinking downwards of 1.4340 before flattening out in today’s morning session. A technical cap that was triggered near 1.4450 ended up pushing the pair lower later in the day and a downgrade of Greece’s bond rating by Moody’s Investor Services added insult to injury.
The euro (EUR) now appears to be slumping against all of its currency rivals as traders are seeking safety in the Swiss franc (CHF) and Japanese yen (JPY).
Although the euro has been a top performer against the other major currencies lately, the ratings downgrade was a sharp blow to the recent uptick in the region’s currency values. Coupled with the poor fundamental data out of the United States, traders have taken the cue to move away from higher yields and into safety prior to tomorrow’s NFP report out of the US.
As for Thursday, the euro looks to be continuing its losses as a shift in sentiment is not likely to fully play out with an expected thin trading environment. Most of Europe will be on holiday in observance of Ascension Day, and global investors are also hesitant to invest prior to tomorrow’s NFP figure.
The Japanese yen, which took a sharp dive yesterday against most of the other major currencies, pared most of those losses in yesterday’s late trading sessions after Moody’s Investor Services downgraded Greece’s bond rating. Yen pairs and crosses were last seen moving in a direction favorable to the JPY as the shift in risk aversion has helped boost safe-havens like the yen and Swiss franc (CHF).
Yen traders have been weighing risk sentiment lately, attempting to decipher the direction of the economy during this news heavy week. With Friday’s Non-Farm Payrolls (NFP) ahead, much can be said about the increase in speculative shifts taking place in the market right now. Last week’s data provided a temporary bullish uptick for the island currency, but Tuesday’s news from Moody’s about reviewing Japan’s bond rating reversed much of this sentiment until yesterday’s shift in risk appetite.
Oil prices pushed beyond $103 a barrel yesterday after investors viewed the recent downward correction as a natural process to help get prices in line with supply. However, a shift in risk sentiment which favored the US dollar (USD) against the euro (EUR) has helped drop commodity values after investors shifted into safer assets. The Swiss franc (CHF) and Japanese yen (JPY) are on the rise and physical assets usually would jump with heightened risk aversion, but the positive movement of the dollar asserted itself over the value of oil.
The decision point anticipated since Monday appears to have been reached yesterday morning, but technical forces appeared to have tested the recent jump and found it wanting. Whether oil traders decide to lift oil prices again will depend on manufacturing and industrial growth figures out of the major global economies. Employment also appears to be a top priority in this growth sentiment and oil traders are eyeing this week’s NFP data out of the United States to verify their revamped growth schedule for oil prices, especially with Europe on holiday today.
The pair has twice failed to establish a beachhead above 1.4450, a level that coincides with the 50% retracement of the May move lower. Resistance is found at 1.4570 from the 61.8% retracement target followed by 1.4750 from the late April and early May lows. A breach here would target the May high at 1.4940. 1.4250 should serve as the initial support level followed by 1.4140 from the rising support line off of the May low and the 100-day moving average at 1.4060.
After a failure to close above the 1.6515 resistance level the pair declined sharply and found support near the 50-day moving average at 1.6325. A break below 1.6300 would perhaps then test the rising trend line off of the May 2010 low at 1.6140. Below the trend line the March low at 1.5935 comes into play.
The yen’s rally failed to breach the 82.25 resistance as well as the 100-day moving average before the pair turned sharply lower while making a significant close below the rising trend line from the May low. Falling daily stochastics point to further declines in the pair. Therefore traders may look to be short on the USD/JPY with initial support at 80.70 and 80.35, followed by the May low at 79.50. A breach here would expose the pre-intervention low at 76.10. A move to the upside and the pair may encounter initial resistance at the previous trend line which comes in at 81.95, followed by 82.25, and retracement targets from the April to May move at 82.50 and 83.25.
In almost textbook like fashion, the USD/CHF rose as high as 0.8890, a level that coincides with the trend line off of the February high only to encounter resistance and plummet, ending the week at a new all-time low at 0.8464. This level should serve as initial support for the USD/CHF, followed by 0.8400. A retracement back to the falling trend line would offer traders better levels at which to enter the trend with a stop above one of the resistance levels near 0.8890 and 0.8945.
Gold prices continue to rally as the technicals point to further potential gains with the Momentum-14 indicator rising sharply higher. Forex traders may want to be long on spot gold with an initial target at the all-time high of $1,577 with a protective stop below the support level at $1,514.
Forex Market Analysis provided by ForexYard.
© 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 dollar was down across the board as the greenback gave back most of its late day gains from yesterday.
The euro recovered its losses and then some versus the dollar after yesterday’s rating downgrade of Greece by Moody’s. Helping to bring the euro off of its lows today were comments made by ECB President Trichet who spoke of further fiscal intervention in the euro zone and a decent Spanish bond auction. Liquidity was noticeably tighter with public holidays in France and Germany which may have helped ease the euro off of its lows. The jump in the EUR/USD this morning moved the pair above the 50% retracement level from the May decline at 1.4450. The next test will come at 1.4570 from the 61.8% retracement. To the downside the 1.4350 level may prove to be supportive.
Sterling came off of its low for the day after better than expected construction PMI numbers. The GBP/USD failed to move below support at 1.6300 and climbed as high as 1.6416. The pound could continue to move higher but the real test of sterling’s momentum will come at the 1.6515-50 resistance zone.
The yen is stronger versus the dollar after Japanese Prime Minister Kan avoided defeat in a vote of no confidence. However, sources say he will chose not to fulfill his entire term in office. The 80.60 support level has held this week but a breach here would allow the USD/JPY to decline to the next support at 80.35. Resistance is found at 81.75 and at 82.20.
After yesterday’s sharp drop in US equities the early price action from this morning should not be confused with the “risk-on” nomenclature. The Nikkei is down- 1.70% while the London FTSE is lower by -0.75%. Crude oil is marginally higher as the commodity treads water just above $100 a barrel.
US data releases this week have done little to support the greenback as highlighted by yesterday’s weak ADP job numbers and the recent trend of weak US economic data feeding into USD buying is beginning show cracks. Economists have begun lowering their forecasts’ for Friday’s NFP jobs report. Storm clouds are beginning to form over the head of the US economy given the Fed’s QEII program is due to end next month and little has been proposed on the policy front to address the recent US slowdown. The payrolls report tomorrow may intensify the negative sentiment.
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The EUR/SEK is consolidating in a triangle chart pattern. Based on the long term trend of the pair the next move may be to the downside.
From February to early April the euro came off of its lows versus the Swedish krona only to consolidate its gains in a defined triangle chart pattern. Moving to the weekly chart it is apparent that the long term trend of the pair is to the downside. Therefore, traders may see the EUR/SEK to break below the rising lower boundary of the triangle pattern which comes in today at 8.8750. Initial resistance is found at the mid-March and April lows at 8.8550, followed by 8.7875, and finally at the March low at 8.700.
However, should the EUR/SEK break out higher from the consolidation pattern resistance would be found at the May high of 9.0730 and the April high of 9.1220.
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Analyses viewing the housing sector of the US economy have recently begun to factor in rental prices as a gauge of inflation. The move away from buying houses as an investment has sunk the value of homes across the country, but rental prices have taken off as a byproduct of this shift in housing behavior.
The Federal Reserve’s policy of maintaining low interest rates through to mid-2012 is partially considered using housing data as a prime element of consumer spending, inflation and sentiment towards investing. But rental prices are only one aspect of home values and their soaring increase, in some areas almost doubling, are beginning to take a toll on consumers. If the issue is pushed further, movement may be seen on interest rates sooner than expected; but so far, analysts aren’t holding their breath.
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The Australian economy posted solid gains in retail sales this morning concurrent with a report which showed the nation’s trade balance falling short of expectations. With yesterday’s shrinkage in the Australian GDP, traders have finally begun to weigh in on the Australian dollar’s (AUD) value.
Though the Aussie was able to withstand sell pressure early in the day Wednesday, by late afternoon trading the currency was sinking against its counterparts. A shift into safe-haven investments late yesterday also helped drive the Aussie further down considering its relatively higher yield. The triple whammy of weak GDP, muted growth in trade surplus and a shift into safe-havens have so far put significant pressure on the AUD in this week’s trading.
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By CountingPips.com
Economic News Releases
01:30 Australia Retail Sales
01:30 Australia Trade Balance
08:30 United Kingdom PMI
12:30 United States Weekly Jobless Claims
13:45 United States Bloomberg Consumer Comfort Indicator
22:45 New Zealand Building Permits
Being contained by 0.9639 support, USDCAD rebounded strongly from 0.9655, suggesting that a cycle bottom has been formed on 4-hour chart. Now the rise from 0.9655 would possibly be resumption of uptrend from 0.9444. Further rise towards 0.9816 could be seen later today, a break above this level could signal resumption of uptrend, then next target would be at 0.9900 area. Key support is now at 0.9655, only break below this level could indicate that the upward move from 0.9444 is complete.
By Ulli G. Niemann
There are many reasons to be investing these days, and too much opportunity to not have your money working for you. However, I believe the majority of people dread having to deal with investment matters, and tend to jump into purchases and then hold their breath hoping for the best. After a long day at work and taking care of the family, it’s hard to get excited about reading up on your 401(k) options, Morningstar ratings and fund performances.
If this sounds like you, there are basically 3 choices.
1. You can have your investments professionally managed,
2. you can continue as you have in the past & keep your fingers crossed,
3. or you can find a methodology that objectifies the investing process (that’s buying and selling investments) and helps you maximize your long-term results.
To determine if you need help managing your investments(and this doesn’t necessarily mean having to pay for advice) you might want to ask yourself these questions:
Do I really have the time and interest to follow the market closely on a daily basis?
Have I done well in the past managing my own investments?
Do I really want to add another layer of work and responsibility onto an already busy schedule?
If you’re like most people, you would answer yes to some and no to others, so how do you decide? If you think you could have or should have done better with your investments, then you need some help. Don’t feel bad. Having counseled hundreds of people over the past 15 years I can honestly say that everybody needs some help, whether they are aware of it or not.
Why? This could come as a surprise, but, in fact, your financial life is a lot shorter than your physical life?
Most people who end up investing don’t really start working and making money until they are about 25 years old. Considering the average retirement age of 65, this gives you only 40 years to save and invest wisely.
If you make a poor investment decision, such as trying to stay fully invested during a bear market, you could lose big both in terms of diminished dollars and wasted time.
To drive home this important point, let me give you an actual example involving my own portfolio. For ease of illustration I have adjusted the beginning portfolio balance to $10,000.
During the period from 1/25/91 to 10/13/00 my $10,000 investment grew to $37,840, which is a 14.67% compounded annual return.
On 10/13/00, based on a methodology I was following, I liquidated all of my domestic mutual fund positions and moved 100% to the safety of my money market account. Thanks to this move, my portfolio retained 100% of its value on that date.
As we now know with hindsight, most people held on to their investment positions and have so far lost on average 50% to 60% of the value of their portfolios. For this example let us use 50%.
If I had held onto my position, my portfolio would be down to $18,920. Last time I hit that level on the way up was in 1995.
In other words, not only would I have lost 50% of my portfolio I would have lost even more by having used up 20% (8 years) of my total financial life.
How can you avoid mistakes like that in the future? Spend a little of your valuable research time looking for investment methodologies that allow you to side-step bear markets and let you move back in during bull markets. In other words, invest your time looking at methodologies instead of investments themselves. This will lay the foundation for more effective use of your money and time.
If you find a methodology that you like, and it matches your investment philosophy, stick with it for the long term. It should have the aspect of telling you when to get out of, as well as when to get into, an investment.
I suggest you follow these broad guidelines:
If you take this advice, I guarantee that pretty soon sleepless nights will be a thing of the past and you’ll be on your way to more confidently and successfully (that means profitably) managing your investments.
© Ulli G. Niemann
