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 |  14-Dec-2007 | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Economic News | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| USD | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Yesterday we could notice a considerable movement in the market especially after the publication of several significant indexes in the US market;
Retail sales index increased by 1.2 percent last month after rising by 0.2 percent in October. A separate report, which was published by the Labor Department showed that higher energy costs pushed wholesale prices up 3.2 percent, which increased twice as much as forecast in November.
The core index, which excludes food and energy, also raised yesterday a much more than predicted by 0.4%, which again was above the Wall Street's forecast of 0.2 percent. The rising prices set off the Federal Reserve's alarm that energy and commodity costs may increase inflation in the short run at the consumer level and the high inflation could force the Fed to pull back on future rate cuts. Treasury notes slipped down after the publication of the reports, which were published the same time. Stock-index futures pared their decline, while the dollar remained significantly higher against the EUR and other major currencies. Also yesterday, the Labor Department report showed that the state of employment in the U.S economy seems to be holding up. Last week, jobless claims declined to 333,000; which was to some extent better than expectations. New applications for state unemployment insurance benefits fell to a seasonally adjusted 333,000 in the week ended Dec. 8 from an upwardly revised 340,000 the week before. The quantity of people enduring to receive jobless benefits after an initial week of aid rose to 2.64 million in the week ended Dec. 1. Today, allot of awareness will revolve around the announcement of the US CPI inflation data. In the case that the CPI will spring an upside surprise and release higher than expected, it will give an additional element to the Federal Reserve's uncertainty whether to make an additional move regarding cutting interest rates further in the short run. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EUR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Yesterday was a relatively empty economic calendar suggesting that the direction of the EUR may depend on shifts in global risk sentiment. The US dollar continued to move forward and increased against the EUR and other major currencies., striking a six-day high especially against the 13 nation currency, principally after the publications of stronger than expected US retail sales and PPI data. It is almost a week since the EUR/USD encountered a rough patch and will face allot of difficulty to maintain gains over the 1.4725 level. The main question at the moment which is being asked by many traders is if the greenbacks strength has returned and little by little we will notice positive signs from the US market after the credit and the mortgage crises. As it seems at the moment, if we will witness better news coming from the US then the probability is that the market will notify a bullish USD and possibly a turnover of the pessimistic sentiment. In addition, The Swiss National Bank kept interest rates unchanged on Thursday for the first time at a policy meeting in over two years. The NSB raised its inflation forecast for 2008 to 1.7 percent from 1.5 percent but lowered it for 2009 to 1.5 percent from 1.8 percent. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JPY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Today during the early trading ours in Asia, Japanese large manufacturers' business sentiment descended to a two-year low, The Tankan index of manufacturer sentiment fell to 19 points in December from 23 in September, providing once again a potential of a BOJ rate hike during next year. As a consequence, the Japanese currency began to depreciate against the US dollar and as it seems we may see the USD JPY pair reach the 113.00 level. The JPY traded at 112.50 per dollar at 11:10 a.m. in Tokyo from 112.33 before the report was published, and after the report came out, the USD JPY peaked to 112.63. The economy of Japan developed much slower than was estimated by the Japanese government in the three months ended Sept. 30. The growth of many large companies decreased to 1.3% in the third quarter from 14% in the second, as a 10% gain in the JPY over the earlier six months cut margins, and in addition to this fact, in many small and medium companies, salaries dropped by 4%. The direction of the JPY remains heavily depended on the performance of U.S stocks and the Nikkei, as this will influence the level of investor's risk appetite, which drives carry trades. In the short term the JPY should remain under pressure, as the confidence of investors to take risks is returning. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Technical News | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| EUR/USD | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| After touching a base at 1.4575, the pair now consolidates higher at 1.4655. All oscillators show that the bullish momentum will probably continue, and that a breach through the next key level of 1.4680 is quite imminent. If the key support level will hold, we might see a correction back to the 1.4600 levels. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GBP/USD | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In the past few days the pair is going through a choppy period, and is giving mixed signals on the daily charts. However the hourlies remain bullish and it looks as if this pair could breach the 2.0500 level again. A preferable strategy might be going long on an intraday trade. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USD/JPY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On the 4 H chart we notice that the bullish trend is running ahead. The volatility is increasing, especially after the pair has broken the 112.00 resistance level. The price should continue to move upwards in a range of 112.50-113.00. As it stands, the bullish pressure will continue to gather momentum on the USD JPY today as well. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USD/CHF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| This pair is still in the midst of a steady bullish channel that has continued over the last 2 weeks. However it is now hovering near the top of this channel setting up the potential for a mini-correction downwards. Nevertheless the longer term outlook remains bullish, so the preferred strategy here could be a buy and hold scenario. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Wild Card | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Gold | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On the 4 H chart we can see that gold is in the middle of an upward channel. It was heading back towards the top of this channel but now it seems that it may correct again before moving up. So this gives Forex traders the opportunity to maximize profits by waiting for the correction and then enter an early long. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Demo Account
13-Dec-2007
