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Monday, 10 Oct 2011
Bank Holidays to Cause Low Market Liquidity
US banks will be off today in observance of Columbus Day, and Canadian banks will be off for the celebration of Thanksgiving. Liquidity will likely be held to a minimum making the market unlikely to experience any major swings.
USD - US Dollar Dips as Employment Data Supports Risk-Taking
The US dollar (USD) was seen trading mildly bearish Monday morning as traders saw a small decline in risk aversion following last week's economic reports. The EUR/USD rose following the completion of a long-term consolidation trend, reaching a 4-day high. The GBP/USD saw somewhat higher gains, with the greenback inching the pair towards last week's early high.
Employment reports from the US and Canada last week portrayed a global economy somewhat stronger than what many had expected. Non-Farm Payrolls (NFP) last Friday revealed a growing jobs market as businesses across the United States and Canada begin seasonal hiring for the holidays. Such reports are likely to drive the US dollar lower as risk aversion declines and traders begin seeking out higher yields.
With a very light news day ahead, traders appear anxious for the week's data which seems to be centered mostly on housing reports. Today's publications are severely limited, however, with most major banks on holiday. US banks will be off today in observance of Columbus Day, and Canadian banks will be off for the celebration of Thanksgiving. Liquidity will likely be held to a minimum making the market unlikely to experience any major swings.
EUR - EUR Bullish as Traders Seek Higher Yields
The euro (EUR) was seen trading with largely bullish results this morning following last week's mildly optimistic assessments from North American employment reports. Against the US dollar (USD) the euro was trading near a 4-day high, with few signs of halting the bullishness which appears to come on the coattails of a long-term consolidation pattern. Against the Great British pound (GBP), the EUR witnessed a similar, albeit weaker, gain in strength.
Traders appear to be clinging stronger to the 17-nation common currency with higher yielding investments in mind. With employment rising in the North American continent, it seems likely that more traders will opt for higher yields heading into the 2011 holiday season. Should data continue to move in such a direction, it is far more likely that the EUR will see further gains.
Economic sentiment across the euro zone remains negative overall, however, with many analysts and economists expecting moves towards safety by traders as early as next week. With a light news day ahead, many traders are awaiting more data releases later in the week before buying up further EUR. With today's low liquidity, not much movement is expected, though random central bank statements could roil markets at any time.
Silver - Silver Price Continuing in Bullish Channel
The price of Silver found modest support over the weekend amid the surging strength of the US dollar, the currency in which such assets are valued. Silver has been trading with stronger price action since early August, but traders have been awaiting a price correction from the rampant increase in risk aversion due to rising tensions from the euro zone's periphery and a sudden lift off in dollar values.
As investors seek safety, the value of Silver, which has been seen trading with mixed results since two weeks ago, is expected to rise following its current bullish channel, bouncing off a recent low near $39.40 an ounce after a selloff in commodity futures pulled down on precious metals last week. A sudden rise in dollar values due to this week's uncertain environment is expected to assist the sentiment favoring Silver, however. Should risk sentiment continue to bounce in sporadic directions this week, the price for this precious metal may continue to experience similar swings in value, favoring an upside as Silver holds within its bullish pattern.
According to the Relative Strength Index on the 8-hour chart, this pair may see a downward correction in trading today. This theory is supported by the Stochastic Slow on the daily chart, which shows a bearish cross forming. Traders may want to go short in their positions today.
Both the Relative Strength Index and Stochastic Slow on the 8-hour chart indicate that this pair is approaching overbought territory. This may be a sign that the cross could see a downward correction in the near future. Traders may want to go short in their positions today.
This pair has been range trading for some time, and appears poised to continue that trend today. Most technical indicators are currently in neutral territory, indicating that no major movement is predicted in the immediate future. Traders may want to take a wait and see approach today.
While certain indicators, such as the MACD on the daily chart, are showing that this pair is in overbought territory, most signs indicate that the pair is range trading and that no major movements are predicted in the immediate future. Traders may want to take a wait and see approach today.
The Wild Card
After spiking yesterday, this pair seems poised for a downward correction today. The Relative Strength Index on the 8-hour chart has entered overbought territory while the Stochastic Slow on the daily chart has formed a bearish cross. Forex traders may want to short their positions today. forex
|01:00||AUD||HIA New Home Sales||1.2%||*||-|
|EUR||German Prelim CPI||m/m||0.3%||0.0%||-|
|01:00||EUR||Italian 10-y Bond Auction||2.60|1.5||*||-|
|02:30||AUD||Private Capital Expenditure||q/q||-4.2%||-0.8%||-|
|08:55||EUR||German Unemployment Change||-12K||-6K||-|
|09:00||EUR||M3 Money Supply||y/y||1.5%||1.5%||-|
|09:00||EUR||Italian Retail Sales||m/m||-0.7%||-0.2%||-|
|11:00||GBP||CBI Realized Sales||21||25||-|
|13:30||USD||Prelim GDP Price Index||q/q||2.0%||2.0%||-|
|15:00||USD||Pending Home Sales||m/m||-1.1%||0.6%||-|
|15:30||USD||Natural Gas Storage||88B||79B||-|
|00:05||GBP||GfK Consumer Confidence||-2||-1||-|
|00:30||JPY||Tokyo Core CPI||y/y||2.8%||2.7%||-|