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Friday, 24 Dec 2010
Crude Futures Soar above $91 a Barrel
Crude futures hit a two-year high Thursday, reaching above $91 a barrel as several economic data releases from the U.S offered a brighter economic outlook for the world's largest oil consumer.
USD - Dollar Lower in Light, Volatile Trading
The U.S. dollar fell versus most of its counterparts as data released from the U.S. signaled that the American economic recovery is strengthening, raising demand for higher yielding currencies.
Weekly U.S. jobless claims fell by 3,000 to 420,000 last week, a larger drop than expected. Core Durable Goods Orders rose in December while New Home sales showed some recovery in November, despite coming out lower than expected.
The greenback weakened 1% against the New Zealand dollar to 74.72 U.S. cents from 74.02 cents yesterday. The U.S. currency slid 0.5% versus the Australian dollar to $1.0042 from 99.90 cents. The Canadian dollar moved back towards parity with the USD as crude oil futures soared.
The dollar fell 0.8% to 82.92 yen, the weakest since Dec. 14, from 83.57 yen yesterday. It fell to $1.3130 per euro from $1.3100 euro as well.
Trading flows were light Thursday causing a volatile trading session, this trend is likely to continue today and traders are advised to take advantage of the expected market volatility.
EUR - EUR Lower vs. Major Currency Pairs
The EUR stayed in a tight range versus the U.S. dollar Thursday; the common currency remained down for this week, heading toward an 8.5% decline for the year. In June, it fell under $1.20 for the first time since 2006.The euro fell to a record low versus the Swiss franc, reaching a low of 1.2553; however, it has since rebounded slightly, currently trading at 1.2573.
The U.K. pound strengthened versus the EUR and USD after a Greek newspaper reported officials and bankers have decided on a debt restructuring plan to begin after 2013. The GBP rose to 85.04 pence per euro from 85.14 pence yesterday. The sterling gained to $1.5440, from $1.5386 yesterday, when it reached $1.5356, its weakest level since September.
With market volume and liquidity at a quarter of its normal volume, sharp moves in the currency pair may be expected.
JPY - JPY Lower as Economic Outlook Brightens
The yen fell against all of its major peers as prospects of gradual recoveries in the world's largest economies brighten. The yen fell to 109.02 per euro from 108.74 in New York yesterday. Against the dollar it fell 0.2% to 83.06 yen, paring this week's advance.
With very low liquidity, economic indicators drive the direction for the currencies. The Japanese currency, with its near zero interest rate, loses attraction as global growth prospects intensify and it seems less likely Japan will raise interest rates any time soon.
Crude Oil - Crude Futures Rise above $91 per Barrel
Crude Oil futures hit a two-year high Thursday, reaching above $91 a barrel as several economic data releases from the U.S. offered a brighter economic outlook for the world's largest oil consumer. The data, along with the Energy Department's report Wednesday that oil stockpiles fell for the third consecutive week, pushed oil prices to new highs ahead of the Christmas holiday.
Light, sweet crude for February delivery finished the week at $91.51 a barrel on the New York Mercantile Exchange, up $1.03 on the day. It rose to $91.63 earlier in the session, the highest price since October 2008.
With low liquidity and high volatility in the markets ahead of the New Year the next few trading days will be integral in seeing whether oil can hold above the $90 level.
The pair seems to be in a tight range at the moment, trading between $1.3140 and $1.3080, with most indicators in neutral territory. Waiting on a clearer direction for the pair may be advised.
The pair may see some mild upward movement as a bullish cross can be seen on the 8-hour MACD with the daily RSI heading into the over-sold territory. Going long may be a good option for today.
The RSI for the pair is floating in the over-sold territory on the 4- and 8-hour charts with a bullish cross evident on the daily chart's Slow Stochastic. Traders may be advised to go long for the day.
Some upward correction may be seen for the pair today as the RSI is floating in the over-sold territory on the hourly and 8-hour charts, while a bullish cross is seen on the 4-hour chart's Slow Stochastic as well as the 8-hour MACD. Going long for the day may be advised.
The Wild Card
Oil reached new highs yesterday, topping $91 a barrel; some correction downward may be in store as the RSI for the commodity is floating in the over-bought territory on the 2-, 4- and 8-hour charts, while a breach of the upper Bollinger Band is evident on the daily and 8-hour charts, indicating an imminent downward move. Forex traders may be advised to go short for today.
|22:30||AUD||AIG Construction Index||54.4||*||-|
|07:45||EUR||French Gov Budget Balance||-80.8B||-||-|
|07:45||EUR||French Trade Balance||-5.8B||-5.1B||-|
|08:00||CHF||Foreign Currency Reserves||434.7B||*||-|
|09:30||GBP||Consumer Inflation Expectations||3.2%||-||-|
|11:00||EUR||German Factory Orders||m/m||3.3%||-0.4%||-|
|13:30||USD||Non-Farm Employment Change||204K||180K||-|
|13:30||USD||Average Hourly Earnings||m/m||0.1%||0.2%||-|
|13:30||USD||Core PCE Price Index||m/m||0.1%||0.1%||-|
|14:55||USD||Prelim UoM Consumer Sentiment||75.1||76.2||-|
|14:55||USD||Prelim UoM Inflation Expectations||2.9%||-||-|
|20:00||USD||FOMC Member Evans Speaks||*||*||*|