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Thursday, 23 Dec 2010

Decreased Oil Inventories Push Crude Oil towards $91.00

A decline in US oil stockpiles by 5.3M barrels led to a steady rise in Crude Oil prices yesterday. As of this morning, the price for a barrel of crude was trading at $90.65. Analysts have forecast a rising price of oil ahead of the holiday season, but recent statements from OPEC seem to make it clear that the oil cartel will do what it can to keep prices below $100 throughout 2011.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendnodowndowndownupup
Weekly Trenddowndowndowndownupup
Resistance1.32051.551083.900.95951.01100.8590
1.31851.548083.700.95751.00900.8570
1.31551.545083.400.95451.00600.8540
Support1.30951.539082.800.94851.00000.8480
1.30651.536082.500.94550.99700.8450
1.30451.534082.300.94350.99500.8430

Economic News

USD - USD Carrying Bullish Sentiment Ahead of Holiday Weekend

The US dollar has experienced a mixed performance against its primary currency rivals lately. Against the euro and UK pound, the greenback has gained a significant edge, pushing hard against its Atlantic rivals in the face of European debt concerns. However, the buck seems to be losing ground against most of its other counterparts.

The USD/JPY saw sharp losses yesterday as a resurgent yen pushed the pair towards 83.35 from as high as 83.70. The USD/CAD also witnessed a downturn yesterday, sliding towards 1.0125 from 1.0175.

On the positive side for the dollar, anticipation for a positive reading from today's reports on durable goods orders and home sales may help drive USD values higher ahead of the holiday season. The boost in retail sales volume prior to the Christmas holiday tends to aid the greenback in holding value against its currency rivals until after the year comes to an end.

EUR - EUR Falls Broadly on Persistent Debt Woes

The EUR declined to its lowest level against the Swiss franc for a sixth consecutive day yesterday, with losses expected to continue through 2011 as the euro zone debt crisis weighs. Analysts have shown concern that a failure to produce immediate results on an expanded bailout mechanism during the coming year may cause uncertainty and debt woes to drag the region down further.

At the moment, the EUR/USD has fallen back towards the 1.31 price level. The EUR/AUD also reached the same price, marking a record low for the pair. It appears as if no end is in sight for the bearish Euro-Aussie. Yesterday marked the seventh consecutive day of declines, and the AUD shows no signs of letting up.

With only one mild report on consumer spending expected out of France today, the euro zone should see a relatively mild trading day. France may reveal an increase in spending ahead of the Christmas holiday weekend, but the effect on the 16-nation single currency will most likely be kept to a minimum as the market continues to focus on the safe-haven US dollar and Swiss franc.

JPY - Japan Cuts Export Growth Forecast on Rising Yen

The Japanese yen was on the rise yesterday as Japan slashed export forecasts in anticipation of a sluggish Asian market heading into the New Year. The USD/JPY was trading lower at 83.35 by the middle of the Tokyo trading session. The pair had fallen from as high as 83.70 from the day before.

The sudden breakout of the JPY against its currency rivals put a damper on many Japanese investment firms' outlook on Japanese growth due to the effect such a currency value would carry on exports.

With a bank holiday taking place in celebration of the Emperor's birthday, Japanese markets will be fairly quiet today. Traders will want to focus their attention on the American markets today as most market news will emerge from the Western Hemisphere. The greenback will be driving today's market and traders will want to bear this in mind before taking positions on the yen.

Crude Oil - Oil Prices Climbing Towards $91 a Barrel

A decline in US oil stockpiles by 5.3M barrels led to a steady rise in Crude Oil prices yesterday. As of this morning, the price for a barrel of crude was trading at $90.65. Analysts have forecast a rising price of oil ahead of the holiday season, but recent statements from OPEC seem to make it clear that the oil cartel will do what it can to keep prices below $100 throughout 2011.

The cold winter months in Europe and the United States, coupled with the long flight delays and cancellations due to bad weather, have caused a run-up in heating oil costs and gasoline demand. With a heavy news day expected from the US, traders could see a large amount of USD volatility today affecting oil prices in an unpredictable manner. It's possible that a resurgent USD could push oil prices back towards $89 a barrel in the short run.

Technical News

EUR/USD

A recent bullish cross on the daily Stochastic (slow) reveals a possible bullish correction heading into today's trading sessions. The price also appears to be floating deep within the over-sold region on the daily chart's Williams Percent Range, supporting the bullish notion. Going long with tight stops could be a smart tactic today.

GBP/USD

Most indicators appear to be floating in the neutral territory for this pair, indicative of this pair's testing the 1.5400 support level. The daily Stochastic (slow) shows what appears to be a bullish cross right on the over-sold line which could indicate an imminent bullish movement. Traders will want to wait for clearer signals today. As of this morning, however, long positions appear favorable.

USD/JPY

The sudden sharp downward movement in the daily Stochastic (slow), RSI, and Williams Percent Range suggests an unnatural movement in the pair, but signals appear to support a continuation of this bearish move. The weekly Stochastic (slow) even shows a fresh bearish cross, suggesting that this pair's bearishness may have room to run. Going short may be a wise strategy today.

USD/CHF

The price of this pair appears to have recently entered the over-sold region on the daily RSI, suggesting a build-up in bullish pressure. The daily Williams Percent Range indicates the same, supporting the bullish notion. Going long with tight stops might not be a bad idea.

The Wild Card

EUR/AUD

This pair's bearish run, which began as far back as October 2008, looks to be continuing strongly today, but technical indicators appear to be suggesting a high intensity of bullish pressure building on this pair. The daily and weekly RSI and Williams Percent Range are floating deep within the over-sold region, while the Stochastic (slow) oscillators also show fresh or imminent bullish crosses. Forex traders may have a unique opportunity to catch this pair at a significant pivot point as it possibly turns upward just before the end of 2010.

Current Time: 11/26 00:30 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
11/26
00:00EUR+ German 10-y Bond Auction-0.87/1.2-3
01:30AUD+ Construction Work Doneq/q-1.2%-1.7%-3
08:00CHF+ UBS Consumption Indicator1.41--1
08:00EUR+ German Import Prices0.3%-0.3%-1
10:30GBP+ Second Estimate GDPq/q0.7%0.7%-5
10:30GBP+ Prelim Business Investment 3.3%2.3%-2
10:30GBP+ Index of Services 3m/3m0.8%0.7%-1
12:00GBP+ CBI Realized Sales2831-3
14:30USD+ Core Durable Goods Orders m/m-0.1%0.5%-5
14:30USD+ Unemployment Claims 291k287K-5
14:30USD+ Core PCE Price Index m/m0.1%0.1%-3
14:30USD+ Durable Goods Orders m/mm/m-1.1%-0.4%-3
14:30USD+ Personal Spending m/m-0.2%0.4%-3
14:30USD+ Personal Income m/m0.2%0.4%-1
15:45USD+ Chicago PMI66.263.1-3
15:55USD+ Revised UoM Consumer Sentiment89.490.2-3
15:55USD+ Revised UoM Inflation Expectations2.6%-1
16:00USD+ New Home Sales467K471K-5
16:00USD+ Pending Home Salesm/m0.3%0.9%-3
16:30USD+ Crude Oil Inventories2.6M-3
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