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Thursday, 8 Oct 2009

Dollar Down Ahead of Key Central Banks Statements

The Dollar is down today as investors await policy announcements from the European Central Bank (ECB) and the bank of England (BOE). Although no interest rate changes are expected, investors will be closely watching any accompanying remarks for clues as to the future of their monetary policy as well as exit strategies. U.S Unemployment Claims are also expected to be released today at 12:30 GMT as well as a testimony by Ben Bernanke at 11:00 GMT.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupdownnoupdown
Weekly Trendupupdowndownupup
Resistance1.48451.609589.001.03550.91150.9295
1.48251.607588.801.03350.90950.9275
1.47951.604588.501.03050.90650.9245
Support1.47351.598587.901.02450.90050.9185
1.47051.595587.601.02150.89750.9155
1.46851.593587.401.01950.89550.9135

Economic News

USD - Dollar Falls toward 2-Week Low on Signs of Global Recovery

The U.S. currency weakened against 15 of its 16 most-traded counterparts as Asian stocks advanced and on expectations the European Central Bank (ECB) today will refrain from lowering interest rates amid signs the global economy is recovering.
The USD dropped toward a 2 week low against the EUR as signs the global economy is rebounding spurred demand for higher-yielding assets.

The greenback traded at $1.4753 against the EUR from $1.4691 yesterday. The U.S. currency depreciated earlier this week on concern the Federal Reserve will be slower to raise Interest Rates than policy makers in other nations. The Federal Reserve may start raising its benchmark rate in the 3rd quarter of 2010, according to analysts' forecasts. Expectations that U.S. Interest rates will stay low as the economy tries to pull out of recession mean the Dollar could be the funding currency of choice for carry trades.

The decline in the U.S. Dollar is closely linked to the Federal Reserve's unprecedented efforts to lift the U.S. economy out of the worst recession since the Great Depression. With its target Interest Rate near zero percent and the combination of fiscal stimulus and special Fed lending programs pumping trillions of Dollars into the U.S. economy, the U.S. government is effectively printing more U.S. Dollars. And as a result investors are wary of keeping too large a portion of their assets in U.S Dollars.

ERU - EUR Gains Broadly Ahead of Rates Decision

The EUR gained against the U.S dollar Thursday before a report forecast to show German industrial output rose for a second month, boosting demand for higher-yielding assets. The British pound dropped for a 5th day against the U.S Dollar, falling to $1.5891, from $1.5922, and leaving it 2.8% weaker against the U.S. currency in the past month.

Traders' attention Thursday will be turned to the ECB and the Bank of England's meeting. The ECB is fully expected to leave rates unchanged at a record low 1.0% on Thursday; having given few hints yet it is preparing to end some of its ultra-loose policy measures. The Bank of England meets the same day and is also set to hold rates at a record low 0.5%, while a majority of economists believe it has allocated all it intends to under its quantitative easing program.

JPY - Yen Touches 8-month High vs. Dollar

The Japanese Yen rose versus all 16 major currencies on speculation foreign investors will buy Japanese equities. The Yen rose to the highest level in more than a week against the U.S Dollar on speculation foreign investors will buy into a share sale by Nomura Holdings Inc., Japan's biggest brokerage.

Traders said the JPY gained as market players tried to trigger stop-loss levels in major Yen pairs and as some Japanese retail investors were forced to sell currencies against the Yen. But further buying faltered as traders were wary of pushing the Dollar/Yen pair below 88 Yen, where large stop-loss sales lurked.

A strong Yen has raised worries for Japanese exporters and the economy because it makes their products more expensive for foreign buyers while cutting into profits generated overseas. Earlier, Japanese investors and exporters were heavy sellers of the Dollar/Yen cross following the report.

Crude Oil - Oil Rebounds above $70 on Weak U.S Dollar

Crude Oil rose as the U.S Dollar weakened against the EUR and a government report showed an unexpected drop in U.S. crude supplies, boosting optimism about a demand recovery in the biggest energy-consuming nation. The Energy Information Administration reported gasoline stocks leapt 2.9 million barrels last week, nearly three times the build that analysts had expected.

Crude prices rebounded above $70 a barrel on Thursday, clawing back some of the previous session's losses, amid the market's exuberance over a global economic recovery getting underway, while a weak U.S. Dollar also lent support.

Technical News

EUR/USD

After the pairs bullish run some bearish correction may be expected today as a bearish cross is evident on the 2 hour MACD as well as the Slow Stochastic chart and with the hourly RSI floating in the overbought territory on the hourly chart.

GBP/USD

A fresh bearish cross is evident on the 2 hour Slow Stochastic chart as well as the MACD; an impending bearish cross is also seen on the 4 hour Slow stochastic. The daily chart, however, shows a fresh bullish cross on the MACD. Going long with tight stops might be a good option today.

USD/JPY

A bullish correction may be expected for the pair after its recent bearish trend with the 2 hour and daily MACD sowing a fresh bearish cross and with the hourly and 4 hour and daily RSI floating in the oversold territory.

USD/CHF

The 2 hour, 4 hour and daily MACD are showing a fresh bullish cross as well as the 2 hour and daily Slow Stochastic. Furthermore the hourly RSI is floating in the oversold territory. Going long for today may be advised.

The Wild Card

Gold

Gold's recent record breaking bullish run may experience some downward correcting today. A breach of the upper level of the Bollinger Bands is evident on the hourly, 2 hour and daily charts. Furthermore, a fresh bearish cross is evident on the hourly, 2 hour and daily Slow Stochastic chart, with the RSI floating in the overbought territory on the hourly and 4 hour charts. Forex traders involved in the commodities market will not want to miss out on the downward movement that this commodity is expecting.

Current Time: 12/22 15:18 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
12/22
15:00EUR+ Consumer Confidence-12-11 -111
15:00USD+ Existing Home Sales5.26M5.21M 4.93M3
21:45NZD+ Trade Balance-908M-550M-5
12/23
JPY+ Bank Holiday---1
07:45EUR+ French Consumer Spending m/m-0.9%0.2%-3
09:00EUR+ Italian Retail Salesm/m-0.1%0.2%-1
09:30GBP+ Current Account-23.1B-21.1B-5
09:30GBP+ BBA Mortgage Approvals 37.1K37.3K-3
09:30GBP+ Final GDP q/q0.7%0.7%-3
09:30GBP+ Index of Services 3m/3m0.8%0.7%-1
09:30GBP+ Revised Business Investment q/q-0.7%-0.7%-1
13:30CAD+ GDPm/m0.4%0.1%-5
13:30USD+ Core Durable Goods Orders m/m-1.1%1.1%-5
13:30USD+ Final GDP q/q3.9%4.3%-5
13:30USD+ Durable Goods Orders m/m0.3%3.0%-3
13:30USD+ Final GDP Price Indexq/q1.4%1.4%-1
14:00EUR+ Belgian NBB Business Climate-6.1-5.8-1
14:00USD+ HPI m/m0.0%0.3%-1
14:55USD+ Revised UoM Consumer Sentiment93.893.5-3
14:55USD+ Revised UoM Inflation Expectations2.9%--1
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