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Monday, 7 Sep 2009
Dollar Expects Low Volatility Today
Today is a quiet news day for the U.S. and Canada, as there are no economic data releases on the calendar today. However, Britain and Euro-zone appear to be releasing the bulk of today's news, which means we may see a day of trading with low liquidity and therefore increased volatility. Day-traders can take advantage of these intense trading days by swinging within the larger-than-normal price fluctuations.
USD - USD Downtrend to Continue; Labor Day Causes Thin Trading
The US Dollar experienced some intense trading sessions last week. Following Friday's Non-Farm Payroll data the USD quickly rose from the better-than-expected results, but ended the day significantly lower against its primary rivals as many investors dumped the greenback in exchange for riskier assets. In fact, the USD dropped against the EUR to above the 1.4300 price level, and the 1.6400 level against the Pound Sterling.
This weekend's G20 Summit also added to the Dollar's bearishness at the start of this week's trading, many analysts have said, as hawkish statements from world leaders has spurred a rally in market optimism and risk appetite. Supporting this notion is the downtrend of the Japanese Yen against all of its rivals, signaling a sell-off in safe-haven currencies - a category which the USD still falls in as well.
With US and Canadian banks celebrating Labor Day, the forex market will be experiencing thin trading today. Without these economic giants pumping liquidity into the market, most current trends will remain as they are for the next day or two, and traders can benefit by jumping into these trends before they finally come to an end.
EUR - EUR Appreciates on Growing Investor Confidence
The EUR gained support last Friday following the US's Non-Farm Payroll data which showed the US jobs sector contracting less than anticipated and enticing traders into riskier assets. The EUR, towards the close of trading last Friday, rose above the 1.4300 price level against the USD, and climbed against the GBP back towards 0.8730, while also clawing its way back to a week high against the JPY, upwards of the 133.40 price level.
Investor confidence in the Euro-Zone has been on the rise for the past few months and September appears to be set for being one of the better months for the 16-nation currency. Some reports have shown this confidence level to have reached a 13-month high, marking this month as the potential turning point in the global recession. The recent strength of the EUR supports this notion as it has begun to appreciate against all of its primary currency rivals.
As for today, the Euro-Zone and Britain will be the leading economies today considering that the US and Canada are on holiday to celebrate Labor Day. With low levels of liquidity, current trends will likely continue, but news about Germany's manufacturing sector could put a damper on recent EUR strength if it comes out much worse than expected.
JPY - JPY Takes a Dive from Positive US Employment Reports
While gaining in value steadily over the past two weeks against all of its primary currency counterparts, the JPY faced a severe downturn at the end of last week's trading. Dropping as low as 93.15 against the USD, 133.45 against the EUR, and even as low as 153.00 versus the GBP, the JPY has taken a hit as a result of the growing market optimism following Friday's employment reports from the US and Canada.
With these two massive economies missing from the market today due to the Labor Day holidays in both, the EUR and JPY may in fact be today's leading currencies. However, with the expected low level of liquidity, and lack of significant economic events, the current downtrend for the JPY will likely continue throughout the trading day. Traders still have an opportunity to enter this trend at a relatively early stage and make healthy profits.
Crude Oil - Crude Oil Price Consolidating Towards Volatile Movement
Despite the drop in the value of the US Dollar last Friday, the price of Crude Oil has actually depreciated to $68 a barrel. This commodity currently trades inside a consolidation trend with a target level of $67.50 as the breaking point. With USD traders pricing in a downward move for the greenback, it is only natural to expect a corresponding upward movement from Crude Oil in the days ahead.
As for today, however, the forex market will likely remain inside of its current trends due to the low levels of liquidity being anticipated as a result of the bank holidays in the US and Canada. As a result, the current consolidation trend being experienced in the price of Crude Oil will likely continue, with a small downtrend in the works for today's early trading hours.
The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bearish cross forming on the 4-hour chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.
There is a bearish cross forming on the 4- hour chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the daily chart's Slow Stochastic also supports this notion. When the downward breach occurs, going short with tight stops appears to be preferable strategy.
The typical range trading on the hourly chart continues. The daily chart Slow Stochastic is floating in neutral territory. However, the 4-hour chart's RSI is already floating in the overbought territory, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
The pair has recorded much bearish behavior in the past two days. However, the technical data indicates that this trend may reverse anytime soon. For example, the 4-hour chart's Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the hourly chart's RSI. Going long with tight stops may turn out to pay off today.
The Wild Card
Gold prices rose significantly in the last week and peaked at $992.65 for an ounce. However, the daily chart's RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.
|EUR||French Bank Holiday||-||-||-|
|EUR||German Bank Holiday||-||-||-|
|07:00||JPY||BoJ Monthly Report||-||-||-|
|17:00||USD||FOMC Member Fisher Speaks||-||-||-|