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Thursday, 1 Apr 2010
Dollar Looks to Extend Bullish Trend Against Yen
Coming off its recent 3-month high against the Japanese Yen, the U.S. Dollar is looking to continue its bullish run in trading today. Risk appetite seems to be returning, especially as predictions are coming in that Fridays U.S. Non-Farm Payrolls Data will show the U.S. added jobs last month. If this remains the case, the Yen will likely fall against its major counterparts today.
USD - Dollar Capitalizes on Employment Forecasts
The Dollar has largely held onto the significant gains made yesterday against the Yen that took the pair to a 3-month high. That being said, as risk taking clearly returned to the marketplace, the greenback took some losses against its European counterparts in recent trading. GBP/USD has increased well over 100 pips in the last 24 hours, and is currently trading around the 1.5195 level. EUR/USD has similarly increased about 100 pips since this time yesterday, and is currently trading around the 1.3505 level.
With investors eagerly awaiting Friday's U.S. Non-Farm Payrolls report volatility will likely remain high today, especially ahead of the weekly American Unemployment Claims report set to be released at 12:30 GMT. Analysts are predicting that today's report will show a drop in unemployment for the week. If true, the Dollar should receive a boost as a result. Additionally, the ISM Manufacturing PMI, set to be released at 14:00 GMT, is forecasted to show an increase in the quality of a number of business conditions in the U.S. This could all signal a very strong day for the USD.
Traders will also want to pay careful attention to predictions for the Non-Farm Payrolls Report on Friday. As of now, analysts are saying that the U.S. added a substantial number of jobs in March. This could lead to a prolonged bullish trend for the Dollar, especially as confidence continues to return to the American economy.
EUR - Euro Tries to Maintain Yesterday's Gains
With no significant European publications expected today, the Euro will attempt to hold onto gains made against the Yen and Dollar yesterday. Recent news regarding Greece's plan to combat its severe deficit problem caused the single currency to move upward against most of its counterparts yesterday. That being said, if predictions regarding the U.S. unemployment claims come true, the Euro will have a hard time maintaining its current bullish position.
With the British Manufacturing PMI set to be released at 08:30 GMT today, Sterling may have a volatile trading day today. Most analysts are predicting a positive figure for the upcoming report, which if true, could help boost the U.K. currency against the Dollar and Yen. On the other hand, with positive U.S. news forecasted today, any gains made by the Pound could be short lived.
JPY - Yen Takes Losses as Risk Taking Returns
The Yen sunk to a 3-month low against the Dollar yesterday. According to some analysts the bearish trend could be prolonged, especially if Japanese investors continue to send their money abroad, as has been recently reported. Despite the improved business conditions in Japan, as evidenced by the most recent Tankan Manufacturing Index, JPY is still having a hard time translating the news into positive gains.
Currently USD/JPY is trading around the 93.40 level. While the pair seems to have leveled out at the moment, any positive U.S. news will likely send it to new highs in afternoon trading.
Crude Oil - Crude Records Gains Due to Falling Dollar
Crude Oil saw a fairly bullish trading day on Wednesday, capitalizing on the Dollar's losses against its European counterparts. In the last 24 hours, the price of crude has shot up to its current level of 83.31. The price increase was also largely fueled by the latest U.S. inventory report, which showed that stockpiles for the world's largest energy consumer dropped in the last week.
Today, crude oil traders will want to pay careful attention to what direction the Dollar goes. With U.S. unemployment claims set to be released today, the price of crude could see some volatility. If the unemployment continues to fall, the Dollar will likely go up, and the price of crude may drop as a result. On the other hand, if U.S. unemployment unexpectedly increases, the price of oil could see some gains in afternoon trading.
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. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
The GBP/USD cross has experienced a bullish trend for the past several days. However, it seems that this trend may be coming to an end. The RSI of the 4-hour chart shows the pair floating in the overbought territory, indicating that a downward correction will happen anytime soon. Going short with tight stops might be a wise choice.
The price of this pair appears to be floating in the over-bought territory on the daily chart's RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart's Momentum oscillator also supports this notion. Going short might be a wise choice.
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.
The Wild Card
Crude oil prices rose significantly in the last week and peaked at $83.50 per barrel. However, the 4-hour 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.
|23:30||AUD||Westpac Consumer Sentiment||-3.0%||*||-|
|23:50||USD||BSI Manufacturing Index||9.7||11.3||-|
|23:50||JPY||Tertiary Industry Activity||m/m||-0.4%||0.7%||-|
|05:00||JPY||BoJ Monthly Report||*||*||*|
|06:30||EUR||French Final Non-Farm Payrolls||q/q||-0.1%||0.1%||-|
|14:30||USD||Crude Oil Inventories||1.4M||-||-|
|17:01||USD||10-y Bond Auction||2.80|2.5||*||-|
|18:00||USD||Federal Budget Balance||-10.4B||-223.2B||-|
|20:00||NZD||Official Cash Rate||2.50%||2.50%||-|
|20:00||NZD||RBNZ Press Conference||*||*||*|
|20:00||NZD||RBNZ Rate Statement||*||*||*|
|20:00||AUD||RBNZ Monetary Policy Statement||*||*||*|