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Friday, 12 Mar 2010
Dollar Lower on Mixed Data
The Dollar remained lower against higher yielding currencies today, after mixed economic data published yesterday. Crude Oil prices remained mainly unchanged on concerns of Chinese monetary policy tightening which might dampen the country's demand for commodities.
USD - Dollar Down Slightly on Mixed U.S Data
The Dollar weakened slightly against the EUR yesterday after the release of mixed U.S. data and better than expected Chinese data. First time unemployment claims fell to a seasonally adjusted 462K, down from a revised 468K in the prior week; however, the result was higher than the expected 456K. Also released Thursday, the U.S. trade deficit shrank to $37.29 billion from $39.90 billion in December. Analysts had anticipated a slight increase.
The Dollar index which measures the U.S. unit against a trade-weighted basket of six major currencies rose to 80.542 after the data, up from 80.484 late Wednesday.
Looking ahead to today, traders are advised to follow the release of the Retail Sales at 13:30 GMT and the Prelim UoM Consumer Sentiment at 14:55 GMT. If the results are better than expected we might see a stronger Dollar going into next week.
EUR - Pound Gains on Higher Inflation Expectations
The EUR gained versus the Dollar on signs Greece's deficit crisis has been contained. The EUR received a slight boost today from a better than expected Trade Deficit data. However, the EUR declined as investors learned the decline was due to a drop in both imports and exports. By late afternoon in New York, the EUR had strengthened to $1.3685 from $1.3651 late Wednesday and was at 123.88 Yen from 123.59 Yen.
The U.K. Pound strengthened versus the Dollar Thursday after the Bank of England's quarterly inflation expectations survey showed the public expects annual inflation of 2.5%, up from 2.4% in the previous survey. The report helped boost the Pound slightly as it boosted investors' expectations the BoE will start tightening monetary policy sooner that expected. The Pound pushed back above the $1.50 level to $1.5063 recently, up from $1.4964 late Wednesday.
While the major news today is expected from the U.S, investors should pay attention to the release of Euro-Zone Industrial Production data, due to be released at 10:00 GMT. Better than expected result may help strengthen the EUR further.
JPY - JPY Continues to Decline on Expectation of Further Monetary Easing
The Yen declined against 15 of its 16 major counterparts as U.S. stock gained and concerns over Greek debt eased, dampening demand for the safe heaven currency. The Yen is down ahead of the Bank of Japan's Policy meeting next week on speculation the Bank of Japan will monetary easing steps as the world's second-largest economy struggles with deflation. The Yen dropped to 124.09 per EUR from 123.82 in New York yesterday. Japan's currency traded at 90.69 per dollar from 90.51.
OIL - Crude Remains Mainly Unchanged On Chinese, U.S data
Light, sweet crude for April delivery settled unchanged Thursday at $82.11 a barrel on the New York Mercantile Exchange and is currently trading at $80.20. Oil Prices remained stagnant as data from China showed higher than expected inflation, prompting expectation the country could start tightening monetary policy and raise interest rates; a move that might dampen it demand for commodities. China is the biggest driver of global Oil demand growth. Positive Oil data reports from China and the U.S this week had sent oil over $83 a barrel Wednesday.
Looking ahead to today, investors should keep an eye for U.S data, as continued improvement in U.S economic conditions will likely provide further support to Oil prices.
The pair has experienced a period of consolidation over the past three weeks, As such; the daily chart shows a triangle pattern has formed. The price has moved back up to the 1.3700 price level, approaching a significant downward sloping trend line that began on December 3rd. Traders may want to go short when the price arrives at the trend line. Selling near a downward sloping trend line is can be an excellent entry point into the market.
The 4-hour chart presents a good selling opportunity. The price has failed to break the significant downward sloping trend line that began at the swing high on January 19th. The chart's Slow Stochastic Oscillator shows a bearish cross has formed, indicating at a potential downward price movement. Aggressive traders may want to enter short now, while those that are more conservative may want to wait for 7-day RSI to breach below the 70 mark to provide further support of a downward price move.
The recent upward correction the pair has made over the past 7 days may be coming to an end. The daily chart shows some technical resistance to the price move, so traders may want to begin to scale back any long positions they may have. The 7-day Relative Strength Indicator has breached below the 70 mark, indicating a sell signal. The price of the pair could rise until 91.25 and then reverse back down in the direction of the long term trend.
The downward price trend for the pair is showing little technical resistance on the daily chart. The currency is trading well below the 10-day simple moving average and the 10-day Momentum indicator shows a steady downtrend. Traders may want to stay short on the pair until the support line of 1.0610.
The Wild Card
Yesterday the pair made a modest correction to the upward sloping price trend that began on February 25th. The price failed to breach this trend line, indicating the uptrend is still intact. The 7-day RSI has also maintained its rising trend line and continues to move higher. The pair could rise to its short term resistance level of 0.9150. Forex traders may want to be long on this pair as a breach of this price could propel the pair to its next resistance level of 0.9410.
|09:15||EUR||Spanish Manufacturing PMI||55.8||55.6||-|
|09:45||EUR||Italian Manufacturing PMI||54.8||55.2||-|
|09:50||EUR||French Manufacturing PMI (p)||50.5||50.5||-|
|09:55||USD||German Manufacturing PMI||51.9||51.9||-|
|10:00||EUR||Final Manufacturing PMI||52.5||52.5|
|11:30||GBP||BoE Financial Stability Report||-||-||-|
|13:30||USD||Challenger Job Cuts||y/y||-22.5%||-||-|
|14:15||USD||ADP Non-Farm Employment Change||201K||212K||-|
|15:45||USD||Final Manufacturing PMI||53.4||53.4||-|
|16:00||USD||ISM Manufacturing PMI||52.8||53.2||-|
|16:00||USD||ISM Manufacturing Prices||49.5||52.1||-|
|16:30||USD||Crude Oil Inventories||-4.9M||-||-|
|01:00||EUR||French 10-y Bond Auction||-||-||-|
|01:00||EUR||Spanish 10-y Bond Auction||-||-||-|
|03:00||NZD||ANZ Commodity Prices||m/m||-4.7%||-||-|