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Thursday, 14 Jan 2010
Dollar Stays Lower before U.S Retail Data
The U.S Dollar remained lower against most major rivals on Thursday after the Federal Reserve's report on regional economic conditions said conditions were improving modestly. Traders said the focus was now turning to the U.S. reports on retail sales and weekly jobless claims for December, both due later in the session.
USD - Dollar Gains vs. Yen for First Time in 3 Days
The U.S. Dollar steadied on Thursday, having ceded ground in the previous session, ahead of a key jobless claims report due later in the session. The U.S Dollar traded lower versus the EUR yesterday after a Federal Reserve report showed a broadening U.S. economic recovery. The Dollar dropped 0.2% to $1.4542 per EUR from $1.4486 yesterday.
The Dollar rose against the Yen, ending 3 days of losses, after Federal Reserve Bank official said that policy makers must raise rates before employment falls to an acceptable level. The greenback rose versus the Japanese currency 0.4% to 91.37 Yen from 90.98. The Dollar's gains against the Yen on Wednesday were also supported by a spike in U.S. Treasury yields.
In European trading hours however, the Dollar briefly got a lift against the EUR after data showed Germany's economy shrank more than expected in 2009. The USD gained 0.1%to $1.4484 after German Gross Domestic Product contracted by a record 5.0% last year, worse than forecasts for a 4.8% decline.
EUR - EUR Strengthens before ECB Policy Meeting
The European currency rebounded on Wednesday after steep losses in the previous session as investors concluded China's unexpected monetary tightening would not derail growth in the world's third largest economy.
The EUR traded near a 1 month high against the U.S Dollar before a report today economists expect will show European Industrial Output gained in November. The EUR traded higher at $1.4545 after it earlier hit $1.4582, its highest since Dec. 16. Analysts said that demand from Asian sovereign entities helped support the single European currency as well as bullish technical indicators.
The European single currency strengthened against the Yen after Greek Finance Minister said the nation is on the right track to solve its problems and does not need bailing out. The EUR gained to 132.21 Yen from 131.79 yesterday, after earlier dropping to 131.52, the weakest since Jan. 6.
Market players will keep an eye on the European Central Bank (ECB) policy meeting due at 13:30 GMT. The ECB expected to keep its benchmark interest rate close to a record low this year as inflation stays below its limit amid a sluggish economic recovery.
JPY - Yen Falls on Better than Expected Australian Data
The Japanese Yen weakened against higher yielding currencies after an Australian report showed employment increased more than economists forecast, boosting demand for riskier assets. The Yen also weakened after reports showed Japan's producer prices fell for a 12th month and machinery orders unexpectedly declined, adding to speculation the government will take more measures to combat deflation and revive growth.
The Japanese currency fell the most against the Australian Dollar out of its 16 major counterparts as Asian stocks advanced on optimism the global economic recovery is picking up. The JPY weakened to 85.13 per Australian Dollar from 84.45 yesterday. Japan's currency fell to 133.17 per EUR from 132.59. It traded at 91.60 versus the U.S Dollar from 91.37.
Crude Oil - Crude Trades Below $80 a Barrel
Crude Oil prices finished lower on Wednesday, falling for a 3rd consecutive session after reports showed U.S. supplies of crude and distillates rose more than expected last week. Crude stocks, expected to rise by 1.2 million barrels, shot up by 3.7 million, the Energy Information Administration said. Inventories of distillates, which include heating oil and diesel, rose by 1.4 million barrels, instead of falling as forecast.
Oil was also pressured by China's move to raise banks' cash reserve requirements, the latest step toward tightening monetary policy, which some traders see potentially dampening energy demand.
A breach of the upper Bollinger Band is evident on the daily chart with an impending bearish cross evident on the Slow Stochastic. Furthermore, the 8 hour RSI is floating in the overbought territory. Going short for the day with tight stops may be advised.
The 2 hour, 4 hour and 8 hour RSI are floating in the overbought territory, with a bearish cross evident on the 4 hour and 8 hour chart's Slow Stochastic. Furthermore, a breach of the upper Bollinger Band is evident on the 8 hour and daily charts. Going short for the day may be advised.
The pair seems to be exhibiting some mixed signals. While the hourly and 2 hour RSI are floating in the overbought territory with the hourly and 4 hour chart's Slow Stochastic are exhibiting a bearish cross, the 4 hour MACD is exhibiting a bullish cross and the 8 hour RSI is floating near the oversold territory. Going short for the day with tight stops may be advised.
The 8 hour and daily RSI are floating in the oversold territory with the daily chart's Slow Stochastic exhibiting a fresh bullish cross. Going long for the day may be advised
The Wild Card
The hourly and 2 hour RSI are floating in the overbought territory with the hourly, 2 hour and 4 hour chart's Slow Stochastic are exhibiting a bearish cross. Furthermore, there is a breach of the upper Bollinger Band on the 2 hour chart. Forex traders are advised to go short for the day.