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Wednesday, 17 Feb 2010
Easing Concerns over Greece's Debt Boost the EUR
The USD declined against the EUR yesterday as anxiety over Greece's debt situation is losing ground. Also better than expected economic data from the U.S and Europe helped boost risk appetite, pushing investors to riskier currencies and commodities
USD - USD Drops on Renewed Risk Appetite
The USD was down against most major currencies yesterday as concerns over Euro-Zone debt problems waned and investors turned to riskier assets. The EUR saw its biggest single-day gain against the USD since July. The USD's sharpest declines were against higher-yielding, commodity-linked currencies such as the Australian and New Zealand Dollars, as improved investor sentiment sent stocks and commodities higher.
The Dollar Index which tracks the greenback against a trade-weighted basket of six major currencies declined 0.6% to 79.634. A better than expected result from the Empire State Manufacturing Survey released Tuesday had little effect on currencies, but helped keep risk appetite strong following gains in European equities.
A heavy news day is expected from the U.S today, with the release of the Building Permits at 13:30 GMT and Industrial Production at 14:15 GMT. With risk appetite returning to markets, better than expected results might actually support the EUR and other higher yielding currencies vs. the Dollar. The release of the FOMC meeting minutes at 19:00 GMT may provide support for the Dollar over any sign of monetary tightening sooner then expected.
EUR - Waning Concerns over Greece's Debt Boost EUR
The European single currency rose to $1.3768, up 1.3% from Monday. Waning concerns over Greece's budget woes and the potential for default as well as a stronger than expected ZEW result supported the EUR. The ZEW indicator of economic sentiment for Germany fell to 45.1 in February from a reading of 47.2 in January, beating economists' expectations of 42.5. In today's early trading the EUR is at $1.3769 from $1.3601 late Monday and at 124.37 Yen from 122.34 Yen. The U.K. Pound is at $1.5787 from $1.5661.
The U.K. reported that inflation jumped to 3.5% last month from 2.9% in December, falling slightly short of expectations, thus helped to lower expectations that the Bank of England will have to raise rates this year.
The focus of today's news is on the GBP with the release of the Claimant Count Change and the MPC meeting minutes at 9:30 GMT. Better than expected result will likely support the Pound.
JPY - Yen Drops on Signs of Stronger Global Recovery
The Yen declined close to its lowest level in almost two weeks against the EUR as signs of a stronger global economic recovery and speculation Greece won't need a European Union bailout boosted demand for riskier investments. The Yen is at 124.34 per EUR in today's early trading from 124.12 in New York yesterday, when it reached 124.48, the weakest since Feb. 4. The Yen fell versus 15 of its 16 major counterparts ahead of reports today that are expected to show a decline in U.K. jobless claims for a third consecutive as well as improvement in U.S industrial production. Japan's currency is at 90.32 per USD from 90.14. With no news expected from Japan today, the Yen's direction will likely be set by today's news releases from Europe and U.S.
OIL - Crude Gains Close to 4%
Crude Oil rallied nearly 4% to finish above $77 on Tuesday, boosted by a drop in the Dollar against the EUR as concerns about Greece's debt faded. Crude oil for March delivery finished up $2.88, or 3.9%, at $77.01 a barrel at the New York Mercantile Exchange. Oil climbed the most in more than four months yesterday as the EUR rebounded from the lowest level against the greenback in 9 months. A weaker U.S. currency boosts the appeal of commodities as an alternative investment. Crude has also benefited from rising tensions between Iran and Western countries over its nuclear program. Iran is OPEC's second-largest Oil producer. Prices also gained after a better than expected result from the Empire State Manufacturing survey.
The pair has been showing a strong and consistent uptrend in the past days, and the momentum appears that it will continue uninterrupted. The small local correction is slowly losing its energy, and the daily chart is showing that the renewal of the bullish trend is quite imminent. Buying on lows might be a good strategy today.
Since the last bullish move, the pair has been consolidating around the 1.5770 level for quite a while now. The hourlies provide bearish signals, suggesting that the restoration of the bearish momentum is due. Going short appears to be preferable today.
On the daily chart the pair is showing consistent bullish momentum for a while now and today is no different. Although the signal is not strong the pair might have a local target at 91.00 which might make it feasible for traders to go long with tight stops
The cross has experienced much bearishness in the last two days, and currently stands at the 1.0650 level. There is much evidence in the chart's oscillators that supports a possible bullish correction today. This is supported by the 4-hour chart's RSI. Going long might be a wise choice.
The Wild Card
On the daily chart the moderate bullish price movement continues within the upwards channel which still has yet to be breached. The 4-hour chart is also joining that notion with the Slow Stochastic pointing to the continuation of upwards momentum. The next testing point should be around 0.9090 . Forex traders have a good opportunity to enter what appears to be the beginning of a steady rising trend.
|23:50||JPY||M2 Money Stock||y/y||4.4%||4.4%||-|
|00:00||JPY||Monetary Policy Statement||*||*||*|
|00:00||JPY||BoJ Press Conference||*||*||*|
|00:00||GBP||10-y Bond Auction||2.73|1.8||*||-|
|00:01||GBP||BRC Retail Sales Monitor||y/y||3.9%||*||-|
|00:30||AUD||NAB Business Confidence||8||*||-|
|06:00||JPY||Prelim Machine Tool Orders||y/y||40.3%||*||-|
|07:00||EUR||German Trade Balance||18.5B||19.3B||-|
|10:00||GBP||Inflation Report Hearings||*||*||*|
|15:00||GBP||NIESR GDP Estimate||0.8%||*||-|
|23:30||AUD||Westpac Consumer Sentiment||-3.0%||*||-|