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Friday, 11 Jun 2010
EUR/USD Spiked after Positive News in China and Europe
The EUR/USD pair kicked off during yesterday's trading session for a second consecutive day this week. Investors turned to buying the Euro after positive economic news in China. The pair received further support by Bernanke, who stated in his speech to act as needed to aid financial stability and economic growth, increasing the likelihood U.S. rates would remain at record lows even longer than previously anticipated.
British Pound and other riskier currencies gained yesterday after investors confidence improved following Trishet, ECB chairman and IMF chairman speeches. Investors put aside fears about Europe fiscal debts, after being assured by Trichet that more rescue plans would be issued if required.
Crude Oil also made a sharp rebound while price per barrel traded above $75 4 weeks high, and 300pips up compared to yesterday's open price. Gold suffered from risk averse and price per ounce declined sharply to $1215, after hitting record high at the begging of the week.
USD - Dollar Heavily Retreated Versus Riskier Currencies
The Dollar pulled back during yesterday's trading session against its major counterparts while investors put aside fears about Europe Economy. Growing appetite for risk came in respond to speeches by Bernanke, U.S. central bank chairman, Trichet, Europe Central Bank Chairman and IMF, international Monetary Fund, chairman. All stated they would act to support their economies to ensure growth including keeping interest rates at record low levels.
The EUR/USD pair rose by more than 100pips since yesterday's trade session, the pair crossed a significant support level and is expected to trade above 1.2075 at day start. The USD traded lower against the CAD, the pair is currently at 1.0330. The cad was supported by a sharp rise in crude oil price. The GBP/USD pair rose by 125pips, and although the pair is now lower than yesterday's high it is trading above $1.4700 during Asia trading hours.
Looking ahead, today traders are advised to follow reports published at 12:30 GMT. U.S. will release retails sales data, which is forecasted to be lower than previous, therefore signaling economic recovery retreat. However, if they are at least above forecast it should boost the Euro further up.
EUR - ECB Meeting boosted the EUR/USD Pair
The Euro ended higher against the U.S. Dollar yesterday supported by Bernanke. In his speech he claimed that the U.S. is committed to ensuring the survival of the euro. The Euro also received local support from Trichet who approached the media right after the European Central Bank (ECB) meeting. Trichet announced that the ECB would buy back Europe bonds if necessary, this came less than 24 hours after a previous announcement stated they would not intervene in the bond market. Trichet also announced the ECB would keep rates at 1%, but this came with no surprise as it came with line of forecasts. The change in ECB strategy helped to boost the EUR against its major counterparts.
The Euro climbed 100pips versus the U.S. Dollar yesterday while investors gain renewed confidence in the European currency. The EUR/JPY pair was also up currently trading above 111. Fears of the European fiscal debts faded yesterday and in general investors responded by selling safe haven currencies and returning to riskier ones.
The faith in Euro might continue during today's trading session if news published thorough the day come above forecasts. Traders should continue to monitor statements of financial leaders, because lately they influence the currency market even more than news events. No major speeches are planned today.
JPY - Yen Weakens vs. Majors
No major news came from Japan yesterday to influence the Japanese Yen currency. The Yen was weaker against its major counterparts, in accordance with investors' selling safe haven currencies. Investors confident in EUR was lifted after Trichet announced the ECB would keep rates at 1%, and his re-assuring to buy bonds thus support the European countries with high debts if required.
Looking ahead, today there are no data releases by Japan. The Yen will continue to decline in case investors remain confident about the European economy and global recovery. The Yen would rise if fear take's over again. Fear about the economy may result by lower than expected data released later today, new rating downgrade for Europe or new warning about Europe growing Fiscal debts would also support the Japanese Yen.
OIL - China's Rising Exports and Uprising EUR boosted Crude Oil price
China's positive economic data published early morning yesterday, helped boost Crude oil price to 4 weeks high above $75. Crude oil may still reach $77 dollar per barrel if good reports would continue to support global recovery.
Traders should pay attention today to UK Manufacturing Production report published at 8:30 GMT, forecasts are at 0.6% increase which is much lower than previous figure 2.3%. Due to the wide gap between previous and forecasted it is unlikely that data would surprise investor's enough to send crude oil much higher than $77. At 12:30 GMT, U.S. Core Retail Sales may provide a boost to crude Oil price, if data turns out higher than 0.1% forecast.
Gold price on the other hand declined, after it reached as low as $1215 per ounce during yesterday's trading session. Gold has recently gained from fears about the global economy. In fact Gold has turned to the new safe haven, gold price reached record high of $1250 the beginning of the week. Therefore it is no surprise to see gold price declining when fears fade off.
The daily chart's RSI signals that this pair is being over-sold and will likely see strength added to the recent upward movement. However, a bearish cross on the hourly chart's Slow Stochastic signals that a downward correction may be imminent in the nearest time frame. Waiting for a clearer signal may be the right strategy today.
The price for this pair currently floats in the over-sold territory on the 4-hour chart's RSI, indicating that an upward correction may occur later today. The recent bullish cross on the 4-hour chart's Slow Stochastic supports this notion while the hourly chart's Bollinger Bands are beginning to tighten, indicating that moderate price volatility is imminent. Going long with tight stops might be the right choice today
It appears that the price has recently moved towards the upper border of the hourly chart's Bollinger Bands, indicating that there is downward pressure. However, a bullish cross on the daily chart's Slow Stochastic indicates that there may be some momentum left in the recent upward correction. It may be a good strategy to wait for a clearer signal from this pair.
The bullish trend is loosing its steam and the pair seems to consolidate around the 1.1440 level. The daily chart's RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Going short with tight stops appears to be preferable strategy
The Wild Card
It appears a violent breach of the lower border on the daily chart's Bollinger Bands has recently occurred, signaling that there is upward pressure on this pair. Supporting this notion is an imminent bullish cross on the daily chart's Slow Stochastic and a recent bullish cross on the 4-hour chart's Slow Stochastic. The RSI on the 4-hour chart also indicates that the price currently floats in the over-sold territory. Forex traders can benefit by entering long positions early and riding out this imminent upward price movement.
|15:30||USD||Crude Oil Inventories||-4.5M||1.1M||-2.1M|
|01:00||AUD||HIA New Home Sales||1.2%||*||-|
|EUR||German Prelim CPI||m/m||0.3%||0.0%||-|
|01:00||EUR||Italian 10-y Bond Auction||2.60|1.5||*||-|
|02:30||AUD||Private Capital Expenditure||q/q||-4.2%||-0.8%||-|
|08:55||EUR||German Unemployment Change||-12K||-6K||-|
|09:00||EUR||M3 Money Supply||y/y||1.5%||1.5%||-|
|09:00||EUR||Italian Retail Sales||m/m||-0.7%||-0.2%||-|
|11:00||GBP||CBI Realized Sales||21||25||-|
|13:30||USD||Prelim GDP Price Index||q/q||2.0%||2.0%||-|
|15:00||USD||Pending Home Sales||m/m||-1.1%||0.6%||-|