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Friday, 7 Oct 2011
EUR Climbs on ECB Rate Statements
The euro was indeed seen gaining a foothold against the USD following the European Central Bank's (ECB) latest announcement regarding interest rates, known as the Minimum Bid Rate. Stuttering mildly ahead of the decision, there was an atmosphere of EUR stability in the market prior to the statement by ECB President Jean-Claude Trichet.
USD - USD Stable ahead of Friday's NFP Data
The EUR/USD was seen moving somewhat bullish late yesterday as investors anticipate a return to risk aversion, but also optimism towards today's Non-Farm Payroll report. An uptick in US private sector employment Wednesday added to risk-taking sentiment by many investors, but fears of European debt contagion are overshadowing the rise. Should today's Non-Farm Payroll (NFP) data continue this trend of optimism, we may see the greenback making gains against its rivals as traders return to their traditional store of value en masse.
With the European Central Bank (ECB) holding interest rates steady, and private sector employment rising in the US, the value of the USD appears to be holding steady as riskier currencies like the EUR also leveled off in yesterday's afternoon and evening sessions.
Most significant on today's calendar will be the US publication of its Non-Farm Payrolls (NFP) data. Should today's news foreshadow a modest growth in the largest economy's employment sector, an assessment that seemed nigh impossible just days ago, there is a possibility that more investment will get pushed towards the storage ability of the greenback as investors flee the period of uncertainty wracking Europe.
EUR - EUR on the Ascent after Interest Rate Announcement
The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading bearish in late trading as shifts away from the greenback, due to uncertainty about global employment levels, caused several market participants to opt for other stores of value.
The euro was indeed seen dropping against the USD following the European Central Bank's (ECB) latest announcement regarding interest rates, known as the Minimum Bid Rate. Stuttering mildly ahead of the decision, there was an atmosphere of EUR ambivalence in the market prior to the statement by ECB President Jean-Claude Trichet.
With nearly every analyst anticipating yesterday's move, and the accompanied dovish statement by Trichet, the market followed suit with expectations and witnessed a quick leveling off in EUR values. Several reports have begun to assume a possible rate reduction as early as mid-2012 by the ECB, though future economic growth will factor heavily in such a decision. For now, traders appear to be looking to a weakening of the EUR through the remainder of the week.
JPY - Talk of BOJ Intervention Shakes JPY
The Japanese yen (JPY) was seen moving moderately bearish throughout the day following other movements in the forex market. The yen surged beyond previous intervention levels on heightened risk aversion in the global economy due to debt fears in Europe and the United States, but has so far this week held its ground. The BOJ tends to resist an overly strengthened yen for the gouging effect it has on Japanese exports.
Weakening commodity prices, however, are helping offset the losses from an overly powerful yen, as is the general sentiment that the JPY acts as a solid store of value in times of uncertainty. The JPY, therefore, is positioned to continue gaining despite attempts by the BOJ to prevent such an occurrence. It will be worth watching to see if the BOJ intervenes in the days ahead.
Oil - Oil Sees Uptick after Inventory Report Reveals Sharp Decrease
Crude Oil prices found support Thursday, moving towards $90 a barrel in late trading as sentiment appeared to shift in favor of a price increase following news that supply in the United States declined by 4.7 million barrels this week. With supply falling and manufacturing and industry in decline, the balance between supply and demand appear to be reaching agreement as the value of oil seems to be leveling out in recent trading, despite the recent swings in currency values.
As investors seek shelter from recent market uncertainty, the value of crude oil, which was seen holding steady all week, may see additional gains before today's close. A sudden jump in dollar values due to a sudden return to risk aversion, as was expected following the recent interest rate announcements, could drive many investors into lower investments on physical assets; driving oil prices back downward by the middle of next week.
The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the hourly chart's RSI is already floating in the overbought territory indicating that 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 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 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bullish cross forming on the 8-hour chart's Slow Stochastic indicating a bullish correction might take place in the nearest future. Going long might be a wise choice.
The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart's Stochastic Slow signals that a bearish reversal is imminent. . Going short with tight stops might be a wise choice.
The Wild Card
This pair's sustained upward movement has finally pushed its price into the over-bought territory on the 4-hour chart's RSI. Not only that, but there actually appears to be a bearish cross on the 8-hour chart Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.
|19:01||USD||10-y Bond Auction||2.24|2.7||-||-|
|01:01||GBP||RICS House Price Balance||53%||54%||-|
|01:50||JPY||Core Machinery Orders||m/m||-3.6%||3.3%||-|
|05:45||JPY||30-y Bond Auction||1.41|3.1||-||-|
|07:00||JPY||BoJ Monthly Report||-||-||-|
|07:00||JPY||Economy Watchers Sentiment||49.3||48.6||-|
|08:00||EUR||German Trade Balance||22.8B||20.2B||-|
|13:00||GBP||MPC Official Bank Rate Votes||1-0-8||1-0-8||-|
|13:00||GBP||Monetary Policy Statement||-||-||-|
|13:00||GBP||Official Bank Rate||0.50%||0.50%||-|
|13:00||GBP||Asset Purchase Facility||375B||375B||-|
|13:00||GBP||MPC Asset Purchase Facility Votes||0-0-9||0-0-9||-|
|13:30||EUR||ECB Monthly Bulletin||-||-||-|
|16:30||USD||Natural Gas Storage||98B||101B||-|