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Tuesday, 17 Jan 2012

EUR Continues to Tumble amid Fresh Euro-Zone Worries

The euro started off the week by extending its bearish run, as traders continued to short the currency after last Friday's credit downgrade of several euro-zone countries. News that talks regarding a Greek debt swap deal broke down only increased fears regarding the prospects of a solution to the euro-zone crisis.

Daily Trendupupdowndownupup
Weekly Trendupupdownnoupup

Economic News

USD - USD Approaches 17-Month High vs. Euro in Slow Trading Day

Traders continued to short the euro in favour of the US dollar on Monday, as fresh euro-zone worries boosted safe-haven assets. Trading was somewhat light yesterday, as US markets were closed for a bank holiday. Still, the EUR/USD extended its bearish run throughout the day, and came within reach of a fresh 17-month low. Against its other main currency rivals, the dollar was decidedly bearish throughout the day. Losses were reported against the Japanese yen and Canadian dollar, while against the British pound the USD traded flat throughout the day.

Turning to today, USD traders will want to pay attention to any news or announcements out of the euro-zone. The crisis there continues to dominate the headlines and analysts maintain that without some kind of positive news, the EUR/USD has the potential to fall significantly further. The German ZEW Economic Sentiment, set to be released at 10:00 GMT, is likely to create some market volatility. A positive figure may cause the euro to stage a slight correction vs. the greenback in mid-day trading.

Additionally, the Canadian Overnight Rate and Bank of Canada Rate Statement are likely to impact the USD/CAD pair. A positive statement may drive the USD lower against its Canadian counterpart.

EUR - Breakdown in Greek Debt Talks Causes EUR to Slide

Friday's news that several euro-zone countries were being downgraded by a leading credit agency caused the euro to slip throughout the day yesterday. Additionally, news that talks regarding a Greek debt swap have broken down have only increased investor pessimism in the long term prospects for a euro-zone recovery. Yesterday, the euro reversed virtually all of last week's minor gains and has reached a fresh 11-year low against the Japanese yen. Against the dollar, the common currency approached a 17-month low before staging a slight correction.

Today, traders will want to pay attention to any news out of the euro-zone, particularly the German ZEW Economic Sentiment figure at 10:00 GMT. As the biggest euro-zone economy, German news tends to have a substantial impact on the euro. While a positive figure may give the euro a slight boost in trading today, analysts are quick to warn that any bullish movement is likely to be temporary. With little in the way of a solution to the euro-zone crisis, the euro is unlikely to stage a meaningful recovery in the near future.

CAD - Canadian Rate Statement May Boost Loonie

The Canadian dollar saw a very bullish day yesterday, as gains were recorded against the euro and US dollar. The closure of US markets yesterday, combined with continued negative news out of the euro-zone, fuelled the loonie's upward trend. With significant Canadian news set to be released today, the CAD will likely see another volatile day.

While analysts are not predicting the Bank of Canada to change the national interest rate, traders will want to pay close attention to the Bank of Canada's rate statement. The statement will be a good indication of the current state of the Canadian economy. Positive news should help the loonie extend its gains going into the rest of the week.

Gold - Gold Stabilizes Following Last Week's Bearish Fall


Gold Stabilizes Following Last Week's Bearish Fall

The price of gold steadily increased yesterday as European stocks saw slight gains following the downgrade of several euro-zone countries last week. Gold, which has had a mixed reaction to the European debt crisis, moved above the $1640 level during yesterday's trading.

Today, the price of gold will likely be determined by euro movements. In the event that any negative euro-zone news is released, gold may give back yesterday's gains as investors revert back to the safe-haven dollar. At the same time, should the German ZEW Economic Sentiment come in above expectations, there may be some room for further bullish movement.

Technical News


Most long term technical indicators place this pair in oversold territory, meaning an upward correction is possible in the near future. The daily chart's Williams Percent Range is around the -95 level, while the weekly chart's Relative Strength Index has drifted below 30. Going long this week may be a wise choice.


Following last week's bearish trend, technical indicators are now showing this pair trading in neutral territory. The daily chart's Relative Strength Index is currently at 40, which typically signifies that no significant movement is expected in the near future. Traders may want to take a wait and see approach for this pair.


Most long term technical indicators are placing this pair in neutral territory, meaning that it may maintain its current trend for the time being. That being said, the Bollinger Bands on the daily chart appear to be tightening. If this continues, a price shift may take place. Traders will want to take a wait and see approach for this pair.


Technical indicators on both the daily and weekly charts are placing this pair in overbought territory, meaning a downward correction may take place. A bearish cross appears to be forming on the weekly chart's Stochastic Slow, while the daily chart's Williams Percent Range has gone above the -20 level. Traders may want to think about going short in their positions.

The Wild Card


Following its recent bullish run, technical indicators are now showing this pair may be in overbought territory and could see a downward correction. The Williams Percent Range on the weekly chart is right around the -5 level, while the daily chart's Relative Strength Index is approaching the overbought zone. Forex traders may want to go short in their positions, as downward movement could occur.

Current Time: 12/01 19:46 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
18:45USD+ FOMC Member Evans Speaks---3
00:30AUD+ RBA Gov Stevens Speaks---5
00:50JPY+ Monetary Base y/y32.5%35.2%-1
01:00NZD+ ANZ Commodity Pricesm/m6.9%--1
01:30AUD+ GDPq/q0.2%0.7%-5
02:00EUR+ FOMC Member Kohn Speaks---3
08:00EUR+ German Retail Salesm/m---3
09:00EUR+ Spanish Unemployment Change82.3K--3
09:30GBP+ Halifax HPI---3
10:30GBP+ Construction PMI58.858.4-5
11:00EUR+ CPI Flash Estimate y/y0.1%0.2%-3
11:00EUR+ Core CPI y/y1.1%1.1%-3
11:00EUR+ PPI m/m-0.3%-0.4%-1
14:10USD+ FOMC Member Lockhart Speaks---3
14:30USD+ Fed Chair Yellen Speaks---5
14:30USD+ Revised Nonfarm Productivityq/q1.6%2.2%-3
14:30USD+ Revised Unit Labor Costsq/q1.4%1.1%-1
15:15USD+ ADP Non-Farm Employment Change182K191K -5
16:00CAD+ BoC Rate Statement---5
16:00CAD+ Overnight Rate0.50% 0.50%-5
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