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Tuesday, 18 Jan 2011
EUR Dives from Investor Pessimism
The euro's downturn against its rivals yesterday was brought on at the start of this week's trading by reduced optimism regarding the EU rescue fund's expansion. Some analysts were disappointed that the finance ministers of the 17-nation bloc did not take further measures to bolster the bailout mechanism during their latest meeting. This temporary setback pushed the EUR down against most of its rivals yesterday.
USD - TIC Long-Term Purchases May Boost USD Today
US banks were off yesterday in celebration of Martin Luther King Jr. Day, resulting in a relatively more volatile market. The US dollar experienced mixed results against its currency rivals during those thin trading conditions.
Against the euro, the greenback traded up slightly, experiencing mild bullishness and ending the day near the 1.3275 mark. The GBP/USD, on the other hand, moved upward, indicating a modest downturn for the buck versus its British counterpart. The pair ended the trading day just over 1.5900.
The American markets will reopen today with one economic report which traders should be on the lookout for. Treasury International Capital (TIC) will be releasing its monthly report on long-term foreign purchases of domestic securities today at 14:00 GMT, and should reveal a significant growth in demand for the USD. This may provide a modest boost to the USD against its currency rivals unless the report fails to meet expectations.
EUR - EUR and GBP Set for Volatility from CPI and ZEW Reports
The euro's mild downturn against its rivals was brought on at the start of this week's trading by reduced optimism regarding the EU rescue fund's expansion. Some analysts were disappointed that the finance ministers of the 17-nation bloc did not take further measures to bolster the bailout mechanism. This temporary setback pushed the EUR down against most of its rivals yesterday.
The GBP/EUR was perhaps the hardest hit among the euro's pairs, trading near the 0.8340 mark this morning from as high as 0.8500 last Friday. The EUR/USD saw a mild downturn, hitting just below 1.3300 before closing out Monday's trading.
Looking ahead to today, one can see a number of significant economic events on the calendar from Britain and the euro zone. The CPI and RPI inflation reports from Britain should kick-start the European session with a dose of volatility, possibly pushing the British pound higher against its rivals in early morning trading.
The ZEW reports from Germany and the broader euro zone should add to what Britain's inflationary figures start. The close proximity of these two reports means that traders should be on guard in today's early hours as sharp swings in value may be imminent.
JPY - Yen Mixed as Japanese Household Confidence Dips
The JPY saw mixed results yesterday as European currencies led the market. With the euro bearish against most of its rivals, the EUR/JPY also moved down mildly to open today's Asian session just below 109.80. Against the USD, the yen remained in a bearish, range-trading pattern. The pair ended Monday at 82.56.
Japan published its household confidence report yesterday which revealed a slight decrease in household sentiment, but not enough to impact the yen in any significant way. The Tertiary Industry Activity report expected tonight at 23:50 GMT will help signal the level of demand for Japanese industrial goods and provide better direction for the island currency. Until then, traders should follow the news from Europe and the United States for an accurate assessment of JPY values.
Crude Oil - Oil Prices Climb towards $92; Downward Correction Expected
The price for a barrel of Crude Oil continued climbing yesterday, topping $91.90 before closing out the trading day. Recent speculation has begun to evaluate the possible risk of rising oil prices to the global economic recovery, but little has been done at this point to intentionally push prices either direction.
With US markets closed in observance of Martin Luther King Jr. Day, the greenback saw mixed results and oil prices remained steady between $91.50 and $92.00 a barrel yesterday. With the US economy coming back online today, traders should anticipate a possible strengthening of the buck with the TIC Long-Term Purchases report expected to show a modest boost in USD demand. If this report adds strength to the dollar, it is possible the price of oil could see a downward correction through most of the trading day.
Most indicators on this pair show the price floating in neutral territory. However, the daily Stochastic (slow) appears to be signaling a fresh bearish cross, suggesting a downturn may be imminent. Going short with tight stops may be a wise move today.
The price on this pair appears to have recently entered the over-bought region on the daily Relative Strength Index (RSI), indicating bearish pressure. A fresh bearish cross on the daily Stochastic (slow) supports this notion. Going short appears preferable today.
This pair's indicators mostly reveal neutrality. The only indication of direction appears to be an imminent bullish cross on the daily MACD. The technical indicators show mixed sentiment and it may therefore be wise to wait for a clearer signal before entering on this pair today.
The price of the USD/CHF seems to have recently jumped into the over-bought region on the daily RSI, suggesting downward pressure is mounting. However, the daily MACD shows a bullish cross, and the daily Stochastic (slow) has what appears to be an impending bullish cross. These mixed signals suggest that traders may want to wait for a clearer signal before opening a position on this pair.
The Wild Card
There appears to be a recent bearish cross on the daily and weekly Stochastic (slow) and daily MACD, highlighting significant downward momentum building on this commodity's price. The weekly RSI has the price floating just beneath the over-bought region, suggesting that more pressure is on the way. Forex traders may want to take this opportunity to catch the downward correction on Crude Oil, which appears to be imminent.
|13:00||GBP||Official Bank Rate||0.50%||0.50%||0.50%|
|13:00||GBP||Asset Purchase Facility||375B||375B||375B|
|13:30||USD||Challenger Job Cuts||y/y||17.6%||-||20.9%|
|13:45||EUR||Minimum Bid Rate||0.05%||0.05%||0.05%|
|14:30||EUR||ECB Press Conference||-||-||-|
|14:30||USD||Revised Nonfarm Productivity||q/q||-1.8%||-2.2%||-2.2%|
|14:30||USD||Revised Unit Labor Costs||2.7%||3.1%||4.1%|
|16:00||USD||FOMC Member Williams Speaks||-||-||-|
|16:30||USD||Natural Gas Storage||-||-||-|
|23:30||AUD||AIG Construction Index||45.9||-||-|
|08:00||EUR||German Industrial Production||m/m||0.1%||0.6%||-|
|08:45||EUR||French Gov Budget Balance||-85.6B||-||-|
|08:45||EUR||French Trade Balance||-3.4B||-||-|
|09:00||CHF||Foreign Currency Reserves||498.4B||-||-|
|10:30||GBP||Consumer Inflation Expectations||2.5%||15.1B||-|