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Friday, 10 Dec 2010

EUR Falls on European Debt Crisis

The euro traded near its lowest mark in more than a week against the dollar as concerns over Europe's debt crisis still linger and dampened demand for the region's assets. The 16-nation currency also headed for a weekly loss against the dollar after Fitch Ratings downgraded Ireland.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendnononononono
Weekly Trenddownnoupupdowndown
Resistance1.33501.588084.750.99300.99500.8500
1.33101.583584.300.98900.99150.8465
1.32751.580084.000.98550.98850.8425
Support1.32151.575083.450.98000.98200.8375
1.31701.572083.050.97700.97900.8340
1.31251.568082.700.97250.97500.8305

Economic News

USD - Dollar Gains on U.S. Unemployment Data

The US dollar rose against most of it major currency pairs on Thursday after US weekly jobless claims came in better than expected. The weekly report has had greater impact on trading in recent months due to investor concern that the US economic recovery will remain tepid; creating fewer new jobs to replace those lost during the recession.

As a result of yesterday's jobless report, the USD extended gains versus the EUR to trade around 1.3240 amid a broad sell-off in the EUR. The dollar experienced similar behavior against the GBP and closed at 1.5775.

The number of Americans filing for their first week of unemployment benefits fell last week, pointing to slight improvement in the job market. The number of initial claims fell to 421,000 in the week ending Dec. 4, down 17,000 from a revised 438,000 claims filed the week before.

Looking ahead to today, there are several important news releases coming out of the US. These include the Trade Balance and Prelim UoM Consumer Sentiment at 13:30 and 14:55 GMT, respectively. These reports are very important and likely to impact the dollar's volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow these releases.

EUR - Irish Debt Concerns Weigh on EUR Strength

The euro fell against most of its major counterparts on Thursday after Fitch ratings agency downgraded Ireland's sovereign debt, and as investors waited for a vote on a rescue package for the debt-laden country. By yesterday's close, the EUR fell against the USD, pushing the oft- traded currency pair to 1.3240 level. The 16-nation single currency experience similar behavior against the JPY and closed at 110.80.

Ireland's Labor Party earlier said it would vote against an 85 billion euro rescue deal form the International Monetary Fund (IMF) and the European Union (EU) when it comes before parliament next week, raising concerns about Ireland's ability to service and redeem outstanding debt. But two independent MPs said they would support the package, signaling its likely passage.

As for today, the most important economic indicator scheduled to be released from the euro zone is the French Industrial production at 7:45 GMT. Traders will be paying close attention to today's announcement as a stronger than expected result may boost the EUR in the short-term. Traders are also advised to follow the Trade Balance figures coming out of the US at 13:30 GMT as this result may set the EUR's main currency pairs' trend for the day.

JPY - Yen Sees Mixed Results vs. Majors

The Japanese yen completed yesterday's trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the CHF yesterday and closed its trading session around the 85.20 level. The JPY also saw bullishness against the EUR as it jumped around 90 points and closed at 110.88.

As for today, the JPY's trends will be affected by the rallies of its primary currency pairs. It seems the USD and EUR are expected to continue a volatile trading session today and their crosses with the JPY will likely be as well. Traders should keep a close look on the news coming from the US and Europe as these economies will be the deciding factors in the JPY's movement today.

Crude Oil - Crude Oil Trades Near $88.50 a Barrel

Crude Oil prices were up slightly during yesterday afternoon to trade around $88.50, after spending the day alternating between gains and losses as investors were reluctant to commit to purchases ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC), scheduled for Saturday.

Traders also appeared to continue worrying about the possibility that China might raise interest rates again soon. Most analysts do not expect OPEC to make any significant changes in its production quotas, but investors want to hear what the oil ministers have to say about possible future moves.

As for today, the US Trade Balance and Prelim UoM Consumer Sentiment reports will likely determine crude's next price moves; with any mildly positive elements within them likely to keep the price of crude oil on its upward path.

Technical News

EUR/USD

The EUR/USD went increasingly bearish yesterday, and currently stands at the 1.3240 level. The daily chart's Slow Stochastic supports this currency cross to fall further today. However, the weekly chart's Slow Stochastic signals that a bullish reversal will likely take place today. Entering on the pair when the signs are clearer seems to be the wise choice this morning.

GBP/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, there is a fresh bearish cross forming on the daily chart's Slow Stochastic indicating that a bullish correction might take place in the nearest future. In that case, traders are advised to swing in after the breach takes place.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The daily chart's Slow Stochastic is providing us with mixed signals. The 4-hour chart does not provide a clear direction either. Waiting for a clearer sign on the hourlies might be a good intra-day strategy today.

USD/CHF

The typical range-trading on the 4-hour chart continues. Both the daily RSI and Slow Stochastic are floating in neutral territory. However, the pair currently sits near the bottom border of the hourly chart's RSI, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be a preferable strategy.

The Wild Card

NSE Nifty Index

The NSE Nifty Index has dropped significantly in the last few days, and it is currently trading around 5758. However, on the 4-hour chart the RSI is floating in the over-sold territory suggesting that a bullish correction is impending. This might be a great opportunity for forex traders to enter the trend at a very early stage.

Current Time: 04/16 10:09 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
04/16
10:00CHF+ ZEW Economic Expectations19.0*7.03
10:00EUR+ CPI y/y0.5%0.5%0.5%3
10:00EUR+ Core CPI y/y1.0%0.8%0.7%3
10:34EUR+ German 10-y Bond Auction1.58|1.6*1.49|1.33
13:00USD+ FOMC Member Stein Speaks***3
13:30CAD+ Foreign Securities Purchases1.09B4.57B-3
13:30USD+ Building Permits1.01M1.00M-5
13:30USD+ Housing Starts0.91M0.97M-3
14:15USD+ Capacity Utilization Rate78.4%78.8%-3
14:15USD+ Industrial Production m/m0.6%0.5%-3
15:00CAD+ BoC Monetary Policy Report***5
15:00CAD+ BoC Rate Statement***5
15:00CAD+ Overnight Rate1.00%1.00%-5
15:30USD+ Crude Oil Inventories4.0M--3
16:15CAD+ BOC Press Conference***5
17:15USD+ Fed Chair Yellen Speaks***5
18:25USD+ FOMC Member Fisher Speaks***3
19:00USD+ Beige Book***3
04/17
01:30JPY+ BOJ Gov Kuroda Speaks***5
02:30AUD+ NAB Quarterly Business Confidence8*-3
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