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Friday, 16 Apr 2010
EUR Falls on Renewed Greek Fiscal Worries
The euro dropped across the board as Greek sovereign-debt concerns sparked a sell off in the 16-nation currency. However, the currency limited its losses after it was announced that Greek leaders have met with IMF officials as a bailout of the nation looks more likely everyday.
USD - Mixed Data Provides Little Direction
The dollar varied in performance against the major currencies after a news heavy day of trading. Significant data releases from the States were mixed and this did not allow for a particular direction to take shape in dollar trading. Initial job claims of 484K were worse than the 439K forecasted by market economists. Also failing to meet expectations were industrial production numbers which posted a 0.1% increase on expectations of 0.6%. U.S. data that exceeded forecasts were the TICS which posted 47.1B after forecasts of only 34.2B. Also the Empire State manufacturing report was stronger than expected on 31.9 on forecasts of only 24.0.
The data helped the dollar strengthen against the euro and the pound, but the greenback fell against the yen. Contrasting data releases did not allow for one particular direction for the dollar during trading.
Today the market is anticipating the release of U.S. building permits and the preliminary UofM consumer confidence survey. The data is expected to have a positive impact on risk appetite in the market and could send the EUR/USD lower. The pair is supported by the 1.3525 price level. A breach of this price could send the pair to the 1.3400 support line.
EUR - Greece Goes to the IMF
The euro fell sharply in yesterday's trading but recovered slightly following an announcement that Greek finance officials met with the International Monetary Fund on Monday. This brings the EU member nation one step closer towards receiving bailout funds. The financing may be needed as Greece is expected to raise only $4B in the private debt markets. The Greek finance ministry had hoped to raise up to $10B in dollar denominated bonds.
Greek worries are continuing to pressure the euro as the EUR/USD fell to a low of 1.3520, from an opening day price of 1.3649. The pair closed at 1.3554. The EUR/JPY was also lower at 125.69 after opening the day at 127.49.
The euro could remain under pressure until funds are released to aid Greece. Worries also persist as other EU member nations struggle to get their finances in order. The nations of Portugal, Spain and Italy are of the highest concerns. We may expect the EUR/USD to continue to fall with a key support level at 1.3385.
JPY - Yen Continues to Strengthen
The Japanese yen strengthened across the board yesterday as mixed U.S. data and fundamental weakness in the European Union continues to boost the Asian currency. Following both negative U.S. unemployment data but positive Philly Fed Manufacturing numbers, the yen outperformed most currencies in yesterday's trading.
The USD/JPY fell to 92.67 after opening the day at 93.40. The EUR/JPY also dropped to 125.59 from 127.49, while the GBP/JPY traded lower at 1.4345 after beginning the day at 1.4485.
A lack of economic data today for Japan will leave the yen's movements influenced by U.S. economic data releases. The major news that traders should be following is the U.S. building permits and the UofM Consumer Confidence Survey. Positive results could allow the JPY to continue to strengthen through today's trading. The next major support level for the USD/JPY rests at 92.15.
OIL - Unemployment Numbers Sink Spot Crude Oil
Spot crude oil prices dropped following worse than expected U.S. new unemployment claims. Prices rose prior to the negative unemployment numbers after Chinese GDP data was stronger than expected. This followed a volatile trading day after U.S. crude oil inventories showed crude oil stocks declined.
Concerns still persist as the economic picture has not improved as fast as many traders would like. A surplus of supply still exists and many oil refineries continue to operate below capacity. Further fundamental numbers will be needed to give traders a reason to bid spot crude oil prices higher. Until then, spot crude oil may find support at $86.30.
This pair has witnessed a sustained upward movement for many days now. This movement has pushed the price of this pair into the over-bought territory on the RSI of the 4-hour chart, signaling that there may be a medium-term downward correction. However, the longer-term trends still appear to be pointing up. Going long appears to continue being the solid choice today.
There appears to be a fresh bullish cross on the Slow Stochastic of the hourly chart, signaling an upward correction may be experienced soon. The price appears to be floating in the over-sold territory on the RSI of the hourly and 4-hour charts as well, which supports the above notion. Going long with tight stops might be a decent strategy today
Even though a sustained downward movement like the one this pair has seen typically pushes the price into levels which indicate a correction that does not seem to be the case here. Most oscillators for this pair are signaling neutrality. The price does however, appear to be in the over-sold territory on the 4-hour chart's RSI, which may indicate an impending upward correction. Going long with tight stops might be wise today.
This pair's strong bullish behavior has resulted in most oscillators indicating that a correction is imminent. While this has been the case for the past two days, it remains to be so. The RSI on the hourly, 4-hour and daily charts all show this pair floating in the over-bought territory, and there are bearish crosses forming on the 4-hour and daily charts' Slow Stochastic. Waiting for the downwards breach and then entering the correction may be wise today.
The Wild Card
The strong bullish movement in the price of Gold recently has pushed the price of this pair into the over-bought territory on the RSI of the hourly, 4-hour, and daily charts, signaling strong downward pressure. There also appears to be a fresh bearish cross on the Slow Stochastic of the hourly and 4-hour charts, which supports this notion. Considering the potential downward correction, forex traders may have a fantastic opportunity to join this trend reversal at a very early stage and with a great entry price.
|21:00||NZD||Westpac Consumer Sentiment||116.7||-||-|
|05:00||JPY||BoJ Monthly Report||-||-||-|
|15:00||USD||Existing Home Sales||5.26M||5.21M||-|