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Wednesday, 3 Mar 2010
EUR Recovers Slightly as Greece's Budget Woes Ease
The USD fell Tuesday versus the EUR on comments from Greek officials regarding the government's commitment to make major budget cuts necessary to reduce the deficit. Pressuring the Dollar further were hawkish statements regarding interest rate hikes from the Canadian and Australian central banks.
USD - USD Declines on Interest Rate Hike Outlook
The USD came under pressure yesterday as Greece is expected to announce new budget cuts. The greenback was down most notably against the CAD and AUD on interest rate hike outlook for the two currencies. The Reserve Bank of Australia (RBA) raised its benchmark rate for the fourth time, as expected, by a quarter of a percentage point, to 4.0% and, while the Bank of Canada left the interest rate unchanged, an exceptionally hawkish statement boosted expectations of a sooner than expected rate hike.
The Dollar index fell to 80.512, from 80.753 in late North American trading Monday. The Aussie recently rose 0.4% to 90.36 U.S. cents. The Dollar slid 0.5% against the Japanese Yen, to buy 88.77 Yen.
Looking ahead to today traders are advised to follow the ISM Non-Manufacturing PMI report due to be released at 15:00 GMT as well as the ADP Non-Farm Employment Change estimate due to be released at 13:15 GMT. The Dollar's level will be determined this week by Greek developments on the one hand and vital economic data from the U.S on the other.
EUR - EUR Rises on Expected Greek Budget Cuts
The EUR rose from a 9-month low against the Dollar as Greece prepared to unveil its new budget cuts, fueling optimism of an imminent solution to its debt crisis. The Greek government will announce as much as 4.8 billion Euros ($6.5 Billion) of additional spending cuts today ahead of a March 16 deadline.
The EUR climbed to $1.3633 in today's early trading from $1.3615 in New York yesterday when it dropped to $1.3436, the weakest since May 18. The currency traded at 120.82 yen from 120.96 yen. The British pound recovered some losses yesterday to currently trade at 1.5052 USD. It had fallen sharply Monday amid concerns over potential changes in leadership.
Along with any development from Greece, traders are advised to follow the release of the British Services PMI at 9:30 GMT, a better than expected result might help push the Pound further up.
JPY - JPY at 11-Week High versus USD
The Yen climbed to an 11-week high against the Dollar on speculation Japanese companies will bring home earnings before the nation's fiscal year that ends this month. Japan's currency advanced versus 14 of its 16 major counterparts ahead of the end of Japan's fiscal year March 31.
Under the new tax provisions Japanese companies are exempt from taxes on repatriated profits. The means that the JPY is expected to stay strong as Japanese investors will likely to continue buying the currency.
Crude Oil - Crude Oil Struggles to Stay above $80 a Barrel
Crude Oil traded near $80 a barrel, gaining 1.3% yesterday as equity markets gained on speculation that the European Union will bail out Greece while the nation is expected to unveil new budget cuts. Oil prices also increased as the Dollar weakened against the EUR, increasing demand for commodities as an alternative investment. Furthermore, a report form the American Petroleum Institute showed that stockpiles of distillate fuel dropped 4.07 million barrels last week.
Today traders should follow the release of the Crude Oil inventories data at 15:30 GMT. Stockpiles are expected to drop to 1.4M from 3.0M last week, a better than expected result might help solidify oil's price above $80 a barrel.
After this morning's upward movement, the EUR/USD pair now appears poised for a downward correction. The pair appears to be range trading between 1.3650 and 1.3450. The hourly RSI shows the price as over-bought and the 4-hour Stochastic (slow) has what appears to be a bearish cross. Going short may be today's best tactic.
The price of this pair appears to be floating in the over-bought territory on the hourly RSI, suggesting short-term downward pressure. However, the daily RSI has the pair floating deep within the over-sold territory, indicating that the pair may in fact be facing strong upward pressure. As a result, there is a chance this pair will correct downward slightly in the morning hours, but longer-term direction may in fact be upward.
This pair has dropped to an 11-week low today and as a result a few indications are pointing to an upward correction. The daily Stochastic (slow) shows a fresh bullish cross and an upward moving indicator, suggesting that the price of this pair may see upward momentum gaining in today's trading. Going long with tight stops might not be a bad idea.
This pair seems to be fluctuating within a very distinct bullish channel on the 4-hour chart. As the last movement was in a downward direction, most indicators are now showing an impending bullish move. The 4-hour Stochastic (slow) shows a fresh bullish cross, which supports this notion. Going long appears to be today's preferable strategy.
The Wild Card
This pair is showing very distinct indications for forex traders to take advantage of in today's trading. The 4-hour Stochastic (slow) is showing 2 recent bearish crosses, and the price on the 4-hour RSI is floating deep within the over-bought territory. The daily chart also shows the price in the over-bought zone. There appears to be strong downward pressure on this pair. Going short and riding out this correction could prove to be very profitable today.
|16:30||USD||Crude Oil Inventories||-4.9M||-1.9M||2.4M|
|17:00||USD||Total Vehicle Sales||17.8M||17.2M||-|
|01:00||EUR||French 10-y Bond Auction||-||-||-|
|01:00||EUR||Spanish 10-y Bond Auction||-||-||-|
|03:00||NZD||ANZ Commodity Prices||m/m||-4.7%||-||-|
|05:45||JPY||10-y Bond Auction||0.45|2.7||-||-|
|09:00||EUR||Spanish Unemployment Change||-118.0K||-||-|
|14:30||USD||Non-Farm Employment Change||280K||229K||-|
|14:30||USD||Average Hourly Earnings||m/m||0.3%||0.2%||-|