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Friday, 13 Jan 2012

EUR Sees Gains Following Spanish Bond Auction

The euro pared recent losses against its main currency rivals on Thursday, following a successful Spanish bond auction. The EUR/USD climbed well above the 1.2700 level, while the EUR/JPY saw steady gains throughout the day. Today, US news is forecasted to generate some market volatility. Traders will want to pay attention to the US Trade Balance and Prelim UoM Consumer Sentiment figures for clues as to what direction the markets will take to close out the week.

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Economic News

USD - Dollar Stages Downward Correction against Euro

The EUR/USD turned bullish on Thursday, as the combination of a successful Spanish bond auction and the European Central Bank's decision not to lower euro-zone interest rates helped turn investors onto the common currency. Analysts were quick to warn that the overall trend for the pair is still strongly bearish and the gains can be partly attributed to traders correcting the huge euro sell-off in the last few weeks.

Thursday also saw the release of several important US indicators that came in below expectations. Both the Retail Sales and Core Retail Sales figures proved to be disappointing , while a higher than forecasted number of Americans filed for unemployment benefits last week. The news cast doubts on the strength of the US economic recovery. How traders will react to the poor economic data will likely depend on US indicators set to be released today.

Today, traders will want to pay attention to the US Trade Balance and Prelim UoM Consumer Sentiment figures. While the Trade Balance figure is forecasted to come in slightly worse than last month, the Consumer Sentiment figure is expected to increase slightly. Positive news is likely to help the USD against its main safe-haven currency rivals, especially the yen and Swiss franc, to close out the week.

EUR - Euro-zone bond auction gives EUR Slight Boost

The euro saw some positive upward movement yesterday, following a successful Spanish bond auction which boosted investor confidence in riskier currencies. The EUR/USD approached the 1.2800 level, while the EUR/JPY came off an 11-year low reached earlier in the week. While the common currency saw a largely bullish day on Thursday, analysts were quick to warn that these gains were largely incidental and that a significant upward correction is unlikely to occur in the near future.

Today, traders will want to pay attention to the on-going developments in the euro-zone. Investors are largely pessimistic that a solution to the euro-zone debt crisis can be found. Until a plan is implemented, it seems less and less likely that the euro will reverse trends. Any further negative euro-zone news may cause the currency to slip to new lows.

CHF - Franc Gains on USD as Traders Return to Safe-Havens

The Swiss franc moved up against most of its main currency rivals on Thursday, as investors returned to safe-haven currencies following disappointing US economic news. The USD/CHF tumbled following the release of the US Retails Sales and Unemployment Claims figures. Similarly, the EUR/CHF maintained its overall bearish trend.

Today, traders will want to pay attention to US economic indicators, specifically the Trade Balance and Prelim UoM Consumer Sentiment figures. Should either of them disappoint and come in below expectations, the franc may see another bullish day to close out the week.

Crude Oil - Oil Sees Gains Following Bullish EUR Reversal

Crude oil climbed well above the $102 a barrel level on Thursday. The commodity received a healthy boost after positive euro-zone data helped boost demand for oil among international buyers. Oil typically turns bullish when the euro increases in value, and international buyers can afford to purchase more.

Whether oil can maintain these gains to close out the week largely depends on news out of the euro-zone. Any positive developments with regards to the euro-zone debt crisis will likely keep the commodity at or above its current levels. In addition, continued tensions in the Middle East are forecasted to keep oil above the $100 level, as supply side worries tend to drive up prices.

Technical News


A bullish cross on the daily chart's Stochastic Slow is a sign that upward movement may occur in the near future. This theory is supported by the Relative Strength Index on the same chart, which has drifted into the oversold zone. Traders may want to go long in their positions today.


The Williams Percent Range on the weekly chart has dipped well into the oversold region, indicating that bullish movement may be on the horizon. Additionally, the Relative Strength Index is hovering close to the 20 level. Going long may be the preferred strategy today.


Technical indicators are still providing mixed signals for this currency pair. While the Relative Strength Index on the 8-hour chart is in oversold territory, most other indicators are in the neutral zone. Taking a wait-and-see approach may be the preferred strategy today.


The daily chart's Williams Percent Range has drifted above the -20 level, indicating that bearish movement may occur in the near future. Traders may want to go short in their positions before any downward correction.

The Wild Card


Daily chart technical indicators are showing a possible bullish correction for this pair in the near future. The Relative Strength Index is right on the border of being oversold, while a bullish cross has formed on the Stochastic Slow. Forex traders may want to go long in their positions before an upward correction takes place.


Current Time: 11/24 21:49 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
20:30CAD+ Gov Council Mem. Kennedy Speaks---1
23:50JPY+ Monetary Policy Meeting Minutes---3
00:30AUD+ Construction Work Doneq/q1.6%-1.8%-3
07:00CHF+ UBS Consumption Indicator1.65--1
09:30GBP+ BBA Mortgage Approvals 44.5K45.5K-1
10:00EUR+ Italian Retail Salesm/m0.3%0.5%-1
10:01EUR+ German 10-y Bond Auction0.44|1.2--1
10:20AUD+ RBA Assist Gov Debelle Speaks---3
12:30GBP+ Autumn Forecast Statement---3
13:30USD+ Core Durable Goods Orders m/m-0.3%0.5%-5
13:30USD+ Unemployment Claims 271K273K-5
13:30USD+ Core PCE Price Index m/m0.1%0.1%-3
13:30USD+ Durable Goods Orders m/m-1.2%1.6%-3
13:30USD+ Personal Spending m/m0.1%0.3%-3
13:30USD+ Personal Income m/m-0.1%0.4%-1
14:00USD+ HPI m/m0.3%0.5%-1
14:45USD+ Flash Services PMI54.855.2-1
15:00USD+ New Home Sales468K500K-3
15:00USD+ Revised UoM Consumer Sentiment93.193.2-3
15:00USD+ Revised UoM Inflation Expectations2.5%--1
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