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Thursday, 10 Jun 2010
Euro Reverses Slight Gains Made Yesterday
After a receiving a slight boost following comments from Fed chairman Bernanke yesterday, the Euro largely reversed its gains in overnight trading versus the U.S. Dollar and Yen. Investors appear to be waiting on news from a meeting today at the European Central Bank as to whether more help will be provided to debt ridden Euro-zone countries.
USD - Dollar Improves as Investors Return to Risk Aversion
Following losses yesterday against currencies like the British Pound and Euro, the greenback appeared to be back on top in overnight trading. GBP/USD fell over 70 pips from yesterday afternoon before slightly rallying to its current level of 1.4545. EUR/USD similarly fell from yesterday's high of 1.2060, to its current level of 1.1975. At the same time, the Dollar did see a slight drop against the Yen. USD/JPY has fallen from 91.57 yesterday afternoon, to its current level of 91.15.
Today, traders will want to watch out for a number of key economic indicators that are likely to impact Dollar pairs. At 12:30 GMT the monthly Trade Balance report, as well as the weekly Unemployment Claims figure are set to be released. Both pieces of news are considered fairly important and tend to generate a substantial amount of market volatility.
Analysts are predicting a slight decrease in the Trade Balance figure, as well as a slight increase in the number of people seeking unemployment insurance this week. While both of these reports may be bad for the U.S. economy, the Dollar may see a slight boost against its main counterparts today, should investors fear the pace of the global economic recovery and turn to the safe haven USD.
EUR - EUR Reverses Gains, Awaits News From ECB Meeting
After seeing moderate gains in trading yesterday, the Euro has reversed courses and fallen once again versus the safe haven currencies. After reaching as high as 110.30 yesterday, EUR/JPY has since dropped over 100 pips to its current level of 109.20. EUR/USD also fell almost 100 pips from yesterday's highs, and the 16-nation currency has also taken significant losses against both the British Pound and Swiss Franc.
Today, Euro-zone investors are eagerly awaiting any news from a meeting of the European Central Bank. The official purpose of the meeting is to set the Minimum Bid Rate for the Euro-zone. While no one is expecting the rate to change from its current level of 1.00%, investors will be paying attention to any news regarding further assistance to some of the more financially troubled European nations. Should any positive news emerge, the Euro could see some gains in late day trading.
JPY - Safe Haven Yen Continues to Rally Against Its Rivals
The Yen appeared to be the big winner in overnight trading, not only making gains on riskier currencies like the Euro and sterling, but also against the fellow safe-haven U.S. Dollar. USD/JPY, which at one point was trading as high as 91.56 yesterday, has since dropped following remarks by the Japanese finance minister. Currently USD/JPY is trading around the 91.15 level.
Today the Yen is likely to see more gains, as there is no positive news forecasted for the Euro-zone and American news will not likely show any substantial growth in the U.S. economy. Should the U.S. Trade Balance and Unemployment Figures come in as predicted, traders can expect the greenback to fall further against the Yen in afternoon trading.
Crude Oil - Crude Corrects Itself After Major Gains Yesterday
Following yesterday's jump in crude prices, the commodity has since corrected itself following a speech from the Fed chairman. Oil prices climbed as high as $74.80 yesterday, but after news that the U.S. economy is still growing, albeit at a modest rate, it has since fallen to its current level of $73.90.
Today, crude traders will want to pay attention to any movement among USD pairs. Should the Dollar respond favorably to any of the day's news events, oil prices will likely continue to drop. With risk aversion still the preferred strategy among investors, there does not appear to be much room for a price increase for crude oil at this time.
The EUR/USD cross has experienced a bearish trend for the past few months. However, it seems that this trend may be coming to an end. The RSI of the weekly chart shows the pair floating in the over-sold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.
The cross has experienced much bullishness yesterday, and currently stands at the 1.4595 level. There is much evidence in the chart's oscillators that supports a possible bearish correction today. This is supported by the 2-hour chart's RSI. Going short with tight stops may turn out to bring big profits today.
The pair currently sits near the bottom border of the 4-hour chart's RSI, suggesting an upward correction may be imminent. The upward direction on the hourly chart's Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.
The cross has been dropping for the past 3 days now, as it now stands at the 1.1430 level. However, the 4-hour chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to be the right choice today.
The Wild Card
Crude oil prices rose significantly in the last week and peaked at $74.70 per barrel. However, the 4-hou chart's RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.
|19:00||EUR||ECB President Draghi Speaks||-||-||-|
|23:30||USD||FOMC Member Williams Speaks||-||-||-|
|00:30||AUD||AIG Construction Index||53.8||-||-|
|01:01||GBP||BRC Shop Price Index||y/y||-1.4%||-||-|
|02:00||AUD||HIA New Home Sales||m/m||-1.8%||-||-|
|02:01||JPY||Monetary Policy Statement||-||-||-|
|08:00||EUR||German Industrial Production||m/m||0.7%||-||-|
|08:01||JPY||BoJ Press Conference||-||-||-|
|08:45||EUR||French Trade Balance||-3.3B||-||-|
|09:00||CHF||Foreign Currency Reserves||540B||-||-|
|10:30||GBP||Manufacturing Production m/m||m/m||-0.8%||-||-|
|10:31||EUR||German 10-y Bond Auction||0.69|1.2||-||-|
|16:00||GBP||NIESR GDP Estimate||0.5%||-||-|
|16:30||USD||Crude Oil Inventories||4.0M||-||-|