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Friday, 12 Jun 2009

G20 Summit and U.S. Consumer Sentiment Set To Dominate USD Trading

Today's upcoming G20 Summit of the 20 most industrialized nations in Berlin, Germany today is set to dominate USD trading. Additionally, the forex market is set to go very volatile on the publication on the U.S. Import Prices indicator at 12:30 GMT, and the publication of the U.S. Consumer Sentiment indicator at 13:55 GMT. Forex traders are advised to open their Dollar positions now in order to make profits as today's events unravel.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupupdownupdown
Weekly Trendupupdowndownupdown
Resistance1.41751.664598.651.07950.82450.8590
1.41551.662598.451.07750.82150.8570
1.41251.659598.151.07450.81850.8540
Support1.40651.653597.551.06850.81250.8480
1.40351.650597.251.06550.80950.8450
1.40151.648597.051.06350.80750.8430

Economic News

USD - Dollar Drops despite Positive Data from U.S

The Dollar's downtrend continued yesterday as the USD dropped against all the major currencies. The Dollar's most distinct bearish trend was marked against the GBP, as the pair was traded as high as the 1.6620 level.

In accordance to what appears to be developing into a pattern, the USD dropped in spite of some positive figures published from the US economy yesterday. The weekly Unemployment Claims report, which measures the number of individuals who filed for unemployment insurance for the first time during the past week, dropped for the fourth time in a row, this time to 601K. The figure is still quite large, and is far from depicting a strong, recuperating economy. However, the trend surely seems to favor the U.S. economy.

The U.S. Retail Sales figures were also published on Thursday, showing a 0.5% increase in the total value of sales at the retail level. This figure reflect a state of mind in which US consumers feel more comfortable to spend, which means they have more confidence that their financial status will improve with time. This kind of behavior is imperative in order to pull the economy out of recession, as only a better cycling of funds has the ability to create a real change in the current gloomy economic conditions.

As for today, there is the G20 Summit in Berlin Germany. Additionally, a batch of data is expected from the US economy, and traders are advised to focus on two main reports. First, the Import Prices which is scheduled for 12:30 GMT. This is one of the earliest publications that try to predict the level of inflation. Traders should also follow the Consumer Sentiment report, as analysts forecast another positive figure for this indicator, which can further support the notion that the U.S. economy returns to the fast lane.

EUR - EUR Looks to Finish the Week Strong

EUR trading on Thursday was highlighted by the EUR/USD climbing back above the 1.4100 level. In a week that was showing bearish movement on the oft-traded pair, the Euro rallied to make up ground on last weeks closing, as it trumped both the greenback and the Yen. Yesterday's push came shortly after the release of US economic data. Positive change in US Retails Sales and Unemployment Claims did not impress enough to drop the EUR for the USD, as the pair went bullish, as traders bought back into higher-yielding assets.
Early Thursday morning, saw the release of the European Central Bank's (ECB) Monthly Bulletin, which reveals data gathered by the ECB Governing Board on the state of the Euro-Zone economy. The report helped get the ball rolling on a bullish EUR trading day.
Traders can look toward Industrial Production at 9:00 GMT and a speech by ECB President Jean-Claude Trichet at 11:30 & 15:30 GMT for some indication to how the rest of the day will go for the EUR. Traders should also follow news from the opening of the G20 Meeting in Berlin, Germany throughout the day for any clues on policy that could add volatility to the forex market.

JPY - JPY Moves on Market Volatility

The Yen's high volatility continued yesterday, as it saw contradicting trends against the major currencies. On one hand, the JPY rose 15 pips against the USD yesterday, as the pair closed at the 97.75 level. On the other hand, the Yen dropped over 50 pips against the EUR, closing at 137.86 level.

It appears that lately the Yen is mostly affected by its counterpart currencies. The USD is currently very weak, and thus the Yen consistently appreciates against it. However, the EUR seems quite strong, and its recent appreciation has pushed down the JPY.

Looking ahead to today, traders are expected to follow the main news events from the US and Western Europe, and the commencement of the G20 Meeting in Germany later today. Traders are advised to follow these events very closely as they may set the pace for JPY trading later today.

Crude Oil - Oil Eyes $75 a Barrel

Crude Oil's bullish trend continues as the price of Crude continues to rise. Oil rose 42 cents to finish trading at $72.39 yesterday. The main reason for Crude's bullishness was the positive economic data released from the US economy. The weak Dollar also helped push up Oil prices yesterday. In addition, the International Energy Agency corrected its demand projection and increased it to 120,000 more barrels a day.

The bullish trend of Crude Oil looks to continue, with the potential of reaching $75 a barrel. Traders should follow the data published from the US, and news coming out of the G20 Meeting later today, as these factors are set to play into Crude Oil's bullishness later today.

Technical News

EUR/USD

The hourly chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bearish cross forming on the 4-hour chart's Slow Stochastic implies that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be the preferable strategy.

GBP/USD

The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI indicating a downward correction may be imminent. The downward direction on the daily chart's Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be the preferable strategy.

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 as well. Waiting for a clearer sign on the hourly chart might be a good strategy today.

USD/CHF

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

The Wild Card

Crude Oil

Crude Oil prices rose significantly in the last month and peaked at $72.40 per barrel. However, the daily chart's RSI is floating in an overbought territory, suggesting that the 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.

Current Time: 09/02 23:13 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
09/02
00:01GBP+ BRC Shop Price Indexy/y-1.9%*-1
00:30AUD+ AIG Services Index49.3*-1
09/03
USD+ Total Vehicle Sales16.5M16.5M-1
02:30AUD+ GDPq/q1.1%0.4%-5
04:20AUD+ RBA Gov Stevens Speaks***5
08:15EUR+ Spanish Services PMI56.255.5-3
08:45EUR+ Italian Services PMI52.851.7-3
09:00EUR+ Final Services PMI53.553.5-1
09:30GBP+ Services PMI59.158.6-5
10:00EUR+ Retail Sales m/m0.4%-0.3%-3
10:00EUR+ Revised GDP0.0%--1
15:00CAD+ BoC Rate Statement***5
15:00CAD+ Overnight Rate1.00%1.00%-5
15:00USD+ Factory Ordersm/m1.1%10.9%-3
19:00USD+ Beige Book***3
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