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Wednesday, 17 Mar 2010
GBP Gains Heavily for First Time in Weeks
Yesterday ended with traders returning to the EUR and GBP while selling safe-haven currencies such as the USD and the JPY. An agreement regarding a future safety net for Greece's debt problems helped lift the EUR. Later, Standard & Poor's affirmed its rating for Greece which gave the euro another boost. The GBP experienced its biggest daily gain in several months after better than expected data was published.
USD - Economy Slowly Improving, Rates Held Steady
The EUR/USD was up for most of the day and is currently trading at 1.3778 from yesterday's opening price of 1.3690. The weakness of the greenback is expected to continue today unless news about Greece and UK debt concerns makes it to headlines, causing investors to jump back into the safety of the Dollar.
Traders were not taken by surprise yesterday by the Federal Reserve Board's decision to keep rates below 0.25%. Fed Chairman Ben Bernanke also calmed investors in his statement by saying that he would leave its target interest rates steady at 0-0.25%.
At 12:30 GMT today the US will publish its PPI (Producer Price Index), forecasts are for 0.2% decline, whereas the previous reading came in at a 1.4% growth. A higher than expected result may increase market volatility for the greenback. Later, the US will publish its Crude Oil inventories report. Low inventory data may support an economic revival. Good results will send investors away from the USD, as they will be diverting investments to riskier assets.
EUR - EUR Closes Higher vs. USD as Greece Concerns Ease
The EUR traded higher against the greenback for most of the day. The EUR/USD climbed 80 pips and is currently trading at 1.3778. The EUR/JPY was also up by 100 pips, marking the rise of riskier assets in lieu of safe-havens from the growth in European consumer sentiment. Both pairs ended yesterday close to the daily high, signaling the rally is expected to continue into today.
The EUR gained after a statement by the European Union (EU) about an aid package to Greece. Standard & Poor's final decision to keep its ratings for Greece steady added to investor confidence in the EUR. Germany's ZEW Economic Sentiment figures, published yesterday, also came slightly above forecasts, supporting a rise in risk appetite and a boost to the Euro-Zone.
The Euro-Zone will be largely absent from the economic calendar today. With a number of significant reports expected from Britain today, the GBP's recent spike may be in the crosshairs for many investors. The big question is whether the Pound is expecting a correction, or if this recent upward move can sustain itself.
JPY - Yen Slides as Risk Appetite Grows
No significant news came out of Japan yesterday. The Yen, as a result, was mainly influenced by traders' appetite for risk. The JPY was primarily down against the GBP and is currently trading at 137.60, from yesterday's 135.70. The Japanese currency saw similar losses to the EUR and is currently trading at the 124.45 price level. Against the USD, it is currently trading at 90.35.
The weakness of the Yen is a consequence of the Bank of Japan's (BOJ) previous announcements to keep the JPY weak. Following these statements, traders were waiting to hear about new monetary easing measures, which were published this morning around 4:00 GMT. In a split vote, the BOJ indeed decide to ease its monetary policy further by releasing additional low-interest loans in order to help jump-start the economy and combat deflation.
Crude Oil - Crude Oil Prices Rise supported by a Strong EUR
Crude Oil is currently trading at $82.13 a barrel. The price was significantly higher yesterday supported by the strength of the EUR vs. the USD. Crude Oil prices rose when the dollar weakened against other major currencies yesterday. If the EUR will keep to yesterday's rally against the USD, oil prices might see new recent highs above the $83 mark. If the price close above this level today this might signal a buy opportunity. Any downturn in EUR sentiment will influence oil prices in a similar fashion.
In recent trading, volatility was common in regards to Crude Oil prices. Traders are awaiting an OPEC meeting which will take place later today. OPEC is still expected to keep production at current levels, which shouldn't affect prices too heavily. Additionally, the US Crude Oil inventories report will be published at 14:30 GMT and may add to today's price fluctuations. Low inventories may in fact push oil prices higher.
A bullish formation on the daily chart is still intact; however the momentum is already quite low. The 4 hour chart is also maintaining a slightly bullish configuration yet with no distinct conclusion. Traders are advised to hold for the break and then swing into it.
The price of this pair appears to be floating in the over-bought territory on the RSI of the hourly chart, signaling an impending bearish move. The fresh bearish cross on the 4H chart's Slow Stochastic also supports this notion. Going short appears to be a good strategy today.
The pair continued with the bullish trend, as it's now being traded around the 90.50 level. The 4-hour chart's RSI lacks downward momentum, suggesting that the bullish trend has more steam in it. Going long seems to be the preferable choice today.
The typical range trading on the hourly chart continues. The 4-hour chart Slow Stochastic is floating in neutral territory. However, the pair currently sits near the bottom border of the daily 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
Bullish trends were initiated around the $1118 level, and have continued with full steam as currently an ounce of gold is valued at $1126. Currently, gold is reaching towards a very strong resistant level placed at the $1130 level. If the resistant level will be breached, another sharp bullish move might take place. This could be a great opportunity for forex traders to join a very popular trend.
|08:45||EUR||French Consumer Spending||m/m||0.7%||-0.3%||-0.8%|
|10:00||EUR||Italian Monthly Unemployment Rate||12.3%||12.4%||12.6%|
|11:00||EUR||CPI Flash Estimate||y/y||0.3%||0.4%||-|
|11:00||EUR||Italian Prelim CPI||m/m||-0.3%||-0.1%||-|
|13:30||USD||Core PCE Price Index||m/m||0.1%||0.1%||-|
|13:30||USD||Employment Cost Index||m/m||0.7%||0.6%||-|
|14:55||USD||Revised UoM Consumer Sentiment||86.4||86.4||-|
|14:55||USD||Revised UoM Inflation Expectations||2.8%||-||-|