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Monday, 23 Nov 2009
Gold Continues to Climb
While all the major currencies continue to provide mix results, there is still one extremely strong in the market - the bullish Gold. During last night gold reached over$1,163 an ounce, making another all time high. However, a recovery of the Dollar, if indeed takes place, has the potential to put an end to Gold's uptrend.
USD - Is the Dollar Recovering?
The Dollar corrected some of its losses against the Euro and the Pound during last week's trading session. The Dollar gained about 200 pips against the Euro, and gained almost 400 pips against the Pound as the GBP/USD pair dropped to the 1.6470 level.
The main reason for the Dollar's recovery seems to be the positive data that was published from the U.S economy. The Retails Sales rose by 1.4% in October, beating expectations for a 1.0% rise. In addition, the Long-Term Purchases report for September delivered much better figures than forecasted. This report measures the difference in value between foreign long-term securities purchased by U.S citizens to the ones purchased by foreigners. The surprising positive figures showed that foreigners have increased their investments in the U.S economy, and this usually tends to strengthen the Dollar. Also last week, the Core Consumer Price Index (CPI), which measures the change in the price of goods and services purchased by consumers, excluding food and energy, rose by 0.2%. The increasing CPI is one of the greatest signs that the U.S economy is indeed recovering.
As for the week ahead, many interesting publications are expected from the U.S economy. Traders are advised to follow the following news events: The Existing Home Sales, the CB Consumer Confidence, the Unemployment Claims and the New Home Sales. As for today, the most significant publication is likely to be the Existing Home Sales report. Positive end result will show that the U.S housing sector is recovering as well, and has the potential to boost the Dollar.
EUR - Euro's Bullishness Halts
The Euro dropped against most of the major currencies during last week's trading session. The Euro continued to drop against the Yen, and the EUR/JPY dropped below the 132.0 level. The Euro also fell against the Dollar.
The Euro's drop seems to be a direct result to the disappointing data published from the Euro-Zone during the past week. The European Consumer Price Index dropped by 0.1% in October, and thus marked the fifth consecutive drop of this indicator. This is a warning sign that the European nations are far from being fully recovered. In addition, the European Current Account, which measures the difference in value between imported and exported goods and services, unexpectedly dropped in October.
Analysts have forecasted that the Current Account will stand on 0.6B on October, yet the end result showed a -5.4B figure. This means that foreign investments in the Euro-Zone have decreased, and that was enough to weaken the Euro.
As for the following week, a batch of data is expected from the Euro-Zone. The most impacting publications look to come from the German economy, as Germany holds the largest and strongest economy in the Euro-Zone. As for today, the economic calendar is filled with publications from the Euro-Zone. Analysts forecast relatively positive figures for the German and the French indicators. If the actual result will reach forecasts, the Euro could be supported as a result.
JPY - Yen Strengthens on Positive Japanese Data
The Yen rallied against all the major currencies last week. The Yen's most remarkable appreciation was against the Pound, as the GBP/JPY pair dropped close to 400 pips. The Yen also saw rising trends against the Dollar and the Euro.
It seems that the main reason for the Yen's strengthening is the positive data from the Japanese economy. The Preliminary Gross Domestic, which measures the change in the inflation-adjusted value of all goods and services produces by the economy, rose surprisingly by 1.2%. The unexpected rise showed that the Japanese economy might be doing better than estimated by analysts. The Yen is relatively quite strong, yet for as long as the Japanese economy will show signs for recovering, the Yen is likely to rise further. Also last week, the Bank of Japan decided to leave the Japanese Interest Rates at 0.10%, the lowest rate in the industrial world. However, this had a muted impact over the Yen, probably due to the fact that all the other major economies have also prevented hiking rates so far.
Looking ahead to this week, many impacting news events are expected from the Japanese economy. The economic publication which might have the strongest influence on the market looks to be the Trade Balance scheduled for Tuesday. The Trade Balance measures the difference in value between imported and exported goods. Considering that the Japanese economy relies greatly on its export, a positive figure has the potential to boost the Yen.
OIL - Oil's Range Trading Continues; Tension in the Middle East Rises
Crude Oil saw a rather volatile session during last week's trading. By the beginning of the week, crude oil rose to $80.85 a barrel. However close to the weekend oil dropped back down, and reached as low as $76.80 a barrel.
Currently, oil is back on a rise, and a barrel of crude oil is traded for over $78 a barrel. The main reason for the oil's recovery appears to be the growing tension between Iran and the Western nation. The nations have failed to reach agreement regarding Iran's nuclear facilities, and in addition the Iranian military is beginning a large scale air defense drills. It seems that if the Middle East tension will grow further, the prices of oil are likely to increase as well.
As for the week ahead, traders are advised to follow news updates from the Middle East as they are likely to have a significant impact on the prices of crude oil. In addition, traders are advised to follow the major economic publication from the U.S, as the value of oil is largely affected by them.
After reaching the 1.4950 level, a technical correction took place today, and the pair is currently traded around the 1.4920 level. However, a bullish cross is taking place at the 4-hour chart's Slow Stochastic, suggesting that a bullish movement could be initiated. Going long with tight stops might be the right strategy today
This pair shows no clear indication of direction for the moment. Nevertheless, there is one signal which does appear clearly. The Bollinger Bands on the hourly chart are tightening and the MACD on all charts is near 0, indicating a volatile movement is impending. When the price jump occurs, entering positions to ride the wave will be a wise choice.
The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.
There is a very distinct bearish channel forming on the hourly chart, as the pair is now floating in its lower section. In addition, all oscillators on the 4-hour chart are pointing down, suggesting that the downtrend might extend. Going short might be the right strategy today.
The Wild Card
There is a very accurate bullish channel forming on the 4 hour chart, as the pair has consecutively appreciated for the past 4 days. Currently, as the RSI on the daily chart is floating above the 50 line and the Slow Stochastic is pointing up, the pair might extend its bullish trend. This might be a great opportunity for forex traders to join a very popular trend.
|22:30||AUD||AIG Manufacturing Index||46.9||-||-|
|23:30||AUD||MI Inflation Gauge||m/m||0.0%||-||-|
|01:35||JPY||Final Manufacturing PMI||52.1||52.1||-|
|08:00||EUR||Spanish Unemployment Change||-64.4K||-32.4K||-|
|08:15||EUR||Spanish Manufacturing PMI||53.8||54.2||-|
|08:45||EUR||Italian Manufacturing PMI||48.4||49.3||-|
|09:00||EUR||Final Manufacturing PMI||51.0||51.0||-|
|13:30||USD||Core PCE Price Index||m/m||0.0%||0.0%||-|
|14:45||USD||Final Manufacturing PMI||53.7||54.1||-|
|15:00||USD||ISM Manufacturing PMI||55.5||54.9||-|
|15:00||USD||ISM Manufacturing Prices||38.5||40.1||-|