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Monday, 26 Apr 2010
Interest Rates Announcements Expected From Both U.S. And Japan This Week
During last week's trading session, the Dollar continued to strengthen, mostly due to the Greek debt crisis which weakens the Euro. This week however, Interest Rates Announcements are expected from the U.S, Japan and New Zealand. This promises a much more volatile week, with unique opportunities to see high profits. Will you take advantage?
USD - U.S. Interest Rates Announcement Expected on Wednesday
The Dollar rallied last week against the most of the major currencies. The Dollar gained about 200 pips against the Euro, and saw a 300 pips rise against the Yen. The Dollar slightly tumbled against the Pound.
The Dollar soared following a series of positive data from the U.S. economy. The Producer Price Index climbed by 0.7% in March, beating expectations for 0.4% rise. This shows that inflation is steadily rising in the U.S. which means that an Interest Rates hike might take place soon. In addition, the Existing U.S. Home Sales rose by 6.8% in March to a 5.35 million annual rate, from a 5.01 million pace in February. Considering that the housing sector in the U.S. was the main reason for the recent recession, every positive data regarding the building industry tends to boost the Dollar. The positive data from the U.S. economy continued as the Core Durable Goods Orders rose by 2.8% on March. This report is a leading indicator of production, and the positive result shows that the economy is advancing faster than expected.
As for the week ahead, many interesting economic publications are expected from the U.S. Yet the publication which holds the greatest impact on the market will surely be the Federal Funds Rate. The Federal Funds Rate is in fact the U.S. Interest Rates for May. Current expectations are that the Fed will leave rates at lower than 0.25%, however, considering the recent positive economic data, an interest rates hike won't be a complete surprise. This means that every decision is likely to have a large impact on the market, and traders are advised to follow this publication.
EUR - Euro Continues To Tumble on Greek Fiscal Crisis Woes
The Euro dropped against most of the major currencies during last week's trading session. The Euro dropped about 200 pips against the Dollar as the EUR/USD pair reached a weekly low a 1.3200. The Euro dropped about 200 pips against the Pound as well.
The main reason for the Euro's bearishness continues to be the fragile Greek debt issue. There are currently concerns that that the $60 billion bailout plan by the Euro-Zone will fail to ease investors' woes regarding Greece's ability to recover from the debt crisis. It appears that until Greece will publish concrete data that shows real improvement regarding its fiscal crisis, the Euro might continue to tumble. Even several positive data from the Euro-Zone's leading nations failed to support the Euro. The German ZEW Economic Sentiment rose to 53.0 points. This reflects the best result in 6 months, indicating that German investors feel greater confidence regarding their financial outlook. In addition, the German Manufacturing Purchasing Managers' Index rose to a record high in April. The manufacturing sector rose to 61.3 in April from 60.2 in March, marking a record high. Yet it seems that as long as the Greece debt crisis continues to be the main story, the Euro could fall farther.
Looking ahead to this week, traders are advised to look for every update regarding the Greek fiscal crisis, as every data on this issue tends to have an instant impact on the Euro. In addition, traders should follow the major publications from the German economy. Such as the Preliminary Consumer Price Index on Wednesday and the Unemployment Change on Thursday.
JPY - Yen Drops On All Fronts
The Yen tumbled against all its major counterparts during last week's trading session. The Yen dropped about 200 pips against the Dollar and about 300 pips against the Euro. The Yen marked its greatest drop against the Pound, as the GBP/JPY pair gained over 500 pips in one week.
There appear to be two major factors for the Yen's freefall. The first factor is the positive U.S. economic data, and the second factor is the rise in most of the Asian Stocks. The combination of the two is leading investors to look for riskier assets than the Yen, as risk-appetite increases following the recovery of two of the largest economies. It currently seems that as long as the U.S. and the Japanese economies will continue to report positive data, the Yen might weaken further.
As for this week, a batch of data is expected from the Japanese economy. However the most significant publication looks to be the Overnight Call Rate on Friday. The Overnight Call Rate is the Japanese Interest Rates announcement for May. Analysts have forecasted that the Bank of Japan (BoJ) will leave rates at 0.10%. Nevertheless, if the BoJ will surprise and decides to hike rates, the Yen is likely to be boosted as a result.
Crude Oil - Crude Oil Recovers to $85 a Barrel
Crude Oil saw mixed trading during last week's session. With the beginning of last week's trading, Crude Oil saw a bearish trend and dropped below $82 a barrel. However by Thursday Crude Oil began to recover, and is currently trading at $85.50 a barrel.
It seems that speculations regarding an increasing demand for energy are boosting Crude Oil. The main reason for these speculations is the series of positive data from the U.S. economy, which were published lately. The report showed that the inflation in the U.S. is risings, and also that the housing sector in the U.S. is recovering. Considering that the U.S. is the world's largest energy consumer, the positive reports create speculations that American citizens will feel safer to consume, and as a result will increase demand for oil.
Looking ahead to this week, traders are advised to continue follow the major data from the U.S. and the Euro-Zone, as these publications seem to have a large impact on oil prices. In addition, traders should follow the U.S. Crude Oil Inventories release on Wednesday, as this report tends to have an immediate impact on the market.
While most indicators for the pair are currently floating in neutral territory, the pair's recent downward trend may continue today as well as the 2 hour RSI seems to be floating in the overbought territory and an impending bearish cross is evident on the hourly MACD. Going short for the day may be advised.
The pair may be seeing a correction to its recent bullish trend today as the hourly RSI is floating in the overbought territory with a bearish cross evident on the hourly and 2 hour charts' Slow stochastic. Furthermore a breach of the upper Bollinger Band is evident on the 2 hour and 4 hour charts. Going short for the day may a good option.
The RSI for the pair is floating in the overbought territory on the 2 hour, 4 hour and 8 hour charts. Furthermore, a bearish cross is evident on the 8 hour and daily charts' Slow Stochastic. Going short for the day may be advised.
While most indicators for the pair are currently floating in neutral territory, the pair's recent upward correction may continue today as well as the 2 hour RSI seems to be floating in the oversold territory and an impending bullish cross is evident on the hourly MACD. Going long for the day may be advised.
The Wild Card
Some upward correction may be seen for the pair today as the hourly and 2 hour RSI is floating in the oversold territory and a bullish cross is seen on the 2 hour, 4 hour and 8 hour charts' Slow Stochastic. Forex traders may be advised to go long for the day.
|07:00||JPY||BoJ Outlook Report||-||-||-|
|08:00||EUR||German Retail Sales||m/m||2.5%||-0.8%||-3.2%|
|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%||-|
|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%||-||-|