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Monday, 2 Nov 2009
Interests Rates Announcements Expected from the U.S, U.K and Euro-Zone this Week
After a week of greenback recovering this week promises to provide high volatility. Interest Rate announcements are expected from the U.S, the Euro-Zone and the U.K. In addition, the Non-Farm Employment Change for October will be released on Friday. In short, sharp fluctuations are expected, with plenty of opportunities to make large profits.
USD - A Week Packed With Economical Data Expected
During last week's session the Dollar managed to recover against most of the major currencies. The Dollar saw a 300 pips rise against the Euro, and the EUR/USD pair is trade near the 1.47 level. However, the Dollar continued to weaken against the Japanese yen.
The Dollar's recovery appears to be mainly psychologically. Last week did not provide sustain data showing that should have supported the Dollar. It seems to be that the fact that the EUR/USD reached the 1.50 level, a very poor level for the Dollar, the market promptly corrected this situation with a bullish trend for the Dollar.
Last week's data mainly showed that the U.S economy is yet to be seen as a recovered economy. The housing sector, the main reason for the recession, is far from returning to levels seen before the crisis began. The employment condition continues to deteriorate, and the weekly Unemployment Claims rises every week.
Nevertheless, the upcoming week has the potential to create mayhem in the market, as various extremely-impacting news publications are expected from the U.S economy. The main data that traders should focus on is likely to be the Federal Funds Rate and the Non-Farm Employment Change. The Federal Funds Rate is in fact the U.S interest rates announcement for November. Currently, analysts expect the FED to leave the rates at their low level, lower than 0.25%. If the FED will surprise and hike rates, it is likely to boost the Dollar. The Non-Farm Employment Change measures the change in the number of employed people during October, excluding the farming industry. Analysts forecast the 173,000 have lost their jobs during October, and that could be the best figure in 14-months. This also has the potential to boost the Dollar.
EUR - European Interest Rates Announcement Expected This Week
The Euro dropped against all the major currencies during last week's trading session. The Euro lost 300 pips against the Dollar, 300 pips against the Pound and over 600 pips against the Yen.
Two main reasons have led to the Euro's downfall last week. One, the economic data from the Euro-Zone has failed to reach analysts' expectations. The German Consumer Climate, a leading indicator of consumer spending, saw a 4.0 end result, failing to reach expectations for a 4.5 result, falling for the first time in 14 months. The German Retail Sales dropped by 0.5% in September, also showing that the German economy still experiencing difficulties to fully recover. Considering that Germany contains the strongest and biggest economy in the Euro-Zone, the negative data has weakened the Euro. The second reason for the Euro's downtrend seems to be the recovering Dollar. Furthermore, it appears that if the Dollar's correction will proceed, the Euro might continue to weaken.
Looking ahead to the following week, the main data expected from the Euro-Zone will be the Minimum Bid Rate scheduled for Thursday. The Minimum Bid Rate is the Euro-Zone's interest rates announcement for November. The Minimum Bid Rate currently stands on 1.00% and analysts expect it to stay this way. However, if the European Central Bank will surprise and hike rates, it will have the potential to reverse the Euro's bearish trend, and to lift the Euro back up. Traders should also follow the British interest rates announcement whish is due at the same day.
JPY - Yen Strengthens Against the Majors
The Yen saw an extremely bullish session during last week's trading. The Yen rose over 600 pips against the Euro and over 500 pips against the Pound. The Yen even saw a rising trend against the recovering Dollar, and the USD\JPY pair dropped to the 89.20 level.
The Yen's bullish correction appears to be a direct result to the positive data published from the Japanese economy. The Japanese Unemployment Rate dropped to 5.3%, its lowest rate in 4 months. The Japanese Preliminary Industrial Production rose by 1.4% in September, beating expectations for a 1.1% rise. This means that the inflation-adjusted value of output produced by manufacturers rose by 1.4% in September as opposed to August. The Yen strengthened despite the fact that the Bank of Japan (BOJ) left the Japanese Interest Rates at 0.10%, the lowest level in the industrial world.
As for the week ahead, many interesting news publications are expected from the Japanese economy. Traders should focus on two main events: the BOJ Governor Shirawaka speech on Wednesday and the Monetary Policy Meeting Minutes. On these events the BOJ will most likely reveal its future plans for the Japanese economy, and this is likely to impact the Yen.
Oil - Crude Oil Drops on Global Recovery Concerns
Crude Oil saw an extremely volatile session last week. Crude oil was traded between 77$ to $82 a barrel during the week, showing sharp ups and downs. In conclusion, crude oil lost a little portion of its value, as it is now traded for $77 a barrel.
Crude oil dropped on concerns that global recovery may take longer than expected, and thus demand for energy might be damaged as a result. The Negative data which was published during the previous week, especially from the American and the German economies, has dented confidence for a swift global recovery. In addition, the strengthening Dollar also contributed to the oil's downtrend. Crude oil, just like other commodities such as gold, is traded in Dollars. When the Dollar appreciates, oil tend to drop and vice versa
As for this week, the leading data from the U.S. and the Euro-Zone are likely to influence on oil the most. The main publications that traders should follow are the interest rates announcements from the U.S, the Euro-Zone and Britain and of course the U.S. Non-Farm Employment Change. A surprising release from any of these publications is likely to have an immediate impact on crude oil's value.
There appears to be a bullish cross forming on the 4H chart's Slow Stochastic, indicating that an upward correction is expected in the near future. However, almost all other oscillators are stuck in neutral territory, signaling that this pair may be less volatile than expected. Going long with tight stops might be the right strategy today
It seems that the Cable has limited its bullish correction after peaking at the 1.66 price level. And now, a bearish cross on the hourly chart's Slow Stochastic indicates that the general downtrend might extend. Going short seems to be the preferable choice today
The typical range trading on the 4 hour chart continues. Both the hourly RSI and Slow Stochastic are floating in neutral territory. On the contrary, the daily chart is showing a moderate bearish momentum with diminishing strength. Forex traders are advised to wait for a clearer signal before entering the market with this pair
There is a very distinct bearish formation continues on the hourly level, as the pair is now floating in its lower section. In addition, all oscillators on the daily chart are pointing down, suggesting that the downward move might extend. Going short might be the right strategy today.
The Wild Card
There is still a bearish configuration on the 4H chart, indicating that the momentum is still down. The RSI is floating around 50, which supports the notion that there is still room to run. In the shorter time frame there is a bullish cross forming on the hourleis Slow Stochastic indicates that there might be a small bullish correction before the bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a currently bearish trend
|23:30||AUD||Westpac Consumer Sentiment||1.9%||*||-|
|23:50||JPY||Core Machinery Orders||m/m||-2.1%||0.9%||-|
|06:30||EUR||French Final Non-Farm Payrolls||q/q||-0.1%||-0.1%||-|
|07:00||EUR||German Final CPI||0.2%||0.2%||-|
|15:30||USD||Crude Oil Inventories||-5.6M||-||-|
|18:06||USD||10-y Bond Auction||2.75|2.7||*||-|
|19:00||USD||Federal Budget Balance||-91.6B||-154.6B||-|
|20:00||NZD||Official Cash Rate||2.50%||2.50%||-|
|20:00||NZD||RBNZ Press Conference||*||*||*|
|20:00||NZD||RBNZ Rate Statement||*||*||*|
|20:00||NZD||RBNZ Monetary Policy Statement||*||*||*|