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Friday, 19 Nov 2010
Ireland Close to Accepting Aid; EUR Rising Hesitantly
The EUR appears to be gaining traction against most of its currency rivals as concerns over Ireland's debt begins to ease. However, the euro zone does not appear to be out of the woods just yet. Analysts have stated that Ireland's debt still looms large over the region and continues to have the potential to spill over into other peripheral countries struggling with debt.
USD - USD Gives Up Gains Made in Last Two Days
The US dollar traded largely flat yesterday amid a change in dynamics from Europe. As Ireland inches closer to accepting an aid package, the EUR appears to be on the rise against most of its counterparts. However, the USD was one of the more stable currencies in the market despite this news.
Against the EUR, the greenback did indeed give up some ground to currently trade just above 1.3630. The USD/JPY remained bullish with a closing price just above 83.45, representing a minute change throughout the day. Against the GBP and CHF the dollar appears to have erased all of its gains made over the last two trading days.
With very little news emerging from the major global economies today, US dollar trading should remain relatively calm. With Fed Chairman Ben Bernanke set to deliver a speech at the European Central Bank (ECB) today on the financial crisis there remains the possibility for news volatility. But traders should also note that there is no expected impact from his speech, only potential hints at future monetary policies. It will be a speech worth paying attention to for any indication at future directions.
EUR - EUR Gains as Irish Debt Concerns Diminish
The euro rose against the majority of its currency counterparts yesterday as concerns about Ireland showed signs of easing. Analysts now appear steadier in their forecasts for a strengthening euro and a somewhat more stable region, financially. However, the euro zone does not appear to be out of the woods just yet. Ireland's debt still looms large over the region and continues to have the potential to spill over into other peripheral countries struggling with debt.
For now, it seems, the euro is indeed gaining ground against most of its currency rivals. The EUR/USD rebounded back above the 1.36 price mark while the EUR/JPY was boosted upwards in the direction of 114.10 from its recent lows near 112.40. The subsequent rise in the EUR was also met with a concurrent rise in commodity prices, which appears to confirm a boost in risk appetite and profit-taking on the USD.
Today's news will be lacking in impactful events. Germany will be publishing its monthly PPI figures, with an expectation of 0.4% growth in production prices. If the figures come in line with forecasts or higher we could see the EUR's rebound gain some traction as the week draws to an end. Traders should also pay close attention to Ben Bernanke's speech at the European Central Bank (ECB) today as it could cause volatility among the USD- and EUR-based pairs.
JPY - EUR/JPY Rebounding; Japanese Stocks on the Rise
As concerns regarding Ireland begin to ease throughout Europe, currencies are set to experience rebounds from the peaks induced by the short-term panic. The euro appears likely to gain against the Japanese yen over the next few trading days. The pair rose from the 112.50 level yesterday up towards 114.10 before settling the day at 113.77.
Japanese stocks and indices appear to be rising as well, which has boosted economic growth in Japan and confirmed a weakening yen. If Europe can continue to dampen concerns regarding sovereign debt, then the euro should continue to rebound against the yen, which may be favorable for both.
Crude Oil - Oil Prices Rising as Winter Approaches Northern Hemisphere
After dropping to a 3-week low price of $80.63 a barrel, Crude Oil has seen a mild rebound since Wednesday. The bounce back in the EUR/USD seen yesterday brought about a shift in trading for the black gold these past two days, with a current trading price just under $83 a barrel.
Wednesday's surprise plunge in US oil inventories also helped support oil prices. Traders are pricing in the expected increase in fuel consumption among the northern hemisphere countries approaching winter. The drop in supplies confirms the notion that usage has been increasing. If the USD continues to weaken, and inventories continue to decline, the price of Crude Oil may very well continue to climb upwards of $87-88 a barrel in the weeks ahead.
After bouncing off the 1.35 support line, this pair now appears poised for a downward correction following yesterday's move. The daily RSI shows the price as over-sold, while there also seems to be a recent bullish cross on the daily Stochastic (slow). It appears going short may turn out to be a wise tactic today.
After retracing Wednesday's bearishness, this pair now appears flat with most indicators floating in neutral territory. Momentum appears only slightly in favor of bullishness, so traders may want to wait for a clearer signal before entering on this pair today.
It appears the daily RSI has this pair floating deep within the over-bought region and has just turned downward, indicating growing bearish momentum. The daily Stochastic (slow) also reveals a fresh bearish cross, which supports this notion. Going short with tight stops appears to be preferable today.
This pair seems to be providing mixed signals. The weekly RSI and Stochastic (slow) show an upward moving price, climbing back towards parity at 1.000. However, the daily chart's Stochastic (slow) reveals a recent bearish cross and the RSI is approaching the over-bought region. Short-term traders may want to short this pair with tight stops to capture what may be a minor downward blip while long-term traders hold their long positions as the pair continues with its latest trend.
The Wild Card
After dropping below $1340 and finding heavy support, Gold now appears to be on the rise. The daily Stochastic (slow) reveals a fresh bullish cross, suggesting additional bullishness. Additionally, the daily chart appears to be developing a head-and-shoulders candlestick formation with a second-shoulder target near $1380. Forex traders have a great opportunity to make significant gains while the price reaches for the second shoulder, and then by shorting this commodity for potentially significant profits.
|11:00||GBP||CBI Industrial Order Expectations||6||7||-1|
|13:30||CAD||NZD Core Retail Sales||m/m||1.0%||0.6%||-|
|14:45||USD||Flash Manufacturing PMI||55.5||56.2||-|
|15:00||USD||New Home Sales||440K||455K||-|
|15:30||USD||Crude Oil Inventories||10.0M||-||-|
|22:00||NZD||Official Cash Rate||2.75%||3.00%||-|
|22:00||NZD||RBNZ Rate Statement||*||*||*|
|01:00||EUR||Spanish 10-y Bond Auction||3.29|2.1||*||-|
|09:00||EUR||German Ifo Business Climate||110.7||110.5||-|
|10:00||EUR||ECB President Draghi Speaks||*||*||*|