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Tuesday, 7 Feb 2012
Lack of Greek Deal Sends EUR Tumbling
The euro was largely bearish yesterday, after Greece once again failed to come to an agreement with its creditors to restructure its debt. Losses were seen against most of its main currency rivals, including the US dollar, Japanese yen and British pound. Today, in addition to any euro-zone developments that may occur, traders will want to pay attention to a speech from the US Fed Chairman at 15:00 GMT. Any positive statements could help the USD extend its recent bullish trend.
USD - Dollar Remains Bullish to Start off Week
The US dollar was able to extend the boost it received late last week during trading yesterday, as negative euro-zone news fueled risk aversion and sent investors to the safe-haven greenback. Greece's inability to reach a debt-swap agreement with its creditors sent the EUR/USD as low as 1.3026 before the pair staged a slight upward correction. Last week's positive US jobs report helped the dollar maintain its gains against the JPY throughout the trading day yesterday. The USD/JPY reached as high as 76.79 before a minor downward reversal.
Turning to today, USD traders will want to pay careful attention to a speech from Fed Chairman Bernanke, scheduled for 15:00 GMT. Any positive statements regarding the US economic recovery are likely to give the dollar additional momentum going into the rest of the week. Specifically, should Bernanke indicate that the US may raise interest rates earlier than planned, the dollar will likely see significant gains as a result.
Following Bernanke's testimony today, the dollar's next big test will likely be the weekly US Unemployment Claims on Thursday. While last week's jobs report was promising, analysts are warning that the fluctuations in the employment number are likely to occur. Should Thursday's figure come in worse than forecasted, the dollar may give back some of its earlier gains to close out the week.
EUR - EUR Still Bearish amid Negative Greek News
News that Greece has yet to reach a deal to restructure its debt, continued to weigh down on the euro during yesterday's session. The euro took significant losses against both the US dollar and Japanese yen throughout the day after investors chose to place their funds with safe-haven assets. The EUR/USD fell as low as 1.3026, while the EUR/JPY dropped to 99.83 before staging an upward reversal.
Turning to today, Greek news is likely to continue being the driving force behind the euro's movements. Any positive developments with regards to the debt-swap deal are likely to boost the common currency, at least in the short term. At the same time, analysts are warning that the Greek situation is not the only issue facing the euro-zone at the moment. The next most pressing matter is Portuguese debt, which will likely have to be dealt with in the near future as well. Regardless of Greece's problems, it appears that the euro-zone crisis is far from being resolved.
CAD - Ivey PMI Boosts Loonie
The Canadian dollar saw some positive gains against its safe-haven counterparts yesterday, following the release of a better than expected Ivey PMI. The PMI is considered one of the leading indicators of Canadian economic health. The figure, which analysts were originally predicting to come in at 58.6, came in at a surprisingly strong 64.1. While gains were recorded against both the USD and JPY, investor risk taking following the release of the indicator caused the euro to gain on the loonie.
Turning to today, traders will want to keep track of any developments in the euro-zone. In particular, the Greek debt situation is likely to influence the direction the CAD takes. Any positive developments are likely to lead to an increase in risk taking, which could help the CAD extend its gains against both the USD and JPY. At the same time, such a development would likely lead to further losses against the euro.
Crude Oil - Risk Aversion Leads to Flat Trading For Oil
The price of crude oil saw relatively little movement during trading yesterday, as risk aversion kept prices close to the $97 a barrel level. Crude tumbled last week, following a positive US jobs report which caused the US dollar to spike against its main rivals. Oil prices tend to fall when there is a strong dollar, because the commodity becomes more expensive for international buyers.
Today, the price of oil may see some upward movement providing a Greek deal to restructure its debt is finally announced. Any further delay in implementing a debt-swap deal is likely to result in an increase in risk aversion which could cause the price of oil to slip further.
Technical indicators are currently mixed for this pair. While the weekly chart's Relative Strength Index is right around the 30 level and oversold, a bearish cross has formed on the daily chart's Stochastic Slow, meaning that downward movement could occur in the near future. Traders may want to take a wait and see approach for this pair until a clearer picture presents itself.
Most technical indicators show that this pair is currently overbought and may see a downward correction in the near future. The daily chart's Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the same chart is above the -20 level. Going short may be a wise choice for the near future.
Technical indicators on the daily chart show this pair in the oversold zone, meaning that upward movement is possible in the near future. A bullish cross is forming on the MACD/OsMA, while the Williams Percent Range is hovering close to the -80 level. Going long may be a wise choice for the pair.
The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. The Relative Strength Index (RSI) on the same chart is hovering close to the 70 level, which typically means that a downward correction is going to take place. Traders will want to pay attention to the RSI. If it crosses the 70 line, a bearish correction may take place.
The Wild Card
Technical indicators on the daily chart are showing this pair in overbought territory, meaning that a downward correction could occur in the near future. A bearish cross has formed on the Slow Stochastic, while the Williams Percent Range is currently at the -20 level. Forex traders may want to go short in their positions today.
|09:00||EUR||Spanish Flash CPI||y/y||-0.1%||-0.3%||-0.4%|
|09:55||EUR||German Unemployment Change||-22K||-1K||-14K|
|10:00||EUR||M3 Money Supply||y/y||2.5%||2.6%||2.5%|
|10:00||EUR||Italian Quarterly Unemployment Rate||12.5%||12.4%||-|
|13:00||EUR||GfK German Consumer Climate||8.5||8.6||-|
|00:30||JPY||Tokyo Core CPI||y/y||2.5%||2.3%||-|
|00:30||JPY||National Core CPI||y/y||3.0%||2.9%||-|
|00:50||JPY||Prelim Industrial Production||m/m||2.9%||-0.4%||-|
|01:00||NZD||ANZ Business Confidence||26.5||-||-|
|01:05||GBP||GfK Consumer Confidence||-2||-1||-|
|01:30||AUD||Private Sector Credit||m/m||0.5%||0.5%||-|
|08:00||EUR||German Retail Sales||m/m||-3.2%||1.7%||-|