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Tuesday, 31 Jan 2012
Lack of Greek Debt Deal Sends EUR Tumbling
After reaching a six-week high against the US dollar in early trading yesterday, the euro staged a downward correction after Greece once again failed to come to an agreement with its creditors regarding its debt. Today, traders will want to continue monitoring announcements out of the euro-zone, with any further negative news likely to bring the common currency further down. Additionally, economic indicators out of both Germany and France are likely to influence euro pairs today.
USD - Dollar Stages Upward Correction Following Poor Euro-Zone News
The USD came off a six-week low against the euro in trading yesterday, after news that Greece had once again failed to come to reach a debt swap deal with its creditors. Earlier in the day, the EUR/USD reached as high as 1.3231 before investors began selling off the pair. The AUD/USD also saw a substantial drop, falling well over 100 pips during the European trading session. The greenback failed to move up against the yen, as investors chose to keep their funds with the safe-haven Japanese currency.
Turning to today, dollar pairs are likely to be influenced by any announcements out of the euro-zone which may lead to further risk aversion. Traders will want to pay particular attention to any news out of Greece. While a Greek debt swap deal is likely to be finalized by the end of the week, safe-haven currencies may continue to go up until a final agreement is announced.
With regards to the rest of the week, traders will want to keep in mind that a batch of US data is forecasted to have a significant impact on the markets. Wednesday's ADP Non-Farm Employment Change figure, as well as the ISM Manufacturing PMI are both considered valid indicators of the current state of the US economy. Furthermore, a speech from the Fed Chairman on Thursday, followed by the Non-Farm Employment Change figure on Friday, are both likely to generate substantial market activity.
EUR - EUR Hits 4-Month Low against CHF
The euro dropped to a four-month low against the Swiss franc on Monday, as investors once again fled riskier assets after Greece failed to reach a debt swap deal with its creditors. Hopes that Greece would come to an agreement to avoid defaulting on its debt were dashed after the Greek finance minister rejected suggestions that the country give up control of its budget policy. Additionally, the EUR/USD dropped well over 100 pips after hitting a six-week earlier in the day.
Today, in addition to monitoring the situation in Greece, traders will also want to keep track of the overall situation in the euro-zone. There are still plenty of scenarios that could cause the euro to tumble against its main currency rivals, including a deteriorating situation in Portugal, which is widely considered the closest to default after Greece. Additionally, news out of the US scheduled for later in the week is likely to generate a lot of volatility for euro pairs.
AUD - Risk Aversion Causes AUD to Slip against Currency Rivals
The Australian dollar had a particularly bearish day yesterday, after poor euro-zone news sent investors to safe-haven currencies like the US dollar and Swiss franc. The AUD/USD slipped over 100 pips throughout the European trading session, while the AUD/CHF dropped some 50 pips before staging a mild correction.
Turning to today, traders will want to note any news out of the euro-zone which could cause the aussie to slip even further. Should Greece once again fail to reach a debt swap deal with its creditors, riskier currencies like the AUD could see further bearish momentum. At the same time, any positive international data is likely to boost confidence in the global economic recovery, which could result in a boost for the AUD.
Crude Oil - Oil Falls Further to Start off Week
Negative euro-zone news sent the price of crude oil tumbling throughout the day yesterday, as investors fled riskier assets in favor of safe-havens. Crude fell as low as $98.49 a barrel during European trading, before staging a slight correction.
Today, crude may continue to fall as long as a Greek debt-swap deal is not reached. It appears that without positive euro-zone data, investors are unlikely to shift their assets to commodities like oil. At the same time, with significant economic data out of the US set to be released later in the week, crude will likely have several opportunities to recoup its losses in the coming days.
According to technical indicators on the daily chart, this pair is in overbought territory and may see a downward correction in the near future. A bearish cross has formed on the Stochastic Slow, while the Williams Percent Range is currently at the -10 level. Traders may want to go short in their positions ahead of the downward breach.
Technical indicators are showing that this pair may have hit a significant resistance point and could see a correction in the near future. The daily chart's Relative Strength Index is in well into the overbought zone, while a bearish cross has formed on the Stochastic Slow. Going short may prove to be the wise choice.
Technical indicators on both the daily and weekly charts are showing that this pair is oversold and may see an upward correction in the near future. The daily chart's MACD/OsMA has formed a bullish cross, while the weekly chart's Relative Strength Index is hovering close to the oversold zone. Traders may want to go long in their positions.
Most technical indicators show this pair trading in the oversold zone, meaning that an upward correction could take place in the near future. The Williams Percent Range on the daily chart is at the -90 level, while the Relative Strength Index on the same chart has dropped to the 15 level. Going long may be the preferred strategy today.
The Wild Card
After steadily climbing in recent days, it now appears that platinum may see a downward correction in the near future. Technical indicators on the daily chart, including the Relative Strength Index and Williams Percent Range, are in overbought territory. Forex traders may want to take advantage of the impending downward correction and go short in their positions. forex
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|03:00||EUR||Daylight Saving Time Shift||-||-||-|
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|01:00||EUR||German Prelim CPI||m/m||0.9%||-||-|
|01:00||EUR||Italian 10-y Bond Auction||1.36|1.5||-||-|
|01:50||JPY||Prelim Industrial Production||m/m||3.7%||-||-|