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Monday, 8 Mar 2010
Market's Calmness Looks to End
After a week of relatively peaceful trading, much harsher volatility is expected for this week's trading. The main questions for this week are whether the U.S. economy will continue to provide positive data and whether the Greek debt crisis will reach a solution. An answer to each of these questions will have a significant impact on the market.
USD - Non-Farm Payrolls Data Fail to Shake the Dollar
The Dollar saw a relatively calm trading session against the major currencies during the past week. The Dollar retained the 1.3650 level against the Euro and the 1.5100 level against the Pound. The Dollar only saw a rising trend against the Yen, and the USD/JPY pair is now traded above the 90.00 level.
The Dollar's steady rates against the majors came mainly as a result of the solid employment data from the U.S. The Non-Farm Payrolls dropped by 36,000 as the Unemployment Rate was held at 9.7%. Both results have beaten forecasts, yet failed to have a significant impact on the market. The results didn't proove that the employment condition in the U.S. is improving as there were more unemployed individuals in February than in January. However the results were better-than-forecasted and showed that the employment's deterioration was halted as the unemployment rate has reached below 10.0% for two consecutive months.
As for the week ahead, many interesting economic publications are expected from the U.S. Traders are advised to pay special attention to the Trade Balance, the weekly Unemployment Claims, the Retails Sales and the Consumer Sentiment reports. The recent peaceful trading of the Dollar shows that investors are waiting for clearer signs whether the U.S. economy is truly recovered or is the more negative data expected. This week's leading publications are likely to try and answer this question - and the Dollar will be largely affected as a result.
EUR - Euro Keeps Steady Rates against the Majors
The Euro kept a steady rate against the Dollar and the Pound during last week's trading session. The Euro slid at the beginning of last week vs. the Dollar, yet managed to correct the losses before the weekend. The Euro also saw a bullish trend against the Yen and the EUR/JPY pair is trading around the 123.50 level.
The Euro kept steady rates against most of the major currencies due to two main reasons. The first reason is the Greece debt issue. The Euro-Zone did not publish a rescue-plan for Greece till now, however many political leaders, such as the French President Nicolas Sarkozy have stated that the Euro-Zone will be ready to help Greece if its financial problems worsened. This has managed to halt the Euro's freefall from the past month. In addition, the economic data from the Euro-Zone showed that the economies are stabilizing. The German Retails Sales remained unchanged from December and the European Gross Domestic Product rose by merely 0.1% in the last quarter. This also supported the steady rates of the Euro.
Looking ahead to this week, traders are advised to follow every update regarding the Greece debt crisis as this seems to set the tone for the trading of the Euro in the near future. If the Euro-Zone will publish a rescue plan, the Euro is likely to be boosted as a result. However, indications that the Greek economic condition is worsening could weaken the Euro if there is no concrete rescue plan offered by the Euro-Zone. Traders should also follow the leading economic publications from Germany and France as they also have large impact over the Euro.
JPY - Yen Slides as Risk Appetite Grows
The Yen dropped against all the major currencies during Friday's trading session. After a week of quiet trading, the Yen dropped 100 pips against the Dollar and about 200 pips against the Euro since Friday.
It appears that the U.S. Payrolls data from Friday, which delivered better-than-expected figures, has weakened the Yen against the major currencies. The end results have increased demand for higher-yielding assets on bets that the global economy is recovering. In addition, speculations that the Bank of Japan (BoJ) would further loosen its monetary policy to avoid deflationary pressure in the economy also weakened the Yen. Traders should also take under consideration that one of the BoJ's goals is to see a weak Yen in the attempt to support Japanese exports.
As for this week, traders should focus on two leading publications from the Japanese economy. Analysts have forecasted that the Core Machinery Orders have dropped by 3.6% during January, following a 20% in December. If the end result will be similar, the Yen is likely to weaken as a result. Traders should also follow the Final Gross Domestic Product (GDP) release on Wednesday night. Expectations are for a 1.0% rise in the last quarter. Such a result will indicate that the Japanese economy is recovering and is likely to support the Yen.
Oil - Crude Oil Prices Continue to Rise
Prices of Crude Oil rose at a steady rate during last week's trading session. With the beginning of last week, crude oil was traded for about $78.00 a barrel. At the moment, crude is traded for close to $82 a barrel.
Crude Oil is rising on speculations that the global economic recovery in addition to supply restrictions by the Organization of the Petroleum Exporting Countries (OPEC) will increase demand for oil. The better-than-expected Non-Farm Employment data from the U.S. economy also supported Crude Oil, as this suggested that the American economy is indeed recovering, as unemployment is stabilizing.
As for this week, traders should follow the major economic news from the U.S. and the Euro-Zone as those seem to have the largest impact on Oil prices. In addition, traders should also follow the U.S. Crude Oil Inventories on Wednesday, as this report tends to have an instant impact on the market.
The hourly and 2 hour charts' RSI are floating in the overbought territory with the hourly, 2 hour and 4 hour charts' Slow Stochastic exhibiting a bearish cross. Going short with tight stops for the day may be advised.
The hourly, 2 hour and 8 hour charts' RSI are floating in the overbought territory with the 4 hour chart's Slow Stochastic exhibiting a bearish cross. Going short for the day may be advised.
The 2 hour, 4 hour and 8 hour charts' RSI is floating in the overbought territory, while a breach of the upper Bollinger Band is evident on the 8 hour chart. Furthermore, a bearish cross is evident on the 4 hour and 8 hour charts' Slow Stochastic. Going short for the day may be advised.
A bullish cross is evident on the 2 hour and 4 hour charts' Slow Stochastic with the 2 hour with the hourly and 2 hour RSI floating in the oversold territory. Going long for the day may be advised.
The Wild Card
The pair's 2 hour, 4 hour and 8 hour RSI are floating in the overbought territory. A breach of the upper Bollinger Band is evident on the 4 hour and 8 hour charts, while a bearish cross is evident on the 4 hour and 8 hour charts' Slow Stochastic. Forex traders may be advised to go short for the day.
|08:00||EUR||German Retail Sales||m/m||0.5%||0.3%||-|
|08:45||EUR||French Consumer Spending||m/m||0.1%||0.7%||-|
|10:00||EUR||Italian Monthly Unemployment Rate||12.4%||12.3%||-|
|11:00||EUR||CPI Flash Estimate||y/y||0.2%||0.2%||-|
|11:00||EUR||Italian Prelim CPI||m/m||0.1%||0.0%||-|
|14:30||USD||Employment Cost Index||q/q||0.7%||0.6%||-|
|16:00||USD||Revised UoM Consumer Sentiment||93.3||94.2||-|
|16:00||USD||Revised UoM Inflation Expectations||2.8%||-||-|