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Tuesday, 27 Sep 2011
Markets Recovers on Hopes for European Action
Following several days of sharp declines, yesterday's session brought trading correction all over the globe. In the forex market, the euro managed to correct losses against the U.S. dollar, rebounding from a 10-month low. In commodities trading, crude oil saw a 500 pips gain and reached as high as $82.45 a barrel.
USD - Dollar Drops versus Majors on Speculation Greece Might Prevent Default
The U.S dollar depreciated against most of the major currencies during Monday's trading session on speculations European policymakers will manage to prevent Greece's economy from default, lowering risk-aversion in the market and reducing demand for the greenback as a safe-haven currency.
The dollar is falling sharply against the euro and the British pound on Tuesday's morning session on expectations that the euro-zone will soon combine a plan to rescue the sluggish Greek economy.
The dollar fell about 200 pips vs. the euro since market opening and the EUR/USD pair is now trading near the 1.3540 level. The GBP/USD pair is currently trading near the 1.5570 level, up about 130 pips from market opening.
As for today, several leading economic releases are expected from the U.S. The most significant publication looks to be the Consumer Confidence survey, which is scheduled at 14:00 GMT. Analysts are forecasting that confidence among U.S consumers rose to 46.2 points in September from 44.5 in August. Such a result will be a good signal for the U.S. economy and the greenback might correct some of yesterday's losses as a result.
EUR - Euro Corrects Losses after Asian Shares Advance
The euro began this week's trading session with a rising trend against most of its major currency counterparts on hopes that the euro-zone will manage to bailout the deteriorating Greece economy; a rally of Japanese stocks in Tuesday's morning session has boosted the 17-nation's currency bullish trend.
The euro is rising against the safe-haven currencies on Tuesday morning session on speculation that the European Central Bank (ECB) will take action and convince the European leadership to region's rescue fund in order to prevent Greece from reaching bankruptcy.
The shared currency is strengthening after Asian shares saw gains, reducing risk-aversion pressure and weakening demand for safe-haven currencies, such as the U.S. dollar and the Japanese yen.
The euro gained about 200 pips against the dollar and the EUR/USD pair peaked at the 1.3565 level. The EUR/JPY pair reached as high as the 103.60 level, marking a 160 pips gain since market opening.
As for today, traders are advised to follow any update regarding the European debt crisis, as any positive news is likely to have a positive impact on the 17-nation currency.
JPY - Yen Tumbles as Demand for Safe-Haven Currencies Plunges
The Japanese yen fell against most of its major currency rivals as speculation that European policymakers will agree on a rescue plan for the sluggish Greek economy has reduced demand for the Japanese currency as a safe-haven investment.
Since the opening of this week's trading session the global press is filled with estimations that European leadership will once again bailout Greece's economy in order to prevent a global crisis. This has reduced the appeal of both the yen and the U.S. dollar as alternative investments in time of crisis.
The yen fell about 160 pips against the euro, and the EUR/JPY cross has reached as high as the 103.60 level. The Japanese currency has dropped about 140 pips against the British pound, taking the GBP/JPY cross to the 119.10 level.
Looking ahead to today, the main event that looks to impact the yen remains the fragile European debt crisis. In case that Greece will in fact manage to prevent default, the Japanese currency looks to continue with the bearish trend. Otherwise, yesterday's losses will be no more than a temporary technical correction.
Crude Oil - Crude Oil Bounces off 7-Week Low to reach $82.45 a Barrel
Crude oil saw a significant bullish move on Monday's trading session, reaching as high as the $82.45 level on optimism that European policymakers will tame debt crisis.
Crude rose 2.8 percent following the biggest quarterly decline since the Lehman Brother crisis in 2008. Currently, it seems that speculation regarding another rescue package for the Greek economy is enough to boost oil prices.
Crude is currently trading near the $82.30 level after reaching as high as the $82.45 from a 10-week low of $77.10 a barrel.
As for today, traders are advised to follow the leading release from the euro-zone and the U.S. economy, as these are likely to have the largest impact on oil prices. Any positive data, especially from the euro-zone has potential to extend crude's bullish correction.
Following several days of sharp declines, the EUR/USD pair managed so correct some of its losses during yesterday's trading, and is currently trading near the 1.3515 level. In addition, as the MACD on the 4-hour chart continues to point upwards, it seems that another bullish session might be expected. Going long seems to be the right choice today.
The cable continues to correct losses and has reached as high as the 1.5595 level during Tuesday's morning session. However, as a bearish cross takes place on the 4-hour chart's Slow Stochastic, it seems that today the GBP/USD pair might resume the bearish trend. Going short with tight stops might be the right strategy today.
The USD/JPY pair continues with the flat-trading and is currently trading near the 76.40 level. Nevertheless, as both the Slow Stochastic and the MACD on the daily chart are providing bearish signals, it seems that the pair might see a bearish move today, with potential to reach the 75.70 support level.
There is a very distinct bullish channel formed on the 1-day chart, as the USD/CHF pair is now trading near its upper border. After several failed attempt to breach through the 0.9185 resistance level, the pair has slightly corrected gains and is currently trading near the 0.9030 level. Today, the pair might see another attempt to cross the resistance level. If it manages to breach it, the USD/CHF could reach as high as the 0.92500 level.
The Wild Card
Silver saw a remarkable correction yesterday, rising close to 600 pips and reaching as high as the $31.85 level. In addition, as all both the MACD and the RSI on the 4-hour chart are providing bullish signals, it seems that another bullish session may be intact. This might be a good opportunity for forex traders to join the technical correction.
|19:00||USD||FOMC Meeting Minutes||*||*||*|
|01:00||AUD||CB Leading Index||0.2%||-||-|
|01:00||GBP||10-y Bond Auction||2.70|1.8||*||-|
|ALL||Jackson Hole Symposium||*||*||*|
|02:35||JPY||Flash Manufacturing PMI||50.5||51.7||-|
|04:00||NZD||Credit Card Spending||y/y||7.0%||*||-|
|08:00||EUR||French Flash Manufacturing PMI||47.8||47.9||-|
|08:00||EUR||French Flash Services PMI||50.4||50.3||-|
|08:30||EUR||German Flash Manufacturing PMI||52.4||51.8||-|
|08:30||EUR||German Flash Services PMI||56.7||55.5||-|
|09:00||EUR||Flash Manufacturing PMI||51.8||51.4||-|
|09:00||EUR||Flash Services PMI||54.2||53.6||-|
|09:30||GBP||Public Sector Net Borrowing||9.5B||10.1B||-|
|14:45||USD||Flash Manufacturing PMI||55.8||55.7||-|
|15:00||USD||Existing Home Sales||5.04M||5.01M||-|