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Monday, 1 Mar 2010
Non-Farm Payrolls Week Begins
After a week which was mostly characterized with the halt of the Dollar's bullish trend, a hefty news week is impending. Australia, Canada, Great Britain and the Euro-Zone will all publish their monthly Interest Rates desiccations. And on top of it all, the U.S. Non-Farm Payrolls is expected on Friday. This means that an extremely volatile week is expected that holds plenty of unique opportunities to make irregular profits.
USD - Dollar's Bullishness is halted
The Dollar dropped against most of the major currencies during last week's trading session. After several weeks of bullish trends, the Dollar saw a bearish correction against the Euro and the Yen.
The Dollar's fall from last week came as a result of several disappointing economic publications. The U.S. Consumer Confidence dropped from 56.5 on January to 46.0 on February, expressing a decline in U.S. citizens regarding their financial security. In addition, both the New Home Sales and the Existing Home Sales have unexpectedly dropped in January. This has proved that the housing sector in the U.S. is not fully recovered yet. Considering that the U.S. housing sector was the trigger for the global crisis, investors tend to take this data very seriously, and when a batch of disappointing indicators are being published, it usually weakens the Dollar.
For conclusion, after several weeks of positive economic data from the American economy, a less fortunate week has halted the Dollar's bullish trend. However, if the economy will deliver recovery signals again, the Dollar is likely to recover as well.
Looking ahead to next week, the U.S. Non-Farm Employment Change report is expected on Friday. This is one of the most impacting publications in the market that tends to create heavy volatility. Traders should also follow the ADP forecast for this report, which is published on Wednesday. This forecast is considered to be quite reliable, and thus has a large impact on the market as well.
EUR - Interest Rates Announcement Expected on Wednesday
The Euro rose against most of the major currencies last week. The Euro's most notable rise was against the Pound, as the pair gained over 200 pips. The Euro also halted its drop against the Dollar, and the EUR/USD pair is currently traded around the 1.3630 level.
The Euro's rising trend came mostly due to speculations regarding a Greece bail-out plan by the Euro-Zone. The Euro was boosted following a statement by the French Finance Minister Christine Lagarde, who said that European governments are studying ways to assist Greece. This has increased risk appetite, and as a result boosted the Euro. Another reason for the Euro's appreciation was the positive data from the German economy. The unemployment in Germany rose by 7,000 people in February, beating expectations for an 18,000 rise. In addition, the German Consumer Climate report showed that German citizens have more confidence in their financial outlook. Germany has the strongest economy in the Euro-Zone, and thus positive data from the German economy usually support the Euro.
As for the week ahead, the most interesting data from the Euro-Zone looks to be the Minimum Bid Rate on Thursday. The Minimum Bid Rate is in fact the European Interest Rates announcement for March. Current expectations are that the European Central Bank (ECB) will leave rates at 1.00%. However, if the ECB will surprise and hike rates, this has the potential to boost the Euro further
JPY - Yen Rises on All Fronts
The Yen rose against all the major currencies during last week's trading session. The Yen gained about 300 pips against the Dollar, about 400 pips against the Euro and over 700 pips against the Pound!
A series of positive data from the Japanese economy have led to the Yen's bullish trend. The Japanese Trade Balance showed that difference between imported and exported in Japan rose to 0.73T. This has an immense impact on the Yen, especially because the Japanese economy relies greatly on its exports. Investors have saw this publication as a strong indication that the Japanese economy is recovering, and thus boosted the Yen. In addition, the Japanese Retails Sales rose by 2.6% during January, beating expectations for a 0.1% drop. This is another indication that the Japanese economy has pulled out of recession, and creating speculations that an interest rates hike might be impending. Currently it seems that for as long as the Japanese economy continues to deliver positive data, the Yen is likely to strengthen further.
As for this week, traders are advised to follow the significant news publications from the Japanese economy such as the Household Spending, the Unemployment Rate, the Average Cash Earning and the Capital Spending, as they are likely to determine the Yen's direction for this week.
Oil - Crude Oil is trading above $80 a Barrel
Crude oil continued to rose during last week's trading. As the trading week began, crude oil was traded for about $78.00 a barrel and after a jumpy session, crude oil was boosted, and by Friday oil was traded for over $80 a barrel.
Crude oil rose on threats by Iran, claiming that it could cut off energy supplies to the Euro-Zone. The threats were given due to Iran's controversial nuclear program. The tension in the Middle-East is usually a catalyst for rising energy prices, and news headlines regarding the Iranian nuclear plan conflict are likely to boost prices of crude oil. Another reason for the rising oil is the drop of the Dollar. The Dollar fell against most of the major currencies during last week. Oil is traded in Dollars, and thus when the USD drops, crude oil usually rises in response.
Looking ahead to this week, traders are advised to continue following the major publications from the U.S. and the Euro-Zone, as they are likely to impact the prices of crude oil the most. Traders should also follow the U.S. Crude Oil Inventories report on Wednesday, as this usually has an immediate impact on the market.
The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the daily chart's RSI is already floating in the over-sold territory indicating that a bullish correction might take place in the nearest future. When the upward breach occurs, going long with tight stops appears to be the preferable strategy
There is a very accurate bearish channel forming on the daily chart as the pair is now floating in the middle. However, the pair currently sits near the bottom border of the hourly chart's RSI, suggesting an upward correction may be imminent. If an upwards breach occurs, going long might be a good choice.
The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bullish cross on the daily chart's Slow Stochastic indicates that an uptrend correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy
The bullish trend is losing steam and the pair seems to be consolidating around the 1.0748 level. The daily chart's RSI is already floating in the over-bought territory suggesting that the recent upwards trend is losing steam and a bearish correction is impending. Going short with tight stops appears to be a preferable strategy.
The Wild Card
Oil prices rose significantly in the last week and peaked near $80 a barrel. However, the daily chart's RSI is floating in the over-bought territory, suggesting that the recent upwards trend is losing steam and a bearish correction is impending. This might be a good opportunity for
forex traders to enter the trend at a very early stage.