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Wednesday, 26 May 2010

Shares and EUR Decline as Debt Concerns Hit Markets

U.S. stocks and EUR pared deep losses to end mostly flat on Tuesday as investors had second thoughts that a festering Euro-Zone banking crisis will spread worldwide and strangle a reviving economy.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupdowndownupnoup
Weekly Trendnononoupnoup
Resistance1.24001.450091.301.17000.83600.8550
1.23701.447091.001.16700.83300.8520
1.23401.443590.701.16400.83000.8585
Support1.22701.435590.001.15700.82300.8520
1.22401.432089.701.15400.82000.8490
1.22101.429089.401.15100.81700.8460

Economic News

USD - Dollar's Upward Momentum Gathers Strength

The U.S. Dollar rose Tuesday as higher-yielding currencies came under broad selling pressure on growing risk aversion, in turn boosting the greenback. World stocks fell to their lowest level since September 2009 on Europe contagion fear and amid growing tension between North and South Korea. Worries about a fresh financial crisis prompted investors to reduce holdings of riskier assets such as shares while seeking the safety of the U.S currency.

U.S. stocks fell early, joining in the broad global sell-off and the concern that economic recovery will be hampered, but pared losses late and ended mixed.
Equities are broadly viewed as an indicator of future energy demand growth.

Traders said with liquidity in the forex market showing signs of drying up; investors are likely to scramble for safe-haven Dollars. That is likely to keep downward pressure on growth-linked currencies such as the Australian Dollar.

EUR - EUR Falls for 3rd Day on Debt Fears

The EUR declined against the Dollar and Yen for a third day as concern about the Euro-Zone's banking system fanned strains in money markets, boosting demand for Dollars across the board. Weighing on the EUR was the Spanish central bank's takeover of savings bank CajaSur on Saturday after a failed merger with another regional lender.

The single currency, however, recouped some losses in afternoon trading after the Conference Board said its index of confidence among U.S. consumers rose this month to the most in more than two years, adding to optimism growth in the world's largest economy may be strong enough to withstand a European slowdown.

The EUR downtrend has so far stalled at $1.2280, stopping well shy of the currency's January 1999 launch rate at $1.1747, but analysts say currencies' tendency to overshoot estimates of where they should be means further weakness is likely.

JPY - Yen Rises More than 1% vs. Aussie as Investors Cut Risks

The Japanese Yen weakened to as much as 111.98 per EUR today from 110.37 after rising to 108.84 yesterday. Against the U.S Dollar, the Japanese currency depreciated to as much as 90.49 from 89.78. A weaker Yen increases the value of overseas sales at Japanese companies when repatriated.

Meanwhile against the Australian Dollar the JPY was up 0.6% at 73.87 as hedge funds and investors took profits on the higher-yielding currency's rally this year. Analysts said the slide in the Aussie against the Yen is expected to slow in the near term as there are a number of bids waiting below 73 Yen.

Crude Oil - Crude Falls More than 2% a barrel

Oil prices fell $1.46, or 2.1%, to $68.75 a barrel joining global stocks, the EUR and most metals with the exception of gold in a broad retreat due to ongoing fears about a potential European debt crisis and renewed tensions on the Korean peninsula.

Market players noted Crude pared losses after the U.S. consumer confidence index hit a two-year high in May. Dropping back from a 2010 peak of $87.15 on May 3, the highest since October 2008, U.S. Crude prices could be set to have the biggest monthly loss since the height of the financial crisis.

Technical News

EUR/USD

Most technical indicators show the pair trading in neutral territory at the moment. That being said, a day of low volatility is expected, which may lead to erratic price movements. Traders may want to take a wait and see approach for this pair today.

GBP/USD

Most technical indicators show the pair trading in neutral territory at the moment. That being said, a day of low volatility is expected, which may lead to erratic price movements. Traders may want to take a wait and see approach for this pair today.

USD/JPY

The pair seems to be exhibiting some mixed signals today. While the 4 hour chart's Slow Stochastic exhibits a fresh bearish cross, the daily RSI is floating in the oversold territory. Waiting on a clearer direction for the pair today may be advised.

USD/CHF

The hourly and daily charts' Slow Stochastic is showing a bearish cross with the daily RSI floating in the overbought territory. Going short for the day may be advised.

The Wild Card

AUD/NZD

The RSI for the pair is floating in the overbought territory on the hourly and 2 hour charts with a bearish cross evident on the 2 hour and 4 hour charts' Slow Stochastic. Forex Forex traders may be advised to go short for the day.

Current Time: 11/29 08:47 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
11/30
19:45NZD+ RBNZ Gov Wheeler Speaks---5
21:45NZD+ Overseas Trade Index q/q0.3%-4.3%-3
22:30AUD+ AIG Manufacturing Index49.4--1
23:30AUD+ MI Inflation Gauge m/m0.2%--1
23:50JPY+ Capital Spending q/q3.0%2.1%-1
12/01
00:30AUD+ Company Operating Profits q/q-6.9%-1.2%-3
01:35JPY+ Final Manufacturing PMI52.152.1-1
05:30AUD+ Commodity Prices y/y-16.9%--1
08:15EUR+ Spanish Manufacturing PMI52.653.1-3
08:30CHF+ SVME PMI55.352.9-1
08:45EUR+ Italian Manufacturing PMI49.049.5-3
09:00EUR+ Final Manufacturing PMI50.450.4-1
09:30GBP+ Manufacturing PMI53.253.1-5
09:30GBP+ Net Lending to Individuals m/mm/m-2.8B2.7B3
09:30GBP+ M4 Money Supplym/m-0.7%0.2%-1
09:30GBP+ Mortgage Approvals61K59K-1
14:45USD+ Final Manufacturing PMI54.755.0-1
15:00USD+ ISM Manufacturing PMI59.057.9-5
15:00USD+ ISM Manufacturing Prices53.552.6-1
17:15USD+ FOMC Member Dudley Speaks---3
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