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Thursday, 9 Feb 2012
UK, Euro-Zone Interest Rate Decisions Set to Impact Markets
The EUR/USD spent much of yesterday range trading, as investors were fearful of opening fresh buy positions ahead of possible Greek news. The market place is not forecasted to be nearly as quiet today, as euro-zone and British interest rate decisions and press conferences are forecasted to generate significant volatility. Should any of the news turn out to be negative, investors are likely to revert back to safe-haven assets which could cause the euro and GBP to drop.
USD - US Unemployment Claims may Boost Dollar
The US dollar spent much of the day yesterday range trading against most of its main currency rivals, including the euro, British pound and Swiss franc. Traders were hesitant to bet against the greenback ahead of possible news on a Greek debt swap deal. The one exception was against the Japanese yen. The USD/JPY took moderate losses throughout much of the day before stabilizing around 76.80 during the evening session.
Turning to today, market sentiment will likely be determined by a combination of international news indicators. First, traders will want to pay attention to interest rate decisions from both the UK and euro-zone. While no changes are forecasted for either rate, the press conferences that follow the indicators are likely to shed some light on the current state of the British and euro-zone economies. Any positive sentiment could result in risk taking, which will likely cause the dollar to drop.
Later in the day, traders will want to pay attention to the weekly US Unemployment Claims, scheduled for 13:30 GMT. The figure will shed some additional light on the current employment situation in the US, following last week's positive Non-Farm Payrolls report. A lower than expected unemployment figure may help the greenback during the evening session.
EUR - Euro-Zone Minimum Bid Rate Set to Generate Volatility
The euro saw very little movement for much of the day yesterday, as traders were reluctant to open fresh positions ahead of possible developments regarding the Greek debt crisis. The EUR/USD was able to maintain, but not extend, its gains from the previous day, and spent most of the session range trading around the 1.3250 level. Against the Japanese yen, the euro took some slight losses after traders began trimming some of their long positions. That being said, the EUR/JPY was able to stabilize around the 102.00 level in the evening session.
Turning to today, traders will want to focus on the British Official Bank Rate and European Minimum Bid Rate figures and the press conferences that follow each indicator. While no official change to either interest rate is forecasted, the press conferences serve as a good opportunity to gauge the current state of the UK and euro-zone economies. Should either press conference indicate the possibility of a future increase in interest rates, risk taking will likely take place which could boost the euro.
CHF - Franc Recoups Losses against Euro
After taking some mild losses against the euro during the morning session yesterday, the Swiss franc was able to stage a recovery which brought the EUR/CHF pair to 1.2100 toward the end of the European session. The markets were fairly subdued otherwise for much of the day, as traders were eagerly awaiting any news regarding a possible Greek debt swap deal.
Turning to today, traders can expect a much more volatility, as indicators from the UK, euro-zone and US are all forecasted to generate heavy trading. The franc will likely see significant gains should any of the news indicate the global economic recovery is not going proceeding at a quick enough rate. Traders will want to note the economic outlooks from both the British MPC and European ECB. Negative outlooks from either may cause traders to revert their funds to safe-haven currencies like the franc.
Crude Oil - Crude Oil Extends Gains Approaching $100
Crude oil saw dramatic gains during trading on Wednesday, and throughout yesterday's session. Crude's bullishness was largely attributed to increased demand out of the US and optimism that a Greek debt swap agreement will finally be put into place. The commodity briefly went above the psychologically significant $100 a barrel level yesterday, before staging a minor downward correction.
Turning to today, crude oil may see additional gains providing that British and euro-zone economic indicators are positive. Additionally, should the US Unemployment Claims figure come in above expectations, risk taking may take place, which could give oil an additional boost as we begin to close out the week.
Long term technical indicators are showing that this pair is range trading, meaning that major market movements are not forecasted at this time. The one exception is the Williams Percent Range on the daily chart, which is currently in overbought territory. Traders will want to keep an eye on the daily chart for indications of a possible downward correction.
Both the Relative Strength Index and Williams Percent Range on the daily chart show this pair in overbought territory, meaning that a bearish correction could take place in the near future. Traders may want to open short positions ahead of a downward breach.
Most technical indicators show this pair trading in neutral territory, meaning that no major movements are forecasted for the near future. The one exception is the Stochastic Slow on the daily chart, which has formed a bearish cross. Traders will want to take a wait and see approach for this pair, as a clearer picture may present itself later on.
The Bollinger Bands on the daily chart are narrowing, indicating that a major price shift may occur in the near term. The Williams Percent Range on the same chart is currently in oversold territory, which can be taken as a sign that the shift will likely be bullish. Traders may want to go long in their positions.
The Wild Card
Technical indicators on the daily chart show that this pair is oversold, and could see an upward correction in the near future. The Stochastic Slow has formed a bullish cross, while the Williams Percent Range is currently at -95. Forex traders may want to go long in their positions ahead of a possible upward correction.
|01:00||GBP||30-y Bond Auction||2.86|1.6||-||-|
|01:30||AUD||AIG Construction Index||47.8||-||-|
|06:30||AUD||RBA Rate Statement||-||-||-|
|08:00||EUR||German Industrial Production||m/m||0.9%||0.1%||-|
|08:45||EUR||French Gov Budget Balance||-59.8B||-||-|
|08:45||EUR||French Trade Balance||-3.0B||-3.3B||-|
|09:00||CHF||Foreign Currency Reserves||517.5B||0.2%||-|
|16:00||GBP||NIESR GDP Estimate||0.6%||-||-|
|16:00||USD||IBD/TIPP Economic Optimism||48.1||-||-|