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Thursday, 29 Oct 2009

U.S. Advanced GDP Report at Forefront of Forex Trading Today

The surprise drop in New Home Sales in the United States yesterday has resulted in a sudden buy-up in USD as investors flock to safe-havens. With a market that appears to be lacking a clear direction recently, major reports such as the New Home Sales report yesterday and today's Advanced GDP data become that much more important to watch as more investors await their release before trading.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddownnodownupdowndown
Weekly Trenddownupdownupdowndown
Resistance1.48001.648591.251.03500.90750.9075
1.47751.644091.001.03250.90400.9050
1.47501.640590.751.03000.90100.9025
Support1.47001.635090.101.02250.89500.8950
1.46751.632589.851.02000.89250.8925
1.46501.630089.501.01750.89000.8900

Economic News

USD - Dollar Rises despite Negative Data

The US Dollar extended gains against the EUR after a report showed an unexpected fall in U.S. new home sales for September. The data offset solid durables goods numbers and stoked fear the rally in risky assets in recent months has run ahead of fundamentals. As a result, the USD finished yesterday's trading session 100 pips higher against the EUR at the1.4716 level. The greenback also saw bullishness against the CHF and closed at 1.0260.

Yesterday, government reports showed that U.S. new home sales unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery even as businesses appeared to be stepping up investment. New single-family home sales fell 3.6% to a 402,000 unit annual pace from a downwardly revised 417,000 units in August. That has helped the U.S Dollar revive its safe haven appeal.

The other factor which led to the bullish Dollar yesterday was that U.S stocks fell, which boosted demand for the USD as a safe-haven currency. Moreover, renewed demand for the Dollar comes after a sharp drop earlier in the month, when the greenback hit 14- month lows versus the EUR, as investors favored foreign currencies and other riskier assets such as equities.

Looking ahead today, the two main news events that may have a very large impact on the Dollar and its main currency pairs in today's trading are the Advance GDP and Unemployment Claims around 12:30 GMT. These reports are very important as they are likely to impact the USD's volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow these releases.

EUR - EUR Sliding against Rising Safe-Havens

The EUR slid to a more than two-week low against the dollar yesterday, as concern over the strength of the U.S. economic recovery added momentum to a broad correction sweeping across all asset classes. After yesterday, the 16-nation currency fell sharply against the USD, pushing the oft-traded currency pair to 1.4710.The EUR experienced similar behavior against the JPY and closed at 130.95.

The EUR surrendered gains against the U.S. Dollar on Wednesday, falling to session lows, as riskier assets such as U.S. stocks pared gains while commodities fell. Analysts also said investors felt uncomfortable pushing the EUR higher given the huge amount of bearish trades on the dollar, which suggests a near-term recovery in the U.S. currency is on the horizon.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is the German Unemployment Change at 8:55 GMT. Traders will be paying close attention to today's German Unemployment Change announcement, as a stronger than expected result may bolster the EUR.

JPY - Yen Benefits from Stock Market Losses

The yen rose across the board on Wednesday as investors trimmed riskier positions in higher-yielding currencies. This came as a result of stocks falling after weaker than expected U.S. data pushed many back into safe-havens. By yesterday's close, the JPY rose against the EUR, pushing the oft-traded currency pair to 132.95. The yen also saw bullishness against the USD and closed at 90.30.

A slide in European shares, led by declines in the banking and energy sectors, accelerated the high-yielding Australian dollar's sharp fall triggered by lower-than-expected domestic inflation data, while boosting the low-yielding yen.
Further strengthening could be seen in the Yen if other nations begin to raise interest rates in order to ward off inflation. This could potentially wreak havoc on the Japanese economy by making Japanese exports relatively more expensive when compared to their foreign counterparts.

Crude Oil - Crude Oil Slips Below $78 a Barrel

Crude Oil fell more than $2 to below $77.20 a barrel on Wednesday, after data showed a surprise build in U.S. gasoline inventories, stirring fuel demand concerns in the giant consumer.

Oil prices also came under pressure after data showed sales of new U.S. homes tumbled unexpectedly in September, the first drop in six months, and feeding doubt about an economic recovery, thus helping the safe-haven USD rise; pushing oil prices lower.

Looking ahead, traders are advised to watch carefully the global stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone in order to predict the next movements in oil prices.

Technical News

EUR/USD

This pair seems to be giving off mixed signals today. There is an impending bearish cross on the hourly Slow Stochastic, while the 4-hour Slow Stochastic indicates a fresh bullish cross. It seems as if short-term movement is down, while the longer-term pressure remains upward. Waiting for the upward swing and then going long appears to be preferable today.

GBP/USD

This pair continues to trade in a tight range between 1.6300 and 1.6400. Most technical indicators show that this trend will likely continue. Forex traders can benefit by buying on lows and selling on highs within this trend.

USD/JPY

The sustained down-trend of this pair has pushed many indicators into showing an impending correction. There are fresh bullish crosses on the hourly and 4-hour Slow Stochastic and MACD, and the price is currently floating in the over-sold territory on the 4-hour RSI. Going long appears to be a wise choice today.

USD/CHF

This pair shows a level of short-term upward pressure with a bullish cross on the hourly Slow Stochastic. However, the longer-term pressure seems to be in a downward direction. Going short after the swing may be a good tactic today.

The Wild Card

Crude Oil

Yesterday's bearish movement in Crude Oil has pushed a number of technical indicators into the over-sold territory. There appear to be fresh bullish crosses on the hourly MACD and 4-hour Slow Stochastic, indicating an impending bullish move. And the price has just left the over-sold territory on the hourly RSI and is now cascading upward. Forex traders involved with commodities like this can take advantage of this knowledge by going long on Crude Oil now, and at a great entry price!

Current Time: 04/16 04:18 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
04/16
05:30JPY+ Revised Industrial Production m/m-2.3%-2.3%-1
09:00EUR+ Italian Trade Balance0.37B1.27B-1
09:30GBP+ Claimant Count Change-34.6K-30.2K-5
09:30GBP+ Unemployment Rate7.2%7.2%-5
09:30GBP+ Average Earnings Indexq/q1.4%1.8%-3
10:00CHF+ ZEW Economic Expectations19.0--3
10:00EUR+ CPI y/y0.5%0.5%-3
10:00EUR+ Core CPI y/y1.0%0.8%-3
13:00USD+ FOMC Member Stein Speaks***3
13:30CAD+ Foreign Securities Purchases1.09B4.57B-3
13:30USD+ Building Permits1.01M1.00M-5
13:30USD+ Housing Starts0.91M0.97M-3
14:15USD+ Capacity Utilization Rate78.4%78.8%-3
14:15USD+ Industrial Production m/m0.6%0.5%-3
15:00CAD+ BoC Monetary Policy Report***5
15:00CAD+ BoC Rate Statement***5
15:00CAD+ Overnight Rate1.00%1.00%-5
15:30USD+ Crude Oil Inventories4.0M--3
16:15CAD+ BOC Press Conference***5
17:15USD+ Fed Chair Yellen Speaks***5
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