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Thursday, 10 Dec 2009
U.S. Dollar Drops After Three Straight Days of Gains
After three days of continuous gains, the U.S. Dollar ended its winning streak Wednesday, as traders began to turn to riskier currencies amid a positive day on Wall Street. Subsequent gains made by the EUR threatened to end any prolonged Dollar increase.
USD - Dollar Slides Amid Increased Investor Risk Taking
Following an upbeat trading day Wednesday on the U.S. stock market, the Dollar slid against its major counterparts for the first time since last Friday's unemployment figures. The Dollar Index dropped to 76.043 from 76.236 as investors began to speculate whether rumors of an impending hike in U.S. interest rates may have been slightly premature. The increase in stocks led to significant gains for the Euro, which was trading above the 1.4730 mark earlier. While the Dollar may have had a rough day in trading, there are several news events on Thursday that promise to create some volatility in the market.
Set to be released at 13:30 GMT, the weekly U.S. unemployment claims report will be a telling statistic as to whether last weeks report was merely a fluke, or the American job market is really improving. If the number comes in at or around the forecasted 463K, the Dollar may make some gains, as the number is roughly the same as last weeks'. If the figure comes in at a significantly higher number, the Dollar could be pushed further down as this would signal the American economy is still not on stable ground.
EUR - EUR Makes Gains Following Positive ECB Rate Outlook
Amid speculation that a report being released on Thursday will show an increase in production in Italy and France, the Euro made impressive gains against both the Dollar and Yen in early morning trading. This is leading to speculation that the European Central Bank (ECB) may be able to abandon its policy of accommodating its banks in the near future.
Traders may want to pay attention to any news coming out of the ECB. Positive economic data could signal that Europe is recovering faster then America and Japan, and could lead to further gains for the EUR. At the same time, if the U.S. unemployment figures come in as expected, the Euro could lose ground on the dollar. A stable U.S. jobs market will likely lead to gains for the Dollar and could result in a repeat of this past week's EUR losses.
Against the Yen, the EUR made gains after a strong Australian jobs report brought back investors to risk taking. It would appear that the positive news from Australia has halted the gains the Yen had made in the last few days. With the European production figures set to be released today, the Euro could emerge even stronger in afternoon trading.
JPY - Yen Falls Following Australian Jobs Report
Following yesterday's gains against the Dollar and EUR, the Yen took steep losses after a very good Australian jobs report on Thursday morning. Investors appeared to be abandoning their safe haven positions with the Yen in favor of riskier currencies like the Aussie and Kiwi. Consequently the Yen fell to below 130.00 against the Euro in early morning trading.
Looking ahead, traders may want to pay attention to the news coming out of Europe and America. Any negative European news would increase the Yen's appeal as a safe haven currency and could lead to serious gains. At the same time, positive news from Europe may lead to a prolonged drop in the Yen against its major counterparts.
Crude Oil - Crude Prices Fall Following Inventories Report
Following a U.S. inventories report showing an increase in distillate oil stockpiles, crude prices fell as there appears to be a glut of the commodity in the American market. While crude oil inventories actually fell, investors largely seemed to ignore this, instead choosing to pay attention to oil overall. Consequently the price of crude fell to just above $70.00 a barrel.
Most analysts are predicting that crude oil prices will stay low for sometime, as a weak economy is forcing many Americans to cut down on fuel consumption. That being said, any positive employment news coming from the U.S. could lead to an increase in prices. Economic gains made in the U.S. will likely lead to an increase in consumption, especially as the weather gets continuously colder.
The cross has been dropping for the past week now, as it now stands at the 1.4710 level. The Slow Stochastic of the daily chart shows a bullish cross has recently formed, indicating that an upward correction is imminent. This view is also supported by the RSI of the 4-hour chart. Going long might be a wise choice.
The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour Chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to pay off today.
The typical range trading on the hourly chart continues. The daily chart RSI is floating in neutral territory. However, the pair currently sits near the bottom border of the 4-hour chart's RSI, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.
The bullish trend is loosing its steam and the pair seems to consolidate around the 1.0280 level. The 4-hour Chart's RSI is already floating in the overbought territory indicating that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
The Wild Card
Oil prices are once again dropping, and it is currently traded around $70.50 per barrel. And now, the daily chart's Slow Stochastic is giving bullish signals, indicating that Oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.
|16:00||USD||IBD/TIPP Economic Optimism||42.0||-||-|
|19:00||EUR||ECB President Draghi Speaks||-||-||-|
|23:30||USD||FOMC Member Williams Speaks||-||-||-|
|00:30||AUD||AIG Construction Index||53.8||-||-|
|01:01||GBP||BRC Shop Price Index||y/y||-1.4%||-||-|
|02:00||AUD||HIA New Home Sales||m/m||-1.8%||-||-|
|02:01||JPY||Monetary Policy Statement||-||-||-|
|08:00||EUR||German Industrial Production||m/m||0.7%||-||-|
|08:01||JPY||BoJ Press Conference||-||-||-|
|08:45||EUR||French Trade Balance||-3.3B||-||-|
|09:00||CHF||Foreign Currency Reserves||540B||-||-|
|10:30||GBP||Manufacturing Production m/m||m/m||-0.8%||-||-|
|10:31||EUR||German 10-y Bond Auction||0.69|1.2||-||-|