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Monday, 16 May 2011
US Dollar Opens with Solid Uptick
The US dollar opened this week moderately stronger versus the euro as traders appear to have continued nursing wounds from last week's dizzying session. The result has been for the EUR/USD to come within reach of 1.4050 as of this morning.
USD - US Dollar Opens Week Bullish vs. Euro
The US dollar opened this week moderately stronger versus the euro as traders appear to have continued nursing wounds from last week's dizzying session. The result has been for the EUR/USD to come within reach of 1.4050 as of this morning. Against the pound, the greenback held close to 1.6180 after a short downward slide during the early Asian session, though bullishness in Britain has generated pressure beneath the Cable in anticipation of an uptick.
Last week's market data was enough to bring the EUR crashing down against a number of its currency rivals with the USD gaining the most from the turmoil. American economic data was only slightly better, however, as most analysts considered US fundamentals soft considering the shift. Inflationary data out of the United States last week was bullish; whether it is enough to force an adjustment in interest rates is another matter. The Fed has made it rather apparent that interest rates will remain where they are for the time being.
As for today, forex traders are focused intently on the TIC long-term purchases report which will spell out how much investment the American economy has attracted this past month. A minor housing report is also scheduled for 15:00 GMT, but market momentum shows optimism already built around the housing market and this report will do little to change sentiment. If euro zone inflationary data published today can spark pressure for an interest rate hike then the EUR may find support versus the USD, but it may depend on other factors to instigate a reversal.
EUR - EUR Remains Bearish as Investors Seek Safety
The euro fell below its four-week low versus the US dollar this morning, with a price of 1.4050 rapidly approaching. Speculation about the speed of reforms in the euro zone, and the rapidity of a response being formed to handle its debt woes have both pulled the euro sharply lower since early last week. The EUR has held modestly steady versus many other currencies, but its primary counterpart was seen gouging the common currency heavily.
The EUR was not able to hold its recently stable price against the US dollar as regional investors battled over the direction of the 17-nation common currency. Regional bears won the day as the rumor mill chewed on the speculative reports that Greece had already secured a new financial aid package, or that it was planning to exit the euro zone. With both staunchly refuted, traders rapidly moved to safety as the speed of assistance appears to be slow in coming.
As for today, the euro zone will be publishing its CPI figures with expectations for solid growth, somewhat above last month's readings. If the region can post stronger inflationary data then there is a chance the ECB will be pressured to adjust its stance on interest rates sooner than many had assumed. It is doubtful this can lift the EUR out of its recent doldrums, but minor upticks could be seen with heavily bullish figures.
JPY - JPY Mildly Bullish as Morning Data Surprises
The Japanese yen (JPY) has been trading with somewhat mixed results since early last week, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to make gains today as investors seek safety from recent turmoil and as the Bank of Japan (BOJ) published several reports this morning which could help the island economy make gains. The dominant stance of risk aversion overarching last week's trading environment has many traders moving towards the yen against the higher yielding currencies like the euro and British pound.
The USD/JPY was seen trading somewhat higher this morning, finding support near 80.70 and moving up towards 80.90 at today's opening Asian sessions. Japan's core machinery orders report was published this morning and revealed a modest uptick which may help the island currency in today's market hours. Market news released out of the US and Europe today will likely be the driving force behind JPY values, though, and traders would be wise to watch the US TIC long-term purchases report closely for today's direction. European inflationary figures could also cause a stir if highly bullish.
Crude Oil - Crude Oil Prices Steady Near $99 a Barrel
Oil prices held steady this morning with the $99 price level acting as a firm footing for this commodity. US oil stockpiles rose over 3 million barrels for the second week in a row last week, which had harangued the price of oil in last week's later sessions, but as of today the price of oil appears supported by market forces.
The value of the US dollar versus the euro in recent trading has pushed towards a five-week high near 1.4070, which originally hurt the value of oil. With today's steady sideways movement, traders appear likely to see oil reaching a decision point this week. Whether oil traders decide to lift oil prices from a buy-in on physical assets, or whether they decide to pull away from the black gold out of a perceived global oversupply, is a point traders will bear witness to this week. Make sure you are active in oil trading this week, it is expected to be more exciting than usual.
The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart's Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the RSI. Going long with tight stops may turn out to pay off today.
The cross has been dropping for the past 3 weeks now, as it now stands at the 1.6180 level. However, the daily 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 be the right choice today.
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.
The USD/CHF cross has experienced a bullish trend for the past few weeks. However, it seems that this trend may be coming to an end. The RSI of the 8-hour chart shows the pair floating in the overbought territory, indicating that a downward correction will happen anytime soon. Going short with tight stops might be a wise choice.
The Wild Card
This pair's sustained upward movement has finally pushed its price into the over-bought territory on the daily chart's RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.
|11:00||EUR||CPI Flash Estimate||y/y||0.2%||0.2%||0.2%|
|11:00||EUR||Italian Prelim CPI||m/m||-0.1%||0.2%||0.2%|
|00:45||NZD||Overseas Trade Index||q/q||1.5%||-1.9%||-|
|01:00||NZD||GDT Price Index||14.8%||-||-|
|01:00||USD||Total Vehicle Sales||17.6M||17.3M||-|
|01:30||AUD||AIG Manufacturing Index||50.4||-||-|
|03:35||JPY||Final Manufacturing PMI||51.9||51.9||-|
|05:45||JPY||10-y Bond Auction||0.40|2.8||-||-|
|06:30||AUD||RBA Rate Statement||-||-||-|
|09:15||EUR||Spanish Manufacturing PMI||53.6||53.9||-|
|09:45||EUR||Italian Manufacturing PMI||55.3||56.2||-|
|09:55||EUR||German Unemployment Change||9K||-5K||-|