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Monday, 1 Feb 2010
US Inflationary Figures may Push USD Bearish
The American economy is due to release a number of reports today which may have a moderately heavy impact on today's trading. The Personal Spending and Personal Income reports due at 13:30 GMT will carry a level of significance in today's market, but not nearly as much as the ISM Manufacturing PMI scheduled for 15:00 GMT. Forex traders won't want to miss out on these reports especially since many are forecasting a short-term downward correction for the USD in today's trading. These reports will either debunk or verify that notion.
USD - Is the USD Expecting a Downturn Today?
The US Dollar has started this week off in a modestly bullish posture. Gaining steady ground against the EUR and GBP, the greenback, so far, has begun to test a number of psychological price barriers. Against the EUR, the dollar has climbed to 1.3860 and is holding steady as of this morning. The most ground, however, has been made against the British Pound. The buck steadily gained a solid 70 pips in the first few hours of trading today; the GBP/USD cross now trades near 1.5930, down from 1.6000.
The American economy is due to release a number of reports today which may have a moderately heavy impact on today's trading. The Personal Spending and Personal Income reports due at 13:30 GMT will carry a level of significance in today's market, but not nearly as much as the ISM Manufacturing PMI scheduled for 15:00 GMT. Forex traders won't want to miss out on these reports especially since many are forecasting a short-term downward correction for the USD in today's trading. These reports will verify that notion.
With commodity prices testing significant support lines, and with the USD's continued strength, the notion that the greenback is facing downward pressure today is hard to miss. While a number of today's economic figures seem less relevant than the American NFP report due this Friday, intra-day traders can take advantage of market expectations by following news events like today's and banking on the small corrections that are being priced into the market around these expectations.
EUR - EUR News Absent from Today's Trading
The EUR has seen better times in its recent past. Today, however, is a different story. The 16-nation currency has plunged against almost every major currency counterpart and currently sits in a bearish posture versus the majority of them still; the only exception being the British Pound, which the EUR apparently is outpacing despite its significant setback in fundamental data. The EUR/GBP pair is currently trading near the 0.8700 mark, up from its recent low of 0.8600 seen last Friday.
The financial problems of Greece are still weighing heavy on the Euro-Zone, but last week's World Economic Forum (WEF) meetings helped shed some light on the approach the Euro-Zone's financial leaders are taking towards that debacle.The EUR is scheduled to be nearly absent from today's market news, however. With one minor release due towards market opening hours in Europe, the region will be strangely missing and the EUR may take a short-term fall as a result.
On the other hand, with a variety of reports due from Britain and the United States, there's a chance that the EUR will benefit if these other countries provide negative data. Today's important releases will be the Manufacturing PMI figures from Britain and the US, and the EUR will react to these reports in a way befitting the currencies of those countries following these releases.
JPY - JPY Bullish from Pacific Growth and Risk Aversion
The Japanese Yen has responded favorably to last week's stream of reports coming from the island economy. Climbing steadily against all of its major counterparts, the JPY appears to be on track to be a big winner in today's market. So far this morning, the Yen has climbed 50 pips against the USD to a price of 90.00; 70 pips versus the EUR to hit the 124.80 mark; and also 45 pips against the British Pound (GBP) to the new price of 143.60.
The positive economic growth being experienced in other Pacific countries like Australia and New Zealand are no doubt feeding the positive sentiment around countries like Japan. But growth in the Japanese Yen typically represents a decline in global economic sentiment and increase in risk aversion. Perhaps a combination of these two factors is what is driving the Yen so much higher against its major adversaries. Should today's data disappoint, the JPY is likely to continue gaining ground today against these other currencies.
Crude Oil - Spot Crude Oil's Next Target $68 a Barrel?
The price of spot crude oil is currently testing a significant support level at $72.50 a barrel. This is a price which the market has not seen since 16 December 2009. Declining inventories in major consumer countries like the United States has led some to conclude that demand for the black gold is continuing to fall, despite few clear signals that such a sentiment exists. One thing is certain is that if Crude Oil can break through its current price barrier then it may continue to drop to as low as $68 a barrel in the short- to medium-term.
This week's data will be highly impacting on the value of the US Dollar, which always carries with it a dramatic change in the value of commodities like Crude Oil. Since many are expecting a downward correction in the USD later today, there is a chance that spot crude oil will fail to breach the barrier in today's trading. However, should today's reports prove positive for the USD, there is a chance that this barrier will indeed be breached and forex traders will have an opportunity to enter the downtrend and ride it out to its next target around $68 a barrel.
The Bollinger Bands on the 2H chart for this pair appear to be tightening in expectation of a volatile price movement. With a recent bullish cross on the 4-hour chart's Slow Stochastic, this pair may be due for a strong upward correction. With the RSI of the 4-hour chart floating in the over-sold territory, going long may indeed be a wise choice today
There appears to be a fresh bullish cross on the hourly chart's Slow Stochastic, signaling a bullish correction may take place. As the price floats in the over-sold territory on the daily chart's RSI, and the 4-hour chart's Slow Stochastic shows fresh bullish crosses, going long with tight stops throughout the day may be a solid move.
The technical oscillators on this pair primarily indicate neutrality as a clear direction is refusing to reveal itself. However, the price does appear to be floating near the over-sold territory on the daily chart's RSI. Longer-term pressure may be upward and going long with tight stops may therefore be a good decision.
The pair has breached through the Fibonacci key level of 1.0600, and all oscillators on the 4 hours chart are indicating further bullish movement. The 4H Bollinger Bands are showing that the price has crossed its upper border, signaling that the current trend should continue, as the pair's new target price might be 1.0685.
The Wild Card
It seems that the bullish momentum prevails as the pair is heading up with plenty of room to run. All of the technical oscillators on the hourly and the daily charts are giving a bullish signals and this pair's target today might be the 1.0745 level. This gives forex traders a great opportunity to join the market at an excellent entry price.
|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||-||-|
|16:00||GBP||NIESR GDP Estimate||0.5%||-||-|
|16:30||USD||Crude Oil Inventories||4.0M||-||-|
|19:01||USD||10-y Bond Auction||2.24|2.7||-||-|