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Friday, 18 Apr 2008
USD Contunues To Be Under Pressure
Yesterday we saw a volatile session for the greenback. The EUR/USD bounced up and down during most of the day, finally closing around 1.59 level, unchanged from the day prior.
The day began quite melancholic for the USD with the Weekly Unemployment Claims Report that increased another 17K from the previous week, rising to 372K, the highest level in 5 years. Moreover, many specialists predict that jobless claims will keep rising in the months ahead, reaching a 400K level as soon as this summer.
Also yesterday, the Philadelphia Manufacturing Index fell to -24.9, down from last month's figure of -17.4 and well below the forecasted figure of -15.0. This indicator measures the general business conditions of manufacturers in the Philadelphia Federal Reserve district. Although this survey is limited to manufacturers in Philadelphia only, traders pay close attention because the Philadelphia Fed releases it weeks before other major reports on manufacturing. Therefore, yesterday's low Philadelphia Manufacturing Index print implies that the U.S. manufacturing sector in general, might also suffer further losses.
It is also interesting to mention Oil prices, which hit this week a record of $114 a barrel, mainly on supply issues and rising demand in China. But the main factor contributing to high Oil prices is the weak dollar itself. The greenback is currently trading around the 1.59 level against the EUR; making safer commodities like Oil more attractive for dollar investments. In addition, due to Oil being dollar denominated, as the dollar weakens, Oil prices should increase by relatively the same percentage.
As for today there is no significant economic news to be release coming out from United Stated, so it will be crucial for traders to identify how the preceding EUR economic indicators will affect the American currency.
Yesterday was another choppy trading session for the European currency. The EUR first dropped vs. the greenback, but later flew over 1.5900, in an attempt to reach the level of 1.6000.
What appears to be the prime reason for the drastic behavior lies in the ECB council member Axel Weber yesterday's speech. Weber stated that the ECB may have to revise its inflation projections for 2009. He also mentioned the increases in food and energy prices are the main reasons for the unplanned revision.
One should bare in mind that the ECB had already rose its forecast for 2009 inflation from 1.8% up to 2.1%. Given the fact that the ECB is not planning to cut rates anytime soon, traders prefer to keep their long EUR positions.
As for today, the German Producer Price Index is due to be released. This indicator measures the rate of inflation experienced by manufactures purchasing goods and services. A lot of attention will be focused on the outcomes of the report as it might hint on crucial decisions regarding the inflation revision in the Euro zone.
Then Yen made another day of bearish trends against all of its major currency rivals. The JPY sustained losses vs. the USD, the GBP and even the EUR, who otherwise could have had an entirely bearish day.
The cheering news which came from the Japanese trade ministry, saying that the Industrial Production figures for February made a 1.6% increase from a 1.2% decline, failed to embark a reversal trend for the JPY who seems determined to magnify its low currency records. The real good coming from the positive figures is that it managed to somewhat temper the overgrowing expectations of recession for Japan, what could suggest a Yen accretion in the horizon.
Investors have been concerns about a stronger yen as it curbs the value of their overseas sales when translated back into the Japanese currency, many specialist suggest the BOJ will have to cute interest rates to cover exportations to emerging economics.
As for today there is not there is no relevant economic information to be release from Japanese markets. Forex traders should follow the figures coming from the U.S. and Europe to indicate if the JPY will keep depreciating today or correct.
The very strong uptrend is forming into a channel in the 4 hour chart, as the pair no floats in the middle of it. The momentum is bullish, and the Slow Stochastic of the 4 hour chart is showing that the trend might continue. Going long might be preferable.
There has been a bullish breach the rough the narrowing channel on the daily chart. The momentum is strong and it appears that the bullish trend might have steam to reach the target price of 2.0025 on this move. Going long appears to be the right way today.
The bullish trend continues with plenty of steam as the pair now floats around 102.32. The Slow Stochastic of the daily chart indicates that there is still more room to run up. The next target price might be 102.70. Going long seems like the right choice today.
The flat line continues, as the pair still did not make a significant breach to any direction. The 4 hour Slow Stochastic is in neutral territory, and the daily studies showing no distinct momentum to any side. Traders are advised to hold for a clear signal, and swing.
The Wild Card
The bullish rally continues, and it appears that oil shows no signs of a halt. All oscillators are pointing up and the momentum appears to be stronger than ever. This is a great opportunity for forex traders to join in a very strong trend that still has a lot of steam in it.
|01:00||JPY||Monetary Policy Statement||*||*||*|
|01:00||JPY||BoJ Press Conference||*||*||*|
|01:00||EUR||German 10-y Bond Auction||1.28|1.6||-||-|
|EUR||EU Economic Summit||*||*||*|
|01:30||AUD||Westpac Consumer Sentiment||-5.1%||-||-|
|09:30||GBP||MPC Meeting Minutes||0-0-9||0-0-9||-|
|09:30||GBP||Public Sector Net Borrowing||16.7B||7.6B||-|
|11:00||CHF||SNB Chairman Jordan Speaks||*||*||*|
|11:00||GBP||CBI Industrial Order Expectations||-25||-17||-|
|13:30||CAD||NZD Core Retail Sales||m/m||0.7%||0.2%||-|
|15:00||USD||Existing Home Sales||4.92M||4.99M||-|
|15:00||USD||Fed Chairman Bernanke Testifies||*||*||*|
|15:30||USD||Crude Oil Inventories||-0.6M||-||-|
|19:00||USD||FOMC Meeting Minutes||*||*||*|