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Thursday, 28 Jan 2010

USD Gains on Interest Rate Hike Speculations

Following signals from the U.S. Federal Reserve that American interest rates may be increased sooner then expected, the U.S. Dollar got a significant boost in trading last night and in the early morning today. Today, a full set of Dollar related news events will likely determine the direction the greenback goes for the rest of the week.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupupdownupdown
Weekly Trenddownupupdownupdown
Resistance1.41101.628591.251.06000.91100.8760
1.40751.625590.901.05700.90800.8730
1.40401.622090.601.05400.90450.8700
Support1.39801.615089.901.04750.89800.8630
1.39501.612089.601.04350.89500.8600
1.39151.608589.301.04000.89200.8570

Economic News

USD - Interest Rate Rumors Boost Dollar

The U.S. Federal Reserve (FED) left interest rates unchanged following their policy meeting on Wednesday, but an overall tone of optimism left the door open to an increase in the near future. The Dollar reacted to the news by shooting up to a near 6-month high against the Euro. The pair was trading as low as 1.3994 on Wednesday, before rebounding to its current level of 1.4020.

Today, the forex news cycle will be dominated by Dollar events. Core Durable Goods Orders, the latest Unemployment Claims report, as well as the Senate vote to reappoint Ben Bernanke as chairman of the FED, are all likely to create heavy market volatility.

Analysts are generally optimistic about today's Dollar news, with unemployment forecasted to drop and the Core Durable Goods Orders in positive territory. Traders can expect the Dollar to make further gains today providing the news comes in as predicted. This will likely be especially true against the Euro, which is still reeling from Greek debt concerns.

EUR - Euro Hits near Record Lows against Dollar

The Euro dropped below the psychologically significant 1.4000 mark yesterday against the U.S. Dollar. This was largely due to rumors that U.S. interest rates may be increased in the near future, combined with continuing concerns regarding Greek debt. Investors shied away from riskier currencies as it became apparent that European interest rates will likely remain at their record lows for some time.

Today, any movement among Euro pairs will likely be a result of Dollar news. The only potentially significant European news event today is the German unemployment change report set to be released at 08:55 GMT. Unemployment in Germany is forecasted to have risen over the last month, which if true, will likely weigh down on the already weak Euro.

Traders will want to pay attention to any news regarding Portugal's handling of their debt. Experts are saying that their current budget will not do enough to cut their deficit to a responsible level. If true, this would likely mean more bad news for the Euro in the forex market.

JPY - USD/JPY Rises Following FED Meeting

The Yen took some significant losses against the Dollar in early morning trading today, rising to its current level of 90.30. Investors are continuing to flock to the greenback and away from the Yen as American interest rates may change in the near future. JPY also fell against the Euro, with the pair shooting up to its current level of 126.50.

Yen traders will want to pay attention to a number of news events, such as the Japanese Household Spending Report and the Japanese Monetary Policy Meeting minutes, both scheduled to be released today. Any positive news regarding the Japanese economy will likely help the Yen bounce back from its current status in the marketplace.

Crude Oil - Oil Increases Following American Inventories Report

Following Wednesday's news that U.S. Oil inventories unexpectedly fell last week, prices increased somewhat significantly to the current level of 73.90. Investors hoping for prices to remain at or near the $74.00 level were pleasantly surprised by yesterdays report. Typically when inventories fall, demand goes up, thereby driving up prices.

Today, Crude traders will want to pay attention to any U.S. Dollar movement. If the Dollar continues to make gains, Oil prices may drop. A strong Dollar usually drives investors away from alternative investments like Oil. That being said, any worse then expected U.S. economic news could result in solid Oil gains in trading today.

Technical News

EUR/USD

The pair may be seeing some correction today as the RSI on the 4 hour, 8 hour and daily charts are floating in the oversold territory. There is also an impending bullish cross seen on the hourly MACD. Going long for today may be a good option.

GBP/USD

The pair is currently trading in neutral territory, but traders will want to pay attention hourly chart MACD which exhibits a fresh bearish cross, indicating the pair's recent downward trend persists. Still, traders may want to take a wait and see approach regarding this pair today.

USD/JPY

A downward correction may be seen today as the hourly and 2 hour RSI are floating in the overbought territory and a bearish cross is seen on the 2 hour and 4 hour charts' Slow Stochastic. Going short for the day may be advised.

USD/CHF

The 4 hour, 8 hour and daily RSI are floating in the overbought territory. A breach of the upper Bollinger Band is evident on the 8 hour chart, while an impending bearish cross is evident on the hourly MACD. Going short for the day may be a good option.

The Wild Card

GBP/CHF

The pair may be seeing some downward correction today. A breach of the upper Bollinger Band is evident on the 2 hour chart, while a bearish cross is evident on the 4 hour and 8 hour charts' Slow Stochastic. The two hour, 8 hour and daily RSI are floating in the overbought territory, supporting the notion of a correction. Forex traders are advised to go short for the day.

Current Time: 09/18 09:03 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
09/18
09:30GBP+ Retail Sales m/m0.1%0.4%0.4%5
11:00GBP+ CBI Industrial Order Expectations119-3
13:30CAD+ Foreign Securities Purchases-1.07B2.47B-2
13:30USD+ Building Permits1.05M1.04M-5
13:30USD+ Unemployment Claims 315K312K-5
13:30USD+ Housing Starts1.09M1.04M-3
13:45USD+ Fed Chair Yellen Speaks***5
15:00USD+ Philly Fed Manufacturing Index28.022.8-5
15:30USD+ Natural Gas Storage 92B--1
NZD+ Visitor Arrivals m/m-0.5%--1
09/19
ALL+ G20 Meetings***3
04:00NZD+ Credit Card Spendingy/y4.5%--1
05:30JPY+ All Industries Activity m/m-0.4%0.4%-1
07:00EUR+ German PPI m/m-0.1%-0.1%-1
09:00EUR+ Current Account13.1B14.3B-1
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