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Thursday, 21 Oct 2010

USD Reverses Gains, Drops against Major Counterparts

The U.S. dollar on Wednesday gave back most of the gains against major counterparts, dropping against the EUR and felling to a 15-year low against the Japanese yen, as the knee jerk reaction to China's interest rate hike subsided.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupdownnoupup
Weekly Trendnodowndowndowndownup
Resistance1.39951.588081.950.97350.98950.8885
1.39751.586081.750.97150.98750.8865
1.39451.583081.450.96850.98450.8835
Support1.38851.577080.850.96250.97850.8775
1.38551.574080.550.95950.97550.8745
1.38351.572080.350.95750.97350.8725

Economic News

USD - USD Reverses Gains, Dropping versus Most Currency Counterparts

The USD fell yesterday, reversing Tuesday's gains, as the knee jerk reaction to china's small interest hike subsided and a renewed interest in growth linked currencies such as the EUR and Australian Dollar reemerged. The dollar was put under further pressure as the release of the Beige Book showed continued weakness in the U.S economy, intensifying expectations of renewed quantitative easing measures by the Federal Reserve. The dollar plunged to a new 15-year-low against the yen, falling to a low of Y80.84, before recovering to around Y 81.08.

The USD briefly rallied during today's overnight trading after comments by Treasury Secretary Timothy F. Geithner to the WSJ, reiterating his support for a stronger dollar. The effects, however, were short lived and the greenback has since reversed most of its gains versus its major counterparts.

The dollar is currently at 81.22 yen from 81.09 yen in New York yesterday. It touched 80.85 yesterday, after briefly reaching a high of 81.83 yen. The dollar gained to $1.3917 per euro from $1.3964.

Today traders should follow the release of the Unemployment Claims data at 12:30 as well as the Philly Fed Manufacturing Index at 14:00 GMT which will likely contribute to the debate surrounding monetary easing and provide volatility to the USD pairs.

EUR - EUR Surges on Merkel Comments

The EUR gained broadly against major counterparts Wednesday following optimistic comments by German Chancellor Merkel on the one hand and renewed expectations of continued monetary easing by the Federal Reserve on the other.

Merkel stated that though the global economy has yet to fully recover from the recession, there are "good reasons to turn now to exit strategies" and away from further easing measures. This bolstered expectations of a stronger euro supported by increasing confidence in the European recovery.


The pound rose against the dollar after U.K. Chancellor of the Exchequer George Osborne stated his plan of tackling the nation's 156 billion-pound ($246 billion) budget deficit. The pound climbed to $1.5851; however, it gave up some of its gains and is currently trading around $1.5820.

A slew of economic data is expected from the euro-zone today which is expected to shed light on the manufacturing and services industries in the euro-zone. Furthermore, retail sales data is expected from the U.K at 8:30 GMT as well as comments by MPC Member Posen at 9:15 GMT. With the abundance of news releases, today is expected to be an exciting day for the EUR and GBP.

JPY - AUD Declines on Lower Equities, Chinese Data

The Australian dollar retreated during today's early trading as Asian shares fell and following the release of mixed economic data from China. However, the Aussie still remains within two U.S. cents of parity on speculation the Federal Reserve will resume quantitative easing measure, namely injecting more money into the U.S economy, debasing the greenback.

The Aussie is currently at 98.28 U.S. cents from 98.71 cents in New York yesterday. It climbed to $1.0004 on Oct. 15. The Aussie is at 79.92 yen from 80.04 yen, after rising to 81.83 yen on Oct. 7.

Crude Oil - Crude Declines on Growth Prospects

The December contract lost as much as 52 cents, declining to $82.02 a barrel in electronic trading on the New York Mercantile Exchange. Crude declined as the Dollar reversed some of its earlier loses and a report during today's early trading showed the Chinese economic growth slowed.

Crude oil climbed the most in five weeks yesterday as the dollar tumbled to a 15-year low against the yen and a drop in total U.S. crude-oil and fuel supplies.

Today, traders are advised to follow the numerous data releases from the U.S and Europe as they will likely determine the crude price levels for today.

Technical News

EUR/USD

The pair may see some downward correction today as the RSI for the pair is floating in the overbought territory on the 2 hour chart with a bearish cross evident on the 4 hour chart's Slow Stochastic. Going short with tight stops may be preferred for the day.

GBP/USD

While mostly flat, with most indicators floating in neutral territory, some downward movement may be expected for the pair today as the RSI for the pair is floating in the overbought territory on the 2 hour chart while a bearish cross is evident on the 4 hour chart's Slow Stochastic. Going short with tight stops may be a preferred for the day.

USD/JPY

The pair seems to be range trading at the moment with most indicators floating in neutral territory. It seems to have found a comfortable range between 80.90 and 81.50. Waiting on a clearer direction for the pair may be advised for today.

USD/CHF

Following a sharp rise over the past few days, the pair seems to be back in its range trading with most indicators floating in neutral territory. Waiting on a clearer direction for the pair may be advised for today.

The Wild Card

EUR/SEK

Following a sharp drop some upward correction may be expected for the pair today. The RSI for the pair is floating in the oversold territory hourly and 2 hour charts indicating upward pressure. The Williams Percent Range for these charts also supports upward direction. Furthermore, a bullish cross is seen on the 4 hour and 2 hour charts' Slow Stochastic. Forex traders may be advised to go long for today, at a great entry price.

Current Time: 10/30 13:39 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/30
13:30USD+ Advance GDPq/q4.6%3.1% 3.5%5
13:30USD+ Unemployment Claims 283K284K 287K 5
13:30USD+ Advance GDP Price Index q/q2.1%2.0% 1.3%3
14:00USD+ Fed Chair Yellen Speaks---5
15:30USD+ Natural Gas Storage 94B--1
22:45NZD+ Building Consents m/m0.0%--3
10/31
00:00JPY+ Monetary Policy Statement---5
00:00JPY+ BoJ Press Conference---5
00:30JPY+ Household Spendingy/y-4.7%-4.0%-3
00:30JPY+ Tokyo Core CPI y/y2.6%2.5%-3
00:30JPY+ National Core CPI y/y3.1%3.0%-1
00:30JPY+ Unemployment Rate3.5%3.6%-1
01:05GBP+ GfK Consumer Confidence-10-1
01:30AUD+ PPI q/q-0.1%--5
01:30AUD+ Private Sector Credit m/m0.4%0.4%-1
06:00JPY+ Housing Startsy/y-12.5%-17.1%-1
07:00JPY+ BoJ Outlook Report---3
08:00EUR+ German Retail Salesm/m2.5%-0.8%-3
08:45EUR+ French Consumer Spending m/m0.7%-0.3%-3
10:00EUR+ Italian Monthly Unemployment Rate12.3%12.4%-1
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