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Wednesday, 29 Sep 2010

USD Tumbles Against Rivals Following Disappointing News

A disappointing US consumer confidence report released yesterday, caused the ‎greenback to take heavy losses against virtually all of its main currency rivals. The ‎dollar appears to have stabilized in overnight trading, but only after it hit a more ‎than 2-year low against the Swiss franc. Analysts are doubtful about whether the ‎USD can bounce back from these losses in the near future.‎

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Economic News

USD - Greenback Falls Among Rumors of Fed Intervention

A worse than expected consumer confidence report released yesterday has sparked ‎rumors that the Fed will take definitive steps in order to help stimulate the ailing ‎US economy. The CB Consumer Confidence report came in at 48.5, well below the ‎predicted figure of 52.5. The steps, which are commonly referred to as quantitative ‎easing, have yet to be implemented. That being said, even the possibility of a new ‎Fed stimulus plan has sent the dollar down. ‎

USD/CHF dropped to its lowest level since March of 2008. Currently the pair is ‎trading steadily around the 0.9760 level. Meanwhile, the greenback has hit a new ‎low against the yen since the Bank of Japan moved in to devalue the JPY earlier ‎this month. USD/JPY currently stands at 83.87, down over 30 pips from yesterday ‎afternoon. ‎

Today, most analysts are forecasting the dollar's bearish trend to continue. While ‎the Swiss KOF Economic Barometer, set to be released later today, is forecasted to ‎come in below last month's levels, the USD is unlikely to see major gains as a result. ‎As long as investors feel that quantitative easing is still a plausible move by the Fed, ‎the dollar will likely remain low, making riskier currencies more attractive.‎

EUR - EUR Makes Big Gains in Dramatic Trading Day

Rumors that the Fed will take new measures to boost the struggling US economy ‎sent riskier currencies soaring during trading yesterday, with the euro making some ‎of the most dramatic gains. With the value of the US dollar low, and still dropping, ‎higher yielding currencies remain attractive to investors looking for short term gains ‎in the currency market. ‎

The EUR/USD pair approached the 1.3600 level yesterday, soaring almost 200 pips ‎in the span of a few hours. The pair has since only staged a marginal correction, ‎and is currently trading around the 1.3580 level. Against the yen, the euro saw ‎gains of over 100 pips during the same time frame yesterday. The EUR/JPY pair ‎currently remains steady around the 113.85 level.‎

Today, analysts are forecasting further gains for the euro, as a lack of significant ‎global economic news will likely keep dollar prices low. Traders will want to watch ‎out for any surprise announcements from the Fed regarding the falling greenback. ‎Any news about a fresh US stimulus plan could send the euro up once again.‎

JPY - Yen Continues to Make Gains on the US Dollar

The USD/JPY pair dropped well below the 84.00 level yesterday, marking a fresh ‎low for the pair since the Bank of Japan (BoJ) intervened to devalue the yen earlier ‎this month. While the main catalyst for the drop was yesterday's disappointing US ‎consumer confidence report, the dollar has been falling consistently against the yen ‎over the past few weeks. Further gains by the yen are likely to fuel investor ‎concerns that the BoJ will step in once again to drive the Japanese currency down. ‎Japan's economy is largely export based, meaning a weak yen is in the country's best ‎interests.‎

Barring any major moves from the BoJ today, the yen will likely continue to make ‎gains on the dollar, especially if the rumors of a Fed stimulus package persist. At ‎the same time, the JPY took substantial losses against the euro and Swiss franc ‎yesterday. Should investor risk taking continue to dominate market sentiment, the ‎yen will likely remain low against its riskier counterparts.‎

Crude Oil - Oil Sees Heavy Fluctuations Ahead of Inventories Report

Over the last few days, the price of crude oil has been bouncing back and forth ‎between around $75.50 a barrel and $77.00 a barrel. While prices have been ‎somewhat influenced by the value of the US dollar, the commodity has not been ‎able to establish a clear trend. In yesterday's trading alone, oil jumped around 150 ‎pips, followed by a steep drop of around 70 pips, and finally by another upward ‎correction. ‎

This trend may change later today when the latest US Crude Oil Inventory figure is ‎released. Analysts are forecasting a drop in US inventories from last week. Should ‎today's figure come in at the predicted level of -0.4M, oil may restart the bullish ‎trend it experienced throughout last week. At the same time, traders will want to ‎pay attention. If the figure comes in above the predicted level, prices may fall in ‎afternoon trading. ‎

Technical News


Most technical indicators show this pair in overbought territory, meaning a downward ‎correction is likely to take place. The RSI on the 8-hour chart is right on the border of ‎the upper resistance line, while the Stochastic Slow on the 4-hour chart is very close to ‎forming a bearish cross. Traders may want to go short on this pair today.‎


After a heavy trading day yesterday, most technical indicators show this pair in ‎neutral territory. These include the Williams Percent Range on the 4-hour chart, and ‎the Stochastic Slow on the 8-hour chart. Traders may want to take a wait and see ‎approach with this pair today, as a clearer picture is likely to present itself later on.‎


The Relative Strength Index and Williams Percent Range on both the 4 and 8-hour ‎charts are showing this pair well into oversold territory. Typically this means that a ‎bullish correction is likely to occur in the very near future. Traders may want to go ‎long with tight stops in their positions today.‎


After a steep drop yesterday, technical indicators show that this pair may be poised ‎for an upward correction. The Williams Percent Range on the 4-hour chart and the ‎MACD on the 8-hour chart both show the pair in oversold territory. Going long may ‎be the preferred strategy today.‎

The Wild Card

Dow Jones Industrials ‎

After making some fairly significant gains yesterday, technical indicators are showing ‎that the Dow Jones may be due for a downward correction. The Stochastic Slow on ‎the 4-hour chart is close to forming a bearish cross, while the Williams Percent Range ‎on the 8-hour chart is well into overbought territory. CFD traders may want to go ‎short in their positions today. ‎

Current Time: 11/30 18:28 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
22:45NZD+ Overseas Trade Index q/q1.3%-2.5%-1
23:30AUD+ AIG Manufacturing Index50.2--1
USD+ Total Vehicle Sales18.2M 18.0M-1
00:50JPY+ Capital Spending y/y5.6%2.3%-1
01:30AUD+ Building Approvals m/m2.2%-2.4%-3
01:30AUD+ Current Account-19.0B-16.6B-3
02:35JPY+ Final Manufacturing PMI52.852.8-1
04:30AUD+ Cash Rate2.00%2.00%-5
04:30AUD+ RBA Rate Statement---5
04:45JPY+ 10-y Bond Auction0.32|2.8--1
06:30AUD+ Commodity Prices y/y-19.8%--1
07:45CHF+ GDPq/q0.2%--1
08:00GBP+ Bank Stress Test Results---5
08:00GBP+ BoE Financial Stability Report---3
08:00GBP+ FPI ---1
08:30CHF+ Employment Level4.24M4.24M-3
09:15CHF+ Retail Sales y/y0.2%0.4%-3
09:15EUR+ Spanish Manufacturing PMI51.351.9-3
09:30CHF+ Manufacturing PMI50.750.8-1
09:45EUR+ Italian Manufacturing PMI54.154.3-1
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