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Tuesday, 30 Mar 2010
Volatility for Sterling Forecasted Following UK Indicators
Sterling traders can expect a busy trading day today as the U.K Nationwide HPI and Current Account reports are likely to shake up the market. The reports, scheduled for 06:00 GMT and 08:30 GMT respectively, may provide the Pound with the necessary momentum to make gains on both the U.S. Dollar and Euro.
USD - Consumer Confidence Report May Lead to USD Gains
The CB Consumer Confidence Survey, set to be released at 14:00 GMT today, will likely lead to heavy trading among USD pairs. The survey asks 5000 respondents to rate how they perceive the current and future economic climate in the United States. This month's survey may prove to be more important than others, largely due to the fact that the American unemployment levels are forecasted to improve in the near future. An increase in consumer confidence combined with solid employment figures will likely lead to significant Dollar gains.
Analysts are forecasting a figure of around 50.2 for the Consumer Confidence report. This would mark a pronounced increase over last month's figure of 46.0, and may signal a real turning point in the U.S. economy. Traders can expect USD to rise against its major counterparts, providing the predictions come true. That being said, an unexpected drop in consumer confidence would likely hurt the Dollar, and could signal a bearish trend for the rest of the week.
Looking further ahead, traders are reminded to pay careful attention to the U.S. Non-Farm Employment Change figure set to be released on Friday. This is one of the most critical U.S. economic indicators, and it consistently creates heavy market volatility.
EUR - European Market Set For Volatile Day
Several British economic indicators are likely to lead to heavy trading in the European Market today. The Nationwide Housing Price Index, (HPI), is a leading indicator of the health of the U.K. housing industry. With the British economy largely sagging over the last few months, a positive result from this report may signal the turning point traders are looking for. Additionally, the Current Accounts report, which indicates the difference in value for imported and exported goods and services, is widely seen as a leading market indicator.
While the HPI is forecasted to show positive gains in the British housing market, the Current Accounts will likely be unchanged from last month. Traders will want to pay attention to both reports, as any positive news out of Europe will likely lead to risk taking among investors. This would likely lead to gains for both the Euro and Pound against the safe haven currencies.
JPY - Number of Indicators Set to Impact Yen Today
While the Yen has been trading with mixed results against its major counterparts as of late, today's British and American economic reports will likely lead to a more stable direction for the Japanese currency. Providing the British Current Accounts report remains unchanged from last month as forecasted, investors will likely shy away from risk taking. This could boost the safe haven Yen in afternoon trading. This sentiment could be reinforced if the U.S. Consumer Confidence survey comes in line with expectations.
That being said, traders should be warned that any unexpected results from either indicator may cause risk taking, likely leading to the Yen falling. With no significant JPY news events scheduled for today, it appears the Yen will have to rely on external indicators for its direction in trading.
Crude Oil - Crude Prices May Drop Following British Reports
While Crude Oil prices have been fluctuating quite heavily as of late, a decrease in risk sentiment among investors may lead to a prolonged downtrend. Investors are likely to be turned off from risk taking depending on the outcomes of both British reports set to be released today. Additionally, if USD receives a boost due to the Consumer Confidence report, traders are warned that the price of oil may drop.
Of course, any trend that oil takes today may change drastically after Wednesday's U.S. Crude Oil Inventories report. Traders should be aware that if the inventory comes in below expectations, the price of crude will likely rise in afternoon trading.
The Wild Card