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Wednesday, 15 Sep 2010
Yen Reaches 15-Year High
The Yen rose to a 15- year high against the dollar on Tuesday after Japan's prime minister won a ruling party leadership vote, reducing the chances Japanese authorities would attempt to stem yen gains. The USD/JPY fell as low as 82.91, its lowest level since mid-1995.
USD - Dollar Drops against the Majors
The U.S. dollar fell against most of its major currencies on Tuesday, touching a 15-year low below 83 yen as a break of technical support levels in several currency pairs sparked a stampede out of the greenback. Also the AUD/USD pair rose as high as 0.9456, its highest level since July 2008 before correcting itself. Currently the pair is trading around the 0.9370 level.
The significant break came in late morning New York trade on market talk that Goldman Sachs said in a research note that while it suspects the Federal Reserve will ratchet down growth forecasts, the revision is unlikely to be enough to spark additional easing.
Another leading indicator released yesterday was U.S. Core Retail Sales. This number handedly beat last month's results but failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies.
Looking ahead today, the two main news events that may have a very large impact on the Dollar and its main currency pairs are the Industrial Production and Crude Oil Inventories at 13:15 GMT and 14:30 GMT respectively. These reports are very important and are likely to impact dollar volatility. Traders should pay close attention to the market as there is an opportunity to capitalize on the fluctuations which are likely to follow this release.
EUR - EUR Traded Near One-Month High against Dollar
The EUR strengthened against most of its major counterparts yesterday, continuing to prove that for the time being the euro is the solid currency that traders can rely on to provide them with steady profits. The 16-nation currency extended gains versus the USD on Tuesday, to close at around 1.2980 amid a broad sell-off in the U.S. dollar.
The euro experienced similar behavior against the JPY and closed at 109.90.
The euro's advance began after U.S. retail sales rose more than expected in August, notching the largest gain in 5-months. Once the euro broke above $1.2920-30 area, the level that was the top of the range since August, it kept going to a one-month high of $1.3033. The move may be accelerated, as being at parity was a key technical point which may encourage more selling of dollars, analysts said.
In addition, the single currency, which slid below $1.19 in June on euro-zone debt trouble, has since risen by more than 8% after smooth government debt auctions in Greece, Portugal, Spain and Ireland eased concerns.
JPY - Yen at 15-Years High vs. Dollar
The yen rose to a 15- year high against the dollar on Tuesday after Japan's prime minister won a ruling party leadership vote, reducing the chances Japanese authorities would attempt to stem yen gains. The USD/JPY fell as low as 82.91, its lowest level since mid-1995 before correcting itself. Currently the pair is trading around the 84.60 level.
The yen has gained more than 10% against the dollar this year as recent weak U.S. data and record low bond yields drove money away from U.S. assets.
Investors worry over a recent rise in the JPY as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency. With steady gains primarily against the dollar, much of the yen's bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. This has had a positive effect on major JPY currency pairings, as the rising turmoil in the market is leading to greater investment in the Japanese currency.
Oil - Traders Await Crude Oil Inventory Report
Oil settled below $77 a barrel Tuesday as the stock market swung between losses and gains on mixed economic news. After a run-up from $72 a barrel at the end of August, crude oil has again slowed its advance, mainly on concerns about the strength of the global economy. While positive news on China's economy has tended to push prices up, data from the U.S. and Europe has been a mixed bag, keeping a lid on price increases.
Today, the release of the crude oil inventory report is likely to help determine the market's next direction for black gold. Moreover, a release of a string of positive economic figures from U.S. could help its bullishness. Therefore, traders are advised now to make some profits as the price of crude oil is set to remain volatile in the short term.
There appears to be a bullish cross on the hourly chart's Slow Stochastic for this pair, indicating an upward correction may be imminent. The recent bullish cross on the daily chart's Slow Stochastic supports this notion. Going long might not be a bad idea today.
The price of this pair appears to be floating in the over-sold territory on the RSI of both the hourly and daily charts, indicating that we could see an upward correction in the nearest future. The bullish cross on the hourly chart's Slow Stochastic supports this notion. Going long might be a good strategy today
After yesterday's volatile price movements, this pair appears to have temporarily calmed down. The price appears to be floating in neutral territory on most oscillators and momentum appears to be showing a flat price movement. Waiting for a clearer signal might be the right choice today
The Bollinger Bands on the hourly and daily charts appear to be tightening in anticipation of a volatile movement. With the recent bullish cross on the 4-hour chart's Slow Stochastic oscillator, the impending movement may be a downward correction. Going long with tight stops might be the right choice today
The Wild Card
The continuous upward trend in this commodity appears to be running out of steam lately. The highs of the upswings have begun to diminish in size and the longer-term oscillators are beginning indicate an imminent correction. There appears to be a bearish cross on the daily chart's Slow Stochastic, and the weekly Momentum oscillator has turned downwards. Forex traders have a great opportunity to enter this possible trend reversal at a fantastic price and capture the impending price swing.