Month: September 2009

Source: ForexYard

The US Federal Reserve yesterday upgraded its assessment of the U.S. economy, saying growth had returned after a deep recession. As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. The previously weakened Dollar had been propping up commodity prices. Following the US Crude Oil Inventory report yesterday, oil prices dropped nearly 4% to below $68.50 a barrel. The Fed statement, which pushed the US Dollar up, only helped extend these decreases in oil prices.

Economic News

USD – Dollar Optimism High Following Fed Statements

The Dollar rallied yesterday against most of its major counterparts amid concern that the Federal Reserve is nearing the end of its efforts to lift the economy out of recession. The Dollar has been sold-off recently partially due to growing optimism about the outlook for the U.S. economy. The USD finished yesterday’s trading session 100 pips higher against the EUR at the1.4700 level.

The Federal Reserve yesterday upgraded its assessment of the U.S. economy, saying growth had returned after a deep recession. As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. The Fed repeated that it continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The Fed also said it would slow its purchases of mortgage debt to extend that program’s life until the end of March, in a move toward withdrawing the central bank’s extraordinary support for the economy and markets during the contraction. Analysts had expected the move, which smoothes out the purchases.

Looking ahead to today, the most important economic indicators scheduled to be released from the U.S. are the Unemployment Claims and Existing Home Sales at 12:30 GMT and 14:00 GMT respectively. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost the USD in the short-term. Traders are also advised to follow FOMC member Evan’s speech at around 14:30 GMT. This speech is very important as it is likely to impact the Dollar’s volatility. Traders are advised to watch closely, as this is likely to set the pace of the Dollar’s movements going into the rest of the week’s trading.

EUR – EUR Declines as Stock Market Falls

The EUR fell to session lows against the U.S. Dollar yesterday, weighed down by declines in stocks following early gains. This came after the Federal Reserve signaled that interest rates will remain low for some time. By yesterday’s close, the EUR had fallen against the USD, pushing the oft-traded currency pair to 1.4700. The EUR experienced similar behavior against the GBP and closed at 0.9000.

Europe’s manufacturing and service industries expanded for a second month in September, suggesting that the Euro-Zone regional economy is gathering strength and showing signs of emerging from its worst recession in more than six decades after governments stepped up stimulus measures and the European Central Bank (ECB) injected billions of euros into markets.

In addition, European economic confidence rose to a 10-month high in August but rising unemployment is a reason to remain prudent about the economic outlook.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.

JPY – Yen Trading Down against Currency Rivals

The Japanese Yen saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell against the USD after several days of recovery, while the GBP/JPY cross also rose to around 149.40. The only economic events out of Japan yesterday were the trade balance figures; only slightly changed from forecasts as volatility was kept to a minimum.

Japan’s exports fell in August for an 11th consecutive month as recovery struggled to gain traction in the island economy. Bank of Japan Governor Shirakawa said last week that he is concerned the recovery may not outlast the worldwide stimulus packages that boosted demand for the country’s cars and electronics. The central bank cited exports as the main reason for raising its assessment of the economy last week, as record unemployment and slumping wages weaken consumer spending.

Another headwind for Japanese exporters is an appreciating currency. The yen has gained more than 7% against the Dollar in the past six months, threatening to erode companies’ profits earned abroad.

Crude Oil – Oil Drops as Inventory Rises; Demand Concern?

Oil prices dropped nearly 4% to below $68.50 a barrel during yesterday’s trading session. This drop came after a U.S. government report showed Crude Oil inventories rose more than expected, rekindling worries that energy demand in the world’s biggest consumer will be slow to recover in the wake of the recession.

The International Energy Agency (IEA) said that the inventories rose to 2.8 million barrels in the week September 18, against analysts’ expectations of a 1.5 million barrel decline.

A weak Dollar had been propping up prices recently. The greenback was narrowly mixed against the JPY, EUR and GBP on Wednesday. Oil, like other commodities, is priced in dollars so when the U.S. currency weakens, commodities become cheaper for investors holding other currencies.

As for today, traders should pay attention to the U.S Unemployment Claims report as it has tended to have an impact on Crude Oil’s prices recently, especially in the short-term.

Technical News

EUR/USD

While this pair experienced a substantial correction yesterday, it failed to break out of its current bullish channel. With a bullish cross on the 4-hour Slow Stochastic, there is the possibility that the upward movement may continue later today. Going long might not be a bad idea today.

GBP/USD

With many signals pointing to neutral, this pair appears to be leveling off. The hourly and 4-hour MACD float near the 0.0 mark, while the Slow Stochastic indicator floats evenly between the 20 and 80 levels on both charts as well. Waiting for a clearer signal on the hourlies might be a wise strategy today.

USD/JPY

It appears as if yesterday’s downward movement has created a few signals which are anticipating a correction today. The hourly Slow Stochastic shows a fresh bullish cross, as does the daily MACD. With the price hovering near the over-sold territory on the hourly, 4-hour, and daily RSI, there is a concern, however, that there may be a little room to continue its bearishness before correcting back up. Traders should wait for the upward swing, and then jump in as early as possible.

USD/CHF

This pair appears to be giving off mixed signals. The hourly chart shows neutrality, the 4-hour chart has both bullish and bearish indicators, and the daily chart suggests upward pressure. While some signals contradict this message, it seems as if the overall trend is for an impending bullish movement. Going long with tight stops might not be a bad choice today.

The Wild Card – USD/MXN

It appears as if a fresh bearish cross has formed on the hourly Slow Stochastic, suggesting to forex traders that an opportunity is impending. The RSI on the hourly, 4-hour, and daily chart are all sitting in a bearish posture. Combined with the bearish cross mentioned above, it is evident that a downward movement is impending. Going short on this pair today may not be a bad idea.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

*Japan Merchandise Trade Balance in August better than expected at ¥185.7B

Europe

*Euro-zone PMI rose to 50.8 in September from 50.4 the previous month

Americas

*The Fed left benchmark interest rate unchanged at 0.25% meeting market expectations

*EIA Crude Oil Stocks unexpectedly gained 2.8M

The Overall Sentiment

US markets closed in negative territory and the Dollar strengthened in a day filled with volatility caused by the Federal Reserve’s monetary policy meeting. The Fed kept its benchmark interest rate unchanged at 0.25% and stated it will remain exceptionally low for an extended period. According to Fed’s chairman Ben Bernanke the US economy’s recovery is accelerating and Fed officials decided to gradually slow the pace of mortgage securities purchases thus extending the completion of the program to the end of March 2010.  By postponing the program’s completion deadline while keeping the magnitude unchanged the Fed’s policy makers are signaling the markets that they see sufficient economy improvement to spread their stimulus over a longer period of time with the purpose of sustaining a smooth transition until the program’s expiration date. Immediately after the Fed’s announcement the Dollar dropped rapidly but forcefully strengthened in the subsequent hours posting its largest gain against the Euro this month and correcting previous losses against the Pound. Volatility was also felt in commodity-linked currencies with the Australian and New Zealand dollars hitting their intraday highest levels in more than a year but declining as the Dollar advanced. Oil contributed to the sentiment by dropping the most in over a month after the weekly Crude Oil Stocks report showed an unexpected gain in stockpiles of 2.8 million barrels. The Yen recuperated versus the Dollar throughout the session after yesterday’s weakness and pushed slightly higher as Japan’s Merchandise Trade Balance showed a surplus of ¥185.7B by the end of the day.

The Day Ahead

The day will start with Australia’s New Home Sales report indicating the current health of the country’s housing conditions and will continue with Germany’s IFO Business Climate survey where markets expectations point to an increase that will bring the index to its highest level in a year indicating that Europe’s largest national economy continues to strengthen leaving recession in the past. In the US Initial Jobless Claims is projected to further indicate that the labor market’s deterioration has slowed the pace as the country’s economy improves. Existing Home Sales is expected to bring some volatility to the Dollar as it is a sensitive factor to the US economy. Market attention will be focused on the G-20 meeting expecting insights on global recovery and exit strategies. In New Zealand its Trade Balance figures will be released where more strength is expected after the positive GDP data earlier this week. The Bank of Japan’s monetary policy meeting will be closely followed to better comprehend the direction of the world’s second largest economy as BoJ’s Governor stated last week that the recovery of the country’s economy may be temporary and only based on worldwide stimulus packages and programs that spurred demand for Japanese cars and electronics.

Technical Analysis

CAD/JPY DAILY

After a steep four-week uphill trend CAD/JPY topped slightly above 90 in early August and developed a bearish channel with very identifiable downward waves. The cross presents an opportunity to open a Short position as it currently trades near the upper boundary of the channel at what seems to be the beginning of a new bearish cycle.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By CountingPips.com

The U.S. Federal Open Market Committee concluded its monetary policy meeting by holding the U.S. interest rate steady at its record low level. The FOMC cut the interest rate to the target range of 0 percent to 0.25 percent in December 2008 and today’s decision to keep the rate unchanged was widely expected by market forecasts.

The Fed statement said that “economic activity has picked up following its severe downturn” but that the economic climate is “likely to remain weak for a time”. The raising of interest rates will be some time in coming as the Fed once again maintained the familiar phrase that interest rates would stay at low levels for “an extended period” as inflation has not become an issue.

Also, the Fed announced a program of buying $1.25 trillion in mortgage-backed securities and up to $200 billion of agency debt in an effort to keep mortgage rates low and support the housing markets.  The program of buying $300 billion in Treasuries is still on pace to finish at the end of October.

US Dollar higher in Forex Trading today.

The U.S. dollar has been mostly higher today in forex trading against the other major currencies on this interest rate day. The dollar has been stronger versus the euro, Canadian dollar, Swiss franc, New Zealand dollar, Australian dollar and the Japanese yen while trading almost unchanged against the British pound.

The euro has fallen versus the dollar today as the EUR/USD has declined from its 1.4810 opening(00:00 GMT) to trading at 1.4777 in the late afternoon of the U.S. trading session at 3:28pm EDT according to currency data from Oanda.

The British pound is almost unchanged today as the GBP/USD has edged up from its 1.6388 opening exchange rate to trading at 1.6394 usd per gbp.  The dollar has gained ground versus the Japanese yen and trading at 91.17 after opening at the day at the 90.79 exchange rate.

The dollar has increased today versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.0731 after opening the day at 1.0677.

The dollar has gained against the Swiss franc as the USD/CHF trades at 1.0249 after opening at 1.0224 today. The Australian and New Zealand dollars have been lower against dollar as the AUD/USD trades at 0.8724 after a 0.8759 opening while the NZD/USD trades at 0.7223 today after opening at the exchange rate of 0.7259.

NZD/USD Weekly Chart – The New Zealand Dollar, despite its decline today, has been on quite a run versus the US Dollar since the first quarter of 2009.  The NZD/USD has come from a low of around 0.4890 in the beginning of March to reaching its highest exchange rate in over a year this week around 0.7300.

By Fast Brokers – Gold failed to breach September highs yesterday, and the precious metal is declining as investors snap up the Dollar.  Investors are presently making a slight retreat from risk as they await the Fed’s monetary policy decision later today.  While we expect the Fed to keep its policy unchanged, the potential for a monetary shock always exists.  Meanwhile, the EU’s PMI data came in negatively mixed today, catching investors a bit off-guard.  The disappointing data has resulted in a comparatively weak Euro.  Underperformance in the Euro is dragging gold lower since the precious metal has recently experienced a stronger positive correlation with the EUR/USD than the GBP/USD.   The S&P futures are hovering around even, and gold will likely remain within a reasonable trading range until the Fed announces its decision.  We maintain our positive outlook on gold trend-wise since we are optimistic about the precious metal’s correlations over the near-term.  Additionally, gold has given us little reason to question the uptrend’s technical strength.

Technically speaking, gold’s psychological $1000/oz area should continue to serve as a strong support.  Gold’s continual defense of $1000/oz is a positive sign for the uptrend since the precious metal is building a solid technical base.  Gold has multiple uptrend lines along with 9/21, 9/15, and 9/10 lows serving as technical cushions.  As for the topside, gold is staring down previous 2009 highs and our relatively flat 3rd tier downtrend line.  Beyond these technical barriers, gold faces the final frontier in March 2008 highs.  These technical levels are the only foreseeable obstacles separating gold from more exciting near-term gains.  However, gold will need a strong push to the topside backed by healthy volume.  Therefore, the precious metal will require participation from its correlations across the board.

Present Price: $1011.55/oz

Resistances:  $1014.88/oz, $1016.56/oz, $1018.24/oz, $1019.79/oz, $1020.86/oz, $1024.48/oz

Supports: $1011.51/oz, $1010.39/oz, $1008.52/oz, $1007.21/oz, $1005.72/oz

Psychological: $1000/oz, 2009 highs and March 2008 highs

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD is pulling back from intraday highs after EU PMI data disappointed for the most part.  While France’s PMI data outperformed, Germany’s came in surprisingly mixed, resulting in subpar headline EU PMI numbers.  The disappointing PMI results are creating a relative weakness in the Euro, dragging down on what was clearly an overbought EUR/GBP.  Although the PMI numbers were negatively mixed, all of the data points still registered an improvement from their previous releases.  Regardless, the failure to broadly surpass expectations is taking a bit of momentum out of the EUR/USD’s sails.  Investors will now look for strong German Ifo Business Climate data tomorrow to help counterbalance today’s disappointment.  In all, the EU’s economic fundamentals continue to indicate a solid recovery.  However, investors are becoming uncertain in terms of how long the impressive recovery will last until we witness a noticeable dip in data.  Additionally, will the future dip in data yield a near-term setback, or a larger pullback resulting in a double dip recession?  While these longer-term considerations, they warrant discussion nonetheless.  As for the near-term, the EUR/USD’s uptrend remains intact as the S&P futures trade well above their own significant technical supports.  Strong EU and U.S. data throughout the remainder the week coupled with a productive G20 meeting could help lead the charge forward.  Meanwhile, investors should keep an eye on the downturn in the Shanghai Composite and Baltic Dry Indexes.  Any further technical deterioration in these indexes could spark a pullback in global equities and drag the EUR/USD lower.  For a more detailed analysis, view our S&P futures commentary.

Technically speaking, the EUR/USD has one more tough area of resistance before taking another large leg up.  8/21/08 highs and the 8/12/08-8/13/08 consolidation represent a zone of strong technical resistance, especially since they revolve around the highly psychological 1.50 level.  That being said, the EUR/USD may have limited room to the topside for the immediate-term.  However, an eclipse of these levels on a boost in volume could ignite another impressive rally in the currency pair.  As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with weekly lows and the psychological 1.45 level.  Therefore, the EUR/USD has several lines of defense to the downside.  We maintain our near-term uptrend on the EUR/USD until further notice.  However, the medium-term is becoming much more uncertain.

Present Price: 1.4756

Resistances: 1.4780, 1.4798, 1.4822, 1.4841, 1.4864, 1.4895

Supports: 1.4745, 1.4724, 1.4703, 1.4678, 1.4656, 1.4634

Psychological: 1.45, 1.50

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable experienced a solid rally today after the BoE uniformly kept its QE package unchanged.  Furthermore, the BoE didn’t act on the idea of lowering the deposit rate.  Hence, the central bank feels comfortable with its present level of liquidity.  However, the BoE’s wording certainly left the door open for further liquidity measures down the road.  The Pound reacted positively to the neutral behavior of the BoE, registering large gains against both the Dollar and the Euro.  Today’s development should help stem the bleeding caused by Governor King’s exceptionally dovish attitude.  However, BBA Mortgage Approvals printed below expectations today, putting a damper on the positive outcome of the BoE meeting.  The recovery in Britain’s housing market has been the most impressive part of the nation’s economic recovery.  We saw the recovery in the Claimant Count Change level off last week as well.  Therefore, today’s strength in the Pound may not be long lasting if the recovery in British economic data slows down.  Such a development would give BoE Governor King ample reason to move forward with additional liquidity measures.  Furthermore, despite today’s decision by the BoE, we believe it is the central bank’s intention to keep the Pound comparatively weak in order to buoy its struggling services sector.  Hence, we maintain our negative outlook on the GBP/USD trend wise over the near to medium-term.

As for the time being, the Cable received much needed support above previous September lows.  Britain doesn’t have any more economic data on tap for the rest of the week, leaving the GBP/USD’s performance in the hands of the G20 meeting and U.S. economic data.  If the G20 summit goes smoothly and U.S. economic data outperforms like last week, the GBP/USD may experience further strength to the topside.  However, the currency pair must face multiple downtrend lines along with 9/17, 9/15, and 9/11 highs.  Therefore, the GBP/USD has quite a few technical obstacles to overcome before having the opportunity to log more substantial gains.  As for the downside, the GBP/USD also has multiple uptrend lines serving as technical cushions.  September lows continue to play an important role along with July lows and the highly psychological 1.60 level.  Hence, the GBP/USD has several strong supports and resistances to deal with before breaking out of its present trading band.  Regardless, we maintain our negative outlook trend-wise regardless of immediate term strength as long as our topside barriers are in place.

Present Price: 1.6409

Resistances: 1.6417, 1.6434, 1.6456, 1.6469, 1.6485, 1.6505

Supports: 1.6395, 1.6380, 1.6354, 1.6326, 1.6303

Psychological: 1.60, 1.65

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By FastBrokers – The USD/JPY pulled back yesterday as Dollar weakened across the board and U.S. equities rallied once again.  However, the USD/JPY has bottomed above September lows and is strengthening as the EUR/USD and gold move lower.  Hence, USD/JPY’s movements are clearly tied the currency pair’s correlations.  We expect this pattern to continue today until Japan releases its Trade Balance data late Wednesday EST.  We believe Japan’s Trade Balance will come in stronger than expected since China’s TEU data continues to grow with the country’s economy performing well.  Additionally, recent data from the U.S. has been stronger than expected; indicating demand for Japanese exports likely improved since the last time we received Trade Balance data.  An outperformance of Japan’s Trade Balance data would likely place further downward pressure on the USD/JPY, corresponding with our expectations continues strength in U.S. equities over the near-term.

However, as we explained in our S&P futures commentary, the Shanghai Composite Index (SCI) and Baltic Dry Index (BDI) are performing poorly.  While China’s demand for commodities doesn’t necessary impact its hunger for Japanese exports, any fundamental slowdown in China could seriously damage Japan’s present economic stabilization.  Strong growth in China has helped Japan’s economy a lot considering American consumption continues to decline.  While we don’t expect present setbacks in China to impact Japan’s Trade Balance release today, investors should keep a close eye on the performance of the SCI and BDI over the near-term.

In all, we maintain our negative outlook trend-wise on the USD/JPY.  The currency pair should continue to perform poorly as long as the global economy improves.  Since we have little reason to be bearish on the S&P futures over the near-term, it seems the USD/JPY’s downward trajectory is intact.  Furthermore, the DPJ has voiced a more conservative fiscal policy which would likely favor a stronger Yen.  Lastly, medium-term momentum is clearly in favor of the downtrend considering all of the technical supports and uptrend lines the USD/JPY has dropped through over the past month and a half.  Technically speaking, the USD/JPY faces several barriers to the topside, including all five of our present downtrend lines along with 9/21 highs.  Therefore, even though the USD/JPY may strengthen further over the immediate-term, the currency pair has a long road ahead to the north.  As for the downside, we spot technical cushions in the form of our 1st and 2nd tier uptrend lines along with 9/21 lows, 9/16 lows, and of course the highly psychological 90 level.  Therefore, the USD/JPY’s topside appears to have more room than the currency pair’s downside, favoring a positive performance for the time being.

Present Price: 91.50

Resistances:  91.62, 91.80, 91.91, 92.18, 92.39

Supports:  91.42, 91.22, 91.09, 90.88, 90.69, 90.44

Psychological: 90

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Source: ForexYard

Following two relatively peaceful trading days, today is filled with news publications from the major economies. Starting at 06:45 and until 09:00 (GMT) traders are advised to follow the news events from the Euro-Zone. Later on, the Crude Oil Inventories will be published at 14:30 (GMT). This indicator tends to have an instant impact on Crude Oil prices, and traders should use it with their trading. Finally, at 18:15 (GMT), the Federal Reserve will announce the U.S Interest Rates for September. This promises to create hefty volatility in the market, which should provide various opportunities for traders to enlarge profits.

Economic News

USD – The Dollar Falls before Federal Reserve Meeting

The U.S Dollar’s weakness resumed, as global investors again embraced risks, reducing safe-haven demand for the U.S. currency, as traders took positions on the first day of the Federal Reserve monetary policy meeting. The U.S. Dollar also weakened on speculation that the Group of 20 leaders, meeting in Pittsburgh starting tomorrow, will call for a reduction in global trade imbalances that may cause further gains in the greenback’s counterparts. The greenback traded at $1.4794 per EUR from $1.4790 yesterday, after declining to $1.4842 earlier on, the lowest level since September 22, 2008.

The hard-pressed Dollar had gained some ground Monday as equity markets weakened, with traders tying a decline in risk appetite to caution ahead of the Fed meeting, as well as the summit of Group of 20 leaders at the end of the week. But Tuesday’s resumption of risk appetite may reflect views in the market that neither event is likely to produce meaningful changes analysts said.

Market sentiment toward the USD remains bearish. Analysts expect the Fed to signal its ultra-loose monetary policy will remain in place well into next year. Additionally, as the G20 to discusses rebalancing the global economy this will almost certainly further weaken the Dollar. The Federal Reserve is widely expected to leave Interest Rates unchanged. But markets will seek out clues on the Fed’s asset purchases. Any sign that the Fed intends to continue its quantitative easing measures beyond this year could send the U.S Dollar to record lows.

EUR – Euro Hits $1.48 for the First Time in a Year!

The EUR traded at a 1 year high against a sliding Dollar on Wednesday, as traders took advantage of the U.S. currency’s rise the previous day to resume selling ahead of a Federal Reserve monetary policy meeting. The European currency advanced as hopes for a global recovery prompted investors to shift money to higher-yielding currencies from the safe-haven greenback.

In late trading, the EUR was up 0.8% at $1.4796 after options-related demand and strong Asian buying pushed it above $1.48 for the first time since September 2008. European Central Bank (ECB) Governing Council member Axel Weber said on Tuesday recent moves in currency markets were surprising given the Euro-Zone’s economic performance relative to other major economies. Traders expect the $1.4870 level may be the next target in EUR/USD cross, with many predicting an eventual move back to $1.50.

The British Pound also gained against the U.S Dollar for the first time in 4 days, as stocks rallied around the world on evidence that the global economic recovery is accelerating. The British currency advanced 1% to $1.6376. The GBP rose 0.2% against the EUR to 90.33 pence, ending a 6 day losing streak. Against the EUR, the British currency rebounded from near the lowest level in more than 5 months after Goldman Sachs Group Inc. recommended selling the common European currency against Sterling.

JPY – Yen Gains as USD Remains Under Pressure

The Japanese Yen extended its gains on Wednesday vs. the greenback as investors unloaded the U.S. currency ahead of meetings by the Federal Reserve and the G20 leaders this week. The currency gained for a 2nd day against the U.S Dollar on speculation world leaders will discuss policies to rebalance global economic growth at the G20 meeting this week. The JPY climbed to 90.82 Yen per Dollar from 91.10, and rose to 134.40 Yen per EUR from 134.76.

The Japanese currency is likely to strengthen further before new Finance Minister Hirohisa Fujii takes office this month; he said a strong Yen was generally good as it boosted the purchasing power of Japan’s economy. Fujii subsequently backed away from that comment, but speculation will remain that after sweeping to power last month, the Democratic Party of Japan may try to shift the country away from its reliance on exports and its opposition to Yen strength.

Crude Oil – Crude Rebounds as Inventories are Expected to Decline

Crude Oil prices rose Tuesday to above $72 a barrel, as pressure on the Dollar and expectations for a further drop in U.S. Crude inventories boosted market sentiment. Weekly petroleum data is likely to show that stockpiles of Crude fell again last week, as imports remained low analysts said. Last week, the EIA said Crude Oil Inventories decreased by 4.7 million barrels in the week ending Sept. 11, as imports dropped 2.1% from a week ago.

The move in Crude Oil today is likely to be supported by a fresh wave of selling of the U.S. Dollar. Traders will be waiting for U.S. Crude inventory data from the American Petroleum Institute and the U.S. Energy Information Administration. Also of interest to commodities traders is leaders of the world’s most powerful economies will convene in Pittsburgh later this week for the G20 Summit.

Technical News

EUR/USD

The pair continues with the bullish momentum and is now trading around the 1.4815 level. As both the MACD and the RSI on the 4-hour chart are pointing up, it looks that the bullish trend is likely to continue today. Going long might be the right choice today.

GBP/USD

Ever since bottoming at the 1.6130 level, the cable saw a sharp uptrend, and has recently breached through the 1.6400 level. As a bullish cross is taking place on the 4-hour chart’s Slow Stochastic, it seems that another bullish session might be impending.

USD/JPY

There is a very distinct bearish channel formed on the daily chart, as the pair is now floating on the bottom of it. The next strong support level seems to be located at the 90.00 level. If the pair will drop below it, it might signal a long-lasting downtrend.

USD/CHF

The pair continues with the bearish momentum, and is now approaching the 1.0200 level. As all oscillators on the daily chart are pointing down it seems that the bearish trend might continue today.

The Wild Card – Crude Oil

The high volatility of Crude Oil continues, as yesterday a barrel of Oil was traded for over $71.50. However, a bearish cross on the 4-hour chart’s Slow Stochastic suggests that a bearish correction might take place today. This might be a good opportunity for forex traders to catch the trend at its beginning.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Investors Were Optimistic Ahead of the Fed’s Decision

Wall Street continued to climb during yesterday’s session, boosted by better than expected data and inclining commodity prices. Even though the start of the session was characterized by high volatility, the major indices found support just off their open and climbed throughout the trading day. The S&P500 finished the session, with a 0.66% gain, while the Nasdaq closed higher by 0.39%.

Economic data also had an influence on the trading day as home prices rose by a seasonally adjusted 0.3% in July. One must note that even though the figure was under expectations it still had a positive effect on the trading day climbing compared to June’s figure. June’s price increase was revised lower to a 0.1% gain, down from 0.5% previously reported. In addition, the Richmond Manufacturing index came out lower than expected but showed a no change situation, compared to its previous result.

Bank of America also grabbed the spot light yesterday, failing to stand up to the government’s deadline, regarding providing information about its Merrill Lynch & Co buy out. According to the SEC the bank broke securities laws by failing to disclose complete and accurate information about the bonuses paid to Merrill Lynch’s employees.

Today Will Be the End of a Two Day Discussion

The Dollar continued to lose ground during yesterday’s trading day, pushed lower by a higher equity and commodity market. Crude oil jumped back to above $71 per barrel, while Gold jumped above the $1000 mark. From a technical point of view, and as shown on previous reports, Gold bounced off its minor trend line to climb higher. The Fed’s outlook today should determine Future price action.

Gold – Daily Chart

Even though investors are currently pricing in a no-change scenario, many will be scrutinizing the speech that follows the decision. If the tone of today’s speech is more upbeat, it could be initially positive for the U.S Dollar. So far the Fed has recognized that the U.S economy is improving but has failed to hint about any future rate hikes. Will this time round be any different? According to some, the Fed will only slow the pace of its purchasing program, but will not completely bail out on its recent stimulus.

The NZD/USD surged higher during morning hours after New Zealand’s GDP result showed an impressive figure. The QoQ figure showed that New Zealand’s economy improved in the second quarter by 0.1%. The NZD/USD jumped, following the release touching a new high for 2009. From a technical point of view the pair climbed above resistance, but has yet to form a whole candlestick above the critical level.

NZD/USD- Daily Chart

Market Data to Watch Out For

Even though a wave of data is coming out today, starting with Germany and France’s PMI results, the main event will be the rate decision. The intraday session should be slightly volatile today, but should receive a clear direction following the FOMC result.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

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By CountingPips.com

Canadian Retail Sales took market forecasters by surprise today with the report of a decline in July after two straight monthly increases according to the monthly report released by Statistics Canada. Retail sales decreased by 0.6 percent to C$34.2 billion in July following an increase of 1.0 percent in June. On an annual basis, retail sales are 4.9 percent lower than the July 2008 level. The fall in Retail sales was not expected as economic forecasts were predicting a 0.5 percent increase for the month.

Core retail sales, excluding automobile sales, fell by 0.8 percent in July following a revised gain of 1.1 percent in June. On an annual basis, core sales are down by 4.7 percent compared with July 2008.  The monthly decline in core sales also surpassed forecasts expecting to see no change in the core data for July.

Contributing to the slide in the retail sales numbers was a decrease in gasoline station sales by 3.4 percent while the overall automobile sector fell by 1.0 percent.  The food and beverages stores sector also contributed to the decline with a 1.5 percent decline. Within this sector, supermarket sales fell 1.6 percent while beer, wine & liquor store sales decreased by 1.4 percent. Furniture, home furnishings & electronic stores also fell by 0.6 percent while clothing & accessories stores decreased by 0.5 percent.

Positively contributing to the monthly retail sales were increases in pharmacies and personal care stores with a 1.1 percent gain and in building & outdoor home supplies stores with a 1.0 percent increase.

US Dollar falls in Currency Trading today.

Today’s currency trading has seen broad based US dollar declines against the major currencies. The dollar has lost ground to the euro, British pound, Australian dollar, New Zealand dollar, Swiss franc, Canadian dollar and Japanese yen at 12:38 pm EDT according currency data by Oanda.

The US stock markets so far are having a positive session today with the Dow Jones gaining by over 50 points, the Nasdaq increasing over 10 points and the S&P 500 showing around an 8 point gain.  Oil has traded higher to $71.50 while gold rose by $11.90 to $1015.60 per ounce after noon EDT.

Economic news to be released later today is the New Zealand GDP report for the second quarter. Forecasts are expecting a 0.2 percent decline but there is potential for a surprise to the upside considering yesterday’s surprising current account surplus registered out of New Zealand for the first time since 2003. The GDP release is set for 22:45 GMT.

USD/CAD Chart – The US Dollar falling versus the Canadian Loonie today in forex trading after gaining for the last couple of sessions. The USD/CAD looks to be on the way to establishing new lows for 2009 after reaching its lowest exchange rate last week since September 2008 at the 1.0590 level.