Month: November 2009

By Rita Ruvinski – The EUR strengthened for the first time in 3 days versus the Japanese yen on speculation the European Central Bank (ECB) will decide as soon as next month to stop some of its emergency stimulus measures.

The European currency also gained strength against the U.S dollar on speculation the Federal Reserve will keep its stimulus measures in place and ensure Interest Rates remain low. The EUR advanced on speculation that the economic recovery remains in place spurred investors to buy higher-yielding assets. The currency was trading at $1.4981, up from $1.4851 late Friday . At the same time, against the Yen the Euro-Zone currency rose to Y133.21 from Y132.26.

The European currency could garner further support as provisional purchasing managers’ indices on the Euro-Zone manufacturing and services sector sectors released at 0858 GMT showed a further improvement in the economic activity.

Market players will be watching for ECB President Jean-Claude Trichet speech, due at 13:00 GMT. The president of the European Central Bank has moved the EUR/USD in many occasions. Recently he has advocated a strong dollar. Trichet has said before that he would make sure extraordinary liquidity measures would be phased out in a timely and gradual fashion. The market remains highly sensitive to any Trichet’s comments on liquidity, his speech will move the market either way.

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.

Source: ForexYard

While all the major currencies continue to provide mix results, there is still one extremely strong in the market – the bullish Gold. During last night gold reached over$1,163 an ounce, making another all time high. However, a recovery of the Dollar, if indeed takes place, has the potential to put an end to Gold’s uptrend.

Economic News

USD – Is the Dollar Recovering?

The Dollar corrected some of its losses against the Euro and the Pound during last week’s trading session. The Dollar gained about 200 pips against the Euro, and gained almost 400 pips against the Pound as the GBP/USD pair dropped to the 1.6470 level.

The main reason for the Dollar’s recovery seems to be the positive data that was published from the U.S economy. The Retails Sales rose by 1.4% in October, beating expectations for a 1.0% rise. In addition, the Long-Term Purchases report for September delivered much better figures than forecasted. This report measures the difference in value between foreign long-term securities purchased by U.S citizens to the ones purchased by foreigners. The surprising positive figures showed that foreigners have increased their investments in the U.S economy, and this usually tends to strengthen the Dollar. Also last week, the Core Consumer Price Index (CPI), which measures the change in the price of goods and services purchased by consumers, excluding food and energy, rose by 0.2%. The increasing CPI is one of the greatest signs that the U.S economy is indeed recovering.

As for the week ahead, many interesting publications are expected from the U.S economy. Traders are advised to follow the following news events: The Existing Home Sales, the CB Consumer Confidence, the Unemployment Claims and the New Home Sales. As for today, the most significant publication is likely to be the Existing Home Sales report. Positive end result will show that the U.S housing sector is recovering as well, and has the potential to boost the Dollar.

EUR – Euro’s Bullishness Halts

The Euro dropped against most of the major currencies during last week’s trading session. The Euro continued to drop against the Yen, and the EUR/JPY dropped below the 132.0 level. The Euro also fell against the Dollar.

The Euro’s drop seems to be a direct result to the disappointing data published from the Euro-Zone during the past week. The European Consumer Price Index dropped by 0.1% in October, and thus marked the fifth consecutive drop of this indicator. This is a warning sign that the European nations are far from being fully recovered. In addition, the European Current Account, which measures the difference in value between imported and exported goods and services, unexpectedly dropped in October.

Analysts have forecasted that the Current Account will stand on 0.6B on October, yet the end result showed a -5.4B figure. This means that foreign investments in the Euro-Zone have decreased, and that was enough to weaken the Euro.

As for the following week, a batch of data is expected from the Euro-Zone. The most impacting publications look to come from the German economy, as Germany holds the largest and strongest economy in the Euro-Zone. As for today, the economic calendar is filled with publications from the Euro-Zone. Analysts forecast relatively positive figures for the German and the French indicators. If the actual result will reach forecasts, the Euro could be supported as a result.

JPY – Yen Strengthens on Positive Japanese Data

The Yen rallied against all the major currencies last week. The Yen’s most remarkable appreciation was against the Pound, as the GBP/JPY pair dropped close to 400 pips. The Yen also saw rising trends against the Dollar and the Euro.

It seems that the main reason for the Yen’s strengthening is the positive data from the Japanese economy. The Preliminary Gross Domestic, which measures the change in the inflation-adjusted value of all goods and services produces by the economy, rose surprisingly by 1.2%. The unexpected rise showed that the Japanese economy might be doing better than estimated by analysts. The Yen is relatively quite strong, yet for as long as the Japanese economy will show signs for recovering, the Yen is likely to rise further. Also last week, the Bank of Japan decided to leave the Japanese Interest Rates at 0.10%, the lowest rate in the industrial world. However, this had a muted impact over the Yen, probably due to the fact that all the other major economies have also prevented hiking rates so far.

Looking ahead to this week, many impacting news events are expected from the Japanese economy. The economic publication which might have the strongest influence on the market looks to be the Trade Balance scheduled for Tuesday. The Trade Balance measures the difference in value between imported and exported goods. Considering that the Japanese economy relies greatly on its export, a positive figure has the potential to boost the Yen.

OIL – Oil’s Range Trading Continues; Tension in the Middle East Rises

Crude Oil saw a rather volatile session during last week’s trading. By the beginning of the week, crude oil rose to $80.85 a barrel. However close to the weekend oil dropped back down, and reached as low as $76.80 a barrel.

Currently, oil is back on a rise, and a barrel of crude oil is traded for over $78 a barrel. The main reason for the oil’s recovery appears to be the growing tension between Iran and the Western nation. The nations have failed to reach agreement regarding Iran’s nuclear facilities, and in addition the Iranian military is beginning a large scale air defense drills. It seems that if the Middle East tension will grow further, the prices of oil are likely to increase as well.

As for the week ahead, traders are advised to follow news updates from the Middle East as they are likely to have a significant impact on the prices of crude oil. In addition, traders are advised to follow the major economic publication from the U.S, as the value of oil is largely affected by them.

Technical News

EUR/USD

After reaching the 1.4950 level, a technical correction took place today, and the pair is currently traded around the 1.4920 level. However, a bullish cross is taking place at the 4-hour chart’s Slow Stochastic, suggesting that a bullish movement could be initiated. Going long with tight stops might be the right strategy today

GBP/USD

This pair shows no clear indication of direction for the moment. Nevertheless, there is one signal which does appear clearly. The Bollinger Bands on the hourly chart are tightening and the MACD on all charts is near 0, indicating a volatile movement is impending. When the price jump occurs, entering positions to ride the wave will be a wise choice.

USD/JPY

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

There is a very distinct bearish channel forming on the hourly chart, as the pair is now floating in its lower section. In addition, all oscillators on the 4-hour chart are pointing down, suggesting that the downtrend might extend. Going short might be the right strategy today.

The Wild Card – EUR/GBP

There is a very accurate bullish channel forming on the 4 hour chart, as the pair has consecutively appreciated for the past 4 days. Currently, as the RSI on the daily chart is floating above the 50 line and the Slow Stochastic is pointing up, the pair might extend its bullish trend. This might be a great opportunity for forex traders to join a very popular trend.

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.

November’s secondary trend stalled towards the end of the week, as both the slide in the Dollar and the rally in the equity markets came to an abrupt halt.  The dollar index found support throughout the week after bouncing higher during Monday’s session. Even though economic news still favored lower levels for the U.S Dollar, the Dollar held its ground, which coincided with a turn in the equity markets. For the week, the S&P 500 index was down 4 points of .4% closing at 1089.

The week started off on a positive note as the broad US equity index broke through the 1,100 mark setting a high for the year 2009 at 1,110 points.  Global markets where lifted by positive news out of Asia.

Japan’s economy grew more than expected in the third quarter, at the quickest pace in more than two years. GDP annualized rose 4.8%, up from the 2.7% pace in Q2 and significantly quicker than the 2.9% pace that was expected by analysts. The economy expanded 1.2% in Q3 from the previous quarter, compared with 0.7% pace in Q2.

The main driver was the pickup in domestic demand boosted by government stimulus programs. Though the data was clearly encouraging, the numbers released throughout the week emphasized that cutting back in government spending could hamper growth in upcoming months.

On Tuesday and Wednesday a wave of U.S data was released, which caused major volatility on the Forex and equity market. On Tuesday US headline PPI rose 0.3% m/m in October (core fell -0.6%).  The market was expecting the headline to increase 0.5% and the ex-food and energy component to rise 0.1%.  The data provide little evidence that the US dollar’s weakness and the rise in import prices in Oct are feeding through to producer prices.

Wednesday, the Labor Department released the CPI figure.  The seasonally adjusted consumer-price index rose 0.3% in October, compared September’s 0.2% increase. The core CPI, which strips out food and energy, advanced by 0.2% in October, the same increase seen in September. housing starts data released on Wednesday decreased 10.6% to a seasonally adjusted 529,000 annual rate compared to the prior month, while economists surveyed by Dow Jones Newswires had forecast a 1.7% increase. The 10.6% fall carried construction to the lowest point in six months.  Meanwhile, building permits in October fell 4.0% to a 552,000 annual rate. Economists had expected permits to rise by 0.9% to a rate of 580,000. One must note that building permits are a sign of future construction. The numbers now show that despite all the government’s efforts the housing sector is still dealing with its share of problems. In addition, when taking a glance at the homeowner vacancy rates one can see that the numbers have shot up – this is a clear sign that there is still plenty of inventory on the market.

The equity markets came under significant pressure on Thursday as the dollar began to rally.  Market participants were apathetic with regard to jobless claims.  The number of U.S. workers filing new claims for jobless benefits last week remained unchanged from the prior week. According to the Labor department, initial claims for jobless benefits remained steady at 505,000 in the week ended Nov. 14. The previous week’s level was revised to 505,000 from 502,000.

On Friday The European Central Bank Friday took its first small step towards unwinding the unprecedented stimulus measures installed to rescue the financial system after last year’s global credit crisis.  The bank said in a surprise announcement that it will tighten the standards under which it accepts newly issued asset-backed securities as collateral from banks for its refinancing tenders from March 1, 2010. It also said it would extend the tighter standards to all ABS from March 1, 2011.

Forex:

Fed Chairman Bernanke’s comments on Friday about the dollar revealed a clear picture regarding possible price activity, expressing his concerns about the economy rather than the value of the Dollar.  In his speech Bernanke outlined the conditions under which the dollar’s movement would become more relevant to the conduct of monetary policy — if the change of its value jeopardized the Fed’s ability to achieve the dual mandate of full employment and price stability. It is this commitment to its dual mandate and to what Bernanke called the “underlying strengths of the US economy” that will “help ensure that the dollar is strong and a source of global financial stability.”  Bernanke took the chance in his speech to respond to recent comments from officials at the weekend APEC meeting that claimed that the low US interest rates and weak dollar were financing a “huge carry trade” that was having a “massive impact on global asset prices”. Bernanke essentially indicated that US monetary policy would be set according to the needs of the domestic economy (in terms of its dual mandate) rather than global capital flows.

Across the other side of the Atlantic, the Sterling came under pressure this week as investors preferred to jump out of riskier assets.  The BoE’s prediction that inflation would pick up came to pass with England’s CPI results (up 1.5% y/y pace from 1.1% in Sept). According to analysts, CPI is expected to post further gains in coming months given the base effects from last year; recent gains in fuel prices and an expiring VAT tax.  Despite the possible higher prices, the BOE warned that while inflation could be volatile in coming months, exceeding the 2% BOE’s target now was not the time to begin removing accommodation.

One must recall that after the release of the minutes from the Bank of England’s most recent meeting Nov 5, traders turned sour on the GBP. The Monetary Policy Committee voted to increase the bond-buying program by £25 billion, taking it to a total of £200 billion since inception. Investor’s now fear that the band could opt for further stimulus to help the U.K economy, something that could batter the Pound. Governor King said last week that he had an ‘open mind’ on whether further bond purchases would be needed.

On the housing front, UK house prices slipped back in November, breaking a run of three months of advances as demand dimmed in the run-up to Christmas. Rightmove said sellers reduced prices by 1.6% from a month earlier when they climbed 2.8%. Prices are 1.6% higher than they were a year ago, but still down more than 6% from the peak in May 2008. The continuing concerns about the flow of lending in the economy, not just though mortgage lending but also corporate credit, were reinforced by a report from the British Chambers of Commerce last week that said credit availability was getting worse.

From a technical point of view the Pound finished below its 20 day moving average, after dropping back into recent range.

Over in Australia, the Reserve Bank of Australia described the speed of prospective rate hikes in coming months as an ‘open question.’ The minutes from the last meeting Nov 3 revealed some caution from the policymakers in terms of balancing risks of inflation against the possibility of putting a brake on a vulnerable recovery, but failed to say whether recent rate hikes were coming to an end. According to officials, business and consumer confidence could prove ‘fragile’ as the effects of government stimulus programs and handouts fade. To date futures are suggesting a more than a 50% chance of a hike to 3.75% at the RBA’s next meeting.

Technically the AUD/USD seems to have held its 20 day moving average and is now trading on trend line support.

The Week Ahead

Next week the markets will be watching the EMU purchasing managers index to start the week, followed by US Existing Homes Sales.  On Tuesday EMU Industrial Order, will precede US GDP, Personal Consumption and Spending.  On Wednesday, the UK GDP will start off the day, with US Durable Goods and Jobless Claims to follow.  Thursday is a light day for economic activity and the US markets will be closed for US Thanksgiving.  On Friday EMU Consumer Confidence with close the week.

Daily Forex Market Analysis provided by eToro

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© 2009 eToro Blog.

By Fast Brokers – Gold is finally experiencing a period of consolidation following its incessant rise to $1150/oz.  Gold is consolidating around the $1140/oz level, right along our 3rd tier uptrend lien while setting lower highs in the process.  Gold’s weakness comes in reaction to pullbacks in the EUR/USD, AUD/USD, and GBP/USD.  Additionally, the S&P futures have ducked back below their highly psychological 1100 level.  All of these correlative forces are trimming gains and gold and allowing bulls to take a breather as investors closely monitor recent uncertainty in the FX markets.  That being said, despite heavy losses in the Cable, the EUR/USD and AUD/USD have experienced what could be considered healthy pullbacks at this point.  However, should losses in these currency pairs accelerate investors could opt to take further profits in gold since the precious metal tends to exert a negative correlation with the Dollar.  After all, some sizable profit taking in gold wouldn’t be abnormal because it has been on a tear since breaking through $1100/oz.

Meanwhile, investors are eagerly awaiting next week’s economic data, most notably housing data and U.S. Prelim GDP on Tuesday.  Should global econ data continue to disappoint, investors may choose to divest from riskier assets including gold since it tends to be negatively correlated with the Dollar and positively correlated with the S&P futures.

Technically speaking, we’re still hesitant to place a downtrend line on gold until we witness further consolidation/profit-taking.  That being said, gold’s psychological $1150/oz continues to serve as the only viable topside technical due to the lack of historical perspective.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 11/16 lows and the psychological $1100/oz level should conditions deteriorate over the near-term.

Present Price: $1139.20/oz

Resistances: $1143.05/oz, $1145.61/oz, $1150.09oz, $1152.65/oz

Supports: $1137.60/oz, $1134.71/oz, $1130.54/oz, $1127.24/oz, $1123.51/oz, $1118.39/oz

Psychological: $1150/oz, $1100/oz

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 USD/JPY hovered below our 1st tier uptrend line earlier today as we witness a broad-based selloff in riskier investment vehicles.  Investors have indicated a preference for the Yen over the Dollar when heading for safety, meaning the USD/JPY could experience a positive correlation with U.S. equities should present weaknesses accelerate.  However, today’s losses in the USD/JPY have been mitigated, and the currency pair is back above our 1st tier uptrend line as the S&P futures try to stick close to their psychological 1100 level.  That being said, investors may want to keep an eye on the S&P’s interaction with 1100 since any significant technical setbacks have the potential to yield further losses in the USD/JPY.

Meanwhile, the BoJ kept its benchmark rate unchanged at 0.1% and raised its outlook for future economic performance.  Therefore, it seems the BoJ is comfortable with its present monetary policy.  However, the DPJ voiced its concern about deflationary pressures in Japan’s economy, placing a bit more pressure on the BoJ to retain its dovish monetary policy.  Therefore, it will be interesting to see how the central bank reacts should the USD/JPY test its October lows.  Investors should also keep in mind that Japan’s Prelim GDP printed at 4.8% at the beginning of the week, 5 basis points above analyst expectations.  Any further positive econ data from Japan combined with weakness in U.S. equities could drag the USD/JPY lower as investors select the Yen as a safe haven asset.

Technically speaking, the USD/JPY is presently fighting to stay above our 1st uptrend line and the 89 level.  Should our 1st tier give way, the currency pair still has 10/2 lows along with October lows serving as technical cushions.  As for the topside, the USD/JPY faces multiple downtrend lines along with the highly psychological 90 level.  Therefore, quite a few topside challenges are in place.  Meanwhile, investors should continue to monitor the S&P’s continual interaction with 1100 since any significant technical movements in U.S. equities could have a noticeable impact on the USD/JPY.

Present Price: 89.02

Resistances: 89.15, 89.28, 89.43, 89.57, 89.69, 89.91

Supports: 88.96, 88.85, 88.73, 88.58, 88.44, 88.30, 88.19

Psychological: 90 and October Lows

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 is undergoing an intense pullback today, dropping beneath all of our previous uptrend lines along with 11/12 lows.  The Pound is getting hit by a report from Nationwide and an analyst poll from Bloomberg implying Britian’s housing recovery may be overdone and analysts are expecting a pullback in prices in 2010.  These two discouraging news releases tack onto Wednesday’s negative Building Permits and Housing Starts data points from the U.S.  Furthermore, the fact that yesterday’s British Retail Sales data printed two basis points below analyst expectations isn’t helping the Pound’s cause.  Today’s bounce in the EUR/GBP highlights the relative weakness of the Pound, yet several near-term downtrend lines due remain on this major Euro cross.  Meanwhile, the S&P futures have ventured back below their psychological 1100 level.  Therefore, investors should keep a close eye on the S&P’s interaction with 1100 since the futures are normally negatively correlated with the Dollar.  Any technically significant pullbacks in the S&P have the potential to impact the Cable with the possibility of extending the currency pair’s present pullback towards previous November lows.

Technically speaking, the Cable is currently stabilizing along what is now our 4th tier uptrend line.  This is an encouraging development since our 4th tier runs through November lows.  That being said, these November lows serve as the next noteworthy technical support should our 4th tier uptrend line give way.  We’ve also readjusted our previous uptrend lines to give investors an idea of where important technical cushions lie.  As for the topside, the Cable still faces multiple downtrend lines along with 10/29 and 11/20 highs.  Meanwhile, it will be interesting to see how the Cable interacts with its psychological 1.65 area.  Furthermore, investors should monitor how the S&P futures deal with their own psychological 1100 level since the futures are normally negatively correlated to the Dollar.  Data-wise, investors will be paying close attention to Monday’s wave of EU Flash PMI data followed by Britain’s Inflation Report Hearings and America’s Prelim GDP on Tuesday.  Tuesday’s data appears to carry the most weight for the Pound.  Therefore, we should get a good idea of whether today’s setback is only temporary or signifies a more lasting trend.

Present Price: 1.6494

Resistances: 1.6540, 1.6578, 1.6606, 1.6634, 1.6664, 1.6694, 1.6730

Supports: 1.6489, 1.6457, 1.6432, 1.6412, 1.6383, 1.6364, 1.6327

Psychological: 1.65, November and Lows, 1.70

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 briefly traded beneath 11/17 lows before stabilizing as we witness a broad based strengthening of the Dollar in reaction to a dip in the S&P futures below their psychological 1100 level.  The wave of disconcerting data points from the past couple weeks appears to finally be taking its toll on investor confidence.  U.S. and British housing and consumption data has been disappointing lately, indicating a slowdown in the pace of their respective economic recoveries.  Furthermore, although the EU data-wire has been relatively quiet this week, last Friday’s EU GDP data left something to be desired.  On a positive note for the Euro, ECB President Trichet made some straightforward comments in his press conference today in regards to the ECB’s intent to start tightening liquidity.  Although Trichet was a bit vague in terms of exactly which measures the central bank plans on reigning in, his language today seemed a bit more pro-active than the last ECB press conference.  As a result, the EUR/USD is holding up rather well today and the Euro’s relative strength is highlighted by a solid upturn today in the EUR/GBP.  Although EU data was light this week, the European Union will kickoff next week with a wave of Flash PMI numbers along with more dialogue from Trichet.  Investors saw encouraging improvements in the last set of EU Flash data, particularly from France.  Any further strength in Monday’s PMI numbers could combine with today’s hawkish statements from the ECB to help buoy the EUR/USD should the S&P’s present pullback accelerate.

Technically speaking, we’ve readjusted our uptrend lines to account for recent weakness.  That being said, the EUR/USD still has a few more solid uptrend lines sitting nearby as technical cushions should the broad-based strengthening of the Dollar continue.  However, a failure of our new 1st and 2nd tier uptrend lines could result in more near-term accelerate losses since they run through November and October lows.  As for the topside, recent weakness in the EUR/USD has created a few more technical barriers, including multiple downtrend lines along with 11/20, 11/18, and 11/16 highs.  Furthermore, the 1.50 level continues to have a strong psychological presence.  Meanwhile, investors should monitor the S&P’s ability to stay around its psychological 1100 level, for if losses accelerate the EUR/USD may follow suit due to their positive correlations.

Present Price: 1.4833

Resistances: 1.4859, 1.4882, 1.4904, 1.4919, 1.4943, 1.4967, 1.4983

Supports: 1.4824, 1.4813, 1.4796, 1.4781, 1.4763, 1.4738

Psychological: 1.50, November Highs and Lows

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 Adam Hewison – It may surprise you as to which indices have had the most comeback from the lows seen in March. In today’s video we take a close look at both the Dow and NASDAQ indices.

In this short video we look at the retracement levels and why these indices may be getting ready for a reversal, but having said that, the major trend remains positive at this time for both indices.

Watch the New Stock Video Here…

As always our MarketClub videos are free to watch and there is no need to register.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

By Ashley Smith – The Australian and New Zealand Dollars headed for their first weekly loss against the USD this month as well as their first weekly decline versus the Yen in three weeks as Asian equities extended a global slump, reducing demand for higher yielding assets. Putting further pressure on the South Pacific currencies was the release of weak U.S economic data which signaled sluggishness in the recovery of the world’s largest economy, reducing risk appetite further.

The New Zealand Dollar was at 73.07 U.S. cents from 73.11. It has dropped 1.7 % this week. Australia’s dollar was at 91.88 U.S. cents, heading for a 1.4% weekly drop. It slid 1.2% Thursday as a drop in equities discouraged carry trades. In carry trades investors buy higher yielding assets with assets from countries with relatively low interest rates, namely Japan and currently the U.S as well. Borrowing costs are near zero in the U.S. and 0.1% in Japan while interest rates are 3.5% in Australia and 2.5% in New Zealand; this disparity attracts investors to the South Pacific nations’ assets.

Australia’s currency has risen 51% in the past 12 months against the greenback, the top performing currency against the Dollar as the Reserve Bank of Australia became the first central bank to increase borrowing costs twice this year. However, investors are becoming more skeptical as to the chances of a 3rd consecutive increase this December, putting more strain on the AUD.

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.

Source: ForexYard

The Dollar and Yen gained against the EUR and other higher yielding currencies Thursday on concerns about the sluggish pace of the world economic recovery. A Decline in equity and commodity prices pushed investors back into the USD and JPY as safe haven currencies.

Economic News

USD – USD Gains on Weak U.S Economic Data

The Dollar gained versus the EUR and other higher yielding currencies on Thursday following the release of weak U.S. economic data and a steep drop in global equities. The Dollar index rose to 75.3108 from 75.108 late Wednesday. The Dollar was supported versus other currencies as U.S. stocks fell, following weakness in European and Asian equities. The Dollar tends to have an inverse relationship to moves by equities and commodities throughout the global financial crisis.

The U.S. Labor Department said 505,000 Americans filed initial claims for unemployment benefits in the latest week, unchanged from the previous week and a level considered still too high to indicate payrolls numbers will turn positive in the near term. U.S. leading indicators rose 0.3% in October after a 1% gain in September; signaling the U.S economy might be recovering at a decelerating rate.

Currency movements have been largely confined to recent ranges as the market continues to debate the speed of economic recovery and the direction of U.S. monetary policy.

EUR – EUR Struggling to Rise above $1.50 Level

The EUR and other higher yielding currencies declined Thursday as weakening confidence about the global economic recovery prompted investors to turn to the Dollar and Yen for safety. Disappointing U.S economic data as well as steep drop in equities triggered a decline in demand for risk. Signals from world leaders regarding a more restrictive official stance toward capital flows and currency volatility also contributed to investors’ risk aversion. The EUR was at $1.4910 from $1.4960 late Wednesday and at Y132.54 from Y133.73. The Pound was at $1.6651 from $1.6740.

The EUR is struggling to rise above $1.50 and is mainly caught between $1.48 and $1.50 trading levels. Further caution arises from ambivalent signals coming from Federal Reserve speakers about the possible timing of interest-rate hikes as well as the Fed’s attitude toward the weakening Dollar.

JPY – JPY Trades Near a Two Week High versus Euro

The JPY traded near a two week high versus the EUR after the biggest drop in global equities this month prompted investors to turn to the safety of the Japanese and U.S. currencies. The Yen traded at 132.80 per EUR early this morning, after climbing yesterday to 131.76, the strongest level since Nov. 3. Japan’s currency was at 88.98 against the USD, following a 0.4% gain.

Concerns about the global economy tend to favor the safe-haven Dollar and the Yen, and decrease demand for assets correlated with economic growth such as stocks and currencies from commodity-rich countries. Today the Bank of Japan will conclude its two-day policy meeting, and is widely expected to leave its overnight call rate target at 0.1%.

Crude Oil – Crude Declines on Falling Equities

Crude Oil prices fell Thursday after 4 consecutive days of gains on poor U.S economic data and falling equities. Further pressure came on Oil prices as the Dollar advanced against the EUR, reducing the appeal of commodities as an alternative investment. It appears that U.S. energy demand remains weak while inventories are still high; furthermore, this week’s U.S. economic data seems to be pointing to a slower pace of recovery as was previously expected.

Crude Oil for December delivery fell $2.12, or 2.7%, to settle at $77.46 a barrel on the New York Mercantile Exchange; the biggest daily drop since Oct. 30. Equity markets along with Dollar levels have been the dominant and most powerful influence on the oil market in recent months.

Technical News

EUR/USD

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

GBP/USD

The typical range trading on the hourly chart continues. The daily chart RSI is floating in neutral territory. However, the 4-hour Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long might be a wise choice today.

USD/JPY

The price of this pair appears to be floating in the over-sold territory on the weekly chart’s RSI indicating an upward correction may be imminent. The upward direction on the daily chart’s Momentum oscillator also supports this notion. Going long with tight stops may turn out to be a good strategy today.

USD/CHF

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the weekly Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

The Oil prices dropped significantly yesterday, and it is currently traded around $78.45 per barrel. However, the 4-hour chart’s RSI is floating in an oversold territory suggesting that a recent downwards trend is loosing steam and a bullish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Forex Market Analysis provided by Forex Yard.

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