Author: FX_Trdr

Source: ForexYard

As the Crises in Dubai created some volatility in the market approaching the weekend, the affect of this story appears to have eased at the moment. Currently the most important data this week looks to be the U.S Non-Farm Employment Change expected on Friday. This publication usually creates unique opportunities to make profits, and traders should take advantage.

Economic News

USD – Dollar Continues to Slide

After showing some signs of recovery, the Dollar continued to drop during last week’s session. The Dollar most significant drops were against the Yen and the Euro. The EUR/USD pair is once again trading above the 1.50 level.

The Dollar saw a downtrend despite relatively positive data published from the U.S. economy. The Existing Home Sales rose by 10.1% in October, as 6.10M residential buildings were sold during this month. Also, last week the Consumer Confidence survey rose from 47.7 in October, to 49.5 in November. This states that U.S. citizens are regaining confidence in their financial security, and thus feel safer to consume. It seems that the positive data from the U.S. economy has turned investors on to higher-yielding assets such as the Euro and the Yen. The main catalyst for this is that the global economies including the Euro-Zone and Japan are relying on their export to the U.S, and thus, if the financial condition in the U.S. will improve, it is likely to have a positive impact on these economies as well. However in the long-term, a continuous stream of positive data from the U.S economy is likely to support the Dollar.

As for the week ahead, many impacting news events are expected, yet the most significant one is likely to be the Non-Farm Payrolls, on Friday. This is one of the most exciting publications, and has the deepest affect on the market, and traders shouldn’t miss out on it. Traders should also focus on the ADP forecast for this indicator on Wednesday, as it has the potential to shake the market as well.

EUR – Interest Rates Announcement Expected This Week

The Euro continued to strengthen against most of the major currencies during last week’s trading session. Despite a mild drop against the Yen, the Euro soared against the Dollar and the Pound.

The Euro rose following a batch of positive data published from the Euro-Zone. The positive publications from the German and French economies have boosted the Euro in particular. The German Business Climate survey rose from 91.9 in October to a 93.9 index in November, making a 15-month record high. This survey is considered to be very reliable in forecasting the German economic outlook for the next 6 months, and thus such a high figure shows that the German economy is indeed on its way to recovery. The French economy also saw positive signs last week. The Flash Services Purchasing Mangers’ Index rose from a 57.7 index in October to 60.4 in November. This survey is showing an improving figure for the fourth consecutive month, stating that the French economy is on its way to recover from the recession as well. As long as the positive data from the Euro-Zone’s leading economies continue, the Euro is likely to continue to rise.

As for this week, the most interesting data from the Euro-Zone is the Minimum Bid Rate announcement expected on Thursday. The Minimum Bid Rate is in fact the Euro-Zone’s Interest Rates decision for December. Currently, analysts assume that the European Central Bank (ECB) will leave rates at 1.00%. However, if the ECB will surprise and hike rates, this has the potential to create mayhem in the market. Traders are advised to follow this event with extra caution.

JPY – Yen Continues to Rise

Despite a modest correction which took place close to the weekend, the Yen continues to strengthen on all fronts. The Yen rose against the Dollar, the Euro and the Pound during last week’s trading session.

The Yen rose on positive data that was published from the Japanese economy. The most significant economic publication from last week was the Japanese Trade Balance. This report measured the difference in value between imported and exported goods during October. The report showed a surprising result of 0.42T, the best figure in 4 months. This has shown that Japanese exports are advancing beyond expectations. Considering that the Japanese economy relies first and foremost on its export industry, the results were likely to boost the Yen.

As for this week, a batch of data is expected from the Japanese economy. The most significant publication is likely to be the Capital Spending indicator, expected on Wednesday. The Capital Spending measures the change in the total value of new capital expenditures made by businesses. A positive result is likely to support the Yen, which could extend its bullish trend.

Oil – Oil Recovers and Reaching over $76 a Barrel

After a week in bearish trading, crude oil is beginning to recover some of its losses, and is currently traded at $76.60 a barrel. During last week’s session crude oil reached a 6-week low, and dropped to the 72.40 level.

Crude Oil dropped last week on speculations that Dubai World, the United Arab Emirates’ largest corporate entity, has gone into serious debt. This has increased worries that global recovery could halt, and thus decreased demand for energy commodities such as crude oil. However, the depreciation of the Dollar has supported crude oil prices close to the weekend.

As for the week ahead, traders are advised to follow the major news events from the U.S economy and the Euro-Zone as they have a great impact on crude oil’s value. In addition, traders should follow the Crude Oil Inventories report on Wednesday, as it has proven to have an instant impact on the market.

Technical News

EUR/USD

The EUR/USD may enter into a bearish trend after gains made last week. The 1-hour chart’s Stochastic Slow supports this, although the 4-hour chart’s RSI shows the pair in neutral territory. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

The 4-hour chart’s Stochastic Slow show the pair currently poised to enter into a bearish trend, and the 1-hour chart’s Stochastic Slow confirms this. Going short today may be the best bet for traders.

USD/JPY

All technical data, including the RSI and Stochastic Slow on the 1-hour and 4-hour charts, indicate that this pair is in neutral territory. Traders are advised to enter into the pair only when a clearer picture presents itself

USD/CHF

The 4-hour charts Stochastic Slow indicate this pair is set to enter a bullish trend. This is supported by the RSI on the 1-hour chart. Traders may want to go long with tight stops today, as the pair may make some gains.

The Wild Card – Crude Oil

The RSI on the 1-hour chart indicates that crude is poised to enter a bearish trend. This is supported by the Stochastic Slow on the 4 hour chart. Forex traders may want to go short with tight stops today, as prices may fall.

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.

Volatility jumped higher at the end of the week, after state owed Dubai world requested to postpone its debt paybacks. Once the news hit headlines Wednesday evening, it immediately caused panic, as the amount of global lenders who are expected to be affected by the situation is still not known.  Dubai world is a government owned holding company that is at the center of Dubai’s thrust to diversify its economy into property, leisure and investment, both locally and globally. The news hit the equity markets hard having an immediate impact on the Dollar and the Yen. Both the currencies soared as investors rushed into safe-haven, exiting riskier assets, such as equities.

The S&P 500 index lost 19 points on Friday and finished the week settling at 1091.5, unchanged for the week.  The week started on a bright spot and seemed to be heading for a positive week which would have created solid returns for the month of November. Market participants were greeted with positive news on Monday after the Euro-zone showed improving data.  The markets remained firm on Tuesday and Wednesday as traders absorbed a plethora of economic data.  On Wednesday the US Commerce Department released better than expected housing data.  New-home sales unexpectedly climbed in October despite bad weather and uncertainty over a big tax credit for first-time buyers.  Sales of single-family homes increased 6.2% to a seasonally adjusted annual rate of 430,000.  Economists surveyed estimated a 1.0% drop to a 398,000 annual rate.

Jobless Claims also had an impact on the trading week as the numbers showed that initial claims for unemployment benefits declined by 35,000 to 466,000 in the week ended Nov. 21. It was the lowest claims figure since September 2008. The four-week moving average of new claims, which aims to smooth volatility in the data, also fell, by 16,500 to 496,500.

Over in Europe, business and consumer confidence in the 16 countries that use the euro continued to improve in November, while capacity use in the manufacturing sector rose for the first time since the onset of the financial crisis.  A monthly survey by the European Commission showed Friday that the overall Economic Sentiment Indicator, or ESI, for the euro zone rose sharply to 88.8 from 86.1 in October. The increase in the ESI was stronger than expected, with economists surveyed last week having forecast it would increase to 88.1. It was the eighth straight month in which sentiment improved.

Forex

The dollar remained on the defensive side up until the FOMC minutes, which released were somewhat negative for the Greenback.  According to the minutes, policy members showed little doubt, regarding interest rates but there appeared to be a more widespread debate about whether to extend Q/E.  Prior to the minutes, it appeared that Bullard was alone in favoring an extension but in fact other members showed signs that they may be in agreement. He noted that low rates could encourage excessive risk but described the dollar’s decline as orderly suggesting there is no need at this juncture to react to the weak dollar.  Opinions were split on the economic outlook even before the jump in unemployment rate.  The Fed did raise its growth forecasts for GDP growth but the minutes suggested that members were split as some saw growth and inflation risks as balanced and others saw downside risks to inflation given subdued growth.  The forecasts and debate occurred prior to the last employment release.

Forecast changes:  GDP growth in 2010 of 2.5-3.5% (2.1-3.3% prior), in 2011 of 3.4-4.5%, inflation in 2010 of 1.3-1.6% (1.2-1.8% prior), in 2011 of 1-1.9%, and unemployment in 2010 of 9.3-9.7% (9.5-9.8% prior), in 2011 of 8.2-8.6%.

On individual pairs the EUR/USD broke through strong resistance during mid week to hit a high of $1.5140.  On Friday, the EUR dropped but managed to find support during the session bouncing throughout the intraday session off its 50 day moving average at $1.4827 and trend line support.

Over in Asia, economic releases out of Japan continued to be bullish for the Yen.  Japan’s exports had a third consecutive monthly gain in October which took the annual pace of decline to the slowest in a year. Exports dropped 23.2% from a year earlier, after a slump of 30.6% in September, beating expectations of a 26.8% drop. On a seasonally adjusted basis, exports rose 2.5% from a month earlier, the third consecutive gain.  The figures emphasized the strength of the recent rebound.

Furthermore, exports to Asia fell 15% from a year earlier, an improvement from the slump of 22.2% in September. Despite the good news, one must note that much of this improvement is down to stimulus measures around the world. Investors remain skeptic about the current strength questioning whether demand will continue grow as support measures fade out.

The Yen presented the most movement for the week, increasing to a 14 year high. The high level of the Yen immediately raised concerns as current rates will weigh on the country’s exports.  Japanese officials immediately expressed their concerns, stating that they might intervene if the Yen continues to strengthen.

After dropping throughout the week the Pound bounced higher on Friday, driven by global momentum and backed by Governor King’s testify to the Treasury Select Committee.  King’s comments on the economy and inflation weren’t out of line with prior statements.  The Governor warned inflation could pick up sharply in the short term but that spare capacity would act as a counterweight to medium term inflation.  King, as well as fellow MPC members mentioned that the economic recovery is underway although growth is still fragile.

The Week Ahead

Next week the markets will be watching Japanese housing starts and Canada’s GDP result, followed by the RBA interest rate decision on Tuesday.  Wednesday brings EMU Producer Prices and US ADP Employment followed by the Fed Beige Book. One must note that the Beige book is often watched by economists as this report, which is published eight times a year, contains anecdotal information on the economic and business conditions of 12 different districts.

Thursday and Friday will be the height of the week as the Euro-zone will release its GDP, which will be followed by the ECB’s rate decision. Even though no rate change is expected, investor’s will scrutinize Trichet’s words, trying to determine future trends. The finale of the week will be the NFP and Unemployment result.  One must note that the current rate is now a double digit number, therefore a higher unemployment figure, could be devastating for the current rally.

Daily Forex 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 Anton Eljwizat – In today’s trading, the silver experienced much bearishness. However, as I will illustrate below the 4-hour chart’s oscillators support a bullish reversal for today. This might be a good opportunity for forex traders to enter the trend at a very early stage and at a great entry price.

• The chart below is the 4-hour Silver chart by ForexYard.

• The technical indicators that are used are the Slow Stochastic and Relative Strength Index (RSI).

• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The RSI signals that the price of this pair currently floats in the over-sold territory, suggesting upward pressure.

Silver 4-Hour Chart

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.

By Fast Brokers – Gold is finally experiencing a sizable setback after nearly hitting the psychological $1200/oz level.  News concerning the restructuring of debt in Dubai has sent a shockwave throughout equity and FX markets, resulting in large selloffs in global equities as well as bullish moves in the Dollar and Yen.  In other words, we are witnessing a large risk aversion due to a spike in investor uncertainty, thereby knocking gold from the perch of its bubbly highs.  Now that the Dubai news has sunk in, it will be interesting to see how far investors are willing to take the present flight from risk.  That being said, investors may want to err on the cautious side considering how far crude fell after its bubble popped last year.  Today’s movement is certainly a sizable step back, yet a warranted one considering the bull run that has taken place since the eclipse of $1000/oz.

Meanwhile, gold has quite a few uptrend lines in place and the $1150/oz level could prove to be a technical cushion along with 11/17 lows.  As for the topside, we’re unable to place a downtrend line until we have a bit more track record to use.  Therefore, the $1175 and $1200/oz level serve as technical barriers along with 11/23 and 11/26 highs.  For the time being investors should monitor the EUR/USD’s interaction with our uptrend lines along with the S&P’s ability to mitigate intraday losses.  We will certainly monitor the situation closely since today’s volatility could carry over into next week.

Present Price: $1159.60/oz

Resistances: $1161.90/oz, $1167.02/oz, $1170.16/oz, $1173.02/oz, $1178.54/oz, $1182.37/oz

Supports: $1153.65/oz, $1150.09/oz, $1140.16/oz, $1137.60/oz, $1131.63/oz, $1127.36/oz

Psychological: $1175/oz, $1200/oz, $1050/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 has captured headlines in the FX markets after the currency pair tumbled beneath October lows and continued to head south before bottoming just below the psychological 85 level.  As we cautioned previously, a movement below our past 1st tier uptrend line could result in an ensuing selloff, and it appears the damage may be done for now.  The USD/JPY registered 5000+ volume for the first time since the selloff in July 8th.  While such a sell-side bias is certainly disconcerting, investors should also keep in mind that the USD/JPY experienced a nearly 7% rally over the next month after hitting these July 8th levels.  Therefore, it will be interesting to see if the USD/JPY can stabilize from today’s lows and pursue a similar rally until the end of the year.  That being said, we will have to see how far investors decide to go with negative news from Dubai.

As most investors are well aware of by now, Dubai World is requesting a debt restructuring of what could be up to $80 billion of credit.  Although actual losses incurred are presently unknown, some European and UK banks could have considerable exposure.  This week’s news concerning Dubai’s debt has shocked FX and equity markets as investors worry that the development may indicate forthcoming problems from other emerging economies.  As a result, Asian markets have been under intense selling pressure, and European/U.S. equities look set to open sharply lower.  Meanwhile, the FX markets are experiencing a broad based appreciation of the Dollar and Yen as gold crashes back below $1150/oz.  In other words, investors have received a psychological trigger sending money towards risk averse investment vehicles.  As one can see, investors continue to favor the Yen over the Dollar as a safe haven.

While investors already preferred the Yen as a safe haven, stronger than expected data releases from Japan have only fueled the USD/JPY’s downturn.  Japan’s Trade Balance came in much stronger than expected earlier this week in addition to positive Household Spending, CPI, and Retail Sales reports late Thursday EST.  Hence, the global economic recovery has helped Japanese exporters recover, resulting in job creation and rising personal consumption.  A recovering Japanese economy is beneficial to the Yen and allows investors to send the USD/JPY lower.  Naturally, Finance Minister Fujii is upping is rhetoric concerning a looser monetary policy from the BoJ.  Therefore, it seems the bottom set today may result from investors speculating that Japan will intervene in the currency markets should the Yen strengthen any further against the Dollar.  After all, all-time lows are getting much closer and the BoJ’s patience has to be wearing thin.  As we recall, some major Japanese companies reliant on exports, such as Toyota, signaled that 90 is their breaking point in the USD/JPY.  Hence, this week’s deterioration in the currency pair could put a lot of pressure on the DPJ to take action.

Technically speaking, 85 appears to be the new psychological benchmark with 90 hanging far overhead.  It’s a bit troublesome to place supports on our chart right now due to limited historical reference.  However, we can tell you that the 82.50-85 area proved to be a strong support area during the Spring/Summer of 1995.  Therefore, the USD/JPY could experience similar support should the currency pair’s present downturn continue.  As for the topside, there are multiple downtrend lines serving as technical barriers as the long-term downtrend bears down on price.  Therefore, the USD/JPY will likely need strong support from the bulls to stage a noteworthy rally.

Present Price: 86.29

Resistances: 86.34, 86.57, 86.81 87.04, 87.22, 87.46

Supports: 86.20, 85.99, 85.74, 85.51, 85.22, 84.84, 84.60

Psychological: 85, 80, 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.

By Fast Brokers – Volatility has picked up more than investors may have expected with a holiday shortened week in the U.S.  The Cable has dropped to the 1.63 area after sinking below our previous 2nd tier uptrend line.  However, the Cable is presently finding some support at previous November lows as U.S. markets come back online and investors digest the concerning news emanating from Dubai.  As most investors know by now, Dubai World is requesting a debt restructuring of what could be up to $80 billion of credit.  Although actual losses incurred are presently unknown, some European and UK banks could have considerable exposure.  This week’s news concerning Dubai’s debt has shocked FX and equity markets as investors worry that the development may indicate forthcoming problems from other emerging economies.  As a result, Asian markets have been under intense selling pressure, and European/U.S. equities look set to open sharply lower.  Meanwhile, the FX markets are experiencing a broad based appreciation of the Dollar and Yen as gold crashes back below $1150/oz.

As for the Cable, the Pound has been hit a bit harder than the Euro since Sterling was already being weakened by cautious comments from BoE Governor King earlier this week.  King explained that considerable obstacles remain on the path to recovery and the use of further alternative liquidity measures aren’t out of the question.  However, this week’s economic data wasn’t so bad, meaning the risk trades could hold their more important technical supports ahead of Monday’s data releases.  Although early Monday will be relatively quiet data wise, activity will pick up in the evening session as China releases its Manufacturing PMI data along with a monetary policy decision from the RBA.  Britain will follow with HPI and its own Manufacturing PMI data on Tuesday.  That being said, a string of positive economic releases could restrain a bit of the investor uncertainty stemming from Dubai’s debt issue and allow the Cable to hold its more important technical supports.

Technically speaking, the Cable’s more critical technical levels seem to be previous November lows along with our 1st tier uptrend line.  Our 1st tier uptrend line runs through October lows, meaning a failure of our 1st tier could potential result in a retracement towards the 1.57 area.  However, before we get ahead of ourselves, we will have to see how November lows and our 2nd tier uptrend line hold up should they be tested.  As for the topside, the Cable faces multiple downtrend lines along with the psychological 1.65 level.  Hence, there are quite a few near-term topside obstacles, and the immediate-term goal for bulls will likely be stabilization and to create a new bottom to build a base from.

Present Price: 1.6326

Resistances: 1.6341, 1.6374, 1.6395, 1.6427, 1.6457, 1.6489, 1.6532

Supports: 1.6301, 1.6285, 1.6257, 1.6242, 1.6212, 1.6183, 1.6153

Psychological: 1.65, November 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 EUR/USD is tumbling towards 11/20 lows after breaking through October lows and surging towards 1.5140.  Today’s whipsaw movement comes in reaction to a broad-based exit from the risk trade in reaction to news from Dubai.  As most investors know by now, Dubai World is requesting a debt restructuring of what could be up to $80 billion of credit.  Although actual losses incurred are presently unknown, some European and UK banks could have considerable exposure.  This week’s news concerning Dubai’s debt has shocked FX and equity markets as investors worry that the development may indicate forthcoming problems from other emerging economies.  As a result, Asian markets have been under intense selling pressure, and European/U.S. equities look set to open sharply lower.  Meanwhile, the FX markets are experiencing a broad based appreciation of the Dollar and Yen as gold crashes back below $1150/oz.  Hence, it seems short-sellers have finally received the psychological trigger they were waiting for to unwind the bull-run in the risk trade.  The question now becomes whether equities and currencies can stabilize before heading below more meaningful technical levels.

As for the EUR/USD, the Euro’s present relative strength is helping the currency pair to hold up above 11/20 lows along with our 1st and 2nd tier uptrend lines.  Wednesday’s surge past October lows was a very bullish move, allowing the EUR/USD to weather today’s storm thus far.  As a result, both the EUR/GBP and EUR/AUD are performing rather well.  However, the EUR/USD may be forced to follow suit should equities and other major Dollar crosses continue their downward movements.  That being said, investors should keep an eye out for our 1st tier uptrend line should it be tested.  Our 1st tier runs through November lows.  Hence, a movement below the 1st tier may indicate a more protracted pullback towards the 1.460 area.  As for the topside, the EUR/USD faces multiple downtrend lines once again along with the psychological 1.50 level.

Meanwhile, it will be interesting to see whether the S&P futures can recover some of their pre-market losses as investors digest the Dubai news along with Thanksgiving turkey.  Despite the investor uncertainty spreading throughout the community at the moment, the ultimate sustainability of Dollar weakness and equity strength could likely rely upon next week’s econ data along with the RBA’s meeting late Monday EST and the ECB’s central bank meeting on Thursday.  Hence, the EUR/USD may be able to hold above 11/20 lows and our 1st tier uptrend line as investors await a confirmation from econ data and central bank policies.

Present Price: 1.4854

Resistances: 1.4860, 1.4886, 1.4904, 1.4920, 1.4946, 1.4970, 1.4999

Supports: 1.4843, 1.4826, 1.4808, 1.4797, 1.4771, 1.4754, 1.4723

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 Rita Ruvinski – The European currency declined sharply in holiday-thinned trade on Thursday as renewed risk aversion prompted investors to shed riskier assets. The EUR hovered near the day’s low of $1.4960 down 1.1% on the day. The currency also hit a near 2-month low against the Japanese yen at 129.52 yen.

The EUR extended losses as ratings agency Standard & Poor’s put the credit ratings of four Dubai banks on negative outlook and stock market losses reached 3%. The negative outlook for the banks is due to their exposure to Dubai World, which is seeking a debt standstill. The Dubai World story has weighed heavily on stocks all day, prompting traders to cut back their dollar-funded positions.

The British pound trimmed early losses but remained 1.4% lower versus the U.S dollar at $1.64. The Sterling also slid 0.4% vs. the EUR to 90.93 pence. Concerns about U.K. bank exposure to Dubai weighed on the Pound, analysts said. There are concerns with regard to the extent of the U.K. banking sector exposure in Dubai so that is weighing on sterling. The underlying picture for Sterling was already fundamentally weak and this news adds further to the bearish sentiment.

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

Fears of a potential default in Dubai sent shock waves through financial markets Thursday, weighing on European and Asian equities and pulling the U.S. Dollar off of recent lows as investors sought out safe havens. Analysts said Dubai’s woes were a blow to sentiment, serving as a reminder that potential trouble spots remain in the world economy.

Economic News

USD – Dollar Rebounds From 14-year Low vs. Yen

The U.S. Dollar rebounded versus most major rivals Thursday, benefiting from safe-haven flows amid fears of a potential sovereign debt default by Dubai. Dubai’s shock move on Wednesday to restructure its biggest corporate debtor, Dubai World, and delay repayment on some of the company’s $59 billion in liabilities, dented risk appetite across asset markets on Thursday, to the U.S Dollar’s benefit.

On Thursday, the greenback headed for its worst month since December against the Japanese Yen, before a report next week that economists say will show U.S. business activity has declined, supporting the case for the Federal Reserve to keep borrowing costs near zero. The U.S. currency traded at $1.4945 per EUR from $1.5019 yesterday.

However the Dollar edged up from its lows against the Yen in early trading Friday as renewed risk aversion prompted investors to shed riskier assets, giving pause to broad Dollar selling. Market players also refrained from re-testing lows on the Dollar as trade thinned for the U.S. Thanksgiving holiday.

However the Dollar-bearish sentiment remained intact on views U.S. interest rates would stay low for some time and on pressure for the Dollar to weaken to correct the U.S.’ imbalances.

EUR – Euro Falls 1% below $1.5 as Stocks Stumble

The European currency declined sharply in holiday-thinned trade on Thursday as renewed risk aversion prompted investors to shed riskier assets. The EUR hovered near the day’s low of $1.4960 down 1.1% for the day. The currency also hit a near 2-month low against the Japanese Yen at 129.52 yen.

The EUR extended losses as ratings agency Standard & Poor’s put the credit ratings of four Dubai banks on negative outlook and stock market losses reached 3%. The negative outlook for the banks is due to their exposure to Dubai World, which is seeking a debt standstill. The Dubai World story has weighed heavily on stocks all day, prompting traders to cut back their dollar-funded positions.

The British Pound trimmed early losses but remained 1.4% lower versus the U.S dollar at $1.64. The Sterling also slid 0.4% vs. the EUR to 90.93 pence. Concerns about U.K. bank exposure to Dubai weighed on the Pound, analysts said. There are concerns with regard to the extent of the U.K. banking sector exposure in Dubai which is weighing on Sterling. The underlying picture for Sterling was already fundamentally weak and this news further adds to the bearish sentiment.

JPY – Yen Advances vs. the U.S Dollar on Risk Aversion

The Japanese Yen strengthened to a 14-year high against the U.S Dollar, rising past 85.00 to the greenback on speculation renewed risk aversion will enhance the allure of the Japanese currency as a refuge.

The Yen climbed as high as 85.83 per Dollar, the strongest since July 1995, before trading at 85.20 from 86.59 yesterday. The currency advanced to 128.87 per EUR from 130.03, after hitting 126.91, the highest since April 29.

Japan’s currency did pare some of its earlier gains after Japan’s Finance Minister told reporters in Tokyo he will contact authorities in the U.S. and Europe about currencies if necessary. Shizuka Kamei, Japan’s financial services minister, also urged an international response to halt the rise in the country’s currency. The market showed paid attention to the warning from the government today and bought back the USD. However the impact of verbal intervention may not last long unless the government takes actual action analysts said.

Oil – Crude Oil Slips to a Low Near $76

Crude oil traded below $76 Friday, poised for a weekly decline on concern that the pace of fuel demand recovery in the U.S., the biggest energy- consuming nation, may stall. Prices fell as the U.S dollar strengthened against the EUR after Dubai’s attempt to reschedule debt spurred investors to seek the safety of assets perceived as lower risk. A stronger Dollar reduces the investment appeal of commodities.

According to analysts there seems to be anxiety across the markets, commodities and equities, stemming from concerns over Dubai’s possible default on debt. The markets are weighing what the implications of Dubai’s debt will be on the global economic recovery, they said.

Crude has remained locked in a tight range for most of this month with gains capped by weak fundamentals and a generally weak U.S. dollar curbing losses. Over the past 28 trading days oil has been bounded between $74.50 a barrel and $78 a barrel, and could spend most of the remaining days of this year within a somewhat broader $75-$82-a-barrel range.

Technical News

EUR/USD

The EUR/USD went increasingly bearish yesterday, and currently stands at the 1.4920 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 4-hour chart’s Stochastic Slow signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

There is a fresh bullish cross forming on the 4-hour chart’s Slow Stochastic indicating a bullish correction might take place in the near future. The upward direction on the hourly chart’s Momentum Oscillator also supports this notion. Going long with tight stops might be the right strategy today.

USD/JPY

The cross has been dropping significantly for the past week now, as it now stands at the 86.10 level. The RSI of the daily chart is already in the oversold territory, indicating that an upward correction is imminent. This view is also supported by the RSI of the 4-hour chart. Going long with tight stops may turn out to be the right choice today.

USD/CHF

The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, there is a fresh bearish cross forming on the 4- hour chart’s Slow Stochastic indicating a bearish correction might take place in the near future. When the downward breach occurs, going short with tight stops may be the correct strategy.

The Wild Card – Crude Oil

Oil prices are once again dropping, and a barrel of oil is currently traded at around $75.25. Now the RSI on the 4-hour chart are giving bullish signals, indicating that oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

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