Author: FX_Trdr

Market Movers of the Day

Asia-Pacific

Australian Trade deficit surprises for the better falling to -1849M

Speech by RBA governor

Europe

BoE rate decision unchanged at 0.5%

ECB rate decision unchanged at 1%

UK NIESR GDP estimate at -0.4%

Swiss CPI at -0.8% suppressing for the worst

UK Manufacturing production gaining 1.7% MoM

UK industrial production down -10.3 YoY less than expected

EU Retail Sales falling –3.6% YoY

Americas

US initial Jobless claims at 512K better than expected

US Nonfarm productivity strongly positive at 9.5% for Q3

US unit labor costs at -5.2% for Q3

The Overall Sentiment

Forex

Rate Decisions coming from the ECB and UK were at the centre with investors focus on rhetoric as key rates were broadly expected to be left unchanged. Both central banks left their rates unchanged with the ECB key rate at 1% and the UK key rate at 0.5%.Both banks seem more upbeat on the economy with the BoE increasing it’s bond purchase by only £25B the smallest amount since the Quantitative easing program was announces.ECB chairman Trichet also hinted emergency liquidity measures will start being  unwounded. The statements from both central Bankers were largely perceived as upbeat for the economies especially in the UK which now some suggest will revise its’ GDP upwards. In Asia-pacific the speech of Governor Glen Stevens also drew attention in a day loaded with Central bank statements with the Governor providing a rather positive outlook for the economy and raising the RBA growth forecast of for 2010.Overall the Dollar ended the day weaker but only modestly the Euro closed rather flat at 1.487$, the Sterling moved to the 1.66$ zone and Aussie moved back above 91 Cents.

Equities

Stocks rallied rather aggressively in the US where both the Dow and the NASDAQ surged beyond 2% with the Dow higher by 2.08% and the NASDAQ higher by 2.42%.Gaines in the Dow and S&P were fueled by positive US economic data starting with the Initial Jobless claims figure which stud at 512K and surprised slightly for the better but most importantly the Non-farm productivity at a 9.5% gain for Q3 showing healthy upward momentum for the US Economy. Cisco earnings release was also quite a market mover as the better than expected results pushed the NASDAQ to strong gains. At the day’s end European equities gained but only slightly while US equities advanced higher with the Dow Industrial closing above the 10,000.

Commodities

In the Commodities play trade was rather flat, Gold returned to the 1090$ zone after testing support at 1085$ and oil hovered around the 80$. Although the day was rather flat the fact commodities held rather well against selling pressure and remained at their high levels pointed upbeat sentiment is still around especially for the yellow metal which is now targeting the 1100$ milestone.

The Day Ahead

The sentiment will be stirred by economic data as the day will by loaded with highly weighted economic indicators starting with unemployment figures in Switzerland, Canada and the US where market eyes will focus on wither unemployment will reach 10%. The Unemployment figure will get special attention as many consider the unemployment to be the lead for future Fed monetary policy change. Another highly regarded economic indicators due are the US is the Nonfarm payrolls and Average hourly earnings which will also reflect strongly on the US Job market. All three are considered to be one of the most highly weighted economic indicators in the US and are known for having strong impact on market sentiment. Additional important economic indicators to watch will be the PPI figures in UK which will reflect on inflation prospect and in Germany factory orders will show industry sentiment in Germany Europe’s largest economy. However both economic indicators are expected to take the back seat in terms of market attention with the US indicators at the spotlight.

Technical Analysis

GBP/USD

Bullish Scenario– A close above of the 1.67 would push the pair to a bullish zone rallying strongly to test the 1.71 resistance.

Target- 1.71

Bearish scenario– After failing to break the 1.67 resistance a close below 1.625 would ignite a strong bearish cycle.

Target A– 1.575

Target B-1.53

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 Yan Petters – The USD/DKK pair has recently dropped around 700 pips and is currently traded for the 5.0146 level. The 4-hour chat provides signal that this bearish move is likely to proceed, how far can it go?

• The chart below is the USD/DKK 4-hour chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The Slow Stochastic has dropped below the 20-line, and is yet to provide a bullish cross. This indicates that the further bearish momentum is expected.
• The MACD is showing a sequence of bearish crosses. This shows that the bearish pressure is quite strong at the moment.
• The RSI continues to face down. It currently seems that for as long as the RSI doesn’t switch directions, the downtrend is likely to proceed.
• The pair is currently testing a very strong support level, placed at 5.005. If the pair will breach this level, it has the potential to drop all the way down towards the next support level which is placed at the 4.940 level.

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 Bank of England’s (BOE) rate statement is due at 12:00 GMT while the European Central Bank (ECB) press conference is expected at 13:30 GMT. While both banks are expected to keep their interest rates at their current level, the statements should provide an insight to the current economic conditions as well as economic outlook for the near future. The BOE is expected to increase its quantitative easing program.

Economic News

USD – USD Down Following Fed Statement

The Dollar traded near its lowest level in a week against the EUR after the Federal Reserve kept borrowing costs near zero. The Federal Reserve reiterated its intention to keep interest rates “exceptionally low” for “an extended period” as long as inflation expectations are stable and unemployment continues to rise. Until the Fed starts signaling interest rate increases, investors will continue to be encouraged to sell the Dollar and buy higher-yielding assets

The Dollar traded at $1.4874 against the EUR in today’s early trading from $1.4861 in New York yesterday, when it touched $1.4909, the weakest level since Oct. 27. The Dollar traded at 90.82 yen from 90.72 Yen Wednesday.

The USD is expected to extend declines against its major counterparts ahead of Friday’s Non Farm Employment report forecasted to show U.S. employers cut fewer jobs in October than in September, damping demand for the U.S. currency as a refuge as economic sentiment continues to improve. The unemployment rate may rise to 9.9%, from 9.8%.

Looking ahead to today, the Dollar’s movements will likely be affected by the Central Bank statements from the U.K and Euro-Zone, however, the release of the Unemployment Claims at 13:30 GMT will likely have an affect on Dollar sentiment as well.

EUR – Pound Gains on Optimistic Services PMI

The EUR gained against 14 of its 16 major counterparts as the Economy Ministry in Berlin is expected to report Friday that German factory orders rose 1% in September after gaining 1.4% in August.

The British Pound gained 0.9% on the day. The Pound gained on both the Dollar and the EUR, after a survey of purchasing managers indicated the U.K.’s services PMI saw activity rise at its fastest pace in more than two years. The Bank of England is expected to increase the amount of debt it will buy from the market in today’s meeting.

The EUR rose to $1.4871 from $1.4712. The EUR jumped to 134.68 Yen from 132.91 Yen. The U.K. Pound strengthened to $1.6565 from $1.6412.

A heavy news day is expected from Europe today. The bank of England statement is due at 12:00 GMT and The European Central Bank is slated to gives its latest policy update at 13:30 GMT. The ECB is expected to keep rates at 1%. Furthermore, the GBP Manufacturing Production is expected to be released at 9:00 GMT.

JPY – Yen Gains ahead of U.S Unemployment Rate Report

The Yen rose against the EUR and Dollar in today’s early trading as Japan’s stocks declined amid concerns the global economic recovery will be slow, boosting demand for the Japanese currency as a refuge. The Yen advanced against all 16 major counterparts ahead a report Friday forecasted to show the U.S. jobless rate climbed last month. The Yen rose to 134.52 per EUR at 9:54 a.m. in Tokyo from 134.85 in New York yesterday. It climbed to 90.59 per Dollar from 90.72.

OIL – Oil Rises Above $80 a barrel

Crude futures settled above $80 a barrel Wednesday after a surprise decline in oil inventories and the Dollar dropped toward its low for the year against the EUR. Light, sweet crude for December delivery settled up 80 cents, or 1%, higher at $80.40 a barrel on the New York Mercantile Exchange.

The U.S. Energy Information Administration reported Oil inventories dropped by 3.9 million barrels last week, while analysts unanimously expected a rise. Oil and fuel inventories have declined for four consecutive weeks supporting the rally in Oil prices. Oil got another boost after the Federal Reserve said it would maintain its ultra-low interest rate policy, which is seen as likely to keep pressure on the Dollar. Dollar denominated Oil tends to rise when the dollar weakens, since it becomes cheaper.

Technical News

EUR/USD

This pair could be in for further bullish strength in the near term. A correction during the Asian trading hours has weakened the pair. As such, a bullish cross has formed on the hourly chart’s Slow Stochastic Oscillator. Traders may want to be long to catch the up tick.

GBP/USD

Yesterday the pair once again tested but failed to break the significant 1.6600 resistance line. Today the pair has continued the appreciation for the third day. Traders who see the importance of this price level may want to set an entry limit sell order at this mark to profit if the pair reaches this price level and then reverses.

USD/JPY

The 4-hour chart shows the pair began to drop from its upper Bollinger Band, only to stall and turn up at average line. We may expect this pair to rise back up towards its upper Bollinger Band. Traders may want to go long with a stop set near the 90.90 level.

USD/CHF

Significant depreciation from the last day and a half left the pair oversold. This is shown by the bullish cross that has appeared on the 4-hour chart. The pair may be due for some appreciation. Going long could be the right choice.

The Wild Card – Gold

The price of the commodity has soared to a new record, touching on a high at $1097.05 yesterday. This has left the commodity potentially overbought. A bearish cross has formed on the daily chart’s Slow Stochastic Oscillator, signaling a potential drop in the price. Forex and commodity traders may have an opportunity to sell gold at the peak of its appreciation today.

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

*Australian Retail Sales surprised for the worst at -0.2% vs. 0.5% expected

*New Zealand Unemployment Rate rose more than forecasted to 6.5%

Europe

*UK Nationwide Consumer Confidence at 72 as expected

*German PMI Services worse than expected at 50.7

*UK PMI Services better than forecasted at 56.9

*EU PMI Services slightly above estimates at 52.6

*EU PPI in line with expectations at -0.40%

Americas

*US ADP Employment Change worse than expected at -203K

*US EIA Crude Oil Stocks surprisingly fell 4.0M

*US ISM Non-Manufacturing PMI weaker than predicted at 50.6

*US Fed left benchmark Interest Rate unchanged at 0.25%

The Overall Sentiment

Equities

US stock markets closed on the positive side but far from their intraday highs. Equities rallied as the Federal Reserve left its benchmark interest rate unchanged at 0.25% and stated once again that it will keep interest rates ‘exceptionally low for an extended period’. Fed officials added that this policy will remain in place as long as ‘inflation expectations are stable’. A downward rally at late trading hours led by a drop from financial shares corrected earlier gains. Still, the S&P managed to close up 0.1% and the Dow added 0.3%. European stock markets advanced driven by better-than-expected companies’ earnings reports sending all main indices to the green side. The DAX gained 1.7%, the FTSE 100 added 1.4% and the CAC 40 rose 2.4%. Canadian stocks advanced as Gold continued to rally and Oil climbed above $80.

Forex

The Dollar weakened all across the board rising only against the Yen as the Fed kept interest rates unchanged and stock markets rallied. EUR/USD advanced strongly reaching an intraday high slightly above 1.49 to finally settle in the 1.4870 area. The Pound strengthened against both the Dollar and the Euro supported by positive data coming from UK’s service sector. GBP/USD retreated to the 1.6550 area after failing to break above 1.66. Commodity-linked currencies advanced as Gold continues to break records and Crude Oil rose above $80. The Aussie dollar managed to climb in spite of some early losses on surprisingly negative Retail Sales figures. The New Zealand dollar gave up most gains as the Unemployment Rate reached its highest level in over nine years. The Yen lost versus most of its counterparts declining against the Dollar for a third day. USD/JPY peaked at 91.30 and corrected to close the day around the 90.50 vicinity.

Commodities

Gold continued to rally setting new record highs at $1097 firmly stating its intentions to break the $1100 mark. Silver advanced for a fourth day climbing above $17.50. Crude Oil rose beyond $80 after the weekly EIA report showed stockpiles unexpectedly dropped 4.0 million barrels.

See more info about the Gold rally

The Day Ahead

Market’s attention will be on Europe as both the European Central Bank and the Bank of England will announce their interest rate decision. The ECB is likely to keep its benchmark interest rate at a record low 1% in its statement scheduled at 12:45 GMT. The bank’s president Trichet will speak at a press conference shortly after and analysts believe that there will be an indication about the ECB’s intention to start approaching the withdrawal of stimulus policy. In addition to the rate decision the Euro-zone will release its Retail Sales report. According to forecasts the BoE will probably leave its key rate at 0.5% and possibly expand its quantitative easing program by an additional £50 billion, thus signaling that the UK economy is still lagging behind when several other countries already started studying exit strategies. To complete an agitated day the UK will release its Industrial and Manufacturing Production figures. In the US session the Initial Jobless Claims report is expected to show a reduction of 10k from a previous reading of 530K in the number of workers applying for unemployment insurance for the first time . Canada’s Ivey PMI is forecasted to fall to 58 from a prior 61.7 in the last significant economic data release of a very appealing day for trading.

Technical Analysis

USD/CAD DAILY

USD/CAD has been moving downwards in several bearish cycles defining a clear trend line that acted as a resistance for every bullish move. The pair presents the opportunity to open a Short position considering that it is currently trading near that trend line and the bullish momentum seems to be running out of steam. Stop Loss should be placed above the resistance and taking into account that the last sessions showed some volatility another attempt to break above it is not out of the question.

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 Fast Brokers – Gold surged past our 2nd tier downtrend yesterday after the IMF announced that India made a large bullion purchase from the monetary fund’s stockpile.  Gold’s technicals were already working in the topside’s favor, making yesterday’s breakout explosive.  Furthermore, gold managed to make yesterday’s key topside movement without the full cooperation of the Euro and Aussie.  In fact, gold’s impressive breakout could signal another round of weakness in the Dollar.  Regardless, gold’s momentum continues to work in favor of the topside as investors and governments try to diversify their assets and decrease their dependency on the Dollar.  Meanwhile, central bank meetings will be in focus for the next 24-48 hours, meaning volatility in the FX markets should increase.  Therefore, investors should expect further volatility in gold, especially considering the precious metal made such a bullish movement.

Technically speaking, we’re at a loss of downtrend lines and historical perspective again.  Therefore, the psychological $1100/oz level serves as our only trustworthy topside technical for the time being.  Speaking of which, gold stopped just short of $1100/oz, hinting that the level could have a near-term psychological impact on investors.  As for the downside, we’ve readjusted our uptrend lines, giving us an idea of support to go along with the psychological $1075/oz level.  Meanwhile, gold’s near-term activity could take its cue from the Dollar.  Hence, investors should monitor any technical breakouts or setbacks in either the EUR/USD or AUD/USD.

Present Price: $1091.30/oz

Resistances: $1091.49/oz, $1092.77/oz, $1095.77/oz, $1100.04/oz

Supports: $1087.85/oz, $1085.28/oz, $1083.14/oz, $1079.93/oz, $1075.01/oz, $1069.89

Psychological: $1100/oz, $1075/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 EUR/USD logged sizable losses yesterday as we witnessed a broad-based preference for the Greenback despite a breakout in gold and U.S. equities ending slightly positive.  Therefore, it seems downward momentum was more in control than correlations and fundamentals.  Speaking of gold, yesterday’s breakout was impressive, and the precious metal is looking to test its psychological $1100/oz level.  Though much of gold’s strength may be attributed to India’s large bullion purchase from the IMF, the breakout could also signal another pullback in the Dollar due to their negative correlation.  In fact, the EUR/USD and GBP/USD have posted encouraging gains since yesterday’s bottom as investors await the FOMC’s monetary policy decision this afternoon.  Since the Fed is expected to keep a loose monetary policy for the foreseeable future, any unexpected wording would likely have a large impact on the Dollar.  If the Fed does stand pat as anticipated, then tomorrow’s ECB and BoE meetings should carry some more weight in the FX markets.

It will be interesting to see how the ECB behaves tomorrow since the central bank has recently voiced its displeasure of such a weak Dollar.  Since the Chinese RMB is pegged to the Dollar, the Euro has also lost a lot of value against the Yuan, causing further damage to the EU’s recovering manufacturing sector.  However, the EUR/USD has pulled back from October highs following the ECB’s public objection, so it is uncertain whether the central bank will continue to be more Hawkish or omit more of a neutral tone.  Considering these observations, the ECB’s rate meeting tomorrow has an air of uncertainty to it, meaning volatility may pick up over the next 24-48 hours.

Meanwhile, the S&P futures have climbed back to their psychological 1050 mark while crude trades around its own psychological $80/bbl level.  Therefore, the bulls have placed the riskier investment vehicles back into a more reasonable position following last week’s large pullback.  As a result, the EUR/USD finds itself at a crossroads as well.  The currency pair has multiple uptrend and downtrend lines we can create while the psychological 1.50 level bears overhead and the psychological 1.45 level rests underneath.  Therefore, investors should keep a close eye on the Dollar’s reaction to upcoming monetary policy decisions until the Greenback commits to a new near-term trend.

Present Price: 1.4780

Resistances: 1.4796, 1.4814, 1.4828, 1.4847, 1.4859, 1.4876, 1.4890

Supports: 1.4773, 1.4759, 1.4740, 1.4711, 1.4684, 1.4648

Psychological: 1.50, 1.45

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 Cabled has recovered nicely from Tuesday lows after bottoming along our 2nd tier uptrend line and just above 10/26 lows.  Buyers come to the rescue following positive economic data flows from Britain coupled with another large topside breakout in gold.  Yesterday’s Halifax HPI number tagged onto the positive Manufacturing PMI performance on Monday by printing 4 basis points above analyst expectations.  Today’s Services PMI data completed the trifecta, printing at 56.9 vs. 55.4E.  We mentioned previously how the Services PMI number should carry a little more weight since the services industry comprises roughly 70% of GDP.  The Services data didn’t disappoint, and the 56.9 reading falls in line with pre-crisis levels.  The Pound has reacted positively, flexing its relative strength while sending the EUR/GBP lower.

The Cable also got a boost from yesterday’s impressive breakout in gold.  The precious metal is presently looking to test its highly psychological $1100/oz level.  As we mentioned in today’s EUR/USD commentary, gold’s large topside movement could signal a coinciding decline in the Dollar due to their negative correlation.  On the other hand, yesterday’s action in gold may been largely due to India’s sizable purchase of bullion from the IMF.  Either way, gold’s breakout sends some positive signals, helping the Cable’s uptrend.  However, despite today’s strength in the Cable, the currency pair still faces our 3rd and 4th tier downtrend lines along with  10/29, 10/23, and 9/11 highs.  Therefore, a few worthy topside technicals remain between present price and more significant topside movements.  As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with 11/03 and 10/23 lows.  Furthermore, the psychological 1.65 level may now work in the Cable’s favor.

The next 24-48 hours will be all about the central bank meetings.  The Fed will announce its monetary policy this afternoon with the BoE and ECB following early Thursday PST.  While the Fed is expected to keep its loose liquidity policy intact for the ‘foreseeable future’, the BoE and ECB meetings carry more uncertainty.  Although analysts are expecting the BoE to increase its QE package by 50 billion, the BoE has expressed a more hawkish tone as of late. Prelim GDP aside, recent British econ data has been more positive than negative.  Therefore, although the BoE is expected to inject more liquidity tomorrow, there remains a possibility that the central bank may just stand pat.  Considering the slight uncertainty surrounding upcoming monetary policy decisions, we could be in for a volatile couple trading sessions in the FX markets.  Therefore, investors should keep a sharp eye on the Cable’s interaction with its technical levels as well as the behavior of its correlations.

Present Price: 1.6526

Resistances: 1.6544, 1.6566, 1.6604, 1.6630, 1.6662, 1.6688

Supports: 1.6505, 1.6473, 1.6428, 1.6397, 1.6362, 1.6329

Psychological: 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 Fast Brokers – The USD/JPY has popped back above its psychological 90 level in reaction to solid gains in both the EUR/USD and GBP/USD.  Hence, the USD/JPY’s recent behavior stems from a slight return to risk, supported by the S&P’s rally to 1050 and Crude’s climb back to $80/bbl.  However, despite today’s recovery in the risk trade, upcoming central bank meetings could move the markets either way.  The Fed, BoE, and ECB will all announce their monetary policy decisions in the next 24 hours, meaning the FX market could experience heightened volatility due to uncertainty surrounding the events.  Although investors are expecting the Fed to stay pat, the BoE and ECB decisions could be wildcards should the central banks decide to diverge from their respective stances.  Since Japan doesn’t have any events on the board besides tonight’s release of the BoJ meeting minutes, the USD/JPY’s movements will likely be linked to broad based activity in the Dollar and U.S. equities.  Because the USD/JPY is moving in correlation with the risk trade today, the currency pair may exert a positive correlation with the EUR/USD, GBP/USD, and U.S. equities for the time being.  Considering the Dollar is at a crossroads, investors should keep a sharp eye on upcoming activity in reaction to monetary policy decisions.

Technically speaking, the USD/JPY has created a little breathing room by getting back above 90 along with our 1st and 2nd tier uptrend lines.  Furthermore, should another downturn take hold, the currency pair has November and October lows to fall back on.  However, the last pop in volume came on Friday’s large pullback, meaning near-term momentum may be in favor of the downside.  As for the topside, the USD/JPY potentially faces multiple uptrend lines along with 10/30 and 10/27 highs.  Investors should keep in mind that there is still a debilitating, long-term downtrend at work, meaning the road to the topside may be filled with speed bumps.

Present Price: 90.76

Resistances: 90.78, 90.93, 91.08, 91.26, 91.44, 91.61

Supports:  90.60, 90.41, 90.29, 90.16, 89.91, 89.77

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.

By Russell Glaser – A big fish has just entered into the gold market; the Reserve Bank of India. Yesterday India’s national bank purchased 200 metric tons of gold from the IMF. The major transaction helped to drive the price of the commodity to a new record high.

While it was known the IMF was shopping 403.3 metric tons of gold on the open market, it was not expected that a national bank would take such a large percentage of the sale. The enormous bulk purchase is viewed as a reduction in the supply of gold in the market as the Reserve Bank of India is expected to hold the gold in its long term reserves. Speculation is now building for other national banks to begin stocking up on the commodity. This move may be a way of national banks to add a bit of diversification to their holding as the dollar continues to weaken against a basket of currencies. The dollar is considered the main holding for a nation’s currency reserves.

Yesterday’s large purchase helped push the price spot gold through its resistance level of $1070 and the commodity is now trading at a record high, approaching the $1100 price level. Perhaps China, the world’s largest holder of U.S. Treasury Bonds will be the next major central bank to move away from the dollar and diversify with gold, fueling more demand for the commodity and pushing the price higher.

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 Federal Reserve is expected to keep its benchmark Interest Rate unchanged near zero today, as traders get ready for a busy news cycle. Investors will focus on the interest rate outlook, but many analysts say the Fed is unlikely to change the wording of its pledge to keep rates low for an extended period. This may have the result of stabilizing USD trading, or potentially driving the world’s primary currency to new extremes. Will the USD experience a reversal from yesterday’s bullishness?

Economic News

USD – Dollar Advances vs. EUR ahead of Fed Statement

The U.S. Dollar clung to small gains versus the EUR Tuesday, but pared earlier gains as traders waded through mixed signals on the health of the economy and the Federal Reserve started its 2 day policy meeting.

The Dollar climbed to a 1-month high against the EUR as concerns about the global banking sector reignited safe-haven demand for the greenback. The Dollar climbed against its major rivals as investors retreated from risk assets on jitters over banks and braced for central bank meetings in the United States, the Euro-Zone and the UK.

Traders remained wary ahead of this week’s heavy news cycle; the U.S. Federal Reserve started its 2 day policy meeting on Tuesday and the European Central Bank (ECB) and the Bank of England (BOE) will also hold policy meetings later in the week.

The overwhelming consensus is that the Fed will hold the federal funds rate steady at near-zero, where the Fed’s target has been since last December. Investors will be paying close attention, however, to the wording of the Fed’s statement for any clue as to when the central bank would begin pushing Interest Rates higher. Once American markets open for the day, traders should expect a lot of volatility.

EUR – Sterling Falls Sharply on UK Banking Sector Concerns

The EUR reversed its gains against the U.S. Dollar and the Yen Tuesday, when concerns over the banking sector boosted the greenback, which tends to gain when investors shed risk assets.

The 16-nation currency traded at $1.4760, from $1.4775 yesterday in New York, after rising to $1.4811 earlier. It was also at 132.95 yen, from 133.32 yesterday after strengthening to 133.98 earlier. Sentiment on the financial sector in Europe was weak and that pressured the EUR and the Pound earlier and contributed to the recent strength of the U.S dollar, analysts have said.

The Sterling tumbled to a 1-week low against the U.S. Dollar after the UK Treasury announced a shake-up of British banks, which raised concerns about the financial sector. The British Pound declined for a 2nd day against the EUR and slid 0.1% versus the Dollar at $1.6398 on speculation the BOE will extend its asset-buying program this week.

JPY – Yen Hits Session Low vs. USD

The Japanese yen hit a session low in trading on Tuesday as U.S. stocks cut losses, reducing safe-haven demand for the Japanese currency. The Yen weakened to 90.46 per Dollar from 90.21.

The Yen climbed earlier on reduced demand for higher-yielding assets after the 101-year-old commercial lender CIT Group Inc. listed $71 billion in assets and $65 billion in debt in its Chapter 11 filing in U.S. Bankruptcy Court in Manhattan recently. Low interest rates in the U.S. and the bankruptcy filing of CIT Group are among the reasons Japan’s currency is rising against the USD, analysts have stated.

The JPY fell against the EUR on speculation the global economic recovery will boost demand for higher-yielding assets. Japan’s currency dropped to 133.89 versus the EUR from 133.32 yesterday.

Crude Oil – Crude Oil rises 2% Ahead of U.S. Factory Data

Oil prices rose above $79 a barrel on Tuesday after data showed U.S. factory orders in September expanded at a quicker pace than expected, signaling potential for more fuel demand in the world’s biggest energy consumer.

Crude prices had fallen sharply earlier in the day as the U.S. Dollar firmed to a 1-month high against other currencies and equity markets declined. A firming dollar and falling stock prices are typically signs of investors shunning riskier assets, including commodities.

Oil traders were awaiting weekly U.S. oil inventory data. Analysts expect that U.S. crude inventories rose by 1.4 million barrels last week, but stocks of distillates, like heating oil and diesel, were expected to fall by 1 million barrels, according to experts.

Technical News

EUR/USD

This pair appears to be continuing to trade within a minor bearish channel. Currently at a peak within this channel, it now appears that there are some indications of an impending downward correction. The pair is currently over-bought on the hourly RSI and the daily MACD shows a bearish cross. Going short may be a wise tactic today.

GBP/USD

This pair has neared the end of a consolidation trend on the daily chart and a tightening of the Bollinger Bands is beginning to show. As this trend continues, traders will likely see very few indications of a clear direction, but a sharp movement may be on the way in the next week and traders should be on the lookout. Waiting for clearer signals may be a wise move today.

USD/JPY

With many indicators floating in neutral territory, this pair appears to be floating within a very tight range. With a fresh bullish cross on the 4-hour MACD, there is a possibility for an impending upward movement. Forex traders should try to capture profits on this pair today by buying on lows and selling on highs within its current range.

USD/CHF

This paid continues to show modest bullishness, and few indications that this will stop any time soon. The hourly RSI shows this pair floating near the over-sold border, which could suggest a level of upward pressure. The weekly Momentum oscillator also shows an upward turn, hinting at the quickening pace of the upward movement. Going long appears to be today’s preferable strategy.

The Wild Card – USD/TRY

This pair is giving off some decent indications of downward movement. The pair has been trading within a tightening consolidation trend since yesterday morning and now appears to have reached the tipping point. Many indicators show neutrality, but the longer-term momentum appears to be down. Forex traders can see a fresh bearish cross on both the 4-hour MACD and daily Slow Stochastic, and use this information to anticipate the strong bearish movement which will likely occur today in order to capture great profits!

Forex Market Analysis provided by Forex Yard.

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