InvestMacro FX

The Australian dollar is finally at par with the greenback! Just today, the AUDUSD pair touched and even moved above the magical 1.0000 number after breaking out from a symmetrical triangle. Back in October 4, I asked whether the AUDUSD had the legs to reach for the parity level (kindly see it here). At that time, the pair had just broken out from a rare broadening right triangle formation. The pair then continued to move north before moving sideways for almost two weeks. The inevitable occurred and luckily for the Aussie bulls, the pair broke out to the upside. At present, the Aussie is now trading at just above 1.0000, it’s first time in history to be at that level. And based on my technical estimate (gauged by projecting the height of the smaller triangle upward), it could at least reach 1.0150. A more promising target would be as high as 1.0700 which is measured based on the height of the larger broadening pattern.

Earlier today, the Reserve Bank of Australia (RBA) surprisingly hiked its interest rate to 4.75% from 4.50% which effectively pushed the Aussie towards uncharted territory against the US dollar. The central bank sees inflation to rise at a faster pace over the medium term. One tool to prevent a rapid rise in prices is of course to increase the market’s interest rates. The increase makes the Aussie more appealing to investors because of its higher yields compared to the meager 0.25% of the greenback. More robust Australian economy, higher RBA interest rates, talks of additional QE measures by the Fed, plus the overall negative sentiment on the dollar have been working well for the AUDUSD, making it the best candidate for carry trade as of the moment. If these factors remain then the demand for the pair would more likely increase as well.

More on LaidTrades.com …

By Greg Holden – ForexYard will be publishing a number of informative articles on the subject of gold trading for the next few weeks as part of a campaign to promote our newest feature: ForexYard’s Gold Trading Account!

Take a look at the chart below and see for yourself what has been happening lately with the price of Gold.

We’ve been experiencing a secular bull market for the last few years with this precious metal, and this technical analysis will demonstrate why it’s likely to continue in the near-term. As you can see, the price of Gold has been rising sharply since July, but took an even steeper path beginning in late September.

You can see in the Stochastic (slow) indicator at the bottom that the price was being over-bought throughout that steeper rise, resulting in a breach of that sharper uptrend. Now what we are seeing is known as a “consolidation triangle.” The previous trend was broken, but the price remains within a larger uptrend, and is even consolidating towards a decision point in the trend.

Following this analysis puts the price of Gold most likely at a rate of $1,340 an ounce sometime in the next few trading days. Upon reaching that price level, we should see Gold receiving a modest level of support, and then a continuing of its previous long-term uptrend.

Gold – Daily Chart

Forex Market Analysis provided by ForexYard.

© 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 Greg Holden – The price of precious metals, such as Gold and Silver, have been rising steadily for the past several months with what appears to be no end in sight. However, Silver is beginning to give off a few indications that it could correct downwards over the next few trading days and test its uptrend’s primary support level near the $24 mark.

The chart below is the Silver daily chart provided by ForexYard.

We can see on the chart that the uptrend has been confirmed multiple times and has sustained itself for months. The trend line drawn on the chart indicates where the price is likely to meet support.

As we can see, there is a recent doji candlestick formation from yesterday, and today appears on track to form a second doji candlestick. A doji is typically representative of an impending reversal in direction, however temporary the reversal may be.

The MACD and Stochastic (slow), shown at the bottom of the chart, each have fresh bearish crosses, suggesting an imminent downward corrective movement has begun to develop.

The first support level to be tested will be reached at the $24.50 price level, and represents contact with the trend line.

If the price of Silver behaves similar to other commodities, such as Crude Oil, we could see a minor breach of the trend line as the pair forms either a flag or pennant consolidation trend over the next few weeks. If the price reaches $24 an ounce, this may well be the case.

Silver – Daily Chart

Forex Market Analysis provided by ForexYard.

© 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 Russell Glaser – US Dollar weakening is taking place in the hours leading up to the Federal Reserve Open Market Committee meeting where the Fed is expected to begin another round of quantitative easing. This key event is overshadowing most other events that have taken place or those that will occur over the remainder of the week.

Yesterday the Aussie dollar shined following the surprise decision by the Reserve Bank of Australia to raise interest rates 25 bps to 4.75%. This sent the AUD/USD soaring, climbing above the parity level versus the greenback. Traders seem to love big round numbers and it doesn’t get any more round than 1.0000.

The election in the US appears to have weakened the greenback as the Republicans took control of the House of Representatives while reducing the Democrat’s majority in the Senate.

Today the pound is higher versus the dollar following release of better than expected Services PMI data. The survey came in at 53.2 on expectations of 52.4. Traders have bid the cable to its highest level since the end of January.

Later today the payrolls firm ADP will release their version of the Non-Farm Payrolls. This is typically considered a preview of the Labor Department’s report to come on Friday. Also due to be released today is the ISM Manufacturing PMI.

And finally we’ve arrived at the highlight of the week, if not the year; the Fed’s announcement on quantitative easing. A majority of economists polled by Bloomberg expect the Fed to announce a $500 billion asset buying program. How and when the Fed will implement the program remains to be seen, as does the direction of the dollar following the announcement this afternoon. Much of the QE II has been priced into the EUR/USD already.

There is a risk that the initial announcement may disappoint traders and the dollar may strengthen following. But the continued loosening of US monetary policy cannot be ignored and the dollar should weaken versus the EUR/USD.

Daily support for the EUR/USD rests at 1.4000, the upper boundary of the triangle pattern on the daily chart. Resistance is found in the range of 1.4080 – 1.4100.

Forex Market Analysis provided by ForexYard.

© 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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

As expected, Obama’s government had to accept a painful defeat at the mid-term elections for Congress. In the future, President Obama has to work closer together with the Republicans. The results of the elections shouldn’t have any major impact on the FX market, since the focus is definitely on the decision of the Fed tonight. Against this backdrop, US economic data due for publication today (ADP employment change index, ISM non-manufacturing index, factory orders) is unlikely to gain much attention. Especially since it is clear that even if economic data surprises positively the Fed will not refrain from announcing further measures of quantitative easing (QE2).

A strong group within the Fed does not seem to be satisfied with growth rates around potential for the US economy in the near future. Do they want to “artificially” reduce unemployment with more rapid growth? It is far from certain whether that can be achieved by monetary policy means. The only thing that can help the dollar today is if things turn out to be not so bad regarding the quantitative easing as some of the real pessimists have been predicting.

So that leaves the question what markets are really expecting. Other than in the case of fundamental data (or as is the case with the BoE these days) there is no consensus poll on the expected QE extension. That is also due to the fact that it was not even clear how exactly the Fed would announce further steps. After all 53 of the 56 analysts polled by Bloomberg expect the Fed to extend its QE measures. Just under half of them also expect it will immediately promise to buy a further USD 500bn. worth of US Treasuries. 12% of the analysts bank on the Fed purchasing between USD 50bn. and 100bn. per month, without announcing a total volume. The remaining analysts either predict a volume of up to a maximum of USD 500bn. or have not quantified their expectations. The uncertainty among analysts reflects the disagreement among the Fed members. Only a few days ago some Fed members clearly set out their very contrasting views. In the end, the continued USD weakness is due to the obvious disagreement of the FOMC members. If the most important decision makers cannot agree on an important issue such as this, the matter must be far from simple.

Against this background what can we expect for EUR-USD today? We consider the following market reactions to be possible: Should the Fed announce a careful approach with monthly purchases we consider it more likely that EUR-USD will come under pressure. Should the Fed announce a total volume we consider a volume of approx. USD 500bn. to be neutral. Should the Fed clearly exceed this level EUR-USD is likely to breach its range between 1.37 and 1.41 to the upside. On the other hand the Fed could also surprise with other announcements, which exceed a specific volume, such as an inflation target, a growth target, a yield target or a change in its communication (“extended period of time“) etc. etc.

GBP

The manufacturing PMI easily beat expectations on Monday, but Tuesday’s construction PMI fell short of consensus.

We expect the BoE’s policy meeting on Thursday to come sharply into focus once the outcome of today’s FOMC meeting is known. Investors are concerned that the BoE may embark on another round of Gilt purchases if the FOMC eases again today. Although the upcoming BoE meeting may be a be a non-event, the fear of a surprise announcement could cause some near-term sterling weakness.

TECHNICAL OUTLOOK

EURUSD BULLISH Look for a break above 1.4159, which would trigger another bullish run towards 1.4373. Support holds at 1.3698

USDJPY BEARISH Outlook is bearish; next big support below 79.75 lies at 77.91. Resistance at 81.41, Monday’s reaction high.

GBPUSD BULLISH Stalled in front of 1.6107; climb through the level would expose 1.6276 and 1.6458 next. Support comes in at 1.5878 ahead of 1.5606

USDCHF BEARISH Bounce-off from 0.9463 pushed through resistance at 0.9929. Near-term support at 0.9703.

AUDUSD BULLISH Push through 1.0004 exposes 1.0222, measured target. Support at 0.9866 ahead of 0.9542 reaction low.

USDCAD BEARISH Momentum is negative; the pair targets 0.9981 with scope for 0.9820. Resistance at 1.0203 ahead of 1.0380

EURCHF BULLISH Targets 1.3924 with scope for 1.4041 next. Near-term support at 1.3540

EURGBP BULLISH Break of 0.8772 would expose 0.8942 and reinstate the bull trend. Support holds at 0.8636

EURJPY BULLISH Only a break below 110.66 would hurt the positive tone. Resistance at 113.78 ahead of 115.68

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The U.S. dollar dropped against most of the major currencies, especially the euro, ahead of the Congressional Election results. The main reason for the dollar’s fall is the speculation regarding asset purchases by the Federal Reserve. In the mean-time, several significant economic releases are expected from the U.S. today, and along with the ripple effect of the elections results, harsh volatility is likely to be observed.

Economic News

USD – Dollar Falls vs. Euro Ahead of Heavy News Day

The U.S. dollar fell sharply against the euro on Tuesday. The dollar dropped about 150 pips vs. the European currency, and the EUR/USD has peaked at the 1.4055 level as of this morning. The greenback also fell against most of the major currencies, including the Australian dollar and the Swiss franc.

The dollar weakened yesterday on speculation a resumption of asset purchases by the Federal Reserve will lead to higher inflation and extend the dollar’s bearish trend. Investors seem to be uncertain about holding the dollar due to the expectations that the Fed is likely to introduce a new stimulus. As a result, the dollar saw an unclear trend over the past few days, especially vs. the euro, its greatest counterpart.

The dollar’s ups and downs might continue into the near future, until the Fed puts an end to rumors and declares the amount of debt it is planning to purchase.

Looking ahead to today, an extremely heavy news day is expected from the U.S. economy. The biggest event is of course the results of the Congressional Election, and traders are advised to keep a close eye on the updates from the elections. In addition, ADP is scheduled to release its forecast for Non-Farm Payrolls at 12:15 GMT.

The ADP’s forecast is considered to be very reliable, and thus tends to have a significant impact on the market. Traders are also advised to follow the Federal Funds Rate announcement. The effect of the announcement is likely to be muted as the Fed is expected to leave rates at a record low of less than 0.25%. Nevertheless, traders should be prepared for the possibility that the Fed will manipulate rates, as this is likely to have an unusual impact on the market.

EUR – Euro Strengthens on All Fronts

The euro rallied yesterday against all of the major currencies. The euro gained about 150 pips vs. the U.S. dollar, and the EUR/USD has reached the 1.4055 level as of this morning. The euro gained about 100 pips vs. the British pound and about 150 pips against the Japanese yen, as well.

The euro gained yesterday as the U.S. Federal Reserve began a two-day meeting regarding a possible stimulus to the economy. The Fed is expected to issue a statement by the end of the meeting, and investors expect it to include a large bond-buying program to support the sluggish U.S. economy. This is expected to spur inflation, and to weaken the greenback. As a result, the euro, which is the dollar’s greatest rival, is strengthening, despite resurgent worries about the euro-zone’s more indebted countries such as Greece, Spain, Ireland and Portugal.

As for today, there aren’t any significant news releases scheduled from the euro-zone. Traders are advised to focus on the major publications from the U.S. and the British economies, as these are likely to have a great impact on the euro as well. In addition, the U.S. Congressional Elections are likely to affect all markets today, and traders should follow the results.

JPY – EUR/JPY Trading Near 1-Week High

The Japanese yen saw a bearish trend against most of its major rivals during yesterday’s trading session. The yen dropped about 150 pips against the euro, and the EUR/JPY is trading near a weekly high. The yen also saw modest losses vs. the U.S. dollar and the British pound.

The yen weakened during yesterday’s trading as U.S. stocks rose, and on speculations that global economic recovery is likely to proceed at a faster pace. This has increased risk appetite in the market, and as a result declined demand for the yen. It currently seems that investors have more confidence in the recovery of western economies, and as a result are reducing demand for safe-havens, such as the yen. If the leading economies will continue to provide positive data, the yen might see further bearishness versus its rivals.

Looking ahead to today, Japanese banks will be closed in observance of Culture Day. Traders are advised to follow the major updates from the U.S. as they are likely to have the largest impact on the market. Special attention should be given to the U.S. Congressional Elections results, as updates are likely to be released throughout the trading day.

Crude Oil – Crude Oil Soars to 6-Month High of $84.50 a Barrel

Crude oil prices rallied during yesterday’s trading session. Crude began yesterday’s trading around $83.20 a barrel. Crude oil’s prices advanced throughout the trading day, and eventually peaked at $84.50, marking a 6-month high.

Crude oil rose on Tuesday following depreciation of the U.S. dollar and as U.S. stocks gained on expectations the Federal Reserve will purchase debts in order to support the economy. This has added to optimism that the U.S. economic recovery will proceed at a faster pace, and as a result will boost demand for energy. In addition, the dollar’s fall has also supported crude, as it increased the appeal of commodities for an alternative investment.

As for today, traders are advised to follow the leading economic releases from the U.S, such as the ADP Non-Farm Payrolls forecast and the Federal Funds Rate announcements, as these are likely to have a large impact on crude oil prices. Traders should also follow updates regarding the U.S. elections results as these are likely to affect prices as well. In addition, traders should focus on the U.S. Crude Oil Inventories report, which is scheduled for 14:30 GMT, as this report tends to have an instant impact on crude oil trading.

Technical News

EUR/USD

The EUR/USD pair saw a rise of 150 pips yesterday, reaching as high as the 1.4055 level. However, a bearish cross has taken place on the 4-hour chart’s Slow Stochastic, suggesting that a bearish correction might take place. Going short with tight stops might be the right strategy today.

GBP/USD

The cable began yesterday’s trading with a sharp drop, yet the pair corrected most of its decline later in the day. Currently, as the 4-hour chart’s MACD has completed a bearish cross, the pair might drop again, with potential to reach the 1.5950 level.

USD/JPY

The pair’s peaceful trading that has characterized it for the past few days continued yesterday as well. Nevertheless, a bullish cross on the daily chart’s Slow Stochastic suggests that a bullish move might be imminent. Going long might be the right choice today.

USD/CHF

The pair erased most of this week’s gains during yesterday’s trading. The pair dropped about 200 pips and reached as low as the 0.9755 level. And now, as the RSI on the daily chart has dropped below the 70-line, it appears that the pair might see further bearishness today, with a key target level of 0.9700.

The Wild Card

Crude Oil

Crude Oil rose to a 6-month high yesterday after climbing to $84.50 per barrel. Currently, all the indicators on the daily chart are providing bullish indications, suggesting that the bullish move could extend today. This might be a great opportunity for forex trader to join a very popular trend.

Forex Market Analysis provided by ForexYard.

© 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.

USD/CHF

Daily graph: http://www.real-forex.com/charts-daily/November2010/CHF_DAILY_031110.JPG

For the last three weeks, an important uptrend corrected the previous direction of the pair until a very important resistance on the daily graph: 0.9933.

Once reached, the pair tested that resistance, but failed to cross it, involving a new decrease started during the last trading session.

In order to catch the opportunity created to go “Short”, we suggest waiting for the confirmation of the new trend which should appear by the identification of a decreasing configuration on One-Hour graph.

Potential trade

One-Hour graph: http://www.real-forex.com/charts-daily/November2010/CHF_1H_031110.JPG

The required configuration should appear once the One-Hour support of 0.9758 will be crossed downward. At this time the market order should be entered. The following is one possibility:

• “Limit” order on “Short” position 10 pips below the One-Hour support level mentioned earlier; meaning: 0.9748.
• “Stop Loss” on the last high appeared: 0.9798.
•  1^st degree to order “Take profit” should be n the following support: 0.9704

USD/CAD

Daily graph:  http://www.real-forex.com/charts-daily/November2010/CAD_DAILY_031110.JPG

The navigation started a few weeks ago was stopped in the beginning the actual trading week. Two sessions ago, the pair broke the support of 1.0180, which became the new resistance. Currently, the pair is making its way to the interesting support of 1.0060.

The behavior of the pair when it will reach that new support should determine the future trend and of course, the positions that should be taken:

1. A vain breach of the support (test) could suggest a “Long” position.
2. If the support is effectively broken, a short technical correction should occur, confirming the change from support to resistance and preceding the new bearish trend. That should create the opportunity to go “Short”.

Keep following…

Have a profitable day!

Real-forex team.

The price of precious metals, such as Gold and Silver, have been rising steadily for the past several months with what appears to be no end in sight. However, Silver is beginning to give off a few indications that it could correct downwards over the next few trading days and test its uptrend’s primary support level near the $24 mark.

The chart below is the Silver daily chart provided by ForexYard.

We can see on the chart that the uptrend has been confirmed multiple times and has sustained itself for months. The trend line drawn on the chart indicates where the price is likely to meet support.

As we can see, there is a recent doji candlestick formation from yesterday, and today appears on track to form a second doji candlestick. A doji is typically representative of an impending reversal in direction, however temporary the reversal may be.

The MACD and Stochastic (slow), shown at the bottom of the chart, each have fresh bearish crosses, suggesting an imminent downward corrective movement has begun to develop.

The first support level to be tested will be reached at the $24.50 price level, and represents contact with the trend line.

If the price of Silver behaves similar to other commodities, such as Crude Oil, we could see a minor breach of the trend line as the pair forms either a flag or pennant consolidation trend over the next few weeks. If the price reaches $24 an ounce, this may well be the case.

Silver – Daily Chart

By CountingPips.com

Important News Releases – November 3, 2010

• Australia building approvals, September
• China non-manufacturing PMI, October
• China HSBC services PMI, October
• United States ADP employment numbers, October
• United States factory orders, September
• United States ISM non-manufacturing data, October
• United States FOMC interest rate decision
• New Zealand employment change & unemployment rate, 3rd Quarter

See full Calendar here