{"id":12753,"date":"2010-09-07T07:59:16","date_gmt":"2010-09-07T11:59:16","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=12753"},"modified":"2010-09-07T07:59:16","modified_gmt":"2010-09-07T11:59:16","slug":"thin-trading-on-us-labor-day-dampens-risk-appetite-boosts-usd","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/09\/07\/thin-trading-on-us-labor-day-dampens-risk-appetite-boosts-usd\/","title":{"rendered":"Thin Trading on US Labor Day Dampens Risk Appetite, Boosts USD"},"content":{"rendered":"

Source: ForexYard<\/a><\/strong><\/em><\/strong><\/span><\/p>\n

The EUR\/USD tested a significant support line at 1.2790, while the GBP\/USD reached as low as 1.5350 before correcting back upwards. Commodity prices seemed to level-out, however, indicating that the upward movement of the greenback may not have been caused by a surging dollar but rather by a decline in everything else. This suggests that risk appetite came under pressure during the thin trading conditions in the market.<\/p>\n

Economic News<\/h2>\n

USD – USD Climbs from a Potential Decrease in Risk Appetite<\/h3>\n

The celebration of Labor Day in the United States and Canada yesterday led to thin trading conditions among many of the major currency pairs. The volatility experienced at the opening of the Asian trading session this morning witnessed some sharp spikes as North American positions began to come back online.<\/p>\n

The EUR\/USD tested a significant support line at 1.2790, while the GBP\/USD reached as low as 1.5350 before correcting back upwards. Commodity prices seemed to level-out, however, indicating that the upward movement of the greenback may not have been caused by a surging dollar but rather by a decline in everything else. This suggests that risk appetite came under pressure during the thin trading conditions in the market.<\/p>\n

Today’s session will see an expected increase in volume which may equalize many of this morning’s significant moves. Should news out of the other major economies reveal deeper weaknesses we may see continued risk aversion, leading to a modest bump to the USD.<\/p>\n

EUR – Euro Declines against Currency Rivals<\/h3>\n

The euro took a dive in today’s opening trading sessions as investors took flight from riskier assets during the bank holidays in North America. Additionally, the Sentix Business Confidence report in the euro zone provided a slightly pessimistic outlook from business analysts.<\/p>\n

The EUR\/USD fell towards 1.2790 while the EUR\/GBP dropped 40 pips to 0.8320. Against the Japanese yen, the 16-nation single currency sunk around 70 pips to currently trade at 107.70. If risk aversion continues to rule the market today, investors should see the euro continue to plummet against most of its currency rivals.<\/p>\n

Looking forward to today, however, there is very little news which is scheduled to impact the euro zone. Britain will be releasing its Halifax housing price index (HPI) which could give the GBP a much-needed boost if figures turn out optimistic. Germany will also publish a report on factory orders. Any positive reading may help increase risk appetite following yesterday’s decline.<\/p>\n

JPY – Will the BOJ Intervene on Behalf of the Yen Today?<\/h3>\n

The Japanese yen appears to be trading in a flat range against a number of its primary currency rivals lately. The explanation seems to lie with today’s interest rate figures and subsequent press statement by the Bank of Japan (BOJ). Speculators have been trying to gauge whether or not the BOJ will announce vigorous actions to counter the recently surging JPY, as it poses a threat to the island economy’s exports.<\/p>\n

Should today’s statements prove to be hawkish regarding the possibility of a future monetary program to combat the rising yen, we should see speculators jump in to short the JPY. However, if the BOJ remains neutral on the issue, or doesn’t issue a strong enough statement regarding potential monetary programs, then the JPY may continue to surge against its primary rivals in today’s trading.<\/p>\n

Crude Oil – Oil Prices Steady at $74 a Barrel<\/h3>\n

The price of Crude Oil appears to have flattened out since last Friday’s Non-Farm Payroll data. Many market participants were pricing in an expectation for a surge in the USD, and therefore a plummeting price of oil, following Friday’s NFP data. Since disappointing data wasn’t delivered, and risk appetite remained steady, commodity prices also seem to have remained stagnant following the release.<\/p>\n

As of this morning, the price of a barrel of Light, Sweet Crude Oil sits at $74.00. As this level represents a significant psychological price level, a sudden price breakout in either direction will likely provide signs of the next trend. For the moment, however, most investors are waiting to see what the Bank of Japan (BOJ) will do with its currency valuation and interest rates since that appears to be today’s lead story.<\/p>\n

Technical News<\/h2>\n

EUR\/USD<\/h3>\n

The EUR\/USD has gone increasingly bearish yesterday, and currently stands at the 1.2815 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.<\/p>\n

GBP\/USD<\/h3>\n

The pair has recorded much bearish behavior yesterday. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s MACD signals that a bullish reversal is imminent. . Going long with tight stops might be a wise choice.<\/p>\n

USD\/JPY<\/h3>\n

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

USD\/CHF<\/h3>\n

The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI indicating an upward correction may be imminent. The upward direction on the 4- hour chart’s Slow Stochastic also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.<\/p>\n

The Wild Card<\/h2>\n

AUD\/USD<\/h3>\n

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.<\/p>\n

Forex <\/strong>Market Analysis provided by ForexYard.<\/a><\/strong><\/em><\/p>\n

\u00a9 2006 by FxYard Ltd<\/p>\n

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.<\/p>\n","protected":false},"excerpt":{"rendered":"

By ForexYard – The EUR\/USD tested a significant support line at 1.2790, while the GBP\/USD reached as low as 1.5350 before correcting back upwards. Commodity prices seemed to level-out, however, indicating that the upward…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-12753","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/12753","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=12753"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/12753\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=12753"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=12753"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=12753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}