{"id":20718,"date":"2011-04-20T07:40:00","date_gmt":"2011-04-20T11:40:00","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=20718"},"modified":"2011-04-20T07:40:00","modified_gmt":"2011-04-20T11:40:00","slug":"debt-tug-o-war-creates-market-uncertainty","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/04\/20\/debt-tug-o-war-creates-market-uncertainty\/","title":{"rendered":"Debt Tug-o-War Creates Market Uncertainty"},"content":{"rendered":"

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

Today’s existing home sales figures out of the United States will likely provide less help for the USD from yesterday’s downtick versus the euro, but risk aversion appears to be moving back in favor with the greenback as debt concerns in both regions favors safe-havens over higher yielding assets. Traders may want to anticipate a give-and-take trading session today as many are having difficulty assessing market direction.<\/p>\n

Economic News<\/h2>\n

USD – Dollar Bearish vs. Euro despite Debt Concerns<\/h3>\n

The US dollar’s short-term bullish run seems to have met resistance yesterday. The EUR\/USD fell to as low as 1.4310 by mid-day on Tuesday as risk aversion in the global economy helped spur growth in both the USD and JPY. However, reports out of Europe showing positive growth in manufacturing halted the greenback’s movement and pushed the EUR\/USD back towards 1.4380 by yesterday’s close.<\/p>\n

Risk aversion present in the market was initially driving the USD higher yesterday morning. Towards the end of trading, however, the greenback had shifted into a bearish posture whereas other safe havens, such as the Swiss franc and Japanese yen, continued to soar. Technical pressure also appears to be weighing on the buck as many investors have added momentum to this latest downtick.<\/p>\n

Today’s existing home sales figures out of the United States will likely provide less help for the USD from yesterday’s downtick versus the euro, but risk aversion appears to be moving back in favor with the greenback as debt concerns in both regions favors safe-havens over higher yielding assets. Traders may want to anticipate a give-and-take trading session today as many are having difficulty assessing market direction.<\/p>\n

EUR – EUR Bullish Contrary to Greece Debt Woes<\/h3>\n

The euro rebounded against its currency rivals despite warnings of Greece’s impending debt restructuring. Yesterday’s manufacturing data out of France, Germany and the broader region uplifted market watchers, rising significantly beyond many of the prevailing forecasts.<\/p>\n

In lieu of these positive figures, the EUR soared against the British pound (GBP), reaching upwards of 0.8916 this morning before settling near 0.8906. Against the US dollar, the euro reached upwards of 1.4380 as of this morning. Inflation also appears to be on track in the euro zone, which could help explain the steady growth of the 17-nation currency.<\/p>\n

This morning’s inflationary figures from Germany may help the euro hold its recent gains, though the added weight will likely be insignificant for day traders. The persistent nuclear crisis in Japan, and rapidly climbing oil prices, has many investors concerned about industrial output figures around the globe. Should the data fall short of expectations the EUR may see a minor corrective blip, though few are expecting a reversal in value any time soon.<\/p>\n

JPY – Unwinding Carry Trades Fuel JPY Growth<\/h3>\n

The Japanese yen appears to have maintained its steady growth from yesterday due to heightened risk aversion in the global market. A dip in US stocks yesterday has helped push many investors into safe haven assets such as the yen and Swiss franc.<\/p>\n

The island currency has gained roughly 1% against the US dollar since yesterday, and has reached towards 82.95 as of this morning. Injecting momentum into the yen’s bullishness was an unwinding of carry trades yesterday as investors felt over-exposed in the euro given the recent fear of a needed debt restructuring for Greece. Traders may want to watch for any additional shifts such as yesterday’s, especially considering that no impactful news will be published from Japan today.<\/p>\n

Crude Oil – Reduced Oil Output Has Little Impact on Price<\/h3>\n

Oil prices fell for a second day Tuesday despite recent sentiments expressed by the Organization of Petroleum Exporting Countries (OPEC) and Saudi Arabia in particular. The oil cartel insisted on Monday that global supply was adequate and blamed market speculation and a variety of unrelated factors for the recent run-up in price.<\/p>\n

To affirm the notion that supply was suitable to current demand, Saudi Arabia announced a decision to scale back its oil production. The move was unexpected given that the price for a barrel of oil is currently trading over $105 a barrel.<\/p>\n

Saudi oil ministers expressed their expectation for a steep fall back in oil prices as global demand begins to slump from worldwide debt concerns. If true, the cutback appears to signal that Saudi Arabia desires prices to remain as high as they are by pushing against any sharp downward movements. Traders may want to begin expecting the price downfall, but current technical data suggests the price is well supported above $100 a barrel.<\/p>\n

Technical News<\/h2>\n

EUR\/USD<\/h3>\n

The Relative Strength Index and Williams Percent Range on both the 8-hour and daily charts show this pair floating in neutral territory. With technical indicators not showing a specific direction for the pair today, traders may want to take a wait and see approach today.<\/p>\n

GBP\/USD<\/h3>\n

The 8-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour chart’s Williams Percent Range is already floating in the over-bought territory indicating that a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.<\/p>\n

USD\/JPY<\/h3>\n

The USD\/JPY has gone bullish yesterday, and currently stands at the 83.00 level. The daily chart’s Slow Stochastic supports this currency cross to rise further today. However, the 2-hour chart’s RSI signals that a bearish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice 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 hourly chart’s Momentum oscillator 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

Gold<\/h3>\n

Gold has reached an all-time high of $1,499.83 an ounce early today, yet a technical correction wasn’t late to come, and gold is now trading near $1,497.50 an ounce. Currently, as the Relative Strength Index on both the d8-hour chart and the 1-day charts is pointing down, it appears a bearish trend may proceed. This might be a good opportunity for forex traders to join a popular trend.<\/p>\n

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


\n<\/strong><\/em><\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

By ForexYard \u2013 Today’s existing home sales figures out of the United States will likely provide less help for the USD from yesterday’s downtick versus the euro, but risk aversion appears to be moving back in favor with the greenback as debt concerns in both regions favors safe-havens over higher yielding assets. <\/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-20718","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/20718","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=20718"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/20718\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=20718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=20718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=20718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}