The greenback was trading within a wide range last week, and started to show some positive momentum towards the end of the week. On many occasions we saw the USD showing massive volatility and price action due to several important news events. US Retail Sales showed a figure of 0.6% after an initial consensus of 0.3%. The US PPI also helped to push the greenback as it came out of negative territory from -1.4% and jumped to 1.1% which was even higher than the expected 0.5%. The sweet taste of positive news was damaged with the release of the Consumer Sentiment that dropped from 83.4 to 82.0 and was expected to rise to 84. The general USD situation is causing the Feds to rethink whether they will hike the rates one more time this month, and if indeed a hike will occur, than it will be a 0.25 hike and not 0.5 like September.
As for today, traders are expecting the Empire State Business Conditions Index to be released at 12:30 GMT. The Index measures the general Business conditions of manufacturers in New York State and is considered to be quite important in the manufacturing sector. The forecast for the index is a slight decrease from 14.7 to 13.0. Later today, at 23:00 GMT Federal Reserve Chairman Ben Bernanke will speak about the economic outlook at the Economic Club of New York, and will probably cause some choppy price movement around the time of the speech.
The rest of the week will be relatively packed with major news events such as the TIC Net Long-Term Transactions, Industrial Production, CPI, Housing Starts, and Building Permits. These will determine whether the USD will continue the positive momentum it started last week, or keep with its already weakening trends.
The European calendar was quite light last week, as most of the price action was derived from US events. Most US data came out relatively high which caused the EUR to trade lower against the USD and halted the massive uptrend that took the EUR to all time highs. The EUR/JPY on the other hand showed no hesitation and continued to go up as the JPY grew weaker against all its crosses. The upcoming week will be full of European news events that might push the EUR back up to break another all time high, as it is already trading in a relatively close area. Traders will be expecting the Swiss Retail Sales, the German ZEW Economic Sentiment, the UK Minutes Meeting, the UK Retail Sales and GDP to be released this week. These events should probably take the EUR higher this week, as most of them are expected to announce higher figures than in previous releases. Together with a relatively packed US calendar it should be an interesting week all around.
The JPY showed strong negative momentum all throughout last week, taking the USD/JPY to 117.63, and the EUR/JPY to 166.90. Sentiments are showing that carry trades are in full motion and massive shorting of the JPY is in play all across the board. Bank of Japan (BOJ) Governor Toshihiko Fukui spoke last night at a BOJ Branch Manager meeting, in Tokyo, and together with Industrial Production release continued to push the JPY down throughout the night. The upcoming week has no major news scheduled to come from the Japanese market, as most of trader’s attention will be focused on US and Europen events.
It is not a secret that shorting the JPY will probably be the right move throughout the following week. Carry trades will probably grow even stronger, even into the following weeks taking the JPY to levels it has not seen for several months ago.
The pair is starting to lose its positive energy, as another break on the upper level of the range has failed. The daily chart is showing a bullish cross on the slow stochastic and together with the RSI the signal is very bullish. Next target price appears to be around the 1.4270 level, and a breach through that level will validate a greater move up.
The cable is trading in a wide range since the middle of September, and there is a very distinct horizontal channel, as the pair is floating at the bottom area. It appears that a move is quite imminent and will most likely be bullish. Next target price should be around 2.0420.
The pair is in a very distinct upwards channel with all indicators showing strong bullish momentum. The RSI on the daily and on the 4 Hour chart is floating around 50 which indicates that there is still more room to run.
The pair is range trading after the relatively big correction from the 1.1600 level. There seems to be a slight bearish signal on the 4 Hour chart that might take the pair below 1.1750 which is a key level. A breach through that level will validate a bigger bearish move.
[B]The Wild Card
Crude Oil [/B]
Oil is floating at all-time high levels and has managed to breach through the 83.90 mark. The uptrend appears to be very strong, and there is a great opportunity for forex traders to get in a strong uptrend after a key level break.