[B]10/01/'08 - Economic News
USD[/B]
On Wednesday the greenback saw gains against its major counterparts, amidst negative world economic data. The greenback was not able to hold on to such gains as early morning trading on Thursday from Asia, saw the dollar once again slip against the Euro and the Yen.
The release of weak German industrial data along with equally poor retail numbers from the euro-zone state, sparked investors to push the EUR/USD back under 1.47, dropping as low as 1.4640 during Wednesday’s trading. With continued speculation over Fed interest rate cuts, the dollar was not able to sustain its momentum as it once again crept toward 1.47 against it European rival.
Two economic events were released from the US on yesterday’s calendar, as St. Louis Fed President William Poole gave a speech at the Financial Planning Association of Missouri, in St. Louis. Poole was adamant that the investors should not take the US financial market problems and assume they will bring a recession. He went on to add that “2008 looks to be a year of rising growth,” as he looked to make positive light of the greenback gains during yesterday’s trading. The release of Housing Starts did little to change trading behavior yesterday, as investors expected very little to begin with.
Today is a day largely dominated by European economic events with a host of important data to be released. The US will release Unemployment Claims today, at 13:30 GMT, followed by a speech at 1800 GMT by Fed Chairman Ben Bernanke. Bernanke will give a speech titled “Financial Markets, the Economic Outlook, and Monetary Policy” which should clarify a great deal regarding interest rate speculation. The dollar will most likely move in the direction that the European economic takes it. Another day of poor European economic data should spur gains in the dollar.
[B]EUR[/B]
Europe was taken a bit off guard yesterday by a string of negative data from Germany and France as the EUR suffered some losses against the dollar. German industrial production numbers came back 1.2% below initial forecasts at -0.9%. German retail sales, which were expecting a 3.5% increase, only managed 1% as the December figure came in at -1.3%. French Trade Balance was released with an unexpected 1.2 Billion decrease to bring its total to -4.8 Billion. This data sparked a quick increase in dollar confidence, as investors questioned how much longer the ECB could keep up its hawkish stance on European monetary policy.
Today’s economic calendar is posted with several important economic events form Europe. At 7:45 GMT the release of French industrial production and government budget balance is expected as industrial numbers are slated for a 2.5% decrease. The day will continue with several UK events followed by the Sterling and Euro Interest Rate Statements at 12 and 12:45 GMT, respectively. To finish up, ECB President Jean-Claude Trichet will hold a press conference in Frankfurt following the Governing Council’s interest rate announcement. Expect high volatility as the Interest Rate press conference normally delivers a clear message of EU monetary policy.
[B]JPY[/B]
The JPY traded with gains on 15 of the 16 major currencies yesterday, amidst disappointing results from the Nikkei. Investors were inclined to cut holdings in high-yielding assets that were directly being funded by Japanese loans. As Japanese stocks continue to weaken speculation over the effect on the JPY is still unclear.
Carry trades resumed heavy volume as well yesterday, as the Dow Jones Industrial average showed significant gains as it rose by 148 points. Resumption of carry trades came during a very volatile point in the market day which magnified the JPY gains in the Forex market.
The Japanese economic calendar posts no significant events today as the main focus regarding the JPY will be the movement in the Nikkei and Dow Jones.
[B]Technical News
EUR/USD[/B]
The pair has been floating in a relatively tight range for several days and now shows some moderate bullish sentiment. There is a bearish channel forming on the 4 hour chart with a top barrier of 1.4705. A breach over that level will validate the next bullish move to 1.4800.
[B]GBP/USD[/B]
Yesterday’s bearish momentum continues to build up as the pair reached the level of 1.9550. It looks as if there isn’t any bullish sentiment to indicate even the slightest corrective move, and the bearish steam appears to be blowing at full strength. It appears that going short still looks like the right choice today.
[B]USD/JPY[/B]
The daily chart indicates that the next key level for the bullish correction move is 110.20 which are the 23.6% Fibonacci level of the 117.90/107.85 move. The will most likely test it soon, and if the breach will occur we should see the pair correcting further, possibly back to the 111.00/112.00 zone.
[B]USD/CHF[/B]
The slow stochastic and the RSI on the 4 hour chart indicate that the local correction move still has some steam in it, as both figures float at around the 50 level. The daily chart supports the bullish notion with a slightly more moderate signal. It is advised to hold the entry for a stronger signal, as the sentiment is quite vague and a stronger one will surely appear soon.
[B]The Wild Card
Gold[/B]
There is a very distinct and sharp bullish channel on the 4 hour chart as Gold now floats at the bottom level of it. Its inability to breach the level indicates that the very strong bullish momentum is not over yet. This could be a great opportunity for Forex traders to go long at a bottom price and enjoy the high profit potential from the technical pattern.