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Forex Market Technical and Fundamental Recap

Discussion in 'Forex Daily News & Outlook' started by forextrends24, May 8, 2009.

  1. forextrends24

    forextrends24 New Member

    Mar 27, 2009
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    Today's Forex Analysis summary.

    The Euro rallied on Thursday after the European Central Bank cut its benchmark interest rate to 1.0%. This news was already in the market and traders saw it as a buying opportunity. The ECB also announced a plan to buy government assets. This should have been bearish news but it did limit gains.

    GBP USD traders sold the British Pound after the Bank of England left interest rates alone and injected another $75 billion into the financial system through its quantitative easing plan. This move flooded the market with money and has the potential to debase the currency if done improperly.

    The USD CAD posted a new low for the year but closed higher. This is an indication that the buying may be greater than the selling in this price area. The weakness in U.S. equity markets gave traders an excuse to take profits following a twelve day decline.

    Thoughts of a revival of the carry trade triggered a rally in the USD JPY early Thursday morning as traders sold the Japanese Yen to invest in the higher yielding stock market. Gains were limited as equity markets fell sharply lower. With the equity markets starting to look weak, watch for strength to develop in the Yen.

    Technical traders are defending the USD CHF in front of a pair of bottoms at 1.1240 and 1.1158. If this area fails then the Swiss Franc is likely to appreciate. Now that the world knows the details about the U.S. banking system, traders may begin to focus on the condition of the Swiss banking system. Increased appetite for more risk may encourage Swiss investors to pull their money out of low-yielding U.S. investments.

    The Australian Dollar is still trending higher in response to the Reserve Bank of Australia leaving its benchmark interest rate unchanged earlier in the week and the news that an economic recovery in China may lead to an increase in Australian exports.

    The NZD USD rallied into the April high where it found resistance. This current rally has been all speculation as increased trader appetite for higher yielding assets has been encouraging buying. Gains could be limited because the New Zealand economy does not support a rally at this time.

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    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.

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