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Goldman Sachs Helps Equity Markets

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Jul 14, 2009.

  1. mercaforex

    mercaforex New Member

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    By Mercaforex

    The USD lost some ground to the EUR and GBP on Monday as the U.S. equity markets turned in a positive day. There was little in the way of major economic data yesterday from the U.S. but reports surfacing began to speculate that the quarterly report for Goldman Sachs will be better than expected today and this seemingly turned on the ignition key for equities to throttle forward. Today the Core Retail Sales figures are on schedule and a rise of 0.5% is expected. Retail Sales data is anticipated to basically produce the same type of numbers they did the previous month. Business Inventories are also on tap today and these numbers are anticipated to decline, but not at the pace they did last month.
    The question traders will have to ask themselves today is whether the chocolate has already been put into the cake. In other words, the positive news regarding Goldman Sachs certainly helped drive the equities markets higher yesterday, but what has to be considered are what type of earnings the financial institution will have to produce today in order to spur on further positive sentiment? Many corporations will be reporting income this week and investors will be sitting on a volcano of information that will be able to propel the markets in a number of directions. Tomorrow the Empire State Manufacturing Index and the Industrial Production releases will be forthcoming from the States. The combination of the retail, manufacturing, and quarterly earnings reports are certain to spur on the currencies. The battle that will ensue the next few days will be a dynamic that involves different perspectives including traders who are looking for short term movements compared to investors who may be undertaking a longer viewpoint. Monday’s action on Wall Street was positive and the big question for the currency markets is the durability of rallies that come from equities.

    EUR:
    The EUR gained against the USD on Monday as it got some footing from stronger results coming from equity markets. Today the German ZEW Economic Sentiment survey will be published and it is expected to produce a reading of 48.0, which would be an improvement on last month’s result. The European Union will also release their Industrial Production numbers and this is anticipated to be a better result than the previous outcome. The sentiment generated from another positive number from the German ZEW may cause some skepticism among some investors today. The European Union is still widely in the midst of a recession and like the U.S., a debate exists in Europe between those who are proclaiming that the economy is emerging from a recession and those who believe that a recovery will be a protracted process. The EUR had a positive day of trading Monday on what largely appeared to be better returns from international equity markets and this trend may continue today.

    GBP:
    Sterling found some backing on Monday as it climbed off of the lower part of its recent range against the USD as an improvement from the RICS House Price Balance coupled with good marks from equities bolstered the GBP. The survey taken by the Royal Institute of Chartered Surveyors showed that the prices of homes in the U.K., particularly London, have begun to show stability and that the prices for homes in some areas actually increased for the first time in twenty months. The result of minus -18.1% compared to the estimated decline of -39.6% was welcomed as a sign of more optimism. Retail Sales as reported by the BRC also showed a climb of 1.4%. Core CPI data will be reported today and a forecast of 1.8% is projected. Tomorrow the Claimant Count statistics will be published. Yesterday’s bout of good news may have provided Sterling upward sentiment but the GBP will be under the glare of traders again today and like the other major currencies will find itself the recipient of momentum generated from the results on local and global stock markets.

    JPY:
    The JPY slowed down against the USD on Monday and lost some value. It is still hovering at the strong side of its range but a good day of trading in the international equity markets increased risk appetite for Asian investors. The JPY will continue to trade off of the sentiment that is based on the caution that ebbs and flows directly as a result from the level of confidence that investors are willing to illustrate.

    Technical Analysis
    EUR/USD:
    The pair is now floating around the 1.4000 price level. The indicators on the daily chart are showing mixed signals which can not indicate a clear direction. The Forex traders should wait for clearer signals before taking any position.
    Support level: 1.3890 resistance level: 1.4110

    GBP/USD:
    This pair is now floating in a tight range between the 1.6235 levels to 1.6317 with no distinct direction. The pair now seems to be consolidating around the 1.6300 as the volatility is beginning to decrease. The RSI is floating around the 50 level and all oscillators on the 4 hour chart do not provide a clear direction as well. The preferred strategy today will be to wait for a clearer signal before taking any position
    .Support level: 1.6190 resistance level: 1.6350

    USD/JPY:
    The pair is now floating around the price of 93.20. However all oscillators on the daily chart are showing bullish momentum and the Bollinger Bands are also indicating an additional upcoming bullish move. Going long appears to be the right decision.
    .Support level: 92.85 resistance level: 93.60

    USD/CHF:
    This floating of the pair continues in a very tight range with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily and 4 hour chart is floating near the 60 line. In addition we can see mixed signals with no specific direction. The preferred strategy today will be to wait for a clearer signal before taking any position.
    Support level: 1.0790 resistance level: 1.0890

    The Wild Card
    Crude Oil:
    We can see an important support level of 60.00 and the bearish move might re-validate as we can see on the daily chart. The traders have an opportunity to join this resistance for a long position.
    Support level: 59.50 resistance level: 61.10
     
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