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Investors Appear Cautious Before Retail Data

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Dec 8, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The USD traded in range against the major currencies on Monday, maintaining the gains it made before going into the weekend. There was little in the way of economic data from the U.S. and the marketplace was left mostly to trade via its own devices. Federal Reserve Chairman Ben Bernanke did deliver a speech basically repeating the mantra that the Fed will not be increasing interest rates in the foreseeable future, that unemployment will remain challenging, but that progress is being made on the economic front. The equity markets turned in mixed results on Monday with the major indexes showing only minor changes. The States will once again be quiet with releases today, and tomorrow Wholesale Inventories and Crude Oil Inventories statistics will be brought forth.
    The lack of hard data essentially will leave traders to gear themselves into a probable cautious mode until Thursday and Friday when weekly Unemployment Claims and Retail Sales figures are on the calendar. Squarely in the middle of the holiday shopping season, consumers will be looked to in order to gauge investor sentiment. The outlook for the U.S. economy still has question marks hovering over it regarding it housing market, jobless situation, and thus its profoundly important consumer base. The USD was helped on Friday because the Non Farm Employment Change numbers were better than expected but the jobless figures will have to show steady improvement before investors, the public, and government officials can rest more easily. Wall Street results the past two sessions may highlight the mixed opinions which are still being debated among analysts. It seems that some equity investors may be more willing to ‘cash out’ of their portfolios in order to lock in year-end profits and wait on the sidelines for another day. The USD turned in a rather firm trading session on Monday and it appears to have some firmer ground around it for the time being.

    The EUR appeared to be stuck within a fairly solid trading range against the USD on Monday unable to return to the loftier parts of its high water marks. Germany released its Factory Orders figures and they proved disappointing with a minus -2.1% compared to the forecasted gain of 0.6%. Also the broad European Sentix Investor Confidence reading didn’t help with a reading of minus -5.5, worse than the estimated minus -4.3. Also making news yesterday were concerns about the budget and deficit problems that are occurring in Greece. Today the German Industrial Production numbers are on schedule and expecting a gain of 1.1%. Tomorrow the German and French Trade Balance statistics will be released. The EUR has traded to the weaker side of its range against the USD for a couple of sessions and this has come on the heels of less than stellar performances from international bourses. Without any huge economic data on schedule for the next couple of days, the EUR will likely find itself within the realms of dollar centric action.

    The Sterling lost a bit of additional ground to the USD on Monday. There were no major economic publications from the U.K. yesterday but that will change today. The Halifax HPI appears that it will actually be released today and it carries an expected gain of 0.8%. Also the Manufacturing Production figures are on the calendar and are estimated to climb by 0.5%. The CBI Industrial Order Expectations reading will also be brought forth today. The U.K. has produced rather lackluster economic data for a while now and there are rumblings that the GDP may continue to show recessionary numbers still. The GBP has traded in a broad range since the summer months and is now starting to lurch towards the lower end of its pattern against the greenback. Today’s data will lead nicely into Thursday’s MPC interest rate decision (which will be unchanged) and monetary policy statement. Traders looking for opportunistic valuations may continue to find the GBP a breeding ground.

    The JPY found itself in a rather consolidated pattern against the USD on Monday as trading results from Asian bourses and further away were predominantly flat. Many pronouncements have been forthcoming regarding the health (and worries) about the Japanese economy and the effect of a strong JPY. However, the statements coming from the government of Japan have been less than unified. The JPY continues to find itself near the stronger parts of its range against the greenback but the past few sessions have seen it weaken enough to possibly cause some doubts about its trend in the short term

    Technical Analysis

    Gold seems to be continuing to build on its strength from Monday. There may be a chance that it may hit $1,180 later today. When looking at the bigger picture over the past few months, Gold has been trading between as wide a range as $950 to nearly $1,250. If you are in the commodity for the long-term, safe support levels may be $982.57 and $1,025.23. However, for those of you in for the short term, safe resistance levels may turn out to be $1,194.86 and $1,227.59. Taking advantage of the current uptrend and going bullish is the most popular choice amongst day traders at the moment.

    The AUD/USD pair continues to experience very volatile trading. In the past four trading days, the pair has been trading bullish, as the bulls outplay the bears. On the AUD/USD 30 Minute Chart, we see some bullish momentum building up over the past 3 hours. However, the last candle shows that the bears haven’t disappeared out of the equation. The resistance levels on the chart are 0.9189 and 0.9164. The most reliable support levels are 0.9051, 0.9082 and 0.9110.

    The GBP/USD pair is currently trading at over 130 pips lower for the day at 1.6330. Even though, there is a chance that the pair’s weakness has reached its limits for today, this is not certain. For nearly a week now, the GBP/USD cross has slid many hundreds of pips. Therefore, the bears seem to be gaining the upper hand. For short-term and medium-term traders, the resistance is 1.6877 and 1.6846, while the support is 1.6256 and 1.6511. Going short now looks to be the most popular bet for fx traders.

    The EUR/USD 30 Minute Chart shows that despite the great volatility for the pair in today’s trading, the pair has been going from highs to lows and lows to highs. In the past several hours alone, the EUR/USD pair has jumped tens of pips. At the moment, the cross stands at 1.4836. However, the trading day offers many opportunities for day traders. Today’s support levels are 1.4780 and 1.4803, and today’s resistance levels are at 1.4867 and 1.4848. Buying on lows and selling on highs seems to be the most reliable strategy for forex traders today.

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