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Mercaforex, ECB On The Schedule & Retail Sales From U.S.

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Jan 14, 2010.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The USD battled in a rather cautious range on Wednesday while losing additional ground to the EUR and GBP. The Federal Balance Budget report was released and did not provide much in the way of fireworks. Wall Street however did manage to lift itself up and the indexes all showed gains. Today may produce the greatest amount of ‘new’ sentiment in the markets because of the Retail Sales data that will be published and the quarterly earnings report from Intel that will brought forth. Also on the calendar are the weekly Unemployment Claims statistics. Any combination of surprises from these three events could trigger volatility. The Retails Sales broad data and the Core statistics are both expected to climb, the broad number estimate is calling for a 0.4% climb, while the Core figure is expected to move upwards by 0.3%. The weekly Unemployment Claims are forecasted to produce an outcome of 438K.

    Tomorrow the U.S. will release the Empire State Manufacturing Index, University of Michigan Consumer Sentiment, and Industrial Production numbers. Also there will be additional quarterly earnings from corporate America. Meaning that today and tomorrow will bring a fresh wave of information into the marketplace as investors still try to find their equilibriums. The USD has shown some weakness the past few sessions in the sense that it has not been able to push back against the major currencies after losing considerable ground late last week. Two factors appear to be critical for the USD, firstly the American economy is still perceived as being problematic meaning the Federal Reserve is not expected to raise interest rates in the midterm. Secondly, risk appetite among investors looking for good asset classes because the Fed is being viewed as very dovish, may continue as they pursue equities for the chance of greater profits. One of the first questions that arises under this scenario is how well Wall Street and the other international bourses will continue to perform. Risk events are plentiful for today and tomorrow and traders should expect a swift market.

    The EUR has shown strength this week against the USD and this has come without the help of much economic data from Europe. Today the ECB will announce their interest rate decision – which will remain the same - and it will hold their monthly press conference led by President Trichet. Since there are literally no investors expecting a rate hike today, the crux of the ECB interest will be around its monetary policy statement regarding prospects for growth, inflation, and most importantly perhaps – comments regarding Sovereign debt. The problem is that the ECB has issued statements about the situation that Greece faces regarding its debt woes already and President Trichet can be expected to dance around this subject gingerly. The European Union will also release Industrial Production data today and tomorrow CPI statistics will be brought forth. Traders will watch the ECB carefully today and will be on the lookout for any new words of wisdom from Jean-Claude Trichet.

    The Sterling gained versus the USD even thought the Manufacturing Production report from the U.K. proved disappointing. Proving that it is not hard data that is guiding the market in the short term, the Manufacturing Production figures produced a result that was unchanged from the previous month instead of the projected gain of 0.3%. The Sterling like the other major currencies is still trading it appears under the lynchpin of risk appetite and it should be noted that the FTSE did turn in a positive performance on Wednesday. There will be no major economic data from the U.K. today, and tomorrow only the CB Leading Index readings are on the calendar. The GBP can be expected to continue to trade in a risk appetite mode today and a considerable amount of that pressure will likely come from a rather dollar centric mantra.

    The JPY managed to turn in day of range trading as international bourses found their footing and turned in gains. The range of the JPY/ USD pair is an open secret but the question is where the pressure will come from next and how it will be applied. Gold is trading near 1140.00 USD and may see some rapid movement taking into consideration the risk events surrounding the greenback today and tomorrow.

    Technical Analysis

    It seems that Gold’s bullish run has recently come to an end for now! According to the Gold 4 Hour Chart, Gold has recently slid from its high of about $1,145 by $5 to the current market price of $1,139.95. The last candle on the chart shows that the bears are currently in control of Gold. What is even more interesting is that the end of the bullish run of the commodity surprised many forex traders, as they expected it to surpass the $1,150 price level. If we look at the bearish candle more closely, the wicks on either side of the body fail to provide us with enough information on how long this bearish behavior will last. Sometimes when a candle is shaped like this, it is possible that the subsequent candle on the chart could be the opposite, meaning in this case bullish. Therefore, I feel that maybe the bearish candle could just be a short-term price correction for the pair, and bullish behavior could return in the coming trading day. On the other hand, it is possible that the bearish behavior will continue! The current support levels are $1,115.14, $1,118.44 and $1,124.79, and the current resistance levels are $1,144.37, $1,153.01 and $1,161.40.

    Silver has caught the attention of many forex traders lately. This is largely due to the large price movements that the commodity makes each day. However, the last candle on the chart may signal that the volatility of Silver has slowed down for the time being. Looking at the bigger picture, I’m of the opinion that the reason for the small body on the latest candle could be due to the Silver price consolidating. Therefore, maybe traders are slightly cautious at the moment, as the commodity’s price jumped tremendously yesterday. Hence the latest behavior of the commodity may be a consolidation of the price of Silver, and in the coming trading day, I feel that it is possible that Silver will record much bullishness. The best thing to do in the short-term could be to buy on lows and sell on highs. Whilst doing this, you should remember that there is always the potential that your position can go against you. The latest support levels lie at $16.7259 and $17.9926, and the latest resistance levels are $18.8831 and $19.4349.

    The EUR/USD currency cross illustrates that it still uphold bullish momentum. In the past 2 trading days alone, the pair has risen by nearly 100 pips to the current market price of $1.4540. A number of forex traders have taken advantage of this bullish behavior recently! In the past 24 hours, I bought and sold the pair several times over! Many analysts foresee the next candle on the chart to be bullish. However, there is always the possibility that the markets can go against forecasts. Moreover, fx traders need to pay close attention to other technical and fundamental factors affecting both this currency pair and the forex market as a whole. For example, a growth in either the Euro-Zone economy or the U.S. economy could dramatically affect both the value and volatility of this currency pair. Therefore, a wise idea would be to follow events closely, to at least get a better understanding of the EUR/USD currency cross. The latest support levels are $1.4218, $1.4265 and $1.4451, and the latest resistance levels are $1.4578, $1.4680 and $1.4776.

    The GBP/USD Daily Chart illustrates points out that the currency cross is currently experiencing a very bullish trend. The past 5 days of trading are represented by the last 5 candles on the chart. Overall, they indicate that the pair has managed to uphold its bullish momentum. The chart signals that the next target price for the pair is the $1.6411 resistance level. However, in order to reach this price level, the pair will have to rise over 100 pips. The question is can this be achieved in 1 trading day or will it take longer? The answer to this question really depends on the fundamentals and the technicals affecting the GBP/USD currency pair. In addition, if the world’s leading banks and forex traders simultaneously go bullish on the pair, then this does raise the possibility of the pair continuing its bullish run. Therefore, we shall wait and see what is on the cards next for the GBP/USD currency cross! The latest support levels are $1.5828 and $1.5895, and the latest resistance levels are $1.6411 and $1.6739.

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