FOREXYARD: Forex News Blog | |
- Nasdaq May Have Peaked as Technical Data Predicts Bearish Movement
- Markets Cautious Ahead of FOMC Statement
- How Will Today’s FOMC Meeting Affect the USD?
| Nasdaq May Have Peaked as Technical Data Predicts Bearish Movement Posted: 21 Sep 2010 01:35 AM PDT
The Nasdaq 100 has been seeing a steady upward trend over the last several weeks as a series of economic indicators have pushed up CFD’s along with other riskier assets. As will be shown through a number of technical indicators, the Nasdaq has been trading in overbought territory for some time and is overdue for a downward correction. We will be looking at the 8-hour chart for the Nasdaq 100, provided by Forexyard. The technical indicators being used are the Stochastic Slow, Relative Strength Index (RSI) and Williams Percent Range. 1. The Stochastic Slow shows that a bearish cross is close to forming right around the 80 level. Typically, a cross formed above the 80 line indicates a downward correction is likely to take place. 2. The Relative Strength Index is trading well above the upper resistance line, and has been for some time. This indicates that the CFD has been overbought for an extended period, and is likely to drop in the very near future. 3. Finally, the Williams Percent Range is currently right around the -5 level. Anything above the -20 mark is generally considered to be in the overbought region, meaning the Nasdaq is likely to experience heavy downward pressure. |
| Markets Cautious Ahead of FOMC Statement Posted: 21 Sep 2010 12:13 AM PDT
Today's main news events are both from the United States. Following the recent wave of negative U.S. news, investors are eager to see whether today’s indicators will generate momentum for the global economic recovery. Here is a roundup of the day’s main events. Housing Starts/Building Permits – USD – 12:30 GMT The housing market remains one of the major drivers behind the economic recovery and as such, is one of the major economic indicators in the U.S. economy. The indicators measure the number of new building permits issued and new buildings under construction respectively. After the expiration of the housing credits last month, all housing related numbers have dropped and have proven to be very volatile publications. Any number below expectations will likely boost the USD as investors will shy away from riskier currencies in favor of the safe haven greenback. FOMC Statement – USD – 18:15 The FOMC statement tends to generate great anticipation and market volatility. Today’s meeting is particularly interesting as the recent wave of negative economic data has fueled speculations that the Fed will resume its asset purchases program, known as quantitative easing. This puts pressure on the USD since continuation of the program will basically mean pumping more dollars into the economy, a step that typically weakens the greenback. Whether or not the Fed will resume quantitative easing is yet to be seen, but the recent stagnation in the U.S. economic recovery does require some action and investors are eagerly awaiting news of the meeting minutes. Investors will be following closely for any clues of future monetary policy moves by the Fed as well as their assessment of the strength of the U.S economic recovery. |
| How Will Today’s FOMC Meeting Affect the USD? Posted: 20 Sep 2010 06:12 PM PDT
With the FOMC meeting minutes expected to be published today at 18:15 GMT, the main question is whether or not the Fed will hold off from further purchasing securities or decide to expand the stimulus further and thus its balance sheet. With the economy showing signs of slowing for the past two quarters and unemployment enduring at 9.5% or higher for the past year, speculations began to surface the Fed will resume its quantitative easing program in order to stimulate the flailing economy. The negative economic indicators that were published over the past few weeks reinforced this assumption. The Fed is also trying to avoid deflation. The Core CPI, U.S. consumer prices excluding food and energy, rose 0.9% in July from a year earlier, the smallest increase in four decades. It seems, however, that there is much debate within the Central Bank as well as among investors on how the Fed should continue. Members of the Federal Open Market Committee are divided over whether to renew quantitative easing which is essentially a large-scale asset purchase program. Several members believe the Fed has already done enough and that there are impediments to growth unrelated to monetary policy such as uncertainty regarding taxes and regulatory policy as well as the lagging housing sector. The Federal Reserve has kept the benchmark interest rate at almost zero since December 2008 and bought about $1.7 trillion in securities. Additional quantitative easing can have adverse effects on inflation in the longer run as this move essentially pumps cash into the economy. Analysts are also divided in their assumptions, largely due to the fact that the latest data has been slightly better than expected. Manufacturing in August expanded at a faster pace than forecast as factories added workers and increased production. Private employers increased payrolls by 67,000 last month, exceeding economists' estimates. The Federal Reserve's move is important not only for the USD but for other currencies as well, particularly the JPY as the Bank of Japan has recently intervened in the market in order to weaken the Yen. Japan's economy is highly dependent on export and therefore a strong currency can hinder its economic recovery. However, due to speculation of further monetary easing by the Fed, Bank of Japan Governor Masaaki Shirakawa's attempts may be hindered as quantitative easing contributes to a weaker USD. |
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