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- Commodity Prices Fall in Unison
- AUD/USD Bearish Correction in the Making
- Can the U.S. Dollar Drop Further?
| Commodity Prices Fall in Unison Posted: 11 Oct 2010 05:30 AM PDT
The prices of spot crude oil and spot gold both fell during the European trading sessions as a strengthening dollar weighed on the prices. Commodity prices have been tracking the movements of the major currencies which entered into the new trading week on a down note following an IMF meeting that answered few questions. During the opening of the Asian trading session commodity prices climbed higher but fell throughout the day as the dollar gained strength. Spot crude oil was trading lower at $82.50, following an opening day price of $83.22. Spot gold was also down on the day $1,347, after opening the day at 1,352.60. Commodities as of lately have been tracking the movements of the major currencies. Following the failure at this weekend's IMF meeting to issue a united statement regarding the recent currency intervention and war of words, traders found little advantage to take on riskier positions. Also weighing on the market is the potential for further quantitative easing (QE) by the Federal Reserve. A second round of QE may provide the struggling US economy with a shot in the arm. In turn it should weaken the dollar as the Fed will essentially be printing more dollars and increasing the money supply. This would be a positive for commodities as an increase in US growth would fuel demand for crude oil while a weakening of the dollar will make crude oil less expensive for those who do not hold dollars. A target for spot crude oil prices is the May high at $87. Spot gold should also continue to push higher towards the $1,400 level. |
| AUD/USD Bearish Correction in the Making Posted: 11 Oct 2010 01:59 AM PDT
The volatile of the AUD/USD pair continues to be affected by the volatile forex market. The last few weeks has seen a lot of bullish strength in the AUD/USD pair. However, as I demonstrated below, it seems that the pair's bullish run may have run out of steam, and a bearish correction could be underway soon. This might be a good opportunity for forex traders to enter the trend at a very early stage and at a great entry price. • Below is the daily chart of the AUD/USD currency pair. • The technical indicators that are used are the Relative Strength Index (RSI), Slow Stochastic and MACD. • Point 1: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction. • Point 2: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure. • Point 3: The MACD indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future. AUD/USD Daily Chart |
| Can the U.S. Dollar Drop Further? Posted: 10 Oct 2010 11:14 PM PDT
Over the past week, the most significant trend was surely the bearish U.S. dollar. The bearishness of the dollar was the trigger for some rather fascinating developments. The most notable one was the free-fall of the USD/JPY pair. The pair dropped to the 81.35 level, marking a 15-year low! The dollar fell against the rest of the major currencies as well, and the EUR/USD pair reached above the 1.4000 level for the first time in five months. Dollar-dominated commodities were highly influenced as well from the bearish dollar, as investors saw them as an alternative investment. Gold marked an all-time record of $1,364 an ounce. Silver prices saw a 30-year high after an ounce of silver was traded for $23.60. Crude oil was largely affected as a barrel of oil has peaked at $84.40, marking a 5-month high. In general it can be said that traders who opened short positions on the dollar, or opened long positions on dollar-dominated commodities have probably boosted their equities during the past week. At the moment, it seems that as long as the U.S. economy and leading European economies such as Germany will provide recovery signals, this trend has the potential to continue. As for today, both U.S. and Japanese banks are closed due to national holidays, and the only significant news event looks to be a speech by the European Central Bank (ECB) President Jean-Claude Trichet, which is scheduled for 17:30 GMT. Trichet is likely to address potential monetary policy steps that the ECB is considering. Heavy volatility might take place during his speech. |
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