Thursday, October 14, 2010

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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Crude Prices May Be Boosted Tomorrow

Posted: 13 Oct 2010 05:55 AM PDT

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Crude oil saw an upward spike in overnight trading. This was largely due to the decreasing value of the US dollar as the Fed debates new quantitative easing measures to boost the ailing US economy. Crude is currently trading around the 82.80 level, up over 100 pips from last night. With the first OPEC meeting in seven months set to take place on Thursday, as well as the latest US crude oil inventory figure about to be released, now may be a good time to examine oil a little more closely to determine how long it will be able to maintain its recent gains.

Ahead of Thursday’s meeting, OPEC ministers seemed fairly comfortable with the current level of crude oil output. With analysts forecasting no major announcements regarding output or pricing, oil is likely to stabilize today between 83.50 and 84.00.

Tomorrow’s crude oil inventory promises to generate substantially more volatility. Analysts are predicting a decrease in US stockpiles from last week’s figure of 3.1M. Should tomorrow’s result come in at the forecasted number of 1.5M, oil may see a significant price jump to close out the week. In addition, traders will want to pay careful attention to any fluctuations in the USD. Should the dollar continue to fall, there is a good chance oil prices may rise in tandem.

GBP/USD – Negative Divergence Shows Weakening Trend

Posted: 13 Oct 2010 02:35 AM PDT

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Over the last two days the price of the GBP/USD has pulled back from its test of the 1.60 level. Signs of negative divergence appear on the daily chart signaling a weakening trend and a possible reversal.

Looking at the daily chart, two trend lines have been drawn. The short term trend line begins at the June low (not shown) and the intermediate trend line starts in mid-September. The second trend line was broke during yesterday's trading in a sharp decline over the past two trading days. In today's European trading session the GBP/USD has climbed has high as the broken trend line and is now acting as a resistance level.

The daily chart highlights a potential reversal of the trend due to the close below the trend line and also negative divergence that has appeared on the Momentum (14) indicator.

The price for the pair was rising and reached a new high (1.6017) in the uptrend while the momentum line was falling, thus creating negative divergence. This is a possible warning sign of a reversal in the trend.

Traders may want to scale back any long positions they may have in the GBP/USD or tighten stops. A close below the support level of 1.5670 (S1), the low from September 30th and a break of the long term trend line will signal a shift in the long term uptrend.

Divergence

Bernanke Speech May Emphasize Quantitative Easing

Posted: 12 Oct 2010 10:43 PM PDT

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A blizzard of economic events is expected from the US, Britain and Euro-Zone. Forex traders should definitely pay close attention to the EUR, GBP and USD markets today as they will be in the driver’s seat of the market for the days ahead.

8:30 GMT: Claimant Count Change
• It measure the changes in the number of people claiming unemployment-related benefits during the previous month
• Better-than-expected results may help the pound recover some of yesterday’s losses against some of its crosses such as the EUR and USD.
• If the results turn out to be in line with forecasts, then the GBP may record a fairly bearish session in today’s trading.

20:10 GMT: Fed Chairman Bernanke Speech
• Fed Chairman Ben Bernanke is scheduled to speak about business innovation at the Life Science Greenhouse, in Pittsburgh.
• This speech is very important as it is very likely to impact dollar volatility.
• Traders are advised to watch closely, as this is likely to set the pace of the dollar going into today’s trading.

British Inflationary Data Could Drive Today’s Volatility

Posted: 11 Oct 2010 08:13 PM PDT

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The United States, Canada and Japan were all absent from trading yesterday due to bank holidays, which helps explain the low liquidity and thin market conditions yesterday. Today's broad spread of economic news, however, should provide a fresh injection of trading volume.

Here is a round-up of today's leading events:

8:30 GMT: GBP – CPI

Great Britain will be releasing its Consumer Price Index (CPI) inflationary data today ahead of this Friday's Inflation Report Hearings in the UK. A modest level of concern regarding Britain's recent growth rate has many skeptical that today's CPI data will be as expected. If the figure is indeed lower than forecasts, we could see the pound dropping against some of its rivals in today's early hours.

18:00 GMT: USD – FOMC Meeting Minutes

The US Federal Reserve's Federal Open Market Committee (FOMC) will be releasing its meeting minutes from the last round of discussions on monetary policy and interest rates today. These minutes tend to not have much impact on currency value unless they reveal hawkish sentiment about future monetary measures.

With speculation growing about an upcoming quantitative easing by the Fed, these minutes may well show whether or not something of that nature is in the works. If a market intervention is being planned, there should be hints of it within these minutes and that could drive the USD far lower in the hours following this release.
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