FOREXYARD: Forex News Blog | |
- Bernanke Speech Could Compound Dollar Losses
- US Retail Sales Likely Rose, Easing Fears of Double Dip Recession
- Gold Hits Record High
- Is there Light at the End of the Tunnel for the USD?
| Bernanke Speech Could Compound Dollar Losses Posted: 15 Oct 2010 04:26 AM PDT
The dollar continues to slide during the European trading session as traders eye a speech today by Federal Reserve chairman, Ben Bernanke. The speech could increase the negative momentum behind the dollar's bearish move as the major currencies advance on the potential quantitative easing. Yesterday's volatile trading session which had the dollar falling to new lows appears to have carried over into today's trading. The EUR/USD is moving higher at 1.4080, up from an opening day price of 1.4036. The USD/JPY is lower at 81.20, down from an open of 81.40. The Cable is posting solid gains as the GBP/USD is pushing for a new 4-month high at 1.6065, up from 1.6000. Traders will be looking towards the 12:15 GMT speech by Bernanke as to the next move by the Fed. The speech could hint at a second round of quantitative easing which could push the dollar lower versus the majors. However, markets may have already priced in a renewal of quantitative easing, leaving the dollar oversold should Bernanke's speech not address an easing of monetary policy. Yesterday's large moves by the major currencies could continue in the New York trading session. The EUR/USD is testing yesterday's 9-month high at 1.4120. The USD/JPY may fall below the 81 level for the second time this week, and the GBP/USD looks to move above yesterday's high of 1.6060 to the next resistance of 1.6250. |
| US Retail Sales Likely Rose, Easing Fears of Double Dip Recession Posted: 15 Oct 2010 12:50 AM PDT
The Release of U.S Retail Sales today at 12:30 GMT is expected to show a slight increase in September, the 3rd consecutive one. This helps ease fears that the U.S economy may plunge in to a double dip recession. The rise is partly due to the fact that retailers are beginning to use discounts and promotions ahead of the holiday season to lure shoppers. Holiday shopping usually brings a jump in retail sales. Another reason for the increase may also be gains in auto sales. Vehicle purchases last month accelerated and saw the strongest performance since August 2009, according to industry data. The main hindrance to retails sales is the persistent unemployment rate, which has been hovering near 9.6% for the past year. According to last week's Non-Farm Payrolls data, company payrolls grew by 64,000 workers in September, the fewest in three months, and wages stagnated. While consumers are still speeding enough to avoid a double dip recession, consumption remains very sluggish as unemployment remains the main hurdle. Uncharacteristically for American consumers, their main focus now is driving down debt and increasing savings. This desire to save in a way also hinders increase in employment thus creating a vicious cycle of stagnating economic recovery. This persistent lack of growth and prolonged unemployment has prompted some Federal Reserve officials to campaign for expansion of quantitative easing programs in order to boost the lethargic U.S economic recovery. A relief for retailers may be expected in the coming months as merchants may be counting on a stronger holiday shopping season. Sales received a boost last month due to back to school shopping. The National Retail Federation is forecasting a jump in sales and companies are planning on stepping up hiring as a result. |
| Posted: 14 Oct 2010 11:46 PM PDT
Gold prices rose significantly in the last two months and peaked at $1381.50 an ounce. However, the 8-hour chart is suggesting that the recent up trend is loosing steam and a bearish correction is impending. Forex traders involved with commodities like this can take advantage of this knowledge by going short on crude oil now, and at a great entry price! • Below is the 8-hour chart for gold by ForexYard. • The technical indicators used are the Slow Stochastic, RSI and Williams Percent Range. • Point 1: There is a "doji" candlestick formed in the chart, indicating that a reversal should take place. • Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction. • Point 3: The RSI signals that the price of this pair currently floats in the over-bought territory, suggesting downward pressure. • Point 4: Williams Percent Range also supports the downward direction. Gold 8-Hour chart |
| Is there Light at the End of the Tunnel for the USD? Posted: 14 Oct 2010 10:39 AM PDT
During today's trading, USD/CAD briefly broke parity for the first time since April and the AUD/USD pair is nearing parity. The USD also declined to a record low versus the CHF today, as well as to a new 15 year low versus the Japanese yen. The recent negative sentiment regarding the greenback is due to bets the Federal Reserve will increase purchases of government debt, i.e. quantitative easing as soon as their next meeting in November. The release of today's weaker than expected data only strengthened the case for further monetary easing. The number of Americans filing first-time applications for unemployment benefits unexpectedly increased last week. Jobless claims rose by 13,000 to 462,000 in the week ended Oct. 9. This indicates that though the economy is not likely to go to a double dip recession, the recovery is much slower than hoped and will take longer to recover than anticipated. The prospect of a prolonged unemployment rate around 10% is one of the main reasons the Federal Reserve is considering extending monetary easing policies. Further bad news came from the trade deficit numbers, which showed the deficit widened more than forecast in August. The deficit with China reached a record level for the month as imports climbed. Irritation in the U.S and Europe grows as China is restraining the Yuan to aid exports; friction over exchange-rate and trade policy dominated discussions at the IMF's annual meeting in Washington this month. Tomorrow Federal Reserve Chairman Ben Bernanke is expected to speak about the future of the monetary policy. The FOMC committee is currently divided on how to proceed with its monetary policy. While some expanding its asset purchases program, others feel that it may not have much effect on the unemployment levels in the long run. While it is very likely the Fed will indeed resume asset purchases in the near future, the biggest question is how much. The current expectation, in light of the dismal economic data being published recently, is for a substantial amount. However, considering the level of disagreement among the FOMC members, the numbers may prove to be much smaller than expected, which will ultimately give the USD a much needed boost. |
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