Thursday, December 23, 2010

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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Crude Oil Approaching $90.70 a Barrel; U.S. Supplies at -5.3M Barrels

Posted: 22 Dec 2010 10:03 AM PST

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Crude oil has risen consistently since December 15, reaching as high as $90.70 a barrel today. Crude has gone up almost 400 pips in the last week alone.

Crude oil prices are rising as demand for gasoline in the U.S. increased by 1.8% over the past 4 weeks compared to a year earlier, averaging 9.2 million barrels a day. In addition, crude prices are rising on speculation that the U.S. economy is strengthening. The rising Standard & Poor's 500 Index is trading in levels not seen since 2008, also boosting crude prices up. The current sentiment in the market is that the U.S. economy, unlike the European economies, has seen the worst of the economic crisis, and that a quick recovery is taking place. This is supporting the data the demand for gasoline in the U.S., the world's largest energy consumer, will increase further in 2011.

U.S. Crude Oil Inventories

The weekly inventory report showed a higher-than-expected drop in crude oil stockpiles, said the Energy Information Administration. The number of barrels of crude oil held in inventory by commercial firms during the past week fell by 5.3M barrels as opposed to the previous week, failing to reach expectations for a 1.1M decline.

To sum up, the impact of rising demand on the one hand, and dropping supplies on the other, will likely boost crude oil prices further in the next week. I won't be surprised if crude oil will test $100 a barrel before the end of 2010.

Is Gold’s Bullish Trend Coming to An End?

Posted: 22 Dec 2010 07:04 AM PST

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In yesterday’s gold analysis, we spoke about how the technical indicators were slightly inconclusive regarding the direction the commodity was taking (and rightly so, considering how little gold has moved in the last day). Since that analysis was published, technical data has begun to provide us with a more decisive picture as to where gold will be heading in the near future.

Once again, we will be looking at the 8-hour gold chart, provided by Forexyard. The technical indicators being examined are the Relative Strength Index and Williams Percent Range.

1. Compared to yesterday’s chart, we now see that the Relative Strength Index has officially moved into overbought territory. Traders can take this as a sign that the pair is likely to enter a bearish trend in the near future.

2. While yesterday’s Williams Percent Range was decidedly in neutral territory, we now see that the indicator is right around the -20 level. This is typically a signal that the pair has entered the overbought region.

Now may be a great time for forex traders to start shorting gold. It appears that the upward movement the commodity has experienced as of late may soon be coming to an end.
gold 22.8

Gold Prices Climbing Despite Year End Trading Conditions

Posted: 22 Dec 2010 03:31 AM PST

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Commodities rose yesterday and continued to rise in European trading today. Spot gold prices moved higher as the euro fell due to European sovereign debt concerns.

Spot gold prices increased yesterday and finished the day higher at $1389.31 after opening the day at 1386.00. This was the second consecutive day of gains for the commodity. Yesterday's trading had low volatility and light volume that characterizes end of year trading.

However, the negative string of news surrounding Europe may be helping to support the price of spot gold as traders look for safe haven assets. This may increase the price of spot gold despite year-end profit taking.

Since last week, Europe has been the target of the ratings firms. Threats to lower the sovereign debt ratings of Belgium, France, Portugal, and Greece have taken their toll on the market. On Friday Moody's Investor Services downgraded the credit rating of Ireland. Yesterday Moody's announced the sovereign debt rating of Portugal may suffer a downgrade and will be announced in the first quarter of the New Year. Today Fitch Ratings announced its intention to examine Greece's credit rating following the political and economic events the country has undergone.

Despite the fiscal difficulties Europe faces, the weaker euro may have in fact prevented a sharper rise in the value of gold. As the dollar strengthens, the price of gold becomes more expensive to those investors who hold currencies other than the greenback, thereby reducing the demand non US investors may have for gold.

Should euro zone troubles continue, we may expect further appreciation in the price of spot gold with the next target the all-time high at $1,431.00.

EUR/USD Testing 200-Day Moving Average

Posted: 22 Dec 2010 12:12 AM PST

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The EUR/USD is under pressure once again with the pair moving closer to key support levels. A breach below these supports may trigger further technical selling.

After a short squeeze pushed the pair as high as 1.3500, the selling of the pair has resumed with the price action contained insie a consolidation zone. The consolidation is evident by the weak ADX of 21 and a flat 20-day simple moving average. While the move lower has not been as active as the month of May at the height of the Greek debt crisis, the downtrend is reemerging.

Since late last week the pair has moved lower between the 38% (1.3370) and 50% (1.3080) Fibonacci retracement levels from the June to November move. A downward sloping line supports the recent price declines. The 50% retracement is the first key technical level in the downtrend.

The second technical support rests at the 200-day moving average that comes in today at 1.3030. This key support is well within reach of today's trading. A move below this may trigger further technical selling.

Once a breach of the moving average has occurred, the next targets for the pair will be the September 6th high at 1.2920 followed by the 61.8% Fib retracement level at 1.2800.

EURUSD_Daily

Euro’s Downfall Deepens on Speculation That Another Credit Cut Is Expected

Posted: 21 Dec 2010 10:52 PM PST

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The euro continued to weaken yesterday, and the EUR/USD pair is now trading near the 1.3130 level, its lowest level since December 2nd. The euro is weakening due to concerns that Portugal and Greece might face a credit downgrade soon.

Estimations in the market are that Moody's Investors Service might downgrade Portugal's bond rating by one or two levels. In addition, analysts forecast that Fitch Ratings will cut Greece's credit rating to a non-investment grade within no more than six weeks.

All this is enough to boost the already existing concerns regarding the euro-zone's future. The most severe concerns are that of another nation, possibly Portugal or Spain, will seek financial aid from the euro-zone. Currently, there are no guarantees that the euro-zone can sustain another financial bailout, and the repercussions of such development could be fatal.

Traders are advised to remain updated regarding the euro-zone's debt crisis, and to take under consideration that until reports will ease the above concerns, the euro might weaken further.

Here are today's leading news events:

• 09:30 GMT, British Current Account – This report measures the difference in value between imported and exported goods and services. If the end result will be better than the expected -8.1B, the pound might strengthen as a result.

• 15:00 GMT, U.S. Existing Home Sales – This report measures the number of residential buildings that were sold during the previous month, and is considered to be a leading indicator of economic health. If the end result will beat the forecast for 4.72M buildings sold, then the dollar is likely to strengthen.

GBP/CHF Provides Bullish Signals

Posted: 21 Dec 2010 01:16 PM PST

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The GBP has dropped significantly versus the CHF in the past week, and it is currently traded around 1.4820 levels. And now as evident in the data below, the 4-hour chart is giving bullish signals, indicating that GBP/CHF pair might go up. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal.

• Below is the 4-hour chart of the GBP/CHF currency pair.

• The technical indicators that are used are the William Percent Range, Relative Strength Index (RSI), and Slow Stochastic.

• Point 1: The Slow Stochastic indicates an impending bullish cross, signaling that the next move may be in an upward direction.

• Point 2: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

• Point 3: The Williams Percent Range shows that this pair was heavily over-sold peaked near the highest mark it could reach, and then turned a corner and now stands in a bullish posture.

GBP/CHF 4-Hour Chart
GBO-CHF 21-12
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