FOREXYARD: Forex News Blog | |
- Oil Prices Drop Following Chinese Interest Rate Hike
- Crude Oil – Bearish Signal
- USD/JPY Falls Below Hourly Support
- Silver Outshines Other Metals this Year
- USD/CHF Targets All-Time Low
- Low Liquidity Felt in Today’s Trading
| Oil Prices Drop Following Chinese Interest Rate Hike Posted: 27 Dec 2010 09:25 AM PST
Oil prices fell throughout the day today, as markets reacted to China’s recent decision to raise a key interest rate. China, which recently took over the title of the world’s largest energy consumer, decided to raise the interest rate in a bid to curb the dramatic economic growth the country has seen over the last few years. As a result, the price of oil came off its morning high of 91.86, and dropped as low as 90.50 before staging a minor correction. With crude oil currently trading around the 91.15 level, there is some disagreement among analysts as to where the commodity is heading. On the one hand, the Chinese interest rate hike has the potential to affect energy prices for the foreseeable future. On the other hand, early predictions for this week’s US Crude Oil inventory figure are calling for a decrease in US stockpiles. Should that be the case, the price of oil has the potential to shoot up, as it would mean that US demand will rise. In addition, the recent winter weather that has hit the north-eastern United States is likely to drive prices up as people use more energy to heat up their homes. What can be said for sure at this point is that Chinese economic policy now plays a deciding factor in the price of oil. Whereas crude oil once saw dramatic price shifts based solely on US news, there are now other factors to consider as we analyze the direction the markets will take. Check back in to the Forexyard blog, as we will further analyze the impact that China is having on the markets in the coming days. |
| Posted: 27 Dec 2010 03:54 AM PST
A bearish cross has formed on the daily chart's slow stochastic oscillator, indicating a sell signal for crude oil. We may expect spot crude oil prices to fall in the near term. Support comes in at $90.75, followed by $89.70.
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| USD/JPY Falls Below Hourly Support Posted: 27 Dec 2010 02:14 AM PST
During this morning's trading, the USD/JPY moved below the support line on the hourly chart signaling further depreciation in the pair may be in store. Following a failure of the USD/JPY to close above the 84.40 resistance level, the pair has steadily moved lower. This morning the pair fell below the hourly support level at 82.80. The next support level rests at 82.30, the December 6th low.
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| Silver Outshines Other Metals this Year Posted: 27 Dec 2010 01:40 AM PST
Silver prices continue to outperform other commodities as spot silver has appreciated over 70% this year. For a majority of the year, spot silver prices were relatively flat, never trading below this year's opening price of $16.83, nor moving higher than $19.80. However, beginning in August, the price of spot silver charged higher to a record price of $30.69. How can these gains be analyzed? One school of thought says the gains in the commodities market are a product of a recovery in the global economy. As the economies of the developed nations of world begin to grow, such as the US, Great Britain, China, and Japan, demand for raw materials have increased along with industrial consumption numbers As more investors have looked to hard assets to provide yield, this has helped to drive up the price of silver. The rise in silver prices coincides with record inflows into ETFs. Investors are looking for new ways to diversify their investments have piled into commodity ETFs in record numbers. The largest silver ETF has booked new investments over $1.1 billion this year alone. Some of the price appreciation can be attributed to speculators driving up the price of commodities worldwide. Crude oil prices are up 27% with an end of year rally in November and December making up a majority of the gains. Spot gold prices are also up sharply this year gaining 26% on a steady rising trend. Another reason for the rising price may be inflationary concerns. Following the economic recession, central bankers lowered interest rates around the globe and provided liquidity in mass in order boost economic growth. This has created an environment of ultra-low interest rates that some economists believe interest rates have been held too low and liquidity provisions held in place too long, possibly creating the next asset bubble similar to that of the US housing crisis. The environment of high liquidity and loose monetary policy is reinforced by the Federal Reserve's decision in October to begin a second round of quantitative easing. This theory has its merits with the sharp appreciation in the price of and gold and the uncharacteristic rise in the price of spot silver, though technical studies show the price of silver may have further room to move higher. As such, it may be premature to call a market top. Monthly stochastics shows no sign of diversion and the rising trend line on the daily chart has held since late August and has proven to be a solid support. An initial target for spot silver should be for a retest of the all-time high in early December at the price of $30.69.
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| Posted: 27 Dec 2010 12:37 AM PST
The USD/CHF pair saw a sharp drop of 220 pips during last week's trading session. However, it saw a technical correction just before the weekend, and as a result climbed from the 0.9500 level to as high as the 0.9665 level. Nevertheless, several technical indications are now suggesting that the bearish trend is back on. A new bearish move has a great potential to take the pair to a historical low level of 0.9460. • The chart below is the USD/CHF 4-hour chart by ForexYard.
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| Low Liquidity Felt in Today’s Trading Posted: 26 Dec 2010 10:49 PM PST
With most countries taking a bank holiday today, traders can expect a low liquidity environment in the marketplace. That being said, several news events from Japan may generate some volatility in evening trading. Here is a roundup of the day’s main news events. 23:30 GMT: JPY Household Spending The Household Spending report measures the change in value of consumer spending over the last month. This is considered to be one of the most significant Japanese indicators, as the level of consumer activity generates a ripple effect throughout the entire country. Last month, the Household Spending figure dropped, leading to a slight decrease in value for the yen. This month, analysts are forecasting a healthy increase in the figure. If today’s news comes in at the predicted 0.4%, traders will likely see a healthy boost for the JPY. 23:50 GMT: JPY Retail Sales Like the Household Spending figure, the monthly Retail Sales figure is a primary gauge of consumer activity in Japan. A healthy retail industry is considered vital for the Japanese economy, and this indicator consistently generates volatility. Analysts are predicting the Retail Sales figure to come in at around 0.4%. If so, that would signal a healthy increase over last month’s figure of -0.2%, and would likely lead to healthy gains for the yen over its main currency rivals. |
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