FOREX TIPS: January 2011

Sunday, January 30, 2011

FOREXYARD: Forex News Blog

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What to Expect Next Week in the Forex Market

Posted: 28 Jan 2011 11:15 AM PST

As this week is about to end and the market is set to be closed, here's a list of what looks to be next week's biggest events in the forex market. Next week will certainly be an unusual trading week, as two different monthly interest rates decisions will be announced, one from Australia and the other from the euro-zone. In addition, next week is also the first week of February, which means that the U.S. Non-Farm Payrolls report is scheduled for Friday. Let's review the biggest economic releases which are expected:

Australian Cash Rate (Tuesday, 03:30 GMT)

The Australian Cash Rate is in fact the Reserve Bank of Australia's (RBA) interest rate announcement for February. After the RBA has surprisingly hiked rates by 0.25% to 4.75% on November, analysts currently estimate that it will leave rates at 4.75%. However, if the RBA will surprise and hike rates once again, the AUD will probably see a sharp bullish move as a result.

U.S. ADP Non-Farm Employment Change (Wednesday, 13:15 GMT)

The Automatic Data Processing (ADP) publishes its estimation regarding the change in number of employed people during the previous month, excluding the farming industry and government. The ADP forecast is considered to be quite reliable, and thus its release usually has a large impact on the market.

European Minimum Bid Rate (Thursday, 12:45 GMT)

The Minimum Bid Rate is the euro-zone interest rates announcement for February. Analysis forecast that the European Central Bank (ECB) will leave rates at a record low of 1.00%. What should be more interesting is the ECB's press conference which will be held at the time, as Jean-Claude Tricet, the ECB President, is likely to discuss the ECB's plan to fight off the rising inflation. His speech is likely to create high volatility in the market.

U.S. Non-Farm Employment Change (Friday, 13:30 GMT)

The Non-Farm Employment Change report measures that change in the number of employed people during the January, excluding the farming industry. It is considered to be the release that has the largest impact on the market. If the report will show that the American labor sector continues to recover, the dollar might see a sharp bullish move as a result.

Saturday, January 29, 2011

FOREXYARD: Forex News Blog

USD/SEK Expected to go Bullish

Posted: 27 Jan 2011 11:52 PM PST

The USD has dropped significantly versus the SEK in the past 3 weeks, and it is currently traded around 6.4430. And now as evident in the data below, the daily chart is giving bullish signals, indicating that USD/SEK 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 daily chart of the USD/SEK currency pair.

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

• Point 1: There is a "doji" candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates an impending bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

• Point 4: The MACD indicates an impending bullish cross, which may signal an upward movement is going to occur in the near future.

U.S. Advanced GDP on Tap

Posted: 27 Jan 2011 11:32 PM PST

Yesterday, Standard & Poor's announced that their downgrading Japan's credit ranking from AA- to AA, due to the sluggish economy that doesn't seem to know how to address its sovereign debt of $11 trillion. This was the first time in nine years that S&P has cut Japan's credit ranking.

The market, of course, had an immediate impact to this turn of events, and the Japanese yen instantly depreciated against all the major currencies, including a 100 pips fall against the U.S. dollar and the euro and the British pound. In the meantime since then, the yen has corrected come of its losses, but the Japanese currency is still trading at relatively low levels. It now seems that any further comment regarding the Japanese debts are likely to create similar responses in the market.

As for today, several significant economic releases are expected from around the globe. Here are the leading two:

• 10:30 GMT, Swiss KOF Economic Barometer
This is an index, which is designed to predict the direction of the economy over the next six months. The expectations are that the index result will be 2.09. However, if the end result will beat expectations, the CHF might strengthen as a result.

• 13:30 GMT, U.S. Advance Gross Domestic Product (GDP)
The GSP measures that change in the total value of all goods and services produced by the economy, and thus considered to be the primary gauge of the economy's health. If the end result will reach projection to a 3.5% rise, the dollar might see a rising trend against its major currency rivals.

Friday, January 28, 2011

FOREXYARD: Forex News Blog

Choppy Market Expecting USD Gains after Friday’s GDP Report
EUR/GBP- Technical Update
Potential Reversal for EUR/CAD
Major US News Likely to Shake Up Market Today

Choppy Market Expecting USD Gains after Friday’s GDP Report

Posted: 27 Jan 2011 07:05 AM PST

The events of this week have resulted in a rather sporadic and choppy trading environment.

Dismal GDP figures from Britain pushed harshly on sterling's recent strength. Meanwhile, President Obama's State of the Union address left many investors optimistic about broader tax overhauls and a possible reduction in corporate taxes, but speculators have already begun to anticipate Congressional gridlock instead of the cooperation necessary to undertake such measures.

Following today's surprise jump in US unemployment claims, the greenback's prices against the other major currencies appears uneasy. The EUR/USD was moving higher, breaching 1.3720 this morning, while the GBP/USD also rose towards 1.5980 before paring its recent gains and currently trading at 1.5955.

Rising consumer confidence has helped lift risk appetite, leading many traders away from the greenback and precious metals and back into higher yielding assets such as the EUR and CHF. But many have stated that the recent rise of these riskier currencies was too rapid and a technical correction could be developing before the week's close.

Tomorrow's Advance GDP publication from the United States (13:30 GMT) represents the only remaining figure to carry a significant impact on the major currencies this week.

The median estimate among the Market News International survey of economists is for a growth of 3.5%, but other forecasts range from 2.9% to 5.4%. Most investors are expecting a moderate level of growth in the US economy, in line with Obama's overtures towards economic recovery in his State of the Union address this week.

It is possible that such a positive level of growth could signal another buy-in to American equities, pushing the USD higher in the short-run prior to the week's end. This would also support the notion of a technical correction to the recent downturn in dollar values against most other currencies.

EUR/GBP- Technical Update

Posted: 27 Jan 2011 01:49 AM PST

A bullish movement in EUR/GBP has pushed a number of technical indicators into the over-bought territory. As I will demonstrate below, the EUR/GBP may very well be heading for a reversal, as a bearish cross has taken place on the Slow Stochastic. In addition, the Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal. Don't forget your Stops and Limits!

EUR-GBP 27-1-2011

Potential Reversal for EUR/CAD

Posted: 27 Jan 2011 12:23 AM PST

The volatile of the EUR/CAD pair continues to be affected by the volatile forex market. The last two weeks has seen a lot of bullish strength in the EUR/CAD 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 8-hour chart of the EUR/CAD currency pair.

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

• Point 1: There is a "doji" candlestick that has formed on 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 Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: The MACD indicates an impending bearish cross, signaling that the next move may be in a downward direction.

EUR/CAD Daily Chart
EUR-CAD 27-1-2011

Major US News Likely to Shake Up Market Today

Posted: 26 Jan 2011 11:26 PM PST

After reaching above the 1.3700 level in overnight trading, the EUR/USD has fallen slightly and is currently trading at 1.3693. Today, a batch of US data is predicted to show a decline in several economic sectors. Traders can expect the USD to drop further unless the indicators come in significantly better than forecasted.

Here is a roundup of the day’s main news events:

13:30 GMT-USD Core Durable Goods Orders

This monthly figure is considered a key indicator of production levels in the United States, and is typically met with heavy market volatility. Analysts are currently predicting today’s figure to come in at 0.9%, which if true, would represent a significant drop from last month. Assuming analysts are correct, the USD is likely to fall following the release of the figure.

13:30 GMT- USD Unemployment Claims

The weekly Unemployment Claims give traders a look at one of the key sectors of the US economy. Unemployment is one of the last things that are hampering the US economic recovery, and this figure always leads to significant dollar fluctuations.

Analysts are predicting an increase in unemployment claims for this week, which if true, is likely to cause the dollar to drop once again against its main currency rivals. Traders are advised to go short on the greenback if the unemployment figure comes in at 407K or above.

15:00 GMT- USD Pending Home Sales

The Pending Home Sales figure is expected to drop to its lowest level in 2 months when it is released today. Home sales are considered a critical part of US economic health. If today’s figure comes in at its predicted level of 0.9%, further bearish dollar behavior is likely to occur.