FOREXYARD: Forex News Blog

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• Commodities Appear Poised for Upward Correction
• Weekly Forecast: USD to Pare Losses this Week?
• EUR/CAD Set for Downward Correction
• Euro Looks to Extend Gains

Commodities Appear Poised for Upward Correction Posted: 24 Jan 2011 07:00 AM PST It appears the decline in US dollar values has not yet been priced into commodities and we may be expecting a major correction in physical asset prices this week as a result. So far the EUR/USD has climbed over 0.9% on the day, but Gold, Silver, and Crude Oil prices are still falling. Either the market is pulling out of commodities in tandem with the US dollar as part of a portfolio diversification in equity markets, or the USD’s plummet has not yet been priced in. Either way, commodities should climb in the days ahead. Here’s why: Gold and Silver are both approaching significant support barriers. Gold’s 3-month psychological support level at $1,335 an ounce is near at hand and we are already beginning to see Gold quiver and shake as it reaches that price, hinting at its upcoming bounce. Silver’s month-and-a-half support line at $27.00 an ounce is literally mimicking Gold’s price behavior. Both should see an upward retracement of around 3-5% in the forthcoming two weeks of trading as a result of these technical indications. Crude Oil likewise appears to be approaching a relevant price barrier near $87.50 a barrel. However, we don’t see the same quakes on oil prices as we do in precious metals, suggesting a fundamental valuation is in play on Crude Oil. In short, if any of the commodities are to break through their immediate support levels, it looks like Crude Oil has the best chance. On the other hand, the heavy downward movement of the USD today suggests that all commodities should experience a corrective upturn this week. Look for the swing and capture the bullish movement as it heads your way!

Weekly Forecast: USD to Pare Losses this Week? Posted: 24 Jan 2011 03:00 AM PST The US dollar’s mixed results last week, on a fundamental level, may be broken down to a shift in risk appetite and consumer confidence. From a technical standpoint, the movement looks like a consolidating retracement against most of its rivals in anticipation of this week’s news. Here is a breakdown of this week’s events to give you an idea of how the US dollar will be affected in the days ahead. Tuesday: 9:30 GMT: GBP – Prelim GDP; Public Sector Net Borrowing - Both the US dollar (USD) and British pound (GBP) are expecting intense volatility this week, kicking off Tuesday with these two highly impacting reports from Great Britain. Gross Domestic Product (GDP) data tends to create a period of portfolio adjustment by large investors and banks while net borrowing figures represent debt and spending levels in the public sector. Traders should anticipate some intense volatility during this time. 15:00 GMT: USD – CB Consumer Confidence - Traders experienced last week what a shift in confidence can do to safe havens and higher yielding assets. The EUR rebounded last week against the USD as higher optimism allowed for a move into riskier assets. If today’s consumer confidence shows growing optimism in the United States we could see last week’s trend reverse, but the give-and-take between these two will certainly create intense volatility in the minutes after this publication. Wednesday: 19:15 GMT: USD – Federal Funds Rate and FOMC Statement - The Federal Open Market Committee (FOMC) will be releasing a statement about the latest round of interest rate decisions by the Federal Reserve Board on Wednesday evening. Interest rates are expected to remain near 0% for the foreseeable future, but the statement released by the FOMC has the potential to hint at future decisions and speculators take that time to adjust their positions simultaneously, boosting liquidity and potentially shifting the trends of the USD against its currency rivals. Thursday: 13:30 GMT: USD – Core Durable Goods Orders - Durable goods orders represents the level of percent change in demand for manufactured goods in the United States. Any decline in manufacturing tends to push the US dollar downward as it signals fewer investors purchasing the greenback in order to buy American goods. If the figure comes in at 0.9% as expected, a decline from last month’s reading, traders may anticipate a bearish USD immediately after it’s publication. 13:30 GMT: USD – Unemployment Claims - The weekly unemployment claims doesn’t usually have a significant impact on the USD unless the figure is remarkably different than expectations. This week’s report is forecast to remain more or less unchanged from last week’s, meaning the potential for a shocking release is greater than normal. Traders should expect high volatilty on Thursday. Friday: 10:00 GMT: CHF – KOF Economic Barometer - The Swiss Konjunkturbarometer (KOF) is a combined reading of twelve economic indicators related to banking confidence, production, new orders, consumer confidence and housing in Switzerland. It is perhaps the most significant report released by the Swiss regarding their economy and tends to have a great impact on the Swiss franc. This month’s reading is expected to have increased from last month’s, suggesting a continuation of the franc’s bullish behavior. 13:30 GMT: USD – Advance GDP - As with the British Prelim GDP released earlier in the week, the American Advance GDP tends to greatly shift investor portfolios leading to significant swings in USD values. This reading of the American GDP is expected to reveal 3.5% growth in value for American goods, adjusted for inflation, in an annualized format. Meaning, if the data comes in line with expectations, dollar values may increase as it may greatly boost investor appetite for US goods and services. What to expect: Last week’s movement among USD pairs and crosses may end up being determined as the beginning of a short-term consolidation pattern since this week’s news is set to effect the greenback heavily. Most reports seem to suggest relative calm, and perhaps even growth, for the US economy. This suggests that, if last week’s movements were in fact a consolidation pattern, this week’s movements may actually see the greenback recovering its losses and shifting back into a bullish posture. Traders should be anticipating the tip of the consolidation trend and the impending reversal.

EUR/CAD Set for Downward Correction Posted: 24 Jan 2011 12:20 AM PST The EUR/CAD pair has seen substantial bullish momentum as of late, moving up over 400 pips in the last week alone. Technical indicators are now showing that a downward correction is likely to occur in the near future, proving forex traders with an excellent opportunity to open up short positions for potentially significant profits. We will be looking at the 8-hour EUR/CAD chart provided by ForexYard. The technical indicators being analyzed are the Moving Average, Williams Percent Range, Stochastic Slow and Relative Strength Index. 1. The pair is currently hovering right below its Moving Average. Any further movement below the Moving Average line would signal an impending bearish move. 2. The Williams Percent Range is currently at the -10 level, which is generally considered to be well into the overbought area. 3. A bearish cross has formed on the Slow Stochastic, indicating a downward reversal is likely to occur in the very near future. 4. Finally, the Relative Strength Index is currently at 80, well above what is considered to be overbought. Traders are advised to open short positions before the downward breach occurs.

Euro Looks to Extend Gains Posted: 23 Jan 2011 11:32 PM PST The Euro put in an impressive week versus both the dollar and the Swiss franc with both pairs approaching short term targets. The EUR/USD has made a close above 1.3500 and now may target the 61.8% Fibonacci retracement level from the November to January move. This level coincides with the resistance level from October at 1.3740. The EUR/CHF completed a bottom head and shoulders reversal pattern and has reached its estimated target at 1.3030, which coincides with the 50% retracement from the mid-November to January move. The 100-day moving average now comes into play which is currently close to the falling trend line off of the November highs at 1.3140. Today's Market Events: EUR – German Flash Manufacturing PMI – 08:30 GMT Expectations: 61.1. Previous: 60.7 EUR – Industrial New Orders – 10:30 GMT Expectations: 2.3%. Previous: 1.4%. Germany, the engine of EU growth, appears be to coming out of the recession with the Bundesbank increasing its economic forecast, raising 2011 expectations to 2.3% from 1.8%. Euro strength will likely be seen if these two industrial reports come in above market expectations.

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