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| Markets Brush Off European Woes as US GDP Improves Posted: 25 Mar 2011 06:57 AM PDT
The Australian dollar extended its rally into the New York morning, reaching an all-high last set in December. US Real GDP growth was released with better than expected results and helped to pair recent dollar declines. The market brushed off disappointing German business confidence data as the Ifo survey dropped in the month of March to 111.1 from 111.3. However, the report had an upbeat tone as it did beat economists' expectations of 110.6. Traders have been giving strong bids to higher yielding assets this week while ignoring stress signals from the European periphery. Yesterday S&P downgraded Portugal's credit rating following the resignation of Portugal's Prime Minister José Sócrates in opposition to strict austerity measures that would accompany any EU bailout funds. US real GDP was revised higher to 3.1% in Q4 which was up from its previous estimate of 2.8%. A change in private inventories was the largest driver of the differences between estimates. At the opening of the US trading session, the EUR/USD was trading near its opening day price of 1.4160 but fell to 1.4120 following the release of the better than expected GDP numbers. One of the stronger performing currencies of this week has been the Aussie dollar with the AUD/USD rising to its all-time high at 1.0250 from a low of 0.9950. A breach of the 1.0250 level may spur further buying of the pair. Support will come in at this week's low as well as 0.9800 and the mid-March low of 0.9700. |
| Posted: 25 Mar 2011 01:51 AM PDT
The AUD/USD experienced much bullishness in the past few days, as it now stands at 1.0240. However; it seems that this trend may be coming to an end. I will illustrate below that the AUD/USD may very well be heading for a reversal. Forex traders have the opportunity to wait for the upward breach on the hourlies and go long in order to ride out the impending wave. • Below is the 8 hour chart of the AUD/USD currency pair. • The technical indicators used are the Slow Stochastic, Williams Percent Ranges, and Relative Strength Index (RSI). • Point 1: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction. • Point 2: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-bought territory, indicating downward pressure. • Point 3: The Williams Percent Ranges is showing that this pair is heavily over-bought and may be experiencing strong downward pressure. AUD/USD 8-Hour Chart |
| Posted: 25 Mar 2011 12:50 AM PDT
The EUR experienced one of its most bullish trading days in recent weeks on Thursday. The EUR made significant gains against many of its most traded currency pairs, such as the GBP, JPY and USD. The euro zone has a few reports scheduled for today but most of the attention will be on the EU Economic Summit meeting. Depending on the statements being released from the meeting of European Union countries, it may be difficult to gauge the direction of the euro and traders should be aware of the heightened volatility in today’s market. Here is a roundup of today's leading events 9:00 GMT-Germany Ifo Business Climate This monthly report reflects the level of composite index based on surveyed manufacturers, builders, wholesalers, and retails. This indicator always provides for extreme market volatility in the major currency pairs. If the results turn out to be lower than forecasts, then the EUR may record a fairly bearish session in today’s trading. 12:30 GMT- U.S. Final GDP The Final GDP report measures the change in the inflation-adjusted value of all goods and services produced by the economy. This report has a direct correlation with the strength of the US economy. If the end result will beat expectations for 3.0%, the USD might we strengthened as a result. |
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