FOREXYARD: Forex News Blog | |
- US Inflationary Data on Tap Tomorrow
- An Over-Extended EUR/USD?
- Retail Sales Adds Weight to USD
- Crude Oil Prices Rebound off their Lows
- UK Economic Data Fails to Impress
- Long USD/JPY
- Risk Aversion May Abate on European Industrial Production Data
| US Inflationary Data on Tap Tomorrow Posted: 13 Apr 2011 09:29 AM PDT
Investors have been witnessing stability in inflationary figures across Europe for the past several days. Indeed, one of the reasons posted for the European Central Bank's (ECB) decision to hike interest rates last week was stable growth in regional inflationary data. Tomorrow, the United States will begin posting its monthly figures on inflation, starting with the Producer Price Index (PPI) and followed by Friday's release of the Consumer Price Index (CPI). The PPI data may reveal a minor slow-down in growth, from 1.6% to 1.1%, if it gets published as expected, but the data does not seem significant enough to affect American growth figures. Friday's CPI figures may further fuel stability in growth forecasts as the core data reading, which excludes food and energy, is expected to remain stable at 0.2%. The overall reading is also being anticipated to reveal a growth from 0.5% last month to 0.6% this month. If US inflationary data can sustain such stability, arguments for monetary adjustments may become more pronounced in the near future. For now, the solid numbers could simply help the greenback push back against its recent weakness in the foreign exchange markets (FOREX). |
| Posted: 13 Apr 2011 09:18 AM PDT
A number of articles published over the last few weeks have argued the case that the euro has been rising against its currency rivals beyond where its fundamentals should have taken it. Today's publications continue to support this notion. What does that mean for the EUR/USD? A number of forces affect the value of currencies, which makes it difficult to play the blame game regarding price changes. We can, however, combine data to paint a picture. First and foremost are the poor fundamentals out of Europe these last several days. Last week the only signs of strength came from Germany, which managed to post positive industrial production and factory orders data. But France revealed a widening trade and budget deficit while the euro zone published below-expected retail sales and a sharp decline in consumer confidence. So far this week, the ZEW readings from yesterday were highly disappointing, and France continued to release negative data, such as Monday's lower-than-expected industrial production output. Today's regional industrial production figure simply piles on top of this bearish sentiment; yet the EUR continues to climb. Technical analysis has begun to show some over-extensions in the EUR/USD pair, with the price climbing into the over-bought region on a number of indicators and oscillators on the charts. Traders may expect this over-extended currency pair to begin banging against its ceiling, located, it appears, at 1.4500. If it can't break through this level, traders may want to begin anticipating a corrective downturn. |
| Retail Sales Adds Weight to USD Posted: 13 Apr 2011 09:11 AM PDT
Beating out expectations today was the Core Retail Sales data from the United States. The more volatile reading from general retail sales, including automobiles, showed only a 0.4% growth whereas the core data published 0.8% growth. Supporting the figure from retail sales was a better than expected reading from this afternoon's business inventory report. The impact from these data was felt almost immediately on USD pairs as the greenback inched higher against a number of its currency rivals from the injection of positive news. Retail sales measures consumer spending and provides investors an early look into the month's estimates on consumer sentiment. It therefore tends to have a visible impact on dollar pairs; today was no exception. Coupling the sales data with this morning's industrial production figures out of Europe, which revealed slower growth than was expected, helped the EUR/USD pull down from yesterday's gains. Traders may begin to anticipate a draw-down in the pair as fundamentals tilt more and more towards the greenback. |
| Crude Oil Prices Rebound off their Lows Posted: 13 Apr 2011 06:30 AM PDT
Spot crude oil prices rebounded with a rally that coincided with rising European equities. Questions remain over Libyan supplies as exports continue but are expected to remain limited. This afternoon at 14:30 US crude oil inventories will be released and are forecasted to show increasing crude oil supplies. Reports that Libyan rebels continue to pump and export oil has helped to improve sentiment in the crude oil market but traders are still uncertain as to how much rebels will be able to export due to key territories controlled by Libyan leader Moammar Gadhafi. Rumors of exports numbering hundreds of thousands of barrels a day are positive but still short of the 1.3M barrels a day Libya was exporting before fighting erupted. This leaves a certain level of uncertainty in the market that remains to be clarified. Positive US retail sales fed into spot crude oil buying as the report showed gains for the ninth consecutive month. US retail sales m/m rose 0.4% after last month's strong increase of 1.1%. Forecasts for the March numbers were for an increase of 0.6% but traders took this as a positive to add to long crude oil positions. At the opening of New York trading spot crude oil was up at $107.10 from $106.16. However, this remains off of the yearly high of $113.43 that was set on Monday. A strong performance by European equities supported crude oil gains as both the FTSE 100 and DAX are trading higher by 1.25% respectively. This afternoon at 14:30 US crude oil inventories are expected to be released showing an increase of 0.9M barrels. Anything below that level should help to continue today's rebound off of the recent low. To the downside, supports are found at $102.70 and $96.20. Resistance should be found at the high of $113.43. |
| UK Economic Data Fails to Impress Posted: 13 Apr 2011 04:43 AM PDT
The pound was under pressure following the release of disappointing unemployment data while the euro continued its run higher for the second time in as many days. As the New York trading session approaches, traders will be looking for increasing retail sales numbers and a slew of central banker speeches. The UK Claimant Count showed a surprising rise of 700 new jobless claims. The report's negative tone was furthered as the previous monthly report was revised lower to show a reduction of 8.5K new jobless claims from a previous 10.5K. Economists had forecasted a decrease of 3.6K. The report identifies a slowdown in the UK economic recovery and underscores yesterday's lower than expected CPI report. These two data pieces combined may give the BOE reason to hold off raising interest rates in the May meeting. In a separate report the UK unemployment rate fell unexpectedly to 7.8% from 8.0%. In response to the negative claimant count the pound lost ground versus both the dollar and the euro with the GBP/USD trading as low as 1.6236 from 1.6254 and is currently trading at 1.6267. While the fundamentals are beginning to turn against the pound, the GBP/USD was been relatively stable. This may speak more to the dollar's weakness than the pound's strength, but nevertheless the GBP/USD has failed to make a move below the 38% retracement level from the move stemming from the late March low to this week's high. Further support is at 1.6175 and 1.5970. Dollar weakness could support the cable and I expect another retest of the 1.6420 level. Despite disappointing industrial sales numbers the euro was bid higher today and underscores the momentum behind the recent 3-week move. Industrial production for the month of February rose only 0.4% on expectations of 0.8%. In response the EUR/GBP climbed higher to 0.8917 from 0.8903 and the EUR/USD touched yesterday's high at 1.4519 but failed to move above this level. However, this is only a minor resistance and traders should be targeting the 1.4580 resistance level. This afternoon traders will be looking for increasing retail sales numbers from the US which are due to be released at 12:30 GMT. Forecasts are for a rise of 0.6%. Crude oil inventories are scheduled for 14:30 GMT. Central bankers from Canada and Australia will also speak later in the afternoon. |
| Posted: 13 Apr 2011 12:08 AM PDT
The strengthening of the yen could prove to be only a knee jerk reaction to the downgrade of the Japanese nuclear plant that was damaged in the earthquake. This could bring an opportunity to enter long in the USD/JPY. Traders may look to enter long on the USD/JPY near the 84 level with a stop below 83.50, a level that the pair failed to break below yesterday despite multiple attempts. An initial target should be the recent high at 85.50. This allows for a nice profit to risk ratio of 3:1. On an extension, the pair would target the September intervention high at 85.90, followed by 88.00. To the downside, multiple supports are found in the near term. 83.30 is an apparent support and the falling channel line off of the September high may also come into play, as could the 200-day moving average at 82.80. Traders can move their stop lower for the trade but would need to raise the take profit level to keep a preferred profit to risk ratio.
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| Risk Aversion May Abate on European Industrial Production Data Posted: 12 Apr 2011 11:28 PM PDT
Yesterday's sell off of equities and crude oil in a bout of risk aversion may present traders with entry opportunities on a rebound. Today's market events: UK – Claimant Count – 08:30 – GMT EUR – Industrial Production m/m – 09:00 GMT USD – Retail Sales m/m – 12:30 GMT Oil – Crude Oil Inventories – 14:30 GMT |
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