Saturday, April 23, 2011

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

Link to Forex Trading Education : Forex Trading Blog by FOREXYARD

FX Fundamental Preview – Greek Default Risks Carry Over into Next Week’s Trading

Posted: 22 Apr 2011 09:40 AM PDT

printprofile

Definitive dollar selling has been the recent theme and gained traction following Monday's announcement by Standard & Poor's highlighting their negative outlook for US sovereign debt. This has helped to push the euro up to its highest level versus the dollar since December 2009, despite the risk for a potential Greek debt restructuring over the weekend.

The USD selling began near the beginning of the month but steadily increased after S&P's report. The initial cause of the dollar selling can be attributed to monetary policy differentials between the US and the developed world as Europe, Britain, Australia and others are expected to tighten interest rates to slow inflationary pressures.

The EUR/USD has climbed to a 15-month high but the euro faces significant event risk as the threat of a Greek debt restructuring announcement could come over the long holiday weekend. A glut of news reports and denials from leaders has hit the wires as rumors fly over a potential default by Greece.

On Wednesday the FOMC will meet and no change is expected to US rates. The Fed's QEII will not be extended nor will it be ended early, but the US central bank's accompanying policy statement may show a more positive stance towards the economy's improvement.

Previously the JPY was used as the funding currency for carry trades but due the continued strengthening of the yen traders have opted for the USD. Despite expectations for further loosening of Japanese monetary policy and increased budgets for the recovery from the earthquake and tsunami, the yen is once again rising. As the USD/JPY falls, further intervention is a possibility with the pair approaching the 80 level.

EUR Trading Mildly Lower on Italian Retail Sales

Posted: 22 Apr 2011 08:57 AM PDT

printprofile

With such a thin market, any news has the potential to affect the major currencies in unpredictable ways. Today's only data release was a minor retail sales figure from Italy. The figure has historically carried little impact onto regional currency values. However, today's muted rise of 0.1% growth in Italian retail sales has apparently helped push down on the EUR's recent decline.

Few analysts expect the euro to take a dive next week. Most view the US dollar's rise an over-extension of safety bets taken ahead of the holiday trading sessions. The Italian sales data may have had less to do with the EUR's downtick than with this fundamental shift, but any data produced on a day devoid of economic news no doubt has an impact.

Traders digested the news after its 9:00 GMT release and immediately put additional funds into the USD as safety from the thin, volatile, Easter holiday markets. The EUR's downtick may not last beyond this weekend, however, since numerous reports put the 17-nation single currency back into a bullish posture by the start of next week when investors, banks and traders return en masse to the forex market.

Traders Exercising Caution; Tight Ranges Expected

Posted: 22 Apr 2011 08:45 AM PDT

printprofile

As is typical around holiday trading sessions, investors appear overly cautious as thin trading and an absence of market-guiding data releases leave the forex market exposed to wide swings. Most analysts appear to be advising caution on their clientele as tight ranges on the major currencies are to be expected.

This environment, however, has the possibility of creating false impressions for inexperienced traders. The market is calm today. The problem is that it shouldn't be. Given the news, data releases and comments flying about this past week, the major currencies should be on edge, vying with one another in a volatile market. Instead we have calm.

All we can do at this point is try to get a feel where most investments will be coming in at the start of next week. Given the cautious environment on Friday, it may not make much sense to be actively trading with quick ins and outs. But longer-term investors may find this market a stable environment to assess their portfolios and adjust their positions ahead of Monday's return to full-bore trading.

Given what we've seen over the past several days it seems safe to say the EUR/USD, GBP/USD and USD/JPY are set to continue their dominant trends at the start of next week. The EUR is a top performer lately and fundamentals, technical data, and market tone appear to be favoring its continued rise, as pointed out in an earlier article.

The deceptive rise of the US dollar in today's trading is likely due to the last gasps of traders pushing down on the euro after ECB President Trichet's comments the other day. As the market returns full volume next Monday, traders who cautiously left themselves in the safety of the USD appear poised to shift directions and flood back into higher yielding assets.

Dollar Gains before Holiday

Posted: 21 Apr 2011 12:53 PM PDT

printprofile

In a quiet US trading session, weaker than expected US unemployment claims and manufacturing data gave traders an excuse to book gains in short dollar positions before the long holiday weekend.

The dollar gained ground heading into the long weekend after higher than forecasted unemployment claims were released. Weekly new job claims rose to 403K on expectations for only 394K. The previous week's report was revised higher to 416K from 412K and only served to highlight the negative tone of the release. Also adding to the negative tone in the afternoon was a lower than expected Philly Fed Manufacturing Index which came in at 18.5 on expectations of 37.1.

Following the jobs data the dollar buying increased and the EUR/USD fell to a daily low of 1.4532 before trading back near the 1.4545 level. Earlier in the European trading session the pair traded as high as 1.4648. The GBP/USD traded as high as 1.6600 before trading back to 1.6521. The USD/CAD rose to its high of 0.9534 after weaker than expected retail sales of 0.4% on forecasts of 0.6%.

Tomorrow Australian, New Zealand and most European markets will be closed due to the Easter holiday. Trading will commence in Asia and the States but liquidity will be light throughout the day.

Happy Holidays
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)