FOREXYARD: Forex News Blog

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• Euro Bounces Higher in New York Trading Session
• Dollar Correction Continues to Build Strength with Declines in Silver
• EUR/USD Back to 1.42 as Greek Debt Woes Resurface

Euro Bounces Higher in New York Trading Session Posted: 12 May 2011 10:25 AM PDT During the New York trading session the dollar failed to hold most of its earlier gains versus the euro and the dollar bloc. The exception to this price action was the pound which was stagnant versus the dollar. US retail sales numbers were released but did not meet market expectations and were largely brushed off by traders. Today the US advanced retail sales m/m in April numbers rose 0.5%, up from a revised report in March of 0.9%. Market expectations were for an increase of 0.6%. While the numbers failed to meet market forecasts, the tone of the markets noticeably changed with the euro coming off of its daily lows. The EUR/USD received a bounce today in afternoon trading, rising as high as 1.4268 from the overnight lows at 1.4123. The dollar bloc was stronger as the AUD/USD fell as low as 1.0566 only to climb higher to trade at 1.0660. The NZD/USD dropped to 0.7840 before rising as high as 0.7986. Sterling was weaker across the board with the USD/GBP coming off of its low of 1.6233 to 1.6290. However, the new low made by Sterling is telling. Despite yesterday's pledge by the Bank of England to raise interest rates in the third quarter, the market's reaction to the news is indicative of traders' expectations for a slower than announced schedule of interest rate hikes. An increase in margin requirements by the CME initially spurred the selling of silver and the commodity continues to be sold off from its high of $47.83 by 28%. Silver prices today found a bounce at the rising trend line off of the late August low, though the price is still down for the day at $34.15.

Dollar Correction Continues to Build Strength with Declines in Silver Posted: 12 May 2011 05:48 AM PDT The rally in the dollar continues to build on last week's gains as silver prices have fallen below last week's low in line with gold and crude oil prices. The sell-off in commodities and global equities has helped to strengthen the dollar as long commodity trades are unwound. Silver is limit down today as the selling from yesterday carried over into today's European trading. The commodity is being sold as a bout of risk aversion has hit financial markets. An initial cause of the selling may be linked to a flare up in the Greek debt crisis as European leaders search for alternative measures. According to a Dow Jones Newswires report a majority of European countries believe a Greek debt restructuring (also known as default) is inevitable. Another explanation for the sell-off in commodities may be due to the expected ending of the Fed's QEII program. With the withdrawal of liquidity and cheap funding opportunities, the supply of commodity buyers are dwindling, leaving speculators holding onto silver at prices above the $40 level. Silver prices plummeted for the second consecutive day, trading on their low of $32.57 from $32.30. The commodity is down 16% over the past two days. Interestingly enough, today's low coincides with trend line rising off of the late August and January lows. After such sharp declines in silver prices, one must ask at what point will real money reenter the picture and begin bidding the price higher. Other commodities are also lower with crude oil trading below $100 at $95.23 and gold falling lower to $1477 from $1504. In addition to the selloff in commodities there are other signs of risk aversion. Global bourses are lower with the FTSE trading down by 1.26% and the Nikkei falling by 1.50%. The selling of equities and commodities has helped to strengthen the dollar as the correction lower continues. Today the EUR/USD dropped to a low of 1.4123, below the 1.4150 support/38.2% Fibonacci retracement from the January to May move. Sterling is lower at 1.6234 versus the dollar despite yesterday's monetary policy changes announced by the Bank of England. The dollar correction continues to build strength with the decline in commodities and the greenback should be supported as long as silver and other commodity trades are unwound.

EUR/USD Back to 1.42 as Greek Debt Woes Resurface Posted: 11 May 2011 10:19 AM PDT The oft-traded EUR/USD has fallen sharply back towards 1.42 during today's American market sessions after investors expressed concern that euro zone policy makers would not be able to respond rapidly enough to debt concerns in Greece and Portugal. According to a report in Reuters, debt-laden countries in the euro zone are approaching a critical decision point and there is significant fear that regional officials will fail to meet that challenge in a timely manner. The euro/dollar, as a result, was seen pushing below its recent support at 1.43 to a current price just above 1.4210. If the pair breaches its psychological barrier at 1.42, forex traders could see a quick sell-off that pushes the pair into the upper 1.30s. Rumors of an additional $87 billion aid package to Greece surfaced recently, which granted the EUR some effervescence in this week's early trading. Greek officials have staunchly denied the rumor, however, dispelling any belief that the pair's rise was sufficiently supported by fundamentals. This afternoon's plummeting value, seen in this light, is indeed backed up by what analysts are viewing among the technical and fundamental figures. Should euro zone officials continue to deliberate over further aid to these ailing economies, the EUR may find itself in a sharply bearish downturn versus its primary currency rivals. A downturn in French industrial production last month, alongside similar reports from Britain and Germany, has also caused a stir as many view the industrial and manufacturing sectors of the euro zone to be faltering this quarter.

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