FOREXYARD: Forex News Blog

---

• Gold Surges Following Bear Trap
• UK Mortgage Approvals Sluggish in October
• GfK German Consumer Climate Beats Forecasts
• Canadian Retail Sales Bullish in October
• Canadian Interest Rate Decision

Gold Surges Following Bear Trap Posted: 25 Oct 2011 08:36 AM PDT The price of spot gold has received a bit of a bump the last three trading days with the commodity rising 1.6% today. Tensions in Europe could be the usual suspect for today's price increase though perhaps it is the prospect of additional monetary policy easing in the US that is driving the gains. The WSJ's front page article describes the potential collapse of the Italian government but gold prices may be moving higher on additional QE3 expectations. On Friday comments from Fed Governor Janet Yellen made no bones about the Fed's willingness to go back to the tool chest should risks to growth or price stability emerge. 'Helicopter' Ben Bernanke is well known for his position when tackling the threat of deflation in the US economy. Perhaps the events in Europe have been clouding the landscape and only now market players are turning their attention to a more strategic play in gold for an additional round of US policy easing. Gold prices recently performed a 'bear trap' when the price of spot gold fell below its rising support line from the September 28th low only to pull higher the same day and continue to advance higher to test the $1,695 level. Should the price continue to move higher there are retracement targets located at $1,725 and $1,771. Support comes in at the October low of $1,603. Read more forex trading news on our forex blog.

UK Mortgage Approvals Sluggish in October Posted: 25 Oct 2011 07:10 AM PDT An early report on housing loans in the UK was released this morning, revealing a mild sluggishness in the number of loans approved for home purchases. The data has been mulling about in mildly bullish territory for the past two months, making this month's dip a decent counter to the increase in consumer spending which we are seeing ahead of the holidays. The Mortgage Approval figure does tend to carry a significant impact on housing, moreover. The number of loans approved for home purchases indicates the level of house price increases and demand for housing across Great Britain which ties into the strength of capital markets. Read more forex trading news on our forex blog.

GfK German Consumer Climate Beats Forecasts Posted: 25 Oct 2011 07:03 AM PDT Released this morning was a report on the state of the German economy according to consumers. The survey, conducted by GfK, revealed a surprising uptick in consumer optimism, beating forecasts for a minor decline of 0.1. The indicator tends to have less impact than other reports due to its distance from economic valuation. Consumers have one part of the picture, but in the case of Germany it doesn't seem to have as much of an impact as the ZEW or Ifo readings, which get released prior to the GfK report. Read more forex trading news on our forex blog.

Canadian Retail Sales Bullish in October Posted: 25 Oct 2011 06:53 AM PDT Holiday shopping appears to be boosting retail sales in most countries which celebrate the end-of-year holidays such as Christmas. Indicators appear to be suggesting that consumer spending is on the rise in most Western countries and Canadian retail sales supports this notion for the northern giant. The Canadian dollar (CAD) was seen holding steady after these publications due to the release of the Bank of Canada's (BOC) interest rate announcement shortly after. The value of the Loonie will likely depend on how the market reacts to the interest rate statement later in the day. Read more forex trading news on our forex blog.

Canadian Interest Rate Decision Posted: 25 Oct 2011 04:17 AM PDT Today the BoC will release its interest rate decision and its accompanying statement. Canadian retail sales are also on the economic calendar though markets will be squarely focused on the BoC. The CAD has recovered nicely with the USD/CAD looking to move back below parity today. Inflation is beginning to pick up in the developed economies of the world (US core 2.0% and UK 3.3%) and Canada is no exception to this phenomenon. Last week Statistics Canada reported a larger than expected jump in core Canadian inflation rising 0.5% m/m and 2.2% y/y. The BoC had previously forecasted inflation to be 1.9% y/y. The increased inflationary pressures will likely complicate matters for the BoC given the headwinds in the global economy with a slowing Chinese economy and a cloudy horizon in Europe which has been driving factor in the FX markets over the second half of the year. The BoC is not expected to change its 1.00% interest rate nor should it adjust its neutral policy stance. Tomorrow the BoC will be releasing the central bank's Monetary Policy Report and is could show a downgrade in Canadian growth expectations which would leave the BoC in a predicament; high inflation and sagging growth. External factors to keep an eye on have been the price of crude oil which is beginning to show some strength in-line with other risky assets such as US equities and the AUD. Spot crude prices have risen to $93.60 and have retraced almost 50% of its 2011 decline. Crude oil strength could continue given improving market sentiment surrounding developments in Europe. USD debasing has also resurfaced with recent Fed comments hinting at the possibility of additional US monetary policy easing. Speculators have built a nicely sized position against the CAD according to the latest CFTC COT report (see chart below). Though the amount of the bearish CAD position has been slightly reduced over the past week there is still room for significant short covering as CAD shorts may already have begun to feel the squeeze. The USD/CAD move lower appears to be accelerating with the pair falling below parity for the first time since September 21st. The 55-day moving average contained yesterday's price action though today the pair has moved through this support level. One level to keep an eye on is 0.9890 where the previously broken downtrend line from the 2010 high is located. Many times a previously broken trend line can act as a support/resistance level. The 61% retracement of the July to October move also comes in at this level. Just below here also rests the 100 and 200-day moving averages. The October 18th high of 1.0260 should serve as initial resistance followed by the Q3 high of 1.0660. Read more forex trading news on our forex blog.

You are subscribed to email updates from Forex Trading Education : Forex Trading Blog by FOREXYARD To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610