By Mercaforex
The USD lost value against the EUR and the GBP on Wednesday as equities markets pushed up further bringing along investors with risk appetite. The USD has had an extremely strong correlation with the results from Wall Street in an inverse manner since the financial crisis broke out last fall. Yesterday’s trading on the Dow Jones and S&P came about as Intel posted better than expected quarterly earnings on Tuesday night. Today the corporate reports will continue with JP Morgan and IBM and with others following suit. Based on the performances turned in yesterday, positive sentiment may be enough to keep this mini-rally going one more day if no major surprises break out. Regarding economic data from the U.S., the Empire State Manufacturing turned in a number of minus -0.6, which was better than the expected decline of -5.3. Industrial Production statistics were also released and it showed a slight improvement.
Today the weekly Unemployment Claims figures will be released and a better outcome is anticipated with a number of 550k compared to last week’s result of 565K. Employment statistics remain a critical lynchpin for investor sentiment but the numbers could be overshadowed today by corporate reports. Tomorrow important housing data will be brought forth. Both Building Permits and Housing Starts data are on the calendar. Considering the rally in the equities markets this week it may sound foolhardy to point out that clouds remain on the American horizon. However, a storm may be brewing around the corner with the news that CIT Corporation, which funds many middle sized and small businesses in the U.S., may be filing for bankruptcy after its talks with the U.S. government broke off last night. Also foreclosure statistics in the U.S. have hit a record pace. Thus the equity rally may prove to be a short term gift to traders who have had the stomach to participate in shares, but this could sour on negative data down the road. The USD has reacted true to form this week, going lower as Wall Street has shown brighter. We may see the stock markets continue their positive run today, which means the USD could weaken again.
EUR:
The EUR had a strong day on Wednesday climbing off the weaker part of its range against the USD as positive trading on the European bourses continued. The European Union released its CPI statistics yesterday and they highlighted that inflation remains nearly non-existent and that the underlying threat is deflation. The Italian Trade Balance figures will be brought forth today along with the French CPI data. The Italian figures will not be enough to stir the currency markets but for those interested is expected to post a result of minus -0.07 billion. Tomorrow the broad Trade Balance statistics will be published for the European Union but should prove insignificant. The real catalyst for the EUR like the other major currencies will be the results from the international equity markets. The EUR has improved its footing the past few days against the USD but it this has come under the auspice of a rally in equities that may not continue forever.
GBP:
The Sterling had another positive day of trading on Wednesday as conflicting U.K. data actually was published. Claimant Count Change figures turned in a better than expected number with a result of 28.3K compared to the forecast of 41.4K. However the Unemployment Rate in the U.K. climbed from 7.2% to 7.6%. There will be no significant economic releases today or tomorrow, but news may continue to come from the regulatory front as information continues to be reported about new restrictions that will be placed on financial institutions. The GBP has had another turnaround this week and has climbed towards the stronger side of its range against the USD, after taking a turn for the worse last week. The results from the Sterling have certainly received a better footing from the solid performance on the FTSE.
JPY
The JPY continued to lose steam to the USD on Wednesday as equity markets continued to turn in good results. The JPY and USD pair has experienced a well traveled range the past few months, as investors have weighed their capital management based on their taste for risk. Gold enjoyed another climb yesterday as it settled near 936.00 USD, proving again that it is trading in an inverse manner with the greenback.
Technical Analysis
EUR/USD:
The pair made a bullish correction breaching the resistance level of 1.4000 the Bollinger bands are tightened indicating that this pair could trade in a tight range today. However the daily chart supports a bullish move. It seems that going long with tight stops will be preferable.
GBP/USD:
This pair is now trading near the upper barrier of a tight bearish channel. Indicators are relatively neutral on the daily chart. However the 4 Hour chart support a bullish movement. Therefore, a long position will be preferable.
USD/JPY:
The pair is still floating within the bullish channel as the direction is unclear. No significant breach has been made, however both the daily and the 4 hour chart support the bullish move. It seems that going long with tight stops might be smart today.
USD/CHF:
On the daily chart the Slow Stochastic and the RSI indicates that we are in oversold territory. In addition the daily chart also gives bullish signals. The preferred strategy today will be a long position.
The Wild Card
Gold:
The Gold is now showing bearish momentum as seen by the hourly oscillators. Both the daily and hourly charts support the bearish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a short position.
The USD lost value against the EUR and the GBP on Wednesday as equities markets pushed up further bringing along investors with risk appetite. The USD has had an extremely strong correlation with the results from Wall Street in an inverse manner since the financial crisis broke out last fall. Yesterday’s trading on the Dow Jones and S&P came about as Intel posted better than expected quarterly earnings on Tuesday night. Today the corporate reports will continue with JP Morgan and IBM and with others following suit. Based on the performances turned in yesterday, positive sentiment may be enough to keep this mini-rally going one more day if no major surprises break out. Regarding economic data from the U.S., the Empire State Manufacturing turned in a number of minus -0.6, which was better than the expected decline of -5.3. Industrial Production statistics were also released and it showed a slight improvement.
Today the weekly Unemployment Claims figures will be released and a better outcome is anticipated with a number of 550k compared to last week’s result of 565K. Employment statistics remain a critical lynchpin for investor sentiment but the numbers could be overshadowed today by corporate reports. Tomorrow important housing data will be brought forth. Both Building Permits and Housing Starts data are on the calendar. Considering the rally in the equities markets this week it may sound foolhardy to point out that clouds remain on the American horizon. However, a storm may be brewing around the corner with the news that CIT Corporation, which funds many middle sized and small businesses in the U.S., may be filing for bankruptcy after its talks with the U.S. government broke off last night. Also foreclosure statistics in the U.S. have hit a record pace. Thus the equity rally may prove to be a short term gift to traders who have had the stomach to participate in shares, but this could sour on negative data down the road. The USD has reacted true to form this week, going lower as Wall Street has shown brighter. We may see the stock markets continue their positive run today, which means the USD could weaken again.
EUR:
The EUR had a strong day on Wednesday climbing off the weaker part of its range against the USD as positive trading on the European bourses continued. The European Union released its CPI statistics yesterday and they highlighted that inflation remains nearly non-existent and that the underlying threat is deflation. The Italian Trade Balance figures will be brought forth today along with the French CPI data. The Italian figures will not be enough to stir the currency markets but for those interested is expected to post a result of minus -0.07 billion. Tomorrow the broad Trade Balance statistics will be published for the European Union but should prove insignificant. The real catalyst for the EUR like the other major currencies will be the results from the international equity markets. The EUR has improved its footing the past few days against the USD but it this has come under the auspice of a rally in equities that may not continue forever.
GBP:
The Sterling had another positive day of trading on Wednesday as conflicting U.K. data actually was published. Claimant Count Change figures turned in a better than expected number with a result of 28.3K compared to the forecast of 41.4K. However the Unemployment Rate in the U.K. climbed from 7.2% to 7.6%. There will be no significant economic releases today or tomorrow, but news may continue to come from the regulatory front as information continues to be reported about new restrictions that will be placed on financial institutions. The GBP has had another turnaround this week and has climbed towards the stronger side of its range against the USD, after taking a turn for the worse last week. The results from the Sterling have certainly received a better footing from the solid performance on the FTSE.
JPY
The JPY continued to lose steam to the USD on Wednesday as equity markets continued to turn in good results. The JPY and USD pair has experienced a well traveled range the past few months, as investors have weighed their capital management based on their taste for risk. Gold enjoyed another climb yesterday as it settled near 936.00 USD, proving again that it is trading in an inverse manner with the greenback.
Technical Analysis
EUR/USD:
The pair made a bullish correction breaching the resistance level of 1.4000 the Bollinger bands are tightened indicating that this pair could trade in a tight range today. However the daily chart supports a bullish move. It seems that going long with tight stops will be preferable.
GBP/USD:
This pair is now trading near the upper barrier of a tight bearish channel. Indicators are relatively neutral on the daily chart. However the 4 Hour chart support a bullish movement. Therefore, a long position will be preferable.
USD/JPY:
The pair is still floating within the bullish channel as the direction is unclear. No significant breach has been made, however both the daily and the 4 hour chart support the bullish move. It seems that going long with tight stops might be smart today.
USD/CHF:
On the daily chart the Slow Stochastic and the RSI indicates that we are in oversold territory. In addition the daily chart also gives bullish signals. The preferred strategy today will be a long position.
The Wild Card
Gold:
The Gold is now showing bearish momentum as seen by the hourly oscillators. Both the daily and hourly charts support the bearish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a short position.