With the United States on holiday Monday, currency traders witnessed a relatively thin trading environment. Though debt concerns loom in the euro zone, and industrial production falters globally, the higher yielding assets like the GBP and EUR appear positioned to gain despite poor fundamentals. This trend appears to have little opposition as dollar traders shift substantial value into other assets. Greece remains the key question going forward though towards the end of last week the debt crisis was beginning to weaken its impact on the FX markets and the euro.
Talks between the EU and the IMF were continuing as scheduled and should end within the next few days. The German newspaper Der Spiegel reported the EU may withhold a 50B euro package for Greece should the indebted nation fail to reach its proposed austerity measures. The dollar is on its back foot again versus the G10 currencies following a week of disappointing data releases. Lower than forecasted durable goods orders, disappointing GDP, and a steep decline in pending home sales on Friday all point to a US economy that is not firing on all cylinders. Given the downturn in US data releases, the dollar could continue to be sold versus the world’s major currencies in the near term.
With the United States economy coming back online following yesterday’s holiday break, the US government is scheduled to release a few minor data sets. The most impactful figure being published will be the Conference Board’s (CB) consumer confidence report, set to be released at 14:00 GMT. The data should be a rock-steady gauge from which to view the impending employment reports coming out Wednesday and Friday. Our forecast calls for further shuffling of the EUR up to Friday, when the market are likely to provide us with a sharp indication as to future trend direction in the coming weeks.
Today’s Important Economic Announcements (GMT)
6:45 AM EUR French Consumer Spending m/m
7:55 AM EUR German Unemployment Change
9:00 AM EUR CPI Flash Estimate y/y & Unemployment Rate
12:30 PM CAD RMPI m/m
1:00 PM CAD BOC Rate Statement & Overnight Rate
1:00 PM USD S&P/CS Composite-20 HPI y/y
1:45 PM USD Chicago PMI
2:00 PM USD CB Consumer Confidence
Forex & Commodities Technical Analysis
EUR/USD
The EUR/USD rose to a three-week high Monday, reaching towards 1.4375 before settling slightly lower. The shift into riskier assets supports a variety of analyses which have called for a solid return to growth in the early summer months of Europe and North America, which is leading the way into these investment shifts. The Fed’s record low interest rates will likely persist for the foreseeable future, according to recent FOMC reports, and the dollar is expected to see little support this week as a result. Today, with the United States coming back online following yesterday’s holiday break, the US economy is scheduled to release a few minor data sets. The most impactful figure being published will be the Conference Board’s (CB) consumer confidence report, set to be released at 15:00 GMT. The data should be a rock-steady gauge from which to view the impending employment reports.
Stop Loss: 1.4406
Take Profit: 1.4279
USD/JPY
The Japanese yen has been trading relatively flat recently as investors flee the greenback in search of higher yields. After reaching upwards of 82.21 last Tuesday, the USD/JPY appears to be holding near a two-week low of 80.80 for the second consecutive day. Japan’s economy has published several positive figures over the last week, much of which has helped establish the yen’s recent bullishness. Whether it will be enough to reverse much of the negative sentiment surrounding Japan is yet to be determined. The yen suffers from Japan’s economic concerns, while shifts in consumer sentiment have helped lift yen values against a number of its rivals. Last week’s data, however, provided a ray of light which caused a secondary shift towards the yen for reasons other than safety. The USD/JPY looks to be continuing this movement for the foreseeable future as a result, especially given the massive shift away from the US dollar which is helping to lift the island currency.
Stop Loss: 81.56
Take Profit: 81.16
Crude Oil
Oil prices held steady this morning with the $100 price level acting as a firm footing for this commodity. US oil stockpiles rose a half a million barrels last week, beating expectations and helping to hold the value of light, sweet crude steady near its current mark. The price of black gold has been trading within a consolidation pattern these past several days and traders are beginning to anticipate a breach sometime this week. The value of the US dollar versus the euro in recent trading has also dropped towards a nine-day low of 1.4300, which has helped support oil prices. With today’s steady sideways movement, traders appear likely to see oil reaching a decision point this week. Whether oil traders decide to lift oil prices from a buy-in on physical assets, or pull away from oil out of a perceived glut, is something traders will bear witness to this week. We currently have slight bearish sentiments.
Stop Loss: 101.50
Take Profit: 99.80
Published by www.SolidityBrokers.com
