After hitting a fresh seven-week high against the US dollar earlier in the week, the euro was unable to extend its gains during trading yesterday despite the release of positive French and German manufacturing data. In other news, weak Chinese economic data resulted in losses for both crude oil and the Australian dollar during the European session. Today, traders will want to note the results of the UK Revised GDP figure at 8:30 GMT, followed by the US Core Durable Goods Orders at 12:30. Any better than expected news could help both the GBP and USD before markets close for the weekend.
Forex Market Trends
USD - Core Durable Goods Orders Set to Impact USD
After taking significant losses earlier in the week as a result of the most recent FOMC Meeting Minutes, the US dollar was able to stabilize for the most part during European trading yesterday. The meeting minutes hinted at a possible new round of quantitative easing, which caused investors to sell the greenback. Yesterday, the USD/JPY gained close to 20 pips during mid-day trading, but quickly erased the gains following a worse than expected US Unemployment Claims figure. Against the Swiss franc, the dollar gained close to 25 pips to reach as high as 0.9578.
As markets get ready to close for the weekend, traders will want to pay careful attention to the US Core Durable Goods Orders figure, set to be released at 12:30 GMT. Analysts are forecasting the figure to come in at 0.5%, well above last month's -1.4%. If the forecasts turn out to be true, the dollar could recoup some of its recent losses against the Japanese yen during mid-day trading. At the same time, should the news disappoint, it may fuel speculations that the Fed will soon begin a new round of quantitative easing and could result in losses for the greenback.
EUR - EUR Takes Modest Losses vs. USD and JPY
After hitting a fresh seven-week high against the US dollar during early morning trading yesterday, the euro took moderate losses later in the day, despite positive French and German manufacturing data. After reaching the 1.2571 level, the EUR/USD fell as low as 1.2535 during European trading. Against the Japanese yen, the common-currency fell more than 40 pips during the second half of the day, eventually reaching as low as 98.26.
Turning to today, euro traders should monitor announcements out of the euro-zone. German and French officials have been meeting in recent days to discuss the current situation in the euro-zone, particularly with regards to Greek progress in the steps it needs to take to get its economy back on track. Any positive news concerning Greece's current debt situation may boost the euro before markets close for the weekend.
Gold - FOMC Meeting Minutes Continues to Boost Gold
Gold extended its bullish trend throughout European trading yesterday, following the most recent FOMC Meeting Minutes from earlier in the week. The meeting minutes, which hinted at a new round of monetary stimulus in the near future, led to risk taking in the marketplace. As a result, gold gained close to $16 an ounce to reach as high as $1673.
Today, gold traders will want to pay attention to US data, specifically the Core Durable Goods Orders figure at 12:30 GMT. If the news comes in above analyst expectations, it may lead to reduced speculations that the Fed is getting ready to initiate a new round of quantitative easing and could result in losses for gold.
Crude Oil - Chinese Data Leads to Losses for Crude Oil
A poor Chinese manufacturing indicator turned crude oil bearish yesterday. The news signaled to investors that demand for oil in China may decrease, and contributed to risk aversion in the marketplace. The price of oil fell close to $1 a barrel during European trading, reaching as low as $97.26 before bouncing back to the $97.65 level.
Turning to today, oil could see volatility if there are any announcements out of the euro-zone with regards to the current debt situation in Greece. Positive developments could lead to risk taking in the marketplace, which may boost the price of oil before markets close for the weekend. Conversely, negative developments in the euro-zone could result in oil extending its downward movement.
The Bollinger Bands on the weekly chart are beginning to narrow, signaling that this pair could see a price shift in the coming days. A bullish cross on the same chart's MACD/OsMA indicates that the price shift could be upward. Going long may be the wise strategy for this pair.
The Williams Percent Range on the weekly chart is approaching the overbought zone, indicating that this pair could see downward movement in the near future. This theory is supported by the Slow Stochastic on the daily chart, which has formed a bearish cross. Opening short positions may be the wise choice.
The weekly chart's Bollinger Bands have begun to narrow, indicating that this pair could see a price shift this week. Furthermore, the Slow Stochastic on the daily chart has formed a bearish cross while the Williams Percent Range on the same chart is in overbought territory. Going short may be a wise choice for this pair.
While the weekly chart's MACD/OsMA has formed a bearish cross, most other long-term technical indicators show this pair range trading. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the coming days.
The Wild Card
The Williams Percent Range on the daily chart has crossed into the overbought zone, signaling a downward correction in the near future. Furthermore, the MACD/OsMA on the same chart has formed a bearish cross. This may be a good time for forex traders to open short positions ahead of a possible downward breach.