Archive for December 10th, 2009
GoLearn Forex Analysis 10/12/2009
The Gold & CHF Correlation by GoLearn Forex
USD/CHF:
The Swiss Franc has a positive correlation to Gold. Thus, as Gold appreciates so does the CHF and vice versa. When the Gold rush of 2009 began the CHF participated in the precious metal’s appreciation. However, the correlation broke down as Gold broke its all time high. In the below Chart the CHF hesitated as it broached Dollar parity while Gold enjoyed near new daily highs. We would have expected the CHF to enjoy new highs, in line with Gold, once breaking parity with the Greenback but that did not transpire.
INSERT CHART CORR
The CHF like most of the G-10 is currently holding at very volatile handles. During the Dollar’s initial rally the Franc closed just above the 50 day MA and has since surpassed it. Currently the CHF has breached S1 at 1.0278. In the Chart below we have drawn a Fibonacci Retrace from the CHF low on April 20th, then trading at 1.17. We used the CHF high on November 26th, with a handle at .9918 to complete the Fibonacci range.
INSERT CHART CHF
The Fibonacci Retrace puts the 23.6% retrace level at 1.0350. The 100 day MA is also converging on the same level. If the Swiss Franc takes out the FIBO 23.6% level and closes below the 100 day MA this would trigger an additional short CHF entry. A close below the 50 day MA at 1.0163 would generate a long CHF entry.
There are a number of moving parts to watch when trading this pair. Gold has been hit hard during this Dollar rally and most analysts felt a retrace was imminent given the metal’s stellar rise. However, most analysts also forecast Gold to retain most if it’s appreciation given the high level of demand. This view may shield the Franc from massive depreciation. However, if the CHF takes out the 100 day MA prior to Gold firming then we would expect to see significant price action.
Commodities in a Slump by GoLearn Forex
It was a mixed day on Wall Street following a continued selloff in the Asian and London sessions. The DJIA closed the day at 10,337.05 up 51.08 points. It saw modest gains as analysts upgraded their ratings on 3M and Sprint Nextel.
The Greenback gave up some gains from its 3 day rally as the DXY closed down slightly to 76.038, but still above the 50 day MA. The big winner on the day was the Kiwi, as it advanced 1.81%. The RBZ held rates at 2.5% but improved their forecasts to include a possible rate hike in mid 2010. Additionally, Governor Bollard added the Bank’s expectation now looks for a significant rise in GDP.
Commodities continued their slump as Oil closed the session down 1.75 to 70.87. Corn, Wheat, and Soybeans sold off as the dollar held firm most of the day. Gold finished the day essentially unchanged to close at 1,128.60
Thursday will see a lot of price action as Unemployment figures is Australia print. Consensus expectations are looking for a modest rise to 5.9%. Obviously a print above or below will advance or plummet the AUD as the market looks for direction in this Dollar rally. The SNB will make its Interest Rate decision, although widely expected to keep rates on hold. Traders will focus their attention to accompanying language from the Central Bank. In the U.K the BOE will announce their interest rate decision and although they are expected to keep rates on hold at .5% it will be the Central Banks accompanying statements that have the chance to stir the market. Lastly, in the U.S, Trade Balance figures will print as will Jobless Claims. Traders will be watching carefully to see where Jobless Claims print as they seek to confirm last week’s NFP numbers. A significantly higher print may put an end to the Greenbacks rally while a better than expected print will affirm the Dollars new levels.
Upcoming Forex Events December 10, 2009
CHF Interest Rate Decision Forecast 0.25% Previous 0.25%
GBP Interest Rate Decision Forecast 0.50% Previous 0.50%
CAD Trade Balance Forecast -0.50B Previous -0.90B
USD Trade Balance Forecast -36.50B Previous -36.50B
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Daily Review 10/12/2009
USD Dollar (USD)
The Dollar was mixed versus the majors after Inventories at U.S. wholesalers rose in October for the first time in more than a year, signaling companies are picking up the pace of orders as the economy shows signs of improvement. NASDAQ and Dow Jones strengthened by 0.5% respectively. Crude Oil fell by 2.7% after the report showed that Crude inventories fell by 3.8 million barrels and Crude price closed at 70.64$ a barrel after oil inventories showed a rise. Gold(XAU) fell by 2% closing at 1120.4$ an ounce. Today, Trade Balance is expected at -36.9B vs. -36.5B prior. Unemployment Claims is expected to rise from 457K to 463K. Federal Budget Balance is expected at -136B vs. -176.4B prior.
EURO (EUR)
The Euro gained slightly versus the Dollar after U.S. stocks rose modestly, reviving demand for higher-yielding assets. Overall, EUR/USD traded with a low of 1.4668 and with a high of 1.4782. Today, ECB Monthly Bulletin will be released and ECB President Trichet will speak at the University of Cambridge.
EUR/USD – Last: 1.4703
|
Resistance |
1.4782 |
1.49 |
1.5090 |
|
Support |
1.4675 |
1.46 |
|
British Pound (GBP)
The Pound decreased versus the Dollar and Euro as the U.K.’s Treasury is expected to raise 550 million pounds targeting payouts at banks in the next few months and another 3 billion pounds from incomes earned after April 2011. Overall, GBP/USD traded with a low of 1.6167 and with a high of 1.6375. Today, MPC Rate Statement is expected to leave the Interest Rate unchanged at 0.5%. Asset Purchase Facility is expected to stay unchanged at 200B in case it will be higher the Pound is expected to drop.
GBP/USD – Last: 1.6254
|
Resistance |
1.6350 |
1.6515 |
1.6670 |
|
Support |
1.6165 |
1.61 |
|
Japanese Yen (JPY)
The Yen continued to strengthen versus the Dollar after Japanese stocks fell the most in 8 days. Core Machinery Orders came out as expected with -4.5%. Overall USD/JPY traded with a low of 87.36 and with a high of 88.7. No economic data expected today.
USD/JPY-Last: 87.86
|
Resistance |
88.5 |
89.2 |
90.1 |
|
Support |
87.35 |
87 |
86.6 |
Canadian dollar (CAD)
The Canadian Dollar strengthened against the Dollar amid speculation that yesterday’s decline to the lowest level in almost two weeks went too far. Overall, USD/CAD traded with a low of 1.0514 and with a high of 1.0661. Today, Trade Balance is expected at -0.6B vs. -0.9B prior.
CAD/USD – Last: 1.0568
|
Resistance |
1.0590 |
1.0650 |
1.0670 |
|
Support |
1.0533 |
1.0485 |
1.0433 |
Research by http://www.ufxbank.com
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