EUR/USD Technical Analysis for January 27, 2012
EUR/USD rose during the Thursday session as traders continued to sell the Dollar overall. However, by the end of the session, all of those gains were given up as the market formed a shooting star at the top of the recent resistance area. The 1.31 level seems to be a bit strong for the bulls at this point. With this in mind, we are thinking that the pair is setting up for a nice short trade now.
The fact that the “pop” form the Federal Reserve’s decision to keep rates ultra-low only lasted about 36 hours should be cause for concern for the bulls in this pair. The economic situation may be a bit worse than people imagined, and many people have to be wondering exactly what the Fed saw in order to do this. A lot of those same people think it was in order to insulate the US form Europe – suggesting that Europe is about to get a whole lot worse.
We are selling a break of the Thursday range in this pair, and would expect a slow grind lower from there, perhaps as low as 1.25 before the move ends. However, a break of the top of the Thursday session would be a massively bullish sign, getting us to buy.
EUR/USD Fundamental Analysis for January 27, 2012
Economic Events: (GMT)
Today is the second day of the World Economic Forum of Business and Government Leaders in Davos.
10:30 CHF KOF Leading Indicators -0.06 0.01
The KOF Leading Indicators Index is designed to predict the direction of the economy over the following six months. The index is a composite reading of 12 economic indicators related to banking confidence, production, new orders, consumer confidence and housing.
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.
13:15 EUR ECB President Draghi Speaks
European Central Bank (ECB) President Mario Draghi (November 2011 – November 2019) is to speak. As head of the ECB, which sets short term interest rates, he has a major influence over the value of the euro. Traders watch his speeches closely as they are often used to drop subtle hints regarding future monetary policy and interest rate shifts.
His comments may determine a short-term positive or negative trend.
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
Analysis and Recommendations:
The EUR/USD is currently trading 1.3161
The euro surged today on weakness of the USD and on news of an almost settlement with Greek creditors. The IIF returned to Greece to finish negotiations after they agreed to reduce the value of the coupon to 3.75.
The new focus is on Portugal. Spain successful held a bond auction today.
The greenback continued to drop against most major currencies today following losses after two major U.S. economic reports showed jobless claims and durable-goods orders jumped. One positive and the other negative.
The downward spiral comes the day after the Federal Reserve said interest rates may remain at current levels until late 2014, reducing the appeal of the USD to international investors, regardless of the positive comments about growth and the economy.
The dollar index dropped to 79.248, and is well below its 80.131 level ahead of the Fed’s policy announcement.
In a news conference, Chairman Ben Bernanke said expanding its balance sheet remains an option and the central bank stands ready to ease further if the outlook worsens. Bernanke said it’s too early to say strong growth is here to stay. As for the bonds the Fed already holds, he said sales of those have been pushed back to 2015.
The two reports released in the US today, showed new applications for unemployment climbed sharply last week. Jobless claims climbed by 21,000 to a seasonally adjusted 377,000 in the week ended Jan. 21, the Labor Department said Thursday. Claims from two weeks ago were revised up by 4,000.
The number of claims varies in January due to holiday temporary hiring’s despite government efforts to adjust for seasonal factors.
The markets pay more attention to the four-week average which showed claims fell slightly, down 2,500 to 377,500.
The second report release was on durable goods, where stronger orders for airplanes and machinery translated into a better-than-expected 3.0% increase in durable-goods orders in December.
Later in the day the U.S. Census Bureau said new home sales fell by 2.2% to a seasonally adjusted 307,000 units in December, confounding expectations for a 2% gain to 320,000.
As investors look closely through the recent data for any sign of improvement, the manufacturing sector remains a decidedly bright spot for the U.S. economy.
USD/JPY Technical Analysis for January 27, 2012
USD/JPY fell during the Thursday session as the shooting star we pointed out from Wednesday got triggered to the downside. The pair is decidedly bearish overall, and the recent consolidation area had absolutely no reason to break apart.
The pair looks as if it is going to continue lower towards the 76.50 level that the Bank of Japan has been buying at. (Shhhh! Don’t tell anyone: It’s a secret!) The market obviously has a benefactor at that level, so it is hard to try and press it lower at the moment. We are selling rallies on shorter time frames in order to take advantage of the current market conditions. We are not buying at this point in time, and will only be aiming for 50 pip gains on sales anyway as the range is so strong.
USD/JPY Fundamental Analysis for January 27, 2012
Economic Events: (GMT)
Close of the Asian Markets
There are no economic events or reports scheduled in Japan today.
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
USD/JPY Fundamental Analysis Jan. 27, 2012, Forecast Analysis and Recommendation:
USD/JPY was trading at 77.76
The dollar weakened on FOMC statements against all its trading partners. The USD was up in the US session until the Fed comments, driving the USD straight down. The Fed said it would hold interest rates until sometime in 2014. Stock markets soared and the currency fell. The yen was also weaked by reports showing an annual trade deficit in 2011, for the first time since 1980. This is the point at which Japan’s savings turn around in terms of momentum has long been seen as the time to sell the Japanese yen.
Weak demand for Japanese goods and services abroad coupled with a stronger yen were among the problems causing the trade gap. You also have to keep in mind the Tsunami and Earthquake that devistated a lot of Japans manufacturing area and lost exports.
The World Economic Forum continues its meeting in Davos, Switzerland, and markets will await comments from policymakers or financial and corporate leaders on the U.S. and European economies. Angela Merkel gave the opening keynote address, admitting that the austerity programs and bailouts in Europe had failed, and preparing the markets for a Greek default.
Markets in Hong Kong, Taipei and Shanghai, among others, remained closed for the Lunar New Year holidays.
GBP/USD Technical Analysis for January 27, 2012
GBP/USD rose again on Thursday as traders continued to buy the Pound in general. The move higher has been pretty impressive, but the truth is that the pair had entered a downtrend a couple of months ago, and the run down to 1.53 certainly will have put a dent in overall sentiment in the Pound by bulls.
The candle formation for Thursday is a shooting star, and it is formed right at the start of a strong resistance area t6hat measures from 1.57 to 1.58 or so. With this in mind, we also look at the 100 day EMA that this happened. The shape of the candle and well lined up timing appears to not be a mistake. The signs are all bearish at this point, and it should also be noted that the recent bounce has been far overdone at this point in time, even if it were the start of a trend change.
The breaking of the bottom of the shooting star for Thursday would be a massive sell signal as it shows the most recent buyers are now losing money. This becomes a compounding problem for the bulls as those who are liquidating also are selling – pushing prices lower.
Because of the recent economic news out of London, it is hard to get excited about the British economy. They are simply far too exposed to Europe to believe the outcome is going to be good for the Brits. The GDP number the other day was a horrible miss and perhaps this pair is ready to fall again as the British economy continues to fall overall.
The reaction to the Federal Reserve’s decision to keep rates low was also probably an overdone one, and as a result we have this exhaustive candle. While the trend changing may or may not be real, the fact is that this pair simply has to pull back to gain traction anyway. Because of this, we prefer the selling of it overall, and will get short of this market on a solid break below the bottom of the shooting star. Buying isn’t possible until we are above the 1.58 level on a daily close.
GBP/USD Fundamental Analysis for January 27, 2012
Economic Events: (GMT)
Today is the second day of the World Economic Forum of Business and Government Leaders in Davos.
10:30 CHF KOF Leading Indicators -0.06 0.01
The KOF Leading Indicators Index is designed to predict the direction of the economy over the following six months. The index is a composite reading of 12 economic indicators related to banking confidence, production, new orders, consumer confidence and housing.
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.
13:15 EUR ECB President Draghi Speaks
European Central Bank (ECB) President Mario Draghi (November 2011 – November 2019) is to speak. As head of the ECB, which sets short term interest rates, he has a major influence over the value of the euro. Traders watch his speeches closely as they are often used to drop subtle hints regarding future monetary policy and interest rate shifts.
His comments may determine a short-term positive or negative trend.
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
GBP/USD Fundamental Analysis Jan. 27, 2012, Forecast
Analysis and Recommendations:
The GBP/USD is currently trading at 1.5724 rising +0.0067 (+0.43%)
The GBP remained under pressure after industry data showed that U.K. retail sale volumes dropped to the lowest level since March 2009 this month, with retailers expecting volumes to keep declining in February. The report came one day after data showing the U.K. economy contracted in the fourth quarter, underlining concerns over fresh monetary easing by the Bank of England, last week news of a rise in unemployment in the UK was reported.
The greenback continued to drop against most major currencies today following losses after two major U.S. economic reports showed jobless claims and durable-goods orders jumped. One positive and the other negative.
The downward spiral comes the day after the Federal Reserve said interest rates may remain at current levels until late 2014, reducing the appeal of the USD to international investors, regardless of the positive comments about growth and the economy.
The dollar index dropped to 79.248, and is well below its 80.131 level ahead of the Fed’s policy announcement.
In a news conference, Chairman Ben Bernanke said expanding its balance sheet remains an option and the central bank stands ready to ease further if the outlook worsens. Bernanke said it’s too early to say strong growth is here to stay. As for the bonds the Fed already holds, he said sales of those have been pushed back to 2015.
The two reports released in the US today, showed new applications for unemployment climbed sharply last week. Jobless claims climbed by 21,000 to a seasonally adjusted 377,000 in the week ended Jan. 21, the Labor Department said Thursday. Claims from two weeks ago were revised up by 4,000.
The number of claims varies in January due to holiday temporary hiring’s despite government efforts to adjust for seasonal factors.
The markets pay more attention to the four-week average which showed claims fell slightly, down 2,500 to 377,500.
The second report release was on durable goods, where stronger orders for airplanes and machinery translated into a better-than-expected 3.0% increase in durable-goods orders in December.
Later in the day the U.S. Census Bureau said new home sales fell by 2.2% to a seasonally adjusted 307,000 units in December, confounding expectations for a 2% gain to 320,000.
As investors look closely through the recent data for any sign of improvement, the manufacturing sector remains a decidedly bright spot for the U.S. economy.
EUR/GBP Technical Analysis for January 27, 2012
EUR/GBP rose during the session originally, but fell later in the session to form a shooting star just under massive resistance at the 0.84 level. The failure is one of several, and the previous few days saw a couple of hammer-like candles as well. Because of this, although the pair looks very weak overall, there are better and cleaner trades out there.
If we had to take apposition, it would be short. The braking below 0.83 actually would clear both of those supportive candles, and have us selling in real life. But the market is a grinding one, and both of these currencies are necessarily favorites at this point in time. Because of that – we are flat in this market.
EUR/GBP Fundamental Analysis for January 27, 2012
Economic Events: (GMT)
Today is the second day of the World Economic Forum of Business and Government Leaders in Davos.
10:30 CHF KOF Leading Indicators -0.06 0.01
The KOF Leading Indicators Index is designed to predict the direction of the economy over the following six months. The index is a composite reading of 12 economic indicators related to banking confidence, production, new orders, consumer confidence and housing.
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.
13:15 EUR ECB President Draghi Speaks
European Central Bank (ECB) President Mario Draghi (November 2011 – November 2019) is to speak. As head of the ECB, which sets short term interest rates, he has a major influence over the value of the euro. Traders watch his speeches closely as they are often used to drop subtle hints regarding future monetary policy and interest rate shifts.
His comments may determine a short-term positive or negative trend.
EUR/GBP Fundamental Analysis Jan. 27, 2012, Forecast Analysis and Recommendations:
The pair EUR/GBP is currently 0.8374 up +0.0002 (+0.03%)
The euro surged today on news of an almost settlement with Greek creditors. The IIF returned to Greece to finish negotiations after they agreed to reduce the value of the coupon to 3.75.
The new focus is on Portugal. Spain successful held a bond auction today.
The GBP remained under pressure after industry data showed that U.K. retail sale volumes dropped to the lowest level since March 2009 this month, with retailers expecting volumes to keep declining in February. The report came one day after data showing the U.K. economy contracted in the fourth quarter, underlining concerns over fresh monetary easing by the Bank of England, last week news of a rise in unemployment in the UK was reported.
USD/CHF Technical Analysis for January 27, 2012
USD/CHF fell during the Thursday session as the Dollar got sold against many currencies around the world. The later hours saw a bounce though, and the resulting candlestick formed a hammer. This bullish sign also managed to happen right at the 0.92 level, an area that we were watching.
This pair has been very bullish until recently, and the fundamentals seem to back the move up. The Swiss are working against the Franc, and as long as a central bank is willing to sell the currency off, it is thought to buy it. With the Franc being so heavily worked against, it makes sense that the chart has been rising. Adding to that, the United States has been reporting better economic statistics lately, and as a result the Dollar has been strong in general. Also, the EU is going into recession, so the Swiss will have trouble selling their products to their neighbors.
The 0.92 level has been resistance and support in recent times. With the shape of the candle being at this point in time, it makes sense that buyers may step back into the market and try to push prices higher. The pair should also grind as the Franc gets closer to the 1.20 mark against the Euro. This area is one that the Swiss National Bank has put a floor in, and they will almost have to intervene if that pair tests the level. If that happens, the Franc will sell off against all currencies, the Dollar included.
So while the Federal Reserve has said it would keep rates low until the end of 2014 at least, this pair could very easily continue to climb at the same time. The breaking of the recent top could see this pair even turn into a long-term buy and hold trade. This market doesn’t move overly fast, so one of the prerequisites is the ability to be patient with a trade. The range is much slower than a lot of other pairs.
We are buying the market on a break of the top of the Thursday hammer, as it would show a breaking of the bearish pressure from the selling that has been done the previous 24 hours. We aren’t interested in selling at the moment.
USD/CHF Fundamental Analysis for January 27, 2012
Economic Events: (GMT)
Today is the second day of the World Economic Forum of Business and Government Leaders in Davos.
10:30 CHF KOF Leading Indicators -0.06 0.01
The KOF Leading Indicators Index is designed to predict the direction of the economy over the following six months. The index is a composite reading of 12 economic indicators related to banking confidence, production, new orders, consumer confidence and housing.
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.
13:15 EUR ECB President Draghi Speaks
European Central Bank (ECB) President Mario Draghi (November 2011 – November 2019) is to speak. As head of the ECB, which sets short term interest rates, he has a major influence over the value of the euro. Traders watch his speeches closely as they are often used to drop subtle hints regarding future monetary policy and interest rate shifts.
His comments may determine a short-term positive or negative trend.
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
USD/CHF Fundamental Analysis Jan. 27, 2012, Forecast
Analysis and Recommendations:
The USD/CHF trading at 0.9168 up-0.0048 (-0.52%)
The USD continues lower today against all currencies. The Franc remained as it was with no economic data to support a move up. The World Economic Forum is meeting in Switzerland this week. The Swissie was bouyed on US data.
The greenback continued to drop against most major currencies today,following losses after a two major U.S. economic reports showed jobless claims and durable-goods orders jumped. One positive and the other negative.
The downward spiral comes the day after the Federal Reserve said interest rates may remain at current levels until late 2014, reducing the appeal of the USD to international investors, regardless of the positive comments about growth and the economy.
The dollar index dropped to 79.248, and is well below its 80.131 level ahead of the Fed’s policy announcement.
In a news conference, Chairman Ben Bernanke said expanding its balance sheet remains an option and the central bank stands ready to ease further if the outlook worsens. Bernanke said it’s too early to say strong growth is here to stay. As for the bonds the Fed already holds, he said sales of those have been pushed back to 2015.
The two reports released in the US today, showed new applications for unemployment climbed sharply last week. Jobless claims climbed by 21,000 to a seasonally adjusted 377,000 in the week ended Jan. 21, the Labor Department said Thursday. Claims from two weeks ago were revised up by 4,000.
The number of claims varies in January due to holiday temporary hiring’s despite government efforts to adjust for seasonal factors.
The markets pay more attention to the four-week average which showed claims fell slightly, down 2,500 to 377,500.
The second report release was on durable goods, where stronger orders for airplanes and machinery translated into a better-than-expected 3.0% increase in durable-goods orders in December.
Later in the day the U.S. Census Bureau said new home sales fell by 2.2% to a seasonally adjusted 307,000 units in December, confounding expectations for a 2% gain to 320,000.
As investors look closely through the recent data for any sign of improvement, the manufacturing sector remains a decidedly bright spot for the U.S. economy.
EUR/CHF Technical Analysis for January 27, 2012
EUR/CHF fell on Thursday as the markets continue to sell the Euro in favor of the Franc. The Euro had risen during a lot of the session, but fell in the later hours. This came over to the EUR/CHF pair, and we saw selling in the end. However, we are currently sitting at the 1.2050 to 1.2060 support level. The Swiss National Bank is currently willing to protect the 1.20 level, and as a result – you simply cannot be involved in this pair to the downside. Yes, it is true that markets like to “test” central banks, but as the intervention would almost be a necessity at that point, it’s a great way to lose money. On signs of possible support, we are now willing to buy.
EUR/CHF Fundamental Analysis for January 27, 2012
Economic Events:
Today is the second day of the World Economic Forum of Business and Government Leaders in Davos.
10:30 CHF KOF Leading Indicators -0.06 0.01
The KOF Leading Indicators Index is designed to predict the direction of the economy over the following six months. The index is a composite reading of 12 economic indicators related to banking confidence, production, new orders, consumer confidence and housing.
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.
13:15 EUR ECB President Draghi Speaks
European Central Bank (ECB) President Mario Draghi (November 2011 – November 2019) is to speak. As head of the ECB, which sets short term interest rates, he has a major influence over the value of the euro. Traders watch his speeches closely as they are often used to drop subtle hints regarding future monetary policy and interest rate shifts.
His comments may determine a short-term positive or negative trend.
EUR/CHF Fundamental Analysis Jan. 27, 2012, Forecast Analysis and Recommendations:
EUR/CHF is trading 1.2068 down -0.0011(-0.09%)
The Franc remained as it was with with economic data to support a move up. The World Economic Forum is meeting in Switzerland this week. The Swissie was bouyed on US data.
The euro surged today on news of an almost settlement with Greek creditors. The IIF returned to Greece to finish negotiations after they agreed to reduce the value of the coupon to 3.75.
The new focus is on Portugal. Spain successful held a bond auction today.
Swiss officials continue to state that they will support the currency at the 1.20 level.
The World Economic Forum is meeting in Davos this week
AUD/USD Technical Analysis for January 27, 2012
The AUD/USD pair surged again on Thursday as the “risk on” trade continues. The fact that the Federal Reserve is promising to keep rates ultra low until the end of 2014 continues to put in a bid for commodities, and as the Aussie dollar is a commodity currency it makes a lot of sense that this pair finally broke out.
The triangle that is on the chart clearly had us going higher once it was broken to the upside, and it was perfectly formed at the 1.04 level – always a clean situation in which to make your trading assessment. The pair action broke out before the Federal Reserve said it was going to keep rates low, and once they did – it only rose further. However, the candlestick for Thursday is a shooting star, and this shows that the pair is likely to fall in the short term.
The 1.07 area was mentioned in previous videos as potential resistance areas, and the top of the Thursday range showed this to be true. However, with the underlying fundamentals favoring the inflation trade – this pair should only be bought. Of course, the chart can do whatever it wants, so we have to wait to see if the “line in the sand” gets crossed. For us, it is the 1.04 level. A daily close below that has us rethinking the whole situation with the pair.
In the meantime, we are hoping to see supportive candles at either 1.05 or 1.04 in order to buy from. The 1.04 area should be very strong, but in these types of breakouts, you often won’t get back to the original breakout. This is why we mention the 1.05 level. However, with the strength in this market, we are not willing to sell this pair at the moment. The buying of Aussie on the dips is the way we are moving forward this year.
The gold markets will also be a tell as well in this market. As long as the gold markets rise, this pair will as well. The pair could become a longer-term trade as well, as the measurement of the triangle does suggest that the pair will go to 1.12 sooner or later. With that, we are looking forward to a long standing trade – assuming we are above 1.04 in the mean time. However, all things look good presently, and we are much more comfortable buying.
AUD/USD Fundamental Analysis for January 27, 2012
Close of Asian Markets
There are no economic events or reports due in Australia today.
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
AUD/USD Fundamental Analysis Jan. 27, 2012 Forecast Analysis and Recommendation:
AUD/USD was trading at 1.0605
The dollar weakened on FOMC statements against all its trading partners. In early Asian markets the USD continued to show weakness until the end of the session when the dollar improved slightly.
The AUD opened at 1.0597 moving up to 1.0615 before settling in near 1.06 for the day.
The USD was up in the US session until the Fed comments, driving the USD straight down. The Fed said it would hold interest rates until sometime in 2014. Stock markets soared and the currency fell. The yen was also weaked by reports showing an annual trade deficit in 2011, for the first time since 1980. This is the point at which Japan’s savings turn around in terms of momentum has long been seen as the time to sell the Japanese yen.
Weak demand for Japanese goods and services abroad coupled with a stronger yen were among the problems causing the trade gap. You also have to keep in mind the Tsunami and Earthquake that devistated a lot of Japans manufacturing area and lost exports.
The World Economic Forum continues its meeting in Davos, Switzerland, and markets will await comments from policymakers or financial and corporate leaders on the U.S. and European economies. Angela Merkel gave the opening keynote address, admitting that the austerity programs and bailouts in Europe had failed, and preparing the markets for a Greek default.
Markets in Hong Kong, Taipei and Shanghai, among others, remained closed for the Lunar New Year holidays.
USD/CAD Technical Analysis for January 27, 2012
The USD/CAD pair fell during the Thursday session as traders pushed the market down below the parity level. The market continues to be pushed around by the oil markets, and will certainly be so for the near future. For what it’s worth, the oil markets are starting to look a little tired at this point.
The daily candle for Thursday ended up as a hammer, showing real support coming into the market. The pair is hanging on by a thread, but the candle is very supportive at the moment. Because of this, we are willing to buy a break of the top of the hammer, and we would sell a break of the bottom of the hammer.
USD/CAD Fundamental Analysis for January 27, 2012
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
USD/CAD Fundamental Analysis Jan. 27, 2012, Forecast Analysis and Recommendations:
The USD/CAD is currently trading 0.99.94 (-0.4879%)
The USD continues lower today against all currencies. The Canadian dollar simply reacted to US weakness and remained as it was with with economic data to support a move up. The World Economic Forum is meeting in Switzerland this week. The Swissie was bouyed on US data.
The greenback continued to drop against most major currencies today continuing losses after two major U.S. economic reports showed jobless claims and durable-goods orders jumped. One positive and the other negative. Followed by a huge miss in the housing market.
The downward spiral comes the day after the Federal Reserve said interest rates may remain at current levels until late 2014, reducing the appeal of the USD to international investors, regardless of the positive comments about growth and the economy.
The dollar index dropped to 79.248, and is well below its 80.131 level ahead of the Fed’s policy announcement.
In a news conference, Chairman Ben Bernanke said expanding its balance sheet remains an option and the central bank stands ready to ease further if the outlook worsens. Bernanke said it’s too early to say strong growth is here to stay. As for the bonds the Fed already holds, he said sales of those have been pushed back to 2015.
The two reports released in the US today, showed new applications for unemployment climbed sharply last week. Jobless claims climbed by 21,000 to a seasonally adjusted 377,000 in the week ended Jan. 21, the Labor Department said Thursday. Claims from two weeks ago were revised up by 4,000.
The number of claims varies in January due to holiday temporary hiring’s despite government efforts to adjust for seasonal factors.
The markets pay more attention to the four-week average which showed claims fell slightly, down 2,500 to 377,500.
The second report release was on durable goods, where stronger orders for airplanes and machinery translated into a better-than-expected 3.0% increase in durable-goods orders in December.
Later in the day the U.S. Census Bureau said new home sales fell by 2.2% to a seasonally adjusted 307,000 units in December, confounding expectations for a 2% gain to 320,000.
As investors look closely through the recent data for any sign of improvement, the manufacturing sector remains a decidedly bright spot for the U.S. economy.
NZD/USD Technical Analysis for January 27, 2012
NZD/USD rose again for the Thursday session as the “risk on” trade continues to press forward. The commodity currencies all got a boost, and with the Federal Reserve willing to keep rates low until the end of 2014, the commodity markets should continue to rise overall. However, this market looks like the top has been put in for the short term based upon the double top at the 0.8250 level that we have formed. However, we are not willing to sell this market, we simply want to let it pullback in order to buy it closer to the 0.81 level. If we close sub-0.80, we would then become sellers. But until that event happens, this market looks like a screaming buy.
NZD/USD Fundamental Analysis for January 27, 2012
Close of the Asian Session
There are no economic events or reports expected to effect the kiwi today.
08:30 USD GDP Price Index (QoQ) 2.0% 2.6%
08:30 USD GDP (QoQ) 3.0% 1.8%
The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product.It is the broadest inflationary indicator.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:55 USD Michigan Consumer Sentiment Index 74.2 74.0
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
NZD/USD Fundamental Analysis Jan. 27, 2012 Forecast Analysis and Recommendation:
NZD/USD is trading at 0.8169 after opening at 0.8168. This pair just slept through all of the changes in the USD.
The dollar weakened on FOMC statements against all its trading partners. The USD was up in the US session until the Fed comments, driving the USD straight down. The Fed said it would hold interest rates until sometime in 2014. Stock markets soared and the currency fell.
Trade reports from Japan, showed that Japan had the first trade deficit since 1980, a lower demand on export products is to blame which might also hold true for New Zealand, as the recession in Europe continues to grow.
The World Economic Forum continues its meeting in Davos, Switzerland, and markets will await comments from policymakers or financial and corporate leaders on the U.S. and European economies. Angela Merkel gave the opening keynote address, admitting that the austerity programs and bailouts in Europe had failed, and preparing the markets for a Greek default.
Markets in Hong Kong, Taipei and Shanghai, among others, remained closed for the Lunar New Year holidays.
