US News Set to Impact Markets This Week
The euro saw mild gains against most of its main currency rivals on Friday, as hopes that Spain will soon seek a bailout from the ECB boosted risk appetite with investors. Still, a lack of significant economic news resulted in little movement among the main currency pairs before markets closed for the weekend. This week, a batch of US news is forecasted to impact the markets. Traders will want to note the results of consumer confidence data on Tuesday, followed by two separate home sales indicators on Wednesday and Thursday. Out of the euro-zone, attention should be given to a speech from the ECB President on Tuesday and an Italian bond auction on Thursday.
USD – News This Week May Signal Gains in US Economy
A lack of significant economic news on Friday led to a low volatility environment in the marketplace, and resulted in little movement for the US dollar. The USD/JPY closed out the week at 78.12, 12 pips below where it stood at the beginning of European trading. After dropping close to 50 pips against the Swiss franc during early morning trading, the greenback was able to stage an upward correction over the course of the day to finish out the week at 0.9327, slightly below where it started out the day.
This week, investors will be closely monitoring a batch of US news, most of which is forecasted to show modest gains in the US economic recovery. Tuesday's CB Consumer Confidence figure, followed by the New Home Sales report on Wednesday and Thursday's Core Durable Goods Orders are all forecasted to come in above their previous readings. If true, the US dollar may turn bullish against its main currency rivals, including the JPY, CHF, EUR and AUD.
EUR – Risk Taking Leads to Slight Gains for EUR
Speculations that the Spanish government will soon request a bailout package from the ECB generated some risk taking on Friday, which resulted in minor gains for the euro. That being said, analysts were quick to warn that the common currency was unlikely to see significant bullish movement until a formal request from Spain is made.
The EUR/USD was able to advance more than 70 pips during early morning trading, eventually reaching as high as 1.3047, before a downward correction virtually erased its earlier gains. The pair finished out the week at 1.2985. After gaining more than 60 pips to trade as high as 102.09, the EUR/JPY proceeded to drop and eventually closed out the week at 101.44.
This week, the main pieces of euro-zone news are likely to be a speech from ECB President Draghi on Tuesday, and an Italian bond auction on Thursday. If the news events signal economic growth in the euro-zone, either through upbeat comments from Draghi or a decrease in Italian borrowing costs, the euro could see gains as a result.
Gold – Gold Approaches Highest Level of 2012
An increase in risk taking due to speculations regarding a possible new bailout package for Spain caused the price of gold to shoot up above $1787 an ounce, close to its highest point this year. The precious metal was not able to maintain its gains though, and proceeded to stage a downward correction during the evening session before closing out the day at $1772.93.
This week, gold traders will want to keep an eye on a series of potentially significant news events out of the US which have the potential to generate volatility in the marketplace. Any better than expected news could turn the USD bullish, which may weaken demand for gold.
Crude Oil – Crude Oil Range Trades to Close Out Week
Despite modest risk taking in the marketplace on Friday, crude oil failed to make any significant gains and spent most of the day range trading. After the commodity advanced slightly more than $0.70 a barrel, to trade as high as $93.81, during the mid day session, a downward correction brought prices down to $93.06.
This week, oil is likely to have several opportunities to recoup some of last week's losses, as a batch of important US economic indicators is scheduled to be released. Traders should note that if any of the news comes in above the forecasted levels, investors could take it as a sign that demand for oil in the US could go up, which may result in an increase in prices.
A bearish cross on the weekly chart's Slow Stochastic indicates that this pair may see a downward correction in the near future. Additionally, the Williams Percent Range on the same chart has crossed over into overbought territory. Opening short positions may be the wise choice for this pair.
The daily chart's Relative Strength Index has crossed into the overbought zone, signaling a possible downward correction in the near future. This theory is supported by the weekly chart's Williams Percent Range, which is currently above the -20 level. Traders may want to open short positions for this pair.
While a bearish cross has formed on the daily chart's MACD/OsMA, most other technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.
The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into oversold territory, signaling that the price shift could be upward. Opening long positions may be the wise choice for this pair.
The Wild Card
The daily chart's Williams Percent Range is currently below the -80 line and in oversold territory, typically a sign that an upward correction could occur. Furthermore, the Slow Stochastic on the same chart has formed a bullish cross. This may be a good time for forex traders to open long positions ahead of possible upward movement.
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