U.S. Unemployment Claims to Set the Level for the USD Today
Today, traders should pay close attention to the release of the U.S. Unemployment Claims report. This indicator always provides for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following this vital announcement at 12:30 GMT.
USD – Dollar Drops on Renewed Risk Appetite
The U.S dollar fell against most of its major currencies yesterday, hitting its lowest level in nearly a month against the EUR, as gains in stocks prompted investors to wade into riskier currency trades. By yesterday's close, the USD fell against the EUR, pushing the oft-traded currency pair to around 1.3130. The Dollar experienced similar behavior against the GBP and closed at 1.6145.
Today's Unemployment Claims release is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the Dollar could go either way as a result. In any case, traders are unsure how the market will react to today's data. A weak report could feed risk aversion, boost Treasuries and actually aid the U.S Dollar. Then again, a better than expected result might be seen as a sign of relative U.S. economic strength, and lift the Dollar. Or it could also encourage risk-taking and aid commodities and higher-yielding currencies at the Dollar's expense.
EUR – EUR/USD Hits One Month High
The EUR hit a one-month high against a weak dollar on Wednesday, lifted by Moody's rating agency affirming Spain's investment grade rating and growing speculation Madrid will ask for a bailout next month. The EUR was up 0.6 percent on the day at $1.3136, its highest since mid-September.
Moody's rating, which is contingent on Spain implementing fiscal reforms and the European Central Bank stepping in to buy peripheral bonds, soothed immediate concerns about a downgrade to junk status. That pushed Spanish yields lower before an auction on Thursday and helped the EUR.
Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.
JPY – Yen Drops On All Fronts
The Yen fell against most of its major rivals during yesterday's trading session. The Yen dropped about 50 pips against the EUR. The Yen also slid 60 pips against the British Pound.
Additionally, yen values will likely be determined by the European and U.S. economic indicators set to be released throughout the day. Positive news from either Europe or the U.S., will likely cause investors to continue buying up riskier assets. This will likely cause the yen to fall once again. That being said, should the news today voice any concerns about the pace of the global economic recovery, we may see investors return to safe haven assets like the JPY.
Crude Oil – Oil Falls below $91.75
Crude oil fell to $ 91.75 on Wednesday after the government reported that U.S. crude production increased by 2.9 million barrels in the week ending 12 October. The US Energy Information Administration said that at 369.2 million barrels, crude oil inventories are above the upper limit of the average range for this time of year.
As for today, traders are advised to watch carefully after the leading stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone in order to predict the next movements in oil prices.
The EUR/USD cross has experienced a bullish trend for the past week. However, it seems that this trend may be coming to an end. For example, the weekly chart's Stochastic Slow signals that a bearish reversal is imminent. A downward trend today is also supported by Williams Percent Range. Going short with tight stops may turn out to pay off today.
The cross has experienced much bullishness in the last 2 days, and currently stands at the 1.6125 level. There is much evidence in the chart's oscillators that supports a possible bearish correction today. This is supported by weekly chart's Slow Stochastic. Going short with tight stops may turn out to bring big profits today.
The USD/CHF cross has experienced a bearish trend for the past 2 weeks. However, it seems that this trend may be coming to an end. The Williams Percent Range of the Weekly chart shows the pair floating in the over-sold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.
The Wild Card
This pair's sustained upward movement has finally pushed its price into the over-bought territory on the daily chart's Williams Percent Range. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic – indicative of an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.
Article Source: U.S. Unemployment Claims to Set the Level for the USD Today