US GDP Figure Set to Impact Markets Today
The USD/JPY spent most of the day yesterday within reach of a recent four-month high, as speculations that the Bank of Japan would soon initiate a new round of quantitative easing continued to weigh down on the yen. In addition, positive data out of the US boosted confidence in the US economic recovery. Today, the main piece of economic news traders will want to pay attention to is the US Advance GDP figure, set to be released at 14:30 GMT. Should the figure come in above the forecasted 1.9%, the dollar may be able to extend its recent gains against the yen before markets close for the weekend.
USD – Positive US Indicators Help Keep Dollar Bullish
Better than expected US indicators, including the Core Durable Goods Orders and Unemployment Claims figures, helped keep the US dollar bullish against several of its main currency rivals during the European session yesterday.
Against the Japanese yen, the USD was able to advance close to 30 pips to reach a new four-month high at 80.22 during afternoon trading. The greenback saw similar gains against the Swiss franc to trade as high as 0.9323. That being said, the day was not all positive for the dollar. A better than expected British GDP figure resulted in the GBP/USD gaining more than 80 pips to trade as high as 1.6142.
Turning to today, dollar traders will want to focus their attention on the US Advance GDP figure, set to be released at 14:30 GMT. As the sole piece of significant news today, analysts are forecasting heavy market volatility after it is released. Should the indicator come in above the forecasted 1.9%, the USD may be able to extend its recent gains against the yen and Swiss franc and recoup some of yesterday's losses against the British pound.
EUR – Euro-Zone Data Turns Euro Bearish Once Again
While the euro did see fairly significant gains during Asian trading yesterday, disappointing euro-zone indicators, combined with general concerns regarding Spain and Greece caused the currency to turn bearish once again during the European session. The EUR/USD fell close to 40 pips during mid-day trading to trade as low as 1.2971. While a minor upward correction took place later in the day, the pair was unable to advance past the psychologically significant 1.3000 level. Positive British news resulted in the euro tumbling close to 60 pips against the GBP, eventually reaching as low as 0.8040.
As markets get ready to close for the weekend, a lack of significant euro-zone news means that any price shifts the euro sees are likely to be a result of US data. Specifically, the Advance GDP figure, forecasted to come in at 1.9%, could lead to euro volatility. If the indicator comes in above the expected level, investors may shift their funds to riskier assets, which could result in euro gains against the safe-haven Japanese yen.
Gold – Gold Bounces Back from 7-Week Low
After hitting a seven-week low earlier in the week, gold was able to bounce back during European trading yesterday amid speculations that the Bank of Japan will soon initiate a new round of monetary stimulus to boost the Japanese export industry. The precious metal advanced more than $10 an ounce over the course of the day, eventually reaching as high as $1717.43 during the afternoon session.
Today, gold traders will want to continue monitoring American news and its impact on the US dollar. If the Advance GDP figure comes in above expectations and benefits the greenback, gold may reverse its current bullish momentum. A strong dollar typically causes gold to decrease in value, as the precious metal becomes more expensive for international buyers.
Crude Oil – Oil Stages Minor Recovery Ahead of US GDP Figure
After hitting its lowest level in almost four months earlier in the week, crude oil was able to stage a very slight upward recovery during European trading yesterday. The price of crude advanced more than $0.60 a barrel to trade as high as $86.70, before reversing once again and stabilizing at the $86.20 level.
Turning to today, oil traders will want to pay close attention to the US Advance GDP figure, set to be released at 14:30 GMT. As the world's leading oil consuming country, news out of the US tends to have a significant impact on the price of crude. Any better than expected data could lead to speculations that demand for oil in the US will increase, which could help the commodity recover some of its recent losses.
The weekly chart's Williams Percent Range is currently in overbought territory, signaling that this pair could see a downward correction in the coming days. This theory is supported by the same chart's Slow Stochastic, which has formed a bearish cross. Traders may want to open short positions for this pair.
The Relative Strength Index on the weekly chart is approaching the overbought zone. Furthermore, the MACD/OsMA appears close to forming a bearish cross. Traders will want to keep an eye on both of these indicators, as they may signal a possible downward correction in the near future.
The daily chart's Slow Stochastic has formed a bearish cross, indicating that this pair could see downward movement in the near future. Additionally, the Relative Strength Index on the same chart is in overbought territory. Going short may be a wise choice for this pair.
The MACD/OsMA on the daily chart has formed a bullish cross, indicating a possible upward correction in the near future. Additionally, the weekly chart's Williams Percent Range has crossed into oversold territory. Opening long positions may be the smart choice for this pair.
The Wild Card
A bearish cross on the daily chart's MACD/OsMA is indicating that this pair could see a downward correction in the near future. This theory is supported by the Relative Strength Index on the same chart, which has crossed above the 70 line. This may be a good time for forex traders to open short positions ahead of a bearish correction.
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