US News Expected to Create Market Volatility Today
The euro was able to extend its recent bullish momentum during the first part of the day yesterday, as positive EU economic indicators continued to generate investor risk taking. That being said, the common currency was not able to maintain its upward momentum and began falling shortly after US markets opened. Today, US news is likely to have the most influence on risk appetite as much of the EU is closed for a bank holiday. Traders will want to pay attention to the ADP Non-Farm Employment Change at 12:15 GMT, followed by the CB Consumer Confidence and ISM Manufacturing PMI at 14:00.
USD – Dollar Bullish After US Markets Open
After taking losses against several of its higher-yielding currency rivals during European trading yesterday, the dollar was able to stage a modest bullish recovery after US markets reopened for the first time this week in the aftermath of Hurricane Sandy. After falling close to 50 pips during the first half of the day to trade as low as 0.9275, the USD/CHF was able to advance some 30 pips during afternoon trading to reach the 0.9305 level. The dollar had significantly more luck against the safe-haven Japanese yen. The USD/JPY gained close to 40 pips throughout the day, eventually trading as high as 79.93.
Today, dollar traders will want to pay attention to a batch of potentially significant US news. The ADP Non-Farm Employment Change, largely considered a valid predictor of Friday's all-important Non-Farm Payrolls figure, will be released at 12:15 GMT. At 14:00, the CB Consumer Confidence figure and ISM Manufacturing PMI will both be announced. Should any of the indicators come in above their forecasted levels, investor confidence in the US economic recovery could increase, which may help the dollar against the safe-haven yen.
EUR – Risk Taking May Help Euro Today
While positive EU news from earlier in the week continued to help the euro throughout morning trading yesterday, the common-currency was not able to hold onto its gains and once again turned bearish during the US session. Against the dollar, the euro climbed more than 60 pips during the first half of the day, eventually trading as high as 1.3019, before falling back to the 1.2970 level when US markets opened. After gaining more than 70 pips against the yen to trade as high as 103.92, the euro fell back to the 103.50 level during afternoon trading.
Turning to today, bank holidays throughout much of the euro-zone means that euro movements will likely come as a result of US news. Traders will want to pay attention to the ADP Non-Farm Employment Change, CB Consumer Confidence figure and ISM Manufacturing PMI. Any better than expected data could lead to risk taking among investors, which may boost higher-yielding assets like the euro during afternoon trading.
Gold – Gold Gains amid a Bullish Stock Market
A bullish stock market yesterday gave a boost to higher-yielding assets and led to significant gains for the price of gold. The precious metal moved up close to $15 over the course of the day, eventually trading as high as $1725 an ounce.
Today, gold traders will want to monitor the results of a batch of US news. Any better than expected data could lead to an increase in risk taking, which may help gold extend its bullish trend. That being said, should any of the news come in below the forecasted levels, risk aversion may result in gold reversing its recent gains.
Crude Oil – Oil Sees Gains as US Refineries Reopen
The price of crude oil was able to gain more than $1 a barrel yesterday, as US oil refineries began opening in the aftermath of Hurricane Sandy. The commodity traded as high as $87.17 during afternoon trading before staging a minor downward correction and dropping to the $87.00 level.
Today oil traders will want to monitor news out of the US. Specifically, the US Crude Oil Inventories figure, which was postponed from yesterday due to the hurricane, is supposed to be released today. Should the indicator come in lower than the forecasted level, it may be taken as a sign of increased demand in the US, which could help boost the price of crude.
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 weekly chart's Williams Percent Range, which has crossed into overbought territory. Traders may want to open short positions for this pair.
In a sign that this pair could see a downward correction, the Relative Strength Index on the weekly chart is approaching the overbought zone. Furthermore, the MACD/OsMA on the same chart appears close to forming a bearish cross. Traders will want to keep an eye on these two indicators, as they may soon point to impending bearish movement.
While the Williams Percent Range on the weekly chart has crossed over into overbought territory, most other long term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach for the time being, as a clearer picture is likely to present itself in the near future.
A bullish cross on the weekly chart's Slow Stochastic indicates that this pair could see an upward correction in the coming days. Additionally, the Williams Percent Range on the same chart is currently in oversold territory. Traders may want to open long positions for this pair.
The Wild Card
The Relative Strength Index on the daily chart is approaching the overbought zone, indicating that this pair could see a downward correction in the near future. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. This may be a good time for forex traders to open short positions ahead of possible downward movement.
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