Euro Sees Gains amid Hopes for US Budget Resolution
Risk taking in the marketplace, largely due to hopes that US budget negotiations would soon be resolved and the “fiscal cliff” of tax increases and spending cuts would be avoided, helped higher yielding assets, including the euro, gain during mid-day trading yesterday. Today, in addition to any developments in the ongoing budget negotiations, traders will want to note the result of the US Durable Goods and Core Durable Goods Orders figures, set to be released at 13:30 GMT. With both indicators forecasted to come in below last month's results, the dollar could extend its recent losses before markets close for the weekend.
USD – US Durable Goods Data Set to Impact Dollar Today
Hopes that the budget negotiations between US Congressional leaders and President Obama would soon be resolved caused the US dollar to fall against its riskier currency rivals yesterday. The USD/CHF fell more than 50 pips to trade as low as 0.9083 during the first part of the day. That being said, the greenback was able to see a slight upward correction following better than expected US home sales and manufacturing data, and was trading at 0.9115 by the afternoon session. Against the safe-haven JPY, the dollar was able to gain more than 40 pips over the course of the day, and was trading at 84.25 by the beginning of the US session.
Turning to today, dollar traders will want to pay attention to the US Durable Goods and Core Durable Goods figures, both scheduled to be released at 13:30 GMT. With both indicators forecasted to come in below last month's figures, the dollar could take losses before markets close for the weekend. In addition, any positive developments in the negotiations to avoid the upcoming “fiscal cliff” of tax increases and spending cuts in the US may encourage risk taking, which would lead to bearish movement for the greenback.
EUR – Euro Reverses Gains Following Positive US News
While the euro was bullish against both the US dollar and yen for most of the European session yesterday, better than expected US home sales and manufacturing data turned the currency bearish during afternoon trading. The EUR/USD, which had gained close to 85 pips to trade as high as 1.3293, fell back to 1.3240 after the US data was released. Against the yen, the euro gained over 100 pips during the first part of the day, eventually peaking at 112.14, before dropping back to 111.61 by the beginning of the US session.
Turning to today, US “fiscal cliff” news is likely to have a significant impact on the euro. While budget negotiations between US Congressional leaders and President Obama appeared to be deadlocked earlier in the week, hopes of an impending deal yesterday led to the euro's temporary uptrend. Any positive developments today are likely to lead to risk taking among investors, which could boost the euro before markets close for the weekend.
Gold – Gold Tumbles Following Positive US News
The price of gold tumbled close to $30 an ounce during the mid-day session yesterday to eventually reach the $1642 level, its lowest level in three-months. Analysts attributed the precious metal's bearish movement to positive news out of the US, which led to doubts that the Fed will initiate additional monetary easing measures in the near future.
Today, gold traders will want to continue monitoring news out of the US, particularly the Core Durable Goods Orders figure at 13:30 GMT. The indicator is forecasted to come in at -0.2%, well below last month's 1.8%. If the indicator comes in at or below the expected level, gold prices may be able to rebound during afternoon trading.
Crude Oil – US Data may lead to Losses for Oil Today
Concerns regarding the upcoming US “fiscal cliff” of tax increases and spending cuts, set to take place at the beginning of the year if budget negotiations remain deadlocked, caused the price of crude oil to fall some $0.65 a barrel during mid-day trading yesterday. That being said, positive US GDP, housing and manufacturing data later in the day helped the commodity recoup most of its losses. By the beginning of the US session, oil was trading at $89.85.
As markets get ready to close for the weekend, oil traders will want to pay attention to a batch of US news set to be released at 13:30 GMT. Any better than expected results could lead to speculations that demand in the world's largest oil consuming country will go up, which could help oil extend its gains during afternoon trading.
The Williams Percent Range on the weekly chart has crossed over into overbought territory, indicating that a downward correction could take place in the coming days. This theory is supported by the Slow Stochastic on the daily chart, which has formed a bearish cross. Opening short positions may be the wise choice for this pair.
While the Relative Strength Index on the weekly chart is approaching the overbought zone, most other long-term technical indicators place this pair in neutral territory, making a defined trend difficult to predict. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
The Relative Strength Index on the weekly chart is in overbought territory, indicating that a downward correction could take place in the near future. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the wise choice for this pair.
The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift could occur in the coming days. Furthermore, the Williams Percent Range on the same chart is in oversold territory, indicating that the price shift could be bullish. Opening long positions may be the best choice for this pair.
The Wild Card
The Slow Stochastic on the daily chart has formed a bearish cross, indicating that a downward correction could take place in the near future. Additionally, the Williams Percent Range on the same chart has crossed over into overbought territory. Forex traders may want to open short positions for this pair today.
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