US Consumer Sentiment Data May Boost Dollar
A better than expected US Unemployment Claims figure gave the USD a temporary boost yesterday afternoon, before a disappointing manufacturing indicator resulted in the greenback reversing some of its earlier gains. Today, the main pieces of economic news are likely to be the UK Retail Sales and US Prelim UoM Consumer Sentiment figure, set to be released at 9:30 and 14:55 GMT. Better than expected British news is forecasted to result in gains, while positive US consumer sentiment data may help the greenback before markets close for the weekend.
USD – Better than Expected Unemployment Claims Turn Dollar Bullish
The USD saw significant bullish movement during afternoon trading yesterday, after the weekly US Unemployment Claims came in at a five-year low. That being said, a disappointing US manufacturing indicator limited the dollar's gains. The GBP/USD fell more than 75 pips during afternoon trading, eventually reaching as low as 1.5954 before bouncing back to the 1.5980 level. The USD/CHF advanced close to 50 pips before peaking at 0.9348. By the end of European session, the pair was at 0.9335.
As markets get ready to close for the weekend, analysts are forecasting volatility following the release of the US Prelim UoM Consumer Sentiment figure at 14:55 GMT. The indicator will provide investors with additional evidence as to the current state of the US economic recovery, and is expected to result in gains for the dollar if it comes in above the forecasted 75.1. Conversely, if today's news indicates that the US economy is slowing down, riskier currencies may recoup some of their losses from yesterday against the greenback.
EUR – US Unemployment Data Results in Losses for EUR/USD
The EUR/USD took significant losses during afternoon trading yesterday, following the release of a much better than expected US Unemployment Claims figure. The pair fell more than 40 pips after the news was released and eventually traded as low as 1.3332, before bouncing back to 1.3355 following a disappointing US manufacturing indicator. The euro had better luck against the British pound. The EUR/GBP advanced some 50 pips over the course of the mid-day session to trade as high as 0.8362.
Today, a lack of EU economic indicators means that any euro movement is likely to come as a result of British or US news. Euro traders will want to pay attention to the UK Retail Sales at 9:30 GMT, followed by the US consumer sentiment figure at 14:55. Analysts expect UK retail sales to have increased from last month which, if true, is likely to result in the euro giving up some of yesterday's gains against the pound. Meanwhile, if US consumer sentiment data comes in above the expected 75.1, the euro could see losses against the greenback.
Gold – Disappointing US Manufacturing Data Leads to Gains for Gold
Gold saw a fairly volatile day yesterday as a result of US news. A better than expected Unemployment Claims figure caused the precious metal to fall close to $15 an ounce, after which, a disappointing Philly Fed Manufacturing Index resulted in prices advancing more than $20. By the end of the European session, gold was trading just below $1690.
As markets get ready to close for the weekend, gold traders will want to pay attention to US consumer sentiment data and its impact on the dollar. If today's news leads to gains for the greenback, gold will become more expensive for international buyers, which is likely to result in prices falling during the afternoon session.
Crude Oil – Crude Oil Extends Upward Movement
Crude oil saw upward movement throughout the day yesterday, as signs of increased demand in the US, the world's leading oil consuming country, led to an increase in prices. By the end of the European session, oil was trading at $95.35 a barrel, up close to $2 and at a four-month high.
Today, the direction oil prices take will likely be determined by the US Prelim UoM Consumer Sentiment figure, set to be released at 14:55 GMT. A higher than expected figure is likely to lead to speculations that demand for oil in the US will continue going up, which would give crude prices an additional boost before markets close for the weekend.
A bearish cross has recently formed on the weekly chart's Slow Stochastic, indicating that a downward correction could occur in the coming days. This theory is supported by the Williams Percent Range on the same chart, which is currently in overbought territory. Opening short positions may be the smart choice for this pair.
The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a shift in price in the near future. Furthermore, a bearish cross has formed on the same chart's MACD/OsMA, indicating that the shift could be bearish. Opening short positions may be the smart choice for this pair.
The Relative Strength Index on the weekly chart is in overbought territory, indicating that a downward correction may occur in the coming days. Furthermore, a bearish cross has formed on the same chart's Slow Stochastic. Traders may want to open short positions for this pair.
The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. Additionally, the MACD/OsMA on the same chart appears close for forming a bullish cross, indicating that the price shift could be upward. Opening long positions may be the best choice for this pair.
The Wild Card
The Slow Stochastic on the daily chart appears close to forming a bullish cross, indicating that upward movement could occur in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into oversold territory. This may be a good time for forex traders to open long positions ahead of a possible bullish correction.
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