US Consumer Confidence Figure may lead to Risk Taking Today
Increased confidence in the euro-zone economic recovery, largely due to a strengthened banking sector, helped keep the euro within reach of its recent 11-month high against the US dollar yesterday. Meanwhile, a better than expected US Core Durable Goods Orders figure helped the USD/JPY come within reach of a 2 ½ year high during afternoon trading. Today, the main piece of economic news is likely to be the US CB Consumer Confidence figure, set to be released at 15:00 GMT. A better than expected figure could lead to risk taking in the marketplace, which would boost the euro further.
USD – Dollar Maintains Upward Movement vs. Yen
After taking minor losses against the Japanese yen during the first half of the day, the US dollar received a boost following a better than expected Core Durable Goods Orders figure. The USD/JPY gained more than 20 pips after the news was released, eventually reaching 91.08, just below a recent 2 ½ year high of 91.24. Against the Swiss franc, the greenback saw relatively little movement throughout the day. The USD/CHF fell close to 30 pips during early morning trading, before recouping virtually all of its losses later in the day. The pair was trading at 0.9285 by the end of the European session.
Today, all eyes will likely be on the US CB Consumer Confidence figure, set to be released at 15:00 GMT. Following worse than expected consumer confidence data last month, investors shifted their funds to safe-haven assets, which boosted currencies like the US dollar and Japanese yen. If today's news comes in below the forecasted 64.5, the dollar could see bullish movement against several of its main rivals, including the Swiss franc, British pound and euro.
EUR – Confidence in EU Economic Recovery Keeps Euro Bullish
The EUR/USD gained close to 50 pips to trade as high as 1.3476 during European trading yesterday, just below an 11-month high, as a strengthened EU banking sector combined with positive US economic news led to risk taking in the marketplace. The EUR/GBP saw bullish movement throughout the day, as signs of weak economic growth in England weighed down on the pound. The pair advanced close to 30 pips during the European session to eventually trade as high as 0.8563.
While US consumer confidence data is likely to have the biggest impact on the euro today, traders will not want to forget to pay attention to several potentially significant euro-zone economic indicators in the coming days. An Italian debt auction, German retail sales data and manufacturing figures out of both Spain and Italy, all have the potential to boost the euro further if they show additional growth in the euro-zone economic recovery.
Gold – Gold Takes Additional Losses amid Positive Global Economic News
Gold prices decreased further when markets opened for the week yesterday, as confidence in the global economic recovery encouraged investors to shift their funds to riskier assets. The precious metal fell close to $10 an ounce during European trading, eventually reaching as low as $1651.64, before bouncing back to $1658 after a disappointing US Pending Home Sales figure.
Turning to today, gold traders will want to pay attention to consumer confidence data out of the US. A worse than expected figure may cause investors to shift their funds back to safe-haven assets, which could help gold recover some of yesterday's losses during the afternoon session.
Crude Oil – Oil Prices Tumble Following US Home Sales Figure
After gaining more than a $1 a barrel during mid-day trading yesterday to trade as high as $96.78, crude oil prices tumbled following a disappointing US Pending Home Sales figure. Worse than expected US news typically leads to speculations that American demand for oil will go down, which typically leads to a drop in prices. By the beginning of the afternoon session, prices had stabilized just above the $95.50 level.
Today, oil prices could decrease further if the US Consumer Confidence figure comes in below the forecasted 64.5. Worse than expected data is likely to result in concerns about the pace of the global economic recovery, which could turn higher-yielding assets, like oil, bearish as a result.
A bearish cross is close to forming on the weekly chart's Slow Stochastic, indicating that a downward correction could occur in the near future. 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 best option for this pair.
The Williams Percent Range on the weekly chart has fallen in into oversold territory, signaling that an upward correction could occur in the near future. This theory is supported by the Relative Strength Index on the daily chart, which is currently just below 30. Opening long positions may be the best choice for traders.
The Relative Strength Index on the weekly chart is currently overbought territory, indicating that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Opening short positions may be the best choice for traders.
Most long-term technical indicators show this pair trading in neutral territory, meaning a definitive trend is difficult to predict at this time. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.
The Wild Card
The MACD/OsMA on the daily chart has formed a bearish cross, indicating that a downward correction could occur in the near future. 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 forex traders today.
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