Ben Bernanke Speech to Continue Dominating Dollar Volatility Today.
The Dollar is set to continue its volatility today, as the market continues to act on yesterday's critical speech of U.S. Federal Reserve Chairman Ben Bernanke. Additionally, traders will continue intensive Dollar trading, as they take into account that U.S. Interest Rates will stay at 0.25%, lower than most industrialized nations. Furthermore, a bullish stock market today could be an additional factor that may add to the forex market's volatility, and possibly push down the USD.
Economical News
USD
The U.S Dollar fell against most of its major currencies pairs yesterday. It was dragged lower by an unexpected rise in weekly U.S. jobless claims that dimmed the economic picture in the U.S. The USD was also pushed lower by Federal Reserve Chairman Ben Bernanke's testimony, as he was put on the defensive due to recent controversial U.S. bank acquisitions.
By Thursday's close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.4043. The Dollar experienced similar behavior against the JPY for most of the day. However, the greenback recovered slightly to finish trading higher at 95.70.
Initial claims for state unemployment insurance increased by 15,000, to a higher-than-expected seasonally adjusted 627,000, a reminder that companies will keep cutting staff, even as the U.S. economy stabilizes. However, recent data shows that some areas of the economy, such as housing and manufacturing, are seeing a smaller pace of decline, consistent with the Federal Reserve's projection that the slump is “slowing.” Companies are unlikely to hire until there are sustained gains in demand, meaning a recovery remains dependent on the effectiveness of government stimulus efforts.
Looking ahead to today, there are several news releases coming out of the U.S. These include the Personal Spending and Revised UoM Consumer Sentiment at 12.30 GMT and 13:55 GMT respectively. Better-than-expected results may help the USD recover some of yesterday's losses against the EUR and CHF. On the other hand, if the results turn out to be lower than forecast, then the USD may record a bearish session in today's trading.
EUR
The 16 nation currency completed yesterday's trading session higher versus most major currencies. The EUR closed higher versus the JPY yesterday, and the pair closed at around the 134.70 level. The EUR also saw bullishness against the GBP as it jumped around 60 pips and closed at 0.8547.
The major economic event that came out of the Euro-Zone yesterday was the Industrial New Orders data release. Industrial orders in the Euro-Zone were unequivocally weak, plunging more than a third, year on year in April, a record decline led by falling demand for capital and intermediate goods. A slowdown in the decline in orders in March had raised hopes that the downturn was bottoming out, but the sharp fall in April signals that a recovery may take longer to start in earnest. Analysts believe the first quarter of this year was the low point of the Euro-Zone's recession.
Looking ahead to today, the most important economic indicator scheduled to be released from the Euro-Zone is the German Prelim CPI. Analysts are forecasting this figure to increase from its previous reading. Traders will be paying close attention to today's announcement as a stronger than expected result may continue to bolster the EUR in the short-term.
JPY
The Yen completed yesterday's trading with mixed results versus the major currencies, on bets that the U.S. Federal Reserve and the European Central Banks' (ECB) efforts to stabilize the global economy will spur demand for higher-yielding assets. The JPY closed at 96.08 per USD from 96.20 yesterday.
Japan's consumer prices fell at a record pace in May, adding to signs that a return to deflation may hamper a rebound from the nation's worst recession. Bank of Japan Governor Masaaki Shirakawa said last week that price declines will accelerate through the middle of the fiscal year, as demand slackens and Crude Oil continues to trade lower than last year's record. Retailers are cutting prices to attract customers as falling wages and the worsening job outlook dampens spending.
Technical Analysis
EUR/USD
The bullishness of the EUR/USD pair seems to have be running out of steam, despite recently hitting the 1.4040 level. The hourly chart's RSI signals that the pair is in overbought territory, and that a bearish reversal is imminent. Going short with tight stops may turn out to pay off today.
GBP/USD
The pair seems to be range trading between the 1.6200 and 1.6610 levels as of late. The hourly chart's RSI and Stochastic Slow indicate that the pair is oversold, and that a correction is likely to happen soon. Entering the cross at an early stage may turn out to be a good strategy, as this week's trading comes to a close.
USD/JPY
The USD/JPY pair is currently on a 3-day winning streak. Most technical data seems to be neutral, and showing no clear signals. However, the hourly chart's RSI and weekly chart's Stochastic Slow indicate that there is additional support that may push the pair up further in the short-term. Going long on this pair may turn out to be a wise choice today.
USD/CHF
The pair has experienced much volatility recently, as it currently trades around the 1.0920 level. The weekly chart's Stochastic Slow signals that the pair will drop in the short-term. However, this is contradicted by the daily chart's RSI and MACD. Entering this pair when the signals are clearer may turn out to be a wise choice in today's trading.
Wild Card
Crude Oil
The black gold is on a 4-day bullish run, as it looks to reach $75 a barrel. It seems that the pair may be approaching oversold territory. However, the daily chart's Bollinger Bands and the weekly chart's MACD support this upward trend to continue for the coming days. Going long with tight stops may turn out to be a wise strategy for forex traders today.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend |  |
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| Resistance | 1.4170 | 1.6540 | 97.10 | 1.1030 | 0.8105 | 0.8605 |
| 1.4130 | 1.6500 | 96.70 | 1.0990 | 0.8085 | 0.8585 | |
| 1.4090 | 1.6460 | 96.30 | 1.0950 | 0.8065 | 0.8565 | |
| Support | 1.4000 | 1.6390 | 95.50 | 1.0870 | 0.8025 | 0.8525 |
| 1.3960 | 1.6350 | 95.10 | 1.0830 | 0.8005 | 0.8505 | |
| 1.3920 | 1.6310 | 94.70 | 1.0790 | 0.7985 | 0.8485 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 2009-06-26 | EUR | German Prelim CPI | m/m | -0.1% | 0.1% |  | |
| German Prelim CPI This indicator is a preliminary measure for the change in the price of goods and services purchased by consumers across Germany. It is a relatively accurate gauge of national inflation. | |||||||
| 2009-06-26 | 04:30 | JPY | All Industries Activity | m/m | -1.8% | 2.3% | |
| All Industries Activity This report measures the change in the total amount of goods and services purchased by domestic businesses. | |||||||
| 2009-06-26 | 06:00 | EUR | German Import Prices | m/m | -0.8% | 0.3% |  |
| German Import Prices This is a report which measure the change in the price of goods purchased by importers. A higher than forecasted result tends to have a positive result on the EUR. | |||||||
| 2009-06-26 | 09:30 | CHF | KOF Economic Barometer | -1.86 | -1.77 | | |
| KOF Economic Barometer This is an index designed to predict the overall direction of the economy over the following 6 months. Also known as KOF Leading Indicators, or Konjunkturbarometer. | |||||||
| 2009-06-26 | 12:30 | USD | Core PCE Price Index | m/m | 0.3% | 0.1% | |
| Core PCE Price Index The Core Personal Consumption Expenditure's (PCE) Price Index is a measure of the inflation experienced by consumers when purchasing goods and services, except food and energy. | |||||||
| 2009-06-26 | 12:30 | USD | Personal Spending | m/m | -0.1% | 0.3% | |
| Personal Spending This is a report which measures the amount consumers spent on goods and services over the past month. | |||||||
| 2009-06-26 | 12:30 | USD | Personal Income | m/m | 0.5% | 0.3% | |
| Personal Income This report measures the income received by individuals. It is an accurate gauge of a country's gross earnings. | |||||||
| 2009-06-26 | 13:55 | USD | Revised UoM Consumer Sentiment | 69.0 | 69.2 | | |
| Revised UoM Consumer Sentiment The University of Michigan (UoM) releases this report which is a survey of consumer sentiment towards general business conditions and economic health. | |||||||
| 2009-06-26 | 13:55 | USD | Revised UoM Inflation Expectations | 3.1% | - | | |
| Revised UoM Inflation Expectations Measures the inflation of goods and services consumers are expecting over the next 12 months. | |||||||
