worse than expected Advance GDP figure sent the dollar tumbling to multi-week
lows against several of its main currency rivals on Friday. The EUR/USD closed
out the week at 1.3249, up close to 100 pips for the day. Against the JPY, the
greenback was down 115 pips to finish the day at 80.27. Turning to this week,
the US Non-Farm Payrolls figure should be closely watched when it is released
on Friday. In addition, Tuesday's US ISM Manufacturing PMI and Wednesday's ADP
Non-Farm Employment Change may lead to significant activity in the marketplace.
The dollar may extend its losses should any of the indicators come in below
USD - Dollar Volatility
Expected Ahead of Non-Farm Report
EUR - Euro Remains Low
Despite Smooth Italian Debt Auction
JPY - BOJ Monetary Easing
Does Little to Damage Yen Strength
Oil - Crude Oil Sees Gains amid Bearish US Dollar
Market Trends – 30 April 2012
USD - Dollar Volatility Expected Ahead of
disappointing US GDP figure resulted in heavy losses for the dollar to close
out last week's trading session. The news reinforced market sentiment that the
Federal Reserve may soon initiate a new round of quantitative easing to help
generate momentum for the US economic recovery. In addition to falling around
95 pips against the euro and well over 100 pips vs. the Japanese yen, the
dollar also took losses against the AUD and CHF. The AUD/USD shot up around 120
pips for the day to close out the week at 1.0470, while the USD/CHF dropped
close to 70 pips to close out Friday's session at 0.9065.
Turning to today, a lack of significant US news means that the dollar could
extend its current bearish trend ahead of potentially significant news later in
the week. That being said, traders will still want to pay attention to the US
Core PCE Price Index and Consumer Spending figures, both scheduled to be
released at 12:30 GMT. Should either of the indicators come in above
expectations, the dollar may see slight upward movement during afternoon
Later in the week, the dollar will have plenty of opportunities to recoup its
recent losses ahead of Friday's all-important US Non-Farm Payrolls figure.
Tuesday's ISM Manufacturing PMI, followed by Wednesday's ADO Non-Farm
Employment Change and Thursday's ISM Non-Manufacturing PMI are all considered
valid indicators of overall economic health. Positive data could lead to dollar
gains in the days ahead.
EUR - Euro Remains Low Despite Smooth
Italian Debt Auction
the euro saw fairly significant gains against the US dollar on Friday, the
common currency remained bearish vs. most of its other rivals despite a
positive Italian debt auction. The euro's downward movement was attributed to a
Spanish credit rating downgrade earlier in the week, which led to risk aversion
among investors. The EUR/JPY dropped around 110 pips during Friday's session to
close out the week at 106.35. Against the AUD, the euro dropped close to 80
pips to finish the day at 1.2648.
Turning to this week, while most investors will likely be focusing on US
employment data scheduled for Friday, euro-zone news is still forecasted to
generate market volatility. Specifically, traders will want to pay attention to
Thursday's European Central Bank (ECB) Press Conference. The press conference
follows the ECB's monthly interest rate announcement, also known as the Minimum
Bid Rate. While no changes are expected in euro-zone interest rates, the press
conference may offer clues as to the current state of the euro-zone economic
recovery and could lead to heavy trading in the marketplace.
JPY - BOJ Monetary Easing Does Little to
Damage Yen Strength
Bank of Japan's long expected new round of monetary easing resulted in
temporary losses for the yen in overnight trading on Friday. That being said,
the JPY bounced back throughout the European session as risk aversion led to
gains for safe-haven currencies. In addition to gains vs. the USD and euro, the
yen also moved up against currencies like the Australian dollar and Swiss
franc. The AUD/JPY dropped close to 90 pips in early morning trading, reaching
as low as 83.54 before staging an upward correction. The pair eventually closed
out the week at 84.04. Beginning in overnight trading, the CHF/JPY dropped
around 85 pips to close out the week at 88.51.
Turning to this week, traders will want to pay attention to a batch of data out
of the US and euro-zone. Both the US and euro-zone have seen negative
fundamental data in recent weeks that has led to doubt in the pace of their
respective economic recoveries. Should any of this week's news, including
Friday's closely watched US Non-Farm Payrolls, lead to further investor
pessimism, safe haven currencies like the yen could extend their recent gains.
Crude Oil - Crude Oil Sees Gains amid
Bearish US Dollar
oil saw moderate gains on Friday, as a bearish US dollar resulted in the
commodity becoming cheaper for international buyers. Overall, crude was up over
$1 a barrel for the day, peaking at $104.97, just below the psychologically
significant $105 resistance level. Crude ended up closing out the week at
Turning to this week, news out of the euro-zone is likely to lead to volatility
in the price of oil. Thursday's ECB Press Conference in particular is
forecasted to highlight the current state of the euro-zone economic recovery.
Any signs of further euro-zone debt troubles could cause crude oil to turn
bearish. That being said, should any US news this week, including Friday's all
important Non-Farm Payrolls figure, result in the dollar sinking lower against
the euro, crude oil could extend its bullish trend.
Williams Percent Rang e on the daily chart has crossed over into overbought
territory, indicating that downward movement could occur in the near future.
Additionally, a bearish cross has formed close to the 80 level on the same
chart's Slow Stochastic. Going short may be the wise choice for this pair,
ahead of a possible downward correction.
a sign that a downward correction could occur in the near future, the Relative
Strength Index has crossed into overbought territory. This theory is supported
by the weekly chart's Williams Percent Range, which is currently well above the
-20 level. Going short may be the wise choice for this pair.
daily chart's Williams Percent Range has crossed over into oversold territory,
indicating that this pair could see upward movement in the near future.
Additionally, the weekly chart's Slow Stochastic seems to be close to forming a
bullish cross. Traders will want to keep an eye on the Slow Stochastic. Should
the cross form, opening long positions may be the wise choice.
daily chart's Williams Percent Range has dropped into oversold territory
indicating that upward movement could occur in the near future. That being
said, most other long term technical indicators show this pair range trading.
Taking a wait and see approach may be the best choice for this pair.