Kotakasu Forex

Forex Trading Weekly Forecast 01.09.2012

2012-01-07T09:04:00.001Z

US Dollar Surges on Nonfarm Payrolls, Europe – Can it Rally Further?

Euro Selling Accelerates as Debt Crisis Fears Continue to Grow

British Pound to Remain Under Pressure with Myriad of Data Due

Australian Dollar at Risk to Head Down Under in the Week Ahead

DailyFX provides forex news on the economic reports and political events that influence the currency market.
07 January 2012 03:14 GMT

EUR Tumbles Ahead of Non-Farm Data

2012-01-07T09:03:00.001Z

The euro saw heavy bearish movement throughout the day yesterday despite positive US data which typically helps the currency. Euro-zone debt worries continue to send investors away from riskier assets. Whether today's US Non-Farm Payrolls can give the euro a boost to close out the week is still unknown.

Forex Market Trends

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3000	1.5670	77.80	0.9560	1.0365	0.8362
	1.2954	1.5598	77.61	0.9537	1.0274	0.8318
	1.2881	1.5516	77.37	0.9475	1.0236	0.8290
Support	1.2790	1.5495	77.20	0.9431	1.0155	0.8246
	1.2761	1.5436	76.84	0.9361	1.0081	0.8201
	1.2745	1.5363	76.60	0.9317	1.0012	0.8165

Economic News

USD - Positive US Jobs Report Turns USD Bullish

The US dollar had a very bullish day yesterday, following a better than expected ADP Non-Farm Payrolls figure and Unemployment Claims report. Gains were made against the euro, British pound and Japanese yen. The EUR/USD fell to an 11-month low, while the USD/JPY shot up past the 77.00 level.

The ADP figure came in at 325K, well above the forecasted 176K. The ADP report is known as an important predictor of today's Non-Farm Payrolls (NFP) figure. The NFP is widely considered the most important global economic indicator, and typically generates heavy market movements.

The NFP will measure the number of non-farm jobs added to US payrolls during the month of December. Analysts are predicting the number to come in at around 152K, which if true, would signal a sizeable increase over November's figure.

The effect the NFP has on the markets has proven to be difficult to predict. On the one hand, a positive number tends to benefit riskier currencies like the EUR, GBP and AUD. On the other hand, should the figure come in below expectations, investors may decide to shift their funds toward safe-haven assets like the USD and JPY. Traders will also want to remember that the NFP number is very difficult to predict and it is not unheard of for the end result to come in well above or below original forecasts.

EUR - Euro-Zone News Sends EUR Tumbling

The euro extended its bearish trend on Thursday, as the euro-zone debt crisis continues to drive investors away from the currency and toward safer assets like the US dollar and Japanese yen. The EUR/JPY hit a fresh 11-year low while the EUR/USD dropped to its lowest level since December 2010. The bearish movement came in despite positive US jobs data which typically benefit riskier assets like the euro.

Today, traders will want to focus on the all-important US Non-Farm Payrolls figure, set to be released at 13:30 GMT. While a positive figure is expected, traders should not count on it helping the euro close out the week on a positive note. Any further negative news out of the euro-zone will likely cause the euro to drop further, especially against currencies like the greenback and yen.

JPY - Yen Tumbles Against USD Following US Jobs Report

The Japanese yen saw a very mixed trading session on Thursday. Against the euro, the JPY hit an 11-year high, largely due to the on-going string of negative news regarding the euro-zone debt crisis. At the same time, positive US jobs data sent the USD/JPY soaring above the 77.00 level.

Today, the Non-Farm Payrolls figure is likely to cause heavy volatility among yen pairs. A positive figure may cause the JPY to slip against some of the riskier currencies like the aussie or British pound. Should today's news come in below expectations, traders can expect the safe-haven yen to receive a healthy boost against all of its main currency rivals.

Crude Oil - Crude Oil Sees Small Drop but Remains Bullish Overall

It appears that the price of crude oil peaked yesterday right around the $103.60 a barrel level before dipping in evening trading. That being said, the price of oil is still extremely high and analysts are forecasting the commodity to remain above the $100 level as long as tensions in the Middle East continue.

Today, traders can expect the current oil trend to continue following the recent EU embargo on Iranian crude oil. Furthermore, should the US Non-Farm Payrolls figure come in as predicted, crude oil is likely to see a boost along with other commodities to close out the week.

Technical News

EUR/USD

Technical indicators are showing that the pair may see an upward correction in the near future. The Williams Percent Range on the 8-hour chart has dropped into the oversold zone, while the RSI on the daily chart has dipped below the 30 level. Traders may want to go long in their positions.

GBP/USD

The 8-hour chart's William Percent Range recently dropped below the -80 level, indicating that possible upward movement could occur. That being said, other technical indicators are inconclusive at the moment. Traders may want to take a wait and see approach for this pair.

USD/JPY

Most technical indicators are showing this pair in the oversold region. The Stochastic Slow on the daily chart has formed a bullish cross while the Relative Strength Index is hovering around the oversold zone. Traders may want to go long in their positions.

USD/CHF

The daily chart's technical indicators are showing that this pair is in the overbought region and may see a bearish correction. The Williams Percent Range is currently above the -10 level, while the Relative Strength Index is at the 70 level. Traders may want to go short in their positions.

The Wild Card

GBP/CHF

The 8-hour chart's Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the daily chart is currently right around the -10 level. These are both signs that downward movement could occur in the near future. Forex traders may want to go short before the downward breach takes place.

Forex Trading Weekly Forecast 01.09.2012

2012-01-07T05:04:00.001Z

US Dollar Surges on Nonfarm Payrolls, Europe – Can it Rally Further?

Euro Selling Accelerates as Debt Crisis Fears Continue to Grow

British Pound to Remain Under Pressure with Myriad of Data Due

Australian Dollar at Risk to Head Down Under in the Week Ahead

DailyFX provides forex news on the economic reports and political events that influence the currency market.
07 January 2012 03:14 GMT

US Dollar Surges on Nonfarm Payrolls, Europe Can it Rally Further?

2012-01-07T01:04:00.001Z

US Dollar Surges on Nonfarm Payrolls, Europe – Can it Rally Further?

Fundamental Forecast for the US Dollar: Neutral

US Dollar rallies as Nonfarm Payrolls Show Economy adds 200k Jobs
Potential for S&P 500 Top could favor US Dollar strength
Clear risk of US Dollar pullback as sentiment grows extreme

The US Dollar (ticker: USDOLLAR ) surged against the Euro and other major counterparts, fueled by deterioration in Euro Zone tensions and unexpectedly strong US economic data. The domestic labor market unexpectedly added 200k jobs through the month of December, sending the unemployment rate to fresh multi-year lows and inspiring confidence in US growth. Momentum favors further Greenback strength, but extremely one-sided trader sentiment warns that any Euro/US Dollar corrections could be fierce in another week full of key event risk.

A relatively empty US economic calendar means that traders will focus on developments out of Europe, but traders should not ignore any fresh rhetoric from US Federal Reserve officials or late-week Advance Retail Sales data. The safe-haven US Dollar traded sharply higher on Friday despite a simultaneous rally in the negatively correlated S&P 500 and improvements in financial market risk sentiment. Why exactly?

We believe the US Dollar benefited from an important improvement in US Federal Reserve monetary policy expectations. The better-than-expected payrolls growth eases pressure on the Fed to enact further monetary policy accommodation. Such developments suggest the US Dollar could benefit from further improvements in labor market data and special focus remains on upcoming Fed rhetoric. The minutes from December’s Federal Open Market Committee (FOMC) meeting disappointed dollar bulls as the Fed struck a relatively dovish note on policy. Yet it will be important to watch how members react to December’s NFP data and its implications for employment trends.

US Dollar focus otherwise remains squarely on the Euro Zone and its many fiscal crises. It can’t be a coincidence that the EURUSD traded to fresh lows as the spread between Italian and German 10-year bond yields traded near fresh Euro era highs. CFTC Commitment of Traders data shows that speculators are their most net-short Euro against the US Dollar in history. Commercial traders are their most net-long, and it’s clear that positioning is dangerously one-sided. Yet what could happen to force an important EURUSD reversal?

It’s obvious that initial euphoria over previous European summits and fresh bailout plans was very short-lived, and traders need more than rhetoric to lift the Euro higher. At the heart of the issue is the lack of sustainability in sovereign debt loads. Very few are willing to buy Italian and Spanish bonds—especially as both countries have significant bond redemptions and funding needs in the first 3 months of the year. The uncertainty is driving the Euro sharply lower at the expense of the safe-haven US currency. As long as such flows continue, expect the EURUSD to hit fresh depths.

There are few important technical levels in the way of further Euro weakness, and indeed the next reaction low suggests the EURUSD could hit $1.2590 until a bounce. Of course, such incredibly one-sided sentiment warns that any short-covering rallies could be quite fierce. It will be critical to watch how the US Dollar trades into Sunday and through Monday’s close. Typically the first day of the trading week sets the pace for subsequent days, and high reversal risk puts special focus on early trading. – DR

DailyFX provides forex news on the economic reports and political events that influence the currency market.
06 January 2012 23:16 GMT

Risk On = Dollar Down, Right? So What Happened with NFPs?

2012-01-06T21:04:00.001Z

The greenback is firmer ahead of the close of North American trade with the Dow Jones FXCM Dollar Index ( Ticker: USDollar ) advancing 0.29% on the session. While today’s strong NFP print saw equities pare some of the early losses, the advance was short lived with stocks retreating once again in afternoon trade. Non-farm payrolls climbed by 200K, besting calls for a print of just 155K with the unemployment rate unexpectedly doping to 8.5% from 8.6%. While US data continues to improve, concerns regarding the deteriorating conditions in Europe have continued to weigh on broader market sentiment with European equities closing lower on the day. Various times throughout the week I’ve noted that we expect to see the inverse dollar/equity correlation breakdown this year with the dollar acting favorably to positive US data flow. Today we saw a hint of this decoupling as the dollar surged across the board on the stronger-than-expected employment data while equities moved higher. While the correlation still holds as of now, look for this to become more prominent later in the year as stronger US data decreases the likelihood of further quantitative easing and increases the likelihood the Fed will begin normalizing monetary policy.

The dollar breached the 10,000 level noted in yesterday’s report before encountering resistance at former trendline support, currently at 10,030. The index now eyes key resistance at the 76.4% Fibonacci extension taken from the August 1 st and October 27 th troughs at 10,070. While we expect a test of this level sometime this month, the greenback is likely to pare some of this week’s gains after three consecutive days of advances. The RSI reversal noted earlier this week has continued to support our bias with the oscillator crossing back above the 50-level as the slope steepens further.

A slight adjustment to our soft resistance targets show the index rebounding off the 10,030 mark just ahead of the European close. Interim support now rests at the 10,000 level, backed by soft support at 9980, the 61.8% Fibonacci extension at 9950, and 9912. A breach of topside resistance eyes subsequent ceilings at trendline resistance dating back to the December 14 th high and the 76.4 extension at 10,070. This level remains paramount for the dollar after failing four breach attempts late last year

The greenback advanced against three of the four component currencies highlighted by a 0.52% advance against the euro which reached its lowest levels since September 2010. As officials struggle to ease market jitters over the deepening debt crisis, investors have continued to turn on the single currency with the euro off by more than 1.8% in the first week of 2012. Longer-term prospects for the euro remain weighted to the downside noting that a pullback of some magnitude is likely before continuing lower. The top performer of the lot was the yen which continues to hold its ground as the low yielder continues to benefit from risk-off flows. The USD/JPY remains well supported at these levels with any advances in the yen likely to be tempered by ongoing intervention concerns.

Year to date the greenback has outperformed all the component currencies save the aussie which has gained 0.20% this week. Notwithstanding developments out of Europe, look for the dollar to pullback early next week before mounting an offensive that should see the index top the 10,070 key resistance level later this month.

--- Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex .

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
06 January 2012 19:06 GMT

U.S. Dollar Gains as Nonfarm Payrolls Show 200K Jobs Gain in December

2012-01-06T15:04:00.001Z

Fundamental Headlines

• Unemployment Falls to 8.5% as U.S. Adds 200K Jobs – Bloomberg

• EU Governments Consider Delay on Any Iran Oil Ban – Reuters

• Iran Plans More War Games in Strait as Sanctions Bite – Reuters

• ECB Steps in as Italian Yields Hit 7% - WSJ

• Euro-zone Fears Grow on New Data – WSJ

European Session Summary

Markets consolidated in the overnight after yesterday’s rally by the U.S. Dollar, though only after higher yielding currencies and risk-correlated assets dipped to fresh weekly lows. Indeed, ahead of the storied U.S. nonfarm payrolls data release, the official gauge of the American labor market, the Greenback looked prime to breakout higher given recent data.

If yesterday’s ADP employment report was supposed to serve as a harbinger for today’s NFP release, it set up market participants for disappointment. The 325K private sector jobs that were reported to have been added in December, as per yesterday’s release, was offset by the official 212K figure, per the Bureau of Labor Statistic’s report on Friday. Overall, the 200K jobs added in December beat the consensus forecast of 155K, according to a Bloomberg News survey. Likewise, the unemployment rate dropped from 8.7 percent to 8.5 percent.

Dow Jones FXCM Dollar Index 5-minute Chart: January 6, 2012

Charts created using Strategy Trader – Prepared by Christopher Vecchio

Certainly, the reaction by the credit, currency, and equity markets suggests that we are at the beginning of a new era of correlations. Typically, on better than expected data, which would encourage risk taking, the U.S. Dollar has sold off in favor of higher yielding assets. Today, however, after the tremendous print, the U.S. Dollar found itself stronger – a sign that the U.S. economy may be decoupling from the rest of the world.

However, I would argue that the case of decoupling is misguided; the U.S. is the world’s largest economy, and if China is facing problems at the same time the Euro-zone crisis worsens, then the U.S. will suffer immensely. Simply put, globalization has put the American economy in the crosshairs as other major economies sink into recession. Instead, I would suggest that the bullish reaction by the U.S. Dollar post-NFP release shows that market participants are pricing out the likelihood for more quantitative easing by the Federal Reserve.

As data out of the U.S. has improved over recent weeks and months, Federal Reserve policymakers have softened their tone for more easing, albeit in the face of pressure from the public. As per the Federal Open Market Committee’s December minutes, it appears that the FOMC will outline the specific criteria necessary for monetary policy. As the FOMC has become more transparent, another round of easing – quantitative easing round three – is looking increasingly unlikely.

24-Hour Price Action

Key Levels: 14:05 GMT

Thus far, on Friday, the Dow Jones FXCM Dollar Index is higher, trading at 9998.87, at the time this report was written, after opening at 9989.74. The index has traded mostly higher, with the high at 10017.52 and the low at 9973.56.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com .

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com .

DailyFX provides forex news on the economic reports and political events that influence the currency market.
06 January 2012 14:35 GMT

Crude Oil to Rise While Gold Declines on US Jobs Report

2012-01-06T11:04:00.001Z

Talking Points

Crude Oil to Rise with Stocks on Pickup in US Employment Growth
Gold May Retreat on Lull in Eurozone Debt Crisis News, US Jobs Data

WTI Crude Oil (NY Close): $101.81 // -1.41 // -1.37%

Crude oil prices remain firmly anchored to broad-based sentiment trends, hinting an upswing may be ahead as the spotlight turns to the US Employment report on tap in the afternoon. Expectations call for nonfarm payrolls to rise 155,000 in December, marking the largest jobs increase in three months. Absent an unexpected gloomy headline out of the Eurozone this seems likely to boost risk appetite into the week-end on hopes an accelerating recovery in the US will help offset the global economic slowdown expected this year. Short-term decoupling from risk trends is not out of the question however as geopolitical risk creeps back into the picture after Iran threatened to hold military in the Strait of Hormuz in the coming weeks, threatening to disrupt a major shipping lane carrying close to 40 percent of the global seaborne crude supply.

On the technical front, prices moved lower as expected having put in a bearish Hanging Man candlestick below resistance at 103.35 , the November 17 high. Near-term support remains at 101.28 , with a break below that exposing the 100.00 figure and 97.89 . Alternatively, a reversal higher through immediate resistance clears the way for a push to 106.05.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1 622 . 72 // + 11 . 13 // + 0 . 69 %

Gold ETF holdings hit a two-month low yesterday – pointing to eroding investment interest in the yellow metal – and a relatively stronger US jobs report may stoke liquidation pressure as firming economic growth trims QE3 bets and weighs on demand for a hedge against runaway inflation. A lull in Eurozone debt crisis news-flow likewise bodes ill for gold prices, denting safe-haven inflows. Continued saber-rattling in Iran may be a mitigating however, capping the downside over the near term.

Sizing up the chart setup, prices are testing resistance at 1629.57, the 38.2% Fibonacci retracement level, with a break higher exposing the 50% barrier at 1662.65. Near-term support lines up at 1575.64 at long-term rising trend line based from October 2008.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $2 9 . 36 // +0 . 18 // +0 . 61 %

Silver prices are being pulled in opposing forces as the US jobs report approaches. On one hand, a pickup in employment growth is likely to weigh on QE3 expectations and pressure silver lower amid waning demand for store-of-value alternatives to fiat currency. On the other, firming risk appetite likely in the wake of the data release will probably put pressure on the safe-haven US Dollar, offering silver a de-facto boost given the metal’s prices are denominated in terms of the benchmark unit. The dominant range is defined between support at 28.41 and resistance at 29.79.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
06 January 2012 09:55 GMT

FOREX: Dollar May Retreat as US Jobs Growth Stokes Risk Appetite

2012-01-06T09:04:00.001Z

Talking Points

US Dollar May Pull Back as Jobs Report Stokes Risk Appetite
German Orders Data May Show Weaker Euro Helping Exports
Swiss Deflation to Deepen But Near-Term Intervention Unlikely
Australian Dollar Underperforms Amid Risk Aversion Overnight

The US Dollar (ticker: USDollar ) continued to push higher overnight as Eurozone debt crisis fears weighed on Asian stock exchanges fell, stocking demand for the go-to safe haven currency. The MSCI Asia Pacific regional benchmark equity index lost 1.3 percent while the greenback gained as much as 0.2 percent having posted its strongest daily advance in nearly a month yesterday. The sentiment-linked Australian Dollar bore the brunt of the selloff – down as much as 0.6 percent against its US namesake.

Looking ahead, a lull in Eurozone debt crisis news shifts the spotlight to the outlook for global economic growth and the US Employment report. Expectations call for nonfarm payrolls to rise 155,000 in December, marking the largest jobs increase in three months. Absent an unexpected gloomy headline out of the currency bloc – such as the downgrade of a major European country like France, for example – this seems likely to boost risk appetite on hopes an accelerating recovery in the US will help offset the global economic slowdown expected this year. Such an outcome bodes ill for the safe-haven US Dollar against the stocks-correlated majors into the week-end, meaning the commodity bloc currency is likely to outperform while the Euro and the British Pound trail behind.

On the data front, German Factory Orders headline the docket in European hours. Expectations call for orders to fall 1.2 percent in the year through November, marketing the first negative reading in 25 months. The foreign demand component of the report ought to most interesting as traders gauge whether Euro weakness is helping to grow external demand, partially mitigating homegrown headwinds facing the Eurozone’s largest economy and the currency bloc at large.

Euro Zone Retail Sales are also on tap, with consensus forecasts pointing to the seventh consecutive month of contraction on the yearly reading. On balance, neither outcome offers anything particularly actionable in the immediate term and ought to pass with relatively little fanfare as the US jobs report looms ahead. Swiss Consumer Price Index numbers round out the docket, but deepening deflation seems unlikely to meaningfully boost Franc intervention expectations at least in the near term while SNB Chairman Philipp Hildebrand battles impropriety accusations amid reports his wife bought Dollars just three weeks before the central bank announced its EURCHF floor at 1.20, sending USDCHF soaring in the process.

Asia Session : What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
		No Data

E uro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
8:00	CHF	Foreign Currency Reserves (CHF) (DEC)	-	229.3B	Medium
8:15	CHF	Consumer Price Index (MoM) (DEC)	-0.1%	-0.2%	Medium
8:15	CHF	Consumer Price Index (YoY) (DEC)	-0.6%	-0.5%	Medium
8:15	CHF	CPI - EU Harmonised (MoM) (DEC)	-	-0.4%	Low
8:15	CHF	CPI - EU Harmonised (YoY) (DEC)	-	-0.8%	Low
10:00	EUR	Euro-Zone Business Climate Indicator (DEC)	-0.48	-0.44	Low
10:00	EUR	Euro-Zone Consumer Confidence (DEC F)	-21.2	-21.2	Medium
10:00	EUR	Euro-Zone Economic Confidence (DEC)	93.3	93.7	Low
10:00	EUR	Euro-Zone Industrial Confidence (DEC)	-7.5	-7.3	Low
10:00	EUR	Euro-Zone Services Confidence (DEC)	-2.1	-1.7	Low
10:00	EUR	Euro-Zone Retail Sales (MoM) (NOV)	-0.4%	0.4%	Medium
10:00	EUR	Euro-Zone Retail Sales (YoY) (NOV)	-0.9%	-0.4%	Medium
10:00	EUR	Euro-Zone Unemployment Rate (NOV)	10.3%	10.3%	Medium
11:00	EUR	German Factory Orders s.a. (MoM) (NOV)	-1.8%	5.2%	Medium
11:00	EUR	German Factory Orders n.s.a. (YoY) (NOV)	-1.2%	5.4%	Medium

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2660	1.2900
GBPUSD	1.5433	1.5594

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
06 January 2012 07:55 GMT

EUR Tumbles Ahead of Non-Farm Data

2012-01-06T09:03:00.001Z

Forex Market Trends

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3000	1.5670	77.80	0.9560	1.0365	0.8362
	1.2954	1.5598	77.61	0.9537	1.0274	0.8318
	1.2881	1.5516	77.37	0.9475	1.0236	0.8290
Support	1.2790	1.5495	77.20	0.9431	1.0155	0.8246
	1.2761	1.5436	76.84	0.9361	1.0081	0.8201
	1.2745	1.5363	76.60	0.9317	1.0012	0.8165

Economic News

USD - Positive US Jobs Report Turns USD Bullish

EUR - Euro-Zone News Sends EUR Tumbling

JPY - Yen Tumbles Against USD Following US Jobs Report

Crude Oil - Crude Oil Sees Small Drop but Remains Bullish Overall

Technical News

EUR/USD

GBP/USD

USD/JPY

USD/CHF

The Wild Card

GBP/CHF

Euro Could See Acceleration Towards 1.2500 Over Coming Sessions

2012-01-06T07:04:00.001Z

Risk correlated markets remain under pressure into Friday trade
Rumors and additional uncertainties in the Eurozone have been influencing
Comments by Greek PM do not help matters
Euro could accelerate towards 1.2500 support
Key economic release due later in the form of US NFPs

The Euro and risk correlated assets remain under pressure heading into Friday and at this point, there appears to be no sign of any relief for these markets. Rumors of an S&P France downgrade and an incident at a North Korean nuclear facility have not helped matters, and this weighs on an already stressed situation on the global macro front, with the Eurozone economy looking increasingly fragile. The latest suggestion by Greece’s PM that the country may default in March and the leave the Eurozone has been a primary driver of Euro selling over the past few hours and disappointing EZ auction results coupled with talk of recapitalizations have added to the high degree of uncertainty in the region.

At this point, next key support for the Euro comes in by the 1.2500 area, and we could see a test of this level sooner than even we had anticipated. We are also starting to see a potential breakdown in familiar correlations where USD performance had been inversely correlated with US economic data results. Economic data has been quite solid out of the US in recent trade and the stronger results have actually been inspiring fresh USD bids. As such, we continue to be very bullish on our outlook for the US Dollar across the board, and recommend looking to fade other major currencies against the buck over the coming months. Some of these currencies include the commodity bloc currencies, highlighted by the Australian, New Zealand and Canadian Dollars.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD : After finally taking out the 2011 lows from January by 1.2870, the market seems poised for the next major downside extension. Overall, we retain a strong bearish outlook for this market and look for setbacks to extend towards the 1.2000 handle over the coming months. While we would not rule out the potential for corrective rallies, any rallies should be very well capped ahead of 1.3200. Thursday’s daily close below 1.2850 could however accelerate declines towards 1.2500.

USD/JPY: Despite the latest pullbacks, we continue to hold onto our constructive outlook while the market holds above 76.55 on a daily close basis. We believe that any setbacks from here should be limited in favor of a fresh upside extension back towards 79.55 over the coming weeks. Look for a break above 78.30 to confirm and accelerate, while only a daily close below 76.55 negates and gives reason for pause.

GBP/USD: Rallies have been very well capped ahead of 1.5800 and it looks as though a lower top has now been carved out by 1.5780 ahead of the next major downside extension back towards the October lows at 1.5270. Key support comes in by 1.5360 and a daily close below this level will be required to confirm bias and accelerate declines. Ultimately, only back above 1.5780 would negate bearish outlook and give reason for pause.

USD/CHF: The recent break above the critical October highs at 0.9315 is significant and now opens the door for the next major upside extension over the coming weeks back towards parity. A confirmed higher low is now in place by 0.9065 following the recent break over 0.9330, and next key resistance comes in by 0.9785. Ultimately, only back under 0.9065 would delay constructive outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com . Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Click here for an introduction to currency overlay and hedging strategies.

DailyFX provides forex news on the economic reports and political events that influence the currency market.
06 January 2012 06:33 GMT

US Dollar Index Eyes 10,000 Will NFPs Tip the Scales?

2012-01-05T23:04:00.001Z

The greenback is markedly higher at the close of North American trade with the Dow Jones FXCM Dollar Index ( Ticker: USDollar ) advancing 0.92% on the session. The gains come on the back of another lackluster performance in US equities which spent much of the session struggling to pare early losses carried over from a more substantial sell-off in European markets. Helping support stocks was a much stronger than expected print on the ADP employment report which showed the US created 325K jobs in December. The data nearly doubled consensus estimates which had called for a print of just 178K. By the close of trade, the S&P and the NASDAQ were higher by 0.29% and 0.81% respectively, while the Dow was slightly weaker, off by just 0.02% on the session.

The dollar pulled further away from the key Fibonacci support level we have continued to cite since the start of the year at 9850. The index breached the 61.8% Fibonacci extension taken from the August 1 st and October 27 th troughs at 9950 before losing steam just ahead of the psychological 10,000 level. The RSI reversal noted yesterday has continued to support our bias with the oscillator crossing back above the 50-level as the slope steepens further.

An hourly chart shows the index struggling to test the 10,000 level just ahead of the close in New York. A breach here eyes subsequent resistance targets at 10,040 and the 76.4% Fibonacci extension at 10,070. The level has continued to provide strong resistance for the reserve currency with the index failing four breach attempts late last year. Interim support now rests at the 61.8% extension at 9950 backed by 9912 and the 50% extension at 9850.

The greenback advanced against all four component currencies highlighted by a 1.16% advance against the euro which moved nearly 147% of its daily average true range. Reports out of Europe continue to suggest that the Germans remain steadfast in the opposition to the expansion of the bail-out fund with yields on French debt continuing to rise despite decent demand at a bond auction earlier today. The euro fell to its lowest levels since September 2010 as ongoing concerns about the deepening debt crisis weighed on demand for the single currency. It comes as no surprise that the Japanese yen once again is the top performer of the lot although dollar advances continue to outpace those of the low yielder. The yen did appreciate against all its other major counter parts as it continues to benefit from haven demand during risk-off environments. Having said that, advances against the greenback will remain tempered on concerns over further currency intervention form Japanese officials.

Tomorrow’s economic calendar carries significant event risk with the non-farm payroll report and the unemployment rate highlighting the docket. Consensus estimates call for the creation of 150K jobs for the month of December while the unemployment rate is expected to up-tick to 8.7%. Today’s blowout ADP print may have set higher expectations for tomorrow’s data although in the past we have seen the report act as a poor indicator for the more encompassing NFP print. Despite the expected rise in the unemployment rate, tomorrow’s data should reinforce recent reports suggesting that the economy is indeed on proper footing. We continue to see a slight decoupling in the dollar / equities correlation which should become more pronounced later this year. Look for the dollar to take cues from the release with a move back into risk-assets likely to halt the dollar’s advance for now.

Upcoming Events

Date	GMT	Importance	Release	Expected	Prior
1/6	13:30	HIGH	Change in Non-Farm Payrolls (DEC)	150K	120K
1/6	13:30	HIGH	Unemployment Rate (DEC)	8.7%	8.6%
1/6	13:30	MDEIUM	Change in Manufacturing Payrolls (DEC)	6K	2K
1/6	13:30	MEDIUM	Average Hourly Earnings (MoM) (DEC)	0.2%	-0.1%
1/6	13:30	MEDIUM	Average Hourly Earnings (YoY) (DEC)	2.1%	1.8%
1/6	13:30	MEDIUM	Underemployment Rate (U6) (DEC)	-	15.6%
1/6	13:30	LOW	Average Weekly Hours (DEC)	34.3	34.3
1/6	13:30	LOW	Change in Household Survey (DEC)	-	278

--- Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex .

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 22:01 GMT

Fresh Scalps for 2012 Short Australian Dollar

2012-01-05T21:04:00.001Z

The start of the week saw risk assets outperform as US data continues to top estimates with stocks and higher yielding assets advancing across the board. The situation in Europe has continued to deteriorate however with remarks made by senior officials suggesting that the Germans remain steadfast in their opposition to expanding the European bail-out fund. While the euro trade remains increasingly crowded, we will attempt to focus on the highest yielding currency among the majors as gauge of broader markets sentiment. Although there are numerous scalps we are currently watching, the Australian dollar remains our setup of choice as we look for the aussie to pare the 1.75% advance seen in the first three trading sessions of 2012.

AUD/USD Scalp Setup

The AUD/USD has continued to trade within the confines of a descending channel formation dating back to November third when the aussie peaked at near two month highs around 1.0385. Note that the relative strength index continues to hold below RSI trendline resistance with a breach above likely to put our setup on hold for some time. Support profit targets are eyed at 1.0240 backed by 1.0215, the 38.2% Fibonacci extension taken from the December 8 th and November 3 rd crests at 1.0188, and 1.0165. A break below our bottom limit at 1.0129 risks substantial losses for the aussie with subsequent targets held at the 50% extension at 1.0129, the 1.01-figure, and the 61.8% extension at 1.0065.

Interim resistance stands at the 23.6% extension at 1.0263 with subsequent ceilings eyed higher at the 1.03-handle, and 1.0335. A breach here negates our short-term bias with such a scenario eyeing resistance targets at the 2012 high at 1.0385 and 1.0425. An hourly average true range of 27.39 yields profit targets of 21-24 pips depending on entry. Should ATR pull back dramatically, adjust profit targets as needed to ensure more feasible scalps.

*Note that since this article was written the aussie has breached our initial topside resistance target. That said, the scalp will not be active until a break back below the 23.6% ext at 1.0263 or a rebound off the 1.03-figure or subsequent resistance level with RSI conviction. We will remain flexible with our bias with a move passed our topside limit at 1.0335 eyeing subsequent topside targets.

Key Thresholds

Entry/Exit Targets	Timeframe	Level	Significance
Resistance 1 Target	30min	1.0263	23.6% Fibonacci Ext
Resistance 2 Target	30min	1.0300	Basic Resistance
Topside Limit	30min	1.0335	Soft Resistance
Topside Limit Break-Target	30min	1.0385	2012 High / Resistance
Topside Limit Extended Break- Target	30min	1.0425	Soft Resistance

Support 1 Target	30min	1.0240	Soft Support
Support 2 Target	30min	1.0215	Basic Support
Support 3 Target	30min	1.0188	38.2% Fibonacci Ext
Support 4 Target	30min	1.0165	Soft Support
Bottom Limit	30min	1.0129	50% Fibonacci Ext
Bottom Limit Break-Target	30min	1.0100	Soft Support
Bottom Limit Extended Break- Target	30min	1.0065	61.8% Fibonacci Ext

Average True Range	1hour	27.39	Profit Targets 21-24 pips

With no data on tap for Australia for the remainder of the week we highlight the much anticipated non-farm payroll report on tap for tomorrow. Consensus estimates call for a print of 155K for the month of December, up from a previous gain of 120K. With today’s ADP employment report crushing estimates with a print of 325K, expectations for a strong NFP report continue to take root. As I mentioned in previous reports this week, we look for the greenback to decouple from its negative correlation with equity markets later this year. As it stands however, a strong print tomorrow could fuel a rally in risk with such a scenario likely to see the aussie move against our bias.

--- Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex for updates on this scalp and other trades .

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DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 19:02 GMT

Guest Commentary: Gold & Silver Daily Outlook 01.05.2012

2012-01-05T17:04:00.001Z

Following the sharp gains recorded on the first business day of 2012 for both gold and silver, gold continued to rise while silver changed direction and moderately declined. The Euro also depreciated against the US dollar. France plans to sell today as much as €8 billion worth of debt. If this debt sale won't go well, it could also have an adverse effect of the Euro. Today, the Euro Area Industrial New Orders report will be published, ADP's estimate of U.S. non-farm employment, U.S. ISM Non-Manufacturing PMI and U.S. Unemployment Claims report.

Gold rose on Wednesday by 0.76% to $1,612.7 ; silver on the other hand declined by 1.61% to reach $29.10. In the chart below are the normalized gold and silver during recent weeks (normalized gold and silver to December 14 th 2011). During January gold increased by 2.9% and silver by 4.2%.

St. Deviation Gold and Silver

Despite the sharp changes in gold and silver throughout recent weeks, their daily percent changes' standard deviations didn't increase compared with their standard deviations in previous months and are well below the high standard deviations recorded back in September when gold and silver sharply declined.

Euro Area Inflation Declined to 2.8% December

According to the recent Eurostat report the Euro Area inflation rate slightly slipped by 0.2 percent points to reach an annual inflation rate of 3% in December 2011.

This decline comes despite the recent cuts in the ECB's interest rates . The Euro is currently traded down. The Employment in the EU is also down by 0.1% during the third quarter of 2011. These reports may have been among the factors to adversely affect the Euro yesterday, as these reports suggest that the economic progress of the EU is slowing down, and thus this news may have curbed the recent rally of bullion prices.

On Today's Agenda

U.S. Unemployment Claims: initial claims rose by 15,000 to 381,000 claims for the week ending on December 24 th ; the number of insured unemployment inclined by 34k to 3.601 million during the week of December 17 th ;

U.S. ISM Non-Manufacturing PMI: This report will show the development of non-manufacturing sector during December 2011. During November this index slightly fell to 52%; this index might affect forex and commodities traders ( see here last report ).

Forex / Gold & Silver– January

The Euro/USD changed direction and sharp decreased by 0.82% to reach 1.2944; other currencies such as CAD also depreciated against the USD. If major currencies will continue to depreciate against the USD, it may also pressure down gold and silver.

Gold and Silver Outlook

Gold continued to trade up in January and even though silver declined yesterday, it is still well above its initial price level. I speculate that if the "risk currencies" including the AUD and Euro will start to depreciate against the US dollar, it may pull down gold and silver. Furthermore, if the upcoming U.S. reports will show an improvement it might help appreciating the US dollar and consequently pressuring down precious metals. Finally if the upcoming French debt sales won't go well, it could have a negative effect on the Euro, which in turn may also pressure down gold and silver.

For further reading:

Gold and Silver Prices Outlook for January 2012

Weekly Outlook for 2-6 January

Get the recent gold and silver outlook report for free! Just sign up to the Trading NRG newsletter.

By: Lior Cohen, Energy Analyst for Trading NRG

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DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 15:23 GMT

Euro Falls Below 1.2800 For First Time Since September 2010

2012-01-05T15:04:00.001Z

Fundamental Headlines

• Cordray’s Ascent Widens Consumer Bureau’s Reach – Bloomberg

• ECB Cash Averts ‘Funding Crisis’ for Italy, Spain – Bloomberg

• Private Hiring Surges, Jobless Claims Dip – Reuters

• EFSF Bond in Demand – WSJ

• France Clears Bond Auction – WSJ

European Session Summary

Higher yielding currencies and risk-correlated assets took a step backwards in the overnight, with the bulk of the significant price action occurring once European markets began to open. While higher yielding currencies, such as the Australian and New Zealand Dollars, slid modestly throughout Asia, the sell-off was ignited after commentary out of Berlin. Indeed, the policy stance that German lawmakers have taken – that of not increasing the Euro-zone’s bailout fund – easily overshadowed the promising French bond auction results.

As so often it has been overlooked in this entire Euro-zone sovereign debt crisis, domestic politics might easily be the biggest hurdle facing the Euro-zone in the coming weeks. Culture and history have often not mixed in Europe, and parliamentarians in the core Euro-zone countries, as well as those in the periphery not facing a debt crisis, have indicated their intentions to reduce further spending measures. In line with this division between inner and outer, this means that any further bailout funds for Europe will need to come from an external source – one that has yet to materialize.

With the German leadership bloc now signaling its reluctance to provide any further fuel to the bailout fund, it is likely that some of the smaller, more fiscally conservative countries will follow suit. Given the political pressure in the common market, it’s of little surprise that the EUR/USD fell below the 1.2800 exchange rate ahead of trading in New York. This is the first time since September 2010 that the Euro has traded this low against its American counterpart.

EUR/USD 5-minute Chart: January 5, 2012

Charts created using Strategy Trader – Prepared by Christopher Vecchio

Overall, the flight to safety was in full swing, with the U.S. Dollar leading the majors just over halfway through trading on Thursday. Likewise, the Japanese Yen was among the top performers. The Euro lagged the majors as it fell through key levels, while the other European currencies, the British Pound and the Swiss Franc, followed suit, settling just as low, if not lower, than the commodity currencies.

24-Hour Price Action

Key Levels: 14:13 GMT

Thus far, on Thursday, the Dow Jones FXCM Dollar Index is higher, trading at 9970.83, at the time this report was written, after opening at 9896.35. The index has traded only higher, with the high at 9980.22 and the low at 9896.35.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com .

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com .

DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 14:35 GMT

Crude Oil Set to Follow S&P 500 Lower, Gold Outlook Turns Clouded

2012-01-05T11:04:00.001Z

Talking Points

Crude Oil Set to Fall on Risk Aversion, French Bond Sale in Focus
Gold Shows Early Signs of Reclaiming Its Safe-Haven Credentials

WTI Crude Oil (NY Close): $10 3 . 22 // + 0 . 26 // + 0 . 25 %

Crude oil prices appear firmly anchored to broad-based sentiment trends with the correlation between the WTI contract and the S&P 500 – a proxy for overall risk appetite – now at the strongest in over two months (on 20-day percent change studies). This suggests the path of least resistance favors weakness as futures tracking the equity benchmark slide over 0.5 percent in European trade.

Markets are turning jittery in anticipation of a French bond auction amid returning Eurozone debt crisis fears. Paris will sell €8 billion in 2021-2041 paper, with the outcome particularly interesting given rating agencies’ threats to downgrade the country’s AAA credit score (which would consequently compromise the AAA score assigned to the EFSF bailout fund) over recent months.

On the economic data front, all eyes are on the US ADP Employment reading as traders prepare for Friday’s all-important official jobs report . Expectations call for an increase of 178,000 in December compared with 206,000 recorded in the preceding month, alluding to a slowdown in hiring. The non-manufacturing component of the ISM survey may be a mitigating factor however , with forecasts suggesting service sector growth accelerated for the first in four months. Weekly inventory figures are also on tap.

On the technical front, prices put in a bearish Hanging Man candlestick below resistance at 103.35 , the November 17 high, warning a double top may be in the works. Near-term support lines up at 101.28. Alternatively, a break higher exposes 106.05.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1 611 . 60 // + 8 . 10 // + 0 . 51 %

Gold prices are inching higher in Europe even as the US Dollar soars amid risk aversion, suggesting the yellow may be reclaiming a degree of its safe-haven credentials. Indeed, the positive correlation between gold and the S&P 500 peaked in early December and has gradually eased since then (though it remains significant at 0.61 on 20-day percent change studies).

At this time of transition, a clear short-term fundamental driver is tough to identify and the outlook is somewhat clouded. With that in mind, the overall bias for the coming months appears bearish as unwinding QE3 expectations weigh on demand for the metal as an inflation hedge.

Sizing up the chart setup, prices are testing support-turned-resistance at the bottom of a falling channel set from early November, with a break above this boundary exposing 1677.05. However, a candle in Star position hints a reversal lower may be brewing, although confirmation is absent for now. Near-term support lines up at 1574.72.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $2 9 . 18 // -0 . 49 // -1 . 66 %

Correlation studies suggest silver is more sensitive to risk trends than its more expensive counterpart. Furthermore, a significant inverse relationship between the gold/silver ratio and the S&P 500 suggests the cheaper metal is likely to underperform amid risk aversion. Prices are pulling back from resistance at 29.79 eyeing initial support at 28.41. A break below this barrier exposes the September 26 low at 26.05.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

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DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 09:51 GMT

FOREX: Euro Debt Crisis Fears Grow Anew, French Bond Sale in Focus

2012-01-05T09:04:00.001Z

Talking Points

US Dollar Gains as Asian Stocks Decline, Stocking Safe Haven Demand
Australian Trade Balance, Services PMI Data Point to Slowing Growth
French Bond Auction in Focus as Eurozone Debt Crisis Fears Resurface
S&P 500 Index Futures Favor Risk Aversion, ADP Jobs Report on Tap

The US Dollar (ticker: USDollar ) pushed higher against its leading counterparts in overnight trade as Asian stock exchanges fell, stocking demand for the go-to safe haven currency. The sentiment-linked Australian Dollar bore the brunt of the selloff – down as much as percent against its US namesake – after the AiG Performance of Service Index printed below the 50 “boom-bust” level, showing the non-manufacturing sector contracted for a third consecutive month, while the Trade Balance surplus narrowed to the smallest in 9 months as exports to China slumped 15.8 percent. The East Asian giant is Australia’s largest trading partner.

Looking ahead, a quiet economic calendar keeps the focus on Eurozone debt crisis issues, with the spotlight turning to a French bond auction . The currency bloc’s second-largest economy is set to sell 2021-2041 paper, with traders keeping a close eye on average yield levels and bid-to-cover readings – a measure of demand – to get a sense of sovereign solvency fears in the region as Eurozone countries face the need to refinance a whopping €157 billion in maturing debt just in the first three months 2012 .

The 3-month Euribor-OIS spread, a measure of liquidity risk, rose for the first time in a week yesterday while the ECB reported that banks parked a record €453 billion in its deposit facility yesterday. This means banks remain jittery and reluctant to funnel any of the nearly €500 billion they borrowed via the central bank’s 3-year LTRO into the real economy. On balance, this points to renewed deterioration in credit markets and may produce a disappointing outcome at the debt sale, weighing on the Euro .

On the sentiment front, S&P 500 stock index futures are trading meaningfully lower in late Asian hours, hinting at the return of risk aversion that offers a lifeline to US Dollar at the expense of stocks-correlated currencies . The US ADP Employment gauge will enter into the picture in the afternoon and may stoke volatility as traders position for Friday’s all-important official jobs report . Expectations call for an increase of 178,000 in December compared with 206,000 recorded in the preceding month, alluding to a slowdown in hiring. Interestingly, forecasts for official overall nonfarm and private-sector payrolls paint the opposite picture, showing hiring will accelerate.

Asia Session : What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	AUD	AiG Performance of Service Index (DEC)	49.0	-	47.7
23:50	JPY	Monetary Base (YoY) (DEC)	13.5%	-	19.5%
0:30	AUD	Trade Balance (A$) (NOV)	1380M	1650M	1418M
2:30	CNY	China HSBC Services PMI (DEC)	52.5	-	52.5
5:00	JPY	Vehicle Sales (YoY) (DEC)	23.5%	-	24.1%

E uro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
7:00	EUR	German Retail Sales (MoM) (NOV)	0.2%	0.7%	Low
7:00	EUR	German Retail Sales (YoY) (NOV)	0.7%	-0.4%	Low
7:45	EUR	French Consumer Confidence Indicator (DEC)	80	79	Low
9:00	EUR	Italian Unemployment Rate s.a. (3Q)	8.1%	8.0%	Low
9:00	EUR	Italian Unemployment Rate s.a. (NOV P)	8.5%	8.5%	Low
9:30	GBP	Purchasing Manager Index Services (DEC)	51.5	52.1	Medium
9:30	GBP	Official Reserves (Changes) (DEC)	-	-$249M	Low
10:00	EUR	Euro-Zone Industrial New Orders (YoY) (OCT)	3.3%	1.6%	Low
10:00	EUR	Euro-Zone Industrial New Orders (MoM) (OCT)	2.5%	-6.4%	Low
10:00	EUR	Euro-Zone Producer Price Index (MoM) (NOV)	0.1%	0.1%	Low
10:00	EUR	Euro-Zone Producer Price Index (YoY) (NOV)	5.2%	5.5%	Low
10:00	EUR	France to Sell 2021-2041 Bonds	-	-	High

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2796	1.3045
GBPUSD	1.5534	1.5666

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

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DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 07:37 GMT

Risk Correlated Assets At Risk for Fresh Bout of Liquidation

2012-01-05T07:04:00.001Z

Spain looking to recapitalize; Greece working to secure bailout money
Rumors of additional ECB rate cuts making the rounds
EUR/AUD cross finally breaks to fresh record lows
Aussie data comes in weaker than expected
France bond auction results to be digested by markets

Ongoing concerns over the health of the Eurozone and its impact on the broader global macro economy continue to dominate trade. The latest talk of Spain looking to recapitalize its banking sector and Greece working hard to secure bailout funds, has not inspired any confidence and we are once again seeing a continuation of risk correlated liquidation, led by Euro declines. The key level to watch below in EUR/USD comes in at 1.2860 and a daily close below will open a fresh downside acceleration exposing 1.2500 further down. Rumors of additional rate cuts have also been making the rounds and this could put additional pressure on the beleaguered Euro currency.

Still, we see a point at which the crisis intensifies to the east and puts even more pressure on China, it correlated economies and emerging markets. One such correlated economy is Australia, and with the EUR/AUD cross rate trading over 85 big figures off its 2008 peak, we anticipate relative weakness in the Australian Dollar going forward, even against the Euro. Just as we saw the crisis spread from the US to the Eurozone and the USD start to find relative bids, so too here, we see the crisis spreading to Australia and the Euro finding relative bids. The EUR/AUD cross rate has now traded to fresh +20-year/record lows, and technically, charts are screaming for a much needed healthy corrective bounce at a minimum. Australian data overnight has not been encouraging and perhaps this could provide the initial spark for some form of a bounce in the cross rate.

Looking ahead, German retail sales, Eurozone inflation and UK services PMIs are due for release in the European session, but France’s sale of 10-year and 30-year bonds will likely garner a majority of the attention. Also worth noting is the potential for downgrades from the rating agencies on European countries after S&P hinted at such developments in late 2011. Global equity markets have been rather supported in recent trade, but are starting to show signs of renewed weakness.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD : After finally taking out the 2011 lows from January by 1.2870, the market seems poised for the next major downside extension. Overall, we retain a strong bearish outlook for this market and look for setbacks to extend towards the 1.2000 handle over the coming months. While we would not rule out the potential for corrective rallies, any rallies should be very well capped above 1.3500. Meanwhile, a daily close below 1.2850 will accelerate declines.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com . Follow me on Twitter @JoelKruger

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Click here for an introduction to currency overlay and hedging strategies.

DailyFX provides forex news on the economic reports and political events that influence the currency market.
05 January 2012 06:29 GMT

EUR Corrects Itself Following German Debt Auction

2012-01-05T07:03:00.001Z

The euro staged a downward reversal yesterday, following a German debt auction that caused investors to once again place their funds in safe-haven assets. Today, traders will want to pay attention as major market volatility is expected following news events from the UK, US and Canada.

Forex Market Trends

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3074	1.5669	77.97	0.9470	1.0381	0.8419
	1.3023	1.5590	77.65	0.9428	1.0267	0.8382
	1.2966	1.5555	77.45	0.9384	1.0195	0.8359
Support	1.2911	1.5484	77.13	0.9333	1.0137	0.8323
	1.2859	1.5440	76.73	0.9300	1.0079	0.8282
	1.2840	1.5370	76.61	0.9248	1.0007	0.8264

Economic News

USD - USD Rebounds Following Return to Safe-Haven Assets

The US dollar had a very bullish day yesterday, following a less than enthusiastic German debt auction which sent investors back toward safe-haven assets like the USD and CHF. The dollar saw upward movement against many of its main currency rivals, particularly the euro and UK pound. The EUR/USD tumbled well below the psychologically significant 1.3000 level, while the GBP/USD fell under 1.5600 before staging a slight correction.

Turning to today, US and euro-zone news are forecasted to generate major volatility, so traders should be prepared for heavy market movement. Most notably, the ADP Non-Farm Employment Change is likely to influence USD pairs. The ADP report is a precursor to Friday's Non-Farm Employment Change figure. While it is not considered as serious as Friday's report, it has been known to generate major price shifts.

Analysts are forecasting the ADP figure to come in at around 176K, which if true, would signal significant job growth for the month of December in the US. Should the ADP figure come in at 176K, it may boost investor confidence in the US economic recovery and signal a return to riskier assets. The USD would likely fall as a result. On the other hand, if tomorrow's news comes in under analyst predictions, investors may decide that the economic recovery is not happening as quickly as possible, and revert back to the safe-haven dollar.

EUR - German Debt Auction Leads to Bearish Euro

Yesterday's German debt auction caused the euro to slide throughout the day, particularly against the USD. The EUR/USD once again fell below the 1.3000 level, in a clear sign that investor's lack confidence in the euro-zone economic recovery. The euro also recorded a bearish day against the UK pound. The EUR/GBP fell throughout the day following a better than expected British construction PMI.

Turning to today, in addition to the ADP Non-Farm Employment Change, euro traders will want to keep their eyes on the UK Services PMI. Analysts are predicting a solid PMI figure, which if true, may cause the euro to slide even further against the pound. Also, traders should pay attention to any news coming out of the euro-zone relating to the current debt crisis. Any further negative news will likely lead to further bearish movement for the single currency.

JPY - Safe-Haven JPY Records Gains Wednesday

The Japanese yen saw a very bullish day Wednesday, especially against riskier currencies like the euro. At the same time, confidence in the US economic recovery led to slight increases for the USD/JPY.

The yen is likely to maintain its bullish trend against the euro as long as negative news regarding the euro-zone debt crisis stays in the headlines. That being said, traders should note that a positive ADP Non-Farm Payroll figure today may help boost riskier currencies like the euro against the JPY.

Additionally, Friday's US Non-Farm Payrolls report is likely to create a lot of volatility for yen pairs. A positive figure may boost risk taking which could cause the JPY to close the week in a downward trend.

Crude Oil - Crude Maintains Upward Momentum

Crude oil maintained its upward momentum yesterday, despite some slight downward movement during mid-day trading. Oil was able to stay above the $102 a barrel level as tensions between Iran and the US stayed high. Investors are worried about crude oil supplies out the Middle East should the current situation between the US and Iran maintain.

Today, oil could see further price shifts depending on how the ADP Non-Farm Payrolls figure comes in. A positive number may increase risk appetite, which typically causes commodities like oil to rise. At the same time, a less positive number may cause investors to revert back to safe-havens which could cause oil to fall.

Technical News

EUR/USD

Technical indicators are showing that the pair may see an upward correction this week. The Relative Strength Index on the weekly chart has entered the oversold region, while the Stochastic Slow on the same chart has formed a bullish trend. Taking a bullish long term trend may be a wise choice.

GBP/USD

Most long term indicators show this pair trading in neutral territory, meaning that major market movements are not expected this week. That being said, the Williams Percent Range on the weekly chart is creeping toward the oversold region. Should the indicator fall below the -90 level, it may be a sign for traders to go long in their positions.

USD/JPY

Following the bearish trend late last week, technical indicators are showing that the USD/JPY may be due for an upward correction this week. Daily chart indicators, like the Relative Strength Index and Stochastic Slow, are showing the pair in the oversold region. Going long this week may be a wise strategy for the pair.

USD/CHF

Following the slight upward movement the USD/CHF experienced last week, technical indicators are showing that the pair may turn bearish in the coming days. The Williams Percent Range on the daily chart is creeping toward the -20 level. Should it go above this level, it may be a sign that the pair will stage a downward correction. Traders will want to keep an eye on the daily and weekly chart for further signs of bearish movement.

The Wild Card

Silver

Technical indicators are showing that silver may fall during the trading day today. The Stochastic Slow on the 8-hour chart has formed a cross above the upper resistance line, meaning that bearish movement could occur. Furthermore, the Williams Percent Range on the daily chart has entered overbought territory. Forex traders may want to go short in their positions today.

US Dollar Advances Amid Lackluster Performance in Equities

2012-01-04T23:04:00.001Z

The greenback is firmer ahead at the close of North American trade with the Dow Jones FXCM Dollar Index ( Ticker: USDollar ) advancing 0.31% on the session. Equity markets pared early losses but teetered in and out of positive e territory throughout the day with the Dow, the S&P, and the NASDAQ squeezing out marginal gains of 0.17%, 0.02%, and 0.01% respectively. With key employment data on tap for Friday, traders will be closely eyeing tomorrow’s ADP employment report as US economic data continues to improve. The greenback remains at risk however as traders continue to seek out higher yielding assets with treasuries coming under pressure for a second consecutive day while stocks advanced.

The dollar was able to hold above the key support level noted in yesterday’s USD Trading Report at the 50% Fibonacci extension taken from the August 1 st and October 27 th troughs at 9850. This level remains paramount for the greenback with a break below risking substantial losses. Daily relative strength looks to reverse, with a break back above the 50-level offering support for further gains in the reserve currency.

An hourly chart shows the index rebounding just ahead of the 50% extension before failing to hold above 9900. We have slightly adjusted our soft resistance target to reflect more recent price action with interim resistance now standing at 9912 followed by the 61.8% extension at 9950 and the 10,000-level. Support holds at 9850 with subsequent floors seen lower at 9800 and the 38.2% extension at 9756.

The greenback advanced against three of the four component currencies highlighted by a 0.86% advance against the euro which moved more than 147% of its daily average true range. The single currency remains at risk as conditions in Europe continue to deteriorate with the euro more than 130pips off the overnight highs at 1.3070. The yen was the top performer of the lot with a fractional advance of just 0.06% as the USD/JPY continues to hold within an extremely tight range between 76.60 and 76.80. Intervention concerns are likely to keep yen advances tempered with an extreme shift into risk aversion likely to see dollar gains outpace those of the yen.

Tomorrow’s economic calendar is highlighted by the December ADP employment report with consensus estimates calling for the addition of 175K private sector jobs, slightly weaker than the 206K print seen in November. The ISM non-manufacturing composite is also on tap with estimates calling for a print of 53.0, up from a previous read of 52.0. As domestic data continues to improve, traders will be putting more emphasis on the Fed’s language after yesterday’s minutes revealed that the committee now looks to release individual forecasts on interest rates in an effort to provide further transparency to markets. Look for the dollar to remain docile as we head into Friday’s key non-farm payroll report, with the index likely to hold its current range.

Upcoming Events

Date	GMT	Importance	Release	Expected	Prior
1/5	12:30	LOW	Challenger Job Cuts (YoY) (DEC)	-	-12.8%
1/5	13:15	MEDIUM	ADP Employment Change (DEC)	175K	206K
1/5	13:30	LOW	Initial Jobless Claims (DEC 31)	375K	381K
1/5	13:30	LOW	Continuing Claims (DEC 24)	3573K	3601K
1/5	15:00	MEDIUM	ISM Non-Manufacturing Composite (DEC)	53.0	52.0

--- Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex .

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
04 January 2012 21:11 GMT

U.S. Dollar Leads, Franc Lags as Liquidity Begins to Return

2012-01-04T15:04:00.001Z

Fundamental Headlines

• Bank Earnings Jump 57% in Analyst Forecasts – Bloomberg

• Slowing Inflation May Give ECB Room to Maneuver on Interest Rates – Bloomberg

• Mortgage Demand Fell at Year-End, Purchases Sag – Reuters

• Banks Park Record Funds with ECB – WSJ

• Fed Will Detail Rate Plans, Easing Market Guesswork – WSJ

European Session Summary

Yesterday’s appreciation by higher yielding currencies against the U.S. Dollar and the modest uptick in equity markets has suggested that the beginning of the year could be strong. However, as markets have begun to acclimate to denser liquidity conditions, risk appetite has seemingly dissipated, with the safe haven currencies, the Japanese Yen and the U.S. Dollar, posting the best day thus far after trading in Asia and Europe on Wednesday.

A brief look at other assets classes continues to suggest that equities and higher yielding currencies may be slightly overweight relative to their fair values. Even as riskier assets, such as the Australian and New Zealand Dollars, ticked higher yesterday, the lack of follow through by credit yesterday and early today suggests that a pullback was due; we are seeing that unfold now. The Italian 10-year bond remains elevated, trading at a 6.923 percent yield, at the time this report was written. Likewise, the flight to safety was evident in early Treasury trading, with the U.S. 10-year Treasury note holding below 2.00 percent.

USD/CHF 5-minute Chart: January 4, 2012

Charts created using Strategy Trader – Prepared by Christopher Vecchio

Overall, softer credit markets have boosted the U.S. Dollar, elevating it to status of top performer thus far on Wednesday. Similarly, as Euro-zone issues have spilled over into 2012, the EUR/USD remains under pressure, hovering near the 1.2950 exchange rate once more. Interestingly enough, it was the Swiss Franc, not the Euro, which was the worst performing currency today, as a controversy at the Swiss National Bank arose.

While it is not worth going into the specific details of the potential debacle that currently looms over the SNB, it is worth noting the potential implications of such drama. Should SNB President Philipp Hildebrand be forced to resign amid the allegations of “insider trading,” the Franc will likely experience significant volatility as questions over the future of SNB monetary policy are raised. The Swiss Franc remains one of our favorite currencies to trade in 2012 .

24-Hour Price Action

Key Levels: 14:00 GMT

Thus far, on Wednesday, the Dow Jones FXCM Dollar Index is slightly higher, trading at 9906.01, at the time this report was written, after opening at 9870.47. The index has traded mostly, with the high at 9915.56 and the low at 9857.43.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com .

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com .

DailyFX provides forex news on the economic reports and political events that influence the currency market.
04 January 2012 14:35 GMT

Crude Oil May Break with Broader Trends as US Iran Tensions Mount

2012-01-04T11:04:00.001Z

Talking Points

Crude Oil May Deviate from Sentiment Trends as US-Iran Tensions Rise
Gold Looks for US Dollar Reaction to Euro Crisis, US Data to Guide Prices

WTI Crude Oil (NY Close): $102.96 // +4.13 // +4.18%

Crude oil prices followed shares higher as expected yesterday on the back of a broad-based recovery in risk appetite. This time around, a pullback appears likely as S&P 500 stock index futures trade lower in early European trade, suggesting sentiment is souring anew. Investors’ anxiety comes as Eurozone debt crisis fears creep back into focus ahead of a pair bond auctions in Germany and Portugal . Later in the day, the spotlight will shift to US Factory Orders figures, which may prove to counter-balance selling pressure as expectations of the strongest increase since July.

Geopolitical jitters continue to provide the backdrop and may see crude decouple from sentiment trends amid continued jostling between the US and Iran, which traders fear may disrupt supply flows through the Strait of Hormuz that serves as the shipping route for close to 40 percent of seaborne crude. The latest development saw the Pentagon rebuff Iranian warnings not to return an aircraft carrier into the Persian Gulf after it left last week, saying “regularly scheduled movements” – including through the Strait of Hormuz – will continue as they have for decades.

On the technical front, prices rebounded as we suggested last week after putting in a Hammer candlestick above resistance-turned-support at the top of a falling channel set from mid-November. The bulls took out interim resistance at challenge the November 17 high at 103.35, with a break above this barrier marking a material shift in tone from an outright bearish bias toward a more neutral one. Continued gains above resistance expose 106.05. Near-term support lines up at 101.28.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1 603 . 50 // + 37 . 23 // + 2 . 38 %

Gold soared yesterday despite a relatively encouraging set of FOMC meeting minutes – which could have been expected to weigh on the metal given their implications fading gold demand as QE3 expectations are unwound – as the US Dollar posted the largest decline in two weeks and offered a de-facto boost to the yellow metal.

Looking ahead, the greenback’s trajectory is likely to remain the key transmission mechanism of risk sentiment trends, with the focus turning to the aforementioned Eurozone bond auctions and the US Factory Orders release. Tension in the Middle East is another component to consider: gold spiked higher along with crude in early European hours after the US brushed off Iranian saber-rattling, so further escalation may prove to be a supportive factor.

Sizing up the chart setup, prices recovered as we discussed last week after showing a Hammer candlestick above support at 1532.45, the September 26 wick low. The bulls are now testing support-turned-resistance at the bottom of a falling channel set from early November, with a break above this boundary exposing 1677.05. Near-term support lines up at 1573.67.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $2 9 . 67 // + 1 . 81 // + 6 . 49 %

Silver continues to move in line with its more expensive counterpart, rising on the back of US Dollar selling yesterday and looking to the greenback for additional direction cues in the hours ahead as the benchmark currency balances the influence of Eurozone debt jitters with improving US economic data .

Prices broke resistance at 28.41 after putting in a Hammer candlestick at the bottom of a falling channel set from early November and are now testing the next barrier at 29.79. This hurdle is reinforced by the channel top, now at 30.50, with a break above that exposing 31.11. The 28.41 has been recast as near-term support.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
04 January 2012 09:04 GMT

FOREX: Euro Selling May Return on Germany, Portugal Bond Auctions

2012-01-04T09:04:00.001Z

Talking Points

US Dollar Recovers in Asia, Commodity Bloc Bears Brunt of Selling
German, Portuguese Bond Auction Outcomes Take Spotlight in Europe
Eurozone CPI to Hit Four-Month Low, May Boost ECB Rate Cut Bets
S&P 500 Futures Point to Risk Aversion, US Factory Orders on Tap

The US Dollar (ticker: USDollar ) recovered against most of its leading counterparts in overnight trade as currency markets digested yesterday’s selloff that saw the greenback slide 0.9 percent against the majors, marking the largest daily drop in two weeks. The Australian Dollar underperformed, down as much as 0.5 percent against its US namesake. The likewise sentiment-linked Canadian and New Zealand Dollars were not far behind, down as much as 0.4 percent apiece.

Looking ahead, the spotlight turns to a pair of bond auctions in Germany and Portugal . Berlin will sell €10 billion in 10-year paper while Lisbon will offer €1 billion in 105-day bills. Traders will keep a close eye on average yield levels and bid-to-cover readings – a measure of demand – to get a sense of sovereign solvency fears in the region as Eurozone countries face the need to refinance a whopping €157 billion in maturing debt just in the first three months 2012 .

Conflicting cues abound. The 3-month Euribor-OIS spread, a measure of liquidity risk, fell to the lowest in two weeks yesterday, meaning credit market conditions have improved. On the other hand, the ECB reported that banks parked €446 billion in its deposit facility yesterday, just shy of the record €452 billion on December 27, meaning most of the nearly €500 billion banks borrowed via the 3-year LTRO has yet to begin moving into the real economy to offer any viable funding relief. All told, markets will have to wait for the auctions’ outcome for greater clarity.

On the data front, the preliminary estimate of December’s Euro Zone CPI reading headlines the docket, with expectations calling for the annual inflation rate to drop to a four-month low at 2.8 percent. The result may bolster expectations that the European Central Bank will reduce benchmark interest rates or introduce new non-standard easing measures to head off fears of a credit crunch and stoke sagging economic growth, weighing on the Euro . As it stands, markets are pricing in a 40 percent probability of a rate cut at the policy meeting coming up on January 12. Final revisions of the December set of German and region-wide Services PMI numbers are also on tap.

On the sentiment front, S&P 500 stock index futures are trading meaningfully lower in late Asian hours, hinting at the return of risk aversion that offers a lifeline to greenback at the expense of stocks-correlated currencies . US Factory Orders figures will come into the picture in the afternoon. Expectations call for the largest increase since July, fueling hopes that improvement in the world’s largest economy will help offset slowdown in the Eurozone and China – the other leading engines of global GDP expansion – and boost risk appetite anew.

Asia Session : What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	Loans & Discounts – Corp (YoY) (NOV)	-0.4%	-	-0.8%

E uro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
7:45	EUR	French Consumer Spending (MoM) (NOV)	0.3%	0.0%	Low
7:45	EUR	French Consumer Spending (YoY) (NOV)	-1.8%	-0.9%	Low
8:45	EUR	Italian PMI Services (DEC)	45.3	45.8	Low
8:50	EUR	French PMI Services (DEC F)	50.2	50.2	Low
8:55	EUR	German PMI Services (DEC F)	52.7	52.7	Medium
9:00	EUR	Euro-Zone PMI Composite (DEC F)	47.9	47.9	Medium
9:00	EUR	Euro-Zone PMI Services (DEC F)	48.3	48.3	Medium
9:30	GBP	Purchasing Manager Index Construction (DEC)	52.0	52.3	Medium
9:30	GBP	Net Lending Secured on Dwellings (NOV)	0.9B	1.3B	Low
9:30	GBP	Net Consumer Credit (NOV)	0.3B	0.0B	Low
9:30	GBP	Mortgage Approvals (NOV)	52.8K	52.7K	Medium
9:30	GBP	M4 Money Supply (MoM) (NOV)	-	-0.3%	Low
9:30	GBP	M4 Money Supply (YoY) (NOV)	-	-2.7%	Low
9:30	GBP	M4 Ex OFCs 3M Annualised (NOV)	-	5.0%	Low
10:00	EUR	Euro-Zone CPI Estimate (YoY) (DEC)	2.8%	3.0%	Medium
10:00	EUR	Italian CPI (NIC incl. tobacco) (MoM) (DEC P)	0.3%	-0.1%	Low
10:00	EUR	Italian CPI (NIC incl. tobacco) (YoY) (DEC P)	3.2%	3.3%	Low
10:00	EUR	Italian CPI - EU Harmonized (MoM) (DEC P)	0.2%	-0.1%	Low
10:00	EUR	Italian CPI - EU Harmonized (YoY) (DEC P)	3.5%	3.7%	Low
10:15	EUR	Germany to Sell €10B in 10-year Bonds	-	-	High
10:30	EUR	Portugal to Sell €1B in 105-day Bills	-	-	High

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2962	1.3108
GBPUSD	1.5544	1.5775

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
04 January 2012 07:13 GMT

Riskier Assets Turn Bullish Following Positive British Data

2012-01-04T07:03:00.001Z

Riskier currencies like the euro and UK pound turned bullish yesterday, following the release of the British manufacturing PMI in morning trading. Meanwhile, the price of crude oil is steadily rising as tensions between the US and Iran continues to generate supply side fears.

Forex Market Trends

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3110	1.5710	77.50	0.9420	1.0425	0.8410
	1.3090	1.5690	77.30	0.9400	1.0405	0.8390
	1.3060	1.5660	77.00	0.9370	1.0375	0.8360
Support	1.3000	1.5600	76.40	0.9310	1.0315	0.8300
	1.2970	1.5570	76.10	0.9280	1.0285	0.8270
	1.2950	1.5550	75.90	0.9260	1.0265	0.8250

Economic News

USD - USD Moves Downward as Investors Move to Riskier Currencies

The US dollar saw a largely bearish day yesterday, as positive economic data out of Europe generated risk taking among investors. The safe-haven greenback took losses against most of its main currency rivals, including the euro and GBP. The EUR/USD once again shot up above the psychologically significant 1.3000 level, while the GBP/USD crossed the 1.5600 barrier. The dollar also tumbled against other safe-haven currencies like the Swiss franc and Japanese yen, largely due to a lack of faith in the US economic recovery.

Turning to today, news out of the euro-zone is once again forecasted to dominate the trading day. Traders will want to pay particular attention to the UK Manufacturing PMI. Analysts are forecasting a drop from last month's number, which if true, may cause investors to revert back to the safe-haven buck.

With regards to the rest of the week, traders will not want to forget about the US Non-Farm Payrolls figure set to be released on Friday. Early predictions are saying that the US increased their payrolls dramatically in December. If true, risk activity may continue, thereby extending the dollar's bearish run.

GBP - UK Manufacturing PMI Sends Pound Soaring

The GBP saw its recent downward trend reverse itself in trading yesterday, following positive news that helped boost confidence in the British economic recovery. The UK Manufacturing PMI came in well above expectations and resulted in gains for the pound versus the USD and CHF. While it is too soon to say whether the figure was an actual signal that the UK was heading toward recovery, it was enough to get investors to move to riskier assets in trading throughout the day.

Today, pound traders will want to pay attention to the UK Construction PMI set to be released at 09:30 GMT. Analysts are predicting the PMI to come in at 51.8, which if true would signal expansion in the British construction industry and may help the pound extend yesterday's bullish momentum.

Traders will still want to take note that the European economies are extremely fragile. While positive news is likely to help currencies like the pound and euro in the short term, the overall trend is still overwhelmingly bearish and the markets could reverse themselves at any moment.

CHF - Franc Sees Mixed Trading Amid a Return to Risk Taking

The positive news out of the UK yesterday resulted in a mixed session for the Swiss franc, as it was able to make gains against the USD and JPY while taking losses against the euro and pound. While investors did move their funds to riskier assets, they were unwilling to completely abandon the safe-haven's which helped the franc against the dollar and yen.

Today, traders will want to pay attention to the news out of the UK and euro-zone. Any further positive news may result in the franc taking further losses against riskier currencies like the euro, pound and Australian dollar. That being said, the franc's safe haven status may help it against the US dollar.

Crude Oil - Oil Prices Shoot Up Following Middle East Tensions

Tensions between the US and Iran have sent the price of crude oil soaring, as investors have begun worrying about crude supplies out of the Middle East. Oil is trading well above the psychologically significant $100 a barrel level. With relations between Iran and the west unlikely to improve in the near future, traders can count on prices to continue rising for the near future.

Today, any positive news out of the euro-zone could help oil's bullish movement. Investors are currently investing in more volatile assets like crude oil. Further signs that the European economies are improving will likely help boost the price of the commodity.

Technical News

EUR/USD

GBP/USD

USD/JPY

USD/CHF

The Wild Card

Gold

Technical indicators are currently showing that gold may increase its recent upward trend in today's trading session. The Relative Strength Index on the 8-hour chart is pointing upward, but has yet to cross over into the overbought zone. This is a sign that the upward trend still has more room to grow. Forex traders may want to go long in their positions today, while the commodity is still bullish. forex

Guest Commentary: Making Plans for the Year

2012-01-04T03:04:00.001Z

Did you make any forex related New Year's Resolutions? If so, was it simply "make money in forex" or something a bit more detailed than that?

2012 already began but it's definitely not too late to make some plans for the New Year.

Getting into details means setting monthly goals. This should not be limited to the amount of money you make every month, but should also consist of other goals.

But before discussing such monthly checkups, the bigger question is: What do you want to achieve in forex trading? Do you want an occasional extra income? Do you want to make some money for a vacation? Do you want to become a pro?

A more definitive goal for 2012 can then help you break down the resolution into quarterly or preferably monthly milestones - points where you check up on your performance in various fields and move on from there.

Number of monthly trades : In order to stay on track you can define a range of monthly trades. Going below this range means you've neglected forex trading. Going above the range is worse: it means that you got addicted. Checking the number of trades on a monthly basis can certainly keep you balanced.

Position sizes : A more detailed resolution can be to stick to position sizes for the month, and change the sizes only once per month / once per quarter. This will help you stay balanced and also provide guidance for moving forward: if you had success for several months, perhaps you can increase position sizes.

Money management : You can include a checkup on your money management behavior, current state of the account and similar issues on a monthly basis.

Trade plan : The same goes rules work for the trade plan. Every plan needs occasional tweaking and some need to be totally replaced. One or two trades aren't enough. This is probably something you already do, but it's worth mentioning and emphasizing that one or two trades aren't enough to make a judgment.

Do you have a plan for 2012?

Further reading: 5 Most Predictable Currency Pairs – Q1 2012

By Yohay Elam, Forex Crunch

Would you like to see more third-party contributors on DailyFX? For questions and comments, please send them to research@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
04 January 2012 02:00 GMT

US Dollar Index Tumbles as Investors Chase Yields

2012-01-03T23:04:00.001Z

The greenback was markedly lower at the close of North American trade with the Dow Jones FXCM Dollar Index ( Ticker: USDollar ) off by more than 0.90% on the session. Equity markets kicked off 2012 with a substantial rally in risk assets as stocks and higher yielding currencies advanced across the board, putting pressure on the reserve currency. Stronger than expected economic data out of the US further fueled the rally after the December ISM manufacturing report posted its 29 th consecutive month of growth in the sector. The major indices closed sharply higher, albeit off session highs, with the Dow, the S&P, and the NASDAQ advancing 1.47%, 1.55%, and 1.67% respectively.

The dollar broke below the 61.8% Fibonacci extension taken from the August 1 st and October 27 th troughs at 9950 before finding solace just above the 50% extension at 9850. As noted in previous reports posted last year, this level remains paramount for the greenback with a break below likely to shift our medium-term bias. Note that the daily relative strength index broke below the 50-level today with a move below RSI support at 35 likely to see substantial losses for the reserve currency in the interim.

An hourly chart shows the magnitude of today’s dollar sell-off with price action closing just above the 50% extension at 9850. Subsequent support targets are seen at 9800 and the 38.2% extension at 9756. Interim resistance now stands at 9900 backed by 9950 and 10,000. Crucial resistance holds at the 76.4% extension at 10,070 where the index has already failed three attempts at a breach. This level remains key for further longer-term dollar advances.

The greenback fell against all four component currencies highlighted by a 1.34% decline against the Australian dollar. As risk sentiment continues to improve look for higher yielding currencies to outperform the dollar as traders jettison lower yielding “haven” assets. The aussie continues to be the chief beneficiary of risk-on flows as traders go back on the hunt for yields. The worst performer of the lot was the Japanese yen which advanced just 0.32% despite broad based dollar losses. As cited multiple times last year, concerns over further currency interventions from the Bank of Japan or the Japanese Finance Ministry are likely to temper yen advances as investors remain reluctant to move too heavily into the low yielder.

Tomorrow’s economic calendar is highlighted by November factory orders with consensus estimates calling for orders to rise by 1.9%, up from a previous decline of 0.4%. As US data continues to improve and concerns regarding a European slow down taking root, look for the inverse relationship between the dollar and US equities to begin to decouple later this year. That said, the greenback should remain well supported so long as prices action holds above the 9850 mark.

Upcoming Events

Date	GMT	Importance	Release	Expected	Prior
1/4	12:00	LOW	MBA Mortgage Applications (DEC 30)	-	-2.6%
1/4	15:00	MEDIUM	Factory Orders (NOV)	1.9%	-0.4%
1/4	22:00	LOW	Total Vehicle Sales (DEC)	13.52M	13.59M
1/4	22:00	LOW	Domestic Vehicle Sales (DEC)	10.40M	10.53M

--- Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex .

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
03 January 2012 22:00 GMT

Kotakasu Forex

Forex Trading Weekly Forecast 01.09.2012

EUR Tumbles Ahead of Non-Farm Data

Forex Market Trends

Economic News

USD - Positive US Jobs Report Turns USD Bullish

EUR - Euro-Zone News Sends EUR Tumbling

JPY - Yen Tumbles Against USD Following US Jobs Report

Crude Oil - Crude Oil Sees Small Drop but Remains Bullish Overall

Technical News

EUR/USD

GBP/USD

USD/JPY

USD/CHF

The Wild Card

GBP/CHF

Forex Trading Weekly Forecast 01.09.2012

US Dollar Surges on Nonfarm Payrolls, Europe  Can it Rally Further?

Risk On = Dollar Down, Right? So What Happened with NFPs?

U.S. Dollar Gains as Nonfarm Payrolls Show 200K Jobs Gain in December

Crude Oil to Rise While Gold Declines on US Jobs Report

FOREX: Dollar May Retreat as US Jobs Growth Stokes Risk Appetite

EUR Tumbles Ahead of Non-Farm Data

Forex Market Trends

Economic News

USD - Positive US Jobs Report Turns USD Bullish

EUR - Euro-Zone News Sends EUR Tumbling

JPY - Yen Tumbles Against USD Following US Jobs Report

Crude Oil - Crude Oil Sees Small Drop but Remains Bullish Overall

Technical News

EUR/USD

GBP/USD

USD/JPY

USD/CHF

The Wild Card

GBP/CHF

Euro Could See Acceleration Towards 1.2500 Over Coming Sessions

US Dollar Index Eyes 10,000 Will NFPs Tip the Scales?

Fresh Scalps for 2012 Short Australian Dollar

Guest Commentary: Gold & Silver Daily Outlook 01.05.2012

Euro Falls Below 1.2800 For First Time Since September 2010

Crude Oil Set to Follow S&P 500 Lower, Gold Outlook Turns Clouded

FOREX: Euro Debt Crisis Fears Grow Anew, French Bond Sale in Focus

Risk Correlated Assets At Risk for Fresh Bout of Liquidation

EUR Corrects Itself Following German Debt Auction

Forex Market Trends

Economic News

USD - USD Rebounds Following Return to Safe-Haven Assets

EUR - German Debt Auction Leads to Bearish Euro

JPY - Safe-Haven JPY Records Gains Wednesday

Crude Oil - Crude Maintains Upward Momentum

Technical News

EUR/USD

GBP/USD

USD/JPY

USD/CHF

The Wild Card

Silver

US Dollar Advances Amid Lackluster Performance in Equities

U.S. Dollar Leads, Franc Lags as Liquidity Begins to Return

Crude Oil May Break with Broader Trends as US Iran Tensions Mount

FOREX: Euro Selling May Return on Germany, Portugal Bond Auctions

Riskier Assets Turn Bullish Following Positive British Data

Forex Market Trends

Economic News

USD - USD Moves Downward as Investors Move to Riskier Currencies

GBP - UK Manufacturing PMI Sends Pound Soaring

CHF - Franc Sees Mixed Trading Amid a Return to Risk Taking

Crude Oil - Oil Prices Shoot Up Following Middle East Tensions

Technical News

EUR/USD

GBP/USD

USD/JPY

USD/CHF

The Wild Card

Gold

Guest Commentary: Making Plans for the Year

US Dollar Index Tumbles as Investors Chase Yields

US Dollar Surges on Nonfarm Payrolls, Europe Can it Rally Further?