USD/CAD Forecast December 29, 2011, Technical Analysis

USD/CAD fell at first on Wednesday as oil rose, but the Saudis stepping into the market as saying that they are willing to produce more in response to any blocking of the Strait of Hormuz by Iran. The US Navy has stated they would get involved with the 5th Fleet that is currently situated in the area. The markets have suddenly decided that perhaps the Iranian threat isn’t much.

The entire area down to the parity level is support. The shape of the daily candle being a hammer does suggest that we are getting ready to bounce again. The Dollar being a safe haven should continue to see money flowing into the US as well. With this in mind, we are willing to buy on a break of the top of the Wednesday candle.

USD/CAD Forecast December 29, 2011, Technical Analysis
USD/CAD Forecast December 29, 2011, Technical Analysis

NZD/USD Forecast December 29, 2011, Technical Analysis

NZD/USD fell on Wednesday as traders sold risk. The Kiwi dollar is highly sensitive to commodity prices, and most fell for the session. The 0.78 level was an area we mentioned as being resistive in yesterday’s video, and it appears that it has held the market down at this point. With this in mind, we are selling a break below the session lows for Wednesday as the gap from three weeks ago still hasn’t been filled. Buying isn’t even a thought at this point.

NZD/USD Forecast December 29, 2011, Technical Analysis
NZD/USD Forecast December 29, 2011, Technical Analysis

GBP/USD Forecast December 29, 2011, Technical Analysis

GBP/USD fell rapidly during the Wednesday session as traders took off risk all the way around. The recent range between 1.54 and 1.58 has contained cable quite well, but the overall move over the last couple of months has been down. The daily candle is closing at the bottom of the range, and this suggests real pressure to the downside. In this low volume environment, it is quite possible that the traders that are involved may simply be taking advantage of the low liquidity.

The support area goes all the way down to 1.53, and it isn’t until that level is broken on a daily close do we get excited about the shorting of this market. The pair is certainly risk sensitive, and the “risk off” trade will push this pair lower as well. The pair is also forming a massive “head and shoulders” on the larger time frames, and a breaking of the 1.53 level would signal that the market should fall roughly 1, 000 pips. The move wouldn’t be all at once, but it could show where cable may be heading for the first several months of 2012.

The Bank of England has been working quietly to bring down the value of the Pound, and with the world being cautious about several different things; this pair is gaining momentum to the downside. However, we are still waiting to see if the 1.53 level can give way.

The upside is a tricky situation for traders. While we are sitting on top of the support level, the 1.58 level seems to be far too strong for this pair to get above. Also, with the Bank of England working against the Pound, and the world economies slowing down – it’s hard to own anything but the US dollar. In an environment like this, traders will run to the Dollar as the fear rises, and with that in mind, we are simply going to wait for a daily close sub-1.53 in order to sell this pair. The upside would have to be made if we closed above the 1.58 level, which looks very unlikely.

GBP/USD Forecast December 29, 2011, Technical Analysis
GBP/USD Forecast December 29, 2011, Technical Analysis

EUR/USD Forecast December 29, 2011, Technical Analysis

The EUR/USD pair fell on Wednesday in low volume trading. The pair is supported all the way down to the 1.29 level, so while the break of the 1.30 level is significant, it isn’t a sell signal in and of itself. The pair looks to be very well supported at this area, so selling is going to be very difficult. The 1.29 level has to be broken to the downside in order to get overly bearish in this pair as it has been so resilient over the last several weeks. The pair can’t be bought right now, and any rallies will also have us selling on signs of weakness.

EUR/USD Forecast December 29, 2011, Technical Analysis
EUR/USD Forecast December 29, 2011, Technical Analysis

EUR/GBP Forecast December 29, 2011, Technical Analysis

EUR/GBP rose on Wednesday as the Pound was punished in various different markets. The pair needed a bounce, and it should be noted that it stopped just a bit below the 0.84 level. The 0.84 level is an area that we have identified as possible resistance, and we are looking to see if there is any significant weakness shown at that level in order to sell. As an alternative, if the pair continues to rise, we would also be interested in selling on weakness at 0.85 as well, as it is the site of the recent breakdown and has yet to be retested.

EUR/GBP Forecast December 29, 2011, Technical Analysis
EUR/GBP Forecast December 29, 2011, Technical Analysis

EUR/CHF Forecast December 29, 2011, Technical Analysis

EUR/CHF fell during the session on Wednesday as the Euro sold off in general. The market for this pair has been very range bound recently, and we are getting close to the bottom of the range. The pair isn’t necessarily a buy yet though, as the Euro is falling hard against many other currencies. It might be difficult to buy this pair, and selling isn’t possible as the Swiss National Bank is willing to step into the market and intervene if we get too close to the 1.20 level. For now, we are flat in this pair.

EUR/CHF Forecast December 29, 2011, Technical Analysis
EUR/CHF Forecast December 29, 2011, Technical Analysis

AUD/USD Forecast December 29, 2011, Technical Analysis

AUD/USD fell on Wednesday as the trading world moved to the bearish side in light volume. The pair did look a bit heavy as it approached 1.02, and the parity level looks like a magnet for this pair. The market is going to be sensitive to headline risk, and with so many negative headlines coming out of all parts of the world, we are selling the Aussie on rallies for short-term trades. The gap from 3 weekends ago still hasn’t been filled, and we expect it to be relatively soon.

AUD/USD Forecast December 29, 2011, Technical Analysis
AUD/USD Forecast December 29, 2011, Technical Analysis

Crude Oil Forecast Dec. 29, 2011, Fundamental Analysis

Crude oil prices declined on Wednesday amid lack of key economic report from the U.S economy, as debt crisis risks were highlighted after the European Central Bank’s balance sheet rose to a record 2.73 trillion euros since it offered three-year loans to financial institutions last week, replacing optimism on Italy’s 9 billion euros of 179-day bills sold at an debt auction today.

No major data was released from US, Euro Zone or UK on Wednesday, so traders were somehow clueless over the economic recovery. Thereby, European and American equities retreated after the Central Bank’s balance sheet was released.

Traders switched on the holiday mode with the year’s trading nearly complete, so trading volumes ebb down and market movement is pretty stuck within a tight range before the New Year’s holiday, yet with slight punch of cautious optimism. Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure, where traders will also continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist through the sessions this week.

 

 

Gold Forecast Dec. 29, 2011, Fundamental Analysis

Gold prices declined amid lack of economic report from the U.S economy, as debt crisis risks were highlighted after the European Central Bank’s balance sheet rose to a record 2.73 trillion euros since it offered three-year loans to financial institutions last week, replacing optimism on Italy’s 9 billion euros of 179-day bills sold at an debt auction today.

No major data was released from US, Euro Zone or UK on Wednesday, so traders were somehow clueless over the economic recovery. Thereby, European and American equities retreated after the Central Bank’s balance sheet was released.

Traders switched on the holiday mode with the year’s trading nearly complete, so trading volumes ebb down and market movement is pretty stuck within a tight range before the New Year’s holiday, yet with slight punch of cautious optimism. Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

Accordingly, we should expect more fluctuations for gold, but should the current pessimism persist, we should expect gold prices to extend the rallies, however, the level of uncertainty is very high, so traders are ought to remain cautious.

 

 

Natural Gas Forecast Dec. 29, 2011, Fundamental Analysis

Natural gas prices fluctuated as meteorologists predicted colder weather than before,boosting demand on natural gas in the next few days.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely lower than average over the coming period, and that could put natural gas between gains and losses in next period.

USD/CAD Forecast Dec. 29, 2011, Fundamental Analysis

The USD/CAD pair rose amid lack of key economic report from the U.S economy, as debt crisis risks were highlighted after the European Central Bank’s balance sheet rose to a record 2.73 trillion euros since it offered three-year loans to financial institutions last week, replacing optimism on Italy’s 9 billion euros of 179-day bills sold at an debt auction today.

No major data was released from US, Euro Zone or UK on Wednesday, so traders were somehow clueless over the economic recovery. Thereby, European and American equities retreated after the Central Bank’s balance sheet was released.

Traders switched on the holiday mode with the year’s trading nearly complete, so trading volumes ebb down and market movement is pretty stuck within a tight range before the New Year’s holiday, yet with slight punch of cautious optimism. Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The USD/CAD pair could still rise if pessimism continues to dominate markets, but we still expect volatility to hold the steer for now, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Thursday December 29:

No economic data will be released from Canada so eyes will still focused on Europe and the crises that could cause any change in trading amid the last week.

EUR/CHF Forecast Dec. 29, 2011, Fundamental Analysis

The EUR/CHF moved in a tight range again on Wednesday yet with a downside bias as the weak Swiss data pressured the franc as the outlook for the nation remains uncertain and clearly downside risks are seen.

The KOF Swiss leading indicator slumped in December more than expected to 0.01 from a revised 0.34 and missed expectations for 0.23 which assures the downside pressure on the economy. The indicator is a gauge for the economic outlook for the coming three to six months and seemingly pessimism is growing with the debt crisis and slowing global growth alongside rising deflation threats.

The euro also found little support in thin trading after Italy’s borrowing costs dropped dramatically from the previous auction. The nation sold 9.0 billion euros of six-month bonds with an average yield of 3.251% from the November 25 auction at 6.504%. Demand also outbid supply as the bid-to-cover ratio was also higher at 1.69 times compared to 1.4 times the previous auction.

On Thursday Italy will sell more bonds and after the auction on Wednesday did not change the tight range trading we expect the same for Thursday.

Germany is set to release the preliminary CPI estimate for December where the index is expected with 0.8% rise on the month from a flat previous and 2.2% on the year from 2.4%. In EU Harmonized terms it’s expected to rise also by 0.8% from a flat previous and on the year to ease to 2.4% from 2.8%.

The euro area will release the M3 Money Supply for November at 09:00 GMT which is expected to hold at 2.8% in the three months to November and on the year to fall slightly to 2.5% from 2.6%.

EUR/USD Forecast Dec. 29, 2011, Fundamental Analysis

Thin trading is still the theme in the market despite the Italian surprise seen with a really good auction on Wednesday.

Italy’s borrowing costs dropped dramatically from the previous auction as the nation sold 9.0 billion euros of six-month bonds with an average yield of 3.251% from the November 25 auction at 6.504%. Demand also outbid supply as the bid-to-cover ratio was also higher at 1.69 times compared to 1.4 times the previous auction.

Still the news failed to entice the pair as we can still see the low trading volumes and the fear over the outlook predominant as investors avoid taking any decision and likely to continue till the end of the week and 2011 unless we have surprises our way.

On Thursday Italy will sell more bonds and after the auction on Wednesday did not change the tight range trading we expect the same for Thursday.

Germany is set to release the preliminary CPI estimate for December where the index is expected with 0.8% rise on the month from a flat previous and 2.2% on the year from 2.4%. In EU Harmonized terms it’s expected to rise also by 0.8% from a flat previous and on the year to ease to 2.4% from 2.8%.

The euro area will release the M3 Money Supply for November at 09:00 GMT which is expected to hold at 2.8% in the three months to November and on the year to fall slightly to 2.5% from 2.6%.

The U.S. will start with the weekly jobless claims for the week ending December 24 at 13:30 GMT after last week they dropped to 364,000.

The Chicago PMI for December is due at 14:45 GMT and expected to ease to 60.2 from 62.6. At 15:00 GMT we have the pending home sales for November which is expected to ease to 1.8% after the 10.4% surge.

GBP/USD Forecast Dec. 29, 2011, Fundamental Analysis

On Wednesday trading, the markets witnessed thin trading amid the year-end holidays. Yet, the pound showed a slight advance against the green currency after a successful bond selling in Italy managed to restore confidence and thereby damp demand on the dollar as a refuge.

The latest announcements byU.K.officials referred that the outlook for the British economy will depend on the latest developments in the euro area, thus the pound is expected to be affected by euro zone news and data.

The Italian Treasury sold 9 billion euros of 179-day bills, where the demand increased to 1.7 times, compared to 1.47 times in the last auction while the borrowing cost retreated to 3.251% from the previous auction’s rate of 6.504%.   Also, 2013 bills were sold for 1.733 billion euros with a yield of 4.853% from the prior auction’s rate of 7.814%.

On Thursday, theU.S.economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16 at 13:30 GMT. At 14:45 GMT,Chicagopurchasing manger is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The data is expected to affect the pair’s movements yet eyes will be on the selling of 2014, 2018, 2021 and 2022 bills by the Italian Treasury, especially the 10-year notes which recorded a yield of nearly 7% in the last auction, a rate which triggered the ask for a bailout by Greece and Portugal.

With mounting expectations the BoE will add to stimulus as early as in 2012, the pound remains under pressure from expected oversupply.

USD/CHF Forecast Dec. 29, 2011, Fundamental Analysis

On Wednesday trading, the markets witnessed thin trading amid the year-end holidays. Yet, the franc showed a slight advance against the green currency after a successful bond selling in Italy managed to restore confidence and thereby damp demand on the dollar as a refuge.

The Italian Treasury sold 9 billion euros of 179-day bills, where the demand increased to 1.7 times, compared to 1.47 times in the last auction while the borrowing cost retreated to 3.251% from the previous auction’s rate of 6.504%.   Also, 2013 bills were sold for 1.733 billion euros with a yield of 4.853% from the prior auction’s rate of 7.814%.

Moreover, data from the Swiss economy showed a drop in KOF leading indicator for the second straight month in Dec. to 0.01 compared with the revised 0.34 in Nov. However, the franc was not much impacted by the release.

On Thursday, theU.S.economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16 at 13:30 GMT. At 14:45 GMT,Chicagopurchasing manger is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The data is expected to affect the pair’s movements yet eyes will be on the selling of 2014, 2018, 2021 and 2022 bills by the Italian Treasury, especially the 10-year notes which recorded a yield of nearly 7% in the last auction, a rate which triggered the ask for a bailout by Greece and Portugal.

USD/JPY Forecast Dec. 29, 2011, Fundamental Analysis

The USD/JPY pair dropped early Wednesday despite the thin trading in the FX market, where the Japanese yen advanced against most of its major counterparts, while the dollar fell amid low volume trading.

Gains for the safer assets such as the yen remain a constant, as concerns regarding the EU debt crisis fueled haven demand which in roll reduces demand for higher-yielding currencies.

On the other hand, the latest U.S. data support the hope that the U.S. economy is gaining momentum, while the ongoing EU debt crisis remains an obstacle in the way of the optimism in the financial market.

On Thursday at 13:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance dropped to 364 thousand last week.

The U.S. economy will issue the Chicago Purchasing Manager for December at 14:45 GMT, where the prior reading was 62.6 and it’s expected to come at 60.2.

At 15:00 GMT, Pending Home Sales for November will be and expected with 1.8% rise after 10.4%.

NZD/USD Forecast Dec. 29, 2011, Fundamental Analysis

The NZD/USD pair was able to advance early Wednesday on the back of the weak U.S. dollar, while the thin trading did not support the Kiwi to record more gains against the dollar.

The U.S. dollar traded in a narrow range against most of its major counterparts, due to the absence of the volume in the FX market which reduced demand for the dollar.

On the other hand, the latest U.S. data support the hope that the U.S. economy is gaining momentum, while the ongoing EU debt crisis remains an obstacle in the way of the optimism in the financial market.

On Thursday at 13:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance dropped to 364 thousand last week.

The U.S. economy will issue the Chicago Purchasing Manager for December at 14:45 GMT, where the prior reading was 62.6 and it’s expected to come at 60.2.

At 15:00 GMT, Pending Home Sales for November will be and expected with 1.8% rise after 10.4%.

AUD/USD Forecast Dec. 29, 2011, Fundamental Analysis

The AUD/USD advanced slightly early Wednesday due to the thin trading in the FX market, on the other hand the absence of fundamentals kept trading calm.

The U.S. dollar was little changed against most of its major counterparts, as the holiday’s season in the United States reduced market participants and the liquidity in the financial market.

On the other hand, the latest U.S. data support the hope that the U.S. economy is gaining momentum, while the ongoing EU debt crisis remains an obstacle in the way of the optimism in the financial market.

On Thursday at 13:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance dropped to 364 thousand last week.

The U.S. economy will issue the Chicago Purchasing Manager for December at 14:45 GMT, where the prior reading was 62.6 and it’s expected to come at 60.2.

At 15:00 GMT, Pending Home Sales for November will be and expected with 1.8% rise after 10.4%.

EUR/USD Forecast December 28, 2011, Technical Analysis

EUR/USD rose again on Tuesday as the trading world felt slightly bullish. However, the market has shown time and time again that the rallies in the EUR/USD pair are to be sold, and it must be said that we are presently “hanging around” the same levels we have been over the last two weeks. The bounce that one would expect at 1.30 hasn’t really happened, and as a result – we think that the level will more than likely give way before it is all said and done. We see support all the way down to 1.29, and a break below that mark would have us aggressively selling. The rallies are to be sold until this pair can close above the 1.35 mark as well.

EUR/USD Forecast December 28, 2011, Technical Analysis
EUR/USD Forecast December 28, 2011, Technical Analysis

USD/JPY Forecast December 28, 2011, Technical Analysis

USD/JPY fell again on Tuesday as the market sold off the Dollar in an otherwise quiet session. The volumes are still light during this time of year as many traders will not be at their desks until after the New Year. The pair has been supported by the Bank of Japan over the last several months, and the selling of it can only be done with shorter term goals in mind. Having said that, the 80 mark above is where the real resistance is. Currently, it appears the markets simply cannot close above the 78.50 level in order to gain any real momentum to the upside.

The situation in the world economy does produce some demand for the US dollar, but the Yen has almost certainly not lost its “safe haven” status either. With this in mind, this is really an argument between two favored currencies at the moment. However, this standoff will not go on forever, and it should be noted that Prime Minster Noda was recently quoted as saying the Yen might actually be reflected the Japanese economy, a signal that intervention isn’t coming anytime soon. Either way, the pair will be very precarious to trade if you have anything more than a 3 day time horizon.

The pair needs to close over the 80 mark to show true strength to the upside. This would be a massive breakout, and the pair should continue to lift from that area. There simply has to be an amazing amount of short sellers in that area, and if they are forced to cover their positions, the rally would be fierce indeed.

The recent action is showing a bit of a triangle, suggesting that a run to that level could be coming soon. For now, it is simply suggested and not implied. The triangle has yet to break, and if it does break to the upside, it would be bullish, but one would have to be very concerned about the above mentioned 80 level as massive resistance. It is there where the fate of this pair will be decided. As far as selling, a break below the bottom line of this triangle would d have us shorting for about 100 pips or so.

USD/JPY Forecast December 28, 2011, Technical Analysis
USD/JPY Forecast December 28, 2011, Technical Analysis