GBP/USD Forecast January 19, 2012, Technical Analysis

The GBP/USD pair shot straight up on Wednesday as traders took on more risk for the session. However, the pair is currently at the bottom of a massive consolidation pattern from just a couple of session back, and will find the 1.55 level to be very resistive. Because of this, we actually prefer the downside at the moment, but will have to wait in order to see if we get that signal.

The pair did manage to break over the shooting star formed on Tuesday, and this is a very bullish sign. With that being said, it looks like the market will just now be looking at serious resistance, and the area just above could be a real fight. Because of this, we cannot buy this pair.

Also, we have to take into account that the British economy will continue to suffer because of the issues in the EU. The European Union will be going into recession this year, and as the Brits sell 40% of their exports to that area, this will certainly have a detrimental effect on the health of the UK economy. Adding to this concern is that fact that the UK banks are all knee-deep in the EU mess, and this will certainly cause pain at home as well.

The US on the other hand is seeing expansion, and this should continue to keep the Dollar attractive in comparison. While this pair is normally a “risk on” pair, the truth is that relationship may decouple for a while as the true fundamentals actually favor the US dollar for once.

Looking at the charts, we need to see a breakout above the 1.58 level to be wholly convinced of the upside potential, and will be looking for selling opportunities between here and there. The breakdown below the 1.53 level would be massive as it would be the longer-term head and shoulders giving way for a move down to the 1.40 level or so. With this in mind, we like selling rallies going forward, and would become very aggressive sub-1.53.

GBP/USD Forecast January 19, 2012, Technical Analysis
GBP/USD Forecast January 19, 2012, Technical Analysis

EUR/GBP Forecast January 19, 2012, Technical Analysis

EUR/GBP rose for the Wednesday session as the Euro did well in general. The Pound also gained against the Dollar, and as a result the “risk on” trade came back. This pair has been in a downtrend as of late, and this latest move may have been the pullback people were waiting for. After all, the daily candle is a bit of a shooting star, and it is near the 0.8250 level, an area that has seen reactions recently. With his in mind, we are willing to sell on a break of the session lows from Wednesday. We are not buying the pair at this point in time.

EUR/GBP Forecast January 19, 2012, Technical Analysis
EUR/GBP Forecast January 19, 2012, Technical Analysis

USD/CHF Forecast January 19, 2012, Technical Analysis

USD/CHF fell hard during the session on Wednesday as traders sold off the US dollar. However, the 0.93 level is just below, and this was the site of serious support previously. Because of this, we would hesitate to sell at this point in time. The level would have to be cleared on a daily close in order to think of selling.

The area is however, a great place to looks for support. If we get it on a 4 hour chart or above, we are willing to have a go on the long side in this pair, knowing that the road ahead is probably choppy but biased to the upside. We are buying on supportive candles going forward.

USD/CHF Forecast January 19, 2012, Technical Analysis
USD/CHF Forecast January 19, 2012, Technical Analysis

EUR/CHF Forecast January 19, 2012, Technical Analysis

EUR/CHF had a fairly wild day on Wednesday as the market first rose, and then fell. The Swiss National Bank has imposed a “floor” at the 1.20 level in which we expect them to intervene. In fact, they said they would. Because of this, you have to be very brave to short this market right now, and we are willing to take the other side of that trade. On the first sign of supportive action, or if we drop below the 1.20 level – we would consider buying a small position in this pair.

EUR/CHF Forecast January 19, 2012, Technical Analysis
EUR/CHF Forecast January 19, 2012, Technical Analysis

AUD/USD Forecast January 19, 2012, Technical Analysis

AUD/USD broke out on Wednesday from a triangle that had kept it under pressure for the last month or so. The solid close at the end of the session foretells higher prices, and the market looks set to continue the rise as we are breaking the very last bits of resistance at the close. The close of the candle is solid, and the top of the range is where we stand.

The 1.04 level was significant resistance, and it appears that the level should be supportive going forward as well. The triangle that was just broken actually measures all the way up to 1.12, and because of this – we have become “buyers only” of this pair as of today. On a pullback and support at 1.04, we are buying. On a break of the Wednesday high, we are buying. Selling cannot be done as long as we stay above the 1.04 level mentioned above.

AUD/USD Forecast January 19, 2012, Technical Analysis
AUD/USD Forecast January 19, 2012, Technical Analysis

USD/CAD Forecast January 19, 2012, Technical Analysis

USD/CAD fell for the Wednesday session as the Dollar got hit around the world. The “risk on” scenario came back into play, and people bought many of the “riskier” currencies. However, the pair is currently at the bottom of a massive symmetrical triangle that has support below at 1.01 as well. Because of this, the pair looks much supported at this point.

On a daily close below the triangle, we still would have to wait…..until the pair can break below the 0.99 level as it is the bottom of support. The pair will rise if there are bad headlines coming out, which seems to happen all the time. We are willing to buy on supportive action at this point, but are very aware of the downward pressures.

USD/CAD Forecast January 19, 2012, Technical Analysis
USD/CAD Forecast January 19, 2012, Technical Analysis

NZD/USD Forecast January 19, 2012, Technical Analysis

NZD/USD rose for the session on Wednesday as traders bought the “risk on” trade globally. The Kiwi is always sensitive to these types of moves as it is representative of so many different commodities. The pair was always going to rise as the stock markets around the world rose, and the commodity markets as a whole did fairly well.

The 0.80 level was a massive resistance area, and the fact that the market managed to close so far above it for the session signals that this uptrend is set to continue in this market. The Dollar has done fairly well against most currencies lately except the so-called “commodity dollars” such as the New Zealand dollar, and as a result shows that the commodity trade is very much alive and well. If this pans out – the NZD/USD should be set to rise for the foreseeable future.

As long as we stay above the 0.80 level, this market is suddenly a “buy only” one. The health of the Kiwi is obvious, but the headline risks could have a say from time to time. The close looks very good at this point, and the 0.82 level should be the next area that the market tries to test going forward.

The trade for our money going forward is to buy on the dips as long as we are above 0.80 or so. We think this area should be supportive in the near term, and the level will be considered vital by a lot of traders. With this knowledge, we are very interested in seeing how price reacts to the level.

On a break above the highs for Wednesday shows that the momentum is picking back up, and if we get above that high – we are long of this market as it should signal more strength ahead. The market does look set to break to higher levels, so we aren’t ready to sell in this market at all. Buying short-term dips and new highs is the way we are going to proceed over the next several weeks in this pair.

NZD/USD Forecast January 19, 2012, Technical Analysis
NZD/USD Forecast January 19, 2012, Technical Analysis

Oil Forecast January 19, 2012, Technical Analysis

The Light Sweet Crude market attempted to rally for the session on Wednesday, but failed to show any amount of follow through later in the session. The $120 level held off the bullishness, and the market is starting to look weak at this point.

The $105 level is massive resistance, and we feel that the area should be a massive one to overcome if the bulls wish to push prices higher. The inability of the markets to continue higher is a poor sign, but the $95 level continues to be very supportive. The area between the two marks has a lot of noise in it, so we are not keen to trade this market yet. We need to see a break out above the $105 level in order to buy, or break below the $95 level to sell. In the mean time, we simply wait.

Oil Forecast January 19, 2012, Technical Analysis
Oil Forecast January 19, 2012, Technical Analysis

Natural Gas Forecast January 19, 2012, Technical Analysis

The natural gas markets had a fairly quiet session on Wednesday as the market tries to digest the massive fall that we have seen over the last week or so. When a market falls like this, there is almost always a bounce sooner or later, as people will sometimes be quick to keep those massive gains.

The supply is far too much for the demand, and this should continue. The fall might see a nice pullback, but we are selling all rallies in this market until proven otherwise. As far as buying, we wouldn’t even seriously consider it until we get above $4, which is a long way away from here.

We are selling rallies, but may hold off on new lows as this fall needs to pullback in order to be healthy.

Natural Gas Forecast January 19, 2012, Technical Analysis
Natural Gas Forecast January 19, 2012, Technical Analysis

Gold Forecast January 19, 2012, Technical Analysis

The gold markets rose again during the session on Wednesday as the sentiment for gold seems to be getter better and better. The $1,650 level has given way, and we think the grind higher could continue at this point in time. The area was a tough fight, and because of that, it looks like the move upwards is starting to be taken seriously.

The level being overtaken is a stark contrast to the selloff that the market went through towards to end of last year. The market has come back, and the bounce has shown that the long-term sentiment is still upwards for the gold markets. The $1,700 level should be the next level the market tries to reach. With the Tuesday candle forming a hammer, we also favor the upside now that the $1,650 level looks to be supportive now.

The European Union continues to struggle with debt crises and various issues of insolvency and this should have people shunning fiat currencies while favoring hard assets. The demand for gold is also seen as fairly strong amongst the central banks of the world, and as a result there will be massive buy orders overall. This is one of the biggest drivers of the gold markets presently.

Until the credit issues are solved, the demand for gold should only rise as central banks continue with easing. The values of various currencies around the world are set to plunge, and this will make “things” and “stuff” more valuable than paper.

Looking at the charts, the $1,650 level should be support now that we have not only broke and closed above it, but also that we have a nice large hammer from Tuesday. The $1,700 level will be resistive, but we believe it to be a minor level and the market should be able to grind through it.

While we may not see $50 a day gains going forward, this market does look healthy overall. The demand for gold remains, and this is true for most commodities. As the central banks continue to tinker with monetary policy, gold will thrive. We are buying at this point, and will continue to do so on pullbacks.

Gold Forecast January 19, 2012, Technical Analysis
Gold Forecast January 19, 2012, Technical Analysis

AUD/USD Fundamental Analysis January 20, 2012 Forecast

Close of Asian Markets

Economic Events: (GMT)

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims  3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the AUD, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

00:30 AUD Import Price Index (QoQ) 0.60% 0.00%

The Import Price Index measures the change in the price of imported goods and services purchased domestically.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

 Analysis and Recommendation:

 Support and Resistance can be found at these levels   
S:            1.0293   1.0326   1.0371  
P:            1.0404 
R:            1.0449   1.0482   1.0527

AUD/USD was trading at 1.0393

The AUD fell against the USD on bad unemployment numbers just out.

AUD/USD dropped to 1.0400 during Asian session, falling 0.33% and recovering from a low of 1.0377.
The duo was likely to find support 1.0326, and resistance at 1.0449,.

The Ozzie government data showed the economy lost 29,300 jobs in December, much worse than expected as the forecast called for the addition of 10,000 jobs.

The data sent the ANZ crashing as traders saw the weak jobs data, coupled with expectations that inflation data could be soft as well, promoted the predictions that the Reserve Bank of Australia will cut interest rates at its next monetary policy meeting.

The USD is expected to pick up strenght today on the US unemployment data. If the US figures come within forecast or exceed, this will push the USD up and put additional pressure on the AUD.

NZD/USD Fundamental Analysis Jan.20, 2012 Forecast

Close of  the Asian Session

Economic Events:

There are no economic events  or reports expected to effect the kiwi today.

Analysis and Recommendation:

Levels of Support and Resistance can be found today at:

S:            0.7912   0.7956   0.7994  
P:0.8038             
R:            0.8076   0.812     0.8158

NZD/USD is trading at 0.8014 down from the opening at .8044 which was the high for the day.

The pair will remain quiet and just continue to track the EU crisis, making a blip up and down on the news of the day.

The US jobs data is due out on Thursday morning ( US Eastern Time ), if the reports come out over forecast, the USD could rally pushing the kiwi down and waking up this pair. At this time, the data is expected to be at forecast levels, but like earlier in AUD, the data can surprise, if the data is bad, the USD will sink.

USD/JPY Fundamental Analysis Jan. 20, 2012, Forecast

Close of the Asian Session

Economic Events: (GMT)

Jan. 19

13:30 USD Core CPI (MoM) 0.10% 0.20%

The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding food and energy. The CPI measures price change from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

13:30 USD CPI (MoM) 0.20% 0.00%

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims 3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the Yen, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

Analysis and Recommendation:

Levels of Support and Resistance can be found today at:

S:            76.456   76.5555  76.674                 
Pivot:    76.7735
R:            76.892   76.9915   77.11

USD/JPY was trading at 76.76

The USD/JPY closed almost at the open today, moving very little. The duo seem to have been sleeping all week. What little life they have shown has been in reaction of EU.

In the news a comment from a Goldman exec said that the JPY is probably 25% overvalued and Japan’s days of trade and current account surpluses “look to be finished”. Even the Japanese Minister joined the crowd, stating it is difficult at this moment to find an FX level for the JPY similarly to the Swiss Franc. The markets and currencies are all skewed by the EU crisis.

The two will most likely trade in this range for the rest of the week. Watch the US jobs reports, this could be the kickstart the USD needs to rally, but at this writing all looks calm.

USD/CAD Fundamental Analysis Jan. 19, 2012, Forecast

Economic Events: (GMT)

13:30 CAD Manufacturing Sales (MoM) 0.90% -0.80%

Manufacturing Sales measures the change in the overall value of sales made at the manufacturing level.

A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims 3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the Swissier, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

15:00 USD Crude Oil Inventories 5.00M

The Energy Information Administration’s (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation.

Analysis and Recommendations:

Support and Resistance levels for tomorrow      
S:            1.0140   1.0105   1.0075
R:            1.0210   1.0250   1.0320

The USD/CAD is currently trading at 1.0123  down from opening at 101.52

The IMF noted today, that they would discuss increasing their funding to 1 trillion euros, at their meeting the end of February, though this news pushed the euro, it is an old story and just a discussion some 6 weeks from now. The USD was down a bit today, on some inflation comments. Tomorrows jobs reports in the US should meet forecasts and have little effect on the markets. Also tomorrow crude inventories reports will be out, but again no major changes here. If either reports exceed or fall short of forecasts, then there might be some action between the pair.

The US Government today turned down a Canadian company’s plans to build a pipeline from the US/Canada border to the Gulf of Mexico, to transport oil from the Canadian tar fields through Oklahoma and onto the Gulf of Mexico. This pipeline would serve many uses and have many benefits. The pipeline is seen as one way to deal with a supply situation in Oklahoma, the delivery point for Nymex oil, and also as an inexpensive transport to get oil from the Canadian tar sands and oil fields on the border of Canada to U.S. refinery industry along the Gulf of Mexico.

The most important benefit means less reliance on Middle Eastern oil imports. The pipeline project, however, has been under intense criticism from environmentalists.

The loonie will most likely trade sideways within a tight range for the next day or so.

Crude Oil Forecast Jan. 19, 2012, Fundamental Analysis

Crude Oil Forecast Jan. 19, 2012, Fundamental Analysis
Crude Oil Forecast Jan. 19, 2012, Fundamental Analysis
Crude oil prices declined though the German and Portuguese bond auctions showed an spike in demand, spurring demand for the euro-area common currency, accordingly, the euro rose against US dollar, while stocks in Europe went pared early gains.

Euro advanced sharply against the U.S dollar after the International Monetary Fund said that it could expand its capacity to 1 trillion dollars from 385 billion dollar in order to support the global economy and prevent the debt crisis from spreading outside the euro-area region.

Now, eyes will be spotted the performance of the European economy, especially after the ECB lent the European banks huge amount of money, and if that money will help the euro zone to continue recovery process amid big challenges.

Gold Forecast Jan. 19, 2012, Fundamental Analysis

Gold Forecast Jan. 19, 2012, Fundamental Analysis
Gold Forecast Jan. 19, 2012, Fundamental Analysis
Gold prices inclined as the USD lost strength despite the German and Portuguese bond auctions that showed an spike in demand, increasing demand on the euro- area common currency, accordingly, the euro rose against US dollar, while stocks in Europe pared early gains.

Euro advanced sharply against the U.S dollar after the International Monetary Fund said that it could expand its capacity to 1 trillion dollars from 385 billion dollar in order to support the global economy and prevent the debt crisis from spreading outside the euro-area region.

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, and investors are ought to remain cautious.

Natural Gas Forecast Jan. 19, 2012, Fundamental Analysis

Natural gas prices traded on Wednesday near a 10-year low even as forecasts for colder-than-normal Midwest weather signaled increased demand for heating fuel.

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 Jan. 19, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 19, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 19, 2012, Fundamental Analysis
The USD/CAD pair dropped on Wednesday as the USD lost strength despite the German and Portuguese bond auctions that showed an incline in demand, and that made investors to buy more euros, accordingly, the euro rose against US dollar, while stocks in Europe pared early gains.

Euro advanced sharply against the U.S dollar after the International Monetary Fund said that it could expand its capacity to 1 trillion dollars from 385 billion dollar in order to support the global economy and prevent the debt crisis from spreading outside the euro-area region.

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

Thursday January 19:

Canada won’t release any new data, so fluctuating trading in the pair is expected, and eyes will be focused on Europe and the crisis that could cause any change in trading.

Gold Fundamental Analysis Jan. 19, 2012, Forecast

Economic Events: (GMT)

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims 3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall and a rise in Gold, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

Analysis and Recommendations:

Gold futures mounted a rise today, ending the day at a five-week high and extending rise to two days. Gold for February delivery ended $4.30 up, or 0.3%, at $1,659.90 on the Comex. Prices started the day in negative territory but turned upward as investors saw a hint of inflation in a U.S. government report and the dollar extended its fall. Face it with the situation in Europe the safety of gold looks better and better every day. But watch for a dollar rally, but gold will mount a comeback if the USD does rally

Support and Resistance levels for tomorrow      
S:            1631.9   1612.9   1595.9
R:            1668.     1658.7   1653.1

Gold continues to be a strong buy, adding on the dips.

Natural Gas Fundamental Analysis Jan. 19, 2012, Forecast

Economic Events: (GMT)

15:30 USD Natural Gas Storage -95.00B

The Energy Information Administration (EIA) Natural Gas Storage report measures the change in the number of cubic feet of natural gas held in underground storage during the past week.

While this is a U.S. indicator it tends to have a greater impact on the Canadian dollar, due to Canada’s sizable energy sector.

16:00 USD Crude Oil Inventories 5.00M

The Energy Information Administration’s (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation.

 16:00 USD Gasoline Inventories 3.60M    

Gasoline Inventories measures the change in the number of barrels of commercial gasoline held in inventory by commercial firms during the reported week. The data influences the price of gasoline products which affects inflation.

The data has no consistent effect, there are both inflationary and growth implications.

Analysis and Recommendations:

Natural Gas continues to fall as the days left of winter begin to wane. Weather is still the major factor here. The weather picture continues to call for a warm winter and the glut of natural gas grows. Tomorrow’s natual gas inventory should push the price down farther. Natual Gas is down, trading at 2.51 from yesterday’s close at 2.53.