EUR/CHF Forecast December 19, 2011, Technical Analysis

EUR/CHF fell on Friday as the gap from November has been closed. The area should provide support now, but the close of the candle was at the extreme low. The 1.22 level is also the bottom of the range, and this could be a buying opportunity if we get supportive action on a shorter time frame. Although owning the Euro doesn’t feel good, the Swiss National Bank is sitting below, and the 1.20 level won’t be broken without attracting the central bank’s attention. The pair should continue to grind sideways overall.

EUR/CHF Forecast December 19, 2011, Technical Analysis
EUR/CHF Forecast December 19, 2011, Technical Analysis

AUD/USD Forecast December 19, 2011, Technical Analysis

AUD/USD fell below the parity level a few sessions ago, and Friday saw a very bearish candle as the day saw an attempt to rally above that parity level, only to form a shooting star at the close. The failure to rally above that parity level shows just how difficult it will be for the bulls to get back above that mark. The market looks very likely to continue lower to fill that gap form a couple of weekends ago, and we are selling weakness in order to join that move. We are not buying the Aussie at all in this environment of fear.

AUD/USD Forecast December 19, 2011, Technical Analysis
AUD/USD Forecast December 19, 2011, Technical Analysis

USD/CAD Forecast December 19, 2011, Technical Analysis

On Friday, the USD/CAD pair managed to retest the 1.03 level as support and finished the day on a positive note. The oil markets are presently going to be the tell for the pair as the Brent market in particular looks very weak. The Loonie is heavily influenced by this commodity, and as long as there is pressure on the oil markets, there will be upward pressure on this pair.

The Dollar is enjoying a bid in this “risk off” environment, and as long as the EU is struggling with this crisis, there will remain strong demand for Dollars. This keeps us from selling Dollar related assets currently, and especially against the commodity currencies like the Loonie. As long as we can keep above the 1.03 level, we are buying dips.

USD/CAD Forecast December 19, 2011, Technical Analysis
USD/CAD Forecast December 19, 2011, Technical Analysis

NZD/USD Forecast December 19, 2011, Technical Analysis

NZD/USD had a bullish day on Friday as the markets bought the “risk on” move for most of the day. The resulting candle was a decent green one, but the end of the day did give back some of its gains. The risk off trade is always ready to come back into the market, so we are more inclined to sell this pair over time, but waiting for rallies that show weakness going forward. We are not interested in buying at this point in time as the headlines are always liable to be bearish for risk in general these days, and the highs are getting lower.

NZD/USD Forecast December 19, 2011, Technical Analysis
NZD/USD Forecast December 19, 2011, Technical Analysis

Japan the Main Focus this Week

This week ends with Japanese Emperor Akihito celebrating his 78th birthday. In Japan the birthday of the reigning emperor is a national holiday and the markets will be closed.

This is likely to be a hectic week in Japan. There is key trade and economic data as well as a meeting of the Bank of Japan.

Beginning Wednesday December 21st, the Finance Ministry is set to release the November trade figures, which the markets will be watching very closely. Japan is the worlds #3 economy, at it is very important to note the surplus or deficit in their trade account. Japan has been suffering all you, due to the recovery from the hurricaine and sumomi that weaked havoc on the island, destroying their major nuclear power plant and releasing radiation through the surrounding cities and towns. Japan has been slow to recover.

 

Just a few months ago, in October, the flooding in Thailand, the escalating European debt crisis and a continuously strong yen all helped to push Japan to a ¥273.8 billion ($3.52 billion) trade deficit, despite expectations for a surplus. A surplus is expected in this weeks reports.

The most distressing about the October figure  was a 7.7% year-on-year drop in Japanese shipments to China.

Early data from HSBC’s monthly Chinese manufacturing survey, distributed this past week, showed manufacturing there remained in contraction, so Japan’s November trade balance with China will bear watching.  A slowdown in manufacturing in China, will spell disaster for the global markets.

The Bank of Japan is due to announce the outcome of its latest policy meeting also Wednesday toward the end of the day. These annoucements could cause a ripple effect at the opening of the European Markets.

The BoJ is almost certain to keep its interest-rate target unchanged at a 0-0.1% range, but it could announce additional easing measures, or further tweak its economic outlook.

During the past 10 days, the Bank of Japan offered banks more in three-month U.S.-dollar loans than at any other time in years, seeking to ease a dollar-funding crunch as lenders sought to meet year-end requirements.

The Bank of Japan’s also released their  “tankan” survey of business sentiment, with manufacturers reporting worse-than-expected conditions. At last months meeting, the central bank cut its outlook citing a downtrend in overseas economies and the strong yen, and a further downgrade at the upcoming meeting is a possibility.  This comments will give the first look at where the global economy is presently and what we should see for January 2012.

It will be a busy week for the yen and the Bank of Japan, they will most definitely need the holiday come the end of the week.

Oil Forecast December 19, 2011, Technical Analysis

Light Sweet Crude

The CL contract found support in the $92.50 level on Friday, an area that is minor support. The market has been sold off hard over the last several sessions and a bounce looks ready to come. However, as the move recently has been so decisive, we are now looking for rallies to sell. Until we get back above the $105 level – this will be our strategy.

Oil Forecast December 19, 2011, Technical Analysis
Oil Forecast December 19, 2011, Technical Analysis

Brent

The Brent markets found a bit of support again on Friday as the daily bar formed a doji. However, the Thursday candle was a shooting star, and the session on Friday will have triggered sell signals for many traders. The breaking below looks very weak, and we are willing to sell rallies at this point.

Natural Gas Forecast December 19, 2011, Technical Analysis

Friday saw the second quiet day in the natural gas pits in a row. The recent selloff has been brutal, and the market certainly needs to take a rest. With the holidays quickly approaching, the volume will shrink, and the markets could be prone to sudden spikes. Knowing this, we are very keen to sell those spikes as the show signs of slowing down. Also, we like selling rallies in general.

Natural Gas Forecast December 19, 2011, Technical Analysis
Natural Gas Forecast December 19, 2011, Technical Analysis

Gold Forecast December 19, 2011, Technical Analysis

The Friday session saw gold regain some of its losses for the week, albeit in a very small way. The session actually broke the top of the shooting star on Thursday, and could be the start of a possible bounce as a breaking of that top signifies at least some interest in buying the yellow metal. The long-term trend is still up, but the move recently has been brutal. We are waiting to see another day or two of calm before we buy again. The support level extends all the way down to $1,500 or so, and as a result we could see support here – meaning we won’t buy.

Gold Forecast December 19, 2011, Technical Analysis
Gold Forecast December 19, 2011, Technical Analysis

USD/JPY Forecast Dec. 19, 2011, Fundamental Analysis

USD/JPY Forecast Dec. 19, 2011, Fundamental Analysis
USD/JPY Forecast Dec. 19, 2011, Fundamental Analysis
, where the US dollar and the yen continued their upside movements against other major currencies on the back of risk aversion which dominated the FX market.

The next move for the USD/JPY pair will depend on the market sentiment, where the BOJ’s decision and the U.S. GDP numbers will contribute in defining the sentiment.

On the other hand, the pair will likely remain under pressure of a possible intervention from the BOJ in FX market, which could change the short term trend for the USD/JPY pair.

On Monday both economies are not due to release any major fundamentals leaving the focus on the market sentiment.

USD/CHF Forecast Dec. 19, 2011, Fundamental Analysis

USD/CHF Forecast Dec. 19, 2011, Fundamental Analysis
USD/CHF Forecast Dec. 19, 2011, Fundamental Analysis
On Monday, both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

Still, the main focus is on the latest developments from the euro area as many euro zone economies gird for bond selling this week.

Concerns from the euro area may remain after last week’s rise in Italian bond yields, downgrade by Fitch to large European lenders and weak growth outlook for the euro area gave bullishness to the pair as demand increased on the dollar as a refuge.

The Swiss franc has been damped as a safe haven, leaving this mission to the dollar and yen, especially after the Swiss National Bank (SNB) refused calls from exporters to raise the franc’s cap or push interest rate to negative.

Perhaps policy makers will wait till seeing the latest developments in the euro zone, noting that the euro area nations are Switzerland’s main trading partners.

The SNB still believes that “the franc is still high and should continue to weaken over time,” leaving the door opened for further future interventions if needed, especially as the latest data from the Swiss economy referred to a slowdown in the growth pace.

On the other hand, data from the United States gave some positivity to the sentiment last week with the improvement in continuing claims for the week ended December 03, empire manufacturing index and current account.

The Fed’s latest monetary decision signaled holding interest rate at its ultra-low level of 0.25% while policy makers referred that the world’s no.1 economy will continue its expansion.

Thus, it seems that the Fed will not add to stimulus after the progress seen recently.

This week, the main focus will be on Swiss trade data, while in the U.S. the main highlight will be GDP 3q annualized (third reading), housing data and other important news.

NZD/USD Forecast Dec. 19, 2011, Fundamental Analysis

NZD/USD Forecast Dec. 19, 2011, Fundamental Analysis
NZD/USD Forecast Dec. 19, 2011, Fundamental Analysis
The NZD/USD pair dropped to its lowest level in three weeks, after the US dollar soared against most of its major counterparts as the current concerns over the global economic outlook reduced demand for higher-yielding currencies.

The current sentiment supports the US dollar and pushed it to record its highest level in eleven months against the euro, as concerns increased regarding the EU debt crisis after the latest EU leaders’ summit failed to provide the market with confidence.

On Monday at 21:00 GMT (Sunday), the New Zealand economy will issue the Westpac NZ Consumer Confidence for the fourth quarter, which had a previous reading of 112.

The Performance Services Index for November will be released at 21:30 GMT with a prior reading of 50.6.

At 00:00 GMT the New Zealand economy will release the NBNZ Activity Outlook for December which had a previous reading of 28.8. As for the NBNZ Business Confidence for December it had a prior reading of 18.3.

GBP/USD Forecast Dec. 19, 2011, Fundamental Analysis

GBP/USD Forecast Dec. 19, 2011, Fundamental Analysis
GBP/USD Forecast Dec. 19, 2011, Fundamental Analysis
On Monday, both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

So far, the main focus is on the latest developments from the euro zone as many euro area economies prepare for bond selling this week.

Concerns dominated investor’s risk appetite behavior last week after the rise in Italian bond yields, downgrade by Fitch to large European lenders and weak growth outlook for the euro area gave bearishness to the pair as demand increased on the dollar as a refuge.

In addition, the downbeat data released last week from the U.K. increased speculations the BoE may add to the stimulus at the beginning of the year, especially after the slowdown in inflation to 4.8% in the year ended November, according to the consumer price index annual gauge, from 5.0% in October.

The releases showed that U.K. unemployment hovered around the highest level in 17 years in the three months to Oct. while retail sales with auto fuel dropped 0.4% in Nov.

Probably, the BoE will announce further stimuli after in February with the end of the 75 asset purchase program and with the release of the coming inflation report that will provide an update about the latest growth and inflation outlooks.

On the other hand, data from the United States gave some positivity to the sentiment last week with the improvement in continuing claims for the week ended December 03, empire manufacturing index and current account.

The Fed’s latest monetary decision signaled holding interest rate at its ultra-low level of 0.25% while policy makers referred that the world’s no.1 economy will continue its expansion. Hence, it seems that the Fed will not add to stimulus after the progress seen recently.

This week, the main focus will be on GDP final reading from both economies, BoE minutes from the U.K. and housing data from the U.S. in addition to other important news.

EUR/CHF Forecast Dec. 19, 2011, Fundamental Analysis

EUR/CHF Forecast Dec. 19, 2011, Fundamental Analysis
EUR/CHF Forecast Dec. 19, 2011, Fundamental Analysis
The EUR/CHF ended last week bearishly and the franc extended the gains after the SNB left the floor for the pair at 1.20 and refrained from action with also steady LIBOR rates near zero.

Investors were betting the bank will move soon and with again promises to take action the pair lost its upside momentum especially as expectations were for 1.25 new floor for the pair and now instead the bank decided to wait and see despite the growing signs of slowdown and rising deflation threats.

This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

On Monday we need to focus on the French auction for sure for signs of demand slowing or rising yields that keeps nation the center of market focus as rating agencies still has its top credit rating under the line of fire that if seen will have drastic and negative consequences on the sentiment and on the market.

The euro area will start the week at 09:00 GMT with the Current Account for October where the deficit might have widened from the previous 0.5 billion after we saw the trade surplus on Friday shrink to 0.3 billion from the previous 2.1 billion euros.

Construction Output for October is due at 10:00 GMT and unlikely to have improved drastically after the previous drop of 1.3%.

EUR/USD Forecast Dec. 19, 2011, Fundamental Analysis

EUR/USD Forecast Dec. 19, 2011, Fundamental Analysis
EUR/USD Forecast Dec. 19, 2011, Fundamental Analysis
despite the attempts to recovery at the end of the week as investors remain pessimistic regarding the outlook for the euro area.

This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

On Monday we need to focus on the French auction for sure for signs of demand slowing or rising yields that keeps nation the center of market focus as rating agencies still has its top credit rating under the line of fire that if seen will have drastic and negative consequences on the sentiment and on the market.

The euro area will start the week at 09:00 GMT with the Current Account for October where the deficit might have widened from the previous 0.5 billion after we saw the trade surplus on Friday shrink to 0.3 billion from the previous 2.1 billion euros.

Construction Output for October is due at 10:00 GMT and unlikely to have improved drastically after the previous drop of 1.3%.

AUD/USD Forecast Dec. 19, 2011, Fundamental Analysis

AUD/USD Forecast Dec. 19, 2011, Fundamental Analysis
AUD/USD Forecast Dec. 19, 2011, Fundamental Analysis
The AUD/USD pair reached its lowest level in two weeks due to the strong US dollar which dominated the market, as the risk aversion controlled investors.

The latest RBA decision to cut the interest rate to 4.25% reduced demand for the Australian dollar. The RBA will release its Board meeting minutes for December which will show the reasons behind cutting interest rates.

The EU sovereign debt crisis is still in the picture, where the latest developments from the ECB and EU leaders’ were not convincing for investors, who still expecting further worsening in the EU region that might affect the global financial and economic stability.

On Monday both economies are not due to release any major fundamentals leaving the focus on the market sentiment.

Crude Oil Forecast Dec. 19, 2011, Fundamental Analysis

Crude Oil Forecast Dec. 19, 2011, Fundamental Analysis
Crude Oil Forecast Dec. 19, 2011, Fundamental Analysis
, where traders avoided risky assets, providing oil accordingly with bearish momentum, as pessimism is surrounding the outlook for the European debt crisis, while economic fundamentals proved the world’s largest economy is on the right track of recovery as 2011 nears to end.

This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

On Monday, eyes will be focused on the French auction, with hopes bond yields decline this time, as rating agencies still has its top credit rating under the line of fire.

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 leader’ latest moves to contain the debt crisis, where we expect volatility to persist through the sessions this week.

Gold Forecast Dec. 19, 2011, Fundamental Analysis

Gold Forecast Dec. 19, 2011, Fundamental Analysis
Gold Forecast Dec. 19, 2011, Fundamental Analysis
, where traders’ targeted gold as a safe haven amid the pessimism that is surrounding the outlook for the European debt crisis, while economic fundamentals proved the world’s largest economy is on the right track of recovery as 2011 nears to end.

This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

On Monday, eyes will be focused on the French auction, with hopes bond yields decline this time, as rating agencies still has its top credit rating under the line of fire.

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 Dec. 19, 2011, Fundamental Analysis

Natural Gas Forecast Dec. 19, 2011, Fundamental Analysis
Natural Gas Forecast Dec. 19, 2011, Fundamental Analysis
, as the weather forecasts suggested temperatures will be above the average in the Eastern and Central of theUnited Statesfor the next 10 days, fueling speculations of falling demand for natural gas as a heating fuel and putting prices under negative pressure as a result.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely higher than average over the coming period, and that could put natural gas prices under pressure next week.

USD/CAD Forecast Dec. 19, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 19, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 19, 2011, Fundamental Analysis
, as the investors are targeting lower-yielding assets, where uncertainty continues to surround the outlook ofEurope’s debt crisis, while economic fundamentals proved the world’s largest economy is on the right track of recovery as 2011 nears to end.

This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

On Monday, eyes will be focused on the French auction, with hopes bond yields decline this time, as rating agencies still has its top credit rating under the line of fire.

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.

Monday December 19:

We don’t have news from the United States and Canada, and accordingly, traders will be focused on the developments from Europe.

Mixed Sentiments Dominate Markets on Europe’s Debt Crisis Fears; Inflation Trapped in the U.S

Cautious optimism prevailed the financial markets today, with improved economic reports capping a busy week for the U.S economy, as economic fundamentals proved the world’s largest economy is on the right track of recovery as 2011 nears to end, but negative vibes are still cited among traders as the EU leaders face a three-day deadline to build up funding package to battle the region’s debt crisis.

So far, the Federal Reserve prophecy is about to be fulfilled by the end of this year, as all key inflation data suggest that price pressures in the U.S are no longer a threat to the economic rebound, therefore, the Fed could have more space to consider more stimulus if the recovery falters, which is not likely to happen now as the economy seems to be adding stream at stronger pace than forecasted.

Currency trading was limited today in light of a mix of positive economic reports and fears over Europe’s debt crisis on Friday, where the U.S. dollar steadied against a basket of major currencies on Friday, where the U.S. dollar index was trading at 80.12, compared with the opening level at 80.16. The Euro was little changed against the Dollar, where the EUR/USD pair traded around $1.3040, compared with the opening level at $1.3029.

The British Pound consolidated against the Dollar as well, where the GBP/USD pair traded around $1.5521, compared with the opening level at $1.5522, and the U.S. dollar dropped faintly against the Japanese Yen, where the USD/JPY pair was trading at 77.66, compared with the opening level at 77.85.

Stocks in the United States were up at early trading on Friday, paring a weekly for the Standard & Poor’s 500 Index, as the Dow Jones Industrial Average was higher by nearly 0.5% to trade around 11,9332, while the S&P 500 index was higher by nearly 0.9 percent to trade around 1,226. European stock indexes were mixed before closing on Friday, where FTSE 100 was up by 0.15% to trade at nearly 5,408 and the DAX was lower by nearly 0.30% to trade around 5,571.

The yellow shiny metal gained to trade around $1,593.07 an ounce after gold prices opened at $1,575.34 levels while crude oil prices rose to trade around $93.83 a barrel since the opening price of $93.72 levels.