Forex Trading Strategies 20/11/2009

Stocks and Currencies at Crossroad

* The dollar and yen advanced as risk aversion increased on Thursday. The overbought stock and commodity markets fell as investors unwound some carry trades. The Conference Board US leading economic indicators index rose less than expected; still, indicating a robust economic recovery. US initial jobless claims remained unchanged from the prior week while continuing claims declined. Increasing demand for dollar liquidity sent 2- year yields to a yearly low. Dollar crosses and stock markets are at important technical levels and the resolutions of these technical levels will likely determine the directions of equities and currencies in the intermediate run. At important resistance, the S&P 500 dropped 14.90 to 1,094.90, pressured by a downgrade of semiconductor stocks. The EUR/USD, between resistance in the 1.50 area and support in the 1.48, fell to 1.4919. Sterling was pressured by lower-than-expected UK retail sales and worries about the UK banking sector. The Australian and Canadian dollars fell for a third consecutive day as commodity prices declined.

* The dollar index rose today, having been testing the 75-area for nearly a month. If this support is broken, the dollar index may fall to the 71-area support which is the low set last year. There are resistances at the 76 handle and in the 77-78 area. If these levels are broken, the technical outlook will improve.




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EUR/USD 20/11/2009

GBP/USD 20/11/2009

USD/JPY 20/11/2009

GBP/JPY 20/11/2009

Gold 20/11/2009

Forex Trading Strategies 4/11/2009

FX Jumpy Ahead of Central Bank Meetings

* The dollar rose against most key currencies on Tuesday as investors worried about the health of the global banking sector and the sustainability of the equity rally. UBS, a huge Swiss bank, reported a wider-thanestimated loss. In the UK, Royal Bank of Scotland said it was taking more public funding, and Lloyds announced a rights issue. Meanwhile, US factory orders rose for a fifth month in six. The greenback pared earlier gains as the US stock market closed mixed. The S&P 500 was up 2.53 to 1,045.41. Investors are cautious ahead of three major central banks’ meetings. The Federal Reserve, Bank of England and European Central Bank are expected to keep their key interest rates unchanged; investors will look for signs of the central banks’ exit strategies. The yen declined modestly. Japan was closed for a holiday. Sterling recovered earlier losses and traded little changed in late afternoon trading. The Canadian dollar rose modestly as crude prices increased and gold prices hit a new all-time high. The Australian dollar declined modestly after the Reserve Bank of Australia raised its key rate 25 basis points to 3.50%, as expected, but downplayed further rate increases.

* The EUR/USD fell on Tuesday after the European Commission warned about further bank losses and that credit growth will be weak until banks repair their balance sheets. In addition, the EC sees slow economic growth in 2010-11. The EUR/USD tested the diagonal support from the long-run uptrend the last few days. If the 1.47 handle is broken, the pair will turn bearish. This is more likely to happen if the stock market correction continues. The S&P 500 is likely to test the support in the 980 area. Our long EUR/USD position was stopped out today with a small profit.



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