Home  Daily Forex Reports JPY Swings for Huge Price Changes Today
|
|
|
|
JPY Swings for Huge Price Changes Today |
|
|
|
Tuesday, 28 October 2008 |
|
The JPY today is seeing extreme volatility in today's trading.
Potential Japanese government intervention in the Forex market may be
influencing the sharp price movements. Traders are advised to can take
advantage today of the vast market swings.
Economic News
USD - Dollar
Continues to Break Records against the EUR
The USD continues to strengthen on all fronts as investors are viewing
the U.S. economy on much stronger footing with the ability to better
handle the impending global recession then most economies of the
western world.
The Dollar continues to break new record highs against the EUR on a
daily basis, and yesterday the EUR/USD pair reached as low as the
1.2330 level. Similar activity was observed against the GBP as well,
mainly because the European nations are currently considered to be the
most vulnerable countries to a prolonged recession, and investors
around the globe have less confidence in the region's ability to handle
a global slowdown.
In addition to the strong bullish trend the USD is experiencing lately,
another support came in yesterday as the U.S. New Home Sales data was
released, providing better-than-expected figures. The indicator showed
464K new single-family homes were sold during September. The importance
of this result is that it was the first time in four months more houses
were sold as opposed to the previous month. Previously, the
deteriorating condition of the U.S. housing sector was the first
trigger many analysts used in order to prove that the U.S economy is
headed towards recession. Yesterday's figures came as a positive
surprise that the U.S economy might be stabilizing and further
strengthened the greenback.
As for future trading, today the U.S. Consumer Confidence survey is
scheduled for 14:00 GMT, and is expected to provide mediocre results.
Tomorrow the Federal Reserve is widely expected to cut interest rates
by 0.5%. What this means is that although in the long term the USD is
expected to appreciate, the next few days it might embark on a moderate
bearish correction for the USD against its major pairs and crosses.
Traders are advised to keep a close eye on the following couple of days
as fantastic opportunities for short-term profits might be observed.
EUR - Another Rate Cut in Store for the EUR?
The EUR seems to be stabilizing against most of the major currencies
except for the USD. The strong downtrend of the EUR vs. the JPY and CHF
has halted since the beginning of the trading week, yet against the USD
the EUR saw another bearish session.
After wide spread rumors claiming that the European Central Bank (ECB)
is planning to cut interest rates, the ECB President, Jean Claude
Trichet, delivered a speech yesterday in Madrid, reinforcing the
suspicions by saying that the ECB will possibly cut Euro-Zone interest
rates at its next meeting, scheduled for November 6th. However, he
avoided revealing the size of the planned cut.
Most people will probably tell you that this is another milestone in
the EUR's bearish journey, but might you consider a different point of
view? Until now, investors around the world were quite united on the
assumption that an interest rate cut is just a matter of time in the
Euro-Zone, and therefore avoided investing in this region and caused
the latest downtrend for the EUR. But how will they act now that it has
been partially confirmed that the cut will indeed take place? Some
investors might see it as an excellent opportunity to make profits from
the weak currency, so don't be surprised if a bullish correction will
take place in the next couple of weeks.
Meanwhile, today's leading indicator will be the German Consumer
Climate survey, which is expected to describe a rather gloomy picture
for the Euro-Zone's strongest economy. Traders should expect another
session of high volatility with still a slight potential for bearish
movements.
JPY - JPY Post Sharp Drops from Unwinding Carry Trades
After a week of tremendous bullish trends, the Japanese leadership is
giving worrying signals to the JPY's overvaluation. Yesterday French
Finance Minister, Christine Lagarde, said that the Japanese
administration is considering getting actively involved in the foreign
exchange market for the first time in four years, and that the Bank of
Japan may begin selling Yen on the open market in the near future.
The unwinding of carry trades that have traditionally used large
amounts of leverage have pushed the JPY higher to levels not seen
before. As investors buy back JPY that they originally borrowed in, the
JPY has seen abnormal gains. The Japanese government faces the
difficult task of estimating how much more deleveraging exists in the
market and when to begin selling the JPY in order to lower the exchange
rate.
There are real concerns in Japan that the exporting sector will be
sharply damaged by a stronger JPY, and considering the already poor
outlook of the Japanese economy, such reaction could be lethal. It
seems that Japan won't accept the current value of the JPY, and will
act to bring it back to a more comfortable level. Traders should take
very seriously any statement on that issue and follow these
developments very carefully, as they could generate a new trend in the
market.
OIL - Crude Prices Keep Dropping
Crude Oil is retaining it low price, and yesterday it made an almost
17-month low falling to $61.30 a barrel.
Speculations that fuel demand is on the verge of a deep cut continue
pushing the price of Crude Oil down, much below analysts' expectations.
Who now remembers that only six month ago Crude Oil prices were
forecasted to rise to the $200 level?
Even the OPEC announcement that it will reduce the production of Oil by
15% failed to create any divergence in the current bearish trend. It
currently seems that as long as equity markets are dropping on a daily
basis, the price of Crude Oil will be consistently damaged.
Technical News
EUR/USD
This pair is still in the midst of a steady downtrend, however the 4
hour and the daily chart's RSI has peaked at the over-sold zone,
suggesting that a bullish correction move might be quite imminent. As
for the short term, a sharp bullish move has already taken place on the
hourly chart and seems to have more steam in it. Going long with tight
stops might be the right strategy for the nearest timeframe.
GBP/USD
After the recent intensive downtrend, the cable appears to be
consolidating at the 1.5650 level. In the shorter time frame a bullish
cross on the 4 hour indicates that there might be a small correction
before the larger bearish move resumes. Selling on highs appears to be
preferable today.
USD/JPY
On the hourlies, the pair is in the beginning of an uptrend correction
initiated at 92.70. The RSI and Momentum are still positively sloped
indicating that there is still steam left in this bullish move. The
daily chart's oscillators show that a negative breach is quite
unlikely, and the 4 hour charts are also showing a beginning of a mild
bullish momentum. Going long might be a preferable strategy.
USD/CHF
The volatile trading continues without a distinct breaking direction.
The hourly chart is giving mixed signals and is mostly floating in
neutral territory. The dailies however, are showing a slight bullish
momentum. The daily chart's Slow Stochastic is positively sloped and
the RSI also confirms that the direction is indeed up.
The Wild Card
Gold
This commodity has been trying to massively correct the intensive
bearish move, and is now trading around the 750 level. The sharp
bullish channel is in a high spot at the moment and together with a
positive slope of the hourly chart's Slow Stochastic it provides forex
investors quite a good potential for long positions.
Written by: Forexyard.com
|
|
Recommended Forex Trading Platforms
 |
A 90 day demo account helps you build up your trading confidence with ample time and capital before entering a live environment. From US$5,000 up to US$ 5,000,000 to trade in virtual money, get direct access to the world's FX markets at no risk or obligation with our powerful, user-friendly online trading platform - the MIG Trading Station. |
|
|
Finance Sites
- Compare Secured Loans
Quickly & easily compare over 150 secured loans and 400 personal loans at the Moneysupermarket.com
- Compare Mortgages
Compare thousands of UK mortgage and remortgage rates and deals.
|
