Today's Action

Commodity prices are sinking today with Crude Oil leading the way lower. The move is coming as traders are exiting from reducing positions and heading back to cash. As expected, the dollar and yen are benefitting from today's action, as the EURUSD has been unable to sustain any rallies and has returned back below 1.4700.

But first, a recap of the numbers:

EURUSD : 1.4712 (+13 pips)
GBPUSD : 1.6235 (- 54 pips)
USDJPY : 87.80 (- 54 pips)
GOLD : 1126 ( - $5.00)
CRUDE OIL : 70.75 (- $2.00)
S&P 500 :1091 (+0.30 points)

Crude Sinks

Crude is cuurently down around $2.50 to just above 70.00. On a day like this, we could have expected that Oil Inventories should a large build up of inventories. However, the opposite happened with inventories falling a much greater than expected 3.2M. Nonetheless, oil prices are still falling and the number has been unable to garner any support for oil. The move in oil may be based on Oil traders reacting to a sharp rise in refined gasoline inventories.

Along with Oil, Gold has also drifted lower and was unable to find support at this morning's lows of 1123, as it has recently hit a new low of 1117. Overall, it appears that traders maybe locking in profits after an impressive rally from March lows. Usually, the inverse occurs with traders selling losers in December to increase their tax losses for the year. However, with so many individuals and firms suffering major losses in 2008, and early 2009, there could be ample amounts of carryover tax losses to cover gains from recent sales.

Pound Continues to Fall

Also on Forex traders radars today is the inability of the pound to find any support. The GBPUSD hit a low of 1.6170 today, and a major mid-day rally to the 1.6350 level evaporated quickly. This all takes us to tomorrows Bank of England MPC meeting. The BoE is expected to leave rates unchanged, and comment about potential increases in quantitative easing. By the way Forex traders are giving the pound the woodshed treatment, it appears they are banking on the BoE to follow the ECB's lead and issue another conservative statement. What this does though, is put the pound in position for a possible sharp rally if the BoE surprises the Forex markets and uses any form of optimistic outlook in its language. With the BoE recently beginning to comment on positives in the UK economy, at Go Forex, we believe that the Forex market may be taking an overly negative stance on the pound and a BoE surprise is likely.