USD & Majors
The US is celebrating Thanksgiving today, which means trading volumes will be light. This could lead to large fluctuations in the market, as a major participant of the market is missing. Due to the holiday, Initial Claims (which is usually released on a Thursday), and Durable Goods (usually posted on Friday's) numbers were pushed to Wednesday. The surprising number was the drop in Claims below the 500,000 mark. The news caused additional risk appetite in the market, thus causing the dollar to weaken further.
On the whole dollar weakness, has caused the EURUSD to hit a new 2009 high as it now trades above 1.5100. Also, the USDJPY has been falling out of control and hit lows of 86.30 this morning.
Looking ahead, the question is whether these moves will hold. One reason they may not is that with next week's Non Farm Payrolls numbers being released. Large institutional traders may curb back on their positions and take profits before the important Employment news. Also, the exuberance for the Yen may be cut short by tonight's Japanese Retail Sales release which is expected to show another negative year over year drop in sales.
The USDCHF dropped below parity (1.0000) yesterday for the first time in 2009. The USDCHF has been quoted by Forex traders as the litmus test for the dollar. If the USDCHF is at parity, than the AUDUSD and USDCAD (currently at 0.9239 and 1.0487 respectively) at parity may not be far behind. Forex traders will be watching the USDCHF to see if the SNB intervenes to weaken the CHF. At Go Forex, we believe that traders should be watching the EURCHF. This is based on the fact that whenever the SNB has commented about their currency, they have mentioned specifically the Euro. Therefore, as long as 1.5000 holds in the EURCHF, we may see the SNB stay pat and let the USDCHF fall further. If so, it may also be an indicator, that other Central Banks (specifically Canada and Australia) will follow the SNB's example and minimize effects of intervention.
Old continues to trade higher and is impervious to any news. As an example, Gold initially rallied above 1000 on the US's weak job outlook. Fears of job losses prompted worries above additional US government stimulus and dollar devaluation. However, with employment numbers now steadying, and the Claims number coming below 500,000, it could have been expected that inflation fears would dissipate, and Gold traders would take profits. None of this has been happening, and gold prices hit 1194 in the early morning. At Go Forex, we believe that there may not be enough supply hitting the market to satisfy the speculative hunger in gold. Therefore, there are good chances that gold prices will continue to move higher and fly by 1200.
EURUSD Support/Resistance 1.5051/1.5141
GBPUSD Support/Resistance 1.6625/1.6725
Gold Support/Resistance 1165/1200