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Good day to all!
The US Dollar strengthens.
With the renewed momentum of strength for the US Dollar, the currency pair takes another hit at the 1.3455 support. I LOVE IT WHEN MY CHART WORKS!
S&P 500 is taking a beating now. This suggest sentiments are negative.
Oil is trading at $76+. I will be concerned if it falls below $70 as oil can be a measure of the economy’s health.
Gold currently trades at $1096, remaining resilient despite the great pressure from the stronger US Dollar.
I love forex. I really do.
In the testimonial by FED’s Bernanke yesterday, he stated that the economy still requires low interest rates to spur demand. A low interest rate normally weakens a currency as traders seek other currencies with higher yields.
However as of now, the US Dollar is strengthening. Why is that so?
Risk aversion strikes again!
For starters, i mentioned that the Greek deficit problem will not be solved easily and we should be careful. Indeed and indeed! Greece’s ratings are in danger of a downgrade. In a report, Moody’s stated that Greece’s sovereign debt rating may be cut within months unless the country meets the objectives of its fiscal deficit reduction plan. This may be a challenge as citizens strike in protest against the actions proposed to fix the problem. A cut in the rating may cause Greek government bonds to be ineligible as collateral at the ECB. This will cause problems for the nation’s borrowing needs.
Next, the Core Durable Goods Orders and Unemployment Claims of the US came out worst than expected, sending the signal to investors that the recovery remains fragile. With the unemployment problem in the US, any adverse release concerning employment strikes worries across traders.
With FED’s Bernanke testifying again today, be careful of unexpected spikes due to comments made.
Tomorrow brings us more important releases such as Germany’s Prelim CPI and US’s Prelim GDP and Existing Home Sales. Monitor the performance closely to see if more “fuel” is added to the “flames” of risk aversion.
Bullish relief may bring us back to 1.3550/600.
More bearish assault may result in a retest of 1.3455. A break here may bring us to 1.3400.
Ok. As much as i want to continue to write and do my research, i am going to try to make peace with Ms Sleep. I am starting to become like a zombie from Left 4 Dead. I need rest!!!!
Trade safely dear koalas!
Read more Forex Articles and Views by The Koala at www.thegeekknows.com