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Good day forex trading koalas.
Today is Christmas and i want to wish all forex trading koalas a Merry Christmas. May you and your family find joy always and your forex trading a successful and safe journey. Remember to always trade safely and say NO to Margin Calls.
In the previous review we noted that while the US economy posted good economic data, the Euro Zone is of a different situation. Sentiments remain apprehensive and the risk of an escalating deficit crisis runs high. Failure to cross 1.32 on the EUR/USD may bring us down towards 1.3 on the EURUSD.
Looking at the EUR/USD chart above, we can see that the week was a relatively slow week. Currency movement was limited and slow as most investors take time off during the holiday season.
During the early part of the week, negative news were streaming out from the Euro Zone. The German Producer Price Index came out lower than expected. There were also concerns that France’s AAA grading is at risk of a downgrade. Belgium faces a possible cut too. With the recent downgrade of Ireland, such speculations would probably bring more risk aversion. Although China mentioned that it supports the Euro Zone’s effort to stabilize the financial condition and that it has taken concrete action to assist some Euro Zone members to curb the deficit crisis, the market seemed to take not much notice and the Euro currency did not receive much demand.
Towards the end of the week we continued to see positivity reflected in the US economy. US unemployment claims were lower than expected and while the US New Home sales did not clock in as expected, it was still an increase. On the contrary, the Euro Zone continued to face challenges in the fight against the deficit crisis. It was reported that the Allied Irish Banks is getting a fresh bailout and this will probably intensify the negative sentiments. Investors are apprehensive about the Euro Zone and it’s resolve and capabilities to contain the spread of the deficit crisis.
While many countries are celebrating Christmas, the global economy moves on. Today China announced an increase in it’s interest rates in order to fight inflation. This may cause risk aversion as investors are worried that a move by China to curb speculative growth may derail the global economy recovery. China is seen as a major economic power to lead the world out of the financial recession. Furthermore it is often speculated that more efforts to curb inflation may be on the way as the Chinese government steps up on its effort on managing home and food prices.
From a technical point of view, the 200 SMA lies just below the current price and hence it may be acting as a support together with the line of 1.3. We will probably be seeing low volume conditions in view of the upcoming New Year’s Day season.
Among next week economic data releases comes important data such as the US CB Consumer Confidence, US Unemployment Claims and US Pending Home Sales. You can find the list of the various economic releases in the Economic Calender below.
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