Crude Oil - Economic Data Lowers Demand for Crude

The price of Crude Oil was significantly lower yesterday as poor U.S. housing data and a strong Dollar weighed on the commodities market. Traders took the information as a pullback to economic growth and a sustained economic recovery, thereby reducing demand for the commodity. Oil fell below a significant support line of $66 and finished the day down at $65.85 from $68.36. Yesterday's 3.6% drop in price was the second day in a row for a pullback in Crude prices. The valuation seems to be taking hints from reported economic data. If this is the case, traders will be wise to follow today's U.S. Core Durable Goods Orders and New Home Sales numbers. We could see Crude Oil trading at $65 by the end of today.

USD - Dollar Rebounds on Return to Risk Aversion

The Dollar came roaring back yesterday against its rivals as poor housing data and falling equity markets sapped traders appetite for risk. Existing home sales numbers were released to an unspectacular reception with the numbers failing to reach their expected targets. Only 5.10M existing homes were sold as compared with economists forecasts of 5.36M. This sent traders running from higher-yielding currencies and into long Dollar positions. Yesterday's trading was notably volatile, with the EUR/USD climbing in early European trading hours to a daily high of 1.4789, only to end the day at 1.4650 from 1.4721. Driving the early appreciation for the EUR was a lower number of U.S. Unemployment Claims. These gains were later eroded after less than spectacular housing data was released. Against the Yen the Dollar was down as traders looked for the less risky currency. The pair closed at 90.82 from 91.30.Looking ahead to today's trading, we can expect further volatility of the Dollar. The Group of Twenty (G20) meets for a second day today. Comments made by the global heads of finance can move the market fast so traders should be aware of their impact. U.S. New Home Sales data is due at 2:00pm GMT time. If the New Home Sales is anything like the Existing Homes Sales data from yesterday, the EUR/USD could continue its decline for the second day in a row to finish the week near the 1.4550 mark.

Fundamental Outlook

The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4525 level and was capped around the $1.4645 level. European Central Bank officials spoke about the economy today with member Constancio noting “There is still great uncertainty regarding the depth and sustainability of a global recovery, which has led some analysts to say it might be slower than is desirable.

Forex Analysis - The USD Remains Pressured on U.S Interest Rate Prospects

The U.S. currency may be headed for a quarterly decline against 14 of 16 major counterparts before report this week forecast to show American employers cut fewer jobs, boosting demand for higher-yielding assets. Although the greenback posted small gains against major rivals Tuesday, edging higher on the Japanese currency, the currency may reverse its earlier gains on speculation a Federal Reserve official will reiterate today that record-low Interest Rates will be unchanged for an extended period.

Forex News Trading

Traders on the Foreign Exchange market, Forex market for short, can potentially make thousands of dollars based on the volatility and fluctuations of a country’s currency. To better themselves and have a leading advantage over other traders, some Forex traders and investors participate in a practice known as news trading. The risks are very high, but the potential gains can be worth thousands of dollars and many traders and investors use this technique.
The technique of news trading is quite simple. It is the trading of foreign currency immediately before or after an important economic news announcement. After such announcements, there is a high possibility that market prices will fluctuate, either for the better or worse, depending on the announcement. For example, if the U. S. Federal Reserve announces another increase of the interest rate, many traders might invest in the U.S. dollar as it is expected that its value will appreciate. The main advantage of news trading is the potential for a country’s currency to make huge gains or losses in very little time. Within minutes of an economic announcement, a country’s currency can gain or lose one hundred points almost instantly. The potential of huge profits attracts Foreign Exchange traders and investors, however there are various risks associated with news trading.
Like any investment, there is always a risk, and news trading on the Forex market is no different. Though the potential profits are huge, the losses are also equally as large. The dangers of news trading come from the fact that a trade must be made quickly or else you are going to lose. If you are caught on the bad side of a trade, your money will be gone quicker than you can blink your eye. You will lose money so fast that there won’t even be time for you to manually close your trades, leaving you with nothing. Stop-loss orders are also potentially dangerous as there is a high probability of slippage because of the sudden price fluctuation.
Though some investors and traders might get lucky trading news, there is only a small probability that you will make a profit. Even if you are an expert news trader, you should still be very, very cautious when participating in this practice. Successful news trading depends solely on how you get your news. The most successful news traders are the ones with the fastest news feeds and those that are able to quickly place their trades immediately after an announcement has been made. Even using other forms of news trading, such as placing orders above or below the market price is still a guessing game, and those traders in the market who base their trades on guesses, won’t have much money after a short time.

Canadian Dollar Declines on National Bank Statement

Canada has been one of the fastest economies to recover from the recession that impacted the world last year, but the Bank of Canada is stressing on the fact that strong currency may delay the economic rebound in the country, affecting traders’ sentiment towards the loonie.
According to Bank of Canada officials, interest rates will be maintained at a record low in Canada until 2010, suggesting that even if the country is recovering from the biggest crisis in decades, economic conditions are not so improved to the point interest rates can be hiked, shunning investors from loonie-priced assets.
USD/CAD traded at 1.0753 as of 21:22 GMT from a previous rate of 1.0677 yesterday.
If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Australian Dollar Climbs on Banks’ Resilience

The Australian dollar climbed today versus most of the 16 main traded currencies as the national central bank affirmed that the largest financial institutions in the country showed themselves resilient from the crisis and are helping the country to recover from the worst recession in decades.
The Reserve Bank of Australia provided support for the Aussie to climb against virtually all main traded currencies today as it declared that banks in the country are weathering the country’s economic difficulties, spurring demand for the Australian currency which has been one of the biggest winners this year so far in trading markets. Other reports also improved attractiveness for the Aussie, as new home sales jumped to the highest level in four years, creating a perfect pattern for traders to search high-yielding opportunities in the South Pacific region, as New Zealand is also recovering faster than other wealthy nations from the global slump.
The optimism towards Australia can be explained by several reasons according to JR Crooks, director of research at Black Swan Capital:
With the potential for China to recover and pump the globe with growth, Australia benefits as they supply much of the natural resources et al. that China uses to produce goods.
Australia also was not so much affected by the credit crunch last year, fact which is providing a better outlook towards the South Pacific than other economic regions:
Australia hasn’t had to tackle the banking/financial fiasco to anywhere near the same degree as have the U.S., Europe, U.K. and others.
The forecast for the Aussie remains bullish, as long as the world economy continues to revive.
AUD/USD rose at 0.8741 as of 11:51 GMT after being traded at 0.8653 hours earlier.
If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.