Dollar again powers ahead on market optimism

Dollar continues to strengthen – other currencies struggle

Today, the Dollar touched a new 11-month high against the Yen. It also reached a one-month peak against the Euro in Asia, supported by growing optimism about the U.S. economy and consequent rises in U.S. bond yields.

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The greenback was at an 11-month high to the Yen before U.S. data forecasts show regional manufacturing expanded and initial jobless claims decreased. This added to signs that the U.S. economy is gathering momentum.

Some analysts expect that the Labor Department could say today, that the number of initial applications by Americans for jobless benefits fell by 5,000 to 357,000 for the week ended on the 10th of March.

The Federal Open Market Committee has commented that it expects “moderate economic growth” and predicted the U.S. unemployment rate “will decline gradually.”

The Federal Reserve has bought $2.3 trillion of securities in two rounds of bond purchases, and has also pledged to keep interest rates low through to the later part of 2014.

The market seems now to have reviewed its view on the U.S. economy and is scaling back expectations of QE3 by the Fed, or the view that the U.S. economy will perform poorly in 2012.

The Dollar’s strength is in contrast to other currencies, which have suffered their own problems. The Euro is shackled by concerns over debt, while the Yen is hampered by speculation of more Bank of Japan (BOJ) easing and the Aussie has been impacted by concerns over growth in China.

The greenback was near its highest level in four weeks against the Euro. Both the Australian and New Zealand Dollars have hit 7 week lows following China having signalled on Wednesday, that it is keeping property market restrictions, thereby dimming the outlook for the fastest growing major economy.

The greenback has in fact gained against all other major currencies, with its index against a basket of major currencies hitting its highest in two months at 80.738.

It touched 84.18 Yen, the highest level since the 13th of April earlier today, and was at $1.3020 per Euro from 1.3032 yesterday. The British pound also hit a nine-month high of 131.46 Yen. The Yen dropped 0.3% to 109.50 per Euro.

The Yen has declined 6.2 percent in the past month to the Dollar. The latest Dollar buying seems in part to also be driven by purchasing from option traders who have sold Dollar calls and from Japanese investors looking to reduce currency hedging on their U.S. bond investments. Speculators appear to have been selling the Yen aggressively since the Bank of Japan’s easing in February.

Australia’s Dollar touched $1.0423, the lowest since January 20th, while the kiwi touched 80.61 U.S. cents, its lowest since January 25th.

It definitely appears that the U.S. recovery is starting to gain some traction and is set to strengthen further.

All the best!
Adrian Jones

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EXOTIC TRADING

Yen Hits 11-Month Low

The Japanese Yen continued it’s downward spiral as Japanese selling, supported by growing US optimism about the economy and rises in US bond yields, continued in Asia on Thursday.

The Yen is struggling to shrug off speculation of more Bank of Japan easing. Meanwhile, the Euro slipped to a 1-month low and remains riddled by debt worries.

News Watch For EURJPY

There are no High Impact news releases scheduled for the EURJPY pair through until the close of trading this Friday.

EURJPY Analysis

The ink barely had time to dry on yesterday’s column when we started cashing in on the EURJPY. Take a look at what happened on the following chart:


Price closed above the 109.000 level and we got a signal to enter to the long side so I placed a Buy order.

The plan was to close half the position at 20 pips profit and move my stop loss to breakeven but some how I managed to wrong foot myself and ended up closing the entire position.

This trade only lasted 6 minutes and there was every indication that the move would continue so I re-entered with half the original position and kept a close eye on my stop loss level.

Sure enough, price eventually surged upwards and I managed to close half the position at 28 pips profit and move my stop loss to break even.

My stop loss was tagged not long ago and we were taken out at breakeven. After the dust settled we came out with a neat 2.83% profit in our account.

At the moment, I have no signals to enter to the long side but I’m keeping an eye on the lower trendline of the black, dashed bullish channel to see if there is any reaction.

We could be in for more action before the closing bell rings at the end of the week so we’ll see how it goes. All the best!

Happy trading

Wesley Govender
Senior Trader for
World Class Trading Stars

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As yesterday saw a bounce off of our trend line target for the Gbp we did see a tiny bit of movement to the downside. However, there was no clear divergence and since the market created several spikes we saw things pretty much go sideways ever since.


We did get a break of a Head and Shoulders neckline from last week. This pattern is about as perfect as you can get and should put us in the 1.5385 area once the market picks back up again. For the time being though we’re having trouble with the 1.5642 area and I would like to see a break below this to go short.


In the news today we have tons for the Usd and nothing for the Cable.

1.8:30 am – PPI Report – High Impact.
2.8:30 am – Unemployment Claims – High Impact.
3.8:30 am – Core PPI Report – Medium Impact.
4.8:30 am – Empire State Manufacturing Index – Medium Impact.
5.9:00 am – TIC Long-Term Purchases – High Impact.
6.10:00 am – Philly Fed Manufacturing Index – High Impact.

Because there is so much high impact news out today, we may be wise to stand aside and let the market absorb the releases and decide on a clear direction.

Good luck and safe trading!

Joshua Schultz
Senior Trader For
Forex Master Method

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Thursday 15th Mar 12

EUR/USD

4 hour chart

Weekly Pivot – 1.3170
Monthly Pivot – 1.3261

Resistance – 1.3190
Resistance – 1.3291
Support – 1.3000
Support – 1.2973
Support – 1.2929

Current Price 1.3060

I would hold the shorts taken at 1.3159 and 1.3078 until we reach our first target of 1.2973. There seems to be no real volume in the market right now with the EUR drifting down as opposed driving down.

We might see a move back up to the 1.3100 level at which point it would be a possible short entry with a target of 1.2973. As we are below the weekly and the monthly pivot point I am only interested in short position right now. Another possible trade is to sell short if we have a close below 1.3000 with a target of 1.2929.

Mark McRae

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