Tuesday October 13, 2009 - 12:18:58 GMT
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Forex Hound - www.forexhound.com
U.S. Dollar Expected to Open Lower
Trading is returning to normal today following yesterdayâ€™s
U.S. bank holiday. Overnight, the Dollar
initially stated to show strength, but that quickly disappeared as demand for
higher yielding assets showed no let up in Asia and Europe. Without any major U.S. economic reports today, look
for the trend toward a weaker Dollar to continue. Earnings surprises could move the markets
The EUR USD is expected to open higher despite a weaker
German consumer confidence number. Overnight
it was reported that the German ZEW Survey fell to 56.0 from 58.8. This report, which showed the first decline
in 4 months, surprised traders which led to initial weakness in the Euro. Investors ignored the news and the marketâ€™s
reaction and quickly bought the weakness to turn the market around.
Recent economic reports suggest the Euro should be breaking
but traders continue to push it higher.
Investors are acting as if the economic data is aged and that better
times are ahead.
The trend turned down in the GBP USD overnight when this
currency pair broke through 1.5858. This
action also helped form a new swing top at 1.6120. Additional selling pressure hit the market
following the release of a disappointing U.K. inflation data report, but
these losses were quickly absorbed by traders who began buying the
weakness. If todayâ€™s low at 1.5706 turns
out to be a bottom, then look for the start of a retracement to 1.5913 to
Sellers near the last swing top at 90.40 are preventing the
USD JPY from changing the trend to up.
The current selling pressure could drive this market down to 89.22 to
88.93. This area needs to hold in order
to form a secondary higher bottom and trigger the start of a new rally. Traders are being cautious in this market at
current levels because they feel the Bank of Japan may take action to prevent
volatility and a rapid rise in the Yen.
Demand for higher yields is helping to drive up the AUD USD
and NZD USD. Aussie traders are
speculating that the Reserve Bank of Australia is going to raise rates
at its next meeting in November. Strong
consumer spending helped boost New
Zealand retail sales in September. This, better than expected report, is helping
to support a higher NZD USD this morning.
Economists are now thinking this
report is another sign that the economy is pulling out of its recession.
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