Thursday January 14, 2010 - 19:47:16 GMT
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Forex Hound - www.forexhound.com
Dollar Feeling Pressure at the Mid-Session
The Dollar Index is
unchanged at the mid-session, but in a position to weaken in sluggish
trading. Adding to the weakness were reports that U.S. Jobless Claims
rose last week by the largest amount in five weeks and U.S. Retail
Sales were down. Both reports show that employment is still a major
issue affecting the economy as well as consumer spending. Both reports
also showed unexpected results. Traders seem to be pressing the Dollar
because the economic data suggests the Fed will keep interest rates
lower for a prolonged period of time.
The European Central Bank
decided to leave interest rates at the historically low 1% level as
expected. The EUR USD weakened a bit after ECB President Trichet failed
to spark interest in the upside following his assessment of economic
conditions in the Euro Zone region.
The AUD USD is trading
better at the mid-session. Investors bought the Aussie and shorts
covered positions following the release of a robust Australian jobs
report early in the trading session. The Australian jobless rate eased
in December while the economy added close to three times as many jobs
as initially forecast.
The size of the rise in the number of
jobs has increased the chances that the Reserve Bank of Australia will
raise interest rates at its next meeting on February 2nd. Some
economists are forecasting a 5.50% rate by December 2010. Gains could
be limited by traders who believe a tighter monetary policy in
Australia and an end to Chinaâ€™s stimulus measures will dampen
The bullish action in the Australian Dollar
spread to the NZD USD. The Kiwi is trading higher but is rangebound
during the New York session.
The weak U.S. economic data is
pressuring the USD JPY. The failure to reach a 50% level at 92.24 was
the first sign of weakness. The second sign will be a trade through the
low for the week at 90.72. This move will put the market in a position
to weaken further with 89.30 the next downside target.
CHF tried to breakout to the upside through a 50% price at 10212 before
failing to attract aggressive buyers. Downside momentum has pushed this
market back inside a retracement zone with 1.0143 the next potential
downside target. Weak U.S. economic data is making the Swiss Franc more
attractive. Losses could be limited because of the threat of
intervention by the Swiss National Bank.
The USD CAD is trading
at a new low for the week. Greater demand for gold, copper and natural
gas is helping to support the Canadian Dollar. Look for this currency
to remain strong as long as there is demand for raw materials.
Short-traders have to be careful down in this area because of possible
action by the Bank of Canada to weaken the Canadian Dollar.
GBP USD is trading higher at the mid-session after erasing earlier
losses. The British Pound turned the main trend to up on the daily
chart earlier in the week when it crossed a main top at 1.6240. This
move was primarily driven by a Bank of England memberâ€™s call for higher
interest rates later in the year. Furthermore, traders are beginning to
believe that the need for further stimulus has dissipated. The first
upside objective is a 50% level at 1.6355, followed by 1.6478.
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