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Saturday August 7, 2010 - 02:17:02 GMT
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December Gold Poised to Test Major Obstacle at $1215.00

December Gold surged to the upside on Friday, finishing the week in a strong position as traders bought the metal as a hedge against a potential drop in the equity markets and because of the weakness in the Dollar.

 

The close put the market in a position to test a major 50% price level at $1215.00. This price represents a retracement of the $1270.60 to $1159.30, June to July sell-off. After briefly piercing a downtrending Gann angle at $1212.60 today, the market settled back indicating there may be sellers up here. This is also a sign that more sellers may show up once the market completes the 50% retracement. Long traders should watch for a technical bounce at this level. The chart pattern suggests there may be a pull-back to $1186.30 sometime next week.

 

The strong surge in the September T-Notes and T-Bonds is an indication that investors are betting on new language in the Fed’s policy statement following next week’s August 10 meeting.

 

Investors expect the Fed to change the language it has been using to describe the length of the current economic slow down. In addition, investors are looking for the Fed to announce the renewal of its asset buyback program.

 

I’ve said this a countless number of times, but I’ll say it again, the bonds are the best indicator for the economy. As long as the Treasuries continue to maintain their higher-top, higher-bottom formation, look for the economy to remain weak.

 

Stocks were under pressure since the release of the jobs data early this morning. The markets sold off as the news was what not what investors expected, however, the ability to hold the markets in a range most of the day indicates that it was only disappointing and not earth-shattering.

 

Despite trading lower on Friday, the markets managed to hold on to their gains for the week. The rally, however, does appear to be running out of steam.

 

The September Euro made a new high for the week on Friday, driven by disappointing U.S. jobs data. The rally through the former top at 1.3262 resumed the uptrend while forming a new swing bottom at 1.3119 in the process.

 

This morning the U.S. government released disappointing jobs data which solidified the thought that the economic recovery was stalling. The report which said private employers added fewer jobs during July than forecast, raised concerns amongst investors about the sustainability of the U.S. recovery.

 

The disappointing non-farm payrolls data will most likely be used by Fed officials next week when they set monetary policy. The weaker jobs number will most likely mean the Fed will announce stimulus measures to help revive the economy which may include renewing its quantitative easing program.

 

Improvements in the Euro Zone economy at a time when the U.S. economy is still struggling makes the Euro a more attractive investment. Upside momentum indicates the Euro has enough buying power behind it to reach the 50% level at 1.3510 over the near-term.

 

Earlier this week the European Central Bank monetary policy committee voted to leave its benchmark interest rate unchanged the historically low 1% level. This move was unanimously expected by traders.

 

Following the release of the interest rate decision, ECB President Trichet noted that the European bank stress tests completed since the last meeting have helped increase transparency and fueled a move toward restoring market confidence in the banking sector.

 

In the wake of recent strong Euro Zone economic data, analysts had expected Trichet to outline an exit strategy or discuss the ECB’s plan for its special liquidity provisions. In other words, is the ECB going to continue to provide free-flowing liquidity to the market or begin to withdraw it. Trichet indicated the ECB would consider this action on that next month.

 

Trichet failed to say anything really bullish about the Euro, but actually may have helped limit gains by stating that the second half of 2010 was likely to be “much less buoyant” than the second quarter because of the implementation of new financial austerity measures. He also added that it was too early to “declare victory” in the economic crisis.

 

Based on Trichet’s comments, the Euro is most likely to continue to be driven by economic news regarding the U.S. economy. At this time, the ECB seems a little more upbeat about the Euro Zone economy while the U.S. Fed is being encouraged to consider the renewal of its quantitative easing program to ward off a potential double-dip recession. As long as the U.S. economy remains weak and interest rates low, look for the Euro to remain firm.

 

The situation is not all rosy for the Euro however. Many of the recent improvements in the Euro Zone economy have taken place before financial austerity measures were in full effect. Furthermore the ECB is still providing stimulus. Like the U.S., consumer spending will be the key to sustaining the recovery. If consumers decide to pull in their purse strings at a time when the government is cutting spending, then the economies in the Euro Zone may come to a screeching halt.

 

Aside from the disappointing U.S. jobs data report, the biggest surprise was the loss of jobs in Canada. Throughout the entire global recession, the talk of the town has been Canada and how the country avoided a prolonged recession and banking crisis.

 

The September Canadian Dollar traded sharply lower due to an unexpected decline in the Canadian jobs market. The news out of Canada reflects its first job losses of the year.

 

Friday’s Canadian jobs report showed that the economy lost 9,300 jobs in July while the unemployment rate unexpectedly rose to 8 percent from 7.9 percent. Analysts had predicted an increase of 15,000 jobs after a strong gain of 93,200 in June.

 

The Canadian Dollar fell on the bad jobs data as traders speculated the weakening U.S. economy would have an adverse affect on the Canadian economy going forward.

 

Based on the drop in yields and the rise in Canadian bond prices, investors are beginning to price in the possibility that the country’s recovery from the recession is starting to cool and could encourage the Bank of Canada to refrain from additional interest rate hikes over the near-term.

 

Traders should continue to focus on the weak U.S. economy as the main catalyst behind the movement in the currency markets. With interest rates expected to continue to remain low for a prolonged period of time and the Fed expected to remain dovish on the economy, continue to look for a weaker U.S. Dollar.

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



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Trading Ideas for 18 December 2017

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Amazing Trader EVENT RISK Calendar:

Mon 18 Dec
10:00 EZ- final HICP
Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account
Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude
Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP
Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes
Mon 25 Dec
00:00 Christmas Holidays

Forex Trading Outlook


Potential Trading Opportunities

  • POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.


  • POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
  • POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity

  • POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
  • POTENTIAL PRICE RISK: Medium- Wed --15:30-- US- EIA Crude

John M. Bland, MBA
co-founding Partner, Global-View.com EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




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