Wednesday October 27, 2010 - 13:32:24 GMT
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Forex Hound - www.forexhound.com
Stocks and Risky Assets Down after Rise in Durable Goods
U.S. equity markets as well as December Crude Oil and
December Gold are trading lower this morning, after the government reported a
3.3% rise in September Durable Goods orders.
In addition to the jump in Durable Goods, traders are paring
equities and risky assets following overnight strength in the U.S. Dollar.
Traders are trimming stock and commodity positions this morning after a Wall
Street Journal reported suggested the Fedâ€™s new quantitative asset program may
not be as aggressive as previously thought.
Technically, December Gold is under pressure this morning
following a change in trend to down late last week. Based on the last main
range of $1237.90 to $1388.10, expectations are for this market to continue
lower until it reaches a retracement zone at $1313.00 to $1295.30. An
uptrending Gann angle at $1303.90 is an additional target.
Following a test of this important support cluster, traders
should watch for a possible technical bounce.
The U.S. Dollar is trading higher across the board this
morning after a Wall Street Journal article suggested the Fed â€śmay opt for a
more measured dose of QE this time around rather than the shock-and-awe version
which characterized QE1â€ť.
Traders are paring long positions against the Greenback as
they seem to believe that the Fed is giving in to some G20 criticism regarding
their aggressively expansionary monetary policy. A few G20 members believe that
the Fedâ€™s aggressive spending has been driving up assets in the past, but that
todayâ€™s global economic conditions warrant a more conservative approach to
stimulating the economy.
The article goes on to further state that the Fed is likely
to purchase a few hundred billion dollars of Treasury Bonds rather that the
previous estimate of $1 trillion. This
speculation is leading investors who aggressively shorted the Dollar to lighten
up on their positions, triggering a short-covering rally in the Greenback.
Technically, this morningâ€™s sell-off in the December Euro
has helped form a potentially bearish secondary lower top at 1.4080. Since the
main trend turned down two weeks ago, traders had been looking for a place to
short on the next rally.
Downside momentum is building that could drive this market
through the last swing bottom at 1.3698, further weakening the market. The
eventual downside target of 50% of the rally from 1.2587 to 1.4259 to 1.3373 is
likely to be reached over the short run if current volatility persists.
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