Saturday November 6, 2010 - 02:33:47 GMT
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U.S. Stocks End with Whimper after Eventful Week.
equity markets closed slightly higher after a spurt to the upside following a
better than expected U.S.
jobs report. Buying pressure died shortly after the major indices reached their
highest levels in more than two years.
The financial markets took a breather after a volatile and
eventful week. Traders seem to have exhausted themselves after a strong rally
following a Republican election victory, fresh stimulus from the Fed and a
better-than-expected jobs report. It didnâ€™t look like there was a major seller
in the markets on Friday, but it appeared that buyers may have grown tired of
chasing the markets higher. This came after an eventful week helped support
demand for equities.
The December E-mini S&P may break back into 1200 over
the near-term which was a former top. If this test doesnâ€™t attract buyers then
look for a possible correction to 1193.00.
December Gold and Silver rallied to new highs for the year
this week. Despite the slightly better Dollar, December Gold and December
Silver continued to post strong gains. Todayâ€™s action indicates that precious
metals investors are willing to compete with stock investors for funds.
The U.S. Dollar finished lower for the week, but a rally on
Friday helped offer a ray of light for the Greenback.
The U.S. Dollar strengthened against most major currencies
after the government said the non-farm payrolls grew by 151,000 in October,
exceeding pre-market guesses. The Labor Department also revised upward payrolls
for August and September. The strong showing helped keep Octoberâ€™s unemployment
rate at 9.6%.
The strong showing from the jobs data report helped the U.S.
Dollar recover some of its earlier losses particularly against the Euro and
British Pound which suffered big losses. The fresh employment data helped give
risky assets a boost, driving up demand for commodity sensitive currencies such
as the Australian, New
Zealand and Canadian Dollars.
The main trend is down for the Dollar against most majors,
but the rate of decline seems to have slowed down. The Dollar Index remains
below a swing top and downtrending Gann angle which indicates continued
pressure until the market can penetrate either one of these resistance points.
The inability to produce a weekly closing price reversal this week leaves this
market vulnerable for a new low next week. If this occurs early in the week,
then bullish traders may attempt to produce a weekly reversal once again.
Getting back to the jobs data, the economy needs to be creating
at least 250,000 jobs or more to get back on track. Even though the Fed pledged
$900 billion in quantitative easing earlier in the week, this doesnâ€™t mean that
employers will start hiring. Employers are waiting for consumers to step up
their game before they will start bringing in new workers.
Technical signs are building in the December Japanese Yen
which indicates impending volatility. Overnight the Japanese Yen had very
little reaction to the Bank of Japanâ€™s decision to hold interest rates unchanged
and the release of details of its recent liquidity-injection campaign.
The December Euro was down sharply on Friday but held on to
its weekly gains. Based on the short-term swing of 1.3733 to 1.4282, traders
should watch for a pull-back to 1.4008 to 1.3943.
The December British Pound reversed Thursdayâ€™s rally. At the
close this market was approaching an uptrending Gann angle at 1.6130. A failure
to hold this level could trigger an acceleration to the downside with a
potential target zone at 1.5974 to 1.5897. This zone represents 50%/.618
retracement of the 1.5650 to 1.6298 range.
Fridayâ€™s strength in the Dollar appears to have shifted
interest away from the Fedâ€™s quantitative easing action from earlier in the
week and back onto the economic fundamentals. This may be only a temporary
condition as most traders should realize that the employment news is only a one
day event so far. One key to sustaining the strength in the Dollar will be
whether the jobs data can begin to form an upward trend.
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