19.11.2007 13:59 Monday
Economic News
USD
We open the week of November 18th, with what has become a familiar trend; the dollar continues to fall. The greenback finished off trading on Friday down against most major currencies as credit and housing worries continue to haunt the US economy. Figures from the Department of Treasury regarding International Capital, Balance of Payments, and Industrial numbers hindered any hopes of the greenback gaining on its progress from early last week. Instead, investors start the week offering the greenback in bulk. Another hit to the dollar came this weekend as the Gulf Cooperation Council, made up of the lion's share of the Gulf States, discussed the possibility of revaluating their currencies away from the greenback. This has become a developing trend as China leaked several hints that they were doing the same, not too long ago.
The greenback this week will have to rely more heavily than usual on outside events, as the shortened Holiday week holds little relevant news in the US economic schedule. Tuesday will see the release of the FOMC meeting minutes which should highlight any suspicion about if and when the Fed will intervene once again to change the economic outlook of the dollar.
US Housing will look to be a notable subject this week with two statements set to be released. Today at 18:00GMT, we will see the release of the National Association of Home Builders Housing Market Index, ahead of Tuesday's Housing Starts numbers.
Other than that the Greenback is expected to remain under pressure, as more and more nations lose faith in the currency that once represented the symbol of economical robustness, and is now becoming less relevant on a global scale.
EUR
The Euro ended trading last week in a consistent fashion, rallying late against the greenback to stay above the 1.46 level. The Euro has become a mainstay in the global economic world, as some see it as the world's new dominant currency. It seems as if any gain from the greenback is not substantial enough to deter the overwhelming strength that the 13 Nation currency has had lately. A quick peek to the week ahead could see a slight dip in the Euro, most likely in the early parts of the week. This however will likely be a short lived trend as the Euro has consistently rallied from falling positions over the last several weeks. This trend has affected the relationship between the GBP and the EUR as well, as gaps between the two European currencies are slowly closing.
The G-20 Conference in South Africa this past weekend was surprisingly mum regarding any serious change in currency policies. Leaders mentioned that the state of the world's economic slowdown was "difficult to predict", helping not one bit in shoring up investor concerns.
The week ahead sees little relevant news from the EU economic calendar. This week will see a speech by ECB President Trichet at the Frankfurt European Banking Congress on Friday. As the President normally spurs market volatility when he speaks, this time should be a bit different as his words come late in the week on Friday. The Euro should continue to progress slowly barring any surprising news events as investors have come to see it as a strong and stable option when trading.
JPY
The JPY once again benefited from slumping housing prices as investors shied away from high-yielding assets funded by the JPY. The Japanese currency was up against 15 of the 16 major currencies to end Friday trading and looks to continue its forward progress. The presumption is that the upcoming housing numbers from the US this week, will continue to push the JPY forward. The focus on Japan at the G-20 Conference in South Africa was geared toward structural reform and fiscal consolidation. The Japanese would ultimately like to contribute more positivity to the JPY via local events as opposed to being reliant on outside factors. BoJ Governor Fukui touched upon his concern revolving the rapid appreciation in recent JPY numbers.
The Japanese economic calendar stays barren of any important news events, as the Holiday week also corresponds with celebrations in Japan. It will be intriguing to see how investor behavior develops in regards to carry trading; it is likely we will see a boost in the JPY as the week begins.
Technical News
EUR/USD
There is a very distinct triangle forming on the 4 hour chart which appears to be at a key level before a breach. If a move towards the 1.4620 will occur, it will probably validate a deeper bearish move into the 1.4570 zone.
GBP/USD
The cable has been trying to massively correct the intensive bullish move, and is now trading around 2.0530. The sharp bearish channel is in a high spot at the moment, and together with a strong bearish cross on the slow stochastic, represents a very good potential for a short position.
USD/JPY
The pair is showing a very strong bearish momentum that appears to be overlooking the normal price movement proportions, and is now trading at the impressive 110.50 level. The direction appears to be down, as both RSI and slow stochastic strengthen the bearish notion.
USD/CHF
After touching a base at 1.1155, the pair now consolidates a bit higher at 1.1170. all oscillators show that the bearish momentum will probably continue, and that a breach through the next key level of 1.1150 is quite imminent. If the key support level will hold, we might see a correction back to the 1.1220 levels.
The Wild Card
Crude Oil
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