The forex markets are generally quiet today. Though, yen is a little softer following rally in Japanese Nikkei. BoJ has just reintroduced the Zero Interest Rate Policy by lowering interest rates to 0.1% last week. The Finance Ministry proposed a record budget deficit that amounts to 88.55T yen for next fiscal year, 6.6% higher that than in the current one which ends next March. It includes 10T yen for laid-off works and tax relief and another 10T yen for the banking system, 3T yen for purchasing commercial papers.
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Weekly Fundamental Outlook for Energies and Metals - Dare To Buy Oil At Current Level?
by OilNGold
Last week was a week full of surprises: The Fed reduced policy rates unprecedentedly to a range of 0-0.25% followed by the Bank of Japan’s return to ZIRP by cutting the overnight lending rate by 20 bps to 0.1%. The Organization of the Petroleum Exporting Countries decided to lower oil output by 2.2M bpd, more than expectation of 1.5-2M bpd. However, oil price, instead of rebounding, dived to 4.5 years low of 35.98 (though partly due to January contract expiry). Over the week, the RJ/CRB index dropped 3% to settle at 220.08.
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Daily Forex Report: Swiss Franc to Take Over Euro’s Leading Strength?

By ActionForex

Dollar index extended the sharp decline to as low as 78.22 before recovering mildly. The broad based weakness in the greenback is still overwhelming in the markets but after all as the greenback is now sitting in side an important support zone of 75.89 to 80.38, some support should be seen in near term as the greenback approaches 61.8% retracement of 71.31 to 88.46 at 77.86. It’s unclear on whether dollar’s up trend has totally finished but some noticeable rebound should be seen on oversold condition in near term. The critical factor to determine dollar’s outlook will indeed be on whether another fall will be seen after the anticipated rebound to make the whole fall from 88.46 a five wave impulsive sequence, or will such fall complete in three wave corrective manner. This should be decided in the next few weeks and will set the tone for 2009. Read the rest of this entry »

Daily Pivots: (S1) 1.3274; (P) 1.3345; (R1) 1.3438

EUR/USD’s rise continues in early US session and reaches as high as 1.3585 so far, taking out mentioned 100% projection of 1.2329 to 1.3290 from 1.2549 at 1.3510. At this point, intraday bias remains on the upside as long as 1.3430 minor support holds. Focus now turns to 1.3768 cluster resistance. On the downside, below 1.3430 minor support will turn intraday outlook neutral first. But another rise is still in favor as long as 1.3250 support holds. Read the rest of this entry »

Daily Report: Dollar at Critical Point ahead of Non-Farm Payroll

By : ActionForex

Short term outlook of the dollar is at a critical point ahead of non-farm payroll today. Dollar index’s sharp retreat from 87.68 argues that rebound from 84.78 might be completed and turned intraday outlook neutral for the moment. More importantly, the lack of decisive momentum is now raising the possibility that dollar index is completing a head and shoulder top formation (ls: 87.87, h: 88.46, rs: 87.68). However, we must emphasize that it’s not advisable to jump ahead before the pattern is formed. Firstly, any rise above 87.68 will dampen the chance of this head and shoulder top scenario and indicate that recent up trend is still intact. Secondly, break of the neckline support at 85.38 will be be an important alert that such head and shoulder pattern has completed. While one could enter short in such case, this should not be taken as the confirmation that a medium term top is formed yet. Sustained break of 83.11 is still needed to be the confirmation. Thirdly, any strong rebound above 83.11 will argue that dollar index could indeed be just unfolding as in triangle consolidations. In any case, head and shoulders look-alikes are always tricky to trade. The non-farm payroll report to be released today could be the trigger.

Elsewhere, the themes in the forex markets are pretty much unchanged. Yen remains firm against dollar and in crosses. EUR/USD’s consolidation continues with the support from Euro’s strength in EUR/GBP which hit record high of 0.8723. Commodity currencies are mixed with clear weakness seen in the Canadian dollar as crude oil dived to as low as 43.36. AUD/USD, on the other hand, continues to trade in tight range.

Job market in US is expected to lose 320k jobs in Nov unemployment rate would have risen to 6.8%, the worst in 7 years. However, as employment surveys have shown signs of aggressive job cuts by employers recently, we think it’s possible that the actual data will surprise on the downside. In November, initial jobless claims reached a 16-year high at 543k, 64k higher than October. Although initial jobless claim came in better than expected at 509k, the data was affected by Thanksgiving holiday and should not be used as an indicator for recovery. Indeed, the 4-week moving average for initial jobless claims rose to 525k and continuing claims rose to 4.09M, the highest since 1982. Also, note that employment component of both ISM indices hit record low in Nov. ADP private job report showed 250k losses, a record. Challenger report showed 148% jump in planned layoffs, highest since 2002. There’s nothing to cheer about.

Technorati : dollar, forex, forex outlook, market overview, report

Comex Gold (GC)

By OilNGold

No change in Gold’s outlook. Corrective rise from 681 should have completed with three waves up to 833.5 after hitting mentioned 824.5/838.8 resistance zone. Further decline is now expected and break of 731.4 support will bring retest of 681 low. On the upside, however, decisive break of mentioned 824.5/838.8 resistance zone will be an early alert that whole correction from 1033.9 has completed and stronger rise should then be seen to test 936.3 resistance first.

In the bigger picture, as mentioned, there is no confirmation that correction from 1033.9 has completed yet. On resumption, it should target next key support zone of 100% projection of 1033.9 to 739.8 from 936.3 at 642.2 and 61.8% retracement of 371.3 to 1033.9 at 624.41. However, break of 824.5/838.8 resistance zone will be the first alert that such correction has completed. Further break of 936.3 resistance will confirm this case and bring retest of 1033.9 high.

Comex Gold Continuous Contract 4 Hours Chart

Comex Gold Continuous Contract Daily Chart

Flaherty Says Planned January Budget Will Contain Economic Stimulus
(CEP News) Ottawa - Finance Minister Jim Flaherty says it would likely take a new government in Canada months to get its first budget developed and in place.

In a televised interview Wednesday evening, Flaherty said he and his cabinet colleagues have been consulting extensively in preparation for the budget he plans to present to Parliament Jan. 27.
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By OilNGold
As discussed before, Gold’s rebound from 698.2 could have completed at 833.5 already, so is corrective rise from 681. Intraday bias is still mildly on the downside and further decline should be seen. Further break of 731.4 support will maintain the original bearish view. In such case, fall from 936.3 should be resuming for 681 low and below. On the upside, however, decisive break of mentioned 824.5/838.8 resistance zone will be an early alert that whole correction from 1033.9 has completed and stronger rise should then be seen to test 936.3 resistance first.

In the bigger picture, as mentioned, there is no confirmation that correction from 1033.9 has completed yet. On resumption, it should target next key support zone of 100% projection of 1033.9 to 739.8 from 936.3 at 642.2 and 61.8% retracement of 371.3 to 1033.9 at 624.41. However, break of 824.5/838.8 resistance zone will be the first alert that such correction has completed. Further break of 936.3 resistance will confirm this case and bring retest of 1033.9 high.

Comex Gold Continuous Contract 4 Hours Chart

Comex Gold Continuous Contract Daily Chart

Daily Pivots: (S1) 1.5283; (P) 1.5355; (R1) 1.5428

GBP/USD’s break of 1.5178 minor support indicates that corrective rise from 1.4557 should have completed with three waves up to 1.5534. Intraday bias flipped back to the downside for retesting 1.4557 low first and break will confirm that recent decline has resumed for next medium term target at 1.3680. On the upside, while another another rise cannot be ruled out, upside is still expected to be limited by 1.5600 cluster resistance (50% retracement of 1.6671 to 1.4557 at 1.5614). However, decisive break of 1.5600/14 will be the first alert that whole fall from 1.8668 has completed and strong rebound might follow targeting 1.6671 resistance.

In the bigger picture, there are some different interpretations of the structure of the whole down trend from 2.1161, with different projection targets. Main question is whether fall from 1.8668 is the fifth wave in the five wave sequence from 2.1161 (1.9337, 2.0158, 1.7445, 1.8668, ?) or it’s the third wave inside the fall from 2.0158. In either case, fall from 1.8668 is possibly completing a five wave sequence of its own. Strong rebound above 1.4278/4310 cluster projection target (100% projection of 1.7630 to 1.5269 from 1.6671 at 1.4310, 161.8% projection of 2.0158 to 1.7445 from 1.8668 at 1.4278), followed by break of 1.5600 resistance will suggests that a medium term bottom is formed and bring larger scale correction. Though, sustained trading below 1.4278/4310 will target 1.3680 key long term support (01 low).

GBP/USD 4 Hours Chart - Forex Chart, Forex Rates, Forex Directory, Forex Portal

Oil price continued hovering around $53 level Thursday. Near-term outlook on price is mixed as there are good and bad news surrounding us. On the positive side, the Fed committed up to $800 billion on Nov 25 in addition to the previous $750B to unfreeze credit for homebuyers, consumers and small businesses. It will also buy debts. The people’s Bank of China announced to cut lending and deposits rate by 1.08%, hoping to put a floor in China’s growth. As the largest and second largest oil consumers in the world, investors hope the policies adopted by the US and china would stimulate corporate and consumer activities which hence increase demand in oil.

However, on the negative side, The US Energy Department reported crude oil inventory gained by 7.3 mmb on the week ended Nov 21. The addition was really out of expectation as both Bloomberg’s and Platts’ survey expected gain of around 1 mmb. The report indicated that analysts still overestimated demand. We expect more and more downgrades in oil price follow.
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