The Euro ended up rising instead of falling like I thought it would, and once again we are seeing the pair hang around the 4750 mark. This has proven to be a pretty strong resistance so there is a good chance it should hold again. 4hr stochastics are trailing up which means the pair could rise or spike above it, but daily stochastics are still trending down which continues to keep me bearish in the medium term.
The Sterling showed signs of life early in the day as it spiked to 9650. However, the rally was short lived and the pair continued to drop once again, hitting the 9550 mark. It seems the Cable may have found support at the 9550 level and both 4hr and daily stochastics are in oversold territory. I feel as though we are at a short term bottom and I would look for the pair to rise back to above 9600.
Well I was totally wrong about the Swissy as it didn’t fell like a rock. I thought we would see the pair rise to 1200 but instead, the Dollar fell down to around 1.1050 before bottoming out. Right now I’m mixed on this pair. 4hr stochastics are trending down hard and shows good momentum. Because of this, daily stochastics have now crossed back down but is still in oversold territory. So you can see the confusion in the air right now. I would hold off until things clear up a little.
The Dollar cooled off a little today as it fell back down to 109.50 against the Yen. In the medium term, the pair still looks like it’s poised to rally as the daily stochastics are trending up and are now exiting oversold territory. In the short term however, 4hr stochastics are trending down which means we could see the pair fall back to 109.00 before bouncing back up. I am still holding off on this pair until I see a more definitive indication that this pair is ready to rally up!
I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.
Now onto the Fundamentals:
Euro Interest Rates about to Rise?
- And don’t look now, but Eurozone inflation is rising… Of course I told you it would, given oil prices, and that the European Central Bank (ECB) would have to drag its feet to cut interest rates… (I also tried to say that on CNBC, right?) Anyway, inflation for the 13-nations that make up the euro, rose 3.1% in November… Whoa Nellie! That’s way too high, given the ECB’s ceiling of 2%!
- The one thing to think about here is that should the ECB decide to raise rates, and the Fed decides to keep cutting rates (recall the discussion about the possibility of 50 BPS this month from the Fed) The euro would be enjoying a positive rate differential… You think the euro was popular as an offset currency to the dollar before? Wait till that happens (if it does of course!)
- Source: Chuck Butler: The Daily Pfennig, 01/08/08
Fed Looks to End Credit Crunch
- The Fed and other global central banks announce a new auction designed to let beleaguered financial institutions access more cash.
- In essence, the Fed is giving beleaguered banks the opportunity to access funds it might need for year’s end without having to borrow money directly from the Fed at the discount rate of 4.75 percent.
- The Fed added that it was coordinating with the Bank of Canada, European Central Bank, Bank of England and Swiss National Bank on the auction process in order to "address elevated pressures in short-term funding markets."
- Source: CNN Money
News events to watch for tomorrow :
- 4:30am EDT- GBP Industrial Production
- 8:30am EDT- US Trade Balance
For a list of all of tomorrow’s news events, check out our Forex Calendar