The Euro did end up rallying early today but once again found resistance at 4900 and proceeded to drop down to around 4850. Both 4hr and daily stochastics are trending down which gives a good indication that we’ll see the Euro continue to fall to at least 4800.
Oh yea! The Cable rallied nice today just like I thought it would. The pair looks like it found a bottom at the 9500 mark. The bullish divergence on the daily chart along with the fact that both 4hr and daily stochastics are trending up give me good reasons to believe that the pair will continue to head up.
The Dollar seemed to have bottomed out at 1.0900 and has since been hanging around that area. Daily stochastics are starting to hook up while 4hr stochastics are trending up. I would look for the pair to bounce up off of the 1.0900 level and make its way up to around 1.0950.
The Dollar continued to drop against the Yen today and fell to around the 107.00 mark. Daily stochastics are in oversold territory but are still trending down. However the 4hr chart shows 2 different bullish divergence as well as being in oversold territory. It might not be right this moment, but this pair looks like it’s about ready to head on back 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 Average Earnings Index
- 8:30am EDT- US CPI
- 9:00am EDT– US TIC Data
- 9:15am EDT– US Industrial Production
- 2:00pm EDT– US Beige Book
For a list of all of tomorrow’s news events, check out our Forex Calendar