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Top FX Market Movers: Commodity Currency Majors Repeat Performance
By John Kicklighter | Published  10/12/2005 | Currency | Unrated
Top FX Market Movers: Commodity Currency Majors Repeat Performance

NZD/USD

Fundamental Speculation: A relatively slow day in the FX markets as a whole with overall speculation relatively calm heading into tomorrow's U.S. trade balance figures.  Nonetheless, traders bid the New Zealand dollar higher on momentum sparked yesterday by an optimistic economic survey.  As a result, bolstering further notions of rate hike expectations in the near future, the carry trade notion continues to play a big role in the commodity bloc currency.

US Trade Balance: Expected to worsen on higher values of imported crude, market participants will be especially noting the deficit with China.  Reaching a record $17.6 billion in June, speculation still surrounds the notion of unfair practices and political ploys in bolstering the Chinese economy's stranglehold on low cost exporting.  Notably, with newly released “panda” bonds, the government may now be able to cut their deficit while seeing an underlying alternative to minimizing currency fluctutations.  U.S. figures are expected to be released at a widened $59.4 billion compared to last month's improved $57.9 billion.
 
Rumorville: Currently big offers reside at 0.7000/10.

AUD/USD

Rising Anticipations: Bouncing off of support at the 0.7506 figure, the currency pair has been lifted by expectations of the upcoming employment report.  Although concerns continue over higher energy costs and rising inflation, short term employment growth still bolsters overall near term economic growth.  With that said, expectations are running high that unemployment rates will remain steady at 5 percent for the fourth consecutive month underpinned by a strong participation rate.  The September participation rate is expected to hit a record 64.9 percent from the August print of 63.4 percent.

Rate Expectations: As a result, interest rate hike considerations remain high as commodity prices retain their lofty levels and inflationary pressures climb.  As a result, coupled with yesterday's positive survey results, traders are betting on forthcoming interest rate increases.

Rumorville: Bids are stacked at 0.7500/05 and 0.7535/40.  Subsequent offers reside at 0.7560/65 along with the 0.7580/90 region.  Stops follow above at 0.7620 and below key support at 0.7500.

Technically Speaking: Bouncing off of the intrasession low, the pair looks to be consolidating above the 38.2 percent fib from the near term bear wave.  As a result, with continued momentum favoring the upside, an imminent test of the 50 percent fib looks probable with a formidable test at 0.7572.

USD/CAD

Crude Concerns: Crude oil regained some momentum on the session on the back of comments by the International Energy Agency.  Stating that demand may pickup as the effects of the hurricanes wane, the report additionally warned that refineries would have to be fully operational in 2006 in order to accommodate mounting demand.  Coupled with the upcoming winter season, traders saw buying opportunities as crude oil briefly hit $63.95 a barrel.  Furthering long initiatives looks to be the EIA weekly report due out on Thursday.

Rumorville: Bids are at 1.1680 with stops below at 1.1660.  Further bids are followed at 1.1620 and 1.1610 with corresponding offers at 1.1730/50 region.

Technically Speaking: Stalling at the previously formed support of 1.1683, the USDCAD currency pair looks to further provide downside selling upon a break.  In the event of a temporary pullback, the 23.6 percent fib level at 1.1727 looks to be a nonstarter with the 38.2 percent fib providing some considerable resistance.

Richard Lee is a Currency Strategist at FXCM.