The currency markets were relatively quiet yesterday, as uncertainties regarding the outcome of the US presidential election led to investors holding off on opening big positions. Still, concerns regarding Greece's economy caused the euro to slip to a fresh two-month low against the USD in early morning trading. Today, trades can expect a significantly more volatile day, as the final results of the US elections combined with a Greek vote on a set of reform packages are set to impact the marketplace. Failure on the part of the Greek parliament to pass the reforms may lead to heavy euro losses.
USD - Final Results of US Election set to Impact Markets Today
Nervous investors remained hesitant to open large positions during European trading yesterday, before the final results of the US presidential election were known. As a result, most currency pairs saw little movement throughout the day. Still, the dollar was able to gain just over 20 pips against the JPY during mid-day trading to reach as high as 80.26. The greenback was not as fortunate against the Canadian dollar. The USD/CAD fell as low as 0.9932 during European trading, down some 24 pips.
[Related -Health Care SPDR (ETF)(NYSEARCA:XLV): The Only ETF You Need To Own – For September]
Today, the final results of the US presidential and congressional elections are forecasted to generate significant market volatility. If it becomes apparent that no clear winner in the election between President Obama and Mitt Romney can be determined, investors may choose to place their funds with safe-haven assets, like the USD and JPY, until a clearer picture presents itself. Additionally, traders will want to pay attention to a Greek parliamentary vote to institute a batch of new reforms needed to unlock a fresh round of bailout funds. Safe-haven currencies could see a boost if Greece fails to institute the reforms.
EUR - All Eyes on Greek Vote Today
[Related -CONN'S, Inc. (CONN) Q2 Earnings Preview: The BIG Move Quarter]
Despite a slow trading day yesterday, the euro was able to see moderate gains against its safe-haven currency rivals ahead of a critical vote on austerity measures in the Greek parliament. The EUR/JPY was able to bounce back from a three-week low to reach as high as 102.87, up just over 50 pips during mid-day trading. Against the US dollar, the common currency was able to advance some 47 pips after hitting a two-month low during morning trading to trade as high as 1.2818 in the afternoon session.
Turning to today, all eyes are likely to be on a Greek parliamentary vote regarding a new batch of austerity measures needed to secure a fresh round of bailout funds. The failure to implement the deeply unpopular austerity measures would threaten to plunge Greece significantly deeper into recession. In such a case, analysts are warning that investors could shift their funds to safe-haven assets, which could cause the euro to turn bearish.
Gold - Despite Modest Gains, Gold Remains Near 9-Week Low
Gold spent most of the day yesterday close to a recent 9-week low, as investors, eager to see who would win the US presidential election, remained hesitant to open big positions. Still, the precious metal was able to gain just over $7 an ounce to trade as high as $1692.45. A minor downward correction brought prices back to the $1689 level later in the day.
Today, the results of the US election are likely to drive the direction gold takes throughout the day. Analysts are predicting that a definitive win for President Obama would mean that US interest rates would remain low for the foreseeable future, which may boost the price of gold. Conversely, a win for Mitt Romney may mean that the precious metal could extend its recent bearish trend.
Crude Oil - Crude Sees Minor Gains ahead of US Election Results
The price of crude oil was able to reach as high as $86.50 during European trading yesterday, up close to $1 a barrel. That being said, the commodity could not maintain its gains, as investors remained nervous regarding the outcome of the US presidential election. By the afternoon session, oil dropped back to the $86.00 level.
Today, in addition to the results of the US elections, which are sure to create volatility in oil prices, traders will also want to pay attention to a Greek parliamentary vote on a new round of austerity measures. Should the parliament vote to implement the new measures, which would unlock a new round of bailout funds, risk taking among investors may boost crude prices.
While the Williams Percent Range on the daily chart is in oversold territory, most other long-term technical indicators show this pair range trading. Traders may want to take a wait and see approach at this time, as a clearer picture is likely to present itself in the near future.
A bearish cross appears to be forming on the weekly chart's MACD/OsMA, indicating that a downward correction may occur in the coming days. Furthermore, the Williams Percent Range on the same chart is hovering close to overbought territory. Traders will want to keep an eye on these two indicators, as they may soon signal impending bearish movement.
The daily chart's Relative Strength Index is currently in overbought territory, indicating that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the weekly chart appears close to forming a bearish cross. Opening short positions may be the smart choice for this pair.
The Slow Stochastic on the daily chart is currently forming a bearish cross, indicating that this pair could see a downward correction in the near future. This theory is supported by the Williams Percent Range on the same chart, which has crossed into overbought territory. Going short may be the wise choice for this pair.
The Wild Card
A bullish cross appears to be forming on the daily chart's MACD/OsMA, indicating that an upward correction could occur in the near future. Additionally, the Williams Percent Range on the same chart has crossed into oversold territory. This may be a good time for forex traders to open long positions ahead of possible upward movement.
Article Source: Greek Vote Set to Generate Euro Volatility Today