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Euro Takes Losses Following Disappointing EU Data

 January 09, 2013 09:30 AM


The euro took losses against several of its main currency rivals yesterday, following the release of worse than expected EU retail sales and German factory orders data. The news also led to bearish movement for other riskier assets, including the British pound and crude oil. Today, euro-zone news is once again forecasted to impact the market. Traders will want to pay attention to the German Industrial Production figure, set to be released at 11:00 GMT. If the figure comes in below its forecasted level, the euro could take further losses during mid-day trading.

Economic News

USD - Risk Aversion Leads to Dollar Gains

The safe-haven US dollar saw moderate bullish movement against several of its higher yielding currency rivals yesterday, after worse than expected euro-zone data, specifically retail sales and German factory orders figures, led to risk aversion in the marketplace. The USD/CHF advanced close to 50 pips during mid-day trading to eventually reach as high as 0.9250. The GBP/USD fell close to 60 pips during the middle of the day to trade as low as 1.6047 by the end of the European session.

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A lack of significant news out of the US today means that dollar movement is once again likely to come as a result of euro-zone data. Traders will want to pay attention to the German Industrial Production figure. Analysts are forecasting the indicator to come in significantly higher than last month's which, if true, is likely to generate risk taking in the marketplace and cause the greenback to give up yesterday's gains. Later in the week, dollar traders will want to pay attention to the US Unemployment Claims and Trade Balance figures, both of which are forecasted to generate volatility for the greenback.

EUR - Euro-Zone Data Once Again Expected to Drive Markets Today

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News that the euro-zone unemployment rate went up last month, combined with a drop in German factory orders, resulted in the euro taking moderate losses against safe-haven currency rivals yesterday. The EUR/USD fell some 65 pips during the mid-day session to trade as low as 1.33068, before a slight upward correction brought the pair up to 1.3090. Against the Japanese yen, the common-currency lost more than 60 pips during the middle of the day to trade as low as 114.23.

Today, euro-zone news is once again forecasted to dictate the direction markets take. Specifically, traders will want to focus on the German Industrial Production figure, scheduled for 11:00 GMT. As the biggest economy in the EU, German economic news tends to have a significant impact on the euro. With analysts forecasting the indicator to come in higher than last month's, the euro could recover some of its recent losses today.

Gold - Increase in Chinese Demand Boosts Gold Prices

An increase in Chinese demand for gold caused the precious metal to reverse its recent bearish trend during the European session yesterday. Gold prices advanced more than $11 an ounce over the course of the day, eventually reaching as high as $1658.66 before falling back to the $1656 level.

Today, gold traders will want to pay attention to euro-zone news and its impact on the US dollar during mid-day trading. If the German Industrial Production figure comes in above its forecasted level, the USD could take losses, which would make gold more affordable for international buyers and possibly boost prices further.

Crude Oil - US Inventories Data Set to Impact Oil Prices Today

After gaining more than $0.70 a barrel during early morning trading, crude oil turned bearish after worse than expected euro-zone data led to risk aversion in the marketplace. The commodity fell close to $1 during mid-day trading, eventually reaching as low as $92.73 by the end of the European session.

Turning to today, oil traders will want to pay attention to the US Crude Oil Inventories figure, scheduled to be released at 15:30 GMT. If the figure comes in below its forecasted level, it will likely be taken as a sign that demand for oil in the US has gone up, which would cause the commodity to turn bullish during afternoon trading.

Technical News

EUR/USD

The Bollinger Bands on the weekly chart are beginning to narrow, indicating that a price shift could occur in the coming days. Furthermore, the MACD/OsMA on the same chart appears close to forming a bearish cross, signaling that the shift in price could be downward. Opening short positions may be the smart choice for this pair.

GBP/USD

The daily chart's Slow Stochastic appears close to forming a bullish cross, indicating that this pair could see upward movement in the near future. Additionally, the Williams Percent Range on the same chart has dropped into oversold territory. Traders may want to open long positions for this pair ahead of a possible upward correction.

USD/JPY

The Relative Strength Index on the weekly chart is currently in overbought territory, indicating that a downward correction could occur in the coming days. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the smart move for this pair.

USD/CHF

The Williams Percent Range on the daily chart has crossed into overbought territory, indicating that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Opening short positions may be the smart move for this pair.

The Wild Card

USD/NOK

The Williams Percent Range on the daily chart has crossed over into overbought territory, indicating that a downward correction could occur in the near future. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Going short may be the wise choice for forex traders today.

Article Source: Euro Takes Losses Following Disappointing EU Data

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