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Currencies Update: Trading volume significantly low
Written by article default Thursday, 25 November 2010 11:08
The absence of fundamentals from major economies and the celebration of U.S. for Thanksgiving Day led investors to trade in relatively small volume.The dollar rose against majors after the improvement in jobless claims housing data yesterday.
Ireland debt woes caused investors to lean in favor of low yielding assets, causing the euro to depreciate on contingent European continent conditions.
Investors believe that Spain should be next to acquire a bailout plan, noting that the economy of Spain amounts twice as much as Portugal, Greece and Ireland combined, therefore, putting more pressure on ECB’s exit strategy from markets, not forgetting the amount of EU’s Stability Fund that might be subject to an increase.
The Dollar index ascended on the daily scale, reaching 79.91, compared with the opening levels of 79.79 where it touched a high of 79.97 and a low of 79.66. The index measures the dollar’s performance against six-major currencies including the Euro, pound and yen.
So far, the EUR/USD pair has failed to breach the support at 1.3310, where the pair is trading, compared with the opening levels of 1.3334 where settling a high of 1.3360 and a low of 1.3289.
The Stochastic Oscillator shows the pair in an oversold areas, accordingly, an upside correctional move might pressure the pair to ascend and target 1.3410, which is considered a strong resistance that would allow the pair to return to the upside minor channel where a daily closing above the mentioned resistance; would pave the path for the pair to ascend and target 1.3505 levels.
The pound fell against the dollar but gained against the euro, reaching nine-week high on concerns regarding Ireland bailout plan and the ability of the plan to ease investor’s fears on Europe’s debt problems.
The cable fell against the dollar to trade at 1.5739, while setting a high of 1.5793 and a low of 1.5735, compared with the opening levels of 1.5770.
The gain acquired against the euro comes as a result of investor’s believes that Spain and Portugal will have to acquire a bailout from EU as bonds declined to record.
The dollar rose against the yen on concerns that China will hike interest rates to curb inflation threats in the country, which boosted demand for safer assets in Asia.
The dollar rose against the yen to trade at 83.60 on the daily scale, where it managed to touch a high of 83.69 and a low of 82.38.
A bullish intraday direction remains intact, targeting 84.00 and 85.00 but requires stability above 82.65.