While the Dollar drops against the major currencies due to the disappointing U.S employment data from Friday, the strongest trend in the market appears to be the bullish gold. Gold continues to break new record highs on a daily basis, and has now reached over $1,100 on ounce. Can it reach higher?

Summary

USD - Dollar Slides on Negative Employment Data

EUR - Euro Rises against the Majors

JPY - Yen Sees Mixed Results against the Majors

Oil - Oil Rises Due to Hurricane Ida Concerns

Forex Market Trends – 09 November 2009

Economic News

USD

The Dollar saw an extremely bearish session during last week's trading. The Dollar dropped around 200 pips against the Euro, and the EUR/USD pair rose to the 1.4900 level. The Dollar also dropped close to 300 pips against the Pound.

Last week's trading has started with a rather bullish sign for the American currency. The Dollar strengthened on all fronts following a few positive publications on Monday. The most affective publication appears to be the Pending Home Sales, which showed that the change in number of homes under contract to be sold but still awaiting the closing transactions, rose by 6.1% during September, beating expatiations for a 0.2% rise. Due to the fact that the housing sector was the catalyst for the crisis, positive housing data tend to support the Dollar.
However, close to the weekend the Dollar saw a sharp downtrend, which came as a result of the disappointing employment data. The Non-Farm Employment Change report showed that the U.S economy lost 190,000 jobs in October, failing to reach expectations for a 173,000 loss. This has led the Unemployment Rate to reach 10.2%, a 26-year low. The total number of unemployed people in the U.S rose to 15.7 million.

As for the week ahead, many interesting data is expected from the U.S economy. On Thursday, the weekly Unemployment Claims will be published. Considering the poor employment data from last week, this report will become even more important. Traders are also advised to follow the U.S Trade Balance on Friday. This report measures the difference in value between imported and exported goods and services during September. It seems that unless positive figures will be published for both these reports, the Dollar might continue to weaken.

EUR

The Euro rose against most of the major currencies during last week's trading session. The Euro's most notable appreciation was against the Dollar as the pair rose to the 1.4900 level. The Euro also saw a bullish trend against the Yen, and currently the EUR/JPY pair is traded at the 134.0 level.

Two main reasons have led to the Euro's bullish trend last week. The first reason was a batch of positive economic data, which came from the Euro-Zone's leading nations. The German Factory Orders, which measures the change in the total value of new purchase orders placed with manufacturers, rose by 0.9% during September. This was the fifth consecutive positive figure for this report. In addition, the French Budget Balance and the Trade Balance also delivered better-than-expected results. This has created a sentiment that the European economies are truly recovering, and as a result strengthened the Euro.
The second reason for the Euro's uptrend was the disappointed data from the U.S economy. The poor employment condition in the U.S turns many investors to look for other investments than the Dollar, and this naturally strengthens the Euro.

Looking ahead for this week, a batch of data is expected from the Euro-Zone. Traders are advised to follow the major publications from the German economy, as this is the strongest economy in the Euro-Zone, and tend to have a significant impact on the Euro. The German Economic Sentiment is scheduled for Tuesday. Another result above 56.0 for this survey is likely to support the Euro. In addition, the German Preliminary Gross Domestic Product is expected on Friday. This is the broadest measure of economic activity and the primary gauge of the economy's health, and thus tends to have an immense impact on the market.

JPY

The Yen saw a volatile session against the major currencies during last week's trading. The trading was characterized with many ups and downs and was concluded in a downtrend for the Japanese currency. This was mostly noted against the Pound, as the GBP/JPY pair rose to the 151.30 level.

The main publications from the Japanese economy didn't seem to have a large impact on the Yen. The Average Cash Earnings dropped by 1.6%, beating expectations for a 2.0% drop. This continues to show that the Japanese economy is yet to recover. The Leading Indicators report, which is a composite of 12 economic indicators and is designed to predict the direction of the Japanese economy, reached expectations for a 86.4% result. However, this deports had little affect on the Yen, as it is once again proven that what impacts the Yen mostly are the publications from the U.S economy. Because the Japanese economy relies on American consumption, it is quite clear that negative U.S data will have a negative affect on the Japanese economy. As a result, the Yen weakened due to the poor employment data from the U.S.

As for this week, the most impacting data from the Japanese economy appears to be the Core Machinery Orders report, schedueled for Tuesday. This is a leading indicator of production, and thus tends to have a large impact on the Yen. In addition, traders should follow the leading publications from the U.S economy, as they have proven to have a sustain affect on the Yen.

Oil

Crude Oil underwent a very volatile session last week. Crude oil began last week's session with a rising trend, and a barrel of oil was traded for $81.0. However, a change in trend took place then, and crude oil dropped to $77.0 a barrel.

Currently, as storms are shutting export terminals and production in Mexico and Hurricane Ida is entering the southern Gulf, oil prices are rising once again, and a barrel of crude oil is now traded for $78.50. Hurricane Ida is currently expected to weaken as it crosses production regions of the Gulf of Mexico. Nevertheless, traders should keep an eye on the developments of this issue, as it is likely to impact the prices of oil throughout this week.

In addition, on Thursday, the U.S Crude Oil Inventories data will be released. This indicator tends to have an immediate impact on crude oil, and traders should follow its result. Traders should also follow the leading publications from the U.S as they have proven to have a large impact on crude oil's value.

Technical News

EUR/USD

There is an impending bearish cross forming on the daily chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the hourly chart's RSI also supports this notion. When the downward breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The GBP/USD cross has experienced a bullish trend for the past week. However, it seems that this trend may be coming to an end. The RSI of the daily chart shows the pair floating in the overbought territory, indicating that a downward correction will happen anytime soon. Going short with tight stops might be a wise choice.

USD/JPY

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bearish cross forming on the 4-hour chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.

USD/CHF

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart's Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the hourly chart's Slow Stochastic. Going long with tight stops may turn out to pay off today.

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