Overview A triple cocktail of good data helped the USD to firm up on Friday. The USD gained against the yen in particular as durable goods, new-home sales, and consumer sentiment all came out better than expected. Gains in US stocks, and further weakness in crude oil also helped the greenback to firm up. The precious metals were unable to hold onto early gains made in Asia, as they got hit by weakness in crude and the EUR. Critical support lines are starting to come into play in the EUR
US data supports Greenback into the weekend U.S. Dollar Trading (USD) slightly stronger stocks, improving US economic data and stable Oil prices all combined to give the USD a solid footing into the weekend. June Durable Goods Orders beat expectations at 0.8% m/m along with Core Orders at 2.0%. University of Michigan Consumer Sentiment showed a surprise jump to 61.2 from 56.2. New Home sales also beat forecasts falling 0.6% to 530K vs. expectations of 505K. In the U.S. share markets, the
Is it a remedy for the worst housing slump the nation has suffered in decades? Or merely a taxpayer-funded bailout that will ...
- Forex: This week's U.S. data is as big as it gets, with GDP, non-farm payrolls, and manufacturing ISM slated for release. But some analysts argue that the most important data will be coming from Europe (weak U.S. data has already been priced in, they argue). EUR/USD started the week in a tight trading range, with sellers around 1.5702 and buyers ahead of 1.5670. The main near-term downside target for EUR/USD is seen at 1.5585 (61.8 fibo of 1.5305/1.6038 move). EUR/JPY failed to make any
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------------------------------------------------------------ INTRA-DAY USD/JPY OUTLOOK : 107.95 Updating time :28 Jul 2008 02:35 GMT Dlr's cross-inspired breach of last wk's high at 107.99 signals recent upmove fm 103.77 has resumed n further gain to 108.30/35 is seen, however, near term loss of momentum shud prevent strg move beyond daily res at 108.59 in Asia. Hold long
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Typically, only the savviest (or the most foolish) of forex traders dabble in currency options. Leverage is already so high (often exceeding 100:1) when trading forex directly, that the additional leverage gained from trading options can seem unnecessary. However, even if not trading options, you would be wise to at least pay heed to options prices. The reason is that movements in the options market often precedes movements in the forex markets.
To explain further, the premiums built into options contracts serve as a proxy for demand for those particular currencies. When premiums on call contracts, which give the holder the right to buy a particular currency at a fixed price, are unusually high, it signals a "risk reversal;" the currency may be overbought. To offer a practical example, call premiums on EUR/USD contracts are approaching a one-year high, which has led some analyst to speculate that a Dollar rally is just around the corner. MarketWatch reports:
"Whenever risk reversals hit critical levels, it indicates that
everyone who wants to be long euros are already long and as a result, sentiment
has hit an extreme." The last time euro/dollar risk reversals were that high....a U.S. dollar "relief rally" followed.
Read More: Forex options market held clues to dollar's moves
