Forex

Risk aversion fuels greenback in currency tradingEven though consumer spending is down, indicating that the U.S. economy continues to slow, the U.S. dollar is gaining again in forex trading.

Even though some feel that the U.S. dollar is overbought, chances are that the currency will retain its strength until the present crisis shows signs of ending.

See Also

• U.S. Dollar in Forex Trading
  Currency trading on the FX market

Loonie losing ground fast in forex tradingThe Canadian dollar is plunging in currency trading on the FX market today. The loonie is losing ground fast in forex trading — at a rate not seen since 1950. The dream of maintaining a level close to parity with the U.S. dollar is just about finished now for the Canadian dollar.

Global demand for commodities is down, and, as a commodity currency, the Canadian dollar is one of the hardest hit by these developments. The continuing struggles as oil prices fall is one of the biggest factors.

See Also

• Candian Dollar in Currency Trading
  Forex trading with world currencies

Currency trading with the euroThe euro is heading lower in forex trading on the currency market this morning. After a brief correction higher, the 15-nation currency is down again on the FX market as global recession fears resurface.

With the German economy moving toward recession, the rest of the euro zone is following suit, and the euro continues to struggle in forex trading against the U.S. dollar.

See Also

• Euro in Forex Trading
  World currences on the FX market

Japanese yen gains in currency tradingThe Bank of Japan has made an interesting move: Cut interest rates by 20 basis points. The new rate is 0.3%.

In any case, the Japanese yen is gaining again in currency trading on the FX market. After a brief appearance by risk appetite in recent days, recession fears are again appearing and risk aversion is the name of the game. As a result, carry trades continue to unwind as traders pay back their yen-denominated debt.

See Also

• More on the Japanese Yen in Currency Trading
  Japanese yen and carry trades
• Japanese Yen in Currency Trading
  Currency trading on the FX market

Forex Market Commentary for October 31, 2008 by Cornelius Luca

GFT Daily Market Commentary

The dollar paired losses versus the European currencies and managed to close higher versus the lower yielding franc and yen. Trading remains impaired by low liquidity and the end of month on Friday won’t improve conditions.  The contraction for third quarter GDP was not as bad as expected, but it confirms the start of a debilitating recession. The dollar remains in a medium-term uptrend against the European currencies and a downtrend versus the yen, but this pattern will be more visible staring November. Bon chance!
 
 

Euro/dollar

The euro/dollar fell from an 8-day high after a 38.2% Fibonacci retracement level and the 20-day moving average held, and closed little changed on Thursday. The medium-term bias remains bearish. 
 
Immediate support is at 1.2805. Below 1.2695, distant support is now at 1.2335.   

 
Initial resistance is at 1.3060. Above 1.3200, resistance is now seen at 1.3260. Distant resistance is at 1.3570 would signal a sustained recovery of euro/dollar.

Oscillators are bullish.

NEAR-TERM: Mixed with significant downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Bearish

Dollar/yen

Dollar/yen climbed up on Thursday, but got stuck in an inside range.   My model remains long, but the medium-term outlook remains bearish.  
 
Immediate resistance is at 99.70. Above 100.50, resistance is now seen at 103.05.

Initial support is at 97.25.  The next level is 95.70.  Below 94.40 there is Friday’s low of 90.94. 

Oscillators are mixed.

NEAR-TERM: Mixed 
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Sterling/dollar

Sterling/dollar marched higher on Thursday and my model remains long.  The upside is limited, as the medium-term outlook remains bearish. 
 
Initial resistance remains at 1.6635. The next level is 1.6760. Distant resistance looms at 1.6940.

Immediate support is still seen at 1.6355. The next level is at 1.6090. Below 1.5735, distant support is at 1.5270 from a pivot low.
 
Oscillators are rising.

NEAR-TERM: Mixed with significant downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Bearish

Dollar/Swiss franc

Dollar/Swiss reversed from a three-week low to close higher on Thursday. The medium-term risk remains on the upside.
 
Initial resistance is at 1.1420. Above 1.1500, the next level is 1.1767. This is followed by the area between 1.1867 and 1.1873. 
 
Immediate support is at 1.1310.  The next level is 1.1180. Distant support comes at 1.1055. 

 
Oscillators are mixed.

 
NEAR-TERM: Slightly bullish 
MEDIUM-TERM: Bullish
LONG-TERM: Bullish