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UFXBank Forex Outlook: Crude Oil Drops Nearly 3.5%

Written by UFXBank Research Team
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USD Dollar (USD) – Friday saw the Dollar slightly weaken against most of the majors to bring an abrupt halt to the entire week’s gains in Forex trading. The consumer sentiment data came out better than expected at 69.3 vs. an estimated 69.00. The G20 meetings created discord within the markets as the rift between United States and China regarding currency rates seemed to widen, no solid agreement was reached through the summit and traders were left with “indicative guidelines" to be discussed in the new year. The NASDAQ and the Dow Jones declined   by -1.46% and -0.80%, respectively. Friday saw commodities plummet, as Oil and gold each fell by nearly 3% while copper, wheat, silver and sugar fell even farther. Crude lost -2.9% closing at $84.88 a barrel, while Gold (XAU) lost -2.7%, closing at $1365.50 an ounce. Today retail sales data will be released and is expected at 0.7 vs. 0.6 previously. NY Empire State Manufacturing Index is also to be released and is expected at 11.70 vs. 15.70 prior.

Euro (EUR) – Friday saw the Euro rebound from a six week low (of 1.3573) against the dollar after finance ministers in the euro zone issued a joint statement regarding the EU’s debt situation. German Prelim GDP came out at 0.7% vs. 0.8% and did not affect the market. Although the pair is still below the moving average the trend seems slightly bullish. Overall, EUR/USD traded with a low of 1.3681 and with a high of 1.3711. No major economic data is expected today.

EUR/USD – Last: 1.3672

Resistance

1.3750

1.3777

Support

1.3660

1.3600

British Pound (GBP) – Although the Pound dropped on Friday, slightly below 1.6000 levels against the dollar, the day ended with little change and the Pound strengthening slightly against the dollar. Europe’s poor Fiscal strength also influenced the GBP, as investors’ fears of the region’s exposure to Irish debt, caused them to flee to safer currencies. The GBP/USD is still extremely oversold and confirms a slightly bearish trend. The pair has a strong daily resistance at the 1.6170 levels which will be tough to break. Overall, GBP/USD traded with a low of 1.6115 and with a high of 1.6152. Today, no major economic data is expected.

GBP/USD - Last:  1.6105

Resistance

1.6089

1.6030

1.6000

Support

1.6120

1.6155

1.6183

Japanese Yen (JPY) – Friday saw the yen continue to gain against the dollar and little change was seen last night as investors adopted a cautious stance after uncertainty from the G20 summit. During last night’s session prelim GDP q/q came out better than expected at 0.9% vs. 0.6%, but despite this, the pair remained unchanged.  The pair formed a tight triangle toward the end of the week on the daily chart and remained well above the moving average. Overall, USD/JPY traded with a low of 82.35 and with a high of 82.53. No economic data is expected today.

USD/JPY-Last: 82.73

Resistance

82.79

Support

82.40

82.30

81.98

Canadian dollar (CAD) – The Canadian Dollar weakened significantly against the US dollar as crude prices decreased by almost 3%. Chinas claim to increase borrowing costs, and the speculations of Irish debt reduced demand for assets related to economic growth and added to the negative momentum. The strengthened commodities support a strong Canadian dollar. The USD/CAD is very choppy on the daily chart, but the trend still seems to be positive for the pair as long as it trades above parity. Overall, USD/CAD traded with a low of 1.0099 and with a high of 1.0128. No economic data is expected today.

 

USD/CAD - Last: 1.01176

Resistance

1.0125

1.0140

Support

1.0085

1.0070

1.0027