Lower U.S. Consumer Sentiments Boosts Demand for Lower Risk Assets

Demand for the lower yielding Dollar is up at the midsession following a U.S. sentiment report that showed the consumer is still not confident in the economy.

Demand for the lower yielding Dollar is up at the midsession following a U.S. sentiment report that showed the consumer is still not confident in the economy. Their primary concerns are keeping their jobs and homes.

The GBP USD is under pressure at the midsession. This market has been bearish since last week’s decision by the Bank of England to expand its quantitative easing program. Following a two-day retracement to the upside, this market has renewed the weakness seen early in the week.

Although yesterday’s improvement in the Euro Zone GDP number helped boost EUR USD prices while triggering speculation the European economy would recover faster than the U.S., the Euro is trading lower at the midsession. Technical factors are the driving force behind this markets weakness. Last week’s closing price reversal top was confirmed early in the week. The charts indicate the start of a 2 to 3 week correction.

Weaker equity and crude oil prices are pressuring the Canadian Dollar. Last week’s reversal bottom in the USD CAD continues to move higher. The charts indicate that a rally through 1.1075 will turn the main trend up and set up a further rally to 1.1177.

The weaker U.S. consumer sentiment report has made traders rethink holding positions in higher risk, higher yielding assets. This is triggering a break in the equity markets and profit-taking in the NZD USD and AUD USD. Losses may be limited by friendly comments from Reserve Bank of Australia Governor Stevens who said that a hike in interest rates would be appropriate given the improved economic conditions.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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