Consumer Confidence Helps Dollar Erase Losses

The U.S. Dollar erased earlier losses following the report of a rise in Consumer Confidence.

The U.S. Dollar erased earlier losses following the report of a rise in Consumer Confidence. Although the reported figure of 52.9 was slightly less than estimates, it still reflected continuing strength in the economy. This morning the S&P/Case Shiller report on home prices was flat. There was almost no reaction to this report by Forex traders.

The Dollar was down overnight as traders took advantage of the thin, holiday trading by taking profits after the almost month-long rally. Demand for higher yielding assets also contributed to the weakness for the second day in a row buoyed by a rise in global equity markets. Finally, some of the selling pressure can be attributed to concerns over rising debt in the U.S.

The EUR USD is trading lower at the mid-session following the friendly U.S. Consumer Confidence report. Overnight the Euro was boosted by a report showing rising prices in Germany.

The GBP USD is trading in a wide range today with a bias to the downside. Overnight the British Pound popped to the upside overnight as traders returned to work after an extended holiday. The market was unable to hold on to its gains, however, and retreated to the downside. Investors are still concerned about the U.K. budget deficit and struggling economy. Sellers hit the market hard following the release of the U.S. Consumer Confidence figure. The selling pressure took out three days of lows and negated the thought that a support base was being built.

The USD JPY broke out of its tight range on speculation of a U.S. economic recovery following the release of the rise in Consumer Confidence. Demand for higher yielding assets is also contributing to the Yen’s weakness.

The USD CHF regained the old top at 1.0337 following an overnight acceleration to the downside through this level. This put the market in a strong position once again following seven days of weakness. Signs of a U.S. economic recovery are helping to strengthen the Dollar.

The slide in the USD CAD appears to be ending as earlier losses are being erased following the release of a friendly U.S. Consumer Confidence report. Last night’s trading action took out a main bottom at 1.0405 to reaffirm the downtrend. Regaining 1.0459 could trigger additional short-covering.

The strength in global equity markets continues support the AUD USD at the mid-session. The first upside objective at .8964 was reached last night. Upside momentum could take this market back to the .618 retracement level at .9018 before new selling pressure surfaces.

Short-covering and demand for higher yielding assets is helping to drive the NZD USD higher at the mid-session. Overnight, the New Zealand Dollar surged to the upside, fueled by greater demand for higher yields and a rise in global equity markets. Two objectives were hit last night at .7144 and .7185. The next upside target is .7215.

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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