Dollar Holds Gain after Friendly Consumer Confidence Report

U.S. Consumer Confidence report erased overnight gains triggered by a report showing rising prices in Germany.

The U.S. Dollar managed to hold on to its gains after erasing earlier losses following the release of a friendly Consumer Confidence report. 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. Expect more of the same trading tomorrow as major players remain absent during the holiday week.

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 finished lower after giving up early gains. The friendly U.S. Consumer Confidence report erased overnight gains triggered by a report showing rising prices in Germany.

The GBP USD traded in a wide range on Tuesday with a strong bias to the downside. Overnight the British Pound rallied as traders returned to work after an extended holiday break. 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 the daily chart on the heels of a rise in U.S. Consumer Confidence. Demand for higher yielding assets also contributed to the Yen’s weakness. Japanese investors seeking higher yields sold Yen to buy U.S. Treasuries.

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. Watch for a quick rally back to 1.0393 over the near-term.

The slide in the USD CAD came to an end on Tuesday as early losses were 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. Today’s closing price reversal bottom could trigger a short-term retracement to 1.0555.

The strength in global equity markets supported the AUD USD most of the day, but the inability to close over a 50% price at .8964 and off the high indicates the start of a potential profit-taking break. Watch for a short-term pullback to .8863.
The NZD USD traded higher most of the day on increased demand for higher yielding assets. Higher global equity markets were the catalyst behind the rally. By the close the Kiwi had backed off its high and closed inside a retracement zone at .7144 to .7185. This could be an indication of the start of a short-term correction back to .7091.

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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