U.S. Dollar Flat Overnight as Traders Await Economic Numbers

The U.S. Dollar was trading flat overnight as traders awaitthis morning’s key economic numbers. Although today’s reports are not likely tochange the Fed’s plan to implement quantitative easing, nervous long tradersmay be waiting for any excuse to book profits following the recent run-ups.

The U.S. Dollar was trading flat overnight as traders awaitthis morning’s key economic numbers. Although today’s reports are not likely tochange the Fed’s plan to implement quantitative easing, nervous long tradersmay be waiting for any excuse to book profits following the recent run-ups.

Today’s numbers include the early CPI and Retail Salesreports, followed by Michigan Sentiment and Business Inventories later in themorning. All reports are expected to remain relatively close to last month’sreports. Traders will, of course react the most to any surprises.

Most traders at this time expect the Fed to ease at sometime in the future. What market participants are trying to do now is assess howthe Fed will implement its new quantitative easing package. The sentiment seemsto be leaning toward a QE program which allows the Fed to dole out the stimulusto areas where it is needed most. For example, based on economic reports, theFed may decide to focus on fighting inflation.

On Thursday, the Canadian Dollar reached par with the U.S.Dollar. This isn’t necessarily a big deal since it has been at this levelbefore. Long traders used the test of this psychological level as an excuse totake profits, forming a closing price reversal top. Short-term traders shouldlook for follow-through to the downside to alleviate some of the overboughtpressure. As long as the fundamentals indicate a weaker Greenback, traders willbe looking for fresh buying opportunities on any break.

The Euro had an inside range overnight. This isn’tindicative of a change in trend however. Traders seem to be waiting for freshnews to drive it higher. Watch for an intraday breakout over Thursday’s high at1.4124. Generally speaking, a weekly close over 1.40 indicates that 1.45 is thenext objective.

The Aussie Dollar is trading slightly lower but still in aposition to challenge parity. This market is set-up to close at its highestweekly level since the 1980’s. The inside trade overnight indicates impendingvolatility. Better economic news from Chinacontinues to support this market, but it is going to take a strong U.S. stockmarket rally today to send the Australian Dollar over 1.00.

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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