The Forex Market Insight Report shows charts on different major currencies and commodities, with brief commentaries on how new data releases and news cause movements in the market.

Headlines:

  • IMF cuts growth forecasts for the US and noted concerns about the impact of high commodity prices on the world economy.
  • AUD sold off as commodity prices (especially Gold) back away from the highs.
  • Oil sold aggressively lower on the IMF forecasts and African Union leader saying Qaddafi had agreed to cease fire terms.
  • EUR softer as traders become concerned that higher rates in the Eurozone will hurt Ireland and Portugal.
  • ECB member Webber rejects reports that the EU is entering a possible “currency crisis”
  • Equities finished mixed as we enter earnings season with the Dow +0.01, S&P -0.28 & Nasdaq -0.32%

AUD/USD
AUD took a breather as it came under increasing selling pressure on the back of commodity prices being aggressively sold. We open the Asian session right on the support level of 1.0470/80 and traders are watching keenly as a break of here could be an extremely bearish signal however traders are trusting support initially, not pre-empting the break.

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XAU/USD
Gold wore the brunt of the IMF report noting growth concerns in the US and the negative impact of commodity prices on world recovery. This saw traders taking profit on their long positions and gold dropped $15 overnight. Although the sentiment is slightly bearish in the short term, traders are still looking for levels to buy and 1450.00 should see support

EUR/USD
The EUR/USD has traded in a tight range over the last 24 hours as the market consolidated following the strong gains seen last week. Looking ahead, traders remain keenly focused on buying any dips in the market. Any pullback to 1.4250 would see buyers step in.

GBP/USD
The GBP/USD has been trapped in a range over the last few days with traders waiting for an indication of the next move. The pound’s strong up-move into the consolidation zone would suggest that the next move would be higher, but we would be wary of a potential breakdown with the GBP/USD struggling near 15-month highs. Any break below 1.6300/10 could be bearish.

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USD/JPY
The yen crosses have all seen selling in early Asian trading after a 6.3 magnitude aftershock hit Japan this morning. This could be the trigger for a short-term correction with the dollar-yen having the potential to head back to 83.50 in the near term.

AUD/JPY
The AUD/JPY has also seen selling after Japan was struck by another aftershock this morning. Traders have seen the AUD/JPY as ‘toppy’ since it reversed at 90 and this could see this week dominated by selling in this pair. Traders note that initial support is around 88.00/10 with a move back to 85.00 not out of the question over the medium term.

Oil
Crude was sharply lower overnight after the IMF downgraded expectations for US growth and said that higher commodity prices could derail the global economic recovery. Oil saw sharp losses overnight, but considering the strong move higher over the last two months, traders could see this as a chance to get back on board with new longs at support at 108.50/60.

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Forex Market Insight Report 04122011