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.

Headline:

  • Fed Chairman Bernanke signals to the market that extended period of low interest rates are likely to continue
  • Bernanke further commented that the Fed isn’t concerned with inflationary risks that a recovering economy may provide, instead focusing on the fact that they need stimulus and low interest rates to create jobs.
  • USD sold aggressively as AUD breaks new highs as traders sought the high yield.
  • Gold smashes through all time highs on Bernanke’s comments
  • US equity markets posted solid gains as traders factored in cheap money for corporates adding to bottom line
  • profits, Dow up 0.76%, S&P500 up 0.62 and Nasdaq up 0.78

AUD/USD
With an extremely high inflation print yesterday and Bernanke signalling no change to rates, it was only one way the AUD could go and that was higher. Traders are still content to play it from the long side and many calling a test of 1.0950 or even 1.1000 by the end of the week.

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XAU/USD
It was straight up for Gold as USD negativity mixed with future inflationary concerns in the US saw Gold breach new highs. The market now seems to be consolidating above 1520.00 for the time being and traders are still happy to play the long side looking for a push towards 1540.00 initially. Support on the dip all the way back to 1500 is expected.

EUR/USD
Yet again the support and resistance trade was the profitable one as EUR found a base in Asia at the previous highs of 1.4640 and surging almost 200 points. Traders happy to buy the EUR on the yield play as it looks as though USD yields will continue at record lows for the time being and traders are still calling it higher, however there may be opportunities to buy the dip.

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GBP/USD
The bull flag noted in yesterday’s report eventuated to perfection as trader’s got long on the dip towards 1.6450 and also on the break of strong resistance at 1.6530. Now we have broken the previous high of 1.6600, traders still seem to have appetite to buy GBP/USD so long as it stays above 1.6600 with many targeting 1.6900/50 in the coming weeks.

USD/JPY
The down-trend broke on the USD/JPY yesterday as traders bought EUR/JPY aggressively. From here traders seem to be looking for confirmation of whether or not the break was false and the important level is not 81.50/82.00 which is the breakout point which could provide support initially, however a break back through there signifies the bearish trend should continue.

AUD/JPY
AUD/JPY broke higher as traders continued to buy the high yielding AUD on the higher than expected CPI numbers. As noted yesterday the topside level to watch was 88.50 and many traders are now calling this to be support and that consolidation in the new range of 88.50-90.00 is expected short term before pushing higher in the coming sessions.

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OIL
Oil consolidated in the 110/113 range overnight but at the time of writing is now probing into new highs with traders calling a break of 113.50 signalling a possible run at 115.00 but a consolidation above 113.00 is required throughout the Asian session for confirmation. A break back through 112.50 could be a bearish signal.

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