The Greenback is Trading in a Bearish Trend Channel Against The CAD

The US Dollar is trading in a bearish trend channel against the CAD.

Now it seems that the currency pair is ready to recover when it touches its Pivot point at 1.0280 together with the bottom line of the trend channel.

A few days before, we had the same situation and the prices recovered.

Also the RSI may indicate an increasing trend for the EUR, but we need to wait if these signs are enough to stop the bearish trend.

US Dollar / Polish Zloty Outlook

The US Dollar has been trading in a bearish trend against the PLN.

Recently, the currency pair couldn’t cross its Fibonacci Retracement line at 2.8541 (61.8%) and the prices rebounded. Now it seems that the USD will continue its downward trend.

A crossing MA Oscillator may support with a breakthrough by the signal line from the top.

But it remains to be seen if the next support level around 2.8247 (50.0%) could be strong enough to stop the actual trend.

GBP And JPY Are Consolidating

The euro dollar pair inclined recording a high of 1.4372 and a low of 1.4336, having the pair trading around 1.4365. The euro breached the resistance level of 1.4340 and now it is targeting the 1.4430 levels and momentum indicators on the four hour charts are supporting the upside. However, the pair is having a support at 1.4310 along with a resistance at 1.4400.

Regarding the pound dollar pair, it is consolidating between 1.6090 and 1.6040 recording a high of 1.6086 and a low of 1.6048, and the pair is currently trading around 1.6075. The pair is in an attempt to climb to the 1.6180 and it is having a support at 1.6010 along with a resistance at 1.6120. However, the daily stochastic oscillator is supporting the upside that is giving a chance for the pair to rally.

Finally, the dollar yen pair is consolidating today after inclining in the past three days. The pair is consolidating between 92.70 and 92.20, recording a high of 92.60 and a low of 92.29, while the pair is currently trading around 92.45. Today's support could be found at 92.10, while the resistance could be found at 92.85. Yet, Fundamentals concerning jobless claims and house prices in the U.S will be released today that may move the market.

Crude Oil Edged Higher To Settle at 79.28

Crude oil edged higher to settle at 79.28, up +0.5%, Wednesday as the EIA report showed inventory draw in crude and major oil products. Tension between Iran and the Western world, potential oil exports from OPEC and market optimism after strong macro-economic data also boosted price. The February contract, currently trading at 79.6, is prone to record the third weekly gain. Crude oil price, surging almost +80% in 2009, will probably record the biggest annual increase since 1999.

According to the US Energy Department, crude inventory drew -1.54 mmb to 326 mmb in the week ended December 25. Cushing stock also drew -0.19 mmb. For oil products, distillate stockpile dipped -2.06 mmb (consensus: -2.23 mmb) to 159.3 mmb. This an initial sign of moderation in the pace of inventory draw. Gasoline inventory also dropped -0.37 mmb to 216 mmb.

Decline in inventory levels in recent weeks has been sending a positive signal to investors that the energy market is improving. This is also the major reason for oil's rally these 2 weeks. However, details in fuel demand suggest we should be more cautious. 4-week averaged demand for gasoline was 9.024M bpd, compared with 9.041M bpd the same period in 2009, while the 4-week averaged demand for distillate, at 3.689M bpd , was -8.8% below the same period last year.

Since the protest began on December 27 in Tehran, the Iranian government has detained about 1000 people. At the same time, Iran accuses Western countries of spurring the demonstrations. Oil prices usually get supported when turmoil occurs, especially in the Middle East as the region in rich in oil. Iran, the world's second largest oil producer, may threaten to suspend oil exports if the tension escalates.

At December's OPEC meeting, the members voted unanimously to keep production quotas unchanged but pledged to increase compliance. According to Oil Movements, OPEC will reduce shipments to 22.89M bpd in the 4 weeks ending January 9. This will be the first cut in 2 months and indicates the organization's determination to limit output.

Gold price slid for a third consecutive day to as low as 1086.6 before rebound. The benchmark contract lost -0.5% to 1092.5. Today in Asia, gold recovers to 1098 as USD retreats. The weight of gold futures will increase in Dow Jones USD Commodity Index next year. The agency said that New York gold futures will make up 9.1% (currently 7.86%) of the index when the gauge is rebalanced in January 2010. The news should push gold price higher.

JPY Depreciated VS. USD

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.75 level and was supported around the ¥91.90 level. In the absence of major news, traders continue to square their books at year-end and react positively to dollar-supportive U.S. economic data.

Ongoing doubts concerning Japan Airlines and the company’s possible bankruptcy are having a negative impact on the yen. Standard & Poors warned Japan’s “AA” credit rating could be lowered if Japan fails to stabilize its debt levels.

The Japanese government released a long-term strategy overnight that aims to achieve GDP growth of an average 2% over the next decade. Data released in Japan overnight saw December PMI improve to 53.8. Minutes from Bank of Japan’s latest Policy Board meeting were released last week in which the government asked the central bank to monitor deflation. The minutes revealed “many” Policy Board members agreed “the bank would maintain its stance of responding promptly to changes in the market situation.”

Policymakers said the central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets.” After an emergency meeting on 1 December, the central bank introduced a ¥10 trillion fixed-rate lending facility that was designed to arrest the yen’s advances and counter deflation. The central bank also characterized the most recent bout of deflation as “mild.” The Nikkei 225 stock index lost 0.86% to close at ¥10,546.44. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥132.75 level and was supported around the ¥131.80 level.

The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥148.95 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.35 level.