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Daily Trading Forecast

Euphoria Embraces Stocks, Commodities, Gold,

Tue, Nov 10 2009, 10:23 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG  |  View company's profile

but hurts the dollar. "Irrational Exuberance" was the famous quote of former Fed. head, Alan Greenspan, describing what was going on during the late 1996 stock market bubble. What is happening now, in our opinion, is "Irrational Behavior." Commodities and precious metals are shooting up, confirming that inflation is a major concern in the system but stocks are soaring on the news.

Equity markets hate inflation like the devil does holy water, but instead they are full of optimism. Something went out of control here. Either equities must correct downwards, or the commodities market along with precious metals must correct. If we had to choose, we think it would be the latter, because it is far too early to cry "Inflation" when deflation dominates. These concerns may vanish next year, when it becomes clear that the U.S. economy can indeed prosper with low inflation. In that case, the USD should strengthen. But that will be a theme for next year, for now the markets will continue to show "Irrational Behavior."

For today's trading, we see more consolidation to come. Soon, the USD will be offered again, perhaps before year end, but today the strong support zones are still holding. See trading details in our major pairs' list below.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
Currently trading at 1.4990, the euro is pausing after its decent rise against the dollar. We see the pair still shying away from the important resistance zone around 1.5020/1.5050, so a continued consolidation will characterize today's market. The trading range is expected to be between 1.4950/1.5020.

GBP / USD
The pound lost considerable territory yesterday and continues to lose more in early European trading. It is currently trading at 1.6660 against the USD. We do not see much more downside risk now, expecting instead a sideways market for today between 1.6760 and 1.6620.

USD / CHF
The dollar is continuing its slight recovery against the Swiss franc in the early European morning and is currently priced at 1,0080. We do not see much more impetus for higher volatility today. Instead, a sideways market can be expected, between support at 1.0060 and resistance at 1.0120.

USD / JPY
Still bumping along its support zone in Asian and early European trading, the dollar currently is trading at 89.80. We would exclude any more downside risk for today, resulting in some recovery to but not above 90.30.

Published on  Tue, Nov 10 2009, 10:47 GMT