Surprise to all Crude Oil Forex Online Traders – Sharp decline below $50 per Barrel

The Crude is experiencing a sharp decline in the prices with the close of last Asian trading session. It plunged 4.2 percent to a close at 50.05 per barrel (an intraday lowest at 48.84) on Monday, when the International Energy Agency (IRA) revised its fall in 2009 demand on last Friday. After this forecast the Stock markets' were opened in negative sentiments and thus dragged down the oil price. Forex brokers and traders observed that in open Asian session, the black gold (Crude oil) extended its weakness and now it is trading at 49.6 per barrel.

According to the reports, IEA predicted that we may see a contraction in the oil consumption by 2.4M bpd to 83.4M bpd, which is the lowest level in last 5 year. Year 2009 is still expected to be seen as the global economic outlook sluggish and auto sales slumped (IEA also revised down global GDP growth to -1.4% from +0.5%). In developed nations the OECD demand is reduced by 760K bpd while that in developing countries the fall is seen for the first time since 1993 by 230K bpd.

Coming to the supply side, IEA expects non-OPEC supplies to witness a down fall of 360K bpd globally, of which 220K bpd is expected to be outside Brazil and the US. In addition, the report forecast over 1M bpd in investment cancellations or delays.

The Crude oil was closed stridently losing 2.11 dollars or 4 per to settle at $49.89. This move was momentous enough for all forex online brokers so it was no shock for them to see a cross below the 9 and 14 day MA. If we see technically crude oil is still in the range of $47.27 - $54.75 sideways which could only turn if we see a break on either side.

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Forex Online Currency Analysis – Overnight Session

These days Dollar is on its full mood. We could witness great recovery and continued strengthening against all major currencies. It is believed that the next volatility could be seen for the dollar in the U.S. session when the release of two important releases, PPI and retail sales, according to the forex online reviews. Looking at the Daily FX currency analysis:

The EUR/USD seen a resistance at the 20-day SMA in the early Asian session and dropped to 100 pips. The traders believe that the euro's decline was in sequence with the selling experienced in the other major pairs, as the dollar posted strong gains tonight on risk-aversion.

The CAD was struggling during the overnight session in order to break above the 1.2240 area, at same place it acted as a resistance during the last U.S. session. In the middle of the trading session, the sentiment of the traders for the Canadian dollar seems to have turned little bearish when the crude oil seen a strong declines lately.

Forex brokers and traders experienced that the Pound traded flat during the Asian session and believes hard that GBP/USD would attempt to break any higher as the session came to a close. Currently, the sterling pound is trading near the opening price of the today’s session. The daily chart shows that this pair is trading very close to a vital swing point, which would require tough force in order to break this level.

The Swissy was on top when it gained 100 pips during the last overnight session, retracing the decline seen yesterday. We noticed that the most gains of this pair came during the late Asian and early European trading hours as the pair gathered good momentum.

The AUD/USD dropped almost 80 pips during the overnight session in contrast with the major gains seen in the previous day of trading session. Moreover the good news is that the aussie crossed the highest valuation in the last half year when yesterday it moved very close to the 200-day SMA.

One of the major releases for today is the National Australia Bank business confidence report. It is seen in the report that Business confidence in Australia has improved to -13. It is an improvement of 9 points from last month's reading of -22.

Lastly, the Yen dropped to 70 pips during the last Asian session, but hit support at the level of 99.40 soon after the European market open. The Japanese yen strengthened overnight as the currency market was driven by risk aversion once again.

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Obama was on Vacation for Valentine’s day

I am at a loss to understand the new American administration. Last week, President Barack Obama spoke in front of the Nation and told a tale of how dire the financial situation was in the US and the world and how something needed to get done soon in order to fix it. He asked for his Congress, made up of two political parties, to stop bickering, band together and pass the nearly 1 Trillion dollar stimulus bill before it is too late. His exact words were “not everything in this bill is perfect, but what we do know, is that we need to act on it immediately”.

So his congress acted and passed the 1108 page legislation that commits 790 Billion US dollars to stimulate the economy. And what does President Obama do? He goes away on vacation for valentine’s day, leaving Washington and the stimulus bill to wait until Tuesday for his return. IF this was such an emergency wouldn’t he have signed the bill himself before going on a mini-trip with his wife? I wonder what all the unemployed people in the US (there are now over 13,000,000 of them) were saying when they saw their leader eating at a $450 per plate restaurant Saturday night – or when news came out on Sunday that he is replacing his 4 year old helicopter (Marine 1 as it is called) with a brand new one that costs more than a Boeing 747. His country is in dire need of stimulating and he is spending unnecessarily.

Well, the dollar was still holding up although Forex Brokers are a bit nervous about all the US spending. Investors stuck with dollar last week despite everything because there are really no options out there right now. England is having a difficult time, Ireland is on the verge of bankruptcy, so is Spain and Greece. Russia announced, to the chagrin of Forex traders holding Euro positions, that it is re-evaluating their payment of debt to the EU (its another way of saying they have no money right now). Even China has been admitting heavy job losses. It is difficult to see where someone investing or trading in the Forex can do better but the US. But I have a better solution.

Look this week for the down under dollars, New Zealand and Australia, to be strong – they are not as bad off as the rest of the world – yes they are hurting, but their liabilities are less exposed to the global economy. I see the dollar giving in this week and investors start to unload their positions. It is not getting pretty out there, and Forex Trading professionals know a rat when they see it – you cannot predict doomsday and then spend like there is no tomorrow on long term items like the US is doing. Let’s wait and see how the market reacts once last weeks happenings have been digested fully.

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Forex Headlines and Forecast with Chart Analysis USD/CAD

Daily FX Chart: USD/CAD

The Canadian Dollar has weakened lately against US Dollar, but considering the numerous factors against the CAD, it would seem that the Forex brokers and traders should be trading it higher. We note two factors that suggest USD/CAD may be ready to pivot higher here, even though it is in the middle of the recent medium term range between 1.1800 and 1.3000. First, the 21-day moving average fell last week and the investing and trading community has held this as support. Second, USD/CAD crossed above the 55-day moving average on Friday, only to close below that level. But today we see the pair charging back above that level, so it appears that we may be preparing for another go at the 1.3000 level. It all depend on what the Forex traders do with it today.

Daily FX-Options	Comment
EUR/CHF	Back end volumes moved about 0.5. Volume lower on Monday, with the big broker trading firms selling 6 month 1.50’s in large amounts at a 9.1 volume. Front end volumes came lower as well suggesting that the current EURCHF range will continue.
EUR/USD	Forex traders pushed high volumes most of the day, with the 1 month down from 20/21 to 19.5/20.35. This could indicate that the Forex brokers do not believe the pair will collapse any time soon, Today expect the contract to trade in the range or experience a slight increase.
USD/JPY	Volumes are stable, a little interest for front end 90-91 strikes, and however they are mainly broker trading on the sell side. Expect that the current trading range will continue.

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More trouble for Europe means gains for the US

The flight to safety in the dollar was enhanced on Friday when the greenback reached a 22 year high against the British pound and a six week high against the Euro. Considering that the US economic woes are significant, this highlights how bad the Euro and British economic outlook is – at least from the perspective of the Forex traders. The pound sunk 1.4% to 1.361 against the dollar and the Euro fell nearly ½ a percent to 1.292 against the US currency. The tumble started after data released on Friday showed that the British economy tightened at a greater rate than was expected, 1 ½ percent to be exact, which confirmed on paper that the British economy was now officially in a deepening recession.

The Yen also made significant gains against the Euro and Pound on Friday, with the Euro closing down ½ of a percent to 114.66. The status of the US and Japanese currencies as a safe bet amongst Forex Brokers underscores the dire shape of the overall global economy. It is not a matter of who is doing well anymore; rather it is a factor of who is not doing as bad. The trading and investing communities are just looking for something to cling to as the Daily FX charts are becoming more and more confusing to traditional technical and fundamental traders.

The surge, or should it put, strength of the dollar was also helped by the US Treasury Secretary designate, Timothy Geithner, who commented in front of a Senate panel that a strong dollar was in the best interest of the US, prompting broker trading firms to speculate that once confirmed, he will do all he can to prop up the greenback. Considering the mountain of debt that the US economy needs to climb out of which grows each day by billions of dollars, it is difficult to see how any one man can accomplish this feat.

The week was capped off by a peculiar stunt by Canada’s ruling conservative party which pre-announced (it was an intentional leak) that when it reports its budget deficit projections on Tuesday the 27^th, it will show a $52 Billion (US) shortfall the next two years and will not return to positive territory for another five. The move was seen as Canada’s way of minimizing the short-selling and thus overall decline of the Canadian dollar in the Forex trading arena. Aside from this, we can read between the lines into the actual numbers and see a truly disturbing picture. Canada’s economy, and currency for that matter, are intrinsically tied to commodities, oil and metals to be specific.

A projected shortfall of this magnitude means that Canadian economists and actuaries are not too optimistic about a short term global recovery that everyone is hoping for. What this simply means is that Canada is looking at a two year period of global declines followed by a three year recovery period. This essentially puts the crisis in a situation where its affects last five years, a really gloomy scenario that Canada is using to set policy. We hope they are wrong.

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