US Dollar Singapore Dollar - Weekly Candle Chart 8th February 2009

Last week’s candle has provided an excellent trading signal for us in the USD vs SGD currency pair, following the recent rally from the lows of eight weeks ago, with a bearish engulfing candle. For those of you need to candle patterns, this is an excellent signal as the up bar of two weeks ago has been completely engulfed by the down body of last week, with the market having opened above the previous close, and then closed below the previous close. My only slight concern is that the closing price has not penetrated the 9 day moving average which would have added extra weight to the candle. My suggested trade for this week would therefore be to attempt small short positions, but with an eye on the moving averages, and with a stop loss set above the 1.5300 region. Use the daily charts for your entry and exit points, and for a longer term trade like this, always consider the support and resistance areas carefully and watch any reaction in the daily charts as they approach these key points.

The main fundamental data out this week is in the US on Wednesday, with the Trade Balance figures, which is the difference in value between imported and exported goods and services during the reported month. A positive number indicates that more goods and services were exported than imported. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports and in addition export demand also impacts production and prices at domestic manufacturers. If the actual exceeds the forecast then this is generally good for the home currency, in this case the US dollar, with a forecast this time of -37.0B against a previous of -40.0B. These figures are followed on Thursday by a raft of figures including Core Retail Sales, Retail Sales, and Unemployment, all of which will move the currency. The difference between the two sets of retail figures is that the first excludes cars, which generally account for around 20% of sales, and therefore it is often felt that this provides a more accurate reflection of the current spending trends of the public. If the actual is better than the forecast then this is generally good for the home currency, the US dollar. The unemployment figures come hard on the heels of the NFP figures on Friday and are the number of people who filed for unemployment benefit for the first time in the last week, and whilst generally viewed as a lagging indicator it is an important one. Last time around the number was 626,000 and the forecast for this week is 610,000.

The short term outlook is bearish, the medium and long term is sideways.