Forexyard Analysis

[forexyard]

16/07/'07 - US Empire State Business Conditions.

Economic News

USD

The greenback continues to float at record highs against the EUR and GBP, as Friday was characterized in moderate ranged price movement at the release of several news event. The US Retail Sales was release much weaker then expected at -0.9% after a wide expectation of flat 0.0%, and the Core figure also disappointed and entered negative territory of -0.4%, with a consensus of 0.2%. The Consumer Sentiment on the other hand came in much stronger than expected at 92.4, with expectations around 86.0 and a previous release of 85.3. The mixed news releases did not cause any sharp changes in the USD behavior and it continued its movement with a light negative sentiment that culminated today as it is now traded again at all time highs of 1.3790. Today's most important release is the Empire State Business Conditions Index which measures the general business conditions of manufacturers in New York State. The index is derived from a survey that asks respondents to rate the level of general business activity as 'decrease', 'increase', or 'no change'. The forecast for the index is 18.0, which is a sharp decrease from last month's 25.8, and might cause a further weakening for the Greenback.

The rest of the week will contain several more news events that might determine the USD's fate for the near future such as the US PPI, Core CPI, and the FOMC Minutes. It looks as if the negative trend will continue and we might see new records this week.

EUR

With almost no major news releases at the end of last week, the EUR showed once again how strong it really is and climbed to a new all time high. It looks as if it is not susceptible to any major economical concept as it is just rallying up without actually paying too much interest to fundamental releases. Beyond the obvious problems in the US housing market and the sub-prime rate, it looks as if the peaks in EUR/USD are now deriving from pure trading momentum, and massive USD selling.

The Euro-Zone calendar is clean of major news events today, and will be relatively light in the following few days, apart for the UK economy which will provide us with the UK CPI, and Minutes Meeting. It looks as if the trend will continue, taking the EUR/USD to all time highs again.

JPY

The Asian markets were closed overnight for Marine Day, and low liquidity was seen as expected on JPY pegged currency pairs. The only major news release expected from the Japanese market today is the Tertiary Industry Activity Index which Measures the change in spending for services. The release is relatively important for the nation's currency and currency trading because about half of the nation's workers are employed in the service industry. Strong spending in the services sector not only signals higher employment rates, but can also be a sign of strong consumer spending in the future. The index is expected to come in lower than last month's 1.7% at 0.2%, which might cause the JPY to weaken a bit and initiate carry trades again, after a small correction which is probably derived from profit taking.


Technical News

EUR/USD

With the pair trading at all time highs, and the daily charts stronger than ever, it looks as if the next move up is imminent. The hourlies are extremely overbought and a preferable strategy might be to wait for an unwinding before entering the long position.

GBP/USD

The 2.0350 proves once again to be a strong resistance as the pair could not break through for the forth time. But it looks as if it is only a matter of time before the strong trend will overcome the resistance level, and than the next target price for the move would be around 2.0420

USD/JPY

The pair is in the midst of a very strong downtrend that shows no signals of a slowdown. The 4 Hour chart is very bearish with a supportive slow stochastic. The daily chart shows that the next target price is 121.00.

USD/CHF

The pair shows consolidation around the key level of 1.2000 which proves to be very important. A small breach beyond that level occurred on Friday, but the pair could not continue. It looks as if the negative trend will continue if an additional breach will occur, so a preferable strategy might be to wait for the oversold hourlies levels to unwind before taking a short position.


The Wild Card

NZD/USD

A very distinct upwards channel is forming in the 4 Hour chart, providing Forex traders with opportunity to join in a very strong uptrend with a target price of 0.7950, at the first move, and 0.8020 at the second wave. The hourlies support the bullish notion and provide the immediate timing for the long position.

 

[forexyard]

18/07/'07 - Will the Fed rescue the USD?

Economic News

USD

The greenback experienced mixed reactions yesterday as it gained further ground versus the JPY but extended its losses against the EUR and the sterling. The USD slipped to a new 26-year low against the sterling reaching the 2.0475 level on the back of the release of better than expected UK inflation figures which was another strong indication that we may see another rate hike by the BoE in the near future. The interest rate differential between the United States and England seems destined to continue to widen and this is putting sustained pressure on the greenback dropping it to unprecedented levels. There was a string of significant data releases from the US yesterday beginning with the PPI figures. The headline figure released in negative territory at -0.2 % while the core figure came in slightly better than expected at 0.3 %. The positive Core PPI release was followed by further positive news as Industrial Production and Capacity Utilization released better than expected at 0.5 % and 81.7 %, respectively. This string of positive data did not stop the dollar from continuing its slide versus the EUR and the sterling because it seems that the Fed is content on keeping a weaker USD as US exporters will be more competitive in the global market. However the greenback managed a rally against the JPY and it was further backed up by the TIC report which surprised on the upside releasing at 126.1B. The TIC report showed that foreign investors bought a record amount of US securities last month thus indicating that carry trades are unlikely to unwind in the near future and this caused the JPY to lose ground against the greenback. The fact that the headline PPI figure released negatively while the core figure only improved slightly indicated to the market that today's CPI figures may also be weak because the costs incurred by the producer are usually passed on to the consumer. However the Core CPI, which bears greater significance than the headline figure as it excludes the volatile food and energy items, may surprise the market and beat the expected figure of 0.2 %.

Looking ahead to today, besides the CPI figures, the market will be eagerly awaiting the release of Housing Starts and Building Permits figures which will shed more light on the status of the troubled US housing sector. It will be important for traders to note whether there was a correlation between yesterday's soft homebuilder's sentiment and today's housing figures. However most of today's volatility is expected to occur during Fed Chairman Brernanke's semi annual monetary policy testimony as traders will shift all their attention to identify a hint of a future rate hike, so they will listen closely to his views on inflation. If Bernanke is interpreted as being hawkish then we may see the dollar find some reprieve, however there is a strong possibility that the CPI and housing figures will be soft so the USD will crawl deeper into the bears' cave.

EUR

Yesterday the EUR continued on its bullish rampage trading at record levels against the greenback. The EUR also rose against the JPY reaching the 168.57 level on the back of comments made by an ECB council member that inflation is still a concern and that European inflation risks are rising. This indicated to the market that a rate hike in the near future is a realistic possibility. The most significant data to be released out of the Eurozone yesterday was the German ZEW Economic Sentiment which measures institutional investor sentiment. The figure came in at 10.4 which was much lower than the expected figure of 19.5. This negative data had no impact whatsoever on the EUR indicating to the market the depth of the bullish EUR. The only data to be released today relevant to currency trading is the Italian Trade Balance and the Eurozone Trade Balance which are expected to come in at -0.88 B and 4.0 B, respectively. This data is expected to make no significant impression on the EUR.

So with no real market moving data expected to be released from the Eurozone today the EUR volatility will be dollar centric. The market sentiment is to sell the dollar and it has been strongly poised against the greenback since investors increased their concerns over the troubled housing market. Therefore the European currency should be able to sustain its bullish momentum today and in the near future but much depends on today's US data releases and Bernanke's speech. Investor sentiment will also be key in determining the future EUR direction and where they feel the EUR has hit a peak against the dollar as many investors are beginning to feel that the EUR is nearing the tip of the iceberg.

JPY

Yesterday the JPY lost ground against the greenback on the back of the TIC report which showed record high foreign investment into US securities. With the JPY still reeling from the rise in carry trades which has been unrelenting in recent times, the positive TIC report only added to its woes dropping the Japanese currency to the 122.86 level. However the JPY managed to stage a fight back earlier today during the Asian trading session following the release of the Japanese monetary policy meeting minutes. According to the minutes of the board's June 14-15 meeting the nine members of the Bank of Japan agreed that they would adjust Japan's benchmark rate gradually and in accordance with the inflation and the economic situation of the country. Although the Japanese inflation is likely to remain flat the BoJ strongly believes that in the long term the CPI trend is upward and this will provide a basis for the BoJ to raise rates in the near future. Without any further significant news to be released for the rest of the weak we should see the JPY continue its rally against the struggling greenback.


Technical News

EUR/USD

Daily chart signal on an upcoming reversal as Slow Stochastic is crossing at 86 , however there is a mild divergence which indicates that the reversal will be slight. On the 4 H chart it can be observed that there is still more room left for the EUR to strengthen. We are in the middle of a bullish trend which might strengthen since the momentum 100.323 has a positive slope .

Going long might be the preferred strategy .

GBP/USD

The bullish trend seems to be running out of steam when Slow Stochastic crossed at 90 which indicates an upcoming reversal . The 4 H chart suggests a significant reversal when the upcoming bearish trend might relocate this pair value at 2.0440- 2. 0472 Fibonacci retracement levels.

USD/JPY

Daily chart implyies on range trading when Slow Stochastic and RSI are sailing in neutral territory . The 4 H chart indicates that the bearish trend will continue which might take this pair to 121.56 Fibonacci retracement level 23.6%. Then we expect a reversal to take place.

USD/CHF

On the 4 H chart the bearish trend still has steam in it and may test the 1.1960 before the reversal will take place ,as a result of the mildly bearish channel which is observed.


The Wild Card

Gold

Daily chart indicates a continuing bullish trend and Slow Stochastic is crossing with a positive slope . We expect the gold to test the 670.84 resistance level ,and then the reversal will start to gather energy and take place. Forex traders may find gold attractive today since there will be a clear opportunity for profit taking.

 

[forexyard]

19/07/'07 - USD - Will a new all time record low be set today?

Economic News

USD

Yesterday The dollar fell to new lows against the Euro and broke its previous record of $1.3813, at the same time the British pound has arrived at a new trading level against the American dollar, over 2.05, this is a all time high more than a quarter of a century. The pair moved up from 2.0490 to 2.0549 in a little more than an hour. The strength in the GBP/USD is driven almost exclusively by dollar weakness and not pound strength. If anything, the Bank of England signaled that even if we do have another rate hike this year, it will not be until the latter part of the fourth quarter, at the earliest
With the US dollar hitting a record low against the Euro and the British pound many Americans wonder whether more weakness is expected for the US dollar. The main fear is that the situation will eventually lead to weaker spending and lower growth across the nation, but on the other hand, many people have also forgotten the benefits that the weaker dollar can bring to the economy. With the outlook so dire, a weak currency could actually be what ends up saving the economy.

Also yesterday, Federal Reserve Chairman Ben Bernanke Delivered the Fed's semiannual report to Congress. Bernanke told to the Congress that the housing market could dampen an expected pickup in U.S. economic growth, but at the same time, he restated that the central bank's main worry is inflation. However, Bernanke also listed a number of factors that could spark inflation, including a tight job market and the possibility energy prices could move higher. As a result of weaker-than-expected home building, the Fed cut its forecast for growth this year by a quarter-percentage point to a range of 2.25% to 2.5%, and downgraded its 2008 projection as well. Bernanke warned that a recent moderation in core inflation may simply reflect temporary influences. He also said there was a risk lofty energy and food prices could cause expectations of future inflation to rise, possibly unleashing an upward spiral of wages and prices. Bernanke didn't give any hint that the Fed was considering relaxing its inflation-fighting bias, warning instead that recent "favorable" core inflation readings, which strip out food and energy prices, are subject to "considerable noise" and "could also be the result of transitory influences."

The Fed cut its economic growth projections by a quarter percentage point to a range of 2.25% to 2.5% this year and 2.5% to 2.75% in 2008, mainly due to a steeper-than-expected downturn in housing construction. The Commerce Department said housing starts set an annual rate of 1.467 million units in June compared with a revised 1.434 million unit pace in May. Economists had forecast June housing starts to drop to a 1.45 million unit pace from the 1.474 million unit rate originally reported for May last month. Building permits fell 7.5% in June to a pace of 1.406 million units. That's just above the 1.402 million unit rate seen in June 1997 and below the 1.48 million unit rate that economists had expected.

EUR

The currency pair climbed to a new record high of 1.3835 following the comments from the US central bank. At the moment the European Central Bank is less stressed about the need to raise rates, the growing chance of a rate cut before a rate hike in the US is driving the dollar lower.

One would expect that the ECB begin backing off, given the recent appreciation in their EUR, but instead of showing any signs of concern; yesterday, Trichet warned that any attempts to influence the ECB would be in violation of the EU treaty. This situation suggests that they are not willing to talk down the Euro and will only do so under their own terms. The Euro was choppy against the majors in trading on Wednesday afternoon in New York. The currency moved as the Euro zone reported its trade surplus for May. Yesterday afternoon, the European currency bounced between a high of 1.3829 and a low of 1.3761. On the whole, the Euro continues to move at a multi-year high against the American dollar. Today, The Swiss will report at 07:15GMT on the trade balance for June, while at 09:30GMT the UK is set to announce its Retail Sales. Other news from the area will include German producer prices.

Switzerland will report on its Trade Balance for June on Thursday. The prior period showed a level of 1.04 billion, and is expected to advance slightly in tomorrow's data. Other news from the area will include the results of a ZEW Survey for Expectations for July.

Great Britain will announce Retail Sales data on a monthly and annual basis for June on Thursday. The previous month saw a rate of 0.4%, and is expected to decline in tomorrow's data. Meanwhile, the prior year's results were 3.9%, and are also anticipated to drop slightly. Other news from the area will include Public Finances and Sector Net Borrowing for June, the M4 Money Supply and Sterling Lending and BSA Mortgage Approvals for the same period.

JPY

Yesterday, Japan's All-Industries Activity Index, which covers a broad range of economic activity including the tertiary index, dropped 0.3 % in May from the previous month, the first decline in two months, the ministry said the downturn was due to the weakness in the tertiary index as well as industrial output . The electric machinery makers' confidence rose to a four-month high and non manufacturers' sentiment improved, a sign that corporate-sector strength continues to underpin Japan's solid economic recovery. The Tankan Index, a monthly survey of leading Japanese companies, produced a diffusion index (DI) of plus 23 for manufacturing firms in July. That was down from a five-month high of plus 31 in June this figure usually notes on slowing the economic growth in Japan which eventually supposed cause to a JPY reduction. Carry traders aren't quite ready to give up yet. The only currencies that the JPY managed to rally against were the Euro, Swiss franc, US and Canadian dollars and for the most part, the damage was small. Looking ahead, we expect a flat trading after night session when no significant data due to be out in near days however the JPY will be effected from the other majors.


Technical News

EUR/USD

The daily chart is bearish as the Slow Stochastic crossed at 86 and also RSI 80 implying on the continuation of the current trend and will test the 1.3775 Fibonacci 76.4% level. On the 4 H chart a bullish flag is establishing however an upcoming reversal is not yet expected and the bears will stay in the picture for a while.

GBP/USD

The pair range traded yesterday after quite a steady uptrend which seems to be calmer. The daily charts are heading up as the hourlies are unwinding from overbought levels ,and support relatively flat trading. The next target price might be around 2.0540.

USD/JPY

On the daily chart a mild bearish channel is observed which might indicates the near future behavior of this pair as also RSI 39 and Slow Stochastic at 38 as them both having a negative slope implying that the next target is 121.00 and will be tested in the upcoming weeks. On the 4 H chart indicators seem to be sailing in neutral territory as usually indicates an upcoming breakout of the neutral channel barriers which is located at 121.57 - 122.35. Hedging seems to be the right strategy until the breakout direction will be determine.

USD/CHF

The pair shows consolidation around the key level of 1.2010 which proves to be very significant level. A preferable strategy might be to wait for the oversold hourlies levels as traders should pay close attention to the 1.1990 level to unwind before taking a long position.


The Wild Card

Silver

Silver is expected to be more attractive then ever since the daily chart is bullish. However, there is an upcoming reversal which forex traders might use for profit taking in the coming days. On short term there is more room to go as silver expected to test the 13.41 Fibonacci 76.4% retracement level before the reversal will take place.

 

[forexyard]

23/07/'07 - The Sub-Prime Issue is Pulling the Greenback Down Further.

Economic News

USD

Last week, we saw the Greenbacks' deterioration continue, as it ignored every piece of positive information that came from the US market, and it looks as if the sub-prime crisis is stronger than everything else in regards to USD strength. Bernanke's speech last week about the economy in general and the inflation in specific, also didn't shed positive light on the near future of the US economy, implying that there will be no rate hike any time soon. The following week will not be very full of important information, but with the sub-prime situation, the release of the Existing Home sales and New Home Sales will be much more important than usual, as this of information has much more importance now. The US Durable Goods is expected on Thursday, and the US GDP will be released on Friday. If the Existing Home sales will show a positive figure than we might see a certain improvement in traders' attitudes towards the greenback, as we know that the housing market is currently the key element in the US economy, and that the USD strength is not reflected correctly, as the Dow Johns is floating at record levels, and the US Stock market is quite strong. If we will see an average and moderate figure, than the GDP and Durable goods will have much less significance in regards to the USD downtrend, and will probably not be able to stop the negative sentiment.

EUR

The European market is consistently showing its strength, with the EUR and GBP trading at record levels against the USD and is not showing sign of a stop for now. The big question now remains when and if the 1.40 barrier will be breached for the EUR/USD? The answer is actually dependant on the US market much more than it is on the European one, as the situation derives from the US market. We must not ignore the ever improving UK market, and the high UK interest rate that contributes to a very strong GBP that is now trading at 26 years highs. This week will be relatively light on news, as the most important releases will be the German IFO, and the Euro-Zone PMI. Today, no releases are expected both from Europe and from the US, which will probably produce a relatively quiet trading day on the sector.

JPY

The JPY advanced to its highest level in more than six weeks against the USD as a slide in Asian stocks and the problematic US housing market encouraged traders to scale back investments in emerging markets funded by borrowing in Japan. The currency also rebounded from a record low against the Euro after Asian shares followed a decline in U.S. equities on concern of mortgage defaults which may cause investors to continue to flee riskier assets. With the sub-prime loan problem in the U.S. getting worst, the JPY's weakening trend has reached its end.


Technical News

EUR/USD

This currency trading pair is heading to 1.3850 which is a major resistance level and if breached will initiate a further move which will set fresh all time highs. The daily charts are very bullish, as the hourlies are overbought. Looking for dips to go long might be preferable.

GBP/USD

With the pair trading at record highs, and the positive momentum leaning mostly on the positive side, it appears that the pair is steadily heading to 2.0800 levels maybe even this week. The daily charts are bullish and the hourlies are neutral which means that traders must look for a better entry point, as a correction might be imminent before the next move up becomes valid.

USD/JPY

After a choppy week, the pair approaches 120.75 which is a very strong support level that the pair has not seen since May. If the support will be breached we will see the beginning of a massive move down. The bias is definitely down as the dailies are bearish, and the hourlies are a bit oversold. Waiting for the hourlies to unwind before going short might be a smart move.

USD/CHF

After a nose dive move from 1.2460, the pair seems to be struggling to break the 1.1960 level. These levels have not been seen since November 2006. The daily chart provides a moderate bearish signal, and the hourlies provide mixed signals. There is no definite bias at this point.


The Wild Card

NZD/USD

After breaking the unbelievable level of 0.8000, and showing nothing but consistent bullish sentiment, there is a great opportunity for Forex traders to jump in one of the healthiest up-trends around. It looks as if there is plenty more room to run, and even with a tight stop trading style, it is possible to take nice profits from a long position.

 

[forexyard]

24/07/'07 - Are Forex Traders Frustrated with the Dollar?

Economic News

USD

Although the USD remained pressured during Monday's trading day, the failure of the EUR to push through 1.3850 prompted a bout of profit taking following the currency's recent gains. However, the beleaguered dollar found no reprieve in the overnight session, dropping to fresh 18-year lows versus the Aussie at 0.8847 and falling to a new 26-year low against the sterling at 2.0640. Traders will closely assess this week's US economic reports to determine the trend direction for the greenback over the coming months - with overwhelming sentiment biased toward further declines as a result of expectations for global interest rate differentials. The economic calendar for the USD today is light, consisting of only the July Richmond Fed manufacturing survey - seen improving to 5, up from 4 in the previous month. Traders will also continue to analyze earnings releases and monitor US equity performance. There are also Fed officials scheduled to speak, including Mishkin and Poole.

Equities, bond yields, and the US dollar all recovered yesterday amidst the lack of any US economic data. However, none of these assets managed to regain all of Friday's losses, which suggests that the selling may not be over. This week's major event risks do not come until Wednesday at which time we will learn more about how much the situation in the housing market has worsened (major affect on the US economy). If existing and new home sales continue to fall, then Fed Chairman Bernanke might claim that things will worsen before they will get better. However if they rebound the market will continue to downplay the risks of a collapse in the housing market. We don't expect the US government to stand in the way of further dollar weakness, however it seems that they are still feeling comfortable with the low greenback especially when it's supporting the wide export sector which will try to leverage the recovery to other territories. In actuality, the manufacturing sector is recovering strongly thanks to booming exports. This is one of the primary reasons why the housing market has not collapsed yet and why the stock market remains not far from its record highs; all due to the widespread benefits of a weak dollar. The question that will be continuously asked is when the USD recovery will take place? Well, optimism is increasing which has translated into stronger capital spending and productivity shall offer that the recovery is in sight .

We think that EUR/USD is more likely to reach 1.3900 in the upcoming weeks as opposed to a significant reversal.

EUR

This morning, the EUR trades just beneath its all-time high against the dollar, hovering near 1.3820. Today, economic data from the Eurozone includes the May current account balance, July service and manufacturing PMI, and May industrial orders. The May current account deficit is forecasted to weaken to 1.2 billion euros in May compared to the 4.0 billion euros a month earlier. The July services PMI is estimated to slip to 58 from 58.3, while manufacturing PMI is seen falling to 55.5 versus 55.6. Lastly, industrial orders for May are forecasted to reverse the previous month's 0.4% decline, rising by 1.1%, but slip to 7.8% versus 12.2% from a year prior. Yesterday, the Euro climbed to a new record high in the early Asian trading session, but failed to hold onto its gains. This type of price action should be worrisome for EUR bulls, however we would need to see a close below 1.3780 to turn bearish which is unlikely.
This is the last chance that we will hear from ECB officials before they go on their summer holidays and the lack of concern over the past few weeks implies that they fully intend to raise interest rates to 4.25% over the next few months.

Yesterday, the ECB member Papademos pointed out that some EZ countries have raised their growth rates while Stark talked about how the current level of the EUR reflects the strength of the Euro zone economy. Next month's monetary policy meeting will be a teleconference with no scheduled press conference. Although Trichet has announced that establishing an impromptu press conference may not be out of the question, we expect him to wait until the September meeting to bring back the words 'strong vigilance.' At that time, he would be preparing the markets for an October rate hike and its will be interesting how the market will react when usually this expression boost up the EUR . Given Trichet's warning to EU government officials about interfering in ECB monetary policy, unless we see the EUR/USD at 1.45 in August, we do not expect to hear much from Trichet next month. Instead, what could lead to some further EUR selling is this week's busy data calendar. Today we are expecting EZ service and manufacturing PMI along with industrial orders and current account. All of these reports might affect the rates, which mean that they have decent chance of surprising to the downside. Yesterday, he Sterling briefly popped to a new 26 year high above 2.0600, supported by the currency's yield advantage, before fading back to 2.0570. However, this morning, the GBP is on a rampage gaining 70 pips since the evening session and is trading at over 2.0635

JPY

The JPY was steady throughout Monday as the dust began settling from China's rate hike on Friday. Friday's sell-off in the Yen crosses was driven by the fear that the problems in US sub-prime sector have become global. So far we have learned that they have not and because of that, some of the Yen crosses have recovered. According to an article in the Nikkei paper, the value of Japanese investment into foreign trusts has increased 56%. The market's appetite for carry trades has also been fueled by their expectation of nonexistent inflation. Consumer prices are due for release this Thursday night when another negative month is forecasted. Meanwhile the LDP elections are scheduled for Sunday and when latest opinion indicate that Prime Minister Abe and the LDP are losing support is effecting directly on both the Japanese Yen and Japanese equities. The USDJPY pair did trade at a six week low of 120.37 during the night session when as overall the USDJPY traded with a range of a low 120.80 and a high of 121.65 before closing the day at 120.47


Technical News

EUR/USD

On the 4 H chart we notice that the bullish trend is running a head. The volatility has decreased and the EUR/USD is in a consolidation pattern after it broke the 1.3830 resistance level. The price action should continue to be upwards in a range between 1.3810 to 1.3860. As it seems, the bullish pressure will continue to gather momentum also today. The long term target is 1.4000.

GBP/USD

On the 4 H chart, a rising wedge (bullish) is forming which may imply a continuation of the bullish carry trade; its recommended to time the entrance to the market with short term charts, 2.0620 seems like a strong entry point. At the moment GPB/USD is being traded around the 2.0590 to 2.0680 range. Volatility is low; we should expect to see also today bullish pressure on the GBP. The uptrend should continue on 2.0700 resistance.

USD/JPY

The USD JPY broke the 120.50 support. USD/JPY is in a downtrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands have tightened. We should expect to see also today a bearish configuration. 1H, 4H Elliott pattern implies that the pair will continue to gather momentum. The target is expected at 120.00

USD/CHF

The USD CHF is in a bearish configuration. The volatility has decreased. The pair has moved without a trend and has swung around the exponential moving average (EMA 50 and 100). Bollinger bands have tightened as well. 1H, 4H Elliott pattern implies a continuation of the bearish pressure. The target is expected at 1.2000


The Wild Card

EUR/JPY

On the 4 H chart we notice that the bearish trend is running ahead. The volatility decreases and the pair is in a consolidation after it has broken the 166.70 support level. The price should continue to move downwards in a range of 167.10 to 166.20. As it seems, the bearish pressure will continue to gather momentum in the Forex trading market also today. The long term target is 164.00.

 

[forexyard]

26/07/'07 - US Durable Goods Orders.

Economic News

USD

Yesterday we noticed the beginning of a dollar recovery against most of the major currencies after the publication of the Federal Reserve report. The dollar has extended its rebound from a record low against the Euro and a 26-year low versus the British pound. The Dollar has lost 1.3% versus the Euro and 2.2% against the pound this month. The dollar climbed broadly yesterday as investors shrugged off signs of housing sector weakness while U.S. Treasury debt prices were little changed. Yesterday the dollar rallied despite a report by the National Association of Realtors that sales of existing homes dropped 3.8% in June to the slowest rate in more than 4 years. It followed data from the Mortgage Bankers Association showing mortgage applications fell for the first time in four weeks to a five-month low The U.S. economy continued to expand at a moderate pace through June and early July with a weaker housing market offset by improvements in the commercial real estate and manufacturing sectors. Existing-homes sales hit a lower-than-expected 5.75 million unit annual rate while prices and inventories remained flat. Applications for new mortgages hit their lowest since mid-February as the demand for homes continues to slide. The inventory of homes for sale fell 4.2% to 4.196 million units at the end of June, which represents an 8.8 months' supply and matched the May supply. As a main note, yesterday data signaled to many analysts that the housing market still has a ways to fall. Higher interest rates, a weapon against inflation, can support a currency by offering investors higher returns on investments denominated in that currency. The Fed survey will be discussed at the central bank's next meeting on Aug. 7, when it is expected to hold the key interest rate at 5.25 percent, since June 2006. Today the data of the Durable Goods orders is going to be published. The forecast stands on 1.9%; this figure reflects a stage a strong recovery in June after plunging the month prior -2.4%. Forex markets may see substantial volatility on the announcement.

EUR

Yesterday the Euro fell against the Dollar by the largest amount in 2 months, putting an end to the currency pair's month long uptrend. Though the Euro has eased back from its July 24th record high of 1.3851, the currency is still up nearly 17% since the beginning of last year. The combination of hawkish rhetoric and seven 25 basis points interest rate hikes by the European Central Bank has driven the EUR/USD from 1.20 to 1.3850 in a little more than a year. The deterioration in Euro zone manufacturing PMI and the drop in the Belgian manufacturing survey suggests that German business sentiment could deteriorate. If that becomes true, the sell-off in the Euro could deepen. A break below 1.3697, may open the door for a move down to 1.3575. The central bank's commitment to continue to raise interest rates has helped to keep the Euro steady near its record highs.

The expectations ahead of the German business climate index are quite low. It a figure will be lower than the previous one, Euro may weaken today. Traders have accumulated excessive EUR long positions that will likely be reduced. Therefore we believe that the report may cause the EUR to strengthen.

JPY

Yesterday the yen retreated from a four-week high and snapped a four- day gain against the Euro, this year's longest rally, as a rebound in U.S. stocks encouraged investors to borrow in Japan's currency to buy higher-yielding assets elsewhere. The Japanese yen may extend losses as investors add to so- called carry trades, taking advantage of the lowest interest rate among industrialized nations. Japanese fund managers are expected to sell nearly 1 trillion yen ($8.3 billion) of foreign-currency trusts this month. The Bank of Japan is likely to hike interest rates only once more in the current fiscal year. Given widely held prospects for continued mild inflation. The BOJ has made it clear that it will skip raising rates in August after conducting its first rate hike in six years this month. The BOJ wants to confirm a downward revision to the CPI data in late August. If the downward bias is up to 0.3 percentage point, as expected, the current 0.6% year-on-year rise in the core CPI will be reduced to 0.3%. Estimated real interest rates would still be negative and thus support the economy as the 0.3% inflation rate would exceed the 0.25% target set by the BOJ. Japanese consumers are continuing to show a willingness to spend again after a downturn that lasted more than a decade. it appears to reflect a steady recovery trend and improved consumer sentiment. Subsequent implications for consumer spending and sentiment are relatively clear; a stable consumption tax may prove bullish for consumption through the medium term. Currently anemic consumer spending rates have definitely shown their impact on economic growth, keeping pressure on the Bank of Japan to limit monetary policy tightening in the absence of a pickup in expenditures.


Technical News

EUR/USD

On the 4 H chart we notice that the bearish trend is running a head. The volatility is very high and the EUR USD is not in a consolidation stage, especially after the pair has broken the 1.3800 support level. The price should continue to move downwards in a range of 1.3750to 1.3650. As it seems, the bearish pressure will continue to gather momentum on the EUR USD also today till the weekend.

GBP/USD

On the 4 H chart we notice that the bearish trend is running a head. The volatility is very high and the GBP USD is not in a consolidation faze, especially after the pair has broken the 2.0550 support level. 2.0520 seem like a strong entry point. The price should continue to move downwards in a range of 2.0520to 2.0420.The volatility is very high, and as it seems, the bearish pressure will continue to gather momentum on the GBP USD also today till the weekend.

USD/JPY

The USD/JPY broke 120.50 resistance. USD/JPY is in an uptrend supported by 1H exponential moving averages. The volatility is high. Bollinger bands are expanded. We should expect to see today a bullish configuration on the USD/JPY. 1H, 4H Elliott pattern implies that the USD/JPY will continue to gather momentum. The target is expected at 121.85

USD/CHF

The USD/CHF is in a bullish configuration. The volatility increases. USD/CHF swings around exponential moving averages (EMA 50 and 100). Bollinger bands are flat. 1H, 4H Elliott pattern implies a continuation of the bullish pressure. The target is expected at 1.2200


The Wild Card

Gold

After a 4 day downtrend, GOLD prices have been moving up. Forex traders may find themselves looking for a direction but without momentum, this will be difficult. Those trading currency should be aware that going short now may be a good move, but need to watch the market closely since the reversal is waiting to gather enough energy before taking place.

 

[forexyard]

30/07/'07 - The Greenback is strengthening despite crashing US stock market.

Economic News

USD

There were several important releases last week relevant to currency trading, especially from the struggling housing sector, that demonstrated once again the housing crisis is nowhere near over. Existing Home Sales came out weak at 5.75M, and New Home Sales disappointed at 834K. To add some fuel to the negative news fire, Core Durable Goods entered negative territory of -0.5%. The flow of weak news from the US continued on Friday as the Annualized GDP came in lower than expected 2.7% despite consensus expectations for 3.4%.

It is quite interesting to see that on top of everything else, the US stock market is weakening, as the Dow Jones dropped another 400 points, yet on the other hand, we clearly see a USD recuperation, that is slowly shaping into a rally. The Greenback is gaining strength against most majors, as the EUR/USD is now trading at 1.3640, and the GBP/USD is trading at 2.0240 after peaking at an unbelievable level of 2.0600. The main reason for that is that traders are putting their trust in the Greenback once again, as external investment is increasing, and traders are hedging risky funds with the US Currency.

This week will be quite full of important news releases, as apart of the Nonfarm Payrolls release on Friday, we also expect Core PCE, the Chicago PMI, and the ISM Manufacturing, and Non Manufacturing Indices. It looks as if price movement will be quite high, and there is a high probability of an additional positive move for the Greenback.

EUR

Last week showed the first signals of the beginning of the end of the positive rally for European currencies. The EUR lost 200 pips against the USD, and the GBP lost more than 400 pips. With the lack of significant news it looked as if the European market was ignoring the US stock market crash, and the flow of negative news that came from the US. Traders are now heading south, especially with the EUR, as it is clear to all that an abnormally strong EUR and high levels of inflation, are not good in the long run, and the ECB is aware of this, as inflation is probably the most important issue in the monetary policy. This week will be quite low on news events, besides the release of the UK rate Decision, and the Euro-Zone Rate Decision on Thursday. Both rates are expected to remain unchanged, as it is highly probable that no surprises will be seen from that. Most of the focus this week will not come from Europe, as the US calendar is very full with highly important news.

JPY

The most intense reaction to the fall of the US stock market would be the massive unwinding of the carry trades. The JPY is growing strong against all crosses, and indeed the only pair that did not see the USD situation improving was the USD/JPY. The news releases from last Thursday showed negative fundamental sentiment as the Core Tokyo CPI and the Retail Sales were both released weaker than expected. Today the Manufacturing PMI will be released, but will probably not generate too much volatility, and is the only bit of mildly important information that will come from the Japanese market this week. It looks as if the unwinding of the carry trades will continue, at least until Friday, where a clearer direction will be determined with the release of the Nonfarm Payrolls, in the US.


Technical News

EUR/USD

The pair is now floating around 1.3640, as the overall sentiment is quite bearish. The daily chart is showing that there is still more room to run and the hourlies are sending mixed signals. 1.3600 is now a major support that if breached will create a further move down, and confirm 1.3550 as the next target price.

GBP/USD

After a breach through the very important 2.0300 level, the signals are more bearish than ever. There is a delicate bullish cross on the 4 Hour chart that might take the pair to a moderate correction, but the pair looks as if it is safely heading south. Next target price appears to be 2.0150.

USD/JPY

There is a local consolidation around 118.50, after a massive rally down. The daily chart is showing a slowdown in bearishness, and the 4 Hour chart is confirming that although the direction is down, the momentum is not as strong as before. A preferable strategy might be to wait for a clearer signal from the daily charts before establishing a position.

USD/CHF

The pair started a moderate uptrend last week that ended with range movement of 150 pips. Both daily and hourly charts show bullish sentiments, and a distinct positive momentum. If the 1.2100 level will be breached, the move up will be confirmed, and we might see the pair return to the 1.2250 levels.


The Wild Card

Crude Oil

There is a very distinct upwards channel forming on the 4 Hour chart, and it is now floating on the upper barrier of the channel. Oil seems to be having difficulties breaking through the 76.90, which provides Forex traders with a great opportunity to go short at a great entry price, and enjoy the strong resistance level.

 

[forexyard]

31/07/'07 - Busy US schedule today - Chicago PMI on tap.

Economic News

USD

The Greenback retreated a bit yesterday, after a strengthening bias appeared amongst traders at the end of last week. The US calendar is full of interesting and important news releases today, after yesterday's almost empty calendar which produced no major price movements.

The US Core PCE Price Index is expected to be released today at 0.2%, which is a slight increase from last month's 0.1%. Personal spending is also expected to be released today, and past data shows that personal spending rose by 0.1% during the month of June, compared to a rise of 0.5% during May. As we can expect, the USD may lose some of its strength again due to the fact that the average American consumer's spending power has decreased. A sharp drop in confidence as well as a widening gap between spending and income will resurrect talk of an end of the year interest rate cut. The most important news release of the day would no doubt be the Chicago PMI, which is expected to go down from 60.2 to 59.0. Although the expected figure indicates growth in the manufacturing sector, it still means the growth level is decreasing. If it comes inline with expectations, it will probably shift the USD down a bit. It appears that the USD will continue to weaken today against the 13-nation currency, on the basis of the diverse data which is going to be published today in the market. The forecast indicates a slowdown in personal spending growth while an inflation gauge closely watched by the Federal Reserve may stay at the same level. The US economy is expected to show additional negative signals especially after the Rising mortgage rates and defaults which have hurt badly the mortgage lenders this year. More than 50 lenders have filed for bankruptcy or have sold out. Traders will be watching the price movement closely today, as it is a direct preparation to Friday's main event - the release of the Nonfarm Payrolls.

EUR

The EUR has grown stronger all across the board yesterday, even with the lack of any major news from Europe and the US. Today will be quite different as besides the busy US calendar there are several major events expected to come from Europe, especially from the UK. The first event to open the news session would be the Euro-Zone unemployment rate release (9:00 GMT) which is expected to be released a bit lower than last month at 6.9%. Also expected at the same time is the release of the Euro-Zone Consumer Confidence which is expected to remain unchanged at -2, and is directly indicating that the consumer's mood in regards to economic conditions is not quite good, yet stable. The most important release that is expected to come from Europe is the Confederation of British Industry (CBI) Distributive Trades Realized which measures the health of the retail sector by asking executives if their firm experienced an increase or decrease in sales compared to a year ago. That is a very important figure because Retail Sales make up a large portion of consumer spending, which is a major driver of the UK economy.

JPY

Yesterday the JPY jumped to recent local highs and touched 118.05 against the USD and 160.67 against the EUR. The JPY is headed for a second day of losses against the EUR as a rebound in U.S. stocks gave investors confidence to buy higher-yielding assets funded by loans in Japan. Last night, overall Household Spending y/y, and the Unemployment Rate data were published in Japan. Japan's households increased spending for a sixth month in June, Spending rose by 0.1% from last year, and the jobless rate fell The to 3.7% percent in June from 3.8% in May, which indicates an improvement. At the moment according to these specific results, an August interest rate increase will be difficult to be obtained by the BOJ, and as it seems it will keep the interest rate at 0.5%, the lowest among major economies. This question will be answered on August 22nd by the Bank of Japan policy makers.


Technical News

EUR/USD

The pair is now forming a downwards channel with strong resistance at the 1.3720 level. The daily chart is bearish, and the hourlies support the notion with a bearish cross above the 80 level on the slow stochastic. It appears that the pair is going to the 1.3600 level.

GBP/USD

After a short correction, the pair regains the bearish path, and seems to be quite confident to reach the target point of 2.0100. The hourlies are quite bearish, as the dailies produce mixed signals. A preferable strategy would be to keep out until a clear daily sign will emerge.

USD/JPY

The pair seems to be having difficulties breaking through the 118.00 level, after several attempts that failed. This sets the support level as a very strong one, that if breached will produce a very strong bearish move. The ongoing sentiment is down so a preferable strategy would be to wait for a break signal before entering with a short position. 177.75 will confirm the move.

USD/CHF

The pair is floating at a relatively tight range for several days now, and the daily studies start sending bullish signals. The hourlies are still producing mixed signals, and most of the time is floating at neutral territories. A break through 1.2135 will confirm that the move up is valid, and will probably take the pair back to the 1.2300 levels quite soon.


The Wild Card

Crude Oil

The upwards channel continues, as we see several attempts to break through the 77.20, with no success. This confirms the fact that Oil is accumulating the bearish energy, and that the correction is imminent. Forex traders might benefit from that, as it might be a great entry point for a short position.

 

[forexyard]

02/08/'07 - EUR & GBP Interest Rate Announcement

Economic News

USD

Yesterday the greenback was on a slippery slope as a succession of negative data from the US threatened to reverse the dollars recent gains. The first and most significant news of the day was the ADP Nonfarm Employment Change, which measures the number of new jobs created outside of the farming sector, this figure came in at 48K which was well below the expected figure of 103K. This weak ADP release gives a strong indication that the Nonfarm Payrolls Report will release on Friday significantly below its expected figure of 135K. Although the ADP figure has been questioned in the past with regards to its predictive value it still managed to shake up the rallying greenback. To make matters worse for the USD there was more negative news to follow as both the ISM Manufacturing Index and Prices figures came in below expectations at 53.8 and 65.0 respectively. However the greenback has performed solidly amongst the global equity market fall and it recouped after yesterday's string of negative data and now seems to be preparing itself for another rally.

Today the only significant news to be released from the US will be Unemployment Claims and Factory Orders which are both expected to release stronger than their previous figures. The persistent problems in the US sub-prime mortgages coupled with further reports of hedge fund worries is fuelling the risk aversion sentiment. The USD has performed well amid this safe-haven sentiment and it will continue to show strength today particularly against the high yielding market currencies as this sentiment is showing no imminent signs of letting up. However with yesterdays negative data taming the dollars bullish run traders will exercise caution ahead of Fridays NFP report which has a strong probability of springing a negative surprise.

EUR

The EUR is still showing signs of resilience as it traded in a relatively close range yesterday even though there was volatility all across the board. The German Manufacturing PMI figure was released slightly below the expected figure of 57.0 at 56.8. However this soft data did not manage to slowdown the overall European Manufacturing PMI figure which was released stronger than expected at 54.8. The most significant news to be released from the Euro-zone today will be the ECB's key interest rate announcement which is expected to remain unchanged at 4.00 %. . The EUR should to continue to range trade today but we could see some strong volatility if the ECB hints towards future rate policy. No news conference is expected to follow the interest rate announcement so a surprise conference by the ECB will cause the market to start flapping.

In other news yesterday the GBP had a short-lived bullish burst on the back of the release of the better than expected UK Manufacturing PMI. Today the BoE will announce its benchmark rate which also expected to remain unchanged at 5.75 %. However the current market sentiment seems to be that the ECB and BoE will both hike rates in the near future so it will be crucial for traders to identify how the preceding economic indicators from Europe and the UK will affect the two central banks monetary policy.

JPY

The JPY has enjoyed a sustained bullish run as a result of the carry trades unwind which is being driven by increased risk aversion. There has been a strong negative correlation between the JPY and US equity markets as a fall in the equity markets has usually sparked a rise in the JPY. This was reiterated yesterday as the JPY had a dip against some of the majors on the back of a short lived Dow rebound. However without any further news releases expected from Japan for the rest of the week the direction of the JPY will heavily depend on the volatility of the equity markets but with the carry trade unwind likely to continue in the near future we should see the JPY extend its gains particularly against the greenback.


Technical News

EUR/USD

There is a bearish configuration forming on the 4 Hour chart. The volatility is high and the EUR/USD is not in a consolidation stage, especially after the pair has broken the 1.3700 support level. The price should continue to move downwards in the 1.3700 /1.36050 range. As it seems, the bearish pressure will continue to gather momentum at least until the week ends.

GBP/USD

The pair is going through a choppy session in the past few days, and gives mixed signal on the hourly level. The daily chart is showing massive bearish formation, and it looks as if the pair is heading 2.0200 again. a preferable strategy might be to wait for the hourlies to unwind before going short.

USD/JPY

The pair is in the middle of a very strong downtrend that started from 124.00. It looks as if the pair is having difficulties breaking the 117.60 level which is now a very strong support. If the support level will be breached it will validate the next move down, to 116.00.

USD/CHF

The pair is floating a low range similar to the one in December. The 1.1950 level is established as an almost impossible level to break. The dailies are showing bullish signals, and the dailies support the bullish notion. It might be preferable to buy on dips, as the bullish sentiment is quite strong.


The Wild Card

Crude Oil

Oil is going through a massive downtrend momentum, and broke the 77.50 level. This provides Forex traders with the opportunity to jump in a good trend and to take some profit on the short rang. Next target price is 75.50.

 

[forexyard]

06/08/'07 - The Greenback Pulls Further Back.

Economic News

USD

The greenback pulled back quite massively last week, as we saw that the small strengthening signal was very short lived and was replaced by a deep drop all across the board. The news that came from the US last week was very consistent as the negative sentiment prevailed time after time and pushed the USD down one step after the other. After weak releases of the Chicago PMI, unemployment claims, ISM manufacturing, and the ADP Nonfarm index, we saw some more negative sentiment on Friday. The Nonfarm Payrolls was released at a disappointing 92K after it was widely expected to come in at around 135K. The unemployment rate also rose a bit to 4.6%, painting a gloomy picture for the US labor market. The release showed strong correlation to the ADP release that although was released much lower than 92K at 46K, still forecasted the extremely negative sentiment that caused the NFP to be released that low. On top of all this the ISM Non manufacturing Index was released a bit later showing a dip from 60.7 to 55.8 and a consensus of 59.5, which completed an extremely negative week for the greenback in regards to news events.

This week might be very interesting for the USD, as it might be light on news events, but the two major events that are expected to be released are the Fed's Rate Announcement, and the Nonfarm productivity, both are expected tomorrow. It looks as if it is not going to be easy for the greenback to pull back from the ongoing depreciation if the negative sentiment will continue, especially with the Sub-Prime condition that doesn't seem to be getting better any time soon.

EUR

There weren't many important currency trading news events which came from Europe last week, and the few that were, came out quite as expected, like the ECB and BOE rate announcements which came inline with expectations, and provided little price movement as they were overshadowed by a packed US calendar. Trichet's speech at the end of last week which stated that the ECB will take a “strong vigilance” policy might raise the expectations that we will see a rate hike next month, in order to further stabilize the Euro-Zone condition.

This week should not be very exciting with regards to news releases, as the UK Inflation report will be the only major event that is expected to deliver some excitement from the European market.

JPY

The unwinding of the carry trades continues at full steam, as the deterioration in USD situation takes the USD/JPY to levels it has not seen since March 2007. The positive news flow from Japan such as the better unemployment rate which went down to 3.7%, and the housing starts which soared 6.0% from negative territories also contributed to the situation.

This week will not contain many news events apart from the Core Machinery Orders release which is expected to drop to -1%, and the M2 CD Money Supply which is expected to remain unchanged at 1.8%. The JPY movement will be heavily influenced by the USD market this week, and the unwinding of the carry trades will most likely continue.


Technical News

EUR/USD

The pair is now trading around 1.3840 which is the July High level, and a very strong resistance. If the level will be breached violently, we might see a further move to the 1.3900. The daily charts are waiting validation, and the hourlies are very bullish.

GBP/USD

The Cable is now in the middle of a short correction move and will probably test 2.0400 shortly. The daily charts are moderately bullish, and the hourlies are unwinding from overbought territories. Next target price might be 2.0500.

USD/JPY

The pair is in consolidation around the 117.70 level, probably before making the next break down. The down trend is very strong, and the pair will probably try to test 117.00 shortly.

USD/CHF

After the 1.1900 level has been breached, a very strong psychological barrier has been broken. This notion is supported by extremely bearish dailies. The hourlies are a bit oversold, which makes it preferable to try to go short on tops.


The Wild Card

Crude Oil

The Oil is floating at a key level, at the bottom of an upwards channel. This provides Forex traders with the opportunity of a great entry point for a long position that might provide a pullback to the 76.50 levels again.

 

[forexyard]

07/08/'07 - U.S Interest Rate on Tap.

Economic News

USD

Yesterday, USD hit a 15-year low against a basket of major currencies as traders speculate that the worst of the credit issues in the US does not seem to be over yet. Equities, bond yields and the US dollar are all higher today indicating that the markets are collectively hoping for some reassurance from the Federal Reserve tomorrow. The turmoil in the mortgage market has everyone worried that the worst has yet to come, but if the Fed still feels that the economy will 'continue to expand at a moderate pace over the coming quarters,' and the upside risks to inflation is a bigger problem than the downside risk to growth, then the rest of us may be able to relax as well.

Crude oil took a plunge of 4.5% as the credit problems in the US have many seeing it as affecting economic growth thus demand for oil from the world's largest consumer. Oil fell by US$3.58 to US$71.17 a barrel.

The USD index (USDX), a gauge of the greenback's value against six major currencies slipped to a low below 80 which has not been seen since 1992.however on contrary the Dow Jones rebounded sharply, rising 286pts (2.2%), while the NASDAQ strengthened by 36pts (1.4%).

Today'a main focus expected to be the Interest rate statement, when the Fed is not expected to lower interest rates since the deflation pressures it may cause. However if analysts perspective were that no rate change will take place until 2008 ,well now according to equities and bonds yields status it is not unlikely for a rate cut taking place in the end of 4th quarter .

Today, cautionary comments from the Fed are very possible when actually at his semi-annual testimony on the economy and monetary policy, Fed Chairman Bernanke warned that things will get worse before they get better and indeed it has already gotten worse since then, the chances that the problems will become even more severe still exist and more likely that a deterioration will take place before the awaited recovery. In addition of the Interest rate announcement we have also the Non farm Productivity q/q which not expected to improve comparing to the 1% last quarter figure, and the Unit labor Costs q/q which no change is expected within this quarter figure.

EUR

The EUR was mixed against the USD as market shows signs of anxiety. According to European Central Bank, the strong Euro has helped cap inflationary pressures due to rising oil prices. Overall, the EUR\USD traded with a range of a low 1.3784 and a high of 1.3840 before closing the day at 1.3795 in the New York session.

Much stronger than expected German factory orders and demand for EUR/JPY has helped the EUR/USD hold steady despite a strong rally in US stocks and US bond yields. However the strong Euro seems to have only a limited impact on demand since orders increased 4.6 percent which compares to the market's -0.6 percent forecast. This suggests that Tuesday's industrial production numbers could also be firm. Trichet installed a strong bid tone in the currency last week when he held a surprise press conference to announce that they essentially plan on raising rates next month. In an environment where the US is on the verge of lowering rates, this has become very bullish for the Euro at the expense of the US dollar.

JPY

The JPY advanced to its highest level in more than 2 weeks against the USD as a slide in Asian stocks and the problematic US housing market encouraged traders to scale back investments in emerging markets funded by borrowing in Japan. The currency also rebounded from a record low against the Euro after Asian shares followed a decline in U.S. equities on concern of mortgage defaults which may cause investors to continue to flee riskier assets. With the sub-prime loan problem in the U.S. getting worst, the JPY's weakening trend has reached its end. The (JPY) was mixed against the greenback and remained little changed from the previous close in the absence of market moving data from either country. Overall, the USDJPY traded with a range of a low 117.19 and a high of 119.10 before closing the day at 118.91 in the New York session.


Technical News

EUR/USD

The forex trading pair has been ranging in the past few days but it still gained no distinct direction. The daily studies are showing bearish signals and the hourlies are currently neutral. On the daily chart we may observe a forming Eliot wave structure. A preferable strategy might be to wait for the hourlies to deliver a positive signal, and look for a good entry point for a short position.

GBP/USD

The pair is going through a choppy session in the past few days, and gives mixed signals on the hourly level. The daily chart is still showing a bearish formation, and it looks as if the pair is heading 2.0200 again. A preferable strategy might be to wait for the hourlies to unwind before going short.

USD/JPY

The downtrend is continuing, creating a bearish sentiment on daily charts. The Hourly chart support the negative notion and are setting a target price of 117.00 The pair is still trading within the boundaries of the upward channel on the daily chart, and if the 116.50 will be breached, than the reverse move is affirmed.

USD/CHF

The pair is floating in a low range similar to the one in December. The 1.1950 level is established as an almost impossible level to break. The dailies are showing bullish signals, and the dailies support the bullish notion. It might be preferable to buy on dips, as the bullish sentiment is quite strong.


The Wild Card

Silver

There is an upcoming reversal which Forex traders might use for profit taking in the upcoming days. On the daily chart, the 5 Eliot waves pattern is shown and the A B C wave's formation might bring silver to 13.00 however it might touch 13.40 first.

 

[forexyard]

08/08/'07 - BOE Inflation Report (GBP)

Economic News

USD

The most significant forex trading news to be released from the US yesterday was the Feds key interest rate statement which left the interest rate unchanged at 5.25 %. Before the release of the statement the greenback experienced a slight revival against the majors as it was widely expected that the Fed would reiterate their robust stance on controlling inflation. This was indeed the case as the Federal Open Market Committee stated yesterday that inflation remained its primary concern and therefore the greenback extended its earlier gains particularly against the EUR. The Fed stated that the resilience of the labor market coupled with rising incomes will keep economic growth stable. Therefore although the Fed has kept its key benchmark rate unchanged in over a year, yesterday's statement was interpreted by investors as being hawkish as the Fed indicated that it will not cut rates in the near future even with the prevailing housing and credit concerns. Traders must pay close attention to any future comments from the Fed regarding its monetary policy as it seems that the Fed is trying to temporarily reassure investors that there is an underlying strength in the US economy and that growth will continue. However the Fed may very quickly change their tune in future statements as the sub-prime crisis and credit woes could drive the US economy into a recession if it is not aided by a rate cut from the Fed.

Today there is no market moving news expected from the US so we should see the greenback consolidate on yesterday's gains however the market remains edgy on the back of the Fed statement so investors, particularly this week, should pay close attention to future US news releases as there will be heightened volatility which may put the USD back onto the familiar slippery slope.

EUR

Yesterday the EUR lost ground against the USD on the back of the Feds interest rate statement which was interpreted as being hawkish. The only news which was released from the European market yesterday was the German Industrial production which released in negative territory at -0.4 %, well below the expected figure of 0.4 %. However this did not have much of an impact on the EUR as traders shifted their attention to the Feds statement, therefore most of the EUR movement was dollar centric. There is no real market moving news to be released from the Euro-zone for the rest of the week, so with the Fed maintaining its current interest rate level and the ECB expected to raise rates in September we should see the resilient EUR target a fresh bullish surge. However whether future US indicators support the Feds decision to keep rates on hold could prove to be a key in determining the direction of the EUR/USD pair.

Elsewhere, the BoE will release its inflation report today which should provide the market with further indication to its future monetary policy. Traders should pay close attention to this report as there is some confusion in the market as too how many future BoE rate hikes should be priced in. There will be volatility on the back of this report and the GBP could lose some ground in choppy trading as market forecasts are heading towards a single rate hike instead of two further rate increases to 6.25 % as was initially expected. However the inflation report will have a significant impact on these expectations.

JPY

Yesterday the US stock market dropped ahead of the Fed statement and this drove a bullish JPY surge as it reached the 117.98 against the greenback. However the JPY strength was premature as the greenback combined with the US stock market rebounded on the back of the interest rate statement. Also speculation on gains in Asian stocks which will further encourage carry trades caused the JPY to depreciate sharply against the high yielding currencies. Also earlier today in the Asian trading session the JPY extended its losses as Core Machinery Orders came in significantly below expectations at -10.4 %. However there is light at the end of the tunnel for the JPY and it may just be able to consolidate its recent rallies as the Bank of Japan is planning to discuss hiking its key interest rate to 0. 75 %. The widening interest rate differential between Japan and the rest of the world has been a thorn in the side of the JPY, as this fact coupled with a rising US stock market has fuelled carry trades over the recent months. Therefore a rate hike by the BoJ could provide the JPY with some much needed reprieve.


Technical News

EUR/USD

The pair has been ranging in the past few days but it still gained no distinct direction. The daily studies are showing bearish signals and the hourlies are currently neutral. On the daily chart we may observe a forming Eliot wave structure. A preferable strategy might be to wait for the hourlies to deliver a positive signal, and look for a good entry point for a short position.

GBP/USD

There is very distinct 5 Elliot wave pattern forming on the 4 Hour chart. The formation is now at the A B and C stage and close to completion. This trend may consolidate at 2.0165 at the end of it, and forex traders would have the chance to enjoy profit taking on dips and tops if they will identify correctly the reversals on this pattern. The general direction of the waves is bearish and targeted at 2.0100.

USD/JPY

The Slow Stochastic on the 4 Hour chart implies an upcoming reversal as it crossed above 80 (clearly over bought territory). The long term moving average (weighted 21) is flat, which may note on an upcoming crossing between the short term moving average (exponential 3). In case of a breach through the daily pivot point at 118.62 the bearish trend might reach 117.65. It is assumed that the pair won't be able to breach the pivot point and will most likely sail at 118.45 - 119.50

USD/CHF

The Daily and the 4 Hour charts are implying a bullish trend continuation before a reversal will take place. On the long term the pair expected to test the 1.1985 Fibonacci level and in case of a breakout, the next target would be the 1.2073 Fibonacci level. It seems that going long will be a preferable strategy in the upcoming weeks.


The Wild Card

Gold

On the daily chart a strong 5 Elliot waves pattern is establishing and the A B C waves are expected to take place and send the Gold to a $662.69 per ounce price. It seems like a great opportunity for Forex traders to take advantage of the situation.

This is a long term analysis which means that it will take at least one month to verify, and must be treated with great caution , as this is a very volatile instrument.

 

[forexyard]

13/08/'07 - USD PPI and Retail Sales

Economic News

USD

Last week was characterized by a relatively empty US forex trading news calendar aside from the interest rate statement that was left unchanged. But the biggest event of last week was no doubt the declaration of BNP Paribas bank, that all withdrawals are now frozen, and there shall be almost no liquidity in the European market. This indicates that the Sub-Prime crisis in the US is starting to be a much more global problem, as it is now bursting in full scale in Europe as well. The BNP statement caused the EUR/USD to fall down more than 150 pips, it appears that the fall was originated from EUR weakness far more than USD strength, yet it marked a bullish trading day for the USD all across the board.

As for this week, the US calendar will be quite full with major events, starting today with the US Retail Sales which is very important as it makes up a large portion of consumer spending, is a major driver of the economy, and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and usually delivers interesting trading sessions. Today's release is expected to come out at 0.3% after hitting negative territory of -0.9% last month. The Core Retail Sales figure is also expected to come higher than last month -0.4%, and be released at 0.3%. If the figures will indeed come out this positive, we might see the greenback showing strong performance over the course of this week, especially with the heavy US calendar that is packed with events such as the US PPI, CPI, Trade Balance, and the Empire State Business Conditions Index.

EUR

The foreign exchange market reacted calmly on Friday as the Federal Reserve, European Central Bank, and Bank of Japan injected more than USD300 billion of cash into the financial system in order to allow financial markets to continue and function properly.

The three central banks of the leading economies acted instantly and injected the funds in order to ensure that market participants can continue to trade and prices will remain stable. In addition worldwide banks began to be acquainted with the deteriorating sub prime mortgage policies that now threaten the world's leading economies.

The EUR also suffered from the drop in global financial markets as we mentioned above however the stability was seen only after the ECB added 61.05 billion Euros in liquidity to financial markets.

Generally, traders are holding their breath regarding the latest developments in the world's economies, as the sub prime crisis is hovering above and threatening the market with a colossal collapsing. Traders need to be cautious with their bonds and yield investments and should be considering the Forex market as a defense mechanism for their investment.

JPY

The JPY held steady against the majors, floating around the 118.00-level versus the USD and 162.00 against the EUR. Earlier in the session, data released showed softer than expected second quarter GDP Deflator, at -0.3% y/y and 0.1% q/q compared to a -0.4% and 0.2% forecast. Capital expenditures were in line with forecasts, up 1.2% in Q2, while private sector-consumption increased by 0.4% which may contribute to the recently strengthening Japanese economy. The June current account surplus was softer than consensus estimates, up by 48.4% to 1.5203 trillion yen, missing calls for a rise of 57.0% to 1.6090 trillion yen. Japan's Minister of Economy Ota supported the strength of the economy, saying the recovery remained intact, Ota added that he would carefully intend to monitor the oil prices and the US economy, bolding the fact that he is concerned from the impact of sub prime issues on the real economy. He also mentioned that the end of deflation was in sight but still not over yet. The Bank of Japan will deliberate policy on August 23rd, and is not expected to change rates. We do not anticipate the BoJ to hike rates until early 2008; it seems that the Japanese economy is back on track.


Technical News

EUR/USD

The pair is floating in a wide range of 250 pips since the beginning of July, and the trend looks to continue. The daily chart is showing moderate bearish sentiment, and the hourlies support this. 1.3600 is now the key support level, and if breached will probably deliver a clear sign that the EUR bearishness has begun, and the move down is now validated.

GBP/USD

After losing more than 400 pips in the last two weeks, the bearish sentiment continues. The daily charts are showing that there is still more room to run and the hourlies are showing a light oversold status. A preferable strategy might be to look for a good short entry point.

USD/JPY

The massive downtrend continues with full steam, as clearly demonstrated by the slow stochastic and RSI on the daily chart. The momentum is still very high and shows no signs of a stop. Next target price would be 117.20 and if it will be breached than it will probably validate the moves' length to the 116.00 levels.

USD/CHF

The daily chart indicates a clear downwards channel, and the pair is now floating at the upper level. A break through the 1.2010 level will validate a channel breach and will unleash a massive bullish move. If the pair will be shy of the break, a moderate bearish movement is expected.


The Wild Card

Crude Oil

After a 800 pip fall in the last 14 days, Oil shows its first signs of a reversal. The slow stochastic shows a bullish cross, and the RSI indicates that the momentum is strong. This provides Forex traders with a great opportunity to get in a reversal move in a relatively early stage and generate high profit potential. Forex traders with a great opportunity to enter a short position on a very stable strong move. Next target price should be around 71.00.

 

[forexyard]

14/08/'07 - Will the USD uptrend continue?

Economic News

USD

US core retail sales in July surprised positively with an increase to 0.4% and additionally the retail sales from June experienced an upward correction to 0.3% instead of the previously stated -0.7%. Strong growth was recorded in the areas of entertainment electronics, (1.0%) and in the clothing industry (1.3%). Strong consumer spending last month sheds positive light on economic growth and might, combined with the positive development in the major financial markets today, reduce investors' fear and open the possibility for a partial recovery of the USD this week.

Yesterday the Fed, as well as other major central banks, continued injecting funds into the financial markets in order to assure liquidity on the back of the sub prime credit problems. After this strong intervention the question remains open if the Fed will cut interest rates at the upcoming meeting on September 18th. With the Feds interest not to be ruled by actions on the stock market and the sentiment of moderate underlying growth, investors might wait vainly for the interest rate cut to come.

Today, we expect the July data for PPI and the US Trade Balance. Overall PPI is expected to rise from the previous -0.2% to 1.0%, indicating a slight increase in inflation. The Trade Balance is expected to increase by 1 billion to -61.0 billion, indicating an increase in the amount of imports to the US what can have a negative effect on the USD. More market moving news like CPI, Industrial Production, Housing stats and consumer sentiment are expected to be released in the coming days. For today, the USD is expected to be slightly bullish with decreased volatility in the USD crosses.

EUR

Yesterdays' economic calendar was rather light with only the announcement of the German WPI, which rose to 0.4% from the previous 0.1%. Today, we will see the new figures for German GDP (6:00GMT) as well as CPI and Real Price Index (RPI) from Great Britain (8:30 GMT). German GDP is expected to fall by 0.1% from the previous value of 0.5%. Great Britain's CPI is also expected to fall to a value of 2.3% from the previous 2.4% and RPI is expected to fall to 4.3% from the previous 4.4%. Negative figures may indicate a depreciation of the EUR among the majors in the current session.

As well as the Fed, did the ECB repeatedly stepped in today to lend money to European banks after the announcement of BNP Paribas to freeze redemptions of their investment funds last week, this way they could take pressure off of the banks which had to cope with skyrocketing overnight lending rates. After yesterdays improvement in the global equity markets volatility is expected to decrease and we should see a stabilization of the EUR which lost approximately 195 pips against the Dollar since last Thursday.

JPY

The JPY's rally against the major currencies since Thursday last week when it gained approximately 150 Pips against the USD, 430 pips against the EUR, 220 Pips against the CHF, and 600 pips against the GBP might be over now. Due to recovery equity markets, a decrease in volatility as well as less implied risk in financial markets , the JPY well revert back to its familiar Carry Trade based activity whereby the Yen is increasingly sold in order to invest in higher interest yielding currencies.

The positive outcome of the Tertiary Industry Activity Index last night, which released at 1.0% above the expected value of -0.2% and above the previous value of -1.0%, showed yet again time that an interest hike in the August meeting of the BOJ would lack fundamental basis, with inflation being low despite recent signs of economical growth of the Japanese economy.


Technical News

EUR/USD

Daily and 4 H chart indicate an upcoming reversal when a bearish wedge structure is observed which seems to be out of energy however still has room to go . On the 4 H chart ,Slow Stochastic crossed at 10 which strengthens the fact that a reversal will occur today. We still seek the signs from the MACD that will determine timing for going long in this pair.

GBP/USD

The daily chart implies that this forex trading pair still has room on the bearish side when Slow Stochastic show a negative slope and point to bearish territory . Hourlies are mixed however a double Doji may imply that range trading is expected in the upcoming hours . The support barrier of the bearish channel which is seen on the 4 H chart has now tested and in case of a breakout this pair is to test the 1.9977 ,however its more likely that a reversal will take place and thus going long seems to be preferable.

USD/JPY

Dailies and hourly indicators are in neutral territory which indicates range trading today, traders need to pay attention to the bullish flag structure which is establishing on the 4 H chart and may signal an upcoming bullish trend however not yet completed. In case of completion this pair may head to 118.83 Fibonacci (61.8%) and then going long seems to be the preferable strategy.

USD/CHF

On the 4 H chart a bullish pennant can be observed and it may imply of an upcoming bullish trend that may send this pair to consolidate at 1.2070 Fibonacci (76.4%). In case of breaking the 1.2070, this pair will head to 1.2113. Going long may be preferable.


The Wild Card

Crude Oil

On the daily chart, we can see a descending triangle which is forming and it may indicate on an upcoming bearish trend . Currently, Crude Oil is testing the 71.63 USD per barrel which is an important Fibonacci level 38.2%,in case of a breakout we may see a reduction to a 70.14 USD per barrel which is the next Fibonacci retracement level (23.6%) this will provide Forex traders with a great opportunity to enter the market with a short position.

 

[forexyard]

15/08/'07 - The Greenback Continues To Push Higher

Economic News

USD

There was some positive forex trading news for the greenback yesterday as the headline US Producer Price Index surprised on the upside releasing at 0.6 %, beating the expected figure of 0.1 % and this rise in producer inflation increases speculation that the Fed will cut rates in the near future. There was more good news to follow for the greenback as the US trade deficit shrunk to 58.1 B. The market was expecting the trade deficit to rise from last months figure of 59.2 B to 61.0 B, so this surprisingly strong data was the main driver of the greenbacks bullish burst against most of the majors. The two key factors responsible for shrinking the US trade deficit is the drop in oil prices and the weak USD. The decrease oil prices means that the US is spending less on imports while a weak dollar is improving the US exporter's ability to compete against the Chinese and US goods are gradually becoming a more preferable alternative to the foreign consumer. The greenback has been steadily pulling back lost ground against the GBP and the EUR in the last two days and yesterday's weak UK CPI figures coupled with the growing investor speculation that the ECB will not raise rates in September contributed to the continuing decline of the GBP/USD and EUR/USD crosses. The US and European equity markets suffered further losses yesterday and although the USD managed to hold its ground against the JPY it did eventually begin to depreciate against the Japanese currency giving further indication that the market is beginning to experience the full extent of a carry trade unwind particularly with today's looming hedge fund deadline.

Today volatility should remain high as there is a host of market moving data to be released from the US kicking off with the CPI figures that are expected to remain unchanged at 0.2 %. The other important data to be released today is the Empire State Business Conditions, TIC report, Industrial production and the Capacity Uitilization Rate. The USD has experienced a pile of negative economic data in recent weeks so we may be in for a downside surprise today. However with the credit woes also placing the EUR under pressure the greenback may be able to maintain its bullish run against the EUR and the GBP. It will be important for traders to identify a connection between the US economic data releases and their impact on the Fed's future monetary policy.

EUR

A string of negative data releases from the Eurozone yesterday coupled with the spreading credit concerns further fuelled the growing sentiment that the ECB may be forced to leave interest rates unchanged in September. The German, French and overall Eurozone GDP all released below expectations at 0.3 %. Also Industrial Production released in negative territory at -0.1 %, well below last months figure of 1.0 %. This basket of negative Eurozone data is a further indication that cracks are appearing in the normally resilient European economy. Also investors will be paying close attention to the ECB's approach in staving off the money market crunch as this will bear a significant impact on the ECB decision on whether to hike rates.

Today there are no significant news events to be released from the European market so any sharp EUR movement will be dollar centric. However it will also be important to follow how the equity markets react today as another decline could spark further risk aversion and then the EUR will continue its freefall versus the JPY.

JPY

The JPY is in a utopian phase as it continued to extend its gains all across the board yesterday. With the US and European equity markets taking another hit yesterday and with the problems in the credit market, the carry trade unwind is now fully rearing its head. The JPY should continue to strengthen particularly against the high yielding currencies as the credit concerns that started in the US are making a ripple effect and are negatively influencing the global markets. This in turn is creating a feeling of risk aversion among investors which is fuelling the current carry trade unwind. There is no important news to be released from Japan for the rest of the week but with the problems in the subprime sector being far from over, there should be further hedge fund liquidations and therefore carry trades will remain the name of the game in the near future. So it seems that the JPY is only now stepping into the bullring and we could see the Japanese currency gore its way to new heights in the next few days.


Technical News

EUR/USD

There are two bearish flags forming on the 4 Hour chart that sent the pair to 1.3483 which is a two month low. The daily chart shows that the bearish trend has not ended yet and sets 1.3437 as a significant barrier which probably slows down the current bearish trend. The Momentum Indicator is supporting this aggressive trend and traders should seek the upcoming reversal which may offer a good entry point for a short term buy position.

GBP/USD

There is a bearish channel forming on the daily chart with a bottom barrier located at 1.9841. Traders should pay attention for a breakout as this pair is expected to consolidate at 1.9798. The 4 Hour chart supports the bearish trend continuance as the slow stochastic is clearly in over sold territory with a negative slope. A preferable strategy might be to go short on peaks.

USD/JPY

A mild bearish channel is forming On the 4 Hour chart with 116.67 as a support barrier which is going to be tested, probably today. In case of a breach the pair might be in its way to 116.23. Going long might be preferable after the reversal will take place.

USD/CHF

The pair is in the middle of a very intense up trend, which was initiated after a breach through the 1.2000 level has occurred. The slow stochastic shows an overbought status which indicates that a correction might occur before the uptrend continues. Target price appears to be 1.2220.


The Wild Card

Gold

There has been a bearish flag forming on the 4 Hour chart, indicating that the momentum is still down. The RSI is floating around 50, which supports the notion that there is still plenty of room to run. This provides forex traders with a great opportunity to go short on a very solid downtrend.

 

[forexyard]

16/08/'07 - Will the US housing market recover?

Economic News

USD

Yesterday, the USD extended its gains across the board after a string of positive US economic data. The US Core CPI data released inline with expectations at 0.2% and overall remained unchanged since last month. The Empire State Business Conditions Index released at 25.1, surprisingly beating the expected figure of 18,which gives a strong indication that future reports on manufacturing in the US are also likely to support the USD's rise. Housing and credit concerns are still here and the crisis hasn't been resolved yet. In order to make cash available, central banks worldwide have pumped billions in funds to banks over the past week, but along with this, Federal Reserve officials are insisting that there are no signs that the subprime issue is harming the broader economy and an interest-rate cut is not yet needed despite the fact that the fund injection could be compared to an interest rate cut from the perspective of the market. On the back of these positive sentiments, the US currency hiked to 1.3400 against the EUR. There is no real market moving news to be released from the US markets today. The news coming out of the US will be the Housing Starts and Building Permits figures and since there are no particular expectations, these indicators will likely generate little interest. Consumer Sentiment Index is the only news release expected from USD for the rest of the week. The core figure is expected to release at 88.5 which is a slight drop from last month's figure 90.4. Therefore, it will be crucial for those trading forex to identify how the preceding economic indicators from Europe and the UK will affect the greenback.

EUR

Yesterday, the majority of news releases from the Euro zone came out quite negative. The GBP Average Earnings Index figure released at 3.3%, slightly lower than the expected figure of 3.5%. This negative momentum was further exacerbated by the weaker than expected GBP Claimant Count Change. This index measures the change in the number of people claiming unemployment related benefits over the previous month. A falling trend has a positive effect on the nation's currency. The figure released in negative territory at -8.5K. This number didn't beat the expected figure of -9.8K, it was still significantly lower than last month's figure of -14.1K. Analysts continue to assert that a EUR interest rate hike is expected despite the fund injections that occurred in the Euro zone.

Today the most significant news coming out of the Euro zone will be the England's Retail Sales. The figure is expected to release at 0.1%, which is 50% below the previous month's figure which might strengthen the negative momentum which the GBP is suffering from.

JPY

Yesterday, the JPY rose to a 4 month high against the EUR and the USD. The Japanese Yen has enjoyed a sustained bullish run as results of the carry trade unwind which was driven by increased risk aversion. The Yen rose 0.8% to 154.99 per EUR and gained to 115.68 per USD. Yesterday's U.S stock losses sparked speculations that the biggest mortgage lender in the U.S. may be forced into bankruptcy. Rising risk aversion caused investors to liquidate risky positions and triggered carry trades to unwind, thus the yen gained some momentum. The persistent problems in the US sub-prime mortgage market, coupled with further reports of hedge fund worries are fuelling the risk aversion sentiment, therefore we may expect the JPY to strengthen all across the board in the coming days.


Technical News

EUR/USD

The 4 hour chart implies an upcoming bullish trend with Momentum (98.6285) having a positive slope and a slow stochastic which crossed at 13. The correction will try to test the 1.3483 Fibonacci 38.2% retracement level. Going long seems like the preferable strategy today.

GBP/USD

The 4 hour chart notes that a tight bearish channel is forming and traders should seek the breakout to get into the market at a good entry point for a long position. However the daily chart indicates a breakout of the bullish channel, supporting the fact that the GBP depreciation would be maintained in the long term.

USD/JPY

The 4 hour chart implies that a tight channel is about to form which has an extreme negative slope, and a breakout is expected. A breakout will probably send this pair to test the 117.04 Fibonacci 23.6%. If a breach of the upper barrier will take place we expect a mild bullish channel and therefore going long seems preferable.

USD/CHF

A reversal is forming on the 4 hour chart as the slow stochastic crossed already twice above 80 and this notion is also supported by the RSI which is clearly in the overbought area for a couple of days already. If this development is also supported by a cross of the MACD it seems like a preferable strategy is to enter into a short position.


The Wild Card

Crude Oil

On the 4 hour chart we can see that a channel with positive slope has been formed with an upper level which could be breached at the 74.32 (50%) Fibonacci level. If this break out takes place we could expect an incline up to the 75.22 Fibonacci level (61.8%). On the 15 minutes chart the formation of a negative wedge is about to be completed, increasing the possibility of an upcoming breakout at 74.32. Forex traders may prefer to enter into a long position when the right signal will be shown.

 

[forexyard]

20/08/'07 - How Will The Currencies React Post The Rate Cut?

Economic News

USD

Last week's news releases were mixed with positive outcomes like the better than expected Core Retail Sales at 0.4%, a PPI which grew from 0.1% to 0.6%, a decrease in the Trade Balance (-58.1B), and an increase of TIC Net Long-Term Transactions (120.9B), and on the other hand negative results such as an unchanged Core CPI at 0.2% and a CPI which decreased to 0.1%, Housing Stats as well as building permits also decreased while unemployment claims rose. Then on Friday the news showed an erosion of consumer sentiment from the previous value of 88.5 to 83.3 and could therewith indicate a reduction of consumer spending that could potentially weaken the USD. This week will be relatively on news releases with only the Unemployment Claims on Thursday and Durable Good Orders and New Home Sales on Friday. A release of Core Durable Goods has an expected value of 0.6%, and a positive surprise on the site of Home Sales Value (above 826K) could strengthen the dollar.

To get hold on the liquidity shortage on the financial markets the Fed surprisingly cut the discount rate - the rate it charges banks for direct loans - on Friday in order to improve liquidity, it also issued a statement accrediting that besides inflation concerns the situation on the financial markets is posing a possible threat for the US economy. With this turnaround of the Feds perspective on the US economy, the discussion about an interest rate cut is newly ignited and we could probably see the beginning of smoothening monetary policy with a cut in the interest rate.

As for today the greenback is expected to float low post the negative releases of last weeks end and growing concerns about inflation.

EUR

Last week's German GDP was released below expectations at 0.3% (previous 0.5%) and the French Nonfarm Employment was released with a disappointing 0.0% compared to the previous 0.8% and the expected 0.5%. This week will be very light on market moving news from the Euro-zone with only German ZEW Economic sentiment on Tuesday, expected to come out at -1.0. This negative value indicates that the majority of investors have a negative outlook on the economical situation in Europe during the upcoming 6 months; an upward surprise could have an important psychological influence on investors who are still shaken by the dimensions of the US credit crisis.

After the announcement of the discount rate cut by the Feds on Friday, financial markets worldwide rallied and the EUR to strengthen against the USD for the first time in the last week. If investors' fears recede and European financial markets will see a recovery, the bullish trend that was set off on Friday could continue today.

Other news expected to come from Europe this week are the Swiss PPI on Monday (expected 0.3%), UK's CBI Industrial Trends Orders on Wednesday (expected -4), and the UK GDP (expected 0.8%) on Friday.

JPY

Last week ended the impressive JPY rally that showed an unbelievable dip from 123.77 to 112.72, a stunning 1105 pip increase against the USD, during the last 4 weeks. The JPY rally went on fairly independent from any Japanese News releases last week and was pushed by an intense unwinding of the carry trades which climaxed on Thursday and Friday last week. With carry trades unwinding, we should see JPY fluctuations being dollar centered today.

This week's interest announcement followed by a speech of BOJ Governor Fukui is expected to stay unchanged, as the BOJ is not able to justify such a move by underlying economical reasons.

Even with an approximation of Japan's interest rate to 1.0%, differences between the JPY and high yielding currencies like the AUD and NZD as well as most of the majors stays significant, and with a return of risk seeking in the global markets we will see carry trades returning in the medium-term.


Technical News

EUR/USD

The pair is in the midst of a correction move initiated at 1.3400 and is now consolidating around 1.3500. the slow stochastic together with the RSI on the 4 Hour chart indicate that there is still more momentum in that move, and the next target price now stands at 1.3550.

GBP/USD

There is a bullish cross forming on the slow stochastic of the daily chart, and a breach thought the 20 level on the RSI. Both indicators are showing a positive reversal with great momentum that might take the pair back to the 2.0000 levels.

USD/JPY

The incredible unwinding move seems to have bottomed at 111.60 and is going up since Friday. The daily studies are bullish, and the hourlies support the bullish notion. A breach through 115.60 will validate the move, and create a great opportunity for a long run buying position.

USD/CHF

The pair is in consolidation at the 38.2 level of the 1.2450/1.1820 move, after a touch at the 61.8 level and a bounce back to 1.2060. The daily studies show strong bullish momentum, as the hourlies support. The next target price might be 1.2200.


The Wild Card

Crude Oil

There is a bullish cross forming on the 4 Hour chart, and together with a breach beyond the 20 level on the RSI a strong bullish notion is created. This provides those forex trading with a great opportunity to enter a long position with good momentum and a very low entry point.

 

[forexyard]

21/08/'07 - Today's focus is on Canadian Core Retail Sales.

Economic News

USD

Yesterday, USD Trading was flat against most currencies as equity markets seem to be stabilized. Analysts have cautioned investors with views that the credit crisis is far from ending and ensured that the USD will remain in a tight range against a number of currencies. In other news, US short- term rate futures were strongly higher yesterday as the cash federal funds rate dropped below the Federal Reserve's target rate and short-dated yields for U.S government debt fell sharply. Today the USD will be affected by other currencies when no special news is due to be released, we however offer to watch carefully the Canadian Core Retail Sales and CPI which are mixed in their forecasts and a significant movement is expected to occur if figures surprise the market . Crude oil fell by $1.30 a barrel to $70.68; however, tomorrow Crude Oil Inventories is due to be out we might see a bit of a movement in this commodity instrument .

There is an interesting situation going on as Fed credibility is in focus. The U.S. senator Kent Conrad, who chairs the Senate's budget panel, called for the resignation of voting Fed member Poole. Conrad said that Poole's comment last week that only a 'calamity' would justify a Fed interest rate cut before a scheduled Sept. 18 meeting was 'reckless' and 'irresponsible.' Conrad's comments come at a time when markets worry that the Fed discount rate cut on Friday may signal that their outlook has been flawed all along. The markets echoed Conrad's concerns when reacting in mixed and indecisive movements. Treasury bills rallied on Monday, with the three-month yield posting its biggest one-day drop since the stock market crash of 1987, and some suggest that today's movements in yields show that the Fed has failed to convince investors that sub prime losses will be contained and for now the sub prime crisis seems to pervade and threaten all of the US economy. Bottom line ,in spite of last week's Greenback strengthening, traders still have the feeling that the US economy has a long way to go until this current crisis will vanish ,which means that in the long term the USD is expected to remain depreciated among the majors ,especially against the EUR.

EUR

The Euro ended the day unchanged against the US dollar as the currency trading market tries to figure out whether the European Central Bank will continue to press forward with raising interest rates next month. The guessing game will be helped by today's German ZEW report, which tends to be one of the more market moving reports for the EUR. Given the turmoil in the financial markets, we expect analyst sentiment to be significantly deteriorates. As we mentioned earlier, due to lack of data today in the US calendar, the German ZEW is expected to be a bigger than usual market mover. Meanwhile over in Switzerland, producer and import prices were weaker than expected however no significant movements were observed on the CHF charts. The GBP traded on the back of currencies, while also benefiting from a return to risky carry trades and seems to have recovered after it's last week sharp reduction.

Yesterdays' GBP strengthening both against the USD and the EUR, was caused thanks to stronger economic data, when house prices, money supply, BBA mortgage approvals and public finances all came out stronger than expected.

This suggests that domestic demand remains robust while the housing market remains stable. This stability may be one of the main reasons why the Bank of England has not felt pressured to add liquidity into the financial markets. However the main discussion recently has been about the possibility that a mortgage crisis will take place also in Great Britain, since there is a similar mortgage policy as in the US and if the real estate market will experience a crisis or even just a revaluation we may see the same market reactions that took place in US, that may bode severely on the England economy and on the GBP currency. In addition, after the recent credit problems which occurred it may cause even a deeper crisis in England, however from our experience the BoE will react instantly if those kinds of signs will suddenly be seen .

JPY

The US dollar has begun to correct against the Japanese Yen. Still, the JPY remains firm and stable in its consistency against most of the majors. Yesterday, the Japanese Yen fell to 154.93 against the Euro from as high as 154.34 and 154.94 late yesterday. It also dropped to 115 against the dollar from as strong as 114.61 and 114.88.As we expect, the Japanese currency may give up early gains and drift lower against the dollar to 115.50 and 157 per Euro. Yesterday, the All Industries Activity Index was published in Japan. This index covers a broad range of economic activity including the tertiary index. Production in all sectors of the Japanese economy rose 0.2 % in June from May. The increase in the all industry activity index, only the fourth in the past 10 months, was spurred by the rise in the tertiary index as well as industrial output. Construction activity was the lone component that showed a contraction, -1.7% in June. The Bank of Japan added one trillion yen to its money markets today. This additional liquidity indicates that the BOJ will not have any intentions to raise interest rates during this week. In the meantime, the Yen crosses are driven less by interest rate expectations for Japan and more by the market's overall risk appetite. As we can expect the further decrease in JPY crosses depends upon the Nikkei. On Sunday night the Nikkei respond very slowly to the recovery in the Dow, but after all, the Japanese stock market ended much lower than its intraday high. This situation shows that many traders still don't believe that the worst is behind us and the consensus opinion is that the central banks will keep attempting to normalize the markets.


Technical News

EUR/USD

The pair is going through a choppy session in the past few days, and gives mixed signal on the hourly level. The daily chart is still showing a bullish formation and it looks as if the pair is heading 1.3600 again. A preferable strategy might be to wait for the hourlies to unwind before going long. Going short seems risky at this point.

GBP/USD

The daily chart implies that this pair still has room on the bullish side, while Slow Stochastic shows a positive slope and points to bullish territory. We may expect the pair to test 2.0100 in the short term; therefore going long may be preferable.

USD/JPY

The daily chart is clearly bullish with still much room left ahead. Slow Stochastic has a positive divergence which should carry this pair to test the 118.00 level in upcoming days. Hourlies also support the bullish notion; therefore buying on dips might be a preferable here.

USD/CHF

The USD/CHF is still in a bullish configuration. The volatility has increased. Hourlies are showing that the pair moves without a clear trend and swings around exponential moving average (EMA 50 and 100). 4H Elliott pattern implies a continuation of the bearish pressure.


The Wild Card

Silver

There is still a bearish configuration on the 4 Hour chart, indicating that the momentum is still down. The RSI is floating around 50, which supports the notion that there is still plenty of room to run. This provides Forex traders with a great opportunity to go short on a very solid downtrend.

 

[forexyard]

22/08/'07 - CBI Industrial Trends Orders (GBP)

Economic News

USD

Yesterday was void of significant US economic releases, however there was a very important meeting comprising of US banking official to discuss the ever-growing credit crisis. U.S Treasury Secretary Paulson reaffirmed his opinion that the US economy will manage to deal with the growing credit concerns hinting that an imminent rate cut by the Fed may not be necessary. On the other hand US Senator Dodd that met with Paulson and Fed Chairman Bernanke urged the Fed to use all its available resources to put the brakes on the spreading credit crisis. Also yesterday the Fed injected another $3.75 B into the financial markets in an attempt to provide additional stability, the Fed has injected over $100 B last week. This action by the Fed coupled with Dodd's and Paulson's opposing rhetoric caused volatility all across the board and the USD had a mixed performance yesterday, as it continued on its bullish path against the EUR and the Sterling but lost ground against the JPY. The current market sentiment seems to be that the Fed will lower its benchmark rate in September and this was further reaffirmed by a reference in yesterday's meeting that Bernanke is unsatisfied with the way the stock market reacted to Friday's discount rate cut by the Fed. However the Fed will be able to avoid lowering its key interest rate if the market begins to experience signs of increased liquidity as a result of it dropping the discount rate from 6.25 % to 5.75 %.

Today there is also no market moving news expected from the US so greenback volatility will arise from factors that will affect the Feds descision on future monetary policy, namely the spreading credit concerns and the performance of the equity markets. The expectations of a rate cut from the Fed in September should provide stability to the equity markets and it will ease the credit crisis, therefore we should see the greenback maintain its bullish momentum in the near future.

EUR

The most significant news to be released from the Eurozone yesterday was the German and European ZEW Economic Sentiment, which measure institutional investor sentiment, both released in negative territory and well below expectations at -6.9 and -6.1 respectively. This negative data strengthened the markets sentiment that the ECB will be forced to leave interest rates unchanged in September. The unrelenting problems in the US subprime housing sector coupled with the spreading credit concerns and reeling global markets will leave little room for the ECB to consider a rate hike in September and it is very possible that may even leave rates on hold in October and November as well. Future ECB monetary policy will very much depend on to what extent the US subprime mortgage crisis continues to negatively impact the financial markets. However in the meantime the fact that the majority of investors feel that the ECB will keep interest rates on hold in its next meeting is putting significant pressure on the EUR and it continued on its bearish path against the greenback yesterday. There was some positive news for the European economy yesterday as the Eurozone Trade Balance released at 5.2 B beating the expected figure of 3.2 B, but this news did not manage to provide the EUR with some much needed reprieve.

Today the only news to be released from the Eurozone will be the Current Account and the Industrial New Orders figures. Both of these indicators are not expected to have much influence on the EUR's direction whose movement today will be mostly dollar centric as investors will also pay close attention to the financial markets which are expected to have a significant impact on future ECB monetary policy.

JPY

The JPY range traded yesterday against the greenback and the EUR, consolidating on its recent gains that have resulted from a sharp rise in volatility which is making carry trades less appealing due to increased risk. The JPY has risen sharply against the EUR in the last few days as a result of the spreading credit concerns and its strength against the greenback has been mainly driven by the market sentiment that the Fed will lower its interest rate in September whilst the BoJ is expected to leave its key benchmark rate unchanged at 0.5 %. The Japanese interest rate announcement will be released later on today and there should be no surprises. The JPY could launch another bullish surge if the credit concerns persist and the equity market start reeling again. However the Feds descision to lower the discount rate has acted as a temporary safety net for the stock market and we could see increased liquidity, so this will slowdown the recent carry trade unwind thus causing the JPY to jump onto its all too familiar bear wagon.


Technical News

EUR/USD

The Pair was range trading yesterday between a support level of 1.3460 and a resistance level of 1.3510. Should the pair trade today above the pivot level of 1.3483 we could see a break through the resistance level and then the bullish trend for the EUR/USD could continue up to the 50% Fibonacci Level. An outbreak through the resistance level instead could indicate a drop down to 1.3400, the 0% Fibonacci level.

The traders have to wait for either breakthrough to occur in order to enter in the appropriate position.

GBP/USD

The 4 hour chart indicates on an upcoming bullish trend when the long term Moving Average (Weighted 21) crossed by a bullish bar. Additionally the ADX (Average Directional Movement) also strengthens our opinion while the DI+ is on its way crossing the DI- from below which is considered a bullish signal. Going long seems to be preferable .

USD/JPY

The pair moved yesterday with a slightly bearish trend between the upper level of 115.10 and the lower level of 114.10, slow stochastic on the hourlies indicates that it won't become a reversal soon and that the pair might instead continue range trading today. Also MACD and RSI reside in neutral territory and thus point to an uneventful day for the USD/JPY.

USD/CHF

The 4 hour chart implies on an upcoming bearish trend as the Slow Stochastic is crossed at 78 and has a negative slope ,however we need to pay attention to the current 4 hour bar ,when a positive bar may indicate an upcoming bullish trend and negative bar will imply on a range trading. Traders need to be aware during the next 4 hours where the market is headed and to take action .


The Wild Card

Gold

The 4 hour chart implies on an upcoming bearish trend as the Slow Stochastic is crossed at 78 and has a negative slope ,however we need to pay attention to the current 4 hour bar ,when a positive bar may indicate an upcoming bullish trend and negative bar will imply on a range trading. Those trading Forex need to be aware during the next 4 hours where the market is headed and to take action .

 

[forexyard]

23/08/'07 - BOJ Kept the Rate at 0.5% as Expected.

Economic News

USD

There was no real currency-market moving news released yesterday from the U.S markets as the greenback lost some ground against the EUR and the GBP, while strengthening slightly versus the JPY touching the 115.95 level.

Markets began stabilizing on Tuesday after Fed Chairman Ben Bernanke assured he would use all available tools to break the fallout from the U.S. mortgage crisis, after the sub-prime situation continues to be problematic. Yesterday, Lehman Global Investment Bank backed by mortgages became the first company on Wall Street to close its sub-prime lending unit causing its 1,200 employees to lose their jobs. In addition, according to data from the Mortgage Bankers Association, home loan applications fell 5.5% last week, the biggest decline in almost three months. As the sub-prime situation continues to deteriorate, the likelihood of a Federal Reserve rate cut of 0.5% is increasing, and may occur even before the September 18'th FOMC meeting.

Today will be very light on market moving news from the U.S markets as the only news coming out of the US will be the Unemployment Claims index. The figure is expected to be released at 315K which is a slight improvement from last month's figure of 322K. It looks as if the USD should continue to trade in a tight range, as no significant move is expected to occur.

EUR

Yesterday, the EUR gained some strength against the USD but also had its best day against the JPY in nearly four years. The EUR\JPY climbed 1.2% to the 157.00 level, where against the USD; the EUR extended gains and climbed up $1.3534. According to ECB president Jean-Claude Trichet, the European Central Bank remains devoted to the "strong vigilance on inflation" policy. In fact, that phrase has signaled each of the eight rate increases since late 2005. It looks like a rate hike in the September ECB meeting is very probable. Due to the ongoing liquidity shortage, the ECB stated that it would add 40 billion EUR in 91-day funds to the European money market today and added that the operation was a "technical measure". Yesterday, there was no significant news coming out of Europe except for the British CBI Industrial Trends Orders. The indicator was released at 9 points, beating expectations of -4, hence supporting a currently ongoing bullish trend of the GBP. There'll be no significant economic news released in the EUR today apart from the GBP Business Investment. The expectations for that indicator release are currently standing at 2.0%, which is significantly higher than last month's figure of -0.6%. If the economic news from the GBP will release inline with market expectations, we should see the GBP resurrection continue, thus pushing the EUR up.

JPY

Last week, the JPY posted its biggest increase against the EUR since March 2000 as the sub-prime mortgage crisis spread through global credit markets. The JPY trades at 156.91 against the EUR, after dropping 1.4% yesterday, the most significant drop since June 2004. The JPY traded at 115.33 against the USD after falling 0.8% yesterday, the highest in two months. Today the BoJ kept rates unchanged at 0.50% as expected. The markets are showing some tentative signs of a return to normality after the release and the market may return to carry trades, with equities stabilizing after the aggressive carry trade unwinding in the last 2 weeks. Bottom line is that the JPY seems to be getting back to normal as traders and hedge funds inject carry trades positions into the market which strengthen the high yielding currencies against the JPY.


Technical News

EUR/USD

The pair is trading at 1.3540 which is the 38.5% Fibonacci level of the 1.3850/1.3370 move and the level is established as a key resistance level. If a breach through this level will occur we might see a bullish move that will take the pair to the 1.3640 level.

GBP/USD

The cable is trading in a bullish channel as the slow stochastic on the 1 Hour chart indicates that there is still room for more. On the 4 Hour and the daily charts the oscillators show that some kind of a correction might be imminent. The overbought short range status indicates that it would be preferable to wait for a stronger signal on the dailies before taking a position

USD/JPY

There is a bearish cross forming on the 4 Hour chart, which could indicate that a small correction move might occur before the bullish trend continues. The daily charts are bullish, with more room to run. A preferable strategy for position traders might be to go long, as for day traders it might be to go short

USD/CHF

There is a stable consolidation at the 1.2060 level for the fifth consecutive day. The daily charts are showing a triple doji formation, and are now in neutral territory. The 4 Hour chart support the neutral signals. The extremely neutral status of the pair indicates that a violent move is imminent, and could be in any direction. A recommended strategy might be to wait for a clear signal before entering the market.


The Wild Card

Crude Oil

The bearish trend continues with full steam and Oil is now traded at 69.50. The daily chart and the hourly studies show that there is still more room to run. The 4 Hour RSI is floating at 50 which provides Forex traders with a great opportunity to get in the trend at a high bearish momentum.