Forexyard Analysis

28/08/'07 - Will the FOMC meeting minutes stirr the market?

Economic News

USD

Existing home sales released yesterday align with expectations at 5.75M and only slightly below the previous value of 5.76M, there was only a slight reaction from the market because the value was already anticipated by investors. Despite a low release of Existing Home Sales and with the difficulties in the US housing market, New Home Sales rose last week substantially from 846K to 870K. We are getting mixed signals from the housing market this month as the New Home Sales release surprised on the upside while there was a fall in the decreasing Housing Starts and Building Permits figures. Today the data for US Consumer Confidence will be released with an expected value of 104.8, which is below the previous value of 112.6, this indicates a degrading of consumer confidence which can influence the USD negatively.

Today's FOMC Meeting minutes are critical as investors are trying to get hints on a possible interest rate cut by the Fed during the next meeting. Although the general consensus is that an interest rate cut can be expected to occur, the timing is unclear. The Fed might await further reactions to its discount rate cut and the liquidity injections to the financial sectors before cutting the interest rate. In the meanwhile the Fed acknowledged in its August 7th meeting minutes that "risks to growth have increased" and therefore the fragile economic growth along with persistent risk aversion in the markets could favor a rate cut already in September.

As there is a lot of uncertainty involved in the recent market developments, investors should look out for indications in the FOMC Meeting Minutes today to get a hint about future Fed monetary policy and the timing of an interest rate change.

EUR

Yesterday the president of the ECB spoke at the annual congress of the European Economic Association in Budapest about the decrease of productivity in the Euro Area and monetary policy. His speech elaborated reasons for the decline of factor productivity and its connection to interest rate changes. Decreased productivity growth in the Euro Zone could be an argument against an interest rate hike during the ECB's next meeting.

Today we will see the release of the German Ifo Business Climate Index as well as the German Ifo Business Expectations Index, both values are, with 105.5 and 100.2 respectively, expected to lie below their previous values of 106.4 and 101.8 and reflect the firm's slightly negative prospects for the next 6 month.

With talks yesterday about a possible sale of the Sachsen LB, which is the state bank of Saxony, another German bank became a victim of the US sub-prime crisis. The SachsenLB had billions of asset backed securities in its portfolio which are now about to default on the back of the US credit woes. The SachsenLB is privatized, in contrast to most other state banks which are state owned, and its securities were backed up by the banks owners; however the clear overexposure of the bank through risky investments called for more transparency of banks investments. With only little market moving data this week, a downside outcome of today's German Ifo Index could depress the EUR's uptrend.

JPY

During the last days the market demonstrated the return of carry trades, where investors sell the JPY in order to buy higher yielding currencies. Carry trades won't be back to full speed immediately as risk aversion is still high, but their return could mean that we will see the weakening of the JPY against all major currencies in the near future.

In the Minutes of the Monetary Policy Meeting on July 11 and 12th, which were released today, the members of the committee acknowledged the substantial growth of Japans economy. Exports as well as business fixed investment increased, private consumption is on an uptrend and production increased due to rising domestic and external demand. The BoJ still wanted to monitor the development of various indicators and decided in a majority vote to leave the interest rate unchanged at 0.5% for the time being. With an expanding economy and increasing commodity prices, there might be support of an interest rate hike to 0.75% during the next BOJ Meeting on September 18-19. On the other hand the still unresolved problems in the US housing sector could prompt the BoJ to wait. As for today it seems that the JPY will continue to range trade against the major currencies and movements will mostly be dependent on the developments in the US sub-prime crisis which is still very uncertain.


Technical News

EUR/USD

The volatility has increased and Bollinger bands are widened. The pair seems to be consilidating around the1.3625 after yesterdays drop from the 1.3682 mark. On the 4 H chart both momentum and the RSI are both giving strong indication that the pair will range trade today. However there is a flag formation appearing and if this pair breaks the 1.3600, then we may see another move downwards.

GBP/USD

The cable has been on steady fall in the last 24 hours, sliding from 2.0186 to the 2.0154 mark. However the hourlies are indicating that we are now in oversold territory as the RSI is at the 20 mark and momentum is bullish. On the 4 H chart the bullish formation is weak so we should see this pair make a slight correction possibly leveling out at the 2.0120 level.

USD/JPY

After last weeks violent drop this pair has been on a steady uptrend. On the hourlies there is a strong bearish cross appearing on the slow stochastic and the 4 H chart also supports a bearish notion. However the dailies are still bullish so a preferable strategy for today may be to buy on dips and sell on highs.

USD/CHF

The 4 H and the hourlies both support a bullish notion. The dailies also indicate that this pair is oversold as there is a strong bearish cross on the slow stochastic coupled with positive momentum. Traders can expect this pair to strengthen before making another slight correction down. However since this pair is currently trading at a key level if there is a break below the 1.2000 support level then the downward correction may be significant.


The Wild Card

Crude Oil

The sustained bullish run that we have seen over the last 3 days seems to be losing some steam now and a reversal may be imminent. On the 4 H chart momentum bearish and the RSI is at overbought levels. So Forex traders have a good opportunity to maximize their gains by going short on an early bearish signal.
 
29/08/'07 - The USD Uncertainty Continues.....

Economic News

USD

Monday's releases from the US markets, which showed that US Existing Home Sales went down by 0.2% in July, caused the greenback to be traded mixed against most of the major currencies. The weak housing figures are raising many doubts and concerns about the health of the world's largest economy. Lower home values have left Americans feeling less wealthy. Investors are waiting for the speech on "Housing and Monetary Policy" by Fed Chairman Ben Bernanke this Friday, which will probably offer a few hints about the future directions of the Fed's monetary policy. As it seems at the moment, the housing market correction could take longer than expected and that could weigh on expenditures going forward.

It should be noted that the sub-prime market is just 4% of the overall real estate market, and its escalating effect is sometimes overwhelming. This ongoing housing problem makes it very difficult for Americans to tap home equity to finance spending. A slowdown in hiring and slimmer pay raises might weaken consumer sentiment and purchasing power as overall economy growth slows. Sales of second hand houses fell in July for the fifth month in a row, as the figure came in the lowest in almost five years, while the surplus of those homes rose to a 16-year high. The labor market shows signs of weakening. Unemployment rose in July to 4.6% from 4.5%. Job growth slowed to 92,000 last month from 126,000, down from last year's average of 189,000 a month. These are quite concerning figures with which the US economy must deal at the short run.

As for today, there is no major news releases expected to come from the US, and the greenback's is floating in a cloud uncertainty. The following two days are packed with major events and should probably shed more light on the Greenback's future behavior.

EUR

Yesterday, the Euro slipped after the IFO Business Climate Index was published in Germany, the country which is considered to have the biggest and strongest economy in Europe. The IFO Business Climate Index fell to 105.8 points in August from 106.4 in July, the third consecutive monthly decline.

In addition the M3 Money Supply y/y index was published yesterday, as the data showed that the M3 money supply grew 11.7% in July year-on-year, up from a 10.9% year-on-year growth rate in June and above expectations for an 11.1% rise.

During the next month the ECB is expected to raise its key interest rate to 4.25%, but as it seems at the moment this move is not too certain after yesterday's meeting in which the president of the European Central Bank, Jean Claude Trichet, participated in Hungary. During his speech Trichet said that the ECB was not pre-committed to any rate increase at its Sept. 6 meeting. Trichet specified that his monetary policy assessment made at the Aug 2 rate-setting meeting, was made before the recent market turbulence and would be re-evaluated. On the other hand, The ECB has said it expects a significant rise in inflation toward the end of this year and early in 2008. The bank defines price stability as an inflation rate of just below 2%. Most of the trader's focus will be on the US markets in the following two day, as most of the important data will be coming from there.

JPY

Yesterday the JPY was very volatile and strengthened for the second consecutive day against the USD. That means that investors are still refraining from the risky carry trade strategy of selling the low-yielding Japanese currency to invest in higher-yielding ones. The slowing US economy will certainly weigh on the greenback, which may continue to fall to 114.00 against the JPY. The biggest JPY move yesterday was seen against the NZD which is a preferred currency for carry trades. The JPY is the best performer among the 16 most-active currencies this month as U.S. mortgage defaults caused stock markets to drop and banks to limit lending. There are no major news expected to come from Japan today, as most of the important data such as the CPI and Manufacturing PMI will be released on Friday.


Technical News

EUR/USD

The pair is now trading around 1.3600 which is the 50% Fibonacci level of the 1.3850/1.3360 move. If a breach up through that level will occur, we should see the pair initiating a further bullish move into the 1.3650 move. The daily chart is supporting the bullish notion, as the slow stochastic floats around 40, which indicates some more room to extend up.

GBP/USD

The cable is floating at the upper levels of the downward channel that is forming on the daily chart. Together with the slow stochastic and RSI which are both at the 50 level, a bearish signal was created with the next target price located 1.9960. The 4 hour chart is showing a slight oversold level which might sustain the move down in the short term.

USD/JPY

The 4 hour chart is showing two consecutive green bars, and the slow stochastic is showing two bullish crosses under the 20 level. The RSI has violently crossed the 20 level from above which strengthens the notion that in the short run, a reverse move is imminent. Traders should pay attention to the fact that the dailies are still bearish, and there is still more room to go down on a longer time scale.

USD/CHF

The daily chart is showing that there is great uncertainty in the pair's movement, as most of the recent bars on the daily chart are wide doji. This indicates that although there is some price movements, the open and close price are very similar. There was an attempt to break through the 1.1960 level again yesterday, and it failed, which means that the support level is still very strong. The hourlies are showing slight bearish momentum, and in general the trend is unclear.


The Wild Card

Gold

There is a bearish channel forming on the daily chart, as the gold is floating on the upper level of it. The slow stochastic has completed the cross above the 80 level, which validates the move as bearish. This provides Forex traders with a great opportunity to enter a short position with great bearish momentum.
 
30/08/'07 - Is it going to be all doom and gloom for the greenback?

Economic News

USD

Yesterday the greenback continued on its bearish decent as it lost ground against most of the majors. Earlier in the week investors were expecting the FOMC minutes to give some indication as to when the Fed will cut rates, however the FOMC minutes did not reveal much and this created uncertainty in the forex trading market as to whether the Fed is actually planning to cut rates. There was no significant economic news released from the US yesterday, so the bearish momentum that was created by the discrete FOMC minutes continued throughout yesterdays trading. The main market movement today can be attributed to the US equity markets rebound after Teusday's large sell off. This caused the USD to weaken sharply against the high yielder's as carry trades were back in action but on the other hand the carry trade winding caused the USD to gain some lost ground against the JPY, so it was not all doom and gloom for the greenback. The US markets sudden rebound yesterday can be attributed to the leaking of a letter by Fed Chairman Bernanke where he explicitly stated that the Fed is keeping a watchful eye on the financial markets and that it will intervene in order to mitigate the negative impact that the problems in the financial markets may have on the economy.

In US news today we are expecting the GDP annualized and deflator annualized figures which are forecasted to release at 4.0 % and 3.7 %, respectively. The previous quarters GDP annualized figure was 3.4 %, so we are expecting a 0.6 % increase in growth which would reaffirm the Fed's view that the economy is expanding at a moderate pace. However these figures are not expected to cause any major movements and the source of today's volatility will be the equity markets. The rebound in the US markets may spillover into Europe and Asia today, so if this occurs the carry trade resurrection will cause the greenback to depreciate against the high yielders but gain against the JPY. If the GDP figures do not surprise the market the greenback is likely to continue on its bearish path against the EUR and GBP, as there is no other data to give the USD some reprieve.

EUR

The only news released out of the Eurozone yesterday was the German Consumer Confidence which came in below the expected figure of 8.5 at 7.6. It was a day light on European news so the EUR movement was mainly pegged to the USD and it continued its bullish rampage against the greenback which started on the back of FOMC minutes release. Investors have been expecting the ECB to hike the interest rate in early September as President Trichet stated on August 2 that the ECB had adopted a stance of ‘strong vigilance' regarding inflation. However earlier this week Trichet stated in his speech that the ECB will actually make its decision on whether to raise the interest rate at its next meeting. This gave a strong indication to the market that the ECB may keep the rate hike on hold in September. The gradual shift in investor sentiment regarding the rate hike has been putting pressure on the EUR recently.

Today the only news expected from the Eurozone is the German Unemployment Rate and Italian Retail Sales which are forecasted to release at 8.9 % and 0.2 %, respectively. This news is not likely to cause any sharp movements in the EUR, so the direction of the EUR today will remain dollar centric and it should be able to maintain its bullish momentum. Also a rise in carry trades will push the EUR higher against the JPY as European and Asian markets react to yesterdays rebound in US stocks.

JPY

Yesterday, the Japanese currency recovered from its previous losses and rose 0.3% to 115.81from 116.17 against the greenback late into yesterday's New York trading session. As a matter of fact, it posted its biggest daily percentage gain since January 2005 due to an incline in U.S. stocks. The JPY also advanced 2.2% against the EUR, to 158.13 from 158.89 yesterday, as rallying U.S. stocks prompted investors to resume so-called carry trades.

In addition, an Australian hedge fund filed for bankruptcy protection yesterday goading investors to sell riskier assets purchased with loans from Japan. Worries that more financial institutions will suffer from the U.S. subprime mortgage meltdown caused investors to halt risky positions in high-yielding currencies.

Looking ahead to today, there are several news releases expected today from the JPY market. The first one will be the Tokyo CPI which is expected to release in negative territory at -0.2 %. Later, the Manufacturing PMI is expected to be released without a significant change at 50.0 and the Japanese Industrial Production is also expected to release in negative territory at -0.4%, down from last month's figure of 1.3%. Nonetheless, these weak figures are expected to generate small interest as they would be overshadowed by the direction of the carry trades which will heavily depend on today's performance of the global markets. It is also very important for traders to monitor whether yesterday's boom in the US stock market will have a ripple effect on the European and Asian markets.


Technical News

EUR/USD

Bollinger bands are widened indicating increased volatility. On the 4 H chart the slow stochastic is crossing above 80 indicating that we are in overbought territory but the momentum and RSI are both relatively flat. The hourlies give us a bullish signal with strong positive momentum. The relatively weak bearish 4 H chart and weak bullish 1 H chart give us a strong indication that this pair will range trade today.
GBP/USD

This pair has breached the key 2.0150 resistance level with resilient positive momentum. The RSI and slow stochastic confirm that this move is indeed validated and it is now targeting the significant 2.000 level and we may see it head even further north in the near future.

USD/JPY

After a strong but brief bullish run this pair has been on a steady decent falling from 116.21 to the 115.18 mark. The slow stochastic indicates that there is still room for this pair to move down but according to the dailies a correction is imminent.

USD/CHF

This pair is in the middle of a clear channel that seems to be heading south. The upper level of this channel is located at the 1.2030 level and it now indicates a key resistance level. If it is breached then the pair will begin target the 1.2100 mark. However if this pair continues to float in this channel then this pair will continue on its bearish path.


The Wild Card

Silver

The hourlies are very bullish as the slow stochastic is crossing just above 20 and there is strong positive momentum. Also the RSI indicates that this pair should continue to head north. However there will be an opportunity for profit taking as the 4 H chart gives a bearish signal all round so taking all factors into account the preferable strategy for Forex will be to buy on dips and sell on highs.
 
04/09/'07 - ISM Manufacturing on Tap.

Economic News

USD

As the US market was closed yesterday for the labor's day holiday no news was released from the US and movements in the market were still an echo of Ben Bernanke's speech on Friday. The President of the US Fed spoke on Housing, Housing Finance, and Monetary Policy at the Federal Reserve Bank of Kansas City. Investors understood his concerns of mortgage market developments and their "possible implications for the broader economy" as a sign for a rate cut, furthermore the "deterioration in financial market conditions and the tightening of credit since its August 7 meeting had appreciably increased the downside risks to growth". The announcement of ISM Manufacturing Index today and Non-farm employment change on Friday will indicate further if this rate cut will already occur in the September FOMC Meeting.

ISM Manufacturing Index, which measures the activity of purchasing managers, is expected to fall from 53.8 to 53.2 supporting the notion of an economical slowdown. ISM Manufacturing Prices are expected to fall from 65.0 to 63.1 indicating a reduction of inflation experienced by manufacturing organizations. Non-farm employment for August, which will be released on Friday, is expected to rise from 92K to 110K and will, together with the ISM data today, be crucial in order to determine the timing of a Fed rate cut possibly as early as September 18th. A negative surprise regarding the Non-farm Payrolls will probably bring about the rate cut, indicating that the economy already was in a slowdown before the sub prime credit woes shook the market.

Without further market moving news today the USD will only react to the ISM Manufacturing Index and prices, and if the outcome takes course as expected the USD will trade flat today.

EUR

Yesterday was a quiet day for the EUR principally because of the U.S. holiday, although there was a bit of a spillover from Friday's U.S. session. The EUR traded around session lows against the USD after dropping to the 1.3610 level late yesterday evening. There was a comfort factor from Bernanke's speech that the Federal Reserve is equipped to act in any moment of necessity. In addition, yesterday's UK economic news proved far more supportive as GBP Manufacturing PMI surprised with strong 56.3, beating expectations of 55.1. German Manufacturing PMI released inline with expectations at 56.0. The GBP Retail Sales Monitor came yesterday in just above expectations at 1.8%. The 13 nation currency managed to appreciate all across the board ahead of Thursday, which is expected to be the "all European" day with major events like the BOE and the ECB Interest Rate Statements and the ECB President Trichet Speech. The ECB is expected to keep its benchmark refinancing rate at 4%.

Today is also devoid of any significant data so we should see the EUR continue range trading. We could see some strong volatility through the following days, so it will be crucial for traders to identify how the preceding economic indicators from European and the U.S markets will affect the currency.

Despite the good European fundamentals, currency traders remain nervy mainly about the stability of the credit markets.

JPY

News out of Japan offered little hope for yen strengthening at the beginning of the week as both labor and business data were very unsatisfactory with the headline figure slumping into negative territory. Sunday's JapaneseCapital spending came in much weaker than expected at -4.9% in contrast to a 13.6% gain in the previous month. The Average Cash Earnings has also suffered a drop to a -1.9% level. In fact, it was the worst performance of that index in more than three years showing that Japanese consumer spending will likely remain relatively weak as wages refuse to rise. This adds to expectations that the BOJ's rate hike will be delayed for the rest of this year. However, the impact on yen trading was limited with most yen traders still focus on the carry trade theme. Yesterday the JPY dropped slightly against the USD touching the 115.80 level.

The following days will provide almost no news from the Japanese markets except the Machine Tool Orders and the Leading Index, both of a minor importance. Therefore, most price movement on JPY pegged currencies will be derived from the European and American markets, while carry trades and equities might resume their gains this week.


Technical News

EUR/USD

On the 4 H chart we notice that the bearish trend is running ahead. It appears that the pair is going to break the 1.3600 support. The volatility decreased and the EUR USD is consolidating after it broke the 1.3610 support level. The price should continue to move downwards in a range of 1.3630 to 1.3580. As it seems, the bearish pressure will continue to gather momentum.

GBP/USD

The GBP USD is in a bearish configuration. The volatility decreased. The pair moves without trend and swings around exponential moving average (EMA 50 and 100). the pair is now forming a downwards channel with strong resistance at the 2.0145 level. Its recommended to time the entrance to the market with short term charts, 2.0170 seems like a strong entry point. Bollinger bands have tightened. 1H, 4H Elliott pattern implies a bearish pressure. The target is expected at 2.0120.

USD/JPY

USD JPY is in a downtrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands are tightened. We should expect to see also today a bearish configuration. 1H, 4H Elliott pattern implies that the USD JPY will continue to gather momentum. The target is expected at 115.15 level.

USD/CHF

The USD CHF is in a bearish configuration. The volatility decreases. USD CHF moves without trend and swings around exponential moving averages (EMA 50 and 100). Bollinger bands have tightened. 1H, 4H Elliott pattern implies a continuation of the bearish pressure. The target is expected at 1.0480


The Wild Card

Gold

Gold broke the 673.45 resistance level. Gold is in an uptrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands are tightened. We should expect to see today a bullish configuration. 1H, 4H Elliott pattern implies that the Gold should to gather momentum also today. The target is expected at 675.00. This provides those trading forex online with a great opportunity to go long on a very healthy uptrend.
 
05/09/'07 - Raising key interest rates: Market waits for forecast clues

Economic News

USD

Yesterday, the most significant news to be released from the US, relevant to forex trading, were the ISM figures which both released slightly weaker than expected. This should have further bolstered expectations of an imminent rate cut by the Fed; however the market is tentative ahead of some key economic data releases later this week. Yesterday's trading began slowly with the greenback pulling back some ground against the majors. Equities also began to rise moderately and this was reflected in an increase in the USDJPY pair. However the greenback experienced a whipsaw reaction on the back of the weak ISM data and it gradually slip to its current levels against the majors. Although the ISM was poor there was still relatively light movement as the market is waiting for further information in order to accurately asses the probability of a rate cut by the Fed.

Today there should be some sharp volatility as we are expecting the release of the Beige Book, which is a Fed survey based on anecdotal evidence. Usually the Beige Book is not the main driver of volatility but today its tone should cause sharp movements as the Fed is trying to dig into the real economy and this will provide the market with another strong indication of whether we will see the Fed cut rates in September. In other news today the ADP Non-farm Payrolls Report is expected to release at 82K, beating the expected figure of 48K. After having a relatively quiet two days of trading the market will come alive today with release of the ADP report and in particular with the release of the Beige Book. If the tone of the Beige Book springs a surprise then the greenback will once again tread in uncertain territory.

EUR

The EUR has been steady all across the board but it did relinquish some ground to the greenback yesterday. However on the back of weak US data the EUR did manage to stage a small rally back against the greenback. In Eurozone news yesterday the GDP figure released inline with expectations at 0.3% indicating that growth in the resilient European economy has remained steady. Also the PPI figure released at 0.3 %, beating the expected figure of 0.1 %. The stronger than expected producer inflation figure supports a further rate hike by the ECB but the global liquidity problems that resulted from the US subprime crisis have forced the ECB to keep rates unchanged at least for September. In European news today we are expecting the Services PMI, German Services PMI and Retail Sales figures. None of these figures are expected to cause any sharp movements in the EUR and we expect this currency to range trade today ahead of tomorrow's ECB interest rate decision. However the EUR may experience some sharp volatility against the greenback on the back of key economic US data releases, therefore any EUR volatility will be dollar centric.

Traders will be tentative ahead of tomorrow's ECB interest rate decision which is expected to remain unchanged at 4.0 % but all eyes will be on ECB President Trichet's speech that will follow this announcement for an indication of when the ECB is likely to hike rates. This speech will be the center of attention as the market sentiment that will develop from this with regards to Eurozone interest rate policy will be a key determinant of the future direction of the EUR.

JPY

Yesterday was a good opportunity for investors to identify the strong correlation between carry trades and the equity markets, as the US equity markets experienced a moderate rise and the greenback gained on the JPY. Most of the JPY crosses were up yesterday indicating that carry trades are back in action, however it is still too early to determine whether they are here to stay. The JPY was also under pressure earlier in the week as a result of data that showed weaker capital spending in the second quarter. Many investors hence believe that the Bank of Japan may delay hiking its key benchmark rate, which is extremely low when compared to the global average, and this could place the JPY on a slippery slope. There is no market moving news from Japan for the rest of the week so the direction of the JPY will be mostly determined by carry trades but with the JPY failing to gain ground against the NZD yesterday it may still be premature to hop onto the carry trade Ferris wheel.


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 1.3555 support level. The price should continue to move downwards in the 1.3650-1.3530 range. As it seems, the bearish pressure will continue to gather momentum at least until the week end.

GBP/USD

In the past few days the pair is going through a choppy session, and is giving mixed signal on the hourly level. The daily chart is showing massive bearish formation, and it looks as if the pair is heading 2.0000 again. A preferable strategy might be going short for the short run.

USD/JPY

A bullish flag is forming on the 4 H chart which might take this pair to 123.73 Fibonacci (76.4%). Slow Stochastic shows a positive divergence which strengthens the possibility of an upcoming bullish trend.

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

Gold

Gold broke the 680.5 resistance level. Gold is in an uptrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands are tightened. We should expect to see today a bullish configuration. 1H, 4H Elliott pattern implies that the Gold should to gather momentum also today. The target is expected at 682.5. This provides Forex traders with a great opportunity to go long on a very healthy uptrend.
 
06/09/'07 - Packed calendar In US and Europe today.

Economic News

USD

The ADP Nonfarm Employment Change was released yesterday, showing a figure of 38K which is far below the expected 82K. As the ADP Nonfarm Employment Change is a statistical indicator, its potential to forecast the real value is limited. For the real value of Nonfarm Employment Change tomorrow a value of 110K is expected, even above the previous value of 92K. if the NFP release tomorrow does not live up to the expectations, there might be a further weakening move for the greenback.

Today is an eventful day in the international Forex markets with the main event being the ECB interest rate announcement. In the US markets the ISM Non-Manufacturing Index will be released and the Fed's Governor Kroszner will speak at 15:30 GMT. The ISM Non-Manufacturing Index is expected to be released at 54.5 which is slightly below the previous value of 55.8. Kroszer's speech will be closely watched because investors could get some hints on the future interest rate decision which still hangs in balance. There are three more news releases with less importance coming from the US today which are the Nonfarm Productivity, Unit Labor Costs, and Building Permits, that might cause some price movement, but will not be able to draw trader's attention from the ISM release.

After the USD weakened yesterday, the expected news tomorrow and today will be important to determine if the US sub-prime crisis is limited to the housing sector or if it indeed affected the broader economy. If so this would increase the possibility of a rate cut by the Fed at their next meeting. A weaker than expected ISM Non-Manufacturing Index as well as anxious words in Fed Governor Kroszer's speech on "Analyzing and Assessing Financial Crises" could potentially depress the USD today.

EUR

Today is packed with news releases relevant to forex trading from the Euro-zone. In Great Britain the Industrial Production is expected to be released at 0.2% compared to a previous release of 0.1%. Manufacturing Production is expected to be released at 0.2% as in the previous month and the BOE will announce its interest rate which is expected to remain unchanged at 5.75%.

The ECB will also announce its interest rate today which is expected to be left at 4.0%. The ECB intends to wait a little longer before changing the interest rate, in order to monitor the consequences of the sub prime crisis and the effects of the liquidity injections. Of particular concern is the impact of the US credit crisis on the German financial system, as Germany is Europe's largest economy.

The ECB interest rate and the following speech by ECB President Trichet will be important for investors to follow as the market might experience some stability and a reduced risk aversion on the side of the investors. If all news will release align with expectations we could even see a little strengthening of the EUR, depending on how confident President Trichet portrays the European economical outlook.

JPY

The JPY gained ground yesterday all across the board as the weak release of the ADP Nonfarm Employment Change once again increases risk aversion in the markets. In this risk averse situation, carry trades will be constrained and the market will have to wait until carry trades will work on full speed again. Although the JPY is not trading at the high levels it saw two weeks ago, it is still floating in a relatively tight range, and a clear signal that the carry trades are back to normal course has not yet been accepted.

With no market moving news releases from Japan for today, the JPY will react on the market's accommodation to the economical releases in the US and Europe.


Technical News

EUR/USD

The pair is floating in a relatively tight range for several days now, as can be seen on the 4 Hour chart. No significant break through the 1.3550/1.3700 range has occurred, and the hourlies continue to deliver mixed signals. The daily chart is giving a moderately bullish sentiment with a bit more room to run.

GBP/USD

The cable is in the middle of an uptrend that started at 1.9650, and according to the daily chart still has some more momentum to continue. The slow stochastic on the 4 Hour chart is showing a bearish cross indicating that there could be a correction move before the uptrend continues.

USD/JPY

The hourly studies show that there is a bearish configuration on the 4 and 1 Hour charts due to a bearish cross on the slow stochastic and RSI that is floating at the 50 level. The daily chart on the other hand is showing a slight bullish momentum, which indicates that buying on dips might be preferable today.

USD/CHF

After losing 100 pips yesterday, the pair is in consolidation at the 1.2040 level. The 4 Hour chart is showing bearish sentiment, and is supported by an extremely bearish daily study. Next target should be a breach through the 1.2000 level.


The Wild Card

Crude Oil

Over the past two weeks there is an extremely accurate upwards channel forming on the 4 Hour chart. Oil has made a significant move and is displaying a healthy consistent move up with plenty of room to run. The next significant resistance level is around 78.50 which provide Forex traders with a great opportunity to jump in to this massive uptrend with large momentum still steaming.
 
10/09/'07 - USD Retreats After Nonfarm Payrolls

Economic News

USD

The USD dropped massively on Friday upon the release of the US Job's report, and in particular because of the extremely negative -4K figure of the Change in Nonfarm Payrolls. As could be easily predicted, investors and economists did not try to speculate or change their forex trading strategy on the present USD trend and continued to massively short the USD. The previous release was 68K, as the market expected 110K. Today, there is no market moving news expected to come from the US, as the only release will be US Consumer Credit which is expected to go down from 13.2B to 8.8B, and will probably not cause a major price movement in the USD.

The U.S. economic development is in serious difficulty. The mortgage industry's decline donated to the net loss of 4,000 U.S. jobs in August and it was the first negative payroll report in four years. As it seems the housing market could sink the country into a full-blown recession. Next week's economic reports include Retail Sales and Consumer Confidence; many economists estimate the U.S. economy's trend will not make any dramatic correction in the short run.

EUR

On Friday, the EUR broke the 1.3750 resistance level after the publication of the weak US economic data. As it seems at the moment, by many economists and major banks, the EUR is running ahead towards the next 1.3900 resistance level. On the basis of the last consecutive pessimistic news from the US economy, many traders have began to favor the 13 nation currency and little by little have begun to neglect and push aside the American Dollar. The European Central Bank is expected to keep interest rates on hold for the remainder of the year, but still we should see the beginning of positive momentum in the Euro zone economic condition. The ECB is going to release several important notifications in the following few weeks and decisions will depend on how the economy coped with the latest market turmoil.

As for today, the only major release that is expected to come from Europe will be the UK PPI Input and Output; both are expected at 8:30 GMT. The input is expected to rise from -5% to -3% and the output is expected to remain unchanged at 0.2%. Both figures are expected to push the GBP up a bit if indeed the figures will be released inline with expectations.

JPY

Friday's US Jobs report took the USD down all across the board, and the JPY was no exception as we saw the USD/JPY touch 112.80 and the EUR/JPY 155.40. There is a distinct sentiment from traders to get away from carry trades, and the unwinding continues with no clear end on the horizon. The negative USD sentiment is now stronger than any interest rate trading potential. If the Feds will indeed cut the rates as expected, the carry trades will probably take even longer to come back.

As for today, Core Machinery Orders is expected to be release tonight at 23:50 GMT with expectations standing on 5.2% which is a massive increase from last month's -10.4% and might generate JPY appreciation on top of the strengthen trend already in motion.


Technical News

EUR/USD

The pair is in the middle of a very strong uptrend at the moment, and the breach through the 1.3740 level which was a strong resistance and a key Fibonacci level, indicates that the move is validated and we might see the positive momentum continue to the 1.3900 level. The hourlies are a bit overbought which indicates that buying on dips might be preferable.

GBP/USD

The uptrend the cable is going through seems to be very strong and the daily chart validates that there is still room to run. The 4 Hour chart is confirming that the momentum up is still quite strong and that 2.0400 is a valid next target.

USD/JPY

After touching the 112.80 level for the second time this month, the pair seems to be consolidating around the 113.00 level. There is a bullish cross forming on the 4 Hour chart that indicates a slight correction up before the bearish move continues. Selling on tops might be preferable today.

USD/CHF

The pair is consolidating at the 1.1860 level after the sharp drop from 1.2100. The momentum is bearish and the next key level will 1.1820 which is the bottom of the last downwards move which started at 1.2462. If a breach through that level will occur a stronger bearish move will be validated that might take the pair to the 1.1740 level.


The Wild Card

Crude Oil

The perfect channel configuration continues with full steam, as the oil now floats on the bottom section of the channel. The RSI is firmly on the 50 level together with the slow stochastic that strengthens the notion that the momentum up is still strong. This provides Forex traders with the opportunity of a great entry point to go long on a very healthy uptrend.
 
11/'09/'07 - US Trade Bakance, Fed Chairman Speaks

Economic News

USD

The last week's unexpected weakness in the labor market caused the USD to slump to a 15-year low against six of its most actively traded peers. Yesterday the USD was traded at 1.3808 against the EUR, which is only 0.4% below a record low of the 1.3852 reached in July 24th. The latest weak employment figures proved once again that the housing crisis hasn't been affecting the real estate sector only, but has expanded and now influences other markets as well. Given the circumstances, the Fed is highly expected to lower its benchmark rate by quarter of a point to 5% next week. Moreover, Federal Reserve Chairman Ben S. Bernanke, driven by the first drop in employment in four years, may even be forced to cut interest rates twice, reaching the 4.75% level in the fourth quarter of this year. There was no significant data released from the U.S yesterday, apart from a Consumer Credit index, which was released at a lower than expected figure of 7.5B, dragging the USD deeper into the bear's cave. Today, the most significant news coming out of the US will be the Trade Balance. The figure is expected to be released in negative territory at -59.0B, slightly lower than the previous month. Also today, the Fed's Chairman Bernanke will deliver a speech in Berlin where he is expected to drop clues on current monetary issues. Heavy market volatility is often experienced during Bernanke's speeches and today may not be different.

EUR

The European Central Bank, the Bank of England and the Bank of Japan held off from raising interest rates at their latest policy meetings as they awaited a clearer reading on how the economy was likely to cope with the turbulence. The GBP fell against the EUR and the global financial market turmoil will prevent the Bank of England from adding to three interest-rate increases this year, reducing the currency's yield advantage. Analysts claim that the EUR will maintain its strengthening against the USD and 1.4000 appears to be very close. The bottom line, the EUR seems to be an attractive investment alternative especially against the USD. There are two major news events expected to come from Europe today, the first one is the UK Trade Balance which is expected to maintain the -6.3B level, and the second one is the ECB President Trichet's Speech which will elaborate further on ECB future monetary policy.

JPY

The Japanese yen has appreciated over the past two months as risk aversion has led carry trades to unwind. The last week's unexpected weakness in the U.S labor market caused Asian equities to drop and triggered investors to sell high-yielding assets, thus further boosting the Yen. The USD/JPY dropped to a low of 112.60 and the GBP/JPY to 228.27 yesterday. There was no significant economic data released from Japan yesterday apart from the Core Machinery Orders with the headline figure releasing at 17.0%, beating expectations of 5.2%. Today is also expected to be void of data. Much of the forex trading market's attention will be focused on how the USD will move. Japanese markets are worried that the deterioration of the U.S. economy is worse than they had expected. The main fear is that the demand for Japanese exports could weaken as the U.S. economy. With carry trades unwinding, the JPY should continue to range trade at its high levels and we should see JPY fluctuations being dollar centered today.


Technical News

EUR/USD

On the 4 Hour chart, a rising wedge is forming which may imply a continuation of the bullish trend. It is recommended to time the entrance to the market with short term charts as 1.3758 seems like a strong entry point. At the moment the EUR/USD is trading around the 1.3720/1.3840 range.

GBP/USD

There is a very channel forming on the 4 Hour chart, as the pair now floats on the bottom level of it. The RSI and Slow stochastic are supporting the bullish notion, and we should see the uptrend continue at a steady pace. The next target price should be around 2.0310.

USD/JPY

USD/JPY is in a downtrend supported by 1Hour exponential moving averages. The volatility is low and the Bollinger bands are tightened. We should expect to see a bearish configuration. The 1H, 4H Elliott pattern implies that the USD/JPY will continue to gather momentum. Traders should pay attention to the fact that the dailies are still bearish, and there is still more room to run on a longer time scale. The target is expected at 113.20.

USD/CHF

The USD/CHF is in a bearish configuration. The volatility decreases as the pair moves without a trend and swings around exponential moving average (EMA 50 and 100).the Bollinger bands are tightened and the 1H, 4H Elliott pattern implies a continuation of the bearish pressure. The target price should be around 1.1810.


The Wild Card

Gold

Gold broke the 703.10 resistance level and is in an uptrend supported by 1H exponential moving averages. The volatility is low and the Bollinger bands are tightened. We should expect to see a bullish configuration. 1H, 4H Elliott pattern implies that the Gold should gather momentum today, which provides those trading forex with a great opportunity to go long. The target is expected at around 710.
 
12/09/'07 - Traders counting on rate cut to push greenback up.

Economic News

USD

The greenback neared an all time low yesterday against the EUR as the markets' expectation that the Fed will cut interest rates continued to diminish. In Fed Chairman Bernanke's speech in Berlin yesterday, he did not make any direct comments regarding the Feds' future monetary policy but he did mention that the Fed will do whatever is necessary to prevent the credit problems from spilling over into the broader economy. The majority of investors believe that the Fed will cut the interest rate by at least 0.25 % on September 18 but a lot of doubt has crept in recently and this is putting the greenback under pressure. Normally a rise in a country's interest rate has a positive effect on its currency as it will boost foreign investment, however with the current subprime crisis in the US coupled with global liquidity problems only a rate cut by the Fed will significantly relieve these problems and once again spur investment. In other news yesterday, the US Trade Balance released at -59.2 B which was lower than the expected figure of -59.0 B. This gave further indication that the US economy is slowing and investors fear that if there is no intervention by the Fed to cut rates that the US economy will head towards a recession.

Today, there is no forex trading market moving news to be released from the US, so we may see the dollar find some much needed reprieve after slipping against the EUR for five straight days. However the USD bearish momentum is strong, as the effects of the global credit crisis are most pronounced in the US and this is could significantly slow the economy. So today the greenback may continue to extend its losses all across the board and it could even reach a new all time low against the EUR.

EUR

The EUR has performed well of late, forming steady uptrends against most of the majors. Yesterday was no different as the European currency maintained its bullish surge all across the board and on the back of Bernanke's speech; it began to target the 1.3850 level against the greenback. The EUR was also boosted by ECB President Trichet as he stated that the Eurozone credit losses were not large enough to weaken financial institutions. His comments reinforced the markets sentiment that the ECB still wants to raise rates and will do so if market conditions permit. The European central bank has been busy providing liquidity to the financial systems in order to prevent short-term interest rates from rising too fast and prompting a bigger credit crunch. However unlike the Fed that is considering rate cuts in order to ease the credit crisis, this is not an option for the ECB as the inflationary pressures in the Eurozone have not yet been put to bed. In Eurozone news yesterday the German WPI released at 0.5 % and the French Trade Balance released inline with expectations at -3.0 B. However these figures were not significant enough to cause any sharp movements in the EUR which was mainly affected yesterday by Bernanke's and Trichet's speeches.

Today we are expecting the Eurozone Industrial Production and the Labor Cost Index. However both these indicators are not considered significant enough to cause any major volatility in the EUR. With today being light on significant news the EUR bullish momentum may begin to lose some steam.

JPY

Yesterday, the JPY lost ground all across the board as the global equity markets recovered on expectations of a future rate cut by the Fed. This rise in global stocks spurred investors risk appetite and therefore carry trades were very quickly backed in the mix. It is currently difficult for investors to predict whether carry trades will be sustained as the full impact of the subprime crisis is still unclear and the equity markets have been whipsaw trading ever since. However, it was not all doom and gloom for the JPY yesterday as Core Machinery Orders released at 17.0 %, far- beating the expected figure of 5.2 %. This was a strong indication that the Japanese manufacturing industry is in an expansion phase.

Earlier today, in the Asian trading session, the Japanese Current Account released at 1.75 T, well below the expected figure of 1.90 T. On the other hand there was some positive news for the Japanese economy as the Corporate Goods Price Index came in at 1.9 %, beating the expected figure of 1.7 %. However none of these indicators had much of an impact on the JPY whose direction is being ruled by carry trades. If stocks rally in the US and European trading sessions later on today then the JPY slip some more even though in the Asian trading it did manage to pull back some lost ground.


Technical News

EUR/USD

Today, the 4 Hour chart implies on a possible recovery of the USD when both RSI (78) and Slow Stochastic (crossed at 82) are clearly in overbought territory. The 4 Doji bars imply on an upcoming move and it appears that going long might be preferable.

GBP/USD

The key level of 2.0330 was breached today as the pair now consolidates around 2.0350 with clear intentions to keep going. The daily chart is bullish as the hourlies are slightly overbought which indicate that buying on dips might be preferable.

USD/JPY

After a three day correction up, the pair is showing a bearish formation again. The slow stochastic and the RSI are both showing strong bearish momentum. The next target price should be around 113.00.

USD/CHF

The pair is heading down and is now at 1.1850. The next key level is 1.1820 which would the lowest it has been since May 2005. If a breach through that level will occur we might see a much bigger move been validated. If the pair will be shy of a breach it will constitute a great entry point for a long position.


The Wild Card

Crude Oil

Oil is consolidating at 78.20 after it has been going up for more than three weeks from 68.50. the slow stochastic on the daily chart is showing a strong bearish cross, and together with inability of the oil to breach through the strong resistance it delivers a great opportunity for Forex traders to go short at a great entry point.
 
17/09/'07 - Markets Await Tomorrow's Rate Decision.

Economic News

USD

The greenback lost some significant ground against the majors last week and it reached an all time low against the EUR. The negative dollar sentiment was mainly driven by the recent weak jobs and housing figures which gave further indication that the US economy may be heading towards a recession. The Fed's hesitancy to lower the interest rate has put the greenback on a slippery slope and the subprime and credit crisis have cast a shadow over the US economy. The most significant news that is expected from the US Today is the Empire State Business Conditions Index and it measures the general business conditions of manufacturers in the New York State. It is forecasted to release at 18.0, which is well below the previous figure of 25.0. If the figure will be released inline or below expectations, it will reaffirm the fact that the US economy is slowing down. With many investors already believing that the US economy is heading towards a recession it is likely that we may see this figure surprise on the downside. If this occurs then the greenback could experience some sharp bearish movement but it is more likely that it will range trade today as a result of investor caution.

Looking ahead to the rest of the week all the market's attention will mainly focus on Tuesday's interest rate decision and statement by the Fed which is expected to lower the interest rate by 25 basis points coupled with a dovish statement that will follow the interest rate announcement. The Fed Statement will play a key role in determining the markets sentiment with regards to future interest rate expectations, while the rate cut should have an immediate impact on the market and provide the dollar with some respite particularly if the Fed springs a very rare surprise and drops the interest rate by 0.50 %. The other significant US data that investors will watch this week is the consumer inflation, US housing starts and the Philadelphia Fed Index.

EUR

The EUR performed solidly last week all across the board and it surged to a new all time high against the greenback. However the bullish EUR will begin to experience a slowdown in momentum, as due to inflationary pressures and the spreading credit crisis in the Eurozone, the ECB is unlikely to raise the interest rates before the end of the year. Although Trichet and the ECB still seem to have a hawkish stance with regards to its imminent monetary policy, the market sentiment has shifted and it will place the EUR under pressure in the near future particularly if more cracks in the usually resilient European economy begin to appear.

Today the only news to be released, relevant to currency trading, out of the Eurozone will be the Trade Balance which is expected to come in at 4.0 B, well below the previous figure 5.2 B. The expected drop in the European Trade Balance may be partly attributed to the strong EUR and fledgling greenback, as it is making it harder for European exporters to compete in the global markets. However this news will not cause any volatility in the EUR and it should range trade today as investors will exercise caution ahead of Tuesday's US Interest Rate Announcement. In addition the German ZEW report is due to be released on Tuesday and it is also likely to cause volatility in the EUR.

JPY

Early last week the JPY went on a bullish rampage on the back of the sharp rebound of US equity markets but since then it has been on a gradual decline. There were strong indications in the beginning of the week that we could see a sustained carry trade unwind but with the volatility of US stocks it is still too early to predict whether we will see continued risk aversion particularly with the Fed's interest rate decision on the horizon. There was no significant news released from Japan in the Asian trading session today and looking ahead to later in the week, the Bank of Japan will announce its interest rate decision on Wednesday. The current market sentiment is that the Japanese interest rate will remain unchanged at 0.50 %, therefore traders will pay close attention to BoJ Governor Fukui's comments for hints to Japan's future monetary policy. The JPY could rise to new heights if the US Federal Reserve fails to cool the market on Tuesday and risk aversion may stay as a priority among investors.


Technical News

EUR/USD

The pair is trading at an all time high and is now in a tight range. It appears to have some more momentum up as supported by the 4 Hour chart. The RSI and slow stochastic are floating at the 40 level, and are showing more room to run on the hourly level. The daily chart is showing a bearish cross on the slow stochastic which indicates that a correction down is close.

GBP/USD

The cable lost ground last week and is now trading at 2.0060. The hourlies are showing that the bearish momentum is slowing down and the bearish cross on the daily slow stochastic is supporting the bullish notion. The next target price might be around 2.0120.

USD/JPY

The pair is trading at 115.40 which is the 23.6% Fibonacci level of the 124.00/112.60 move. A breach up through that level will validate the move up at least up to the 38.3% level which is 117.00. All oscillators support the bullish notion.

USD/CHF

After several failed attempts to break through the very important support of 1.1800 last week, the pair is showing positive momentum on the daily studies. The slow stochastic and RSI are showing strong positive momentum which indicates that the next target price might be 1.1930.


The Wild Card

Crude Oil

The bottom barrier of the 4 Hour channel has been breached which indicates that a bearish correction move is imminent. The slow stochastic is showing a strong bearish cross which might pull the Oil back to the 77.00 levels again. This is a great opportunity for Forex traders to profit from a strong correction move.
 
19/09/'07 - US Core CPI ,Housing Starts and Building Permits.

Economic News

USD

Despite yesterday's sharp interest rate cut by the Fed the market anticipated the move. Stocks jumped on the news that the Federal Reserve decided to cut its key interest rate by a 0.5% to 4.75% and the dollar crashed to its historic lowest level against the EUR. The Fed slashed interest rates in order to protect the U.S. economy from sinking into a recession; sparked by the turmoil in the credit and housing markets. During the FOMC meeting, Fed chief Ben Bernanke stressed that the central bank will continue to act as needed to promise price stability and sustainable economic growth.

According to Fed's chief Bernanke's latest move, we can understand that he is more concerned by the sign's of a possible recession which are caused by the tumble in the housing market, jobs market, and the significant reduction in retail sales.

Along with an Interest Rate decision, although somewhat overshadowed by it, other U.S economy news continued to flow yesterday prior to the interest rate news, further exacerbating the currently limping U.S economy. The USD PPI index released at -1.4%, down from last month's figure of 0.6% and well below the forecasted figure of -0.2%. Housing Market Index released inline with expectations at the level of 20, yet down from the previous month's figure of 22. The U.S CPI index is on tap today along with the Housing Starts and Building Permits. All of the latest are expected to come out quite negative.

EUR

Traders drove the EUR to a record high against the USD yesterday after the Fed cut its target rate for overnight loans between banks by 0.5% as rising defaults on subprime mortgages rippled through global credit markets. In total, the European currency has gained 5.5% this year versus the USD as traders bet the Fed would cut rates as the U.S. economy slowed. The EUR traded as high as $1.3987 against the USD although exporters/importers may weigh in on any attempt by the market to surpass the psychologically critical 1.40 level.

Yesterday, there was no significant news released from the EUR zone, apart from the German ZEW Economic Sentiment, which came in weaker than expected at -18.1. However this soft data did not manage to slowdown the European currency from extending its gains across the board after a significant Interest Rate cut by the Fed.

Today is also expected to be devoid of data so we should see the EUR continue range trading on it's heights and will heavily depend on the volatility of the equity markets.

JPY

Yesterday, the Japanese currency dropped against all 16 major currencies after the Fed rate cut fueled a rally in U.S. stocks, spurring investors to buy riskier assets funded by borrowed yen.

The dollar pared some of its early gains against the yen to trade at 115.90 yens per one USD.

Some traders are moving back into risky positions, buying the high-yielder's and selling the yen, so-called carry trade bets, investors buy high-yielding currencies with funds borrowed in Japan, where the benchmark interest rate is 0.5%.

The yen traded as weak as 115.98 per dollar after the Fed interest rate cut, down 3.9% since it appreciated to 111.61 per dollar on Aug. 17, the strongest since June 2006, as investors exited carry trades.

BOJ kept its benchmark rate at 0.5%, the lowest among industrialized nations and we expect the greenback to continue its recovery against the JPY despite the interest rate differential moving towards JPY favorability.


Technical News

EUR/USD

The weekly chart implies on an upcoming reversal as a bullish channel is observed and the price is currently touching the upper barrier. In case of breach through this barrier we may see an aggressive bullish movement. Today, a bullish flag structure is shown on the 15 min. chart which may indicate an upcoming bullish movement which is also supported by the Slow Stochastic (14). Going long seems to be preferable.

GBP/USD

On the 4 hours chart, the slow stochastic is crossing 89 clearly in over bought territory, which implies on an upcoming bearish trend. There is an opposite head & shoulders pattern which is reflected on the 4 hour chart which also indicates on an upcoming bearish trend. Going short seems to be preferable today.

USD/JPY

The 4 hour chart indicates an upcoming bearish trend when a rising wedge is observed and the pair failed to breach the upper barrier. Forex traders need to pay attention for the 115.46 Fibonacci 38.2% levels because in case of a breakout the next barrier is located at 114.72 which is the lower boundary.

USD/CHF

On the 1 hour chart a falling wedge structure is shown which implies on an upcoming bullish trend however , on the 15 min. a descending triangle is establishing which indicates on an upcoming bearish trend especially if the 1.1802 level would be breached. If this level will not be breached, we expect to a bullish trend to take place.


The Wild Card

Crude Oil

Today we may see the Crude Oil weakening as the bullish trend seems to be out of steam. The 4 hour chart is bearish and the Slow Stochastic is crossed on overbought territory (84) and having a negative slope. Going short seems to be preferable today however Forex traders need to pay attention for a possible 80.80 breakout.
 
20/09/'07 - Historic All Time High For The EUR/USD - 1.4000

Economic News

USD

It was a busy day for currency trading yesterday, as the USD fell to an all-time low against the EUR, however grazed back slightly due to data showing a decline in U.S. consumer prices. The Greenback also fell against the GPB taking it to 2.0173 before declining back to 2.0025.

Yesterday, data coming from the US showed some concerns about the country's economic outlook data such as: CPI, Housing Starts index, and the Building Permits index; the consumer price index surprisingly decreased and pushed lower by 0.1% from the previous month and new home construction strike a 12-year low. The Home Construction Index decreased by 2.6% last month to its lowest in more than 12 years, while building permit activity, a sign of future construction plans, also dropped to a low which has not been seen since mid-1995, Building permits fell 5.9% to an annual rate of 1.307 million.

As it seems at the moment the housing recession may deepen, causing more damage on an already slowing economy, after borrowing costs rose and lenders shut off access to credit, and of course still dealing with the delicate issue of the mortgage defaults which will probably delay the recovery from the worst homebuilding recession in 16 years. The U.S. Federal Reserve announced on Wednesday that it added $9.75 billion of impermanent reserves to the banking system in the course of overnight repurchase agreements and today, the Federal Open Market Committee (FOMC) cut its fed funds target rate by 50 basis points; the first cut in that rate in four years.

EUR

Yesterday's trading day for the 13 nations currency was defined as a quite dramatic day. The EUR climbed up during the early morning hours in Europe to 1.3987 which was a new time high, before it has strengthen back to 1.3956. The EUR is trading at a very important point against the USD. The historic break through the 1.4000 level today might generate some concerns from the ECB, as it rises it can lower exports, mainly to the United States, where the prices for anything from automobiles to steel to consumer goods are more expensive to American buyers, and the ECB would try to avoid this situation. US Federal Reserve Chairman Ben Bernanke and ECB President Jean Claude Trichet are scheduled to speak today regarding those important issues.

The most considerable "ray of light" regarding yesterday's Euro-zone economic data was the German PPI which raised to 0.1%, The rest of the economic data which will be release this week are not very market moving since we only have the Philly Fed survey and leading indicators left on the calendar, and most of the moves will be only technical ones.

JPY

JPY Yesterday, The USD strengthened against the JPY rising to 116.09 from 115.74 after the BOJ, as expected, kept its benchmark interest rate stable at 0.5% and kept its estimations of the national economy unchanged. As it seems for the near future, the BOJ will cooperate with US and European central banks by holding its benchmark interest rate, as it would find it hard to raise rates at the time when U.S. central bank is cutting them.

Currently traders treat the USD/JPY as a less attractive alternative for future investments especially after the US Fed interest rate cut, however tending to the GBP or to other commodities currencies (AUS,NZD) as a substitute may also be considered as a riskier move since those pairs are characterized as extremely volatile compared to the USD/JPY.


Technical News

EUR/USD

The pair breached through the 1.4000 level and is now trading at all time high levels near 1.4040. The hourly studies are showing strong bullish momentum after the physiological barrier, and will probably continue to go up intraday. The daily charts are showing a bearish cross forming, which indicates that on the longer run a correction might be in place.

GBP/USD

The cable is trading in a very unstable and choppy manner in the past few days. The daily studies show a slight bullish momentum and the hourlies show mixed signals with a moderate bearish tendency. It would be preferable to stay out of the cable trading until the smoke clears.

USD/JPY

The pair is in the midst of a very accurate upwards channel, and is now testing the bottom barrier. The oscillators show that a negative breach is quite unlikely, and the daily chart is showing bullish momentum. A preferable strategy might be to go long on dips.

USD/CHF

A very strong breach through the 1.1800 has occurred, and the pair is now trading around 1.1770. The breach indicates that the bearish move has been validated and that the next target price is 1.1740. On the daily chart a bullish cross is starting to form which might indicate that a correction up could be imminent if the cross will validate.


The Wild Card

Crude Oil

The upward channel is showing that the move is nowhere near the end, and is showing a very accurate technical behavior. The Oil is floating at the lower barrier of the channel which provides Forex traders with a great opportunity to establish a great entry point and continue the bullish ride.
 
24/09/'07 - The Greenback Continues to Weaken.

Economic News

USD

The dollar posted its biggest losses through the past week after the Fed dropped its benchmark rate to 4.75%, mainly due to the biggest housing slump which threatens to weaken the U.S economy. The USD fell to a record low against the EUR and tested the lowest levels since 1976 vs. the CAD on speculation that the Federal Reserve will continue to reduce U.S. interest rates. The housing crisis is not over and the Fed is likely to lower interest rates again before the end of the year as the economy comes to a standstill. This week, the USD may extend its losses as reports are expected to show declines in Home Sales, Durable Goods, and Consumer Confidence. The expectations for the Existing Home Sales release currently stand at 5.50M, slightly down from the previous month's figure of 5.75M. On Wednesday, the Durable Goods Orders figure is expected to be released in negative territory at -3.5%, while the core figure is expected to be released at -0.8% which would be a significant drop from last month's figure 3.7%. The consumer data, which includes Consumer Confidence, Personal Spending and Personal Income, is also expected to weaken. On Friday, the Chicago Purchasing Managers' Index will provide traders with a picture of the health of manufacturing in the Midwest and will also be a benchmark for near future trading sentiments.

Although the calendar seems full of major events, it is unlikely that any one event will be aggressive enough to create a shift in market behavior, as the negative momentum on the USD appears to be stronger than ever.

EUR

A surprisingly aggressive Federal Reserve rate cut last Tuesday helped the EUR to reach its all time high against the USD. The European currency has reached the 1.40 level at the end of the last week and is now steadily floating above 1.41. The EUR was also stronger versus the JPY, trading 0.8% higher, testing the 163.00 level. Last week's Euro-zone data showed that the European private sector's growth slowed to a 2 year low in September as major European indicators descended, making any further interest rate hike this year by the ECB unlikely. Signs of instability continued to flow as last week's Service sector PMI in the Euro zone dropped from 58.0 to 54.0, while manufacturing PMI fell from 54.3 to 53.2.

This week is expected to be relatively light on market moving news from the Euro-zone; therefore most price movement on EUR pegged currencies will be derived mainly from the U.S. markets.

JPY

Last week, we saw the Japanese economy slowly sliding into its natural place in the carry trades global system, which is a slow and consistent weakening process. The JPY declined against all the Majors as a decline in borrowing costs and an advance in stocks spurred risk appetite and gave a boost to the carry trade. The Japanese Yen has sold off significantly over the past week dropping 0.7% against the USD and 1.6%, to a 162.64 level, per EUR.

Yesterday, Yasuo Fukuda was elected LDP president in Japan which will formally be introduced as the new PM tomorrow in the Lower House. This was widely expected and there has been no market reaction. The bulk of Japanese data due out this week will be on Thursday, which is when we will see labor market, consumer spending, and inflation data. Most of these numbers are expected to be relatively weak and not likely to help the Japanese Yen.


Technical News

EUR/USD

The strong momentum continues as another all time high of 1.4125 was breached. The pair now consolidates around 1.4110 with a clear intention to continue the uptrend. The hourlies are very bullish, and the dailies are showing the third consecutive bearish cross. Going long might be preferable in the short run.

GBP/USD

The cable is showing a stable up trend that was initiated at 1.9900. The hourlies are showing more room to run and are pointing 2.0350 as the next destination in this specific move. A breach through that level will validate a much stronger move with a potential to reach 2.0450 and above.

USD/JPY

The pair has been trading in a wide range in the past three weeks and showed no distinct direction. The hourlies are showing moderate bearish signals, whereas the dailies are showing a strong bearish move in the making. 114.00 appears to be the next target price.

USD/CHF

After four attempts to breach through the 1.1700 the daily slow stochastic and RSI are showing stronger bullish signals. A bullish cross is forming on the 4 hour chart which indicates that a moderate correction move is quite inevitable. Going long with tight stops might be preferable today.


The Wild Card

Crude Oil

The uptrend is showing no sign of a halt as the upwards channel remains stronger than ever. The Oil is floating on the bottom barrier of the channel which provides Forex traders with a good opportunity for a long entry point. Next target price is around 81.90.
 
26/09/'07 - US Durable Goods

Economic News

USD

The greenback fell to a new all time low of 1.4160 against the EUR on the back of continued aggravation in the US economy. It seems that everybody is selling dollars as the outlook for consumer spending becomes gloomy with each passing day. Consumer confidence dropped to a 2 year low in the month of September when sales of existing homes fell to a 5 year low. The deterioration in the labor markets, tight credit conditions and rising energy prices were the major reason for the last market figures. The drop in confidence and home sales only reinforces the need for the Federal Reserve to continue lowering interest rates. We expect another 0.25% - 0.50% of easing by the end of the fourth Quarter followed by another 50bp before the middle of next year. The next Non-Farm payrolls report is not expected to be "flattering” either. On top of the layoffs that have already been announced in the financial sector, workers at General Motors held their first nationwide strike in 25 years in addition 73,000 workers have been displaced and 30,000 are expected to be fired. If this is not resolved soon, it will have a meaningful impact on non-farm payrolls which will naturally dovetail into further weakness for the US economy which only will weaken the USD even more than it has already. We think that in this case a recession is only a matter of time until we will see it on the statistics figures and the US economy won't be able to avoid this unpleasant situation. Meanwhile the only piece of good news was the Richmond manufacturing index which jumped from 7 to 14 in the month of September to the highest level since April 2006. The manufacturing sector is expected to be one of the biggest beneficiaries of the dollar weakness which is why today's durable goods may not be as bad as analysts are currently predicting thanks to the weak USD which will make the US exports more attractive then ever.

EUR

Economic data out of Europe continues to get worse and if the EUR does not stop rising, the European Central Bank will be forced to take an action and to intervene in the currency. Investors should not forget that the EUR topped out in late 2004 after Trichet called the moves brutal and he may have to do so again as German business climate fell to a 19 month low in September. This is a result of deteriorating credit conditions, a strengthening currency and tight monetary policy. As an export dependent nation, the Euro-zone has a lot to lose if the EUR continues to rise as exporters are already experiencing the negative effects because their commodities are suddenly too expensive, and buyers all over the world prefer the American merchandise to the European.

The only major benefit of a strengthening currency is lower inflationary pressures. We are already seeing the initial impact with import prices falling for the first time in nearly 2.5 years. Less inflationary pressure means less pressure on the ECB to raise interest rates. If we see a material slowdown in economic data, softer inflation may actually give the central bank the flexibility it needs to begin talking about lowering interest rates. This should still be a few months away, but it is a factor that is certainly worth watching. There is not much on the Euro-zone calendar today, but Switzerland has leading indicators due for release which are expected to be weaker.

JPY

The JPY strengthened against a basket of currencies as investors were prompted to diversify away from risky carry trades. Yesterday we saw the release of Japanese Trade Balance which failed to provide any support for the Japanese Yen. The Traded Balance rose from 671.2 bln to 743.2 bln for the month of August and did not affect the market. Tomorrow will be a significant day for the JPY as Core CPI , Overall Household Spending, Industrial Production and Retail Sales are due to be released and all of them forecasted to be better then last years figures which may strengthen the JPY against the majors .

It seems that the Japanese economy is right back on track and traders need to consider the Japanese market as an attractive alternative to invest their money in.


Technical News

EUR/USD

The pair is starting to show the first bearish signals on the daily charts as a double bearish cross combined with and the RSI breach of over 80 are forming. The hourlies support the bearish notion and a correction to the 1.4060 is quite possible.

GBP/USD

The cable is trading in a wide range lately and is showing no significant clear direction. It is now in the middle of a downtrend initiated at 2.0300. The hourlies are showing bearish momentum, as the dailies support the bearish notion. Next target price might be around 2.0080.

USD/JPY

The pair has been dropping for the past week from 116.30 to 114.00 and is now consolidating around 114.90. The sentiment is mildly bearish as the negative momentum on the 4 hour chart is growing. A violent breach through the 114.00 will validate the bearish move and probably take the pair to 113.50.

USD/CHF

After several attempts to break the 1.1640 the pair is showing local bullish momentum and is now trading around 1.1690. The hourlies are showing a bullish cross on the slow stochastic and the RSI is floating around 50 which indicate that the bullish momentum is slowly growing. Next target price should be around 1.1730.


The Wild Card

Crude Oil

There has been a massive breach through the bottom area of the channel in the 4 Hour chart. Oil is now trading at 79.80 and showing the first strong bearish sentiment in over a month. This could be a great opportunity for Forex traders to go short on a very good entry point that has potential to very profitable in the long run.
 
01/10/'07 - Greenback Shows First Positive Sentiment, US ISM Manufacturing.

Economic News

USD

The greenback weakened all across the board on Friday and it closed off the week at another all time low against the EUR. The string of weak US economic data released throughout last week support an additional rate cut by the Fed and this is putting the dollar under pressure. On Friday, the Core PCE Price Index, which measures the rate of inflation experienced by consumers when purchasing goods and services, released inline with expectations at 0.1 %. This data provided a strong indication to the market that although the Fed cut the interest rate significantly to 4.75 % there is still room for a further rate cut because the inflationary pressures are not taking effect yet as there was only a slight increase in consumer prices. Therefore the greenback plummeted on the back of this news hitting all time lows against multiple currencies, particularly against the EUR, as the interest rate differential between the US and Europe is expected to continue to tighten while the growth differential is expected to widen to Europe's favor . The current market sentiment is very dollar bearish as the US economy is expected to expand at a much slower rate than previously forecasted and this sluggish growth forecast has prompted market analysts to believe that the Fed will be forced to cut the interest to 4.0 % in 2008 in order to stimulate growth.

Looking ahead, there will be some key US economic data releases this week kicking off today with the ISM Manufacturing Index and The ISM Manufacturing Prices. These figures may cause some volatility as the Fed is now keeping a close watch on all the indicators to determine its future monetary policy. However, this weeks' trading may be somewhat range bound as the market will begin to shift its focus to Friday's all- important Non Farm Payrolls report. If the US data releases will continue to disappoint this week, than the greenback will remain under pressure as expecations of another rate cut increase while some positive news will provide the greenback with reprieve as the EUR and GBP should be well past their peak.

EUR

The EUR continued on its record setting trend as it closed on a new all time high against the greenback on Friday. The strong EUR may cause serious repercussions for the European Union as their exporters will find it increasingly difficult to compete against the US and Chinese exporters in the global market. Nevertheless, ECB President Trichet is still maintaining a hawkish stance that the strong EUR will not have any serious negative impact on the European economy. However the ECB may have to change its tune very soon as weaker inflation and consumer confidence reports are indicating that the strong EUR is beginning to take its toll on the European economy. Also due to the spreading global credit crisis, that has left a significant imprint on Europe, the ECB is unlikely to raise its interest rate in the near future as it will not want to rock the boat. So in next weeks', ECB monetary policy meeting, Trichet is expected to have a dovish stance in regards to future policy. The EUR should be nearing the end of its bullish run as the strong currency is causing cracks to appear in the European economy and a rate hike in the near future is highly unlikely, however weak US data is preventing a reversal and driving the European currency to new heights.

JPY

Earlier today in the Asian trading session the Japanese Tankan Large Manufactures Index, which measures the business conditions of large manufacturers, released at 23 beating the expected figure of 21. Although US economic growth is slowing, the Japanese business confidence is holding steady near a two-year high as companies are increasing expenditure plans. The Tankan also indicated that large Japanese companies increased their profit and sales estimates for the current financial year. Nevertheless this was not enough to boost the JPY, and on the contrary, the Japanese currency lost ground particularly against the high yielding currencies as a rally in Asian stocks brought back investors risk appetite thereby spurring on carry trades. Therefore the direction of the JPY over the next week is still likely to remain heavily correlated to the Dow.


Technical News

EUR/USD

The pair closed at another all time high of 1.4280, on Friday and is now consolidating around 1.4250. The hourlies are starting to show bearish signals that might indicate a correction. The dailies are showing multiple bearish crosses and proving that it's only a matter of time before the pair pulls back to the 1.40-1.41 levels.

GBP/USD

There was a violent breach through the 2.0400 level on Friday. The dailies are pointing to a target of 2.0600 and are starting to be a bit bearish. It might be preferable to buy on dips as a correction on the hourly level is quite imminent.

USD/JPY

The pair has been trading a wide range for a while now, and is showing no significant direction on the daily studies. The hourlies are bullish and showing potential momentum which might take the pair back to 116.00 soon. Due to lack of a significant trend, traders should consider the pair for intraday trading, and avoid position trading.

USD/CHF

After hitting rock bottom at 1.1620, the pair is showing a slight pick-up to the 1.1660 level. The dailies are showing a very strong bullish cross, and together with an extremely oversold 4 Hour chart the bullish correction move seems inevitable. 1.1700 appears to be the next target price.


The Wild Card

Crude Oil

The massive uptrend continues as can be clearly seen on the daily chart. The slow stochastic is floating at 60, and a double doji formation indicates a further break is close. The hourlies are showing a bullish cross and together with a bullish RSI value provides a great opportunity for Forex traders to resume the strong uptrend.
 
03/10/'07 - ADP Nonfarm Employment Change

Economic News

USD

Since the beginning of the week the Greenback has rebounded after a sharp sell-off, which was prompted by an aggressive Federal Reserve interest rate cut last month and expectations of monetary consolidation. The moderate USD appreciation continues today as investors are seeking more clues on the health of the U.S. economy. Yesterday was also characterized by quite subdued trading as many investors sat on the sidelines before the release of the ISM Non-Manufacturing Index later in the session and the most anticipated and important jobs report this Friday. Last month's U.S Pending Home Sales indicator dropped 6.5%, but the U.S equity markets showed little reaction to yesterday's report. The EUR/USD dropped only 0.3% to 1.4173 at 7:30 a.m. in London from 1.4154 in New York yesterday. But that was no surprise at all. With Thursday's ECB and BOE monetary policy meetings as well as Friday's U.S non-farm payrolls report still due to be released, traders are expecting the news to shed more light on the current U.S economic situation. The ADP Nonfarm Employment Change is on tap today along with the ISM Non-Manufacturing Index. The Non-Manufacturing Index is expected to release at 55.0, just 0.8 points weaker then a previous month's figure. On the contrary, the expectations for the ADP Nonfarm Employment Change release are currently standing at 53K, significantly higher than last month's figure of 38K. Along with the economic data and positioning, market participants have also been taking notice ahead of the G7 meeting.

The following two day are expected to be quite volatile and full of sharp price movements. Beyond the expectations for volatility, Friday's NFP will probably be more important than ever, as the greenback future is still very much unclear. A higher than expected release could be a great beginning for a much anticipated positive sentiment that might pull the US economy out of its dark corner.

EUR

There is a new stage in the EUR - USD complex relationship as Europe urges the U.S to curb greenback depreciation. The European Chief political spokesman added his voice to the list of demanders before the next G7 meeting in Washington, to make a greater effort of stopping the USD collapse. The European Financial leaders are afraid of the impact that high EUR may have on European exports which currently seem to be a vital ingredient in the local Euro economy. The major concern is a future recession in the Euro zone economy, because exporters are pressured to cut their prices on the demand that is coming from overseas consumers that prefer US goods due to the cheep dollar. This is causing the US goods demand to grow at the expense of the European one. We must say that the threat to the Euro zone is derived from future interest rate hike expectations and the ECB is more focused onlocal inflation risks. Today, there is no significant data expected from the Euro zone, when retail sales, German Services PMI are the only releases and both are forecasted to be slightly weaker compared to last month's figure. The bottom line is that an upcoming EUR strengthening is more likely to take place due to the fact that internal economic powers will surely be more significant, than a potential USD application.

JPY

Carry trades are still the name of the game when it comes to Japan and the JPY is going through a neutral period as the price action is quite small in the USD/JPY and the trading range appears to be quite tight. Yesterday, the JPY saw little change against the greenback as it drifted from the 115.30 level to 115.60. It would be quite clear that the calm behavior we have seen from the JPY will not continue, as the packed US calendar will draw the attention of most traders. Today's ADP, the ISM Non Manufacturing, and the Nonfarm Payrolls will no doubt take the USD/JPY out of its latest dead calm.


Technical News

EUR/USD

The pair is consolidating around 1.4150 after the drop from yesterday's 1.4280 and is still seeking direction on the 15 minutes chart. The 4 Hour chart shows that there is still more room for the downtrend and the dailies are sending mixed signals with a slight bearish preference. Testing the 1.4100 level will be a key event for the pair.

GBP/USD

The cable continues to have very choppy trading sessions with no specific clear direction. The volatility range is around 80 pips in width, and the movement is revolved around 2.0400. Both hourlies and dailies are floating on neutral territory, which means that traders must look for the entry point in the 15 minutes chart and try to take short term positions.

USD/JPY

The trading range for the pair is getting tighter every day, and it appears to be looking for the break quite soon. The signals are showing that a break through the 116.00 level will validate the move as bullish, and will probably be strong. A breach through the 115.00 level will still keep the pair in a ranging mode.

USD/CHF

The pair advanced 120 pips in the last 48 hours, and is showing that the momentum is still there although diminishing on the 4 Hour charts. The daily chart is showing that a test of the 1.1800 level appears to be very possible, and a breach will send the pair up further to 1.1830, which is a key resistance and a 23.6% Fibonacci level of the 1.2460/1.1630 move.


The Wild Card

Crude Oil

The breach through the bottom barrier of the channel has created a bearish momentum that seems to have a lot of steam in it. The 1 Hour chart is showing strong consolidation in the 80.20 level, which mean that the further break down could be close. This could be a great opportunity for Forex traders to get into the downtrend on a very good entry point, as it not completed yet.
 
08/10/'07 - The Greenback Sailing Quiet Waters, Columbus Day Halts US Markets

Economic News

USD

Last week's much anticipated U.S Jobs Report didn't bring much relief for the greenback. The USD rose sharply on last Friday, after the Nonfarm Payrolls data showed September U.S. jobs growth of 110K. However, the initially strong rally of better-than-forecasted NFP figures turned into a similarly sharp sell-off for the USD. Since then, the greenback has stabilized and has been trading around the 1.41 level against the EUR. Last Friday's Average Hourly Earnings index released at 0.4% beating expectations of 0.3%. In fact, the latest string of the better-then-expected U.S data is reducing the probability of further possible Federal Reserve interest rate cuts. Now speculators forecast that the Fed will only cut rates by 25 basis points throughout December.

Also on Friday, the Canadian Unemployment Rate released at the lowest rate in 33 years. The Canadian Employment Change index released at 51.1K beating expectations of 16.5K. As a result, the USD has tumbled to a record low against the CAD, falling 1.5% to the 0.9816 level, the biggest drop in 3 years.

Today the U.S financial markets will be closed due to Columbus Day. Low liquidity is expected during the New York session and the USD should continue to range trade at its low levels. During the rest of the week, there is no real market moving news expected from the U.S markets except on Friday, where the US Retail Sales along with the Consumer's Sentiment are due to be released. Looking forward this month, the focus in the market has shifted to an upcoming meeting of finance ministers and central bankers from the Group of Seven rich nations and a Fed policy meeting at the end of the month. As a whole no ground breaking movements are expected to happen this week.

EUR

Last Friday's relatively strong U.S Nonfarm Payrolls data sent the EUR substantively lower against the USD, hitting fresh multi-week low of $1.4032. It didn't take much time for the pair to snap back to earlier levels, indicating the resilience of the EUR as it remained robust throughout the most important news releases of the month. Today, due to the fact the US and Japanese markets are closed, most of the movement will probably emanate from the small amount of news that is expected from Europe. The European morning will start with ECB President Trichet's speech at the breakfast meeting organized by the European Policy Centre, in Brussels. Trichet will mostly discuss future considerations of an interest rate adjustment.

The following releases are expected to come out of the UK today, kicking off with the UK PPI Output and Input figures. The PPI Input is expected to be released at 1.4% which is much higher than last month's -0.5%. The UK PPI Output is also expected to come a bit higher than last month on 0.2% and a previous figure of 0.1%. The second release will be the UK Industrial Production which is expected to rise from a negative territory of -0.1% to positive levels of 0.3%. Other than that it appears that today will be relatively quiet and the entire trading day is expected to be characterized by low liquidity all across the board.

JPY

Last week, the JPY was the only major currency to decline against the USD almost on a daily basis. On Friday the USD rose 0.3%, to a fresh record high of 116.85 vs. the JPY, making it the biggest weekly loss against the USD in more than a year. The Japanese currency has also fallen for the 4th straight week vs. the EUR, losing 0.9% to 165.40. Since the end of the previous week, the JPY continued to lose ground as investors increased Carry Trades under the notion that Asian equities will follow U.S. stocks higher. Currently the JPY is trading around the 117.00 level against the USD and 165.50 against the EUR. Today will be quite a thin trading session for the JPY as there is no news expected from Japanese markets. Later this week, the JPY Interest Rate Announcement will be closely watched, although no change in rate is expected. Therefore, most price movement on the JPY pegged currencies will be derived mainly from European and American markets.


Technical News

EUR/USD

The pair is in stable consolidation around 1.4120 and as the Bollinger bands are getting tighter the next move is getting closer. There is a bearish cross forming on the 4 Hour chart, indicating that the next break will probably be bearish. The daily charts are quite neutral, as traders should look for entry point on the hourly level.

GBP/USD

The cable is in the midst of a moderate uptrend which seems to be in a halt. The hourly charts are giving no distinct signals, and the dailies are floating on neutral ground. It would be preferable to stay out for the moment and wait for a clear signal on the 4 Hour chart be fore placing an order.

USD/JPY

There is a solid channel forming on the 4 Hour chart as the pair now floats on the bottom barrier. The slow stochastic and RSI are showing that the bullish momentum is still strong, and that the next target price might be 117.80.

USD/CHF

The pair is still in the middle of the correction move initiated in 1.1620 and it appears to continue with full steam. The daily slow stochastic is signaling that there is still more room to run. The hourlies are supporting the bullish notion as the RSI is floating around the 50 area, which means that the trend is nowhere near over. The next target price might be 1.1840.


The Wild Card

Crude Oil

There has been a bearish breach through the bottom barrier of the upwards channel. The breach indicates that the correction move will be equal to the channel's width. The oil has completed the correction move, and the daily study show that the main uptrend will probably resume shortly. This is a great opportunity for Forex traders to jump back onto the uptrend at a relatively low price.
 
09/10/'07 - Greenback Gains in Strength Once More

Economic News

USD

A delayed reaction to Friday's non-farm payrolls report as well as the market's expectation for today's FOMC minutes, has taken the US dollar higher against every major currency today. Today's FOMC minutes will conclude the September 18th monetary policy meeting, where the U.S central bank lowered both the Fed funds and discount rate by 0.5% each. The credit market has relatively stabilized since the rate cut and there have been no new outbursts in the financial sector. After the last appreciation of the USD, the FED is not likely to cut rates again. We need to remember that weak USD fuels growth in the U.S economy. In fact, recent economic data including non-farm payrolls could give the Fed the luxury of waiting until December before lowering interest rates again. Towards the end of the week, our focus will turn to trade, inflation and consumer spending. The weakness of the US dollar should help to narrow the trade deficit while boosting inflation. Consumer spending is the biggest potential market mover this week (it is not due out until Friday). The strength of payrolls in September and the upward revision to retail sales in August suggest that retail sales could be stronger than the market is currently expecting. Overall, it seems to be shaping up to be a dollar positive week.

EUR

The Euro is slipping back towards 1.40 on the back of a smaller than expected rise in German factory orders as well as mixed commentary from ECB and IMF officials. Despite the German Economics Minister's comment that he is not losing sleep over the current level of the EUR this morning, recent economic data indicates that as much as some officials may try to deny it, the strength of the currency is indeed having an impact on the economy. French calls for central bank intervention to cut the costs borne by European exports failed to sway Germany's finance minister, Peer Steinbrück, who insisted publicly Monday that he loved "a strong euro." But before a meeting of finance ministers from the 13 countries that use the EUR, Pedro Solbes of Spain underlined concerns about recent volatility that are shared across much of southern Europe. After saying that exchange rates should reflect economic fundamentals, he insisted that efforts to correct the EUR/USD relationship should "not only be made by the Europeans, but by all the parties concerned," according to news agencies. Buffeted by the impact of the subprime mortgage crisis in the United States and facing a projected economic slowdown, concern is growing that Europe is paying the price for problems created elsewhere especially in the U.S. EU ministers are expected to agree today to move ahead next year with a study that could lead to requirements for more disclosure of debt-default risks, as well as revisions on how assets valued. The proposed changes were suggested at an informal meeting of finance ministers in Porto, Portugal, last month following the losses in the U.S. subprime mortgage market. Nevertheless, pressure is growing and the employers' federation BusinessEurope last week complained about the effect on exporters of the euro's high rate against the yen. It added that by crossing $1.40, the euro exchange rate had reached a "pain threshold" for European companies which are seeking a way to minimize their losses . Even in Germany, where a strong currency is seen as a sign of political and economic success, the economics minister, Michael Glos, expressed a sharply different view to that of Steinbrück. "The weaker USD is making us very worried," he said Monday after a speech before the International Iron & Steel Institute in Berlin, "especially if it grows weaker still."

JPY

The Japanese market was closed for a public holiday in Japan yesterday, so there was no economic data released. Today we have the Eco Watchers index but it is not expected to be market mover. The big event this week is the BoE interest rate decision, yet even that may not cause any significant movements in the JPY since there is only a 3 percent change for a quarter point rate hike. Should the stock market resume its rise, we could see fresh gains in carry trades. The dollar could extend its gains against the JPY given the bullishness of last week's non-farm payrolls release when carry trades seemed like an attractive long term investment.


Technical News

EUR/USD

On the 4 Hour chart we notice that the bearish trend is running ahead. The volatility increased and the EUR/USD is in a consolidation after it has broken the 1.4100 resistance level. The price should continue to move downwards in a range of 1.4050 to 1.4000. As it seems, the bearish pressure will continue to gather momentum as well today.

GBP/USD

On the 4 Hour chart, a bullish rising wedge is forming which may imply a continuation of an additional bullish move. It's recommended to time the entrance to the market with short term charts. 2.0300 seem like a strong entry point. At the moment GBP/USD is traded around the 2.0330 /2.0340 range. The volatility is quite low and we should expect the bullish pressure to continue. 2.0400 is now a strong resistance

USD/JPY

The USD/JPY broke the 117.60 resistance and the downtrend is supported by 1 Hour exponential moving averages. The volatility is low and the Bollinger bands are tightened. We should expect to see the bearish configuration continue. The 4 Hour Elliott pattern implies that the USD/JPY will continue to gather momentum. The target price might be 118.00

USD/CHF

Bollinger bands are widened on the daily chart suggesting increased volatility. The daily chart is bearish while the hourlies are bullish. So the preferred strategy may be to go short on 4 hour highs.


The Wild Card

Crude Oil

The daily and the hourly charts both indicate a strong bearish trend. The slow stochastic is crossing with a positive slope. However the momentum and RSI are both indicating under bought levels, so we may see a reversal in the near future. For today the crude oil should continue on its steady slide down. Therefore, Forex traders may find a short position on crude oil very attractive today since there will be a clear opportunity for profit taking.
 
10/10/'07 - Is the greenback rally over already?

Economic News

USD

Yesterday there was not any significant US economic data released apart from the FOMC Meeting Minutes and on the back of this announcement the USD remained relatively firm against most of the major currencies but weakened slightly against the EUR. The FOMC Meeting Minutes did not expose much about what the Fed is planning in the mid-term regarding its policy; however it pointed out that it would cut both the discount and Fed Funds rate to prevent some of the unpleasant effects on the economy that might take place. The Fed rate cut is now expected to be at least 0.5 % and if it is put into effect it could once again shake the greenback. As it stands the U.S. subprime housing crisis is absolutely not over yet and it will not come to an end until 2009 with a total of 150 billion dollars. Although the significant weakness in the emerging markets is due to that crisis the overall global growth remains strong and stable. While the US economy still suffers from the last housing problem, credit difficulty and subprime mortgage complexity, the up coming positive effect is that the U.S. trade deficit is getting smaller as stronger overseas development and a weaker dollar makes U.S. exports more competitive on the global market. Despite that the US dollar might resume its downtrend against the 13 nation currency, due to the fact that the European economy is currently viewed as more diversified and less exposed to the crisis. Towards the end of the month the Fed will make its key interest rate decision which will be closely followed by traders as a further monetary easing will place the greenback under pressure.

EUR

Yesterday, during a conference meeting the President of the European Central Bank, Trichet, implied that the next main issue which will be discussed at the G7 meeting is that of the exchange rates. As it stands at the moment this main issue will mainly concern the Yuan, US dollar and Japanese Yen. Trichet did not suggest that the EUR was one of the problems and this view continues to be supported by German officials.

The most up-to-date observations came from the part of Germany's Finance Minister who unambiguously pointed out that he is in favor of keeping a strong EUR. The impact of the currency's rise persists to be more noticeable in German data than French data, even though the French have been more attentive than the Germans in regards to the current level of the EUR. During the same month, the French deficit actually improved. EUR bears should not expect to get any support from the ECB in the short term.

JPY

Tomorrow at 15:30 GMT the policy board of the Bank of Japan will declare its assessment at the ending of the two-day meeting regarding the issue of Japans key Interest Rate. As it stands, the Governor of the Bank of Japan, Toshihiko Fukui, will most likely avoid raising the interest rate and will leave it on hold at 0.5 percent because deflation remains a constant battle for the Japanese economy. The BoJ's last rate increase occurred in February and as a result of the U.S. housing problem and its negative effect on economic growth the BOJ would like to avoid a situation in which it will raise rates while other central banks are cutting them or keeping them on hold. The market is currently very volatile and it calls for apprehensive monitoring, so the BOJ has to raise its interest rate slowly but surely to avoid incompetent future investment and sustain growth over the long term. However the major global central banks expect the BOJ to possibly look to raise its key interest rates by December, which will provide the fledgling JPY with some support. In the last week the JPY has been on steady downtrend and this is likely to continue today as there are no significant news releases to provide the JPY with some reprieve.


Technical News

EUR/USD

On the 4 Hour chart we see that the bearish trend is still running ahead. There is more volatility on the EUR/USD and there is a consolidation after the pair has broken the 1.4100 resistance level. The price might continue to move downwards a little bit and do a correction in a range of 1.4050 to 1.4000. As it seems, the bearish pressure will continue to gather momentum as well today.

GBP/USD

The GBP/USD broke the 2.0400 resistance level and uptrend is supported by the positive momentum in the 4 Hour chart. The volatility in the GBP/USD is low and the Bollinger bands are tightened. We should expect to see a bullish trend today.

USD/JPY

We can notice negative momentum on the 4 Hour chart, and it seems the pair might continue with the bearish trend. There is a resistance entry level at 117.50, and in case the pair breaks this level it is a very strong buy signal.

USD/CHF

There is high volatility in the USD/CHF, and we can see it by the wide Bollinger bands in the 4 Hour chart. We also see that this Stochastic Slow is crossing deep in oversold territory indicating a strong possibility of a reversal.


The Wild Card

Gold

Gold broke the 740.20 support level, and it is in an uptrend supported by the 1H exponential moving averages. The volatility is high, and the Bollinger bands are wide. Today, we expect to see a bullish configuration. The target is 741.55. This provides Forex traders with a great opportunity to go long on a very healthy uptrend.
 
11/10/'07 - Japanese Interest Rate, US Trade Balance, Import Price Index

Economic News

USD

Despite appreciation which the dollar experimented over the last days it changed its direction after the publication of the Meeting Minutes of the FOMC, from September 9. Yesterday, there were no important news events in the US ,however today we expect the Trade Balance, which measures the difference in value between imported and exported goods and services, and the forecast is a little down from the last figure of -59.3B .Thus ,we foresee an anxious trading day brewing . At the same time, The Import Price Index is due to be published, which is supposed to come up at 1.0% leaving negative territory of -0.3% that may have a positive influence on the USD ,and also at 12:30 GMT The Unemployment Claims is expected to released at 315K with a previous figure of 317K as traders hope to get a "message" from the US economy regarding jobs employment which may have implications on a possible recovery of the economy after the last strong NFP which some analysts translated as a signal of the USD recovery that will start the appreciation of the Greenback against the majors and especially against the EUR .

Later on, we have the Crude Oil Inventories and after all the data traders will expect to hear an implications on the future monetary policy from the Fed Governor Kroszner .

EUR

Despite weakening economic data ,ECB President Trichet which has been pressured to initiate actions for restraining the EUR level for Euro zone exporters, has not changed his monetary policy stance or expressed any concern about the level of the EUR. Instead, in his speech this past weekend, he simply credited the central bank for their decisive and active response to the recent market turmoil. Now that the earning season is beginning however, the central bank head may not have any choice but to recognize the damage that the EUR is having on corporate profitability. Last week, European Aeronautic Defense and Space Company said they stand to lose 1 billion EUR for each 10 cent drop in the USD against the EUR and we are sure that they are not the only ones feeling the pain. Over the past few years, European companies have become more adept at hedging currency risk, but most of these companies probably did not expect the EUR to break 1.40 and head towards 1.50. Many companies will be blaming their losses on exchange rate fluctuations. In terms of economic data, even though Euro zone manufacturing PMI remained unchanged, activity slowed in both France and Germany. Switzerland has been experiencing a more material slowdown even though the central bank remains optimistic. Despite a weakening currency, the country has been hit hard by the global financial turmoil. Swiss consumer prices are due for release tomorrow and forecasted to be weak comparing the last figure which may start a decline of the CHF and should boost inflationary pressures that with no doubt will effect the EUR as well .

JPY

Normally it is difficult to get surprises from the BOJ and today proved to be a normal day with the BOJ committee voting 8:1 to retain an unchanged policy for the ninth consecutive month, keeping the interest rate at 0.75% causing the current JPY reduction against major currencies . The decision will enable the Bank to observe the recovery in the credit markets and also that of the U.S. economy on which Japanese exports have a sizeable exposure. Fukui is likely to maintain the same statement in his press conference later today, confirming a gradually improving economy and that inflation will soon re-emerge. However, his argument is wearing thin. As given his desperate wish to normalize rates, this is consecutive ninth month of no change and that in itself emphasizes the fact that not all is well, and certainly the central expectations of the BOJ have not developed. Seven of these meetings were before the market turmoil which resulted in credit tightening and since then global conditions have worsened and therefore cast significant doubts over whether the Japanese economy can break out of its 17 year doldrums. The Japanese market has started to show impatience as no action is been taken in favor of handling the current turmoil and the credit crisis. Unadjusted Current Account Surplus which registered a solid 42.1% YoY gain in August. While it is below forecasts of 49.8% it still marks a large gain over the earthquake depressed July numbers at +4.5% YoY. Further moderation was seen in Japan's money supply with M2+CD in line with forecasts at +1.7% and down from August's 1.8%. Only Trade Balance which came in at JPY 892.2 bn and above forecasts of 854 bn was positive in the last figures however this tends to reflect the resumption of shipments following the delays caused by the Niigata earthquake in July. Broad Liquidity rose by 4.1% ,which actually is a good sign however, the shrinking in money supply is consistent with the recent slowing in the economy and the major apprehension is a delay reaction which may cause a serious damage to the Japanese economy. Bottom line ,it is clearly reflected in the market reactions that carry trades are back on track and a consistent appreciation of the high yielding currencies among the JPY is expected.


Technical News

EUR/USD

On the 4 Hour chart we notice that the bullish trend is running ahead. The volatility has increased and the EUR/USD is in a consolidation after it has broken the 1.4160 resistance level. The price should continue to move upwards in a range of 1.4180 to 1.4210. As it seems, the bullish pressure will continue to gather momentum as well today.

GBP/USD

The GBP/USD is in a bearish configuration, as the volatility decreased. The pair moves without a trend and swings around exponential moving averages (EMA 50 and 100). Bollinger bands are tightened and the 4 Hour Elliott pattern implies a continuation of the bearish pressure.

USD/JPY

The massive uptrend 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 117.50 and if it will be breached than it will probably validate the moves' length towards 118.50 levels.

USD/CHF

The pair is heading down and is now at 1.1798. The next key level is 1.1750. If a break through that level will occur, we might see a much bigger move been validated. If the pair will be shy of a breach it will constitute a great entry point for a long position.


The Wild Card

Crude Oil

Over the past two weeks there has been an extremely accurate upwards channel on the daily chart, although for the last few days the Gold is floating around 730 - 740 levels. The next significant resistance level is around 745.50 which provide Forex traders with a great opportunity to jump in to this massive uptrend with large momentum still steaming.
 
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