Forexyard Analysis

[forexyard]

13/02/'08 - US Retail Sales On Tap.

Economic News

USD

The greenback drifted lower against the EUR and the GBP yesterday ahead of today's much anticipated Retail Sales report, which is expected to disappoint and therefore increase speculation that the U.S economy is headed towards a recession. It is highly unlikely that the Retail Sales figure will surprise on the upside amidst a slowing U.S economy, so traders already began to short the dollar yesterday ahead of today's report. There were no significant economic indicators released from the U.S yesterday, however there was some major market moving news as billionaire investor Warren Buffet offered to take a $800 billion state in municipal bonds guaranteed by troubled MBIA Inc., Ambac Financial Group Inc and FGIC Corp. in his attempt to control approximately 33% of the debt insurance market. This news bolstered U.S stocks as there was speculation that this move would ease credit markets and help prevent a slump in the value of municipal debt. Therefore it was not all doom and gloom for the greenback as it did manage to rally sharply against the JPY on the back of this news, due to the resulting momentary resumption of risk appetite among global investors. On the other hand this willingness to take risks among investors due to some real positive market news was another major reason why the greenback depreciated against the Sterling and the EUR yesterday. Since the interest rate gap between the U.S and Europe has widened substantially in recent weeks and so it now makes the greenback susceptible to carry trades. Also the dollar gains against the JPY were cut short as investors concluded that the so called “Buffet Plan” was insufficient to relieve the grey cloud surrounding the U.S economy.

Today, the only important data from the U.S will be the Retail Sales headline and core figures. Analysts expect a downside surprise amidst a slowing U.S economy and much of this speculation was already incorporated into yesterday's dollar slide. However, should Retail Sales drop far beyond expectations then this will throw the dollar back to the bears, any other outcome will result in a greenback consolidation after yesterday's sharp decline.

EUR

There was positive news yesterday for the EUR as both the German and Euro-zone ZEW Economic Sentiment released better-than-expected. These figures measure institutional investor sentiment and the monthly indicator reflects the difference between the share of investors that are optimistic and the share of investors that are pessimistic. Now although both the German and Euro-zone ZEW figures are still negative indicating that the share of pessismism outweighs the share of optimism, yesterday's figures nevertheless indicated an improvement in sentiment because there is declining pessimism. Therefore the EUR rallied against most of the majors, particularly versus the USD and the JPY on the back of the so called “Buffet Plan”. Also the negative speculation surrounding the greenback ahead of today's U.S Retail Sales report was another key contributing factor in the EUR's sharp rally versus the greenback. The EUR's rally versus the JPY was eventually capped as investors concluded that the “Buffet Plan” was not enough to remove the negative sentiment surrounding the U.S economy. Nevertheless, the EUR was able to maintain its gains versus the troubled U.S currency which faces another difficult day today with the looming Retail Sales figures.

Looking ahead to today, there should be more positive news for the EUR as Euro-zone Industrial Production is expected to release at 0.5%, which is significantly better than the previous figure of -0.5%. Therefore this is a very positive indication for the European economy as high levels of production are signs of a strong economy. So although the German economy is heavily reliant on exports, the Euro-zone economy is still showing resilience despite the strong EUR. We expect the EUR to continue its rally against the greenback today but much depends on how the U.S Retail Sales figures release.

JPY

The JPY declined all across the board yesterday after Warren Buffet's plan to shore $800 billion worth of municipal debts. This news sparked a risk appetite among investors and therefore carry trades were back in full swing, albeit temporarily. The JPY managed to recoup some of its losses as investors realized that this move was not enough to change the current negative sentiment surrounding the global economy. Earlier today during the Asian trading session the only news released from Japan was the Current Account and the CGPI figures. The Current account came in at 1.86T, which was slightly below the previous figure of 1.90T but still very strong. The CGPI figure, which measures the rate of inflation experienced by corporations when purchasing goods, released at 3.0% which was noticeably better than the forecasted figure of 2.7%. The JPY should continue to rebound today as risk fear resumes it's strangle hold on investor sentiment as the market now moves forward from yesterday's positive news. So with the outlook for the global economies remaining bleak, carry trades should continue to unwind and the JPY should maintain its positive momentum although a JPY level below 106.00 versus the greenback could dampen Japanese exports dramatically.

Technical News

EUR/USD

The daily chart indicates a relatively high bullish momentum as the slow stochastic is floating around the 50 level. The 4 hour chart is supporting the bullish notion yet it might be preferable to wait for a significant break above the 1.4600 in order for the next move to be validated.

GBP/USD

There is a very distinct downwards channel forming on the 4 hour chart as the cable now floats in the mid section of it. The momentum is locally bullish, and traders must wait for a breach beyond the upper level of the channel at 1.9620 in order for the correction move to be fully validated. A failed breach will keep the cable floating within the channel in a mild bearish movement.

USD/JPY

The flat tight range is still in place, as the pair is showing very weak bullish momentum within the range. The Bollinger Bands are very tight on the daily chart which indicates that the break can't be very far away. The slow stochastic has a positive slope which might imply that the break could be beyond the 107.60.

USD/CHF

The bullish momentum is slowing down and the pair now consolidates around 1.1020. The daily chart is giving mixed signals, and the tight Bollinger bands and the doji formation are implying an upcoming strong move. The direction of the move is still vague, and traders are advised to hold for the break and swing into it.


The Wild Card

Gold

Gold is being traded within a very distinct channel on the daily chart, and is now floating at a strong key point of the bottom barrier. forex traders are advised to wait for a break beyond the 899.00 which will validate a sharp dropping move that might take gold prices into a deep abyss.

 

[forexyard]

14/02/'08 - US Trade Balance and Unemployment Claims on Tap

Economic News

USD

The USD continued to rebound yesterday after a surprising gain in January Retail Sales suggested consumer spending was holding up. Retail Sales increased 0.3% last month, following a 0.4% drop in the prior month. Government data showing higher Retail Sales in the month of January - diminished economists' expectations for a decline in the greenback. The report was also a surprise for investors because it followed a weak January jobs report and shrinking service sector numbers, which normally acts as an early indicator to sub par Retail figures.

Yesterday's data pushed the greenback primarily against the JPY, while against the rest of the major currencies such as the EUR and GBP, the USD remained relatively unchanged. Traders continue to scale back positions ahead of today's' testimony by Fed Chairman Ben Bernanke. The Federal Reserve Chairman may signal more rate cuts in the near future, as the last few days of bullish dollar behavior may only be a glitch in the bearish dollar trend that has existed for most of 2007 and 2008. Based on Interest Rate Futures, markets are expecting the Fed to reduce its benchmark interest rate to as low as 2% this year, although expectations for another 50bp rate cut have decreased. The market is now pricing in a 68% chance for 50bp cut, down from yesterday's 80%.

Today, the greenback's momentum may continue as all attention will be focused on the U.S. Trade Balance, Unemployment Claims data and Fed Chairman Bernanke's speech. We may see the greenback extend its gains across the board if the U.S. news surprises on the upside but it may also retreat slightly as the current market sentiment seems to be that the recent USD rally is running out of steam.

EUR

After developing a small rally for 3 days running, the EUR lost ground against the USD on the back of weaker Euro zone Industrial Production and stronger U.S. Retail Sales numbers yesterday. The EUR was down 0.1% at $1.4569 after hitting a session low at $1.4534.

The unexpected increase in Retail Sales, helped ease fears of an economic slowdown in the U.S., placing some additional pressure on the 15 nation currency. The European market was looking for Industrial Production to accelerate in the month of January, but instead the indicator printed at -0.2%, far below the forecasted 0.5%.

Today, we await the release of the GDP data from Germany and France. Both of the figures are expected to drop, further dragging the EUR down. Today's price action could be critical in determining whether the retreat this week is a correction or a larger rebound in the greenback. Also the ECB President Trichet is expected to deliver a speech later today in Spain. The speech will be closely followed by investors for hints on future ECB monetary policy. Today, we may see the EUR extending its losses against the USD if the U.S. news will indeed surprise on the upside.

JPY

Yesterday, the JPY dropped to a one-month low against the USD after U.S. government data showed an unexpected rise in Retail Sales last month, easing concern that the biggest economy will slide into a recession. On its way down, the JPY reached a low of 108.37 before easing to 108.10 by the end of Tokyo session yesterday.

Carry trades unwind resumed yesterday as the Japanese GDP figure rose to 0.9%, after growing only 0.3% through the previous quarter. On the other hand, The GDP deflator, a broad measure of prices used to derive real growth from nominal, fell 1.3% from a year earlier, the biggest drop since 2006.

Today the Japanese economic calendar is barren of any scheduled events. Forex traders should keep an eye on the economic events around the world, as today could prove to be very volatile.


Technical News

EUR/USD

The pair is consolidating around 1.4570 with a moderate bullish momentum. The 4 hour chart is still bullish and the daily chart indicates that there is still room to run. 1.4590 is a key Fibonacci level which if breached will validate the next move up with a target of 1.4650.

GBP/USD

The 4 hour chart is showing a very strong uptrend with increasing momentum. The 1.9650 level was fully breached indicating that the bullish momentum will continue to grow locally. The daily RSI is floating around 50 which indicate that on the longer run we might see the trend reach 1.9850 as a valid target price.

USD/JPY

The much anticipated breach through the 108.00 has occurred, as the pair now heads up north. The positive slope on the daily slow stochastic strengthen the notion that the bullish momentum is about to grow. Being on the buy side appears to be the right choice today.

USD/CHF

The pair maintains the bullish move with a diminishing momentum. The daily chart is indicating an upcoming bearish with a potential to bring a bearish correction move. The 4 hour chart is still bullish which make the selling on high strategy quite feasible today.


The Wild Card

Gold

The massive uptrend continues with full momentum as Gold is now regaining energy for the next move on the daily channel. All oscillators support the bullish notion and this could be a great opportunity for forex traders to enter a very intensive uptrend with no intentions to stop.

 

[forexyard]

18/02/'08 - Will The Dollar Continue to Slip This Week?

Economic News

USD

The greenback slipped all across the board on Friday as a host of negative U.S data increased speculation of another Fed rate cut in March and was another strong indication that the U.S economy is heading towards a recession. The main driver of the dollar slide on Friday was the soft Consumer Sentiment figure which released at 69.6, well below the expected figure of 76.0. This was the lowest Consumer Sentiment figure in 16 years, indicating that U.S consumer spending is in a sharp decline and this once again sparked recession fears. The U.S currency gained some ground against the majors towards the beginning of last week but its positive momentum quickly reversed on the back of growing recession fears. There was more bad news for the greenback on Friday as the Empire State Business Conditions Index, which measures the general business conditions of manufacturers in New York State, released in negative territory signaling a sharp contraction in the level of general business activity. Also the U.S TIC Report, which measures the monthly difference in cross-border foreign and domestic purchases of long-term securities, came in well below expectations thus indicating that the demand for the greenback has declined drastically. All this negative data would now justify another rate cut by the Fed and as long as the U.S economic indicators continue to disappoint, the greenback will remain under pressure. Looking ahead to today, low liquidity is expected during the New York trading session as U.S banks will be closed in observance of President's Day. Therefore, the greenback should trade relatively flat, especially since there is also no major market moving news expected from Europe or Asia. The next key U.S data release will be the NAHB Homebuilders Survey on Tuesday, which should give forex investors an indication as to how the struggling housing market is reacting to the string of aggressive rate cuts by the Fed. The short term outlook for the greenback remains grim as investors are now betting on a 0.5% rate cut at the next FOMC meeting.

EUR

The EUR continued to gain ground all across the board last week, in particular against the greenback and the Sterling, as expectations of a rate cut by the ECB all- but diminished. ECB President Trichet emphasized that the problem of inflation is of greater concern than growth thereby eliminating any room for a rate cut in the near future. Now although the strengthening EUR has been dampening exports, the Euro-zone economy has remained resilient. So with the Fed and the BoE expected to continue slashing rates, the EUR is now in the driver's seat among the basket of major currencies and it is likely to target new highs in the near future. The only way that the EUR bubble will burst is if Euro-zone growth begins to show signs of a significant slowdown that would eventually force the ECB to lower rates.

There is no real significant Euro-zone news expected today or tomorrow, so the EUR should be able to maintain its bullish movement. The short term outlook for the EUR remains bright as speculation of further rate cuts in the U.S and the U.K is resulting in the EUR being favored by global investors.

JPY

The JPY fell sharply last week as carry trades were back in action on the back of Warren Buffet's offer to shore up more than $800 billlion worth of municipal debts. However this carry trade reversal was only temporary and as the market digested this news of the “Buffet Plan”, the JPY climbed back onto the bullish wagon because global economic uncertainty continued to heavily weigh down on investors and risk aversion once again seized the financial markets.

The most significant news from the Japanese economy last week was the Interest rate Announcement by the BoJ on Friday. The BoJ kept its key benchmark rate unchanged at 0.5%, which is one of the lowest interest rate levels in the world making the JPY a carry trade favorite. BoJ Governor Fukui stated on Friday that the BoJ will assess the downside risk to the economy more closely as global financial markets have continued to display signs of instability and the global economic outlook is still uncertain. However the Japanese economy is still on the recovery path and it seems that the BoJ intends to resume its interest rate adjustment as economic circumstances permit it to do so. Therefore the JPY should be able to maintain its bullish momentum in the near term, especially if the global economy continues to slowdown sparking further risk aversion.


Technical News

EUR/USD

The key Fibonacci level of 1.4660 was breached on the 4 hour chart indicating that locally the momentum is still strong. The daily chart is showing a bearish cross forming on the slow stochastic which implies on a possible bearish correction if validated. Taking positions for the short term might be a preferable strategy today.

GBP/USD

The cable is showing renewed bearish momentum within the bearish channel. The daily RSI and slow stochastic are floating at the 50 level which implies that the bearish move might be relevant on the daily level as well. Next target price might be 1.9500.

USD/JPY

After the much anticipated bullish break failed to touch 108.50, it appears that range trading might continue this week. The 4 hour chart is moderately bullish, and the daily RSI is showing a positive slope. Buying on dips might be the right move this week.

USD/CHF

After another failed attempt to break the 1.1100 it appears that the bearish momentum is back. The 4 hour chart is showing strong bearish momentum and the daily chart supports the notion. Next target price might revolve around 1.0900 on the first move.


The Wild Card

Crude Oil

The strong bullish bonanza appears to continue with no signs of a halt. All oscillators are indicating that this bullish trend will continue, and the daily is showing that Oil is ignoring all bearish cross on the slow stochastic. This is great timing for forex traders to swing in while the momentum is still high.

 

[forexyard]

19/02/'08 - Will the FEDs Cut Again?

Economic News

USD

U.S. traders were off yesterday celebrating Presidents Day and there was no news or economic data to drive the market. By the end of the trading session, the USD was up 0.4% against the EUR, mainly as a result of position unwinding. This week, inflation will be in focus as the U.S. consumers expect the rise in food and energy prices. Although the greenback edged higher yesterday, analysts estimate that the U.S. data releases may keep the pressure on the currency this week. Bernanke's remarks and recent economic data have left investors betting on another half percentage point cut at the central bank's March meeting. Futures contracts on the Chicago Board of Trade indicate traders see 74% likelihood the Fed will lower its benchmark rate by 0.5 %point at the next FOMC meeting. The rest of the bets are on a 0.75 % point reduction. Today, the U.S economic calendar is relatively tame with only the National Association of Home Builders (NAHB) data providing any meaningful guidance to traders. NAHB index is measuring the demand outlook of single-family home builders. Also, during the day, Minneapolis Fed President Stern is scheduled to speak about the U.S. economy at the Financial Planning Association of Minnesota. Traders scrutinize his speeches closely for clues regarding future monetary policy. Traders may expect little major action in the U.S. currency till tomorrow, when the CPI report, Housing Starts and FOMC Meeting Minutes will be released. Overall, we expect that bearish dollar sentiment will persist during the rest of the week.

EUR

With the absence of data coupled with the U.S. holidays, the EUR held broadly in a range yesterday. Overall the EUR/USD traded with a low of 1.4612 and a high of 1.4688 before closing the day at 1.4654.

Meanwhile, there are more comments coming out of the ECB, which confirm the market's belief that the Central Bank is growing less hawkish. The ECB member Liikanen, said that the European growth will likely fall below 2% this year due to weakening sentiment and the ongoing financial turmoil. Currently, the market is pricing in between 50 to 75bp of interest rate easing by the ECB this year. But the biggest story in the European financial market yesterday was the British Prime Minister's announcement that the government will be temporarily nationalizing Northern Rock, one of the top 5 U.K. mortgage lenders. The decision has triggered a wave of GBP selling. The British Pound dropped to $1.9490 yesterday, from $1.9612 late on Feb. 15. It also fell to the lowest level in two weeks against the EUR. There is no Euro zone economic data due for release till tomorrow, when we expect German Producer Prices Index. Today, the EUR should continue to gain on speculations that the Fed will probably cut its benchmark rate at the next FOMC Meeting.

JPY

The JPY depreciated vs. the USD yesterday as the pair tested offers around the 108.30 level and was supported around the 107.75 level. The Bank of Japan monthly report echoed the same tone held by BoJ Governor Fukui last week. The report talked about the ongoing slowdown in the U.S. economy and its potential impact on the Japanese economy. The JPY also declined against the USD after Japan's former top currency official said the economy may enter a recession for 1 or 2 quarters this year. Also yesterday, the Tertiary Industry Activity Index deteriorated in the month of December, led by a sharp decline in retail activity.

The Japanese economy continues to be extremely sensitive to global demand and the interest rate policy will remain dormant until the BoJ sees concrete signs of improvement. Ironically, negative news on the global economic front will likely lead to a strengthening of the Japanese currency while positive news will drive the JPY lower as carry trades dominate flows. Today, the only news to come out of the Japanese financial market is the Monetary Policy Meeting Minutes. The Bank of Japan Meeting Minutes is a detailed record of the bank's Interest Rate meeting held about one month earlier. This indicator is of quite a minor importance, therefore today, most price movement of JPY pegged currencies will be derived from the U.S. and the European financial data.


Technical News

EUR/USD

The pair is showing strong bullish sentiment again, and has made a relatively fast move that topped at 1.4710. The 4 hour chart is bullish and the slow stochastic is pointing to a strong bullish momentum. Next target price is 1.4750.

GBP/USD

After several failed attempts to breach through 1.9480, it appears that the cable is showing some bullish signals with increasing momentum. The bullish cross with the positive slope on the 4 hour chart strengthens the notion that a move back to 1.9600 is quite imminent.

USD/JPY

The consolidation around the 108.20 level has ended, and the pair is showing strong bearish momentum again. It appears that the bullish breach above the range was not validated, and that range trading might be the name of the game. Taking short term selling positions might be the right move today.

USD/CHF

The 4 hour slow stochastic is showing a strong bearish cross, as the pair already started to drop. Both daily and 4 hour chart are showing plenty of room for the bearish trend, and a touch at the 1.0900 might be very possible today.


The Wild Card

Crude Oil

The pair has been going through a very strong bearish trend in the past month, and has been showing some consolidation lately. The daily chart is showing a bearish cross on the slow stochastic, and together with the negative slope on the 4 hour one, it could be a great opportunity for forex traders to get in a short position, before momentum increases.

 

[forexyard]

20/02/'08 - Core CPI On Tap

Economic News

USD

Yesterday's trading session was characterized by low volatility due to a lack of any significant economic news events. As a result, the greenback saw small losses as it range traded against its major currency rivals. In U.S. share markets, a more consistent trend of bearish behavior took place as the NASDAQ fell by -15.60 points (-0.67%) whilst the Dow Jones was also down by -10.99 pts (-0.09%). Crude oil floated close to $100 a barrel last night, rising by just under $5 a barrel which contributed to the dollar's mild reduction yesterday. The release of the NAHB homebuilder confidence index yesterday surprised the market by rising for the second straight month, though the figure is still below standards as it creeps towards lows seen last in the US recession of 1991. Looking ahead to today's basket of US economic events, the 13:30 GMT release of Core CPI is expected to show at 0.2%, equaling last month's result. Housing Starts figure, also to be released at 13:30 GMT are forecasted to return at $1.01 Million also on par with last month's number. Building Permits are expected to return with identical numbers to last month's 1.05 Million dollar figure. Wednesday's US calendar will be wrapped up by the 19:00 GMT release of the FOMC meeting minutes as volatile conditions can be expected. The FOMC meeting is generally a good source of information regarding future polices regarding the dollar and interest rates. The January 30 FOMC meeting called for a vote regarding a 50bp rate cut for the dollar. If the aforementioned figures meet their expectations, Forex traders may interpret it as a positive sign in a relatively gloomy period for the US economy. In other dollar related news, ten-year bond yields rose overnight to a one-month high of 3.90% on inflation fears; a strong reading could threaten technical resistance by around 4% and open the door for a sharp move toward higher long-term interest rates around the world. Usually when a sharp positive movement in bond yields is expressed, the market atmosphere can be characterized as uncertain as traders could begin to seek low risk investment alternatives.

EUR

The latest trends in Forex trading hint toward a strengthening of the EUR ahead of expected Inflation reports. The EUR saw a small boost versus the dollar, as the often traded pair stayed above the 1.47 key level. The Euro zone, along with the rest of the world's economies has been affected by a recent rise in food and energy prices. The futures market is currently pricing a EUR interest rate cut by 0.5% to 0.75% for this calendar year. As such figures have added to speculation regarding ECB interest rate policies, one of the main reasons why the European Central Bank has refused to cut interest rates is the growing inflation pressures on the Euro zone economy. Today, their ongoing hawkish stance may be validated by the German producer price report (PPI), which is forecasted improve by 0.4% compared to last month's figure. As this is the only scheduled event on the European calendar, expect most of the EUR movement to come as a response to today's US data.

JPY

Since the beginning of February, the Yen crosses have been trapped within a wide trading range, making those involved in carry trading struggle to properly define the overall market outlook. Volatility in the financial markets continues to be very high, which has made it very difficult for carry trades to recover from last month's poor showing. Investors should expect this situation to continue as the US economy is not reflecting any signs of stability in the near future. The Japanese economy has found itself once again in its own recession scare, after most investors thought that Japan's economic recovery was completed. Yesterday's monetary policy meeting minutes touched upon Japan's wariness regarding downside risks from the US.

Today see's two scheduled events from the Japanese economy. At 23:50 GMT we will see the release of the All Industries Activity Index and Trade Balance figures. Both are expected to see mild improvement, as it could help put a positive spin on JPY forecasts. Still, the key Japanese event will come on Friday, when BOJ Governor Fukui is expected to clarify the current status of Japan's economy and where it's headed in the near future.

Look for the JPY to continue range trading today, as it will be most affected by today's basket of US economic events.


Technical News

EUR/USD

The pair breached the 1.4720 level which validated the next bullish move, as we now see a consolidation around that Fibonacci level. It appears that the pair is accumulating momentum for the trend which might be expressed in a moderate bearish correction. Buying on dips might be a strong strategy today.

GBP/USD

The 4 hour chart clearly indicates that the bearish trend has not yet said its last word. The slow stochastic is showing a classic positive slope structure which indicate on an upcoming increasing momentum. The daily chart supports the bearish momentum, as no clear reversal cross is in sight.

USD/JPY

The familiar tight range we have seen the pair traded in, continues uninterruptedly. The main difference is that we now see the pair floating in a slightly wider range and with moderate bullish momentum. It would probably still be recommended to stay out of this one until a strong and distinctive signal will appear.

USD/CHF

There is a very interesting wave pattern forming on the 4 hour chart, as the pair now initiated the second bearish move within the formation. Together with relatively strong bearish momentum on the slow stochastic, it appears that 1.0880 might be a valid target price.


The Wild Card

Crude Oil

After spiking to the very impressive $100 level, it seems that Oil is the center of forex trader's focus today. The inability to breach that level violently, together with many bearish indications by various oscillators is strengthening the notion that a sharp correction move is quite imminent. Going short with tight stops and limits might provide high profit potential.

 

[forexyard]

25/02/'08 - Existing Home Sales On Tap

Economic News

USD

The last few weeks have been characterized by Dollar negativity and even despite small gains last week look forward for future downwards pressure on the USD. A major concern has become the severity of the problems in the US economy and how the Fed can solve such issues to bring some stability to the failing dollar. Last week's data from virtually every economic sector in the US reflected the growing instability in what once was the benchmark of global economies.

The Fed's main intervention has been its monumental cuts in US interest rates, as they have been sliced 225bp over the last 7 months. Today's Existing Home Sales index should give us a good measure of how well it has worked. With lower interest rates, the housing market should expect to see a boost; however expectations have the index down 1.8% to 4.8M. Some felt the rate cuts would spur on new buyers in the market, specifically low income buyers who wouldn't necessarily be looking as hard if it weren't for the combination of low prices and low interest rates.

With the dollar already at dangerously low levels versus the major currencies to start the week, any more negative data will likely drive the dollar to record lows versus the EUR and a handful of others. Remarkably, the greenback has pulled itself out of such holes in the recent past, climbing from record setting lows to the EUR to storm back under 1.45. With the week set to see forecasted drops in Durable goods, GDP, Chicago PMI, personal income and spending as well as what will likely be negative comments from several Fed Governors, the dollar looks set to make a slight bearish push before Fed Chairman Ben Bernanke's Wednesday remarks. Generally Bernanke does enough to reassure dollar investors to push the legendary currency back up to more respectable levels, regardless of the overall negative outlook on today's US economy. Look for a falling dollar before pressure from Commodities prices drives the greenback up before weeks end.

EUR

The EUR finds itself in excellent position this week to make historic gains versus all of its major currency rivals, namely the US dollar. EUR/USD begins the week well over 1.48, as we wait what is being forecasted as a strong Euro-zone economic news week. Amidst the deceleration of global economies, the Euro-zone has managed to string together a set of positive data, allowing it to make extra strides versus its most competitive rivals. Last Friday's early release of growing Manufacturing and Service PMI should be enough to push the European currency into bullish trends throughout the week.

Today at 18:50 GMT, we expect a speech by European Central Bank (ECB) President Jean-Claude Trichet, at the New Year's Reception for Asia-Pacific, in Frankfurt. He will more likely than not, map out what we already assume to be a strong week for the EUR. Trichet's hawkish monetary policy has not changed and has allowed a continuation of EUR strength in the currency market. Investors should expect consistent bullish movement from the EUR across the board this week, as no change in policy and or interest rate should be expected in the near future.

This week we will continue to see what is forecasted already as positive data from the retail sector, namely sales and PMI. Unemployment and CPI numbers, followed by the German IFO report will shape the list of significant economic events from the Euro-zone this week. With slowing markets and under achieving US economic data, the bullish EUR will be a force to be reckoned with.

JPY

The trading week opened today, with a decrease in the JPY against 15 of the 16 most actively traded currencies. A large part of this is due to the resumption of carry trading due to rising stock prices around the world. Investor returns to higher-yielding assets funded with loans from the Japan restarted itself on Friday of last week. As commodities and stock prices charge upwards, the JPY will should see acceleration in the bearish trend.

The week ahead we expect a set of key Japanese data, a rarity in the often dominating European/American relevance of economic data. Retail Sales, Industrial CPI and Overall Housing spending highlight a busy week for the JPY. Still though, with the rising volatility seen toward the end of last week, expect the JPY to make most of its movement in response to US economic data, as has been the case over the last several weeks.

Today we can expect annual CSPI numbers at roughly 23:50 GMT, though it should contribute significantly to JPY movement, expect the JPY to recover from its bearish opening to the week.


Technical News

EUR/USD

The bullish channel continues with strong momentum as the pair now floats around 1.4828. The slow stochastic on the 4 hour chart is floating around 50 which indicates that the bearish signal is in place. The RSI is forming back into bullish formation and supports the general notion. Next target price might be 1.4883.

GBP/USD

The cable is going through choppy sessions within a wide range with no distinct direction in the past two weeks. A fresh bearish signal can be seen on the 4 hour chart, and together with a bearish cross on the daily slow stochastic, the bearish momentum is quite strong. Going short appears to be favorable today.

USD/JPY

After a short period of time that the pair peaked at the 108.40 zone, we see that a consolidation in a tight range is the name of the game again. The local momentum within the channel appears to be bearish, and it appears that a touch in the 106.50 zone might be close. Selling on highs might be a good choice today.

USD/CHF

The pair is entering a bearish formation on the daily chart as the RSI floats near 50 with a bearish slope. The 4 hour slow stochastic supports the bearish notion and points at an upcoming test of 1.0800, possibly by Wednesday. If that level will be breached we will see a stronger bearish move that might take the pair to the 1.0720 zone.


The Wild Card

Gold

Gold is floating at record highs with diminishing momentum as clearly indicated by the daily chart. The 4 hour chart is showing on an upcoming bearish cross which strengthens the notion that a corrective move is quite imminent. This could be a great opportunity for Forex traders to get into a bearish move at record highs.

 

[forexyard]

26/02/'08 - US PPI and Consumer Confidence On Tap

Economic News

USD

The strong selling of USD was boosted yesterday after hopes that a possible rescue plan for 'Ambac Financial Group', the second largest U.S. bond insurer, would help limit the damage from the ongoing credit crisis. Also yesterday, the US Existing Home Sales for January fell to the lowest level in 9 years while prices slid for the 7th consecutive month, posing a threat to consumer spending; the largest part of the enormous US economy. By the end of the day, the USD remained range bound vs. the EUR, while appreciating the most against its' high-yielding counterparts, most notably the JPY. Economic data from the US now shows the effects of the worst housing recession in 25 years have spread into other areas of the economy. The Fed Bank of Philadelphia's general economic index fell this month to -24, the weakest reading in 7 years. With other major sectors such as Employment, the financial markets and business investment; the Fed now has more than just the housing market to contend with when making its monetary policy decision. Currently, the market is pricing at a 65% chance that the Fed will lower its Interest Rate by another 0.25%. Today, traders may expect to see an overall increase in volatility as the US economic calendar filled with eventful releases like the PPI, National Home Price Index as well as the Consumer Confidence data, later in the afternoon. We expect the USD to rally on the back of stronger inflation numbers but weaker consumer confidence could cap the currency's rise.

EUR

The EUR was little changed yesterday at 1.4821, taking a breather after hitting a three-week peak of roughly $1.4862 last Friday. The European markets rallied on hopes that 'Ambac', the embattled U.S. bond insurer, may soon announce a rescue package. 'Ambac', is currently facing billions of dollars of losses from guaranteeing repackaged subprime mortgages. The company is talking to banks and regulators about raising extra capital in order to retain its top credit ratings. With yet another fork in the road for invested US clients, the EUR continues to become a much safer and stable alternative for long term success. Today, investors will focus mainly on the German Ifo Business Climate as well as German Ifo Business Expectations indices for February. Traders will try to find clues on the health of the Euro-zone economy and its' interest rate outlook. The underlying impression remains that the European economy is slowing down and that at some point we could see interest rates in the Euro-zone decline. The hawkish stance by ECB President Trichet could be challenged if the ongoing trends continue. Today's economic news is particularly important for the EUR, and could be responsible for a key turning point in for the 15 Nation currency. It will be crucial for traders to identify how the preceding economic indicators from Europe and the US will affect the currency. Investors may expect another volatile trading session.

JPY

The JPY fell broadly yesterday as news over the U.S. bond insurance sector boosted stock prices and other risky assets. The JPY also fell after a report showed declines in the sales of Existing Homes in the U.S. slowed last month, signaling the housing slump may be closer to a bottom than ever before. The USD/JPY dropped to a session low of 108.21 before consolidating around the 108.00 level by the end of late Tokyo session.

Risk aversion has subsided and appetite among investors to borrow in JPY and invest in risky high-return investments is back in play. The Yen often suffers in times of rising risk appetite because investors borrow it at low Japanese interest rates to fund "carry trades" that invest in higher-yielding currencies and assets.

It appears that in the short term the JPY might suffer in this environment. There is no significant economic news coming out of Japan today. We should see the JPY continue on its bearish path. As for the long term, we need to keep in mind that March is the most volatile month for JPY and we'll take a more in-depth look into what this could mean for the JPY crosses as we approach the pivotal month. As the Japanese fiscal year nears its closing we should begin to get a clear picture of future trends.


Technical News

EUR/USD

The pair has been going through a consolidation phase after a very strong and consistent period of bullish momentum which was initiated near the 1.4450 level. The daily chart is showing its first bearish signals, and the 4 hour chart is floating in neutral territory. It appears that a correction move might be quite imminent with the first target price of 1.4720.

GBP/USD

The daily chart is showing a triple doji formation with a bearish cross on the slow stochastic. The 4 hour chart is already indicating escalating bearish momentum, with RSI and slow stochastic at a negative slope. It appears that going short might be preferable today.

USD/JPY

The pair has not yet made a significant move beyond the flat range it has been going through in the past month. Forex traders are anxiously waiting for any breaks to signal an upcoming strong trend, yet none are coming. All oscillators are quite neutral, and no distinct direction is seen on the horizon. It is advised to wait for a clear sign before entering the market.

USD/CHF

After going through a very choppy month, the pair finds local consolidation at the 1.0900 zone. The daily chart is showing some bearish momentum with negative slope on the slow stochastic, as the 4 hour chart is showing moderate bullish sentiment. It appears that selling on highs might be preferable.


The Wild Card

Gold

Gold is in the middle of a correction move that is now showing strong signs of support. It appears that it will not be able to breach through the 931.00 level which is a key Fibonacci level of the 854.70/953.20 move. The bullish cross on the hour chart is strengthening the notion that Forex traders might enjoy a great entry price for the upcoming bullish move.

 

[forexyard]

26/02/'08 - US PPI and Consumer Confidence On Tap

Economic News

USD

The strong selling of USD was boosted yesterday after hopes that a possible rescue plan for 'Ambac Financial Group', the second largest U.S. bond insurer, would help limit the damage from the ongoing credit crisis. Also yesterday, the US Existing Home Sales for January fell to the lowest level in 9 years while prices slid for the 7th consecutive month, posing a threat to consumer spending; the largest part of the enormous US economy. By the end of the day, the USD remained range bound vs. the EUR, while appreciating the most against its' high-yielding counterparts, most notably the JPY. Economic data from the US now shows the effects of the worst housing recession in 25 years have spread into other areas of the economy. The Fed Bank of Philadelphia's general economic index fell this month to -24, the weakest reading in 7 years. With other major sectors such as Employment, the financial markets and business investment; the Fed now has more than just the housing market to contend with when making its monetary policy decision. Currently, the market is pricing at a 65% chance that the Fed will lower its Interest Rate by another 0.25%. Today, traders may expect to see an overall increase in volatility as the US economic calendar filled with eventful releases like the PPI, National Home Price Index as well as the Consumer Confidence data, later in the afternoon. We expect the USD to rally on the back of stronger inflation numbers but weaker consumer confidence could cap the currency's rise.

EUR

The EUR was little changed yesterday at 1.4821, taking a breather after hitting a three-week peak of roughly $1.4862 last Friday. The European markets rallied on hopes that 'Ambac', the embattled U.S. bond insurer, may soon announce a rescue package. 'Ambac', is currently facing billions of dollars of losses from guaranteeing repackaged subprime mortgages. The company is talking to banks and regulators about raising extra capital in order to retain its top credit ratings. With yet another fork in the road for invested US clients, the EUR continues to become a much safer and stable alternative for long term success. Today, investors will focus mainly on the German Ifo Business Climate as well as German Ifo Business Expectations indices for February. Traders will try to find clues on the health of the Euro-zone economy and its' interest rate outlook. The underlying impression remains that the European economy is slowing down and that at some point we could see interest rates in the Euro-zone decline. The hawkish stance by ECB President Trichet could be challenged if the ongoing trends continue. Today's economic news is particularly important for the EUR, and could be responsible for a key turning point in for the 15 Nation currency. It will be crucial for traders to identify how the preceding economic indicators from Europe and the US will affect the currency. Investors may expect another volatile trading session.

JPY

The JPY fell broadly yesterday as news over the U.S. bond insurance sector boosted stock prices and other risky assets. The JPY also fell after a report showed declines in the sales of Existing Homes in the U.S. slowed last month, signaling the housing slump may be closer to a bottom than ever before. The USD/JPY dropped to a session low of 108.21 before consolidating around the 108.00 level by the end of late Tokyo session.

Risk aversion has subsided and appetite among investors to borrow in JPY and invest in risky high-return investments is back in play. The Yen often suffers in times of rising risk appetite because investors borrow it at low Japanese interest rates to fund "carry trades" that invest in higher-yielding currencies and assets.

It appears that in the short term the JPY might suffer in this environment. There is no significant economic news coming out of Japan today. We should see the JPY continue on its bearish path. As for the long term, we need to keep in mind that March is the most volatile month for JPY and we'll take a more in-depth look into what this could mean for the JPY crosses as we approach the pivotal month. As the Japanese fiscal year nears its closing we should begin to get a clear picture of future trends.


Technical News

EUR/USD

The pair has been going through a consolidation phase after a very strong and consistent period of bullish momentum which was initiated near the 1.4450 level. The daily chart is showing its first bearish signals, and the 4 hour chart is floating in neutral territory. It appears that a correction move might be quite imminent with the first target price of 1.4720.

GBP/USD

The daily chart is showing a triple doji formation with a bearish cross on the slow stochastic. The 4 hour chart is already indicating escalating bearish momentum, with RSI and slow stochastic at a negative slope. It appears that going short might be preferable today.

USD/JPY

The pair has not yet made a significant move beyond the flat range it has been going through in the past month. Forex traders are anxiously waiting for any breaks to signal an upcoming strong trend, yet none are coming. All oscillators are quite neutral, and no distinct direction is seen on the horizon. It is advised to wait for a clear sign before entering the market.

USD/CHF

After going through a very choppy month, the pair finds local consolidation at the 1.0900 zone. The daily chart is showing some bearish momentum with negative slope on the slow stochastic, as the 4 hour chart is showing moderate bullish sentiment. It appears that selling on highs might be preferable.


The Wild Card

Gold

Gold is in the middle of a correction move that is now showing strong signs of support. It appears that it will not be able to breach through the 931.00 level which is a key Fibonacci level of the 854.70/953.20 move. The bullish cross on the hour chart is strengthening the notion that Forex traders might enjoy a great entry price for the upcoming bullish move.

 

[knlge876]

Thanks for the good works!

I wondered is there any news for the Euro.USD this afternoon, which surged over 65 pips in 5 minutes at around 5:20 pm EST?

 

[forexyard]

27/02/'08 - EUR/USD Breaches 1.50

Economic News

USD

The greenback continued to fall sharply yesterday on the back of more negative U.S economic data which further fuelled speculation of an aggressive Fed rate cut in March. The greenback fell to a new all time low against the EUR after U.S Consumer Confidence released well below expectations at 75.0 for the month of February, which is a 17 year low for this figure. There was some positive U.S data released yesterday as the PPI figure surprised on the upside, releasing at 1.0% which was well above the forecasted figure of 0.4%. However this positive data was negated by comments from Fed Vice Chairman Donald Kohn saying that risks to U.S. economic growth are of greater concern to the central bank than inflation. The greenback is likely to remain firmly rooted in grizzly bear territory in the near term as given the risks to the U.S economy the Fed will be forced to keep cutting rates and ignore rising inflation. Another key factor that drove the greenback to an all time low against the EUR yesterday was the fact that positive Euro-zone data is continuing to make a rate cut by the ECB highly unlikely, while a Fed rate cut is now almost certain.

Looking ahead, it does not seem as though the greenback will receive any reprieve today as we expect the Durable Goods and New Home Sales figures. These figures are forecasted to come in lower than last month and with the U.S economy in tatters there is a high likelihood that these figures will disappoint beyond market expectations. Also Fed Chairman Bernanke will speak before the House Financial Services Committee and he is likely to reiterate Vice Chairman Kohn's comments that U.S growth is of prime concern to the Fed. However many analysts are now of the opinion that since the greenback has crossed the key 1.5000 level against the EUR, it could consolidate before once again being pulled back by the bears. So traders can expect the bears to remain firmly on top in the near term and the greenback will only manage a sustained recovery once all the Fed rate cuts are firmly behind us and there is a steady stream of positive U.S economic data.

EUR

The EUR appreciated sharply against the greenback yesterday, reaching a new all time high and breaching the key 1.5000 level. There was positive news for the Euro-zone yesterday as the German Ifo Business Climate Index, which measures the mood of firms in manufacturing, construction, wholesale and retail, surprised on the upside releasing well above the forecasts at 140.1 up from its previous 103 mark. This news coupled with weak U.S data was the main driver of the EUR's sharp rally against the greenback yesterday. The reason for this is because the stronger-than-expected Ifo survey and high crude oil prices reduce expectations that the European Central Bank will cut rates to deal with a slowdown of growth in the Euro-zone.

Looking ahead to today, we expect the German Consumer Confidence figure, German Import Price Index and the Euro-zone M3 Money Supply. These figures are unlikely to cause any volatility and any sharp EUR movement today will be dollar centric. The EUR will maintain its bullish rampage against the greenback for as long as the interest rate differential between the Euro-zone and the U.S continues to widen. If U.S data once again disappoints today, then the EUR will target another new high against the fragile U.S currency.

JPY

The JPY was one of the few currencies that failed to gain ground against the freefalling greenback yesterday. The JPY range traded against the USD yesterday as the euro-dollar pair grabbed center stage on the trading arena as a result of key U.S and Euro-zone data releases. The JPY may find itself losing more ground versus the greenback despite the fact that the USD has been weakening all across the board. The main reason for this is the fact that the continuing rate cuts by the Fed have reduced global liquidity level concerns and therefore investors may now prefer to place their funds in countries where the yield is high. So we may see carry trades back in action in the near term despite the fact that slowing global economic growth is driving risk aversion.


Technical News

EUR/USD

The pair has breached the much anticipated 1.50 key level and is now traded at all time high levels around 1.5040. The bullish move was validated and the momentum is now very strong. It appears that the pair is going towards the 1.5090 on the immediate level, and that going long should be a preferable choice today.

GBP/USD

The bullish trend is very strong as the cable is carried up on the back of the USD weakness. There is a bearish cross forming on the 4 hour chart, yet with a strong bullish momentum on the daily chart it might be a good choice to buy on dips, as the local correction move unfolds.

USD/JPY

The pair is shaping into a bearish formation within the flat channel. The slow stochastic on the daily chart indicates that the momentum is relatively strong, and the RSI supports the bearish notion. Next target price might be around 106.50, and if breached we should see a stronger bearish move being validated.

USD/CHF

The key level of 1.0700 was breached yesterday, after three failed attempts on the daily chart. The bearish move is validated on the 4 hour chart as no reversal cross are seen. All oscillators are pointing to the continuation of the trend, and the next target price is now 1.0650.


The Wild Card

CRUDE OIL

Oil is traded at historical levels of more than 101.00, and shows no room for hesitation. All technical indicators on all time frames are showing that the direction is up and the momentum is extremely high. forex traders should use this momentum to swing into the trend, and join oil on its journey to fresh all time highs.

 

[forexyard]

knlge876

Hi knlge876

Thanks for your comments. Regarding Euro/Dollar.....no doubt you have been following todays activity! Some pretty surprising movements today. How have you fared through it all??

 

[forexyard]

28/02/'08 - USD Still Under Pressure.

Economic News

USD

Yesterday, the USD fell to a record low vs. the EUR on expectations that the Fed will cut Interest Rates aggressively, despite stubborn inflation. Momentum in the EUR/USD pushed the pair through the closely watched 1.50 level and quickly surpassed 1.51 in the same session. The U.S. currency traded at the 1.5108 level vs. the EUR at 12:45 p.m. in Tokyo, after earlier touching the 1.5144 level. The greenback retreated after Bernanke said that the Fed will act in a timely manner to support growth and to provide adequate insurance against downside risks. The Fed has lowered benchmark overnight interest rates to 3% from 5.25% since September and financial markets expect policy makers to lower them by a further 0.5 percentage point at their next meeting on March 18. Meanwhile, the bad news out of the U.S. continued to mount. Data out yesterday revealed that Durable Goods Orders fell 5.3% in January, the most in 5 months, compared with the 4% forecast. The report added fears of a U.S. economic slowdown at a time when rising Oil prices are pushing prices higher, leaving the Fed with the dilemma of whether growth or inflation is potentially the bigger problem. Looking ahead to today's U.S. calendar, the Preliminary GDP results will be released at 13:30 GMT, along with Unemployment Claims data for the month of January. Volatility will likely continue across domestic financial markets as today's fundamental data holds potential to drive sharp moves in the U.S. currency. The USD will probably trade around its record lows against the EUR during the day and may even record new lows as the week progresses. Look for new lows and technical trends as opportunities for profits.

EUR

The EUR advanced yesterday vs.10 of the 16 most-active currencies in the past 5 days after the ECB policy makers expressed concerns that inflation in the Euro zone may quicken. The ECB officials also indicated that there is no change in their hawkish stance on Interest Rates. Therefore the EUR is likely to strengthen. The EUR also continues to benefit from the faulty condition of the USD. Besides the overwhelming strength and confidence being shown by the currency, the European economic forecast continues to release positive data. Yesterday's German Import Price Index printed at 0.8%, much higher than the forecasted 0.2%, while the British GDP remained stable at 0.6% Analysts predict that the Fed will lower the Interest Rate target by at least another 0.5 percentage point at next month's FOMC meeting. Meanwhile, the EUR could test 1.52 -53 levels in the short-term. The Fed has already lowered its benchmark overnight lending rates by 2.25 percentage points to 3% since last September, while the ECB has kept its main rate at 4%. Given the rate difference between the Europe and the U.S., the EUR will stay high as long as the BOE will keep its Interest Rates unchanged. Today, ECB President Trichet is expected to deliver a speech at 14:15 GMT in the Netherlands. As head of the central bank's governing body, which is responsible for setting the Euro zone's short term Interest Rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy. Today, the EUR is expected to trade around its current high levels, and if the U.S. fundamental data disappoints, the EUR might add another 100 pips.

JPY

The JPY rose against the EUR and 14 of the 16 most-active currencies as Asian stocks fell, encouraging investors to reduce holdings of higher-yielding assets funded with loans in Japan. It rose to 160.51 level against the EUR from 161.00 in New York yesterday. With stocks falling, the JPY is being propelled by risk reduction among investors. Japan's currency may move between 106 and 107 per USD for the rest of this week Japanese retail sales rose 1.5% in January from a year earlier, marking the sixth straight month of increases, according to the government report. There are several news releases expected to come from the Japanese market tonight, as the first will be the Manufacturing PMI at 23:15 GMT. With a forecast of 52.0, we can see that there is a positive view towards Japan's growth in the manufacturing sector and for its economy in general. Slightly later at 23:30 GMT the Core CPI is expected to be released with a forecast of 0.9%, and a previous release of 0.8%, we can see that Japan's inflation level should continue to be inline with expectation, proving that the journey towards a stronger and more stable economy continues full steam ahead. It appears that the JPY will continue to gain against most currencies in the near future, as it is consistently showing strong data and solid monetary policy, with the majority of the economic forecasts seeing the continuation of growth for 2008.


Technical News

EUR/USD

After peaking at the all time high of 1.5140 the pair now shows signs of bearish sentiment on the 4 hour chart. The daily chart still remains very bullish, which means that once the corrective move will consume its momentum, the bullish move will continue. Buying on dips might be a good choice of action before the weekend.

GBP/USD

The cable failed to breach through the 1.9950 level, which is a strong resistance and a key Fibonacci level. The bearish cross on the daily chart indicates on an upcoming corrective move that might take the cable below the 1.9750 on the local level. The 4 hour chart is giving mixed signals, which means that Forex traders must wait for a clear bearish signal on the hourly level before making an entry.

USD/JPY

The pair has made an aggressive bearish move within the flat channel of the daily chart, and is now approaching strong support. The 1 hour chart is showing local consolidation around the 106.20 level, and the bullish cross on the 4 hour chart is indicating that moderate bullish momentum is starting to form. Buying on dips could be a good strategy today.

USD/CHF

After the pair breached the strong key level of 1.0750, and validated the bearish move with a full bar beneath the breach level, it appears that the momentum is stronger than ever. Both the daily and the hourly studies are very bearish and a target price of 1.580 appears to be quite possible.


The Wild Card

Crude Oil

The 4 hour chart is showing a fresh upwards channel formation, as Oil now breached through the bottom barrier. forex traders must pay close attention to a possible break through the 99.00 level, as it is now a key level that might take crude oil to a very deep abyss. If a break will not occur, a moderate float within the channel is expected.

 

[forexyard]

03/03/'08 - Greenback Bears Firmly On Top

Economic News

USD

The dollar began the new week in similar fashion to the way in which it closed last week; falling against most of it major currency rivals. Investors will now have to get used to the notion that the 1.50 key level for EUR/USD has been broken and will continue to rise. The major currency pair is currently above 1.5150 and looks to be set in its bullish trend, as data from the US continues to disappoint. The latest scare comes on investor worries regarding additional losses from banks that are under pressure from the subprime mortgage market. The housing and credit crisis has not subsided and is pushing investors away from the greenback.

The EUR is not the only currency to see record highs lately versus the dollar. Amongst a basket of common currencies that are seeing gains against the greenback, the JPY is the most notable. Currently floating around 103, the USD/JPY has plummeted to three year lows, and is growing ever closer to the key support level of 100.

This week is jam packed with important economic data from all over the world. The US will have its share of important data as we expect figures from Nonfarm Employment Change, Unemployment Rate, ADP Nonfarm Employment Change, Non Manufacturing ISM, Factory Orders, and Pending Home Sales. These events will be preceded by today's 15:00 GMT release of ISM Manufacturing Prices and Index. Expectations are understandably low, as are most of the forecasts for US data in the coming week. The week's economic data will be coupled with a long list of speeches by important economic policy makers in the US, as the likelihood of more Fed intervention is gaining steam. The contrasting views amongst the economic elite in the US are only contributing to the lack of confidence investors currently have in the dollar. Look toward Tuesday' remarks by Fed Chairman Ben Bernanke to get a good sense of the US monetary outlook. As data in the US does not look positive for the near future, expect the greenback to continue its epic slide.

EUR

The EUR has become the beneficiary of the latest USD woes, as it once again gained significant ground against its American rival last week. In total the Euro gained over 2% on the greenback in February, its biggest gain since September of last year. As the EUR grows against the dollar, investors should begin to take into consideration a Euro interest rate cut. ECB President Jean-Claude Trichet has been adamant in keeping with his hawkish monetary policy, however the growing divide between the EUR and the dollar is taking its toll on the whole of the Euro-zone economy. The already tense European import/export industry is now faced with even more hurdles as it cannot compete globally with such inflated prices due to its currency strength.

The 15 nation currency has seen gains against a majority of its most traded currency rivals, outside of the JPY, whose current strength cannot be rivaled. The Euro-zone has the opportunity within the coming months, assuming that there is a change to monetary policy, to flourish and allow its currency growth to come naturally and not from pure trading momentum or Dollar fears. The importance behind EU economic data moving its own currency is critical in convincing wary dollar investors that the growth is real.

The economic calendar this week from the Euro-zone holds several key events. We expect that Thursday morning's scheduled Interest rate statement will involve a small cut in the interest rate. This will be followed by remarks by Trichet who normally triggers some market fluctuation in and around his speeches. Today we expect the release of German Manufacturing PMI and CPI figures, both of which are forecasted to come back with similar numbers to their last release. Either way, they should not effect market movement, as we expect rises in the EUR sans EUR/JPY to continue.

JPY

The trading week opened today with the JPY gaining against most of the traded currencies. At 7:00 GMT, The JPY obtained a fresh three-year high against the USD as it traded at 102.90 JPY. The JPY also gained 0.55% against the EUR and 0.92% against the GBP. The JPY rally against the USD is mainly a result of the growing worries about the health of the US economy after dismal reports from last week's U.S economic session which showed the sharp impact of the credit crisis.

We are nearing a key support level in the USD/JPY of 100. History has shown us that upon approaching this level the currency pair springs back up to make significant gains. Not since the mid-90's have we seen the support level broken, and even then it was short lived.

Last Thursday there was a surprising increase in the Japanese consumer spending and rising consumer prices. Those positive indicators assisted in the JPY's bullish behavior. The assumption behind most investors is that the Japanese economy is growing at a steady pace and will continue to do so for most of 2008. Today, as a result of those positive figures from last week, The Japanese currency is likely to remain bullish. There is no important economic news expected to be released in Japan, however, today should see active JPY trading in response to key U.S and Euro-zone data releases.


Technical News

EUR/USD

The pair opened this week's trading session with strong bullish momentum, and is now traded at all time high levels around 1.5230. The 1 hour and the 4 hour chart are indicating on additional bullish momentum, and the daily chart is showing that a potential corrective move might not occur before the pair hits 1.5290.

GBP/USD

The pair opened this week's trading session with strong bullish momentum, and is now traded at all time high levels around 1.5230. The 1 hour and the 4 hour chart are indicating on additional bullish momentum, and the daily chart is showing that a potential corrective move might not occur before the pair hits 1.5290.

USD/JPY

The pair is going through a massive bearish trend, as the daily chart shows 6 consecutive sharp falling bars. There is a bullish cross forming on the daily chart, yet it's still in early stages. The 4 hour chart indicates on the continuation of the bearish trend locally, making it preferable for Forex traders to buy on dips.

USD/CHF

The pair has been dropping constantly since the local consolidation around 1.0900, and is showing no signs of a halt. There are now the first signals of a corrective move on the daily chart which shows a strong bullish cross on the slow stochastic. The hourlies are floating in neutral territory, and a preferable strategy might be to keep out of this one until a clear signal will appear on the 4 hour chart.


The Wild Card

Crude Oil

Oil is going through a very strong uptrend within a much defined bullish channel. After a local corrective move, we can now see the bullish momentum growing stronger again. This could be a great opportunity for Forex traders to enjoy a very distinct technical formation, with potential for a bullish break beyond the upper section of the channel.

 

[forexyard]

04/03/'08 - Credit Crisis Continues to Hurt the Greenback

Economic News

USD

Yesterday, escalating fears of a recession in the U.S., hammered global stocks and sent the USD to record lows against the EUR for the 5th consecutive day. The greenback's drop to an all time low yesterday came after the ISM Manufacturing report showed that U.S. manufacturing diminished for the second time in 3 months. The ISM index, which measures the activity level of purchasing managers in the manufacturing sector, dropped to 48.3 in February from 50.7 in January. This unfortunately, is not the only trace of the U.S. economic slowdown, as all signs continue to hint that the economy is slipping into a 'mild' recession. HSBC yesterday, announced huge losses, due to credit issues, as they reiterated the uncertain future of the US economy in their official statement. The Housing Crisis is having an impact on the broader economic picture, and the ramifications could be disastrous for the future. Declining Home Constructions are already dragging on growth, undermining consumer spending, which accounts for two-thirds of the economy. Americans are in the precarious position of feeling less wealthy and in turn buying fewer goods. Such an economic environment provides a heavy burden on the U.S. currency, keeping it where it is now, floating around record lows. Fed Chairman Ben S. Bernanke recently stressed that the Fed will not hesitate to ease rates further if the economic outlook deteriorates. Now, traders are betting that the Fed will be forced to reduce its benchmark interest rate by 0.75% at its March 18 meeting. During the following days, these bets will most likely be priced in by the market and we might see the greenback stabilizing ahead of the FOMC Interest Rate announcement in 2 weeks. As for today, there is not much on the U.S. economic calendar. Fed officials Bernanke, Fisher and Mishkin, all are expected to deliver speeches on economic issues during different events today. Traders may expect another weak USD trading session. It is likely; the greenback will stay low and continue to deteriorate on expected positive European data.

EUR

Yesterday, the EUR ended its trading session 0.3% higher, closing at 1.5223 vs. the USD. Earlier, the currency pair had hit a record peak of $1.5275, after Warren Buffet speculated that the U.S. economy is already deep in a recession. European Manufacturing PMI was unchanged yesterday at 52.3, signaling that the growth of the European manufacturing sector is slowing down. Along with record energy costs, the soaring EUR has made European exports less competitive, adding pressure on the Euro zone economy. Additionally, the European CPI, which measures the rate of inflation, remained yesterday at a record high level of 3.2%. Unlike the Federal Reserve, ECB President Jean-Claude Trichet is placing greater emphasis on inflation rather than on growth. Therefore, following the latest inflation data, the ECB is widely expected to keep Interest Rates unchanged at 4.00%. Recent economic data gives the ECB all the justification that it needs to remain hawkish, especially as commodity prices climb to record highs. As for the mid-term forecast, here is the equation; as long as 'inflation pressure' prevents the ECB from slashing its Interest Rates, the European currency is expected to stay elevated. Toady's European economic calendar will be relatively quiet with only the PPI and the GDP figures on tap, both of which are of minor importance to market movement. If these indices will bring stronger figures than forecasted, the EUR/USD may press even higher and any retracement should be seen as an opportunity to add to long positions.

JPY

The JPY breached below the 103.00 level against the USD, and reached 102.62 for the first time since 2005 after the ISM report showed that the U.S. manufacturing contracted once again. The Yen also gained on the back of stronger Japanese economic data. Yesterday's Japanese Average Cash Earnings, an indicator which measures the monthly change in the wages paid to jobholders, jumped 1% in the month of January which suggests that the Japanese economy may be accelerating. The JPY gained against about a dozen of the most traded currencies as Credit Market losses prompted investors to reduce holdings of higher yielding assets financed with loans from Japan, a strategy called the Carry Trade. The rapid upward movement in the JPY against the USD is fueling speculation of a breach to the key 100.00 level for the first time since 1995. At the mid term, we believe that the combination of deteriorating U.S. data and a speeding up in the Japanese economy, may indeed deliver such a result. As for the short term forecast, today's Japanese economic calendar will be quite empty with only Capital Spending data due to be released. This quarterly indicator measures the total amount of new capital expenditures by private businesses. The market is expecting a low release, signaling less business investments during the last quarter; however it is expected to generate relatively small interest in the market. Today, there probably will not be too much volatility in the wake of Friday's Interest Rate Announcement and the BoJ Monthly Report. The JPY looks prime for another day of range trading.


Technical News

EUR/USD

The strong bullish momentum is calming and the pair is finding consolidation at 1.5180. The slow stochastic on the 4 hour chart is showing a negative slope, which indicates that a corrective move might be quite imminent. Going short with tight stops might be a good decision today.

GBP/USD

The daily chart is showing that the cable is trading in a range with no specific direction for the past 6 trading days. The very strong resistance level of 1.9900, and the bearish cross on the daily slow stochastic indicates that a local bearish move might take the cable back to the 1.9800 levels as a first target price.

USD/JPY

After bottoming at 102.60 the pair shows fresh bullish momentum and is now floating around 103.20. The cross on the daily slow stochastic is very strong and will most likely cause a local technical corrective move. The RSI which has crosses the 20 level from above support the bullish notion, and it appears that although the USD/JPY will likely range trade, being on the buy side of such activity might be a preferable strategy.

USD/CHF

The failure to breach beyond the 1.0300 level on the daily chart establishes a very strong support level at that point. A bullish cross on the daily slow stochastic indicates an upcoming move that might take the pair to the 1.0500 zone quite quickly. Going long might be preferable today.


The Wild Card

Crude Oil

There is a very clear narrowing bullish channel forming on the 4 hour chart as the pair now floats at the bottom level of it. The inability to breach through the 101.70 level will validate the channel and will probably take Oil beyond the 102.00 levels again. This should be a great opportunity for Forex traders to be in the bullish move at a relatively good entry point.

 

[knlge876]

Hi knlge876

Thanks for your comments. Regarding Euro/Dollar.....no doubt you have been following todays activity! Some pretty surprising movements today. How have you fared through it all??

Hi forexyard.

I'm starting on the Forex. Hope I will do ok.

Good trading

 

[forexyard]

knlge876

Best of luck!

 

[forexyard]

05/03/'08 - US ADP Data on Tap

Economic News

USD

Yesterday the greenback remained range bound against the EUR and the GBP, failing to breach new lows. However the greenback did lose some ground against the JPY and the CHF after Fed Chairman Bernanke painted a gloomy picture of the struggling U.S housing sector in his speech yesterday. He mentioned that mortgage foreclosures are likely to remain on the increase coupled with falling home prices and therefore an active policy will be needed by the Fed in order to provide this failing sector with some stability. These comments added to the rising fears of a recession in the U.S and there are already some key investors such as Warren Buffet who believe that the U.S economy has already crossed that line. Yesterday was a day full of speeches by key U.S Fed Officials which included Fed Governor Mishkin and Dallas Fed President Fisher. Mishkin's comments were still in accordance with the majority opinion in the Fed, which is that growth is the main concern with inflation expected to ease in the medium term. On the other hand Fisher continued on his one man crusade against inflation in the US, saying that slower growth was preferable to higher inflation. These comments however did not really manage to cause any significant volatility. Looking ahead, the main news from the U.S today will be the ADP report which is forecasted to release at 10K, significantly lower than last months figure of 126K. This figure has some predictive value with regards to Friday's key NFP report and it should cause some volatility. However traders' main focus is Friday's NFP report and this will cause a heightened level of caution, so investors will be hesitant to drop the greenback any lower ahead of Friday, unless the ADP springs a major surprise. The longer term picture remains gloomy for the greenback as the poor U.S. economic outlook will keep the Fed on its interest rate slashing path.

EUR

The EUR had a stable trading session all across the board yesterday. The EUR has reached a new all time highs against the greenback on each of the last five consecutive days. However this record setting trend was halted yesterday by comments from leading European Finance Ministers ahead of the ECB meeting on Thursday. Chairman Juncker of the Eurogroup of finance ministers mentioned his concern about the current excessive exchange rate volatility and this gave the greenback some reprieve. The only news coming in from the Euro-zone yesterday was the GDP and PPI figures, which released inline with expectations at 0.4% and 0.8%, respectively. This news did not have any effect on the EUR, which continued to remain solid throughout the day.

Looking ahead to today, we expect the Euro-zone Services PMI and Retail Sales figures. However these figures will not impact the EUR, which may slip slightly versus the greenback today as traders exercise caution ahead of Friday's NFP report. However the broader EUR outlook is still very bright as no ECB rate cut is expected any time soon, while the Fed is expected to cut rates by at least 0.5%. Many analysts believe that the EUR will target the 1.5500 level against the greenback.

JPY

The JPY strengthened slightly against the greenback yesterday on the back of Bernanke's negative U.S housing outlook and recommendation of active policy in order to stabilize the sector. However it lost some of these earlier gains towards the end of the European trading session. Many analysts believe that the JPY will breach the 100.00 level against the greenback in the near term. The main reason for this is because the JPY is benefiting from risk aversion, which is a product of weakness in the equity markets across the globe. Another reason for the rosy JPY outlook is the fact that there is developing now a substantial interest rate compression between the USD and the JPY. Therefore the USDJPY has lost the status as the “King” of the carry trades, leading to a sharp depreciation of this pair. The only news released out of Japan earlier today during the Asian trading session was the Capital Spending figure, which measures the total amount of new capital expenditures by private businesses. This figure surprised on the downside releasing at -7.7%, which was well below the forecasted figure of -2.4%. However it did not have any effect on the Japanese currency which is mainly affected by risk sentiment.


Technical News

EUR/USD

The pair continues to consolidate around 1.5180, and moderate bearish momentum is being created on the 4 hour chart. The daily slow stochastic is showing a bearish cross, and the correction towards the 1.5100 appears to be imminent. Going short with tight stops, might be a good choice today.

GBP/USD

The cable has made the first step of the bearish correction move and appears to be continuing with that notion. The slow stochastic of the 4 hour chart is showing negative slope, and the RSI is floating on the 50 level, which indicates that the pair still have much more room to run. The first target price might be 1.9700.

USD/JPY

After bottoming at 102.50 the pair is gaining in a moderate corrective move and is now floating around 103.60. There is a very bullish structure forming on the slow stochastic of the 4 hour chart, and the momentum is high. Going long appears to be the preferable strategy today.

USD/CHF

After a moderate bullish correction, the pair is heading south again and is now traded around 1.0400. The 4 hour chart is showing growing bearish momentum, and the daily study supports the bearish notion. The estimated target price for the next move should be around 1.0340.


The Wild Card

Gold

There is a very clear and distinct channel forming on the daily chart, as gold now floats at the middle level of it. Oscillators are showing bearish momentum, and it appears that we might see gold touching 960.00 before the weekend. This is a great opportunity for Forex traders to enjoy a very clear and strong technical entry point.

 

[forexyard]

06/03/'08 - European Interest Rate Announcement on Tap

Economic News

USD

The greenback continued to experience losses yesterday, as the US currency could not rebound even amidst positive economic data. The release of surprisingly positive ISM service sector data had some investors convinced that the dollar would rise; instead it floated dangerously low versus a basket of major currencies. Most notably, was another record low versus the EUR as the major pair hit the 1.53 key level, spurring investors into even more aggressive bearish behavior regarding the dollar.

ISM Non-Manufacturing Composite and Activity data is a measure of the activity within the service sector of the US. Though yesterday's figures did produce positive results, (composite data rose to 49.3 from 44.6 and activity data from 41.9 to 50.8) traders learned quickly that the harsh truth is that the overall economic outlook in the US is poor and recession is inevitable. The manufacturing and service sectors as a whole have suffered from the credit crisis in the US, experiencing one of the smallest consumption periods for some time. Unemployment is rising and can only hurt the already ailing economy. This should be a sign as to the direction of the dollar ahead of Friday's Non-Farm Payrolls, which is one of the more important figures to be released on the US calendar.

Today, as we prepare for tomorrow's end of week news events, we will have a relatively quiet news day from the US. Unemployment Claims and Pending New Home Sales are the only significant events on the schedule, and will likely not be enough to reverse the bearish trend of the greenback, assuming the figures return on a positive note. The assumption according to historical evidence is that we should expect a big loss in the Non-Farm payroll tomorrow, as it has had similar results to ISM figures released in the past. Investors should look for more drops in the dollar price as there does not seem to be anything that prevents the detrimental fall of the greenback.


EUR

The EUR had a fabulous day of trading yesterday, as anyone focused on bullish EUR trends was successful. The 15-Nation currency hit record highs versus the dollar and used that momentum to do so against the GBP as well. Mentioned earlier, the EUR touched the 1.53 level versus the greenback and then climbed to an all-time high against the sterling at just above 0.7685. This activity came mainly as a result of PMI and retail sales figures returning better than initially forecasted. German PMI, which measures the activity level of purchasing managers in the manufacturing sector, came back at 52.2 up from its previous mark of 49.2 as retail sales rose by 0.4%.

Yesterday's events all but solidified the ECB's hawkish monetary policy, as many believe that ECB President Trichet will do nothing regarding the interest rate. The biggest issue facing the Central Bank is controlling the rising inflationary pressures brought on mostly by rising global food and oil prices. As we await words from Trichet tomorrow , expect the market to react positively regarding the EUR.

Apart from the expected interest rate statement and Trichet's speech, we will see French Budget Balance released today, as it should not contribute to any real market movement. Investors in the EUR should look for another day of gains, as the major currencies competing against the Euro-zone currency are currently involved in a swing of negative data.

JPY

In direct response to a boost in stocks on Wall Street, the JPY successfully gained against a basket of its crosses yesterday. The JPY has been the beneficiary of dollar woes lately, however now it is beginning to take its toll on the Japanese business sector. A large group of Japanese businesses are now losing significant profit due to low USD prices against the Yen. A major source of the Japanese income comes from import/export relationships with the US. Low dollar prices have forced Non-US manufacturers to lower prices in order to facilitate the needs of the worlds biggest consumer market.

Yesterday saw no news from the Japanese economy, as the currency moved according to world news events. Amongst, the big currencies, only the EUR has performed with real consistency lately, however the Yen is slowly showing its rejuvenation as investors expect Japanese growth to continue throughout 2008.

Today we are slated to see the release of Leading Index and Machine Tool Orders. The two are not expected to contribute much to the movement of JPY, as most JPY enthusiasts will stay tuned to stock prices and EUR and USD news. As we await words from BoJ Governor Fukui on Friday regarding the outlook of the Japanese economy, expect the JPY to range trade throughout the day.


Technical News

EUR/USD

The pair breached the 1.5300level which validated the next bullish move, as we now see a consolidation around that Fibonacci level. the pair is moving strongly with the trend although we might see a moderate bearish correction today.

GBP/USD

The 4 hour chart indicates that the bearish trend has not yet said its last word. the slow stochastic is showing a classic positive slope structure which indicates upcoming incresing momentum. The daily chart shows an incresing direction, as no clear reversal cross is in sight.

USD/JPY

After the familiar tight range we saw the pair trading in, it continues with an uncertain trend. We might see a correction upwards today. Due to no significant signal, JPY traders may look to the interesting candle formation on the weakly chart which may be signally a reversal.

USD/CHF

There is a very interesting cross on the daily slow stochastic chart which might indicate an upcoming move. However we are still in a bullish momentum. It appears that going long would be preferable today.


The Wild Card

Crude Oil

After spiking to the very impressive $104 level, it seems that Oil is the center of Forex trader's focus today. The inability to breach that level violenty, together with many bearish indications by various oscillators is strengthening the notion that a sharp correction move is quite imminent. Going short with tight stops and limits might contain high profit potential.

 

[forexyard]

11/03/'08 - US Trade Balance

Economic News

USD

The greenback slipped lower against the JPY yesterday as U.S stocks tumbled on the back of heightened recession speculation. Therefore carry trades continued their sharp unwind as “riskier” positions were pared off by investors. However the greenback did manage to consolidate nearly all across the board today, in particular against the EUR on the back of comments from President Trichet that the ECB is concerned about the recent exchange rate volatility. Nevertheless, despite the greenback's slight recovery today most analysts believe that it will continue its bearish path, at least over the next few months. Investors are now ready for another rate cut by the Fed after the recent string of negative U.S economic data which was topped off on Friday by the surprisingly weak NFP report. With the constantly increasing recession fears it also now seems likely that the Fed could make another emergency rate cut ahead of its next scheduled meeting on March 18th. If this occurs, then we will see the greenback fall much steeper far quicker than anticipated.

Yesterday there was no real market moving news released from the U.S economy and the dollar movement was mainly EUR news related. Looking ahead to today, we expect the U.S Trade Balance and a speech from Fed Governor Kroszner. The U.S Trade Balance, which measures the difference in value between imported and exported goods and services, is forecasted to release lower than last month at -59.5B. However this figure is likely to surprise on the upside as the recent sharp deprecation of the greenback should have boosted U.S exports but there may be a lagging effect. If the Trade Balance comes out strong today then the greenback should be able to sustain yesterday's consolidation and it may even trigger a rally. However the near term outlook for the greenback remains dismal in particular with the potential for upcoming Fed rate cuts. In addition the relentless stream of weak U.S data should keep the U.S currency on its back foot.

EUR

The EUR dropped slightly lower yesterday on the back of comments from ECB President Trichet warning of excessive volatility in the currency markets. The EUR hit a record high against the greenback last week touching the 1.5459 level after the ECB held Euro-zone interest rates firm at 4.0%. However the EUR now seems to be correcting on the back of Trichet's comments. Nevertheless, analysts expect this correction to be short lived as these comments were still perceived as relatively dovish. In addition further inevitable weak U.S data will give the EUR an offensive edge against the greenback.

There was a string of European data released yesterday and most of the figures surprised on the upside. The most significant data to note is the better-than-expected release of the German Trade Balance, which is still on the increase despite the appreciation of the EUR. Looking ahead, the most important news to be released today will be the German ZEW Economic Sentiment which measures institutional investor sentiment in the German Sector. The German economy is one of the key players in the EU and is heavily reliant on exports. Therefore the ZEW Economic Sentiment will shed more light for investors as to how the German economy is holding up despite the sharply appreciating EUR. The EUR may still continue yesterday's correction but it is more likely to resume its bullish surge against the greenback on the basis of further expected weak U.S data. However traders holding long positions on the EUR should remain weary of the upcoming U.S Trade Balance figure which may trigger a USD rally.

JPY

The JPY was one of the few currencies to strengthen against the greenback yesterday as U.S stocks fell on the back of increased recession fears. The JPY traded near an eight-year high against the greenback as widening losses in credit markets prompted investors to trim holdings of higher-yielding assets funded by loans in Japan. The JPY will continue to appreciate against the greenback for as long as “risk phobia” maintains its stranglehold over investors. Also positive Japanese news ensured that the JPY remained well supported as Private Sector Machinery Orders unexpectedly surged a seasonally-adjusted 19.6% in January from the previous month, the fastest gain since August 2000. The JPY will now head towards the $100.00 level and although Japanese corporations are suffering, according to the latest Tankan Survey, it is unlikely that the BoJ will intervene.


Technical News

EUR/USD

After a very strong bullish trend the pair is showing some consolidation on the past few days. There is a bearish cross forming on the 4 hour chart which indicates a possible upcoming reversal move. The 1 hour RSI is support the bearish notion, and Forex traders are advised to wait for the break and swing in the trend.

GBP/USD

The cable is floating around 2.0060 which is a key 38.2% Fibonacci level of the 2.1130/1.9400 move. If a breach through that level will be validated with a full bar on the daily chart, we should see a stronger bearish move continue until the 1.9900 zone, and it would be advisable to enter the market with a short position.

USD/JPY

After a touch at the 101.50 level, the pair now shows its first signs of a bullish movement. The 4 hour chart is showing the formation of a strong bullish cross, and together with the RSI at the 50 level, we should probably see a moderate corrective move in the next 48 hours.

USD/CHF

The pair is showing some consolidation at the very deep abyss of 1.0200 after a sharp drop for the past two weeks. The daily chart is still very bearish, yet the 4 hour chart is showing hints of a local correction. Selling on highs might be a good strategy for today.


The Wild Card

Gold

There is a very distinct downwards channel forming on the 4 hour chart. The slow stochastic is floating at the 40 level with a negative slope. This could be a great opportunity for Forex traders to enjoy a strong signal for the continuation of the bearish corrective move.

 

[forexyard]

12/03/'08 - Can the Dollar Rally?

Economic News

USD

The greenback rose all across the board yesterday after the Fed announced new methods to inject liquidity into the financial markets. The US Federal Reserve, European Central Bank, Bank of England, Swiss National Bank and the Bank of Canada all announced provisions of additional liquidity in an attempt to once again shore up confidence in the money markets . The greenback drew comfort from this announcement because the Fed's acceptance of mortgage-backed securities could ease some of the problems in the US mortgage market and therefore reduce the risk of a severe US recession. This news also led to speculation that the Fed is more likely to cut the interest by 0.50% next week, instead of the more aggressive 0.75% which was expected previously. Therefore the market reacted to the lower probability of an aggressive move by the Fed next week and risk appetite was partially restored among investors causing the dollar to soar against the low yielding JPY. The greenback also managed to reverse the EUR's bullish surge, gaining back a lot of lost ground. There was more positive news for the greenback yesterday as the U.S Trade deficit increased to $58.2 B, instead of the forecasted $59.5 B. This gave investors another strong indication that the weak dollar is managing to significantly boost exports, which will in-turn stimulate growth. Many analysts believe that yesterday's dollar rally will be short lived as the market will come to the realization that the Fed's new measurement of liquidity injection does not solve the problems of the of a weak housing market, a capital deficient financial system and deteriorating corporate credit quality. U.S stocks also surged yesterday as the DJIA gained almost 300 points after the Fed said it will expand its securities lending program to loan up to $200 billion Treasury securities under a new Term Securities Lending Facility. Looking ahead to today, the only significant news expected from the U.S will be Crude Oil Inventories which measures the weekly increase in barrels of commercial crude oil held in inventory by U.S firms. At the moment crude oil is trading near all time highs so investors will be closely monitoring this data because the level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces. Today the greenback may give up some of its gains as the market digests yesterday's Fed announcement. However the greenback may rally again leading up too next week's rate cut as the market is now expecting less aggressiveness from the Fed.

EUR

The EUR retreated from its all time high against the greenback yesterday on the back of the Fed announcement of its new measurements to inject funds into the money market. However there was positive news for the EUR yesterday, which pushed the EUR to a new record high, as both the German and Euro-zone ZEW Economic Sentiment surprised on the upside. Analysts believe that the firmer-than-expected reading indicates that investors in the German economy are becoming slightly more optimistic that they can avoid the worst of the fallout from the US slowdown. Nevertheless, this positive data which pushed the EUR upward was not enough to cushion the EUR's fall against the greenback. Also earlier ECB Member Weber hinted in a statement that the ECB was not in a position to lower interest rates due to the rising German inflation fears. The ECB has kept its key benchmark rate unchanged at 4.00% since the credit crisis erupted and it has since then stressed that inflation remains its primary concern. However the strong EUR should dampen exports which will slowdown growth and place the ECB under pressure to lower rates. Nevertheless, the central bank remains optimistic as 50% of European exports are within the EU and so far economic indicators have not shown any clear signals of a significant slowdown. The EUR will remain resilient due to improved German GDP expectations and it should resume its bullish movement against the greenback after yesterday's sharp fall.

JPY

The JPY slipped all across the board yesterday, in particular against the high yielders and coming off an eight-year high against the dollar as a sharp rally in U.S. stocks encouraged investors to re-enter risky carry trades funded by cheap borrowing in the Japanese currency. U.S stocks leaped upwards yesterday and the DJIA gained nearly 300 points after the Federal Reserve said it will expand its securities lending program to loan up to $200 billion of Treasury securities. The Fed also said it will lend the Treasuries for 28 days instead of overnight and will increase currency swap lines with the European Central Bank and the Swiss National Bank. If the freshly surfaced “risk appetite” among investors is able to hold out as the market digest yesterday's news, then the JPY will continue to depreciate at rather rapid rate. However most analysts believe that the rally in U.S stocks will be short lived as yesterday's Fed announcement is still not a solution for the deteriorating housing market. Therefore the JPY should begin to claw back some lost ground today as the market comes to this realization and carry trades ease off.


Technical News

EUR/USD

The pair has been quite choppy in the past two days yet no clear direction was seen. The daily chart is showing moderate bearish signals as the 4 hour chart is still quite bullish. The very wide doji formation on the daily chart indicates that a break might be imminent, so traders are advised to wait for the breach and swing.

GBP/USD

The cable is showing strong bullish momentum on the daily chart and on the 4 hour chart with plenty of room to run. The hourly is showing a moderate bearish signal which might make it wise for Forex traders to buy on dips. Next target price might be 2.0210.

USD/JPY

After bottoming at 101.50 and bouncing back to 103.00, the pair is resuming the bearish movement. The slow stochastic of the 4 hour chart is showing a strong bearish cross, and it looks as if the strong support of 101.50 might be breached before the weekend.

USD/CHF

There was a short bullish corrective move after the very strong bearish trend, as the pair now appears to ct be consolidating around 1.0300. The 4 hour chart is showing a bearish cross, and with a very bearish daily chart, the right direction appears to be down.


The Wild Card

Gold

The ongoing bullish bonanza continues with no indication of a stop. All oscillators on all time scales are showing one unified bullish direction. Forex Traders are advised to use that strong bullish momentum and swing into the most current lucrative trend in the Forex market.