Mercaforex Analysis

[mercaforex]

Winds Of Caution Prevail

The USD traded within well practiced ranges against the major currencies on Thursday. Weekly Unemployment Claims data was released and met the expectation of 608K head on. This result was slightly above the previous week. The Philly Fed Manufacturing Index put in a better number of minus -2.2, the estimate had been minus -17.6. The marketplace was very quiet most of the day and much of this had to do with investors standing on the sidelines waiting for the testimony of Treasury Secretary Timothy Geithner in Washington. In hearings that took place in two venues over several hours, Geithner answered questioned about the regulatory changes that the Obama administration is proposing. Equity markets turned in a flat day also in what appeared to be a game of wait and see.

There will be no major economic data from the U.S. today and traders will be left to deal with the remains of this week’s sentiment that has been generated from lackluster economic data, uncertainty in the stock markets, and the continuing parade of public officials who have made their way to various microphones. It stands to reason that it will be the residual affect from the equity markets that could jolt the USD the most today if volatility were to develop. Plenty of doubts and questions remain regarding the regulatory changes the Obama administration wants to implement. Having said this, it also seems likely that much of this debate is known and the true ramifications from any rule changes will take months to enact. Next week may produce more fireworks because the Existing Home Sales data and the FOMC meeting are on the calendar. Trading ranges and the broad marketplace have shown a high degree of caution and this should produce range trading for the USD today.

EUR:
The EUR moved in a rather timid range on Thursday against the USD. Economic data from the European Union was light with only the Italian Trade Balance figures being published and its result was slightly worse than anticipated. The main impetus from the day for the EUR was dollar centric action and the European Summit that is now underway in Brussels. European leaders are expected to continue issuing pronouncements today regarding the economic health of the continent. Banking and budget issues continue to hover over the European Union, particularly from countries that are members of its political theater but have not been fully integrated into its monetary component yet. There will be very little data from Europe today. Traders will keep their eyes on the EU summit, corporate news, and any dollar centric action that could swell up. The EUR has shown a lack of ability to climb back to the strongest part of its range against the USD the past two days and this characteristic should be watched closely.

GBP:
The Sterling like most of the other currencies on Thursday found itself in familiar ground as the day came to an end. However the GBP did see its range propelled early by a rather poor Retail Sales report, which came in worse than forecasted with a drop of -0.6 compared to the anticipated positive number of 0.4%. This news may have spooked some traders because the previous Retail Sales numbers from the U.K. had produced better than expected results. The sudden emergence of dwindling consumer spending sent a swift reminder that the U.K. is still within the grasp of a recession. There will be no major economic data and investors will be casting their eyes on the continuing EU summit. Politicians from the U.K. taking part in the European meetings have publically stated that they want to be rather careful on how any new financial regulatory changes are implemented. The Sterling has been able to maintain its stability against the USD this week, but it has shown signs of occasional weakness, traders may be keen to test the GBP and see how it continues to react to pressure.

JPY:
The JPY lost value to the USD on Thursday as it backed away from the stronger side of it range. International equity markets continued to produce mixed results yesterday and did not show the ability to produce good results going into the weekend. Gold has languished within a stubborn range all week long and finds itself seeming stuck near 935.00 USD. Unless something shocking happens to the equity markets, it stands to reason that the JPY will find itself moving within a rather well worn range today.

EUR/USD:
This pair has been floating in a wide tight around 1.3850 to 1.3950 with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily and 4 hour chart is floating near the 50 line. However we can see on the daily chart that the Slow Stochastic shows that the bearish momentum might come. The preferred strategy today will be a short position with tight stops.

GBP/USD:
The Bollinger Bands are tightening up on the daily chart, indicating decreased volatility. RSI and Momentum are still negatively sloped indicating further bearish movement today. Both daily and 4 hour chart support a bearish notion and a breach through 1.6250 will validate a larger bearish move.

USD/JPY:
There is a bullish trend developing on the 4 hour chart. This pair has now breached the very strong resistance level of 96.50 and we expect further bullish movement. Therefore buying on dips seems to be preferred today.

USD/CHF:
This pair has been caught in a tight range of around 1.0760 to1.0890 over the last few days. The Oscillators are relatively flat on the hourly level. However we can see on the daily chart that the RSI and Momentum are positively sloped supporting a bullish move. The preferred strategy today will be a long position

The Wild Card

Gold:
Gold has been dropping over the last trading day and all the indicators support further bearish movement. Forex traders will be able to maximize gains today by entering a short position before we see a correction.

 

[The Baptist]

GBP will break upside vs USD in my view...

heres my chart

 

[mercaforex]

Friday was a rerun of the previous sessions as the USD traded in a known range against all of the major currencies. The USD closed the week on the stronger side of its range against the EUR and against the Sterling. There were no major releases of economic data on Friday and sentiment was mainly from the likes of the equity markets, which also continued their lifeless track into the unknown. Reports surfaced this weekend that insider trading from top corporate management is at a two year high and the majority of the activity is selling. In other words, it appears that top management is attempting to get out of the market after the rally in the stocks that have taken place since March. After a week of consolidated trading dominating the currency markets and stock markets investors should be poised to see a branch or two snap off of the tree and the question is which market is going to crack.
It will be a quiet Monday for data from the U.S. but traders should not be fooled into thinking that things will remain this way for long. Existing Home Sales numbers are due on Tuesday and the FOMC Statement from the Federal Reserve is on Wednesday along with a host of other publications including Core Durable Goods and New Home Sales statistics. Despite recent claims by many that the U.S. economy has stabilized and has the potential to see growth by the end of this calendar year, there remains a loud contingent of disagreement. Unemployment problems and concerns regarding the housing sector are critical and consumer spending isn’t likely to rise significantly until workers are more secure about their long term prospects. The USD in light of these gray clouds has actually continued to show stability. While the USD lost ground during the bear rally in the equity markets since the March lows, the greenback has shown that as fresh concerns about the economy have arisen, that risk adverse investors have given the greenback a whiff of stability. The markets appear to be on a razor’s edge and waiting for another shoe to drop. If drama breaks out in the international markets it is likely to be of a negative nature and that would strengthen the USD.

EUR:
The EUR continued to find itself lagging on Friday. There were no major economic reports from the European Union but news continues to emerge regarding concerns about the banking sector and government budgets. Calls for more regulation and transparency were heard at the E.U. summit last week and ECB President Trichet apparently has gotten into the act as well. The German Ifo Business Climate survey will be released today and has an estimate of 85.1 compared to the previous outcome of 84.2. German economic sentiment reports have shown improvement for a while now and investors could simply shrug their shoulders at another good outcome. Tomorrow Europe will publish a large dose of PMI surveys and this data may prove more powerful. The EUR found itself trading on its heels last week against the USD and traders will continue to monitor the pressure that comes its way.

GBP:
The Sterling held its ground against the USD on Friday on a day of rather cautious trading. On a whole the GBP did lose a bit of ground to the USD last week but it came about in what can only be described as whipsaw trading. The U.K. did not release any major economic data on Friday and today will be a quiet day as well. However the U.K. will publish plenty of housing figures this week with mortgage approval and HPI numbers. The U.K. like the U.S has many questions concerning its financial stability and with that in mind BoE Mervyn King will be speaking on Wednesday. The Sterling has been able to maintain its stronger range against the USD the past couple of weeks in the face of indecisiveness in the markets. Yet, with so many questions looming regarding the ability of the U.K. to enjoy a real recovery anytime soon, there are plenty of traders who will attempt to wager against the Sterling.

JPY:
The JPY traveled within a range on Friday that has become rather well practiced. With global equity markets showing very little in the way of strong faith, the JPY like the USD have found that risk appetite has gone on a diet. Gold essentially continued a parade to nowhere on Friday completing an extreme week of consolidated trading. It was as if Gold traders sunk their feet into cement and refused to move as long the clouds from the financial storm refused to produce rain or clear up. The JPY faces a similar plight, faced with doubts about the international economy investors seem content to use the Japanese currency as a safe haven and wait.

 

[mercaforex]

Poor Sentiment Helps The USD

The USD gained against most of the major currencies on Monday except for the JPY. On a day of little economic data from the U.S., equity markets took center stage and fell considerably, thus helping the greenback’s status as a safe haven. Existing Home Sales data will be released today and is expected to produce a figure of 4.82 million compared to the previous number of 4.68. While this may turn out to be a better number than before, what must be taken into consideration is that Americans are turning to cheaper houses and taking advantage of the amount of foreclosures on the market. The mood on Wall Street mirrored the cracks that are emerging in the armor of official statements that have been trying to convey a positive economic outlook. In essence, what we have begun to see are the realities of weaker revenues from corporations and their tendency to issue downgrades taking a toll on prospects.
Tomorrow will be a potentially huge day of publications. Core Durable Goods, New Home Sales, and the FOMC Statement from the Fed are on schedule. The combination of poor sentiment that has risen to the surface and the upcoming reports could provide a potent mixture. The White House admitted last night that U.S. Unemployment is expected to reach 10% in the coming months and this news will have to be managed carefully by the Obama administration. Jobs and housing remain critical factors in the economy and directly affect consumers. There are many questions that have created an overhang of doubt regarding the chances for real growth. President Obama may find that it becomes increasingly hard to spend U.S. taxpayer money if tangible results cannot be verified within the coming months. The USD has taken another step into the spot light and investors who are weary may find the greenback a familiar friend.

EUR:
The EUR lost additional ground to the USD on a day when negative returns on bourses took hold. While the German Ifo Business Climate survey did come in slightly better than expected with a number of 85.9 compared to the forecast of 85.1, the EUR turned in uninspiring results. Today a parade of PMI data will be forthcoming from Europe. Both the German and French Flash Services and Manufacturing readings will be issued. The figures are expected to provide slightly positive feedback but again investors will ask if these numbers can be looked at with anything but a skeptical glance. ECB member Ewald Nowotny was quoted yesterday as saying that the European Central Bank’s interest rates would remain low well into 2010. Also getting into the act was ECB President Trichet warning that governments have little room for more debt. Additionally Europe, like its counterparts, is clearly within the grasp of a recession that is producing poor revenues for a broad range of its corporations and growth outlooks have been diminished. While the EUR was able to make a climb in value in conjunction with the better results in international equities markets since March, it appears that the currency could find itself in for a tough road if bourses retrace and concerns about the European financial system linger.

GBP:
The Sterling did find itself under pressure on Monday and was not able to withstand the strength of the USD. There was no major economic data from the U.K. on Monday but the BBA Mortgage Approval figures are on cue today. Tomorrow BoE Governor Mervyn King is scheduled to speak and Inflation Hearings will take place. GBP investors like others will continue to look at housing data and corporate revenues with concern. Inflation continues to take a back seat to deflationary risk. The long term prospects of the U.K. government being able to cope with the amount of debt that they have saddled themselves with has the ability to become a cautionary tale. Having created a broad amount of stability the past few months the GBP still finds itself within the stronger side of its range against the USD but yesterday’s Sterling weakness will be monitored by investors closely.

JPY:
The JPY gained in strength against the USD as the Nikkei traded significantly lower and some Japanese corporations reiterated their stark warnings about growth. Risk adverse traders have come to the fore in the JPY. Gold slid in trading yesterday on the renewed strength of the greenback and finished the day around 917.00 USD and it should be noted that a broad range of commodities went lower too, including Crude Oil. With equity markets showing a large amount of strain, including the Nikkei, JPY investors are sure to be a cautious bunch.

Technical Analysis

EUR/USD:
The Bollinger Bands are tightening up on the daily chart, indicating decreased volatility. RSI and Momentum are still negatively sloped indicating further bearish movement today. Both the daily and 4 hour chart support a bearish notion and a breach through 1.3790 will validate a larger bearish move. Therefore the preferred strategy today will still be a short position.

GBP/USD:
The 4 hour chart shows that the bearish channel continues with strong downward momentum as the pair now floats around 1.6300. Oscillators show that the momentum is still bearish and a breach through 1.6190 will validate a bigger bearish move into the 1.6110 levels. The RSI is also forming back into bearish formation and supports the general notion. The preferred strategy today may be a short position.

USD/JPY:
On the 4 hour chart the Oscillators are beginning to slope negatively indicating a possible correction. In addition the Slow Stochastic on the daily chart is crossed at the 23 mark indicating that we are in oversold territory. However the other key indicators give a mixed signal so the preferred strategy today will be trading in a range.

USD/CAD:
There is a very strong bullish trend developing on the 4 hour chart. This pair has now breached the very strong resistance level of 1.1500 and we expect further bullish movement. Therefore the long position is preferable.

The Wild Card

Gold
According to the hourlies, the downtrend the gold is going through seems to be very strong and the daily chart validates that there is still room to run. The daily chart is confirming that the downward momentum is still quite strong and that 897.00 is the next valid target. Forex traders may be able to maximize gains today by entering a short position.

 

[mercaforex]

The Fed Has Everyone’s Attention

The USD traded to the weaker side of its range against the major currencies on Tuesday as the markets essentially set themselves up for today’s economic risk events. The U.S. did release their Existing Homes Sales data and it proved disappointing with a number of 4.77 million compared to the estimate of 4.82 million. The previous statistics from Existing Homes Sales were also revised downward. Equity markets traded in a rather consolidated manner on Tuesday finding little in the way of impetus from either the Existing Homes Sales data or President Obama’s new conference. While Obama did say that his administration is not considering any new stimulus programs at this time, he did continue to talk about the need to move forward with the new healthcare proposals which conceivably could cost hundreds of billions of dollars. The crux of the matter is that investors remained cautious yesterday choosing to wait for today’s FOMC Statement.
It is a dead certainty that the Federal Reserve will not change their interest rate today, but what all eyes will be on is the statement issued from the two day meeting which will deal with the recent speculation on what the interest rates will do. The Fed was quick to douse water on rumors a couple of weeks ago that it was considering any interest rate hike in the midterm when the ‘green shoots legions’ got ahead of themselves proclaiming a recovery was around the corner. Today’s report will likely serve as confirmation for one of the groups regarding the debate that persists between bulls and bears. Also scheduled for release is the Core Durable Goods, which are anticipated to be minus -0.2%. Making their way forth too will be New Home Sales and Crude Oil Inventories. With the specter of the Fed meeting and the major economic data it stands to reason that the markets could see volatility sparked by any shocks to the nervous systems of investors. And when you throw the prospect of weekly Unemployment Claims and Final GDP numbers which are due tomorrow it stands to reason that we have the potential to see plenty of trading opportunity the next few days. If the U.S. produces poor numbers today with Core Durable goods and the FOMC restates its opinion that the American economy is unlikely to show substantial growth this calendar year and interest rates will remain mired within a near zero policy, the USD could actually pick up strength based on a desire for a safe haven by beleaguered investors.

EUR:
The EUR managed to climb against the USD on Tuesday coming off of its recent weakness and placing itself in a position that will certainly ignite debate amongst its supporters and detractors once again. The PMI data from Europe was negative from Germany with both the Flash Services and the Manufacturing readings producing disappointing results. The French managed to produce mixed results from the same PMI data. Europe will publish its Current Account findings today and tomorrow the broad Industrial New Orders statistics will be brought forth. Though the EUR was able to bounce back yesterday, news regarding the amount of problems that some of its banks have continue and data from Eastern Europe has produced a steady diet of dire economic warnings from Poland, Latvia, Bulgaria, and Romania. The inner dynamics of the ECB compared to the BoE and the Fed are wide, specifically because the ECB while a Central Bank does not have the ability to implement quantitative easing in the same manner as the other two because it does not have one central treasury from which to issue money. Thus the question that should be asked long range about the recession that Europe is experiencing, is about the individual countries making up its membership and their ability to cohesively deal with problems that may be affected by exposure to the financial crisis. The EUR found some stability yesterday and it may find that it trades in a dollar centric manner today.

GBP:
The Sterling was able to lift itself up against the USD on Tuesday and this came as the BBA Mortgage Approval figures showed a positive number of 31.2K compared to the estimate of 29.5K. The previous month’s figure was revised upward too. Today BoE Governor Mervyn King is scheduled to appear before the Parliament’s Treasury Committee and speak about inflation and the banking crisis. This coupled with the Fed meeting in the U.S. could form a volatile mix for the GBP today. Tomorrow the Nationwide HPI will be released. Thus, investors will have a deluge of new opinions regarding economic sentiment to digest today and Thursday. Having been taken to the lower point of its strong range against the USD earlier this week, the Sterling will face a true test of its standing among investors the next few days.

JPY:
The JPY traded in a tight formation on Tuesday after making gains on Monday against the USD. International equity markets turned in mixed results across the board yesterday. Having found the strong side of its ranges against the greenback earlier this week the JPY appears to have met some resistance once again. With a slew of data coming forth from the U.S. today it stands to reason that risk adverse traders will be on full alert today. International equity markets will be a lynchpin for the JPY and traders may seek safe havens depending on the day’s results.

Technical Analysis
EUR/USD:

This pair is floating in a wide range between the 1.4000 levels to 1.4130 with no distinct direction. The pair now seems to be consolidating around the 1.4090 as the volatility is beginning to decrease. The RSI is floating around the 50 level and all oscillators on the 4 hour chart do not provide a clear direction as well. The preferred strategy today will be to wait for a clearer signal before taking any position.
Support level: 1.4010 resistance level: 1.4230

GBP/USD:
This pair is now nearing the bottom barrier of the bullish channel on the 4 hour and daily chart. However, the RSI on the one hour chart is showing that we are in the over-bought territory, suggesting that a bearish correction is impending. The oscillators also support that bearish correction. Going short with tight stops appears to be preferable.
Support level: 1.6390 resistance level: 1.6590

USD/JPY:
The 4 hour chart is showing that the pair is in a bullish configuration as volatility is increasing, according to the 4 hour chart the RSI is floating around the 50 level, implying the continuation of the larger bullish trend. Going long appears to be preferable.
Support level: 94.50 resistance level: 95.90

USD/CHF:
This pair continues floating in a tight range between the 1.0630 levels to 1.0700 with no distinct direction. However, the RSI on the one hour chart is showing that we are in the over-sold territory suggesting that a bullish movement is impending. Going long with tight stops appears to be preferable.
Support level: 1.0620 resistance level: 1.0710

The Wild Card
Crude oil
The crude oil is now floating with no distinct direction. Both the Daily RSI and the Slow Stochastic are floating in neutral territory. The preferred strategy today will be to wait for clearer signal before taking any position.
Support level: 67.10 resistance level: 69.90

 

[mercaforex]

FOMC Barks, But New Home Sales Bite

The USD found backing on Wednesday and picked up strength against the EUR and GBP. The FOMC Statement released by the Federal Reserve made for a tentative market going into the publication. The Fed surprised no one when it left its interest rates alone. However, the FOMC Statement did say that while the economy has shown signs of stabilizing that the economy is not exhibiting many signs of growth. The statement also killed off the notion that an interest rate hike will be happening short term or midterm. Lastly the report acknowledged that energy prices have risen the past month, but emphasized that they believe demand relative to supply remains weak. While investors argued over the statement and tried to muster support for their various viewpoints, one thing is clear – the U.S. economy is still struggling and it appears that the Fed continues to be more concerned with the threat of deflation and poor growth than inflation at this juncture.
The USD did trade slightly weaker during the initial trading session yesterday, but as the day progressed showed that it was going to hold its ground. Core Durable Goods produced a better than expected result of 1.1%, bettering the estimate of minus -0.2%. However, the straw that broke the optimists back was the New Home Sales figures which produced a starkly lower number than projected coming in with 342K compared to the anticipated 360K outcome. What this number proved is that while Existing Home Sales may have stabilized given its earlier report this week, New Home Sales continue to struggle. Simply put the large inventory of Existing Homes available at low prices precludes any possibility for New Home Sales to show much improvement anytime soon. Too many homes available due to foreclosures and home owners having to sell at distressed prices are abundant because of the poor employment picture. Today the Weekly Unemployment Claim numbers are due and they are forecasted to be 602K, which would be a small improvement over last week’s result. Also the Final GDP data is on schedule today and an estimate of minus -5.7% is the projection. The equity markets turned in another lackluster day in the U.S. yesterday and this remains the telltale clue for the USD.

EUR:
The EUR declined on Wednesday as the ECB announced that it would make 442 billion EUR available to banks in the European Union in order to facilitate better liquidity. The Current Account numbers were released for the E.U. and they produced a negative figure of minus -5.9 billion compared to the forecasted decline of -4.7 million. Today the broad Industrial New Orders statistics are on the calendar and are projected to be unchanged from the previous report. Tomorrow will see some inflationary (or deflationary) information from Germany as the case may be. Having gained on Tuesday after a poor day against the USD on Monday, the EUR was not able to sustain its performance yesterday as sentiment once again was given another sign that not all is well within the European banking system via the ECB’s action. While banks participating in the ECB lending yesterday proclaimed optimism that they were able to borrow money at a very low interest rate, it remains unclear if the ECB may in fact lower their key interest rate further. Though President Trichet appears loathe to cut rates more, the European Union is deep within its worst recession since the end of World War II, and he will be faced with hard choices in the short and midterm. The EUR will likely trade based off of the sentiment surrounding results on equity markets and any news generated from more speculation about the ECB. The EUR appears to be under pressure from the USD and may find it is pushed back further today.

GBP:
The Sterling was taken lower on Wednesday as Bank of England Governor Mervyn King addressed the Parliament. Mervyn King stated that the U.K. economy faces many challenges and that the endeavor will be ‘a long, hard slog’. There will be little in the way of economic data from the U.K. today but the Nationwide HPI is on schedule tomorrow. Andrew Sentence, a BoE member, added during yesterday’s hearing that the economy has shown signs of stability but that this does not give an indication of how strong the recovery will be. Mervyn King added his voice to this matter, when he said that a recovery was ‘uncertain’ and compared the recession to the economic condition of the 1930’s regarding an inability to foresee the future. The Sterling continues to maintain the stronger side of its range against the USD in the midst of this economic gloom. The actions of the U.K. government and the Bank of England to provide a semi-transparent window into the conditions of the financial sector has been one of its strong underpinnings. The GBP may find it is faced with headwinds however considering yesterday’s hangover via the sentiment brought about by Mervyn King.

JPY:
The JPY lost ground to the USD as the Nikkei was able to produce better results than other equity markets due to news of a Japanese bank merger. However, the trading of the JPY and USD appear to be locked into the same solid range that the currency pair has maneuvered within the past few months. Gold traded up to the 935.00 USD mark on Wednesday even as the USD showed that it was not weakening. This highlights the possibility that Gold has a strong psychological support level and that within these markets that remain uncertain, could face a unique test in the coming days if international equity markets wobble and the USD gets stronger.

Technical Analysis
EUR/USD:
The pair is now floating between the 1.3890 prices levels to 1.3990 with no distinct direction. The pair made few attempt to breach through the support level of 1.3896 but failed. On the daily charts the indicators are giving mixed signal. The traders should wait for a clear break before taking any position.
Support level: 1.3850 resistance price: 1.4050.

GBP/USD:
The float within the narrowing bearish channel on the daily chart continues as no significant breach has been made and is floating between the 1.6399 level to 1.6490 The momentum is still bearish supported by the Slow Stochastic that indicate the continuation of the bearish movement within the channel. Going short with tight stops appears to be the preferable strategy.
Support level: 1.6290 resistance price: 1.6550.

USD/JPY:
There is a bullish channel on the 4 hour chart. However this pair is now trading near the upper barrier of this channel, so there may be a slight correction before this pair makes another bullish move. It is important to note that most of the indicators on the daily chart also give a strong bullish signal. Going long appears to be preferable.
Support level: 95.50 resistance price: 96.90

USD/CHF:
The bullish channel on the daily chart continues with a volatile price movement. The Slow Stochastic on the daily chart is also showing continued bullish movement and is supported by the RSI. Going long appears to be the right strategy.
Support level: 1.0850 resistance price: 1.1050.

The Wild Card
Crude oil:
It looks like all the recent bullish trend has reached its pick, and now, all indicators on the 4 hours chart are showing for a bearish correction. Traders may have an opportunity to join the corrective move at a very early stage.
Support level: 67.10 resistance price: 70.90

 

[mercaforex]

Contradictory Sentiments Clash

The USD traded in range on Thursday as contradictory sentiment unfolded in the market place. The weekly Unemployment Claims numbers came in worse than expected producing a number of 627K, which was above the estimate of 602K. Final GDP data was also released and its result of minus – 5.5% was slightly better than the forecast of minus -5.7%. The outcome from these reports can be described as nothing less than brutal. However the U.S. equity markets managed to turn in a good day and it came on the back of better than expected quarterly data from the likes of one of America’s retail giants, Bed Bath & Beyond. The company produced higher earnings than anticipated. Ben Bernanke was in the news also on Thursday as he testified in Washington regarding his role in the Bank of America and Merrill Lynch takeover implemented last year. Bernanke was asked pointed questions, but the fact that he handled the questions without being beaten down may have helped the stock market too.

Today will be a relatively quiet day for data going into the weekend. The University of Michigan Revised Consumer Sentiment survey will be published and it is projected to have a reading of 69.2. Also Personal Spending and Personal Income information is on schedule. It has not been a secret that much of the USD value in the currency markets has been predicated on the results from the U.S. equity markets since March. The correlation of an inverse pattern between Wall Street and the greenback has come about mainly because of the relationship of investors with risk appetite as opposed to those who are risk adverse. It may feel like we are hitting a nail with a hammer, when it is mentioned here that the market is a battle of perceptions. Nevertheless, that is exactly what it is and going into this weekend traders will have their sentiment tested once again. On the horizon Non Farm Employment Change numbers are on the calendar next week and until then investors will have to watch equities as a barometer when making their USD decisions.

EUR:
The EUR started Thursday on its weaker foot but as the day progressed the EUR stabilized and finished slightly stronger. Industrial New Orders numbers were published for the European Union and posted a negative -1.0% outcome compared to the estimate calling for an unchanged statistic. The Germans will bring forth a few inflation reports today and what investors will watch for is actually deflation. Banks in Europe continue to deal with issues of liquidity and they are being put under the microscope due to their lack of transparency when asked about their exposure to the financial problems not only in Eastern Europe but the recession that continues to roil across the continent. UBS AG announced last night that they sold shares to raise approximately 3.8 billion Swiss Francs and said they expect to report a second quarter loss. Europe like their international counterparts continues to battle the economic downturn and the question for the EUR how it will be perceived by investors in the short term compared to the long term.

GBP:
The Sterling traded in a mixed range against the USD on Thursday. The Bank of England issued their Financial Stability Report and it highlighted that problems persists in the U.K. banking sector. The report emphasized that the long term financial health of its institutions remain vulnerable and that levels of liquidity must be monitored closely. The Nationwide HPI which was scheduled for release today has apparently been pushed back until Monday of next week at the earliest. Thus, going into the weekend the GBP will see very little in the way of fresh economic data to help guide investors. The GBP continues to cling onto the stronger edges of its trading range against the USD. Expect to see fairly cautious trading for the Sterling today.

JPY:
The JPY moved in a consolidated pattern against the USD on Thursday. These results came about even as the U.S. stock markets turned in rather strong results. News from Japan that the rate of deflation is growing will not please the Bank of Japan, this as Core CPI dropped to minus -1.3% was reported. Gold moved up to the 942.00 USD mark yesterday and Crude Oil climbed also, but most of the other commodity prices showed downward pressure. The JPY continues to trade in a tight range against the greenback and there is little reason to think that this will change today.

EUR/USD:
The bearish trend made a corrective move breaching the resistance level of 1.4010. However the pair is now floating within a tight channel on the daily chart as no significant breach has been made. trading in a range appears to be the preferable strategy. Support level: 1.3890 Resistance level: 1.4140

GBP/USD:
The pair made a substantial bullish correction and the sharp bullish channel on the daily chart continues with no signs of a stop. The Slow Stochastic on the daily chart is showing continued bullish movement and is supported by the RSI. Going long appears to be the right strategy. Support level: 1.6390 Resistance level: 1.6530

USD/JPY:
The sharp bullish channel on the daily chart continues with no signs of stop. The Slow Stochastic on the daily chart is showing continued bullish movement and is supported by the RSI. Going long appears to be the right strategy. Support level: 95.40 Resistance level: 96.40

USD/CHF:
This pair continues floating in a tight range between the 1.0850 levels to 1.0940 with no distinct direction. However, the RSI on the 4 hour chart is showing that we are in the overbought territory suggesting that a bearish movement is impending. Going short with tight stops appears to be preferable. Support level: 1.0810 Resistance level: 1.0990

The Wild Card

Gold:
The Gold is now showing bullish momentum as seen by the hourly oscillators. Both the daily and hourly charts support another bullish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a long position. Support level: 935.10 Resistance level: 950.30.

 

[mercaforex]

Week’s Data Will Build In Momentum

On a day with little economic data to help propel the markets the USD lost ground in clear range trading against the major currencies. The U.S. equity markets turned in a flat performance and perhaps the stock market’s ability to hold onto gains made on Thursday helped risk appetite for another day. There were news reports on Friday suggesting once again that the Chinese government is calling for another international reserve currency to appear, but plenty of investors will look at this skeptically since the Chinese hold a massive amount of USD’s and the Chinese, as of yet, have failed to allow their own currency trade without government interference. Revised University of Michigan Consumer Sentiment data was presented on Friday and it came in slightly better with a result of 70.8 compared to the estimate of 69.2.
The U.S. will be quiet again today regarding economic data, tomorrow this starts to change with the S&P/CS Composite – 20 HPI and the CB Consumer Confidence reports along with the Chicago PMI reading. The USD and marketplace as a whole could prove to be in for a whirlwind this week with the Non Farm Employment Change numbers due on Thursday. Unemployment and housing continue to be a key focal point for investors who are trying to gauge the health of the U.S. economy and its ability to maneuver within this rather deep recession. With the likes of Pending Home Sales data waiting in the shadows on Wednesday, investors will get a powerful dose of information to confirm or refute their sentiment before going into the long weekend because of the Independence Day holiday. The U.S. is perched on a rather remarkable ledge having picked up enough strength against the EUR last week to get traders attention, however on Friday it wallowed within a weaker value. When all is said and done this week, the results from the USD may give a good idea to investors on where the greenback is headed this summer.

EUR:
The EUR did manage to pick up ground against the USD on Friday. There was little in the way of economic data from the European Union except for German inflation numbers. The German Import Prices did not register a change which was below the estimated rise of 0.3%. The German Prelim CPI did manage to climb 0.4%, above the forecast of 0.1%. However, neither of these reports suggest that inflation is about to rear its head. Today the European Union will release its broad Consumer Confidence numbers and a reading of minus -29 is the anticipated result. News making headlines last week were the actions of the Swiss Central Bank which apparently is trying to weaken the Swiss Franc. Also France is coming under criticism for its rather large budget which the IMF says should be restrained because of the danger it poses to the long term health of the economy. Tomorrow the German Unemployment Change numbers will be published. Also this week the ECB will meet and announce their interest rate decision, which is widely expected to be unchanged. The EUR did find itself wavering last week but showed some life going into the weekend. Many traders will watch it carefully this week to see if new cracks emerge it its armor.

GBP:
The GBP had a good day of trading on Friday climbing back to the higher side of its strong range against the USD. After the mid week’s testimony from Bank of England members warning about the length of the fight that the U.K. faces regarding its economic downturn, the GBP did show that it still has support. Mortgage Approval numbers will be forthcoming today from the U.K. and a result of 46K is expected. Also the GfK Consumer Confidence reading will be published and is forecasted to produce a minus -25 outcome. Tomorrow if the tentative schedule can be believed, the Nationwide HPI is on the table along with Current Account statistics. This will be a big week of data for the Sterling with the advent of housing sector, manufacturing, and Bank of England news all prevalent. The Sterling had a guardedly good performance as it closed out trading on Friday and there is little doubt that traders will look for opportunistic ranges from the GBP over the next few days.

JPY:
The JPY turned in another classic day of range trading against the USD on Friday as it picked up a small amount of value. The international equity markets were flat and this resulted in cautious trading across the board. Gold is standing once again around the 936.00 USD mark and is apparently showing some support in this area. Gold has returned to its inverse trading pattern against the USD and this will bear watching this week if the equities and currencies turn in volatility with so many economic risk events on the calendar.

Technical Analysis
EUR/USD:
This pair has been floating in a wide range with no distinct direction the last few days. The Oscillators are relatively flat on the hourly level and the RSI on the 4 hour chart is floating near the 50 line. However we can see on the daily chart that the Slow Stochastic shows that the bearish momentum might come. Going short with tight stops appears to be the correct strategy.

GBP/USD:
There is a bearish channel on the 4 hour chart. However this pair is now trading near the upper barrier of this channel, so there may be a slight correction before this pair makes another bearish move. It is important to note that most of the indicators on the daily chart also give a bearish signal. Going short appears to be preferable.

USD/JPY:
A negative bearish head and shoulders structure is shown on the 4 hour chart which took this pair to 95.20 however a double top stochastic pattern with a positive slope is establishing which may indicate an upcoming bullish trend as the next target is located at 96.40. Therefore, going long seems to be preferable today.

USD/CHF:
The bullish channel on the daily chart continues and the Slow Stochastic on the 4 hour chart indicates the continuation of the bullish movement within the channel and will try to breach the very strong resistance at the 1.1000 level. Going long appears to be preferable.

The Wild Card
Crude oil
The crude oil continues floating in a wide range between the 68.20 levels to 69.50 with no distinct direction. The crude oil now seems to be consolidating around the 68.90 as the volatility is beginning to decrease. The RSI is floating around the 50 level and all oscillators on the 4 hour chart do not provide a clear direction as well. The preferred strategy today will be to wait for a clearer signal before taking any position.

 

[mercaforex]

Jobless Claims Around The Corner

The USD started the day on its weak foot against the major currencies as a wave of optimism from the previous day of gains on the global equity markets helped spur early trading. However, upon rather less than stellar economic data coming from many fronts on Tuesday, equity markets started to get beaten down and the USD began to gain strength as risk adverse investors stepped forward. The U.S. released its CB Consumer Confidence numbers and they provided a jolt of doubt among the legions of optimists proclaiming that growth is around the corner with a result of 49.3 compared to the estimate of 55.4 and below last month’s outcome of 54.8. Also the S&P/CS Composite HPI survey was published and presented only a slightly better figure of minus -18.1%, beating the expectation of minus -18.7%. Another factor that should be taken into account is that volume on the stock markets apparently was very low on Monday as it gained showing that the market’s positive run was carried forth by a meager few and yesterday’s decline may have been a natural reaction.

Today the ADP Non Farm Employment Change numbers will be brought forth and they are forecasted to be minus -388K compared to last month’s negative -532K figure. Investors will watch this report with a skeptical approach before tomorrow’s data from the U.S. government. Since ADP has changed their numerical approach to garner their results, their numbers have been divergent from the official report. Pending Home Sales are also on tap today from the U.S. and this number could potentially set off some early fireworks before the long Independence Day weekend. The forecast is calling for a 0.7% increase. The ISM Manufacturing PMI reading is on the calendar too. Traders must remain aware that because of the holiday weekend that will ensue on Friday that volume in the U.S. market is light and that tomorrow’s Jobless data will probably cause volatility the remainder of this week as investor position themselves.

EUR:
The EUR took it on the chin on Tuesday as it gave up its previous day of gains. There was rather less than positive data coming from the European Union as the M3 Money Supply figure produced a 3.7% gain compared to the estimate of 4.6%. Also Private Loan data was weaker than expected as reported from the European Central Bank. Today the broad Final Manufacturing PMI reading will be released and it is anticipated to have a reading of 42.4. However, it is tomorrow EUR investors will be waiting for because of the ECB meeting and any pronouncements on fiscal policy. There is virtually no chance that the European Central Bank will change their interest rate tomorrow taking into account the statements by various ECB members the past month. The question surrounding the ECB has more to do with the level of quantitative easing that the Central Bank is capable of and has the fortitude to carry forth. The EUR will likely also stay under the cloud from economic risk events coming from the U.S. the next two days also. Having lost some ground yesterday, a test of the EUR may arise today until ‘true’ sentiment comes into the market after the jobless data from the U.S. tomorrow.

GBP:
The Sterling had a tough day because of data released from the U.K. on Tuesday. The Final GDP number came in poorly with a result of minus -2.4% compared to the forecast of minus -2.0%. Also the Current Account Balance figures did not meet expectations. Today the Manufacturing PMI survey results will be published and a reading of 46.4 is anticipated. It must be noted that the Halifax HPI has been tentatively pushed back until tomorrow and Friday will see the Final Services PMI data from the U.K. The Sterling has had a good ride the past few months as it has shown stability and gained against the USD even as recessionary data has been brought forth. The question surrounding the GBP – as with all other major currencies – is one of outlooks. There is a difference between stability and real growth and the debate that is flaring between those who are optimistic against those who are taking a cautious approach is sizeable. The Sterling like other currencies will be dollar centric because of the magnitude of the data that will be coming from the U.S. tomorrow. Until then market participants should expect a test of known trading ranges.

JPY:
Proving yet again that it is mired within range bound movements, the JPY lost ground to the USD as international equity markets traversed downward. It appears that for the time being that the JPY/ USD pair is performing a dance in which they allow the other to lead in alternating turns and this routine has been going on for a while now. Gold traded lower yesterday as the USD got stronger and found itself around the 926.00 USD level. Commodity prices on a whole have run into resistance lately as questions about supply and demand have come into vogue.

Technical Analysis

EUR/USD:
The pair is still floating within the bearish channel as the direction is unclear. No significant breach has been made. However both the daily and the 4 hour chart support the bearish notion. It seems that going short with tight stops might be smart today. Support level: 1.3960 Resistance level: 1.4190.

GBP/USD:
The Bollinger Bands are tightened indicating decreased volatility. However on the daily chart it seems that another sharp downward move is imminent. If we see a breach beyond 1.6380 it could be an opportune time to enter a short position. Support level: 1.6340 resistance level: 1.6590.

USD/JPY:
This pair was previously trading in a steady uptrend which is now flattening out. On the daily chart there is a tight horizontal channel forming. Indicators are bullish and the next target price will be around 97.30 level. Therefore a long position will still be preferable today.
Support level: 95.90 resistance level: 97.40.

USD/CAD:
There is a very accurate bullish channel forming on the 4 chart. The daily chart also supports a bullish notion. We expect the next target price to be at 1.1670. Therefore the preferred strategy today will be a long position.
Support level: 1.1440 resistance level: 1.1690.

The Wild Card
Crude Oil:
Crude Oil is now showing bearish momentum as seen by the hourly oscillators. Both the daily and hourly charts support another bearish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a short position.
Support level: 68.90 resistance level: 72.50.

 

[mercaforex]

Fireworks Will Start Early In U.S.

The USD lost ground within range trading yesterday as the currency markets essentially set themselves up for today’s jobless data. The ADP report came out on Wednesday and promptly shot another round of bullets at optimists. This poor data however did not make investors in the equities markets runaway, in fact they took the Dow and the S&P higher. The Non Farm Employment Change numbers today may be the biggest report of this year, considering that the equity markets have had a good run since March and managed to keep much of its gains. A number of minus -360K is forecasted today, last month’s number was minus -345K. June’s Non Farm report produced a better number than expected but it was the Unemployment Rate jumping that kept the markets cautious and fed market sentiment the entire month. The Unemployment Rate will be brought forth today also and a result of 9.6% is the estimate.
Today’s data has been the subject of speculation for weeks now. The White House fueled the discussion a couple of weeks ago when President Obama warned about high unemployment. An Unemployment Rate near or above 10% serves as an extremely weary place for bad sentiment, if this mark is neared today it could send the equity markets into a tailspin. Yesterday, investors basically shrugged off the poor ADP numbers and the bad results from Pending Home Sales keeping values in a cautious range. The markets have somehow been able to be nonchalant about a considerable amount of lackluster data the past month, how long can they keep that up? Housing and unemployment releases have not been fantastic. If the jobless numbers today are poor it could be the proverbial spark that serves as the motivator for trading unrest in July. Sentiment has been on a razor’s edge the past few weeks and there has been considerable grist for debate. With the Americans on holiday tomorrow this could be an extremely hectic day in the currency markets, if the Non Farm Employment Change number is poor and equities get hit, the USD could find a lot of takers.

EUR:
The EUR gained on the USD in cautious range trading on Wednesday. The Germans released their Retail Sales figures and it produced a gain of 0.4%, better than the projection. Also the European Final Manufacturing PMI was published and had a result of 42.6, slightly above the estimate of 42.4. While the EUR will be affected by the risk events taking place across the ocean today, the ECB will get into the act also. The European Central Bank is holding their fiscal policy meetings and is almost a dead certainty that they will not change their interest rates. However investors and other interested parties will watch the press conference held by ECB President Trichet closely to see what he speaks about and what he does NOT speak about. There have been considerable grumblings in Europe that banks have not been lending money to businesses in a ‘proper’ manner, but this comes under the potential cloud of a credit crunch that may be affecting financial institutions in a way the public does not understand. The tone of the ECB meeting will be important for EUR investors as they look onto to see if more optimism is offered or a cautious approach is delivered. The EUR has thus far been able to maintain the gains it has made against the USD since March and investors may be asking themselves if this has been a realistic trend.

GBP:
The Sterling had a mixed day against the USD. The Manufacturing PMI data was released and provided a result of 47.0, better than the projection of 46.4. The Halifax HPI has again been postponed and is now tentatively scheduled for Friday which leaves only the Construction PMI data for today and it carries an estimated reading of 46.1. The events in the U.S. today will put the GBP in a dollar centric mode and its trading could potentially see a broad test of sentiment after the jobless data. Tomorrow the Services PMI is on schedule from the U.K. along with the Halifax report. Today’s volume could be significantly larger than tomorrow’s but Sterling traders will be a nervous bunch these two days.

JPY:
The JPY experienced a day of consolidated movement going into today’s rather large day of data from the States. International equities turned in a mixed day of trading and showcased that investors are basically taking a wait and see approach. The JPY and USD have turned in a notoriously consolidated range as of late. This has a lot to do with the belief that both currencies serve as a safe haven, with this in mind the trading in the pair has produced a rather unexciting dynamic.

Technical Analysis
EUR/USD:
On the 4 hour chart the Oscillators are beginning to slope negatively indicating a possible correction. In addition the Slow Stochastic on the one hour chart is crossed at the 80 mark indicating that we are in overbought territory. Therefore the preferred strategy today will be a short position.
Support level: 1.3940 Resistance level: 1.4190.

GBP/USD:
The RSI and Momentum on the daily chart are negatively sloped which supports bearish movement. On the one hour chart the Slow Stochastic has also crossed at the 79 level indicating that we are in overbought territory and that a correction could be on the horizon. Therefore the preferred strategy today will be a short position.
Support level: 1.6290 Resistance level: 1.6550.

USD/JPY:
The one hour chart show that the pair is in a bullish configuration as volatility is increasing. However according to the daily chart this pair is moving without a clear trend and swinging around RSI at the 50 level implying the range movement. The target is expected to touch in and around the 96.90 level.
Support level: 95.50 Resistance level: 97.10.

AUD/USD :
The Bollinger Bands are tightening up on the daily chart, indicating decreased volatility. RSI and Momentum are positively sloped indicating bullish movement today. Both daily and 4 hour chart support a bullish notion and a breach through 0.8110 will validate a larger bullish move.
Support level: 0.7990 Resistance level: 0.8150

The Wild Card
Crude oil
• According to the hourlies, the downtrend the crude oil is going through seems to be very strong and the 4 hour chart validates that there is still room to run. The daily chart is also confirming that the downward momentum is still quite strong and that 67.10 is the next valid target. Forex traders may be able to maximize gains today by entering a short position.
Support level: 67.90 Resistance level: 72.50.

 

[mercaforex]

Traders Will Get A Breather Today

The USD picked up ground in a swift manner against the EUR and the GBP when the jobless data showed that the U.S. unemployment situation is still getting worse. The Non Farm Employment Change numbers produced a figure of minus -467K compared to the estimate of minus -360K. The Unemployment Rate now stands at 9.5%, which is a 26 year high. The outcome from the payrolls roiled the equities markets in a violent manner as both the Dow and S&P tumbled. The weakness from Wall Street had an immediate effect on the USD. The greenback found backing as weary investors turned to the proverbial ‘safe haven’ plays. The U.S. is on holiday today and trading from the States will be extremely light in the currency markets.

No data will be coming today from the U.S. because of the Independence Day celebrations getting started and Monday will see the release of the ISM Non Manufacturing PMI. Traders should expect a relatively flat marketplace today and if volatility rears its head within the currency markets it could be taking place because an investor is trying to take advantage of what should be less than exciting volume. The results from the jobless data will certainly start yet another firestorm as its merits are debated. Some economists are sure to point out that the unemployment data is a lagging indicator – meaning that it is not forward looking. However, others will point out that unemployment is a prime motivator within consumer confidence and that weak job prospects coupled with the fear of losing a job in a deep recession will continue to cause ill winds. Because of the holiday in the U.S. today the markets could see some players try to take advantage of a timid market. Traders will have to be aware that today’s results may be due to residual effects from yesterday, but also may lack impetus from real market movers.

EUR:
As expected the ECB did not change their interest rate and the EUR found itself trading in a dollar centric mode coupled with rather interesting issues arising from the European Union. The EUR lost ground to the USD in a rather quick pace as international equity markets slipped on the negative U.S. data. Adding to this picture was the press conference held by ECB President Trichet who proclaimed the ‘party line’, saying that signs of stability have emerged although economic activity remains week in the European Union. He added that there is a chance for growth coming about sometime in 2010. Trichet also talked about the banking situation in Europe, encouraging banks to lend more in order to help stimulate the economy. However, it remains unclear at best if financial institutions have that capability. Europe did release its Unemployment Rate yesterday and the broad data showed that the continent’s jobless problems are increasing. A rate of 9.5%, the same exact rate as the U.S. was reported. The German Parliament today will be discussing the possibility of creating a ‘bad bank’ in order to handle the toxic debt within their financial system. The European Union will release its Retail Sales figures today. It should be a relatively flat day for the EUR due to the holiday across the ocean but traders should be cautious for sudden gyrations.

GBP:
The Sterling lost ground to the USD on Thursday on the heels of the jobless data from the States. Only the Construction PMI data was released yesterday and it produced a reading of 44.5, which was below the forecasts of 46.1. The Halifax HPI has been pushed off again and is now tentatively showing a possible release this coming Monday. That essentially leaves only the Services PMI as the main economic data and it is forecasted to be 51.8. Making some waves yesterday from the U.K. is a report that the government is going to issue new regulatory standards for its banks next week and they supposedly will be much ‘harsher’ than the previous model practiced. With the holiday being celebrated in the U.S. today, the GBP could find itself wandering within a relatively well known range going into the weekend.

JPY:
The JPY picked up some ground against the USD as global equity markets were propelled downward on Thursday. The violent reaction in the bourses caused the risk adverse to come out of the cracks as expected. However, the trading between the JPY & the USD as pointed out several times is within the firm grasp of a consolidated pattern and its movements have been rather muted. Gold traded around the 933.00 USD mark as the day came to an end. JPY traders should expect a rather quiet day of movement considering the U.S. holiday.

Technical Analysis

EUR/USD:
The pair made a substantial bearish movement yesterday. However the indicators on the daily and 4 hour chart are showing mixed signals which can indicate that a bullish correction is possible. The Forex traders should wait for clearer signals before taking any position.

GBP/USD:
This pair is now nearing the bottom barrier of the bearish channel on the daily chart. If this pair breaches the 1.6290, then we could see some sharp downward movement. The oscillators also support a bearish notion indicating dcreased volatility. The Forex traders should wait for the breach before taking any position.

USD/JPY:
There is a tight flat channel appearing on the daily chart and this pair is now trading in the middle of it. In addition the Oscillators are neutral and the hourlies are also giving a mixed signal. Traders should wait for a clearer signal before taking any position.

USD/CHF:
Bollinger bands are tightened indicating that this pair could trade in a tight range today. However both the dailies and the hourly’s support a bullish move. It seems that trading in a range will be preferable.

The Wild Card

Crud Oil
Crude Oil is now showing bearish momentum as seen by the hourly oscillators. Both the daily and hourly charts support another bearish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a short position.

 

[mercaforex]

Spillover Affects May Gyrate Markets

The U.S. was closed for trading on Friday and currencies across the board moved in an extremely quiet manner. Trading today from the U.S. could see a spillover from sentiment that was generated on Thursday due to the rather negative jobless data which served as a reminder that the economic slope remains a perilous one. Talk of ‘green shoots’ can still be heard but they appear to be over matched for the time being with words of caution - that the recession may have slowed but the slump is not over. The ISM Non Manufacturing data will come from the U.S. today and a reading of 45.9 is expected, this would be a better number than last month’s outcome. This release will be the only major statistic from the U.S. for the next couple of days.
The currency markets and in particular the USD has been led by the results from the equity markets the past couple of months. The Dow and S&P will serve as the lynchpin for investors this week but traders will also have to keep their ears pinned to the many speeches coming forth from the upcoming G8 meetings. There has been plenty of speculation that Brazil, China, Russia, and now India are leading a parade which will discuss the possibility of the global economy becoming less reliant on the USD. However the skeptical question that must be asked is how this would be worked out and who would be willing to deliver leadership. In short expect words but no actions from this drama. It is highly unlikely that the USD can be cast aside for many years and dialogues about it possibly being relegated to a less important position seem more like political bantering than economic reality. The USD proved that it is the domain of risk adverse traders on Thursday and its results today and all of this week will likely continue to come based on what type of risk / reward scenarios are playing out on Wall Street.

EUR
The EUR traded to the weaker side of its range against the USD on Friday but because of the holiday across the ocean volume was rather light. The broad Retail Sales figures were released from the European Union on Friday and they produced a minus -0.4% result, which was worse than the anticipated number of minus -0.1%. Today the Sentix Investor Confidence survey will be published for Europe and a reading of minus -23.7 is projected. Tomorrow German Factory Orders will be the big release. The EUR has found some doubt crawl into its trading the past week as news about the health of the German banking sector and concern expressed by ECB President Trichet about the economic welfare of the continent has been heard. Like their global counterparts, European investors have seen doubts rise about the prospects for growth seep into their sentiment again. The EUR will find that it moves in a dollar centric mode today as investors deal with the overlap from markets that were basically brought to a standstill on Friday and the repercussions that still need to be filtered from last Thursday’s session.

GBP
Sterling continued to find a slippery road on Friday after losing ground on Thursday to the USD. The GBP has had a good run the past few months against the greenback and its results have brought out an army of traders who have tried to pick its top believing it will go lower, leaving some of these traders bloodied. The U.K. released its Services PMI data on Friday and its reading was slightly below expectations coming in with a figure of 51.6 versus the estimate of 51.8. The Halifax HPI has been moved back yet another day and is tentatively scheduled for Tuesday now. Tomorrow will definitely see Manufacturing and Industrial Production figures. News that GBP traders will be watching, will be from the Chancellor of the Exchequer, Alistair Darling, who may be announcing the government’s plans for broader regulatory powers today that will be given to the Bank of England and FSA. The MPC meeting will be taking place Thursday and its results will be likely be that the BoE will release more funds for fiscal stimulus. The Sterling finds itself trading at the lower end of what has been a strong range against the USD. Its results will be watched by all traders this week.

JPY
The JPY has shown once again that it is within a classic consolidated range with the USD. The Japanese stock markets lost ground largely on the heels of strong head winds which were generated by the retreat in equities in the U.S. markets on Thursday. The JPY continued to pick up strength from Asian investors that are showing a desire for a safe haven. Risk adverse sentiment has seemingly returned to vogue.

Technical Analysis
EUR/USD
The bearish channel on the daily chart continues with a volatile price movement. The Slow Stochastic on the daily chart is also showing continued bearish movement and is supported by the RSI. Going short with tight stops appears to be the right strategy.
Support level: 1.3850 resistance price: 1.4010.

GBP/USD
The 4 hour chart show that the pair is in a bearish configuration as volatility is increasing, and showing only bearish signals. Going short with tight stops appears to be preferable.
Support level: 1.6010 resistance price: 1.6310.

USD/JPY
The bearish channel on the daily chart continues. The Slow Stochastic on the 4 hour and the daily chart indicates the continuation of the bearish movement within the channel. However the Slow Stochastic on the daily chart is showing the correction of the current bearish trend is possible. Going short with tight stops appears to be the preferable.
Support level: 94.90 resistance price: 95.90.

USD/CHF
The bullish channel on the daily chart continues and the Slow Stochastic on the 4 hour chart indicates the continuation of the bullish movement within the channel and will try to breach the strong resistance at the 1.1030 level. Going long appears to be preferable.
Support level: 1.0850 resistance price: 1.1030.

The Wild Card
Gold
According to the hourlies, the downtrend the gold is going through seems to be strong. The daily chart is confirming that the downward momentum is still quite strong and that 910.00 is the next valid target. Forex traders may be able to maximize gains today by entering a short position.
Support level: 909.00 resistance price: 935.00.

 

[mercaforex]

Caution Prevails On Light Volume

The USD traded in a fairly solid range on Monday while holding onto its gains made last week. It was a quiet day of economic news and volume remained relatively light yesterday in the markets as traders seem to be still finding their way back to their offices after the long holiday weekend. The U.S. did release its ISM Non Manufacturing PMI survey and it had a result of 47.0, above the forecast of 45.9. The data showed that U.S. firms are still contracting albeit at a slower pace which highlights the sentiment that stability does not necessarily mean growth. U.S. equity markets produced a rather flat day of trading and investors will keep their eyes not only on the value of shares but the volume.
It will be another quite day of data from the States and investors will keep their focus on Wall Street looking for what has become a ‘golden’ barometer for the USD. Tomorrow the Crude Oil Inventories report is due along with the Fed Credit and Liquidity Report but neither piece of data should be earth shattering. Until Thursday when the weekly Unemployment Claims figures are published traders essentially will be left on their own to consider the direction of the market. Equities have shown signs of weakness the past couple of weeks and the volume in options have increased significantly as investors have taken positions below the current market levels. Besides stocks, traders will have to keep their ears posted on the comments from politicians who have the capability of causing a scare in the market. Vice President Joe Biden made a remark over the weekend that was considered rather ‘odd’, this when he said the Obama administration had misread the economy early on. The comment in fact may be true, but coming from someone inside the present U.S. administration was considered as a surprise and we shall see if President Obama tries to muzzle his subordinate. Look for the USD to continue moving in an inverse pattern compared to the results on Wall Street as the words ‘safe haven’ remains on the tips of many investors tongues.

EUR:
The EUR remained on the weaker part of its range against the USD Monday. The Sentix Investor Confidence readings were published for the European Union yesterday and its outcome was a negative -31.3 compared to the estimate of minus -23.7. Today the German Factory Orders statistics will be presented and an increase of 0.6% is the forecast, the previous result was unchanged. Also the French Trade Balance numbers are on schedule. Tomorrow could prove an interesting day with the Final GDP figures for Europe and the German Industrial Production data. The core issues that remain for EUR investors are the health of the banks and their transparency and the questions surrounding risks to a possible recovery that appears still tentative. The EUR has shown cracks in its armor the past couple of weeks and investors will watch it carefully to see if its range erodes further against the greenback.

GBP:
The Sterling was pushed back against the USD again on Monday. Today the U.K. will release its Manufacturing Production data and an increase of 0.1% is expected, this result would be worse than the numbers produced last month. Also on schedule are the Industrial Production statistics. The Halifax HPI has been delayed for at least another day and is now on the calendar for Wednesday. Recession continues to have a firm grip in the U.K. and there is a debate on the exact strategies that should be enacted to combat it. The British Chamber of Commerce said yesterday that the Bank of England should seek government approval if they intend on ‘printing money’ and added that a recovery from the recession is not guaranteed. The GBP which has performed well the past few months appears to have now met some downward pressure and the question is if the Sterling will continue to get knocked around.

JPY:
The JPY turned in a performance that was flat against the USD. In what has been a noted range for the past few months against the greenback, yesterday’s action was notable because of the severe consolidation the currency pair maintained. Gold traded down to the 924.00 USD mark on Monday showing that the commodities are coming under pressure as the USD has picked up a bit of momentum. The JPY continues to be the domain of risk adverse investors who are looking for capital preservation.

Technical Analysis

EUR/USD:
The 4 hour chart shows that the bearish channel continues as the pair now floats around 1.3950. Oscillators show that the momentum is still bearish and a breach through 1.3890 will validate a bigger bearish move. The RSI is also forming back into bearish formation and supports the general notion.

GBP/USD:
The Bollinger Bands are tightening up on the daily chart, indicating decreased volatility. RSI and Momentum are still negatively sloped indicating further bearish movement today. Both daily and 4 hour chart support a bearish notion and a breach through 1.6090 will validate a larger bearish move.

USD/JPY:
This pair has been floating in a tight range around 94.95 to 95.45 with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the 4 hour chart is floating near the 50 line. However we can see on the daily chart that the Slow Stochastic shows that the bullish momentum might come. The preferred strategy today will be trading in a range.

USD/CHF:
There is a bullish trend developing on the 4 hour chart. This pair has now breached the resistance level of 1.0850 and we expect further bullish movement. Therefore a longt position seems to be preferred today.

The Wild Card

Gold
Gold has been dropping over the last trading day and all the indicators support further bearish movement. Forex traders will be able to maximize gains today by entering a short position before we see a correction.

 

[mercaforex]

Equities Slump & The USD Climbs

As U.S. stock markets got hammered yesterday, the USD got stronger against the EUR and GBP. The USD continued to show that when international bourses roil, that it and the JPY become bastions for those seeking safe havens. There was little economic data from the U.S. yesterday and traders took their cue from events unfolding on Wall Street via shares and the bond markets in Chicago. Crude Oil Inventories is on schedule today. Crude Oil may prove interesting because of its recent decline in the commodity markets. Crude was trading near 72.00 USD a barrel a couple of weeks ago and as of yesterday was being pressured around 62.00 USD. The price of oil highlights that speculation may have played a role in its recent upward move and now that concerns about a ‘real’ recovery have grown - commodities and equity market have both suffered.
The USD has shown strength the past two weeks and has made a slow and steady move against the EUR and GBP while gaining value, as questions have arisen again about the housing sector, corporate growth (or stagnation as may be the case), and the outlook for employment. Investors will find themselves looking at the results from the stock markets today amidst nervous sentiment. Alcoa is due to issue their quarterly report today and this may be a crucial test, the large aluminum company is expected to issue a loss but the question is if the number will meet expectations. Tomorrow the weekly Unemployment Claims figures will be released along with Wholesale Inventories. The week has been quiet with economic data and this will continue into Friday when only the University of Michigan Prelim Consumer Sentiment and Trade Balance numbers will be reported. The USD has had a good showing the past few trading sessions and it will be of interest to see if the greenback continues this trend, equities will likely be a key component for trading decisions.

EUR:
The EUR continued to slip against the USD and now finds itself lurching towards important support levels. Germany Factory Orders were reported yesterday and actually turned in better results than expected with a number of 4.4% compared to the forecast of 0.6%. Today the European Union will publish its Final GDP and the estimate is looking for a number of minus -2.5%. The German Industrial Production data is also on cue and the anticipated statistics are calling for an increase of 0.6%. The EUR has been slowly giving back some of the strong gains it made against the USD the past few months, this as international equities have fallen back and questions have grown about the health of financial institutions in Europe. With the advent of the G8 meetings in Italy today, politicians will certainly get a chance to make speeches about the economic crisis and what is being done to confront it. Tomorrow Germany will issue their Trade Balance figures. The EUR has been put under pressure the past week and traders will have to watch it with a steady gaze.

GBP:
Sterling traded lower against the greenback on Tuesday as Manufacturing Production numbers showed a negative result of minus -0.5% compared to the estimated gain of 0.1%. Also the Industrial Production data turned in worse results. Today the Halifax HPI is on schedule and appears that it will actually be released after a week of delays. The estimate is calling for an unchanged result, but like the U.S. many questions remain about the health of the housing sector in the U.K. Tomorrow the Bank of England’s MPC meeting results will be brought forth. The key interest rate in the U.K. will not be tampered with, but investors will await any word on new amendments to fiscal policy. Traders should also be aware that the U.K. government is hinting strongly that the entire banking system will be put under much greater scrutiny and tougher regulations. The GBP has enjoyed good results against the USD the past few months, but as of late its strong trend appears to be showing signs of cracking.

JPY:
After turning in a day of nearly no movement on Monday, the JPY moved quickly against the USD on Tuesday and gained strength. The steep fall on the Nikkei spurred on risk adverse Asian investors, thus taking the JPY to the stronger side of its range against the USD. The question now becomes what will become of the strong range the JPY and USD pair have shown. The Japanese economy is suffering badly from the global recession and its giant export companies will be none too happy about the JPY getting stronger and the fact that international equity markets are nervous may do the JPY no favors.

Technical Analysis

EUR/USD
The hourlies show that the pair is in a bearish configuration as volatility is increasing, and showing only bearish signals, the RSI and the slow stochastic supporting the continues of the bearish trend. Going short appears to be the correct strategy.

GBP/USD
The sharp bearish channel on the daily chart continues with no signs of a stop. The Slow Stochastic on the daily chart is showing continued bearish movement and is supported by the RSI. Going short with appears to be the preferable strategy.

USD/JPY
After a long substantial bearish movement it seems that the correction is imminent, on the daily chart the Stochastic Slow is crossing at the 13 level and the RSI is at the 17 level which indicates that we are in oversold territory and support the correction. Going long appears to be the right strategy.

USD/CHF
The bullish channel on the daily chart continues and the Slow Stochastic on the 4 hour chart indicates the continuation of the bullish movement within the channel and will try to breach the very strong resistance at the 1.0990 level. Going long appears to be preferable.

The Wild Card
Gold
According to the hourlies, the downtrend the commodity is going through seems to be strong. The daily chart is confirming that the downward momentum is still quite strong and that 901.00 is the next valid target. The preferred strategy will be a short position.

 

[jeffsmith]

Hey Mercaforex thanx for the updates

 

[mercaforex]

Will Equity Cauldron Spill Over?

The USD lost a little ground to the major currencies on Thursday as mixed results turned up across the board within the marketplace. After making significant gains against the EUR and GBP earlier in the week, the greenback found some resistance in yesterday’s trading. Equities underscored the results on the currency markets by turning in a flat day in which most international bourses moved in a tepid manner. The weekly Unemployment Claims figures were released yesterday and the number was better than expected with a result of minus -565K compared to the estimate of minus -608K. Also Wholesale Inventories data was released and produced a negative -0.8% outcome. Today the U.S. will release its Trade Balance numbers and the University of Michigan will deliver the Prelim Consumer Sentiment reading.

Going into the weekend the USD can expect to trade in correlation with the results from Wall Street still. The unemployment data in the States yesterday was better than the anticipated number but nothing to write home about. There is a palpable nervous sentiment that exist in the stock markets and earnings from the likes of many retail companies the past two days did little to calm fears that the U.S. economy is not exactly rosy. It is clear that in order to spur sales among consumers that retail companies have had to heavily discount their prices in order to create demand. Fears of unemployment continue to cause anxiety for consumers and this directly impacts many aspects of the recession that has a strangle hold on the American economy. The affects of summer trading may be underway with traders starting to look forward to holidays, but with so much pressure on the stock markets investors will have to keep their eyes primed on bears whose negative sentiment seems to be growing. The USD has had a fairly good stretch of trading based on a flight to quality, even though so many question the amount of stress that the U.S. government is putting on the greenback structurally due to the huge amount of stimulus packages it has undertaken. Today’s trading will likely mirror the results from Wall Street and the USD’s safe haven status is likely to be spoken about again by some traders.

EUR:
The EUR turned in a mixed performance on Thursday as it basically treaded water against the USD. The German Trade Balance numbers were released yesterday and produced a result of 10.3 billion compared to the estimate do 8.9 billion. Today the French and Italian Production data is on the calendar and the German’s will publish their Wholesale Price Index figures. These numbers will be watched by traders but may have little impact on the currency markets. It has been a relatively light week of economic data from Europe which continues to be under a cloud from speculation swirling about the poor health of the Eastern and Central European economies and the exposure that financial institutions have regarding this. It is being reported that the IMF, the International Monetary Fund, has been approached about having to create an aid program for a host of these nations that are requesting loans. The outlook for an economic recovery in Europe has grown weary like its counterparts and investors appear to be looking at the EUR with a more critical eye.

GBP:
The Sterling stabilized on Thursday and gained against the USD after being put under pressure earlier in the week. The Bank of England’s MPC results surprised no one when the key interest rate was left unchanged. The BoE did cause news on Thursday however when they announced no change to the level of quantitative easing that it has undertaken. Today the U.K. will be releasing its PPI Input and Output data but no major change in the inflationary landscape is likely to occur today. The Sterling may have gotten a boost when investors choose to believe that the Bank of England’s non-action on Thursday was a good conservative business maneuver. The U.K. is suffering its steepest recession since the end of World War II and the British government is facing a critical test of its leadership. The Sterling goes into Friday’s trading with the possibility of being a focal point for opportunistic traders who may choose to tread within its ranges.

JPY:
The JPY found some tranquility on Thursday after two days of rather volatile trading. The JPY and USD currency pair has traded within a very tight range the past few months and its movement this week was eye opening. The strength the JPY has shown against the USD comes on the heels of investors looking for a safe haven as international equity markets have wobbled. The Bank of Japan went on record yesterday saying that the strength of the JPY is undesirable and not welcome. The Japanese economy showed that it is suffering from the recession severely yesterday when its CPGI inflationary readings showed an enormous decline of -6.6%. The JPY is at the stronger side against the USD and may provide traders with the ability to test its waters for those willing to see if its range can stay true.

Written by: Robert Petrucci, Chief Commodity Expert and Forex Analyst

Technical Analysis

EUR/USD:
The pair made a bullish correction, after crossing the 1.3990 level and is now floating between the 1.3910 price levels to 1.4020. However, all oscillators on the the daily chart are showing bearish momentum. Going short appears to be the preferable strategy.

GBP/USD:
The bearish trend made a corrective move breaching the resistance level of 1,6290 and is now floating between the 1,6250 price level to 1,6335. However the negative slope on the 4 hour chart's Slow Stochastic indicates the formation of the bearish movement within the channel. Going short appears to be the preferable strategy.

USD/JPY:
The sharp bearish channel on the daily chart continues. However the Slow Stochastic on the daily chart is showing the correction of the current bearish trend is possible and is supported by the RSI. Traders should wait for a stronger signal before taking any position.

NZD/ US:
There is a very accurate bearish channel forming on the 4 chart. The daily chart also supports a bearish notion. We expect the next target price to be around the 0.6170 level. Therefore, the preferred strategy will be a short position.

The Wild Card

Gold:
Gold is now showing bearish momentum as seen by the hourly oscillators. Both the daily and hourly charts support another bearish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a short position.

 

[mercaforex]

Risk Adverse Traders Ruling The Markets

The USD picked up ground against the EUR and GBP in what appears to be the continuation of risk adverse trading. The University of Michigan Prelim Consumer Sentiment data was released and produced a reading of 64.6 compared to the estimate of 70.9. The U.S. stock markets were already in a precarious place before the consumer sentiment figures were published and found nothing to smile about afterwards. The performance of stocks on Wall Street remained sluggish and as Friday came to an end the currency markets showed once again that the USD remains a magnate for investors who would prefer to be cautious. The U.S. will release its Federal Budget Balance data today. Tomorrow the Retail Sales numbers will be brought forth. The retail reports will garner interest because of the dismal outcome from the University of Michigan Consumer Sentiment reading on Friday and investors will look for correlations.
Investors will continue to pay prime attention to earnings reports from Wall Street. Heavyweights such as Goldman Sachs and J.P. Morgan are on schedule this week and traders will be keen to judge the health of these major financial institutions. Also starting to find chatter are the murmurs of another stimulus package which found a backer in Warren Buffet in a recent interview. President Obama is beginning to feel heat from his political opponents who are saying that his actions thus far have not produced tangible results. Whether or not the political agenda of his opponents has merit remains questionable, but it appear the subject is on the verge of growing into a bigger debate. If a second stimulus plan finds backing the argument could grow into a full-fledged summer imbroglio. Unemployment, housing, and consumer spending remain core issues for the U.S. economy and stock markets remain nervous because of the clouds that seem unlikely to go away anytime soon. The USD has pushed its way to the stronger side of its recent range against both the EUR and the Sterling and has shown that it will likely hold its ground as long as equity markets flounder.

EUR:
The EUR continued to trade to the lower part of its range against the USD on Friday as the affects from sagging returns on equities markets took their toll. There has been little in the way of major economic data from the European Union and today will be a quiet day as well. ECB President Trichet is scheduled to speak in Germany today but it is doubtful his remarks will spur the markets. Tomorrow the German ZEW Economic Sentiment reading is due along with the broad report for the European Union and the broad Industrial Production numbers. On Wednesday inflation data will be published but like it is actually deflation which remains a concern in Europe and among its major counterparts. Look for the EUR to move on sentiment generated from the results on global equity markets and lingering discussions about the health of the European banking system which continues to foster speculation that it will need additional capital in order to function properly.

GBP:
Sterling was taken lower again on Friday against the USD as pressure continued to mount against the GBP. There was little in the way of economic data except for the PPI Input and Output numbers which did not cause any major surprises. The U.K. will release its BRC Retail Sales Monitor and RICS House Price Balance figures today. Both of these numbers could cause some waves for the Sterling but it is most likely that the GBP will remain likes its counterparts at the whim of investors who are gauging their risk sentiment based on the results from the equity markets. Inflation data will be published from the U.K. tomorrow and on Wednesday the Claimant Count Change figures are on schedule. The Sterling has found itself in a downward trend the past two weeks and its slope appears slick.

JPY:
The JPY maintained its strong range against all the major currencies including the USD on Friday as a barrage of risk adverse trading continued to surge in the currency markets. In essence the lack of commitment on the part of equity traders has fed directly into the desire of currency traders to take paths of preservation in a flight to quality as questions and doubts linger about global growth. Gold continues to show a lack of takers and it has not found the ability to climb from the lower plateaus of its current range. The JPY continues to turn in strong results even as the Bank of Japan calls for a weaker Japanese currency and this circumstance looks as if it may stay the case as long as traders remain cautious.

Technical Analysis

EUR/USD:
After a continuation of a bearish trend, the pair is now floating in a tight range between the 1.3915 levels to 1.3980. On the daily chart The RSI is floating around the 59 which do not provide a clear direction. The preferred strategy today will be to wait for a clearer signal before taking any position.
Support level: 1.3830 resistance level: 1.4050

GBP/USD:
The sharp bearish channel on the daily chart continues with no signs of stop. The Slow Stochastic on the daily chart is showing continued bearish movement and is supported by the RSI. Going short appears to be the right strategy.
Support level: 1.6010 resistance level: 1.6250

USD/JPY:
Bollinger bands are tightened indicating that this pair could trade in a tight range today. However both the dailies and the hourly’s support a bullish move. It seems that the preferred strategy today will be to wait for a clearer signal before taking any position.
Support level: 91.90 resistance level: 92.90

AUD/USD:
There is a very nice bearish channel appearing on the daily chart. The Momentum and RSI also have a negative slope and support further bearish movement. The next target price seems to be around the 0.7650. The preferred long term trade will be a long position.
Support level: 0.7650 resistance level: 0.7810

The Wild Card
Crude oil:
The crude oil is now showing bearish momentum as seen by the hourly oscillators. Both the daily and hourly charts support another bearish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a short position.
Support level: 58.10 resistance level: 61.10

 

[mercaforex]

Goldman Sachs Helps Equity Markets

The USD lost some ground to the EUR and GBP on Monday as the U.S. equity markets turned in a positive day. There was little in the way of major economic data yesterday from the U.S. but reports surfacing began to speculate that the quarterly report for Goldman Sachs will be better than expected today and this seemingly turned on the ignition key for equities to throttle forward. Today the Core Retail Sales figures are on schedule and a rise of 0.5% is expected. Retail Sales data is anticipated to basically produce the same type of numbers they did the previous month. Business Inventories are also on tap today and these numbers are anticipated to decline, but not at the pace they did last month.
The question traders will have to ask themselves today is whether the chocolate has already been put into the cake. In other words, the positive news regarding Goldman Sachs certainly helped drive the equities markets higher yesterday, but what has to be considered are what type of earnings the financial institution will have to produce today in order to spur on further positive sentiment? Many corporations will be reporting income this week and investors will be sitting on a volcano of information that will be able to propel the markets in a number of directions. Tomorrow the Empire State Manufacturing Index and the Industrial Production releases will be forthcoming from the States. The combination of the retail, manufacturing, and quarterly earnings reports are certain to spur on the currencies. The battle that will ensue the next few days will be a dynamic that involves different perspectives including traders who are looking for short term movements compared to investors who may be undertaking a longer viewpoint. Monday’s action on Wall Street was positive and the big question for the currency markets is the durability of rallies that come from equities.

EUR:
The EUR gained against the USD on Monday as it got some footing from stronger results coming from equity markets. Today the German ZEW Economic Sentiment survey will be published and it is expected to produce a reading of 48.0, which would be an improvement on last month’s result. The European Union will also release their Industrial Production numbers and this is anticipated to be a better result than the previous outcome. The sentiment generated from another positive number from the German ZEW may cause some skepticism among some investors today. The European Union is still widely in the midst of a recession and like the U.S., a debate exists in Europe between those who are proclaiming that the economy is emerging from a recession and those who believe that a recovery will be a protracted process. The EUR had a positive day of trading Monday on what largely appeared to be better returns from international equity markets and this trend may continue today.

GBP:
Sterling found some backing on Monday as it climbed off of the lower part of its recent range against the USD as an improvement from the RICS House Price Balance coupled with good marks from equities bolstered the GBP. The survey taken by the Royal Institute of Chartered Surveyors showed that the prices of homes in the U.K., particularly London, have begun to show stability and that the prices for homes in some areas actually increased for the first time in twenty months. The result of minus -18.1% compared to the estimated decline of -39.6% was welcomed as a sign of more optimism. Retail Sales as reported by the BRC also showed a climb of 1.4%. Core CPI data will be reported today and a forecast of 1.8% is projected. Tomorrow the Claimant Count statistics will be published. Yesterday’s bout of good news may have provided Sterling upward sentiment but the GBP will be under the glare of traders again today and like the other major currencies will find itself the recipient of momentum generated from the results on local and global stock markets.

JPY:
The JPY slowed down against the USD on Monday and lost some value. It is still hovering at the strong side of its range but a good day of trading in the international equity markets increased risk appetite for Asian investors. The JPY will continue to trade off of the sentiment that is based on the caution that ebbs and flows directly as a result from the level of confidence that investors are willing to illustrate.

Technical Analysis
EUR/USD:
The pair is now floating around the 1.4000 price level. The indicators on the daily chart are showing mixed signals which can not indicate a clear direction. The Forex traders should wait for clearer signals before taking any position.
Support level: 1.3890 resistance level: 1.4110

GBP/USD:
This pair is now floating in a tight range between the 1.6235 levels to 1.6317 with no distinct direction. The pair now seems to be consolidating around the 1.6300 as the volatility is beginning to decrease. The RSI is floating around the 50 level and all oscillators on the 4 hour chart do not provide a clear direction as well. The preferred strategy today will be to wait for a clearer signal before taking any position
.Support level: 1.6190 resistance level: 1.6350

USD/JPY:
The pair is now floating around the price of 93.20. However all oscillators on the daily chart are showing bullish momentum and the Bollinger Bands are also indicating an additional upcoming bullish move. Going long appears to be the right decision.
.Support level: 92.85 resistance level: 93.60

USD/CHF:
This floating of the pair continues in a very tight range with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily and 4 hour chart is floating near the 60 line. In addition we can see mixed signals with no specific direction. The preferred strategy today will be to wait for a clearer signal before taking any position.
Support level: 1.0790 resistance level: 1.0890

The Wild Card
Crude Oil:
We can see an important support level of 60.00 and the bearish move might re-validate as we can see on the daily chart. The traders have an opportunity to join this resistance for a long position.
Support level: 59.50 resistance level: 61.10

 

[jeffsmith]

Major Pairs Lack A Solid Direction During The Asian Session

July 15th, 2009

Overall the major pairs traded practically flat during the Asian session, just below a number of significant price point. It is important to note that the major pairs failed to break these price points in the prior day, something that has caused the market to retrace during the second part of Tuesday’s session almost every pip gained earlier. However, helped by stronger than expected activity after the closing bell in the S&P futures, the major pairs recovered much of those declines. For now, investors are still waiting for the BoJ to hold its press conference, which may influence the fx market.

 

[mercaforex]

Clear Picture Remains In Affect

The USD turned in a mixed day as it held its ground against the EUR, picked up a bit of steam against the JPY, and lost value to the GBP. The news that dominated trading was the quarterly report from Goldman Sachs and Wall Street turned in good day with the positive sentiment as backing. Retail Sales figures were released from the U.S. and came in with contradictory information. Core numbers were worse than expected, while the broad numbers showed a slight gain. Business Inventories were published too and the result was a minus -1.0%, slightly off of the estimated decline of -0.9%. The results on the stock market yesterday were positive as noted but equities did not produce the gains that they did in the previous session, perhaps because the Goldman Sachs numbers were already anticipated and traders had entered the marketplace the day before the actual report came out.

Quarterly earnings will continue to dominate market sentiment today with a slew of companies reporting their incomes and business outlooks. One company in particular that investors will watch is Abbot Labs because of it wide business spectrum and the reflection it will be able to give for existing economic conditions. The U.S. will issue CPI data today, but inflationary concerns will take a back seat and the Empire State Manufacturing Index may be the most important release. The manufacturing report from the New York Fed is expecting to post a minus -5.3 reading, which would be better than last month’s outcome. Industrial Production and Crude Oil Inventories numbers are also on schedule. Tomorrow the weekly Unemployment Claims will lead the parade, besides the earnings data from corporations which will keep coming. The USD continues to trade mainly within the domain of risk appetite sentiment. A clear picture has emerged which will likely remain, showing that the USD’s value is trading in an inverse manner with the results from Wall Street.

EUR:
The EUR battled to maintain its value on Tuesday as less than wonderful news was produced from Germany. The ZEW German Economic Sentiment survey was published, but the expected positive surge met a cold hard place when it turned in a negative reading of 39.5 compared to the forecast of 44.2. The broad Industrial Production numbers from the European Union were also released and produced a minus 0.5% outcome, worse than the estimate of 1.5%. The negative data kept the EUR in waters that did not allow it to pick up as much value against the USD compared to the performance the GBP turned in. Europe will release its CPI numbers today and investors will continue to monitor these figures not so much for inflation but actual deflation. Tomorrow the Italian Trade Balance report is on schedule. Europe’s dose of poor economic data yesterday served as a reminder that while some are speaking about the possibility of growth coming about by year’s end, that there are warning signs that the recession’s grip is strong and may persist for a longer duration. The EUR was not able to gain on a day when the equity markets should have given it some impetus and this highlights that the currency may continue to find some headwinds if the stock markets should stumble.

GBP:
The positive day from the equity markets helped propel the Sterling’s value on Tuesday. CPI data released by the U.K. showed it meeting expectations, which left the GBP to trade on the good sentiment. The Claimant Count Change numbers are on cue from the U.K. today and are forecasted to show a number of 41.4K compared to last month’s figure of 39.3K. The unemployment numbers from the U.K. could become critical if a surprise were to transpire. The economic picture from Britain remains speculative in the sense that some are speaking about improving data, while others continue to point out that the slump has merely slowed and it doesn’t meant that actual growth is taking place. Thus, the Sterling remains firmly in the midst of sentiment trading that will be likely dominated by the returns in equities. If share prices do well, the GBP should perform better, and if stocks tumble, it is likely the Sterling will do so as well.

JPY:
In what is proving to be a long running saga, the JPY lost ground to the USD as equity markets showed positive gains globally. Having traded to the stronger side of its range last week against the USD as risk adverse trading took precedent, the JPY has now lost two days in a row to the greenback as risk appetite has increased. Gold climbed back to the 926.00 USD mark, showing that the precious metal continues to trade within tried and true habits. Look for the JPY to remain a barometer for caution as the currency markets move largely in step with the equity markets worldwide.

Technical Analysis

EUR/USD:
This pair has been floating the last three days in a wide range between 1.3910 to 1.4072 with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily chart is floating near the 55 line. The preferred strategy today will be trading in a range.

GBP/USD:
This pair is now nearing the upper barrier of the bullish channel on the one hour chart. If this pair breaches the resistance level 1.6450 then we could see some sharp upward movement. The Oscillators also support a bullish notion. Going long with tight stops appears to be preferable.

USD/JPY:
The hourlies show that the pair is in a bullish configuration as volatility is increasing, and showing bullish signals However according to the 4 hour chart this pair is moving without a clear trend and swinging around RSI at the 45 level. Going long with tight stops appears to be preferable.

USD/CHF:
The floating of this pair continues in a very tight range with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily and the 4 hour chart is floating near the 50 line. In addition we can see mixed signals with no specific direction. The preferred strategy today will be to wait for clearer signal before taking any position.

The Wild Card
Gold:
Gold is now floating with no distinct direction. Both the Daily RSI and the Slow Stochastic are floating in neutral territory. The preferred strategy today will be to wait for clearer signal before taking any position.