Economic News
USD
U.S. Bailout Package on Tap
All eyes look to the U.S. House of Representatives as the $700 billion bailout plan, passed in the Senate yesterday, is put forward for a second round of voting. This bill was killed the first time it reached the House since congressmen were not yet in agreement over the various stipulations included in the package. Witnessing an immense single-day drop in stocks following Monday's defeat of this bailout package may have indeed convinced Congress of the dangers in not passing this legislation. The short-term benefit of implementing this rescue plan is obvious; it should stabilize markets and boost investor confidence. However, some analysts expect it to do little more than ease the inevitable recession the U.S. will experience in the near future. The long-term costs and benefits of this package are still unknown.
Yesterday, traders who took advantage of the strengthening USD had the potential to make lucrative sums of money as the dollar reached a price level unseen in over a year. Diving as low as 1.3750 against the EUR and 1.7546 against the GBP, the USD gained some momentum and now sits steadily near 1.3850 in anticipation of today's news. The only currency beating the greenback's bullish trading day was the JPY, ending yesterday's session at 105.11, 70 points below the day's opening.
The bailout package is not the only thing on tap today, either. Also emanating from the U.S. economy are figures on Non-Farm Employment Change, Unemployment Rates, Average Hourly Earnings, and the ISM Manufacturing Index. Starting at 12:30 GMT traders should keep an eye on these figures as any worse-than-forecasted numbers have the potential to create a slight downturn to the USD. Keep in mind, however, that the primary driving force in today's market is the bailout plan. The news surrounding this monumental event will drive the market far more than any other factor.
EUR
Dovish Speech by Trichet Foreshadows a Cut to Interest Rates
As the trading week ends, analysts have observed one of the worst short-period downturns in the history of the EUR. Starting the week from a relatively high position, but on a slight bearish run, the EUR then tapered off throughout the week dropping to a 13-month low versus the USD. Pushed by decreasing economic growth, poor figures from the biggest European economies, and less risk appetite from investors, the EUR is starving for attention.
Following the speech delivered by Jean-Claude Trichet, President of the European Central Bank (ECB), yesterday led to a disastrous trading day for the EUR. Analysts are now forecasting a cut to interest rates in the Euro-Zone as his speech was far less hawkish than anticipated. He spoke of diminished inflation risks, the possibility of easing interest rates in next month's meeting, and the U.S. bailout package, but did little to lessen the fears within the Euro-Zone economy of the coming recession. These worries of a European recession have grown as the 15-nation currency took a major hit following the passage of the U.S. bailout package in the Senate yesterday, and from bank failures across Europe. Sagging below 1.3800 versus the USD and hitting as low as 0.7813 against the GBP, the recent outlook for the EUR is not good as it hit a record one-week drop against its primary currency rivals.
As for today, traders have little to look for in terms of economic data from Europe. With German banks on holiday and the only significant figure being European Retail Sales, the actor standing in the spot light today will be the bailout package being voted on by the House of Representatives in the U.S.
JPY
Japanese Yen the only Currency to Beat USD's Bullish Run
The JPY underwent a bullish trading session yesterday as it appreciated against all of its major currency rivals as well as being the only currency to beat the USD's bullish run. The JPY closed yesterday's trading session at 105.11 versus the USD. Moreover, the traumatic trading day experienced by the EUR led the JPY to reach a 2-year high of 144.55 against the 15-nation currency.
Japan was absent from the economic calendar yesterday as no indicators were published. However, the export-based Japanese economy took advantage of the drop in the price of Crude Oil which helped to lower the transportation costs of Japanese goods exported to the global economy.
Today is also expected to be a quiet news day from Japan. The JPY's trends will be affected by the rallies of its primary currency pairs. It seems as if both the USD and EUR are expected to undergo a volatile trading session today and their crosses with the JPY will likely be affected. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY's movement today, especially the U.S. bailout plan currently being looked over by the U.S. House of Representatives.
Oil
Crude Declines amid Worsening Demand Outlook
The price of Crude Oil continues to fall, dropping 4.6% to $93.97 a barrel so far this week. This weekly drop is the biggest since the December of 2004. The price of Oil most likely will not stay at current levels near $100 if the global economy skids into recession and economic activity slows, dragging down demand for Crude Oil. With the ongoing financial crisis, demand for energy in the world's largest energy consuming nation, the U.S., has reduced. If indeed the U.S. falls into a deep, sustained recession, the price of Oil will likely go even lower, potentially reaching as low as $50 a barrel!
Today's chapter will be about whether or not the U.S. House of Representatives approves the government's $700 billion bank-bailout plan. After the House rejected the first version on Monday, the legislative body will now consider the Senate's revised bill again today. However, the market remains pessimistic about this legislation; even if the financial bailout plan is passed it is highly unlikely that it will slow down the onset of the coming recession.
The downward pressure on the price of Crude Oil is likely to persist, and it depends now on whether or not the Organization of the Petroleum Exporting Countries (OPEC) can maintain production discipline and restrict supplies. If OPEC can control its Oil exports, it may be able to keep the price of Crude Oil near its recent highs; if not, prices will continue to deteriorate.
Technical News
EUR/USD
It seems that the pair has reached it bottom after breaching the 1.3750 level. Currently, a bullish cross on the 4 hour chart's Slow Stochastic suggests that a bullish correction is impending. Going long with tight stops looks to be the right strategy today.
GBP/USD
After breaching through the 1.7560 level, the cable seems to be on its way to initiate a bullish reversal. A bullish cross on the 4 hour chart's Slow Stochastic implies that the move is quite imminent. Going long might be preferable today.
USD/JPY
The pair continues to provide mixed results, and is now traded around the 105.25 level. It seems that a moderate bullish movement might take place as all oscillators on the 4 hour chart are pointing up. Buying on lows appears to be the right choice.
USD/CHF
There is a very distinct bullish channel forming on the daily chart, however as the Bollinger Bands on the hourlies are tightening, suggesting that a sharp movement is forthcoming, and as the RSI has crossed the 40 line, the pair seems to be facing a mild downtrend.
The Wild Card
Gold
There is a very accurate bearish channel forming on the daily chart, as gold prices had consecutively dropped since reaching the $926 an ounce price. Currently, as the RSI on the daily chart is floating near the 50 line and the Slow Stochastic is pointing down, gold might extend its bearish trend. This might be a great opportunity for forex traders to join a very popular trend.
Friday 3 October 2008
Wednesday 24 September 2008
Daily Forex Analysis
Economic News
USD
Rescue Package Generates Confidence in the USD
The USD surprisingly underwent a bullish trading session yesterday as it appreciated against all of its major currency rivals. Earlier in the day, the greenback reached session highs against the EUR after negative Euro-Zone manufacturing data focused attention on weakness in the Euro-Zone. At the end of yesterday's session the USD closed at 1.4644 versus the EUR. The USD also saw steady gains against the Pound Sterling and Swiss Franc.
The most influential economic data coming from the U.S. yesterday were the testimonies of Fed Chairman Bernanke and Treasury Secretary Paulson to the Senate Committee on Banking, Housing, and Urban Affairs. Investors were encouraged by a slight decrease in oil prices as they awaited details of the U.S. government's bailout package. The initial euphoria about the plan to buy damaged mortgage debt has turned to anxiety about how the government will fund the $700 billion deal without burdening the U.S. taxpayer. Analysts say that this has limited the USD's gains. Liquidity was thin in the market, with investors uncertain about the future movement of the stock market. They were staying on the sidelines until turmoil in financial markets subsided. In other news, the Bernanke and Paulson testimonies were in support of their proposal to give the government the authority to buy up illiquid assets, something Congress seems skeptical about unless there are mechanisms built into the law that would protect U.S. taxpayers from any downside losses. The proposal has had a huge affect on the greenback so far this week.
Looking ahead to today, the most important financial indicator scheduled to come from the U.S. economy is the Existing Home Sales. Analysts forecast that the Existing Home Sales will slightly drop to 4.93M from 5.00M. If data returns inline with expectations we should see the dollar's resurrection continue as traders will look to infuse bullish USD positions. Traders should also keep tabs on today's testimonies by the Bernanke and Paulson as they are scheduled to testify to financial committees in Congress again today regarding their economic rescue package.
EUR
Negative Manufacturing Data Creates Bearish Reversal for EUR
The EUR finished yesterday's trading session with mixed results versus the major currencies. The 15-nation currency saw high volatility, especially against the USD, eventually closing at 1.4644 levels. The EUR also depreciated yesterday versus the GBP and JPY, but finished strong against the Swiss Franc.
The most influential economic indicator coming from the Euro-Zone was the Flash Manufacturing PMI. Euro-Zone services and manufacturing activity decreased for a fourth consecutive month in September, pointing to an economy in stagnation despite economic figures beating expectations. Euro-Zone manufacturing activity fell to a near seven-year low of 45.3 from August's 47.6, considerably below the 47.2 forecast. When this indicator is above 50.0 it signifies growth in the manufacturing industry, and just the opposite when it is below this figure. Another important indicator was French Consumer Spending. French shoppers cut back on spending in August, and manufacturing output saw its sharpest contraction in over six-and-a-half years in September, pointing to weak economic growth in the Third Quarter. These indicators point out the already well-known fact that the European economy has significantly weakened the EUR.
Looking ahead to today, the most important financial indicator scheduled from the Euro-Zone is the German Ifo Business Climate, which is an economic measure based on a survey of about 7,000 business managers and has historically been an excellent indicator of general economic health. Traders are advised to pay close attention to this announcement as a stronger-than-expected result may launch a bullish correction to the EUR's weakness which started yesterday.
JPY
Yen Gains Stability from Calming Markets
Yesterday, the JPY underwent a relatively flat session against most of its major currency rivals. Floating between 105 and 106 against the USD and closing at 105.64 yesterday. The JPY was predominantly influenced by the other major currencies' behavior, which experienced more volatile sessions due to the rapidly changing markets in today's economy.
The only economic indicator coming from Japan yesterday was the BSI Manufacturing Index, a general measure of market conditions and business health. Large manufacturing corporations saw their business conditions index bump up to -10.0 from -15.1 in the Second Quarter, while the Non-Manufacturing index also increased to -10.2 against a prior -15.3. Small corporations saw a minor increase in business conditions, but still have the largest number of negative figures. Sentiment in all industries increased from -36.5 to -34.3 in the Third Quarter, helping the JPY's stability overall.
Today's late release of the Japanese Trade Balance and CSPI should provide little fluctuation in the market as well. Traders should keep a close watch on the news coming from the U.S. and Euro-Zone as both will continue to be the deciding factors in the Yen's movement today.
Oil
Price of Oil Comes Down from Suspicious Price Jump
How can the recent spike in the price of Crude Oil be explained? An interesting perspective by analysts has it that a maneuver taken by powerful traders pushed the price to jump during the last hour of trading for October delivery of Light Sweet Crude in an attempt to grab a corner in the market. Investigations have been initiated to look into these allegations. This outlook can be justified by the fact that only about 41,000 trades changed hands, as compared to the usual 200,000+ that change hands on a typical trading day, yet still the market made an historic jump in price, which automatically raised eyebrows among investors.
Dropping from the $110 mark reached Monday and leveling-off near $106 during today's early trading sessions; the price of Crude Oil appears to be coming down from its recent flight. Adding to this downturn is the rally seen by the USD which has investors more confident in the strength of the currency market. For today's trading, the movement of the USD should remain a strong indicator for the price of Crude Oil, especially since Crude Oil Inventories are to be released today from the U.S., and the economic recovery program is still under deliberation, potentially causing higher volatility in the market.
Technical News
EUR/USD
The pair has been going through choppy sessions with no distinct direction for the past 3 trading days. Several attempts to breach through the 1.4500 support level failed, and the pair is consolidating around 1.4650. The daily chart provides mixed signals; however, the 4-hour chart is showing signs of local bearish momentum. The Slow Stochastic is negatively sloped, implying that a bearish correction might continue in the near future.
GBP/USD
The daily chart indicates that the bullish trend has not yet said its last word. The Slow Stochastic is showing a positive slope on the daily chart, and it appears that the bearish trend will continue. Going short with tight stops might be a very wise choice today.
USD/JPY
The momentum which was created after the bearish breach through the flag on the 4-hour chart continues with full steam. The daily chart is still very bearish as the 4-hour chart is starting to show first signals of a moderate bullish momentum. It might be preferable to sell on highs today.
USD/CHF
There is a widening bullish channel forming on the 4-hour chart as the pair now floats at the bottom level of it. A bullish cross on the Slow Stochastic supports the notion that the pair will test the upper level of the channel, probably before the weekend. Going long with tight stops might be a good choice today
USD
Rescue Package Generates Confidence in the USD
The USD surprisingly underwent a bullish trading session yesterday as it appreciated against all of its major currency rivals. Earlier in the day, the greenback reached session highs against the EUR after negative Euro-Zone manufacturing data focused attention on weakness in the Euro-Zone. At the end of yesterday's session the USD closed at 1.4644 versus the EUR. The USD also saw steady gains against the Pound Sterling and Swiss Franc.
The most influential economic data coming from the U.S. yesterday were the testimonies of Fed Chairman Bernanke and Treasury Secretary Paulson to the Senate Committee on Banking, Housing, and Urban Affairs. Investors were encouraged by a slight decrease in oil prices as they awaited details of the U.S. government's bailout package. The initial euphoria about the plan to buy damaged mortgage debt has turned to anxiety about how the government will fund the $700 billion deal without burdening the U.S. taxpayer. Analysts say that this has limited the USD's gains. Liquidity was thin in the market, with investors uncertain about the future movement of the stock market. They were staying on the sidelines until turmoil in financial markets subsided. In other news, the Bernanke and Paulson testimonies were in support of their proposal to give the government the authority to buy up illiquid assets, something Congress seems skeptical about unless there are mechanisms built into the law that would protect U.S. taxpayers from any downside losses. The proposal has had a huge affect on the greenback so far this week.
Looking ahead to today, the most important financial indicator scheduled to come from the U.S. economy is the Existing Home Sales. Analysts forecast that the Existing Home Sales will slightly drop to 4.93M from 5.00M. If data returns inline with expectations we should see the dollar's resurrection continue as traders will look to infuse bullish USD positions. Traders should also keep tabs on today's testimonies by the Bernanke and Paulson as they are scheduled to testify to financial committees in Congress again today regarding their economic rescue package.
EUR
Negative Manufacturing Data Creates Bearish Reversal for EUR
The EUR finished yesterday's trading session with mixed results versus the major currencies. The 15-nation currency saw high volatility, especially against the USD, eventually closing at 1.4644 levels. The EUR also depreciated yesterday versus the GBP and JPY, but finished strong against the Swiss Franc.
The most influential economic indicator coming from the Euro-Zone was the Flash Manufacturing PMI. Euro-Zone services and manufacturing activity decreased for a fourth consecutive month in September, pointing to an economy in stagnation despite economic figures beating expectations. Euro-Zone manufacturing activity fell to a near seven-year low of 45.3 from August's 47.6, considerably below the 47.2 forecast. When this indicator is above 50.0 it signifies growth in the manufacturing industry, and just the opposite when it is below this figure. Another important indicator was French Consumer Spending. French shoppers cut back on spending in August, and manufacturing output saw its sharpest contraction in over six-and-a-half years in September, pointing to weak economic growth in the Third Quarter. These indicators point out the already well-known fact that the European economy has significantly weakened the EUR.
Looking ahead to today, the most important financial indicator scheduled from the Euro-Zone is the German Ifo Business Climate, which is an economic measure based on a survey of about 7,000 business managers and has historically been an excellent indicator of general economic health. Traders are advised to pay close attention to this announcement as a stronger-than-expected result may launch a bullish correction to the EUR's weakness which started yesterday.
JPY
Yen Gains Stability from Calming Markets
Yesterday, the JPY underwent a relatively flat session against most of its major currency rivals. Floating between 105 and 106 against the USD and closing at 105.64 yesterday. The JPY was predominantly influenced by the other major currencies' behavior, which experienced more volatile sessions due to the rapidly changing markets in today's economy.
The only economic indicator coming from Japan yesterday was the BSI Manufacturing Index, a general measure of market conditions and business health. Large manufacturing corporations saw their business conditions index bump up to -10.0 from -15.1 in the Second Quarter, while the Non-Manufacturing index also increased to -10.2 against a prior -15.3. Small corporations saw a minor increase in business conditions, but still have the largest number of negative figures. Sentiment in all industries increased from -36.5 to -34.3 in the Third Quarter, helping the JPY's stability overall.
Today's late release of the Japanese Trade Balance and CSPI should provide little fluctuation in the market as well. Traders should keep a close watch on the news coming from the U.S. and Euro-Zone as both will continue to be the deciding factors in the Yen's movement today.
Oil
Price of Oil Comes Down from Suspicious Price Jump
How can the recent spike in the price of Crude Oil be explained? An interesting perspective by analysts has it that a maneuver taken by powerful traders pushed the price to jump during the last hour of trading for October delivery of Light Sweet Crude in an attempt to grab a corner in the market. Investigations have been initiated to look into these allegations. This outlook can be justified by the fact that only about 41,000 trades changed hands, as compared to the usual 200,000+ that change hands on a typical trading day, yet still the market made an historic jump in price, which automatically raised eyebrows among investors.
Dropping from the $110 mark reached Monday and leveling-off near $106 during today's early trading sessions; the price of Crude Oil appears to be coming down from its recent flight. Adding to this downturn is the rally seen by the USD which has investors more confident in the strength of the currency market. For today's trading, the movement of the USD should remain a strong indicator for the price of Crude Oil, especially since Crude Oil Inventories are to be released today from the U.S., and the economic recovery program is still under deliberation, potentially causing higher volatility in the market.
Technical News
EUR/USD
The pair has been going through choppy sessions with no distinct direction for the past 3 trading days. Several attempts to breach through the 1.4500 support level failed, and the pair is consolidating around 1.4650. The daily chart provides mixed signals; however, the 4-hour chart is showing signs of local bearish momentum. The Slow Stochastic is negatively sloped, implying that a bearish correction might continue in the near future.
GBP/USD
The daily chart indicates that the bullish trend has not yet said its last word. The Slow Stochastic is showing a positive slope on the daily chart, and it appears that the bearish trend will continue. Going short with tight stops might be a very wise choice today.
USD/JPY
The momentum which was created after the bearish breach through the flag on the 4-hour chart continues with full steam. The daily chart is still very bearish as the 4-hour chart is starting to show first signals of a moderate bullish momentum. It might be preferable to sell on highs today.
USD/CHF
There is a widening bullish channel forming on the 4-hour chart as the pair now floats at the bottom level of it. A bullish cross on the Slow Stochastic supports the notion that the pair will test the upper level of the channel, probably before the weekend. Going long with tight stops might be a good choice today
Tuesday 23 September 2008
Daily Forex Analysis
Economic News
USD
Market Uncertainty Lands Heavy Blow against the USD
The USD saw a traumatic day of trading yesterday as it stretched as high as 1.48 versus the EUR, and spiked up to 1.8636 against the GBP. This sharp decline in the value of the USD comes from the ongoing financial crisis and the fact that the recent rescue plan has not yet produced enough confidence in the future of the financial sector. Investor uncertainty lingers over the question of whether or not this plan will do the job, especially when many of its details may not get released until later next week. Until then, the USD will continue to bear the brunt of the recent volatility emerging from this crisis.
Another player in the USD's recent drama is the sharp climb in the price of Crude Oil. As October contracts came to a close, traders dove into the craze over black gold and watched with joy at the record-high one-day jump in the price of Oil, adversely affecting the USD - as Oil is bought and sold in dollars - pushing its already weakened value to a lower mark.
Looking at today's trading, there will be two crucial testimonies given by U.S. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson. These will represent the initial steps in the deliberation and implementation of their newly proposed economic rescue plan. They are expected to emphasize their latest actions concerning the $700 billion bailout, Fannie Mae and Freddie Mac, the investment bank failures, and other financial problems. Their testimony will take place at 14:00 GMT in front of the U.S. Senate Committee on Banking, Housing and Urban Affairs. Traders should watch these speeches carefully as they will no doubt bring extreme volatility to the market, especially on the direction for the USD over the next few days.
EUR
Will the EUR's Rally be Short-Lived?
The EUR's rally yesterday can be attributed to the rash sell-off in dollars as traders were bailing out of the USD in light of the recent Wall Street blues. No doubt European Central Bank President Trichet's speech about transparency in financial institutions made a positive impact as well. The EUR hit a high mark it hasn't seen in some time as it reached up to the 1.48 level against the USD, as well as spiking versus the JPY up to the 156.8 level. Given all the positive data emerging from yesterday's market it appears as if the EUR is on a rather strong bullish run. However, dark clouds are on the horizon.
The difficulties which the EUR may see are going to begin later today. With many economic indicators being released from France, Germany, Belgium, and the Euro-Zone in general, the European markets may see high volatility. The downside of these indicators comes from the fact that they are all expected to return negative results as compared to the previous release of this data.
On tap today, traders should pay close attention to French Consumer Spending, the French and German Manufacturing PMI, as well as the Euro-Zone's Industrial New Orders figure since all this data together will carry a heavy impact on the EUR. The question is whether or not the negative data coming from the Euro-Zone can out-do the strong downtrend in the USD and create a reversal in the EUR's primary trading pair. If today's indicators come out worse than expected, traders might see a reversal to yesterday's trends.
JPY
Japan Not Behind the Wheel of JPY's Recent Movement
No data emerged from the Japanese economy yesterday as banks on the island country observed Autumnal Equinox Day. As a result, the driving forces behind the JPY yesterday were the other major currencies. The JPY saw mixed results based on recent American and European figures. Against the USD, the Yen rose in value as the dollar took a plunge resulting from the recent financial crisis and market uncertainty. However, against the EUR, the JPY witnessed a sharp devaluing spike as the EUR recorded a long-overdue jump in strength.
As with the USD, the JPY is also influenced by the price of Crude Oil. When Oil prices soar, as traders saw yesterday, the Japanese economy loses steam from an expected increase in the cost of transporting goods, thereby increasing the cost of Japanese exports. Today, traders should watch the Japanese BSI Manufacturing Index indicator as it is forecasted to be lower than the last release. This negative release may drive the JPY further down versus its currency counterparts. However, the USD and EUR are expected to be behind the wheel of today's trading.
Oil
The Price of Crude Oil Soars
Just when investors thought it couldn't get worse, the market drops and creates a record jump in the price of Oil. The price of black gold made history yesterday as it jumped $25 in one day. This price explosion did not go unnoticed by traders. As investors gambled on the direction and future strength of the market, the price of Crude Oil became a stronger currency-hedge for traders. After experiencing a significant drop in price, falling as low as the $91 mark last week, the price of Light Sweet Crude unexpectedly reversed and began an upswing which has done nothing but gain strength.
The uptrend does not appear to be losing momentum; however, if the USD rallies, we may see some leveling-off in the price of Oil. Adding to the upswing in the price of Oil yesterday was the expiration of the contracts for October delivery of Light Sweet Crude. As the contracts for November kick off, traders may see some signs for a reversal. Today, on the other hand, traders should note the direction of the USD during and after the speeches delivered by Bernanke and Paulson as the dollar's movement is typically a strong indicator for the direction of price of Crude Oil.
Technical News
EUR/USD
Yesterday the pair was consolidated around the 1.4780 level, after making a 300 pips rise. Currently, a bearish cross on the 4-hour chart's Slow Stochastic suggests that a bearish correction might take place. Going short with tight stops could be a good strategy today.
GBP/USD
There is a very distinct bullish channel forming on the daily chart, as the cable is now floating in the middle of it. The current price has crossed the Bollinger Band's upper border, signifying that the uptrend should continue. Going long might be the right choice today.
USD/JPY
It appears that the bearish momentum has reached its peak, as the pair failed to breach the 105.00 level. A rise to the 105.70 will validate the bullish reversal, with a target price of 106.60.
USD/CHF
The pair has limited its bearish momentum after testing the 1.0700 level. And now, a bullish cross on the 4-hour chart's Slow Stochastic indicates that a bullish movement is quite imminent. Going long seems to be preferable.
The Wild Card
Gold
After failing to breach the $910 level, gold prices dropped significantly, and are now traded around $889. The Bollinger Bands on the 4-hour charts are tightening, suggesting that the bearish move should extend. This might be a great opportunity for forex traders to join a very promising trend.
USD
Market Uncertainty Lands Heavy Blow against the USD
The USD saw a traumatic day of trading yesterday as it stretched as high as 1.48 versus the EUR, and spiked up to 1.8636 against the GBP. This sharp decline in the value of the USD comes from the ongoing financial crisis and the fact that the recent rescue plan has not yet produced enough confidence in the future of the financial sector. Investor uncertainty lingers over the question of whether or not this plan will do the job, especially when many of its details may not get released until later next week. Until then, the USD will continue to bear the brunt of the recent volatility emerging from this crisis.
Another player in the USD's recent drama is the sharp climb in the price of Crude Oil. As October contracts came to a close, traders dove into the craze over black gold and watched with joy at the record-high one-day jump in the price of Oil, adversely affecting the USD - as Oil is bought and sold in dollars - pushing its already weakened value to a lower mark.
Looking at today's trading, there will be two crucial testimonies given by U.S. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson. These will represent the initial steps in the deliberation and implementation of their newly proposed economic rescue plan. They are expected to emphasize their latest actions concerning the $700 billion bailout, Fannie Mae and Freddie Mac, the investment bank failures, and other financial problems. Their testimony will take place at 14:00 GMT in front of the U.S. Senate Committee on Banking, Housing and Urban Affairs. Traders should watch these speeches carefully as they will no doubt bring extreme volatility to the market, especially on the direction for the USD over the next few days.
EUR
Will the EUR's Rally be Short-Lived?
The EUR's rally yesterday can be attributed to the rash sell-off in dollars as traders were bailing out of the USD in light of the recent Wall Street blues. No doubt European Central Bank President Trichet's speech about transparency in financial institutions made a positive impact as well. The EUR hit a high mark it hasn't seen in some time as it reached up to the 1.48 level against the USD, as well as spiking versus the JPY up to the 156.8 level. Given all the positive data emerging from yesterday's market it appears as if the EUR is on a rather strong bullish run. However, dark clouds are on the horizon.
The difficulties which the EUR may see are going to begin later today. With many economic indicators being released from France, Germany, Belgium, and the Euro-Zone in general, the European markets may see high volatility. The downside of these indicators comes from the fact that they are all expected to return negative results as compared to the previous release of this data.
On tap today, traders should pay close attention to French Consumer Spending, the French and German Manufacturing PMI, as well as the Euro-Zone's Industrial New Orders figure since all this data together will carry a heavy impact on the EUR. The question is whether or not the negative data coming from the Euro-Zone can out-do the strong downtrend in the USD and create a reversal in the EUR's primary trading pair. If today's indicators come out worse than expected, traders might see a reversal to yesterday's trends.
JPY
Japan Not Behind the Wheel of JPY's Recent Movement
No data emerged from the Japanese economy yesterday as banks on the island country observed Autumnal Equinox Day. As a result, the driving forces behind the JPY yesterday were the other major currencies. The JPY saw mixed results based on recent American and European figures. Against the USD, the Yen rose in value as the dollar took a plunge resulting from the recent financial crisis and market uncertainty. However, against the EUR, the JPY witnessed a sharp devaluing spike as the EUR recorded a long-overdue jump in strength.
As with the USD, the JPY is also influenced by the price of Crude Oil. When Oil prices soar, as traders saw yesterday, the Japanese economy loses steam from an expected increase in the cost of transporting goods, thereby increasing the cost of Japanese exports. Today, traders should watch the Japanese BSI Manufacturing Index indicator as it is forecasted to be lower than the last release. This negative release may drive the JPY further down versus its currency counterparts. However, the USD and EUR are expected to be behind the wheel of today's trading.
Oil
The Price of Crude Oil Soars
Just when investors thought it couldn't get worse, the market drops and creates a record jump in the price of Oil. The price of black gold made history yesterday as it jumped $25 in one day. This price explosion did not go unnoticed by traders. As investors gambled on the direction and future strength of the market, the price of Crude Oil became a stronger currency-hedge for traders. After experiencing a significant drop in price, falling as low as the $91 mark last week, the price of Light Sweet Crude unexpectedly reversed and began an upswing which has done nothing but gain strength.
The uptrend does not appear to be losing momentum; however, if the USD rallies, we may see some leveling-off in the price of Oil. Adding to the upswing in the price of Oil yesterday was the expiration of the contracts for October delivery of Light Sweet Crude. As the contracts for November kick off, traders may see some signs for a reversal. Today, on the other hand, traders should note the direction of the USD during and after the speeches delivered by Bernanke and Paulson as the dollar's movement is typically a strong indicator for the direction of price of Crude Oil.
Technical News
EUR/USD
Yesterday the pair was consolidated around the 1.4780 level, after making a 300 pips rise. Currently, a bearish cross on the 4-hour chart's Slow Stochastic suggests that a bearish correction might take place. Going short with tight stops could be a good strategy today.
GBP/USD
There is a very distinct bullish channel forming on the daily chart, as the cable is now floating in the middle of it. The current price has crossed the Bollinger Band's upper border, signifying that the uptrend should continue. Going long might be the right choice today.
USD/JPY
It appears that the bearish momentum has reached its peak, as the pair failed to breach the 105.00 level. A rise to the 105.70 will validate the bullish reversal, with a target price of 106.60.
USD/CHF
The pair has limited its bearish momentum after testing the 1.0700 level. And now, a bullish cross on the 4-hour chart's Slow Stochastic indicates that a bullish movement is quite imminent. Going long seems to be preferable.
The Wild Card
Gold
After failing to breach the $910 level, gold prices dropped significantly, and are now traded around $889. The Bollinger Bands on the 4-hour charts are tightening, suggesting that the bearish move should extend. This might be a great opportunity for forex traders to join a very promising trend.
Friday 19 September 2008
Daily Forex Analysis
Economic News
USD
Paulson's Announcement Creates Hope for a USD Rally
The USD saw mixed trends against all of its currency counterparts yesterday during an unusually volatile trading session. Against the JPY, the USD was up 1% at 105.36, while against the EUR the greenback recovered from its initial losses during the early trading sessions. This is mainly because the greenback is still suffering from the meltdown of some major American financial institutions. The USD did obtain some relief, however, after stock markets rallied worldwide. This was in large measure due to the coordinated effort of six of the world's top central banks by pumping $247 billion into circulation to calm stock markets across Europe and the United States.
Also contributing to the USD's rally was the proposal of US Treasury Secretary Henry Paulson to come up with a plan that would help eliminate bad mortgage-related debt. The main idea will be to create a body that will deal with today's financial crisis similar to what was done during the savings and loan crisis of the 1980s with the establishment of Resolution Trust Corp. As a result of Paulson's announcement, stock markets worldwide witnessed one of the largest jumps in recent days and the USD began a strong rally.
In other economic news yesterday, the US Unemployment Claims figure was released and showed an unexpected rise to 455K from 445K in the last week, contrary to market forecasts. Traders should keep an eye on the EUR and JPY as indicators of the strength of the USD today as analysts are expecting a large amount of volatility during today's trading sessions while investors follow closely the development of this recent financial crisis.
EUR
Will the Euro-Zone Consider Cutting Interest Rates?
Yesterday, the EUR saw a very volatile trading session with mixed results against its major currency counterparts. The EUR rallied against the USD during early trading sessions as the European Central Bank (ECB), and other central banks, sold USD to pump liquidity into the global financial system. However, during later trading sessions the EUR lost its early gains after US stock markets landed a strong rebound. The EUR also rose 1.2% against the JPY to finish the day at 151.22.
The expectations of an ECB early cut of Interest Rates continues growing amid fears that global financial crises will seriously dampen economic activity in the Euro-Zone. Economists didn't expect the ECB to cut official rates this year given the recent Euro-Zone inflation, which now sits at a record high of 4% for the last few months. The recent report that economic growth will fall below 1% in the Euro-Zone next year, and the ECB joint liquidity action with other central banks, is making a rate-cut more probable in the Second Quarter of 2009. Traders may expect the ECB to contemplate such a move if this recent financial crisis worsens.
Today will be a very quiet news day for the EUR as only one economic figure will be released. The German PPI, which measures the change in the price of goods sold by manufacturers, is forecasted to be lower than the previous month's. Traders should follow the development of the other currencies, the GBP and JPY primarily, as they will also affect the EUR's volatility today.
JPY
USD-Supplied Money-Market Operations Introduced to Japanese Economy
The JPY underwent a bearish trading session yesterday, as it depreciated against all of its major currency rivals. In early trading, the Asian currency rallied against the USD, backed by unwinding carry trades, as investors abandoned the JPY to purchase higher yielding, yet riskier, assets. After the joint action by the world central banks to inject liquidity into the market, the JPY was no longer considered a safe haven because such a move made the risk of global currencies decrease significantly. The USD rose 1% against the JPY, closing at 105.36, while the EUR rose 1.2% to 151.22.
Another major initiative that was enacted yesterday came from the surprise announcement that for the first time in its history the Bank of Japan will introduce USD-supplied money-market operations in an effort to deal with strong USD demand. In other news, traders saw the release of the Bank of Japan's (BoJ) Monthly Report yesterday, which stated that it has cut its assessment of business investment, citing low corporate profits. The BoJ also reiterated its view about a sluggish economy in part because of high energy costs and weakening export growth.
Today, the JPY will be absent from the economic calendar and traders are advised to follow global developments instead. It would be wise for traders to follow the USD, EUR and GBP today as they are more likely to determine the JPY's movements
Oil
Oil Prices Float in Expectation of Market Direction
Has the upswing in the price of oil met its peak? Those trading on Thursday saw a continuation of the previous day's rally in the price of Crude Oil. Due primarily to a weakened dollar, Oil jumped from $91 Monday, to $98 Thursday, before showing any signs of reversing. Now the market is beginning to see this price float around the $97 mark while traders assess the direction of the USD before the weekend. As a result of yesterday's announcements that various central banks would begin to pump billions of dollars into the market, we may see a reversal to the price of Crude Oil, but it is still too early to tell if this action will have the desired effect.
So long as the direction of the major currencies remains uncertain, commodities like Oil will be bought up by traders looking to stash their money in a safe place. This will continue to drive the price of oil higher and higher. Traders would be wise to keep an eye on the direction of the USD today. If the dollar rallies, we may see a drop in the price of Oil. If not, look for Oil to continue climbing.
Technical News
EUR/USD
The pair has breached the key Fibonacci level of 1.4400, and the break has been validated by a full bar beneath that level on the 4-hour chart. The negative slope on the 4-hour chart's Slow Stochastic strengthens the notion that the momentum is quite bearish. Going short might be wise today.
GBP/USD
The pair is in the middle of a very intensive downtrend that still shows great momentum and on a bigger scale appears to have more room to run. The hourly chart is showing a strong bearish cross, and the 4-hour chart is also joining to that notion with the Slow Stochastic pointing to the continuation of the bearish movement. Being on the sell side appears to be the right choice today.
USD/JPY
The pair is showing local bullish momentum on the hourly level after a violent hike to the 107 level. On the daily chart, the pair has been range trading with high volatility for a while now and it appears that the bullish price movement might be back. The Slow Stochastic and the RSI of the hourly chart are indicating an upcoming test of the 107.80 level. If that level is breached, swinging in the trend would be the best strategy
USD/CHF
The pair has breached through the Fibonacci key level of 1.1100, and all oscillators on the 4-hour chart are indicating further bullish movement. The hourly Bollinger Bands are showing that the price has crossed its upper border, signaling that the current trend will probably continue, as the pair's new target price might be 1.1250.
The Wild Card
CHF/JPY
There has been a strong breach through the upper level of the bearish channel on the 4-hour chart and the momentum on the daily chart is now bullish. There is also a very strong bullish cross forming on the 4-hour chart which indicates the continuation of the bullish channel. The RSI supports that bullish notion and it appears that the next target price might be around 97.00 Going long appears to be preferable strategy for forex traders today
USD
Paulson's Announcement Creates Hope for a USD Rally
The USD saw mixed trends against all of its currency counterparts yesterday during an unusually volatile trading session. Against the JPY, the USD was up 1% at 105.36, while against the EUR the greenback recovered from its initial losses during the early trading sessions. This is mainly because the greenback is still suffering from the meltdown of some major American financial institutions. The USD did obtain some relief, however, after stock markets rallied worldwide. This was in large measure due to the coordinated effort of six of the world's top central banks by pumping $247 billion into circulation to calm stock markets across Europe and the United States.
Also contributing to the USD's rally was the proposal of US Treasury Secretary Henry Paulson to come up with a plan that would help eliminate bad mortgage-related debt. The main idea will be to create a body that will deal with today's financial crisis similar to what was done during the savings and loan crisis of the 1980s with the establishment of Resolution Trust Corp. As a result of Paulson's announcement, stock markets worldwide witnessed one of the largest jumps in recent days and the USD began a strong rally.
In other economic news yesterday, the US Unemployment Claims figure was released and showed an unexpected rise to 455K from 445K in the last week, contrary to market forecasts. Traders should keep an eye on the EUR and JPY as indicators of the strength of the USD today as analysts are expecting a large amount of volatility during today's trading sessions while investors follow closely the development of this recent financial crisis.
EUR
Will the Euro-Zone Consider Cutting Interest Rates?
Yesterday, the EUR saw a very volatile trading session with mixed results against its major currency counterparts. The EUR rallied against the USD during early trading sessions as the European Central Bank (ECB), and other central banks, sold USD to pump liquidity into the global financial system. However, during later trading sessions the EUR lost its early gains after US stock markets landed a strong rebound. The EUR also rose 1.2% against the JPY to finish the day at 151.22.
The expectations of an ECB early cut of Interest Rates continues growing amid fears that global financial crises will seriously dampen economic activity in the Euro-Zone. Economists didn't expect the ECB to cut official rates this year given the recent Euro-Zone inflation, which now sits at a record high of 4% for the last few months. The recent report that economic growth will fall below 1% in the Euro-Zone next year, and the ECB joint liquidity action with other central banks, is making a rate-cut more probable in the Second Quarter of 2009. Traders may expect the ECB to contemplate such a move if this recent financial crisis worsens.
Today will be a very quiet news day for the EUR as only one economic figure will be released. The German PPI, which measures the change in the price of goods sold by manufacturers, is forecasted to be lower than the previous month's. Traders should follow the development of the other currencies, the GBP and JPY primarily, as they will also affect the EUR's volatility today.
JPY
USD-Supplied Money-Market Operations Introduced to Japanese Economy
The JPY underwent a bearish trading session yesterday, as it depreciated against all of its major currency rivals. In early trading, the Asian currency rallied against the USD, backed by unwinding carry trades, as investors abandoned the JPY to purchase higher yielding, yet riskier, assets. After the joint action by the world central banks to inject liquidity into the market, the JPY was no longer considered a safe haven because such a move made the risk of global currencies decrease significantly. The USD rose 1% against the JPY, closing at 105.36, while the EUR rose 1.2% to 151.22.
Another major initiative that was enacted yesterday came from the surprise announcement that for the first time in its history the Bank of Japan will introduce USD-supplied money-market operations in an effort to deal with strong USD demand. In other news, traders saw the release of the Bank of Japan's (BoJ) Monthly Report yesterday, which stated that it has cut its assessment of business investment, citing low corporate profits. The BoJ also reiterated its view about a sluggish economy in part because of high energy costs and weakening export growth.
Today, the JPY will be absent from the economic calendar and traders are advised to follow global developments instead. It would be wise for traders to follow the USD, EUR and GBP today as they are more likely to determine the JPY's movements
Oil
Oil Prices Float in Expectation of Market Direction
Has the upswing in the price of oil met its peak? Those trading on Thursday saw a continuation of the previous day's rally in the price of Crude Oil. Due primarily to a weakened dollar, Oil jumped from $91 Monday, to $98 Thursday, before showing any signs of reversing. Now the market is beginning to see this price float around the $97 mark while traders assess the direction of the USD before the weekend. As a result of yesterday's announcements that various central banks would begin to pump billions of dollars into the market, we may see a reversal to the price of Crude Oil, but it is still too early to tell if this action will have the desired effect.
So long as the direction of the major currencies remains uncertain, commodities like Oil will be bought up by traders looking to stash their money in a safe place. This will continue to drive the price of oil higher and higher. Traders would be wise to keep an eye on the direction of the USD today. If the dollar rallies, we may see a drop in the price of Oil. If not, look for Oil to continue climbing.
Technical News
EUR/USD
The pair has breached the key Fibonacci level of 1.4400, and the break has been validated by a full bar beneath that level on the 4-hour chart. The negative slope on the 4-hour chart's Slow Stochastic strengthens the notion that the momentum is quite bearish. Going short might be wise today.
GBP/USD
The pair is in the middle of a very intensive downtrend that still shows great momentum and on a bigger scale appears to have more room to run. The hourly chart is showing a strong bearish cross, and the 4-hour chart is also joining to that notion with the Slow Stochastic pointing to the continuation of the bearish movement. Being on the sell side appears to be the right choice today.
USD/JPY
The pair is showing local bullish momentum on the hourly level after a violent hike to the 107 level. On the daily chart, the pair has been range trading with high volatility for a while now and it appears that the bullish price movement might be back. The Slow Stochastic and the RSI of the hourly chart are indicating an upcoming test of the 107.80 level. If that level is breached, swinging in the trend would be the best strategy
USD/CHF
The pair has breached through the Fibonacci key level of 1.1100, and all oscillators on the 4-hour chart are indicating further bullish movement. The hourly Bollinger Bands are showing that the price has crossed its upper border, signaling that the current trend will probably continue, as the pair's new target price might be 1.1250.
The Wild Card
CHF/JPY
There has been a strong breach through the upper level of the bearish channel on the 4-hour chart and the momentum on the daily chart is now bullish. There is also a very strong bullish cross forming on the 4-hour chart which indicates the continuation of the bullish channel. The RSI supports that bullish notion and it appears that the next target price might be around 97.00 Going long appears to be preferable strategy for forex traders today
Wednesday 17 September 2008
September 18 Non-dollar currencies analysis
euo/usd : the last trading day, the euro rose sharply, the highest rate at 1.4382. SCL, the euro trend downward, above 1.4950 resistance in the vicinity. Short-term, the upward rebound in the euro, followed in the vicinity of 1.4070. Ultra-short-term, the upward trend of the euro, followed in the vicinity of 1.4240, can do more at the top of the support the euro. Wait and see, or near 1.4260, the euro BUY
GPB/USD: the last trading day, the British pound rose substantially, the highest rate at 1.8242. The center line, the downward trend pounds, above 1.8790 resistance in the vicinity. Short-term, sterling rebounded upwards, followed in the vicinity of 1.7730. Ultra-short-term, the upward trend in sterling, followed in the vicinity of 1.8060, at the top of the support to do more pounds.
Wait and see, or near 1.8100, BUY more pounds
USDCHF: the last trading day, the United States and Switzerland declined substantially, the lowest rate at 1.0991. The center line, the upward trend in the United States and Switzerland, followed in the vicinity of 1.0840. Short-term, the United States and Switzerland downward correction, above 1.1280 resistance in the vicinity. Ultra-short-term, downward trend in the United States and Switzerland, above 1.1100 resistance in the vicinity, to go short in the bottom of the resistance to US-Swiss. Wait and see, or near 1.1070, short-Swiss-US
USDJPY: the last trading day, the United States main acts, the lowest exchange rate at 104.36. The center line, the oscillation upward trend in the United States and Japan, followed in the vicinity of 102.50. Short-term, US-Japan movement oscillation, the top resistance in the vicinity of 110.70, followed in the vicinity of 102.50. Ultra-short-term, the United States and Japan oscillation downward trend, the internal structure more complicated, mainly wait-and-see proposal.
Wait and see
USDCAD: the last trading day, the United States and Canada from top to bottom shocks, exchange rate fluctuations of 1.0614-1.0807. The center line, the upward trend in the United States and Canada, nature is not yet clear, followed in the vicinity of 1.0410. Short-term, the upward trend in the United States and Canada, followed in the vicinity of 1.0540. Ultra-short-term, high oscillation in the United States and Canada, the direction of unknown investors, mainly wait-and-see today. Wait and see
AUD/USD: the last trading day, the Australian dollar down oscillation, currency fluctuations range 0.7799-0.8073. The center line, the downward trend in Australian dollars, above 0.8820 resistance in the vicinity. Short-term, downward trend in Australian dollars, above 0.8350 resistance in the vicinity. Ultra-short-term, low oscillation in the Australian dollar, the direction of unknown investors, today continue to wait and see
GPB/USD: the last trading day, the British pound rose substantially, the highest rate at 1.8242. The center line, the downward trend pounds, above 1.8790 resistance in the vicinity. Short-term, sterling rebounded upwards, followed in the vicinity of 1.7730. Ultra-short-term, the upward trend in sterling, followed in the vicinity of 1.8060, at the top of the support to do more pounds.
Wait and see, or near 1.8100, BUY more pounds
USDCHF: the last trading day, the United States and Switzerland declined substantially, the lowest rate at 1.0991. The center line, the upward trend in the United States and Switzerland, followed in the vicinity of 1.0840. Short-term, the United States and Switzerland downward correction, above 1.1280 resistance in the vicinity. Ultra-short-term, downward trend in the United States and Switzerland, above 1.1100 resistance in the vicinity, to go short in the bottom of the resistance to US-Swiss. Wait and see, or near 1.1070, short-Swiss-US
USDJPY: the last trading day, the United States main acts, the lowest exchange rate at 104.36. The center line, the oscillation upward trend in the United States and Japan, followed in the vicinity of 102.50. Short-term, US-Japan movement oscillation, the top resistance in the vicinity of 110.70, followed in the vicinity of 102.50. Ultra-short-term, the United States and Japan oscillation downward trend, the internal structure more complicated, mainly wait-and-see proposal.
Wait and see
USDCAD: the last trading day, the United States and Canada from top to bottom shocks, exchange rate fluctuations of 1.0614-1.0807. The center line, the upward trend in the United States and Canada, nature is not yet clear, followed in the vicinity of 1.0410. Short-term, the upward trend in the United States and Canada, followed in the vicinity of 1.0540. Ultra-short-term, high oscillation in the United States and Canada, the direction of unknown investors, mainly wait-and-see today. Wait and see
AUD/USD: the last trading day, the Australian dollar down oscillation, currency fluctuations range 0.7799-0.8073. The center line, the downward trend in Australian dollars, above 0.8820 resistance in the vicinity. Short-term, downward trend in Australian dollars, above 0.8350 resistance in the vicinity. Ultra-short-term, low oscillation in the Australian dollar, the direction of unknown investors, today continue to wait and see
Daily Forex Analysis
Economic News
USD
Steady Federal Funds Rate and AIG Bailout Help Boost USD
The greenback experienced a bullish trading session yesterday against all the other major currencies. The highlight of the day was the Fed's announcement that Interest Rates would remain unchanged. The American markets and the USD both reacted positively to this news. Markets also gained stability yesterday with the decision by the Fed to bailout AIG, a major international insurance corporation whose collapse would have wrought havoc on the global economy. The USD rose against the EUR to reach the 1.41 level during part of the day and mostly traded in the mid 1.41's. The USD saw even bigger gains against the JPY, rising more than 200 pips and closing the day in the mid 106's.
Although there were some major economic data releases from the U.S. yesterday, most of the focus went to the Federal Funds Rate announcement. The other main figures that were released prior to the announcement were an unchanged positive rate of the Core PPI and a slightly positive TIC Net Long-Term Transactions figure, which fell sharply compared to last month. The TIC release should have had a bearish effect on the USD, but most of the attention went to the FOMC statement where Fed Chairman Bernake decided to keep the interest rate unchanged. It was mentioned in the FOMC announcement that the financial markets will be under more pressure in the future, and hinted that a decrease in the target interest rate could occur, meaning the USD is not out of the woods just yet.
As for today, the main economic data release will be the Building Permits. With the financial sector getting most of the spotlight recently, traders will look at the housing sector to see the effects. The Building Permits figure is expected to slightly decrease, but nothing as drastic as the recent news from the financial sectors. The other two major releases, the Current Account and Housing Starts, are also expecting a slight drop compared to last month. With the EUR not having any major news releases today, traders should pay attention to the releases coming from the JPY as the Overnight Call Rate has been announced as unchanged at 0.50%, and will be followed by a press conference held by the BoJ to discuss Japan's economic future.
EUR
Positive Economic Indicators Help EUR
Yesterday, the EUR saw a volatile trading session against its major currency counterparts. With a batch of important data releases from the Euro-Zone, Great Britain and the U.S, the market witnessed high volatility. The EUR was bearish against the USD; however, it fluctuated against the GBP, and was very bullish against the CHF and JPY, as the EUR/JPY cross was traded above the 150 range.
Yesterday's events have once again shown how the world's economies affect each other as the U.S. economy had a great impact on the Euro-Zone. The anticipation and release of the American Interest Rate dropped the EUR against the greenback despite positive releases from Europe. Looking at the most impacting releases, the German ZEW Economic Sentiment was higher than last month and the yearly Core CPI increased as well. This data was not enough to cause the EUR to be bullish against the USD and GBP, but did the job for the EUR versus the CHF and JPY.
Today will be a very quiet news day for the EUR as only one economic figure will be released. The Trade Balance is expected to drop even more compared to last month which should harm the EUR; however, the other currencies should drive the market's momentum. The other 3 currencies: the GBP, JPY and USD all have major economic releases that should affect the EUR's volatility today.
JPY
Japanese Interest Rates Held Steady
So far today we are seeing a very bearish trading session for the JPY against its top currency counterparts. The JPY lost grounds to the EUR, USD and GBP, as positive data was released from all 3 of the Yen's counterparts. Against the EUR, the JPY was traded at above 150, and it lost over 200 pips to the USD, trading in the 106 range.
The only economic release from Japan yesterday was the Household Confidence report, which decreased compared to last survey, and traders followed by losing some confidence in the Yen. Harming the JPY even more were the excellent economic news releases from the world's major markets. These helped the EUR, USD and GBP gain positive momentum on behalf of the JPY.
Looking ahead today, the Japanese market should have a heavy effect on the JPY versus its major currency counterparts. The Overnight Call Rate was held steady at 0.50%, but traders should pay close attention to the BoJ Press Conference that will follow it to look for expectations of Japan's economic future. Later tonight, the monthly Tertiary Industry Activity Index is expected to be released with an increase to a positive figure. This should add bullish momentum to the Yen against its counterparts. If Crude Oil prices change drastically following the Crude Oil Inventories release, expect some more volatility on the JPY.
Oil
US Crude Oil Inventories on Tap
Traders witnessed the first rise in oil prices in weeks during today's early trading session. The rise from its recent lowest price of $91 back up to $94 this morning has been predicted by most analysts to be a natural fluctuation in the market, not a trend reversal. When a price drops as rapidly as Crude Oil's has in the past weeks it is natural to see an upward spike here and there as market forces test the limits of the downward trend. Also, the USD's latest surge surely won't help bring a rally to the price of Crude Oil. As the USD gets stronger, Crude Oil prices tend to drop. OPEC has also announced that it forecasts the demand for Oil to be lower than it had previously predicted and may discuss further cuts to production as a result.
Interestingly, media analysts often compare present Crude Oil prices to local fuel prices. While there is a correlation between the two, it must be remembered that Crude Oil prices are a future price, not a present price. As of right now, the price of Crude Oil in the spot market sits at $94.09; this is the price that oil will be bought at in October 2008. The prices that people experience at the gas pump is a reflection of the price of Crude Oil in July, which saw record highs around $147 per barrel, as well as speculation about current Oil Inventories due to the recent hurricanes. Today's announcement from the US about Crude Oil Inventories should assuage fears by shedding light on exactly where these inventories stand. During this announcement, traders may see some volatility in the price of Light Sweet Crude.
Technical News
EUR/USD
The pair slowed down its volatile activity yesterday and is now trading around the 1.4200 level. A bullish cross on the 4-hour chart's Slow Stochastic suggests that the next move should be bullish. Going long might be the right choice today.
GBP/USD
The cable continues to fluctuate within a relatively wide price range and is currently trading at the 1.7900 level. However, a bullish momentum is implied by both the 1-hour and the 4-hour charts. Going long looks to be the preferable choice today.
USD/JPY
The pair's bullish ride was terminated at the 106.50 level, and a bearish inclination took place instead. As all oscillators on the hourlies are pointing down, it appears that going short will be a good strategy today.
USD/CHF
After a few days of mixed results, it seems that the pair has consolidated around the 1.1200 level. However, currently the 1-hour chart is providing exclusive bearish signals, suggesting that a bearish move is imminent. Traders should wait for the breach and swing.
The Wild Card
AUD/JPY
It seems that the pair has limited its bullish correction after reaching that 86.00 level, and is now ready to resume its downtrend. With plenty of room left to go, forex traders might enjoy a very promising trend.
USD
Steady Federal Funds Rate and AIG Bailout Help Boost USD
The greenback experienced a bullish trading session yesterday against all the other major currencies. The highlight of the day was the Fed's announcement that Interest Rates would remain unchanged. The American markets and the USD both reacted positively to this news. Markets also gained stability yesterday with the decision by the Fed to bailout AIG, a major international insurance corporation whose collapse would have wrought havoc on the global economy. The USD rose against the EUR to reach the 1.41 level during part of the day and mostly traded in the mid 1.41's. The USD saw even bigger gains against the JPY, rising more than 200 pips and closing the day in the mid 106's.
Although there were some major economic data releases from the U.S. yesterday, most of the focus went to the Federal Funds Rate announcement. The other main figures that were released prior to the announcement were an unchanged positive rate of the Core PPI and a slightly positive TIC Net Long-Term Transactions figure, which fell sharply compared to last month. The TIC release should have had a bearish effect on the USD, but most of the attention went to the FOMC statement where Fed Chairman Bernake decided to keep the interest rate unchanged. It was mentioned in the FOMC announcement that the financial markets will be under more pressure in the future, and hinted that a decrease in the target interest rate could occur, meaning the USD is not out of the woods just yet.
As for today, the main economic data release will be the Building Permits. With the financial sector getting most of the spotlight recently, traders will look at the housing sector to see the effects. The Building Permits figure is expected to slightly decrease, but nothing as drastic as the recent news from the financial sectors. The other two major releases, the Current Account and Housing Starts, are also expecting a slight drop compared to last month. With the EUR not having any major news releases today, traders should pay attention to the releases coming from the JPY as the Overnight Call Rate has been announced as unchanged at 0.50%, and will be followed by a press conference held by the BoJ to discuss Japan's economic future.
EUR
Positive Economic Indicators Help EUR
Yesterday, the EUR saw a volatile trading session against its major currency counterparts. With a batch of important data releases from the Euro-Zone, Great Britain and the U.S, the market witnessed high volatility. The EUR was bearish against the USD; however, it fluctuated against the GBP, and was very bullish against the CHF and JPY, as the EUR/JPY cross was traded above the 150 range.
Yesterday's events have once again shown how the world's economies affect each other as the U.S. economy had a great impact on the Euro-Zone. The anticipation and release of the American Interest Rate dropped the EUR against the greenback despite positive releases from Europe. Looking at the most impacting releases, the German ZEW Economic Sentiment was higher than last month and the yearly Core CPI increased as well. This data was not enough to cause the EUR to be bullish against the USD and GBP, but did the job for the EUR versus the CHF and JPY.
Today will be a very quiet news day for the EUR as only one economic figure will be released. The Trade Balance is expected to drop even more compared to last month which should harm the EUR; however, the other currencies should drive the market's momentum. The other 3 currencies: the GBP, JPY and USD all have major economic releases that should affect the EUR's volatility today.
JPY
Japanese Interest Rates Held Steady
So far today we are seeing a very bearish trading session for the JPY against its top currency counterparts. The JPY lost grounds to the EUR, USD and GBP, as positive data was released from all 3 of the Yen's counterparts. Against the EUR, the JPY was traded at above 150, and it lost over 200 pips to the USD, trading in the 106 range.
The only economic release from Japan yesterday was the Household Confidence report, which decreased compared to last survey, and traders followed by losing some confidence in the Yen. Harming the JPY even more were the excellent economic news releases from the world's major markets. These helped the EUR, USD and GBP gain positive momentum on behalf of the JPY.
Looking ahead today, the Japanese market should have a heavy effect on the JPY versus its major currency counterparts. The Overnight Call Rate was held steady at 0.50%, but traders should pay close attention to the BoJ Press Conference that will follow it to look for expectations of Japan's economic future. Later tonight, the monthly Tertiary Industry Activity Index is expected to be released with an increase to a positive figure. This should add bullish momentum to the Yen against its counterparts. If Crude Oil prices change drastically following the Crude Oil Inventories release, expect some more volatility on the JPY.
Oil
US Crude Oil Inventories on Tap
Traders witnessed the first rise in oil prices in weeks during today's early trading session. The rise from its recent lowest price of $91 back up to $94 this morning has been predicted by most analysts to be a natural fluctuation in the market, not a trend reversal. When a price drops as rapidly as Crude Oil's has in the past weeks it is natural to see an upward spike here and there as market forces test the limits of the downward trend. Also, the USD's latest surge surely won't help bring a rally to the price of Crude Oil. As the USD gets stronger, Crude Oil prices tend to drop. OPEC has also announced that it forecasts the demand for Oil to be lower than it had previously predicted and may discuss further cuts to production as a result.
Interestingly, media analysts often compare present Crude Oil prices to local fuel prices. While there is a correlation between the two, it must be remembered that Crude Oil prices are a future price, not a present price. As of right now, the price of Crude Oil in the spot market sits at $94.09; this is the price that oil will be bought at in October 2008. The prices that people experience at the gas pump is a reflection of the price of Crude Oil in July, which saw record highs around $147 per barrel, as well as speculation about current Oil Inventories due to the recent hurricanes. Today's announcement from the US about Crude Oil Inventories should assuage fears by shedding light on exactly where these inventories stand. During this announcement, traders may see some volatility in the price of Light Sweet Crude.
Technical News
EUR/USD
The pair slowed down its volatile activity yesterday and is now trading around the 1.4200 level. A bullish cross on the 4-hour chart's Slow Stochastic suggests that the next move should be bullish. Going long might be the right choice today.
GBP/USD
The cable continues to fluctuate within a relatively wide price range and is currently trading at the 1.7900 level. However, a bullish momentum is implied by both the 1-hour and the 4-hour charts. Going long looks to be the preferable choice today.
USD/JPY
The pair's bullish ride was terminated at the 106.50 level, and a bearish inclination took place instead. As all oscillators on the hourlies are pointing down, it appears that going short will be a good strategy today.
USD/CHF
After a few days of mixed results, it seems that the pair has consolidated around the 1.1200 level. However, currently the 1-hour chart is providing exclusive bearish signals, suggesting that a bearish move is imminent. Traders should wait for the breach and swing.
The Wild Card
AUD/JPY
It seems that the pair has limited its bullish correction after reaching that 86.00 level, and is now ready to resume its downtrend. With plenty of room left to go, forex traders might enjoy a very promising trend.
Tuesday 16 September 2008
Daily Forex Analysis
Economic News
USD
US Federal Funds Rate on Tap
The greenback experienced an intense trading session yesterday against all the other major currencies. The EUR/USD pair crossed the 1.4475 level then suddenly dropped as low as 1.4090! As of right now the USD is trading around 1.4250 against the Euro. The USD/JPY, on the other hand, saw a straight downtrend falling from almost 108.00 to the 104.00 level.
"Financial Tsunami" was probably the most common phrase on Wall Street yesterday, as $700 billion were erased from shareholder wealth. Wall Street saw its worst day since the September 11, 2001, attacks, following Lehman Brothers' filing for bankruptcy protection. This announcement was given after the Bank of America decided to purchase Merrill Lynch instead, leaving the seniors of the 4th largest investment bank in the U.S., Lehman Brothers Holdings Inc., with no other option as they watched their stock drop 95%. However, it seems that investors have an even greater concern in mind than that of Lehman's crash, as AIG, the word's largest insurance company, is currently seeking funding to shore up its balance sheet, and rumors suggest that the Fed has asked JPMorgan Chase & Co. and Goldman-Sachs Group Inc. to explore arranging the amount of $75 billion in loans in order to support AIG. The faltering of AIG will most likely have repercussions far more severe than what was observed yesterday, and could unequivocally point out a global recession. The only reason the USD managed to end the trading day at a relatively high level against the EUR was because investors were aware that the rest of the world will also probably be largely affected by the U.S economic condition, and the European economies don't seem to be able to prevent what could be a world-wide depression either.
As for today, a massive fundamental day is expected from the U.S, with the Federal Funds Rate on tap. Former expectations did not predict an interest rate change; however, yesterday's events have placed a great question mark on that notion and rumors regarding an interest rate cut were passed around. If the Fed will eventually decide to manipulate its interest rate to the downside, the USD will probably face a bearish session against its major currency rivals.
EUR
ECB Infuses Funds in Attempt to Stabilize EUR
Yesterday, the EUR saw a volatile session against its major currency counterparts. The EUR sharply dropped against the JPY; however, it fluctuated very heavily against the USD, and eventually returned to previous levels as the pair is now being traded around 1.4250.
Yesterday's events have clearly demonstrated that the gloomy condition of the U.S. economy has a great impact on the Euro-Zone. After Lehman Brothers filed for bankruptcy protection, the European Central Bank (ECB) held a money market operation in which it parceled out 30 billion Euros to European banks, only a third of the level demanded, in order to try and calm the local markets within the current financial turmoil. The German, French, British and Swiss economic chiefs have acted in similar methods, all in order to increase the demand for cash. However, the EUR failed to recuperate, and even lost all its gains versus the USD.
As for today, a batch of data is scheduled from the Euro-Zone. The most influencing financial indicator will be the European Consumer Price Index, which is forecasted by analysts to increase by 3.8%. A figure below it will likely push the EUR down. Nevertheless, it appears that news from the U.S. will once again call the tone today, and traders are advised to stay fully alert of U.S. data.
JPY
JPY Stability Pushes its Value Higher
Traders witnessed the JPY undergo a strong bullish session yesterday versus the Majors. The JPY appreciated almost 400 pips against the USD, setting the pair around the 104.20 level, and rose over 450 pips against the EUR; the pair is now trading around 148.40.
The main reason for the JPY's bullish behavior is of course the breaking crisis in the U.S. that pushed the market to fluctuate excessively yesterday, and as speculations about the Fed cutting interest rates today grow stronger, the JPY extends its rising trend even further. Moreover, the rise in risk aversion led investors to cut the amount of carry trade holdings for higher-yielding assets funded by the JPY, pushing the JPY up against all the major currencies.
Looking ahead today, no significant data is expected from the Japanese economy; however, the market is expected to be anything but stable. The news from the U.S will once again be a main focus for today's trading. Traders should follow it closely, as any crucial information might ignite a new trend in the market. Until then, the JPY might slightly depreciate today, correcting yesterday's trading session.
Oil
US Data Had No Impact on Crude Oil's Falling Price
Will the price of oil continue to drop? It seems like the only question asked recently about the movement of this commodity, and is one of the more difficult to answer. Analysts are predicting exact opposites. Some say this downtrend will soon reach the bottom and hit a quick reversal. This comes in light of OPEC's recent threat to decrease production in order to calm the market if the price of Crude Oil drops below $90. Others say that oil is currently overvalued, as it has been since March, and will continue to drop because of decreasing demand, the progress in the development of clean energy sources, and the continuing airline budget turmoil. One thing that is certain, however, is that the price of oil has not stopped falling.
No event seems large enough to impact this downtrend. Hurricanes come and go, production quotas are hacked and slashed, yet still prices drop. This information points to one conclusion: the price of oil may have been overvalued indeed, and the price is now correcting itself through open market forces. In the last year, the price of Crude Oil has found support around the $84 mark and traders should be made aware of this. If indeed the price of oil is near the trough of this downtrend, it will likely happen around that mark. Today, however, Crude Oil sits at $91.96, which means traders may still have the opportunity to join in this bearish session before it reaches its final throes.
Technical News
EUR/USD
There is a distinct bullish channel forming on the hourly chart, as the pair is now floating around the bottom level. The Slow Stochastic on the daily chart suggests the trend will probably continue rising. The breach through the 1.4003 level will validate the next 1.4400 target price.
GPB/USD
The cable has resumed its bullish trend and is attempting to breach the 1.8000 level. Should the breach take place, the pair might further extend its bullish run, with a potential price target of 1.8020.
USD/JPY
The pair is continuing its bearish movement with full steam as it breached the 104.00 level. The daily chart shows that the current price has dropped beneath the Bollinger Band's lower border, indicating that the bearish move is gathering more steam. Going short seems to be a preferable choice today.
USD/CHF
The bearish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily Slow Stochastic is showing the continuation of the trend. It seems that the pair could face another bearish session today. Going short might be the right choice.
The Wild Card
Oil
Oil prices are once again dropping, and a barrel of Crude Oil is currently trading around $92. Now, all oscillators on the daily chart are providing bearish signals, indicating that Crude prices will probably continue its downward slide. This might give forex traders a great opportunity to enter a very popular trend.
USD
US Federal Funds Rate on Tap
The greenback experienced an intense trading session yesterday against all the other major currencies. The EUR/USD pair crossed the 1.4475 level then suddenly dropped as low as 1.4090! As of right now the USD is trading around 1.4250 against the Euro. The USD/JPY, on the other hand, saw a straight downtrend falling from almost 108.00 to the 104.00 level.
"Financial Tsunami" was probably the most common phrase on Wall Street yesterday, as $700 billion were erased from shareholder wealth. Wall Street saw its worst day since the September 11, 2001, attacks, following Lehman Brothers' filing for bankruptcy protection. This announcement was given after the Bank of America decided to purchase Merrill Lynch instead, leaving the seniors of the 4th largest investment bank in the U.S., Lehman Brothers Holdings Inc., with no other option as they watched their stock drop 95%. However, it seems that investors have an even greater concern in mind than that of Lehman's crash, as AIG, the word's largest insurance company, is currently seeking funding to shore up its balance sheet, and rumors suggest that the Fed has asked JPMorgan Chase & Co. and Goldman-Sachs Group Inc. to explore arranging the amount of $75 billion in loans in order to support AIG. The faltering of AIG will most likely have repercussions far more severe than what was observed yesterday, and could unequivocally point out a global recession. The only reason the USD managed to end the trading day at a relatively high level against the EUR was because investors were aware that the rest of the world will also probably be largely affected by the U.S economic condition, and the European economies don't seem to be able to prevent what could be a world-wide depression either.
As for today, a massive fundamental day is expected from the U.S, with the Federal Funds Rate on tap. Former expectations did not predict an interest rate change; however, yesterday's events have placed a great question mark on that notion and rumors regarding an interest rate cut were passed around. If the Fed will eventually decide to manipulate its interest rate to the downside, the USD will probably face a bearish session against its major currency rivals.
EUR
ECB Infuses Funds in Attempt to Stabilize EUR
Yesterday, the EUR saw a volatile session against its major currency counterparts. The EUR sharply dropped against the JPY; however, it fluctuated very heavily against the USD, and eventually returned to previous levels as the pair is now being traded around 1.4250.
Yesterday's events have clearly demonstrated that the gloomy condition of the U.S. economy has a great impact on the Euro-Zone. After Lehman Brothers filed for bankruptcy protection, the European Central Bank (ECB) held a money market operation in which it parceled out 30 billion Euros to European banks, only a third of the level demanded, in order to try and calm the local markets within the current financial turmoil. The German, French, British and Swiss economic chiefs have acted in similar methods, all in order to increase the demand for cash. However, the EUR failed to recuperate, and even lost all its gains versus the USD.
As for today, a batch of data is scheduled from the Euro-Zone. The most influencing financial indicator will be the European Consumer Price Index, which is forecasted by analysts to increase by 3.8%. A figure below it will likely push the EUR down. Nevertheless, it appears that news from the U.S. will once again call the tone today, and traders are advised to stay fully alert of U.S. data.
JPY
JPY Stability Pushes its Value Higher
Traders witnessed the JPY undergo a strong bullish session yesterday versus the Majors. The JPY appreciated almost 400 pips against the USD, setting the pair around the 104.20 level, and rose over 450 pips against the EUR; the pair is now trading around 148.40.
The main reason for the JPY's bullish behavior is of course the breaking crisis in the U.S. that pushed the market to fluctuate excessively yesterday, and as speculations about the Fed cutting interest rates today grow stronger, the JPY extends its rising trend even further. Moreover, the rise in risk aversion led investors to cut the amount of carry trade holdings for higher-yielding assets funded by the JPY, pushing the JPY up against all the major currencies.
Looking ahead today, no significant data is expected from the Japanese economy; however, the market is expected to be anything but stable. The news from the U.S will once again be a main focus for today's trading. Traders should follow it closely, as any crucial information might ignite a new trend in the market. Until then, the JPY might slightly depreciate today, correcting yesterday's trading session.
Oil
US Data Had No Impact on Crude Oil's Falling Price
Will the price of oil continue to drop? It seems like the only question asked recently about the movement of this commodity, and is one of the more difficult to answer. Analysts are predicting exact opposites. Some say this downtrend will soon reach the bottom and hit a quick reversal. This comes in light of OPEC's recent threat to decrease production in order to calm the market if the price of Crude Oil drops below $90. Others say that oil is currently overvalued, as it has been since March, and will continue to drop because of decreasing demand, the progress in the development of clean energy sources, and the continuing airline budget turmoil. One thing that is certain, however, is that the price of oil has not stopped falling.
No event seems large enough to impact this downtrend. Hurricanes come and go, production quotas are hacked and slashed, yet still prices drop. This information points to one conclusion: the price of oil may have been overvalued indeed, and the price is now correcting itself through open market forces. In the last year, the price of Crude Oil has found support around the $84 mark and traders should be made aware of this. If indeed the price of oil is near the trough of this downtrend, it will likely happen around that mark. Today, however, Crude Oil sits at $91.96, which means traders may still have the opportunity to join in this bearish session before it reaches its final throes.
Technical News
EUR/USD
There is a distinct bullish channel forming on the hourly chart, as the pair is now floating around the bottom level. The Slow Stochastic on the daily chart suggests the trend will probably continue rising. The breach through the 1.4003 level will validate the next 1.4400 target price.
GPB/USD
The cable has resumed its bullish trend and is attempting to breach the 1.8000 level. Should the breach take place, the pair might further extend its bullish run, with a potential price target of 1.8020.
USD/JPY
The pair is continuing its bearish movement with full steam as it breached the 104.00 level. The daily chart shows that the current price has dropped beneath the Bollinger Band's lower border, indicating that the bearish move is gathering more steam. Going short seems to be a preferable choice today.
USD/CHF
The bearish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily Slow Stochastic is showing the continuation of the trend. It seems that the pair could face another bearish session today. Going short might be the right choice.
The Wild Card
Oil
Oil prices are once again dropping, and a barrel of Crude Oil is currently trading around $92. Now, all oscillators on the daily chart are providing bearish signals, indicating that Crude prices will probably continue its downward slide. This might give forex traders a great opportunity to enter a very popular trend.
Monday 15 September 2008
US Federal Funds Rate
Be Prepared! US Federal Funds Rate Tomorrow at 18:15 GMT.
We at ForexYard encourage our customers to get involved in the most intense market events. As such, we think you should know that US Federal Funds Rate figures are expected tomorrow, September 16th, 18:15 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the Majors are the ones most affected by market events in general but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the US Federal Funds Rate, please read below.
What is the US Federal Funds Rate?
The US Federal Funds Rate, or Interest Rates, is the rate at which banks lend balances held at the Federal Reserve to other banks overnight. This figure is released 8 times each year. It is important because short-term Interest Rates are the leading factor in determining the value of a currency.
In fact, most other economic indicators are used by traders to speculate about the future movement of these Interest Rates. This figure is decided on by the members of the Federal Open Market Committee (FOMC) who vote on where to set a "target rate," because the actual rate is set by the open market. It is a mechanism used by the Federal Reserve to regulate the supply of money in the US economy and has a direct impact on supply and demand for the USD.
According to the needs of the US economy, the FOMC will elect to increase, decrease, or leave the rate unchanged. Traders pay close attention to this figure as it has a strong correlation with the value of the US Dollar. If rates are cut, there will be an increase in the amount of USD in circulation making them grow weaker in value. If rates are increased, the exact opposite happens. Dollars are taken out of the economy to help contain inflation and strengthen the value of the USD.
If the Federal Funds Rate is Decreased
At present, market analysts are forecasting the Federal Funds Rate to be maintained at 2.0%. However, if Interest Rates are cut below the 2.0% mark, this would stipulate that the Fed is going to start buying securities. This might have the effect of lowering the value of the USD against its major currency pairs as traders will start selling USD during its devaluation.
By decreasing the Interest Rates, it stimulates US economic growth by making it cheaper to get a mortgage or buy a car. This entices investors to put more money towards capital in the local economy. However, this change in the Interest Rate is always approached with caution. If rates are cut too far, the rapidly growing economy will force a sharp increase to the rate of inflation. As inflation raises, the cost of goods and services also rise and make the value of the dollar even weaker. When this happens it usually warrants a subsequent increase to the Federal Funds Rate.
Ultimately the Fed is trying to find the target interest rate that balances these factors. Traders should expect a call by the Fed to maintain present rates with a bias towards cutting these rates as the global economy is still witnessing a recessionary move. This should maintain the steady growth the USD has seen in recent weeks versus its major currency rivals.
If the Federal Funds Rate is Increased
Although the current forecast is predicting the Fed to hold Interest Rates steady, there is the possibility of an increase in this figure. If the Fed decides to enact such an increase in Interest Rates, it will begin selling securities. This will limit the amount of US currency in the market. If the Federal Funds Rate will indeed be increased, the upward momentum of the USD will take off as its value becomes much stronger versus its currency rivals.
This result is less likely for September 2008 seeing as such a move has the potential to cause a recession. Since the US economy is currently witnessing a recessionary move, an action such as this is not likely. It is far more possible that the Fed will indeed issue an order to maintain current rates, or to issue a cut in the target rate, than it would be for the Fed to issue an increase in the Federal Funds Rate at this time.
The best way to capture profits from the announcement of these rates is to be aware of their impact on the strength of the USD and trade accordingly.
(forexyard)
We at ForexYard encourage our customers to get involved in the most intense market events. As such, we think you should know that US Federal Funds Rate figures are expected tomorrow, September 16th, 18:15 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the Majors are the ones most affected by market events in general but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the US Federal Funds Rate, please read below.
What is the US Federal Funds Rate?
The US Federal Funds Rate, or Interest Rates, is the rate at which banks lend balances held at the Federal Reserve to other banks overnight. This figure is released 8 times each year. It is important because short-term Interest Rates are the leading factor in determining the value of a currency.
In fact, most other economic indicators are used by traders to speculate about the future movement of these Interest Rates. This figure is decided on by the members of the Federal Open Market Committee (FOMC) who vote on where to set a "target rate," because the actual rate is set by the open market. It is a mechanism used by the Federal Reserve to regulate the supply of money in the US economy and has a direct impact on supply and demand for the USD.
According to the needs of the US economy, the FOMC will elect to increase, decrease, or leave the rate unchanged. Traders pay close attention to this figure as it has a strong correlation with the value of the US Dollar. If rates are cut, there will be an increase in the amount of USD in circulation making them grow weaker in value. If rates are increased, the exact opposite happens. Dollars are taken out of the economy to help contain inflation and strengthen the value of the USD.
If the Federal Funds Rate is Decreased
At present, market analysts are forecasting the Federal Funds Rate to be maintained at 2.0%. However, if Interest Rates are cut below the 2.0% mark, this would stipulate that the Fed is going to start buying securities. This might have the effect of lowering the value of the USD against its major currency pairs as traders will start selling USD during its devaluation.
By decreasing the Interest Rates, it stimulates US economic growth by making it cheaper to get a mortgage or buy a car. This entices investors to put more money towards capital in the local economy. However, this change in the Interest Rate is always approached with caution. If rates are cut too far, the rapidly growing economy will force a sharp increase to the rate of inflation. As inflation raises, the cost of goods and services also rise and make the value of the dollar even weaker. When this happens it usually warrants a subsequent increase to the Federal Funds Rate.
Ultimately the Fed is trying to find the target interest rate that balances these factors. Traders should expect a call by the Fed to maintain present rates with a bias towards cutting these rates as the global economy is still witnessing a recessionary move. This should maintain the steady growth the USD has seen in recent weeks versus its major currency rivals.
If the Federal Funds Rate is Increased
Although the current forecast is predicting the Fed to hold Interest Rates steady, there is the possibility of an increase in this figure. If the Fed decides to enact such an increase in Interest Rates, it will begin selling securities. This will limit the amount of US currency in the market. If the Federal Funds Rate will indeed be increased, the upward momentum of the USD will take off as its value becomes much stronger versus its currency rivals.
This result is less likely for September 2008 seeing as such a move has the potential to cause a recession. Since the US economy is currently witnessing a recessionary move, an action such as this is not likely. It is far more possible that the Fed will indeed issue an order to maintain current rates, or to issue a cut in the target rate, than it would be for the Fed to issue an increase in the Federal Funds Rate at this time.
The best way to capture profits from the announcement of these rates is to be aware of their impact on the strength of the USD and trade accordingly.
(forexyard)
Friday 12 September 2008
currencies analysis
EUR/USD
The cable has breached the key Fibonacci level of 1.4000, and the break has been validated by a full bar beneath that level on the 4-hour chart. The negative slope on the daily Slow Stochastic strengthens the notion that the momentum is quite bearish. Going short might be wise today.
GPB/USD
The pair is in the middle of a very intense downtrend that still shows great momentum and on a bigger scale appears to have more room to run. In the short term, a bullish cross on the hourly chart indicates that there might be a small correction before the bearish move resumes. Selling on highs appears to be preferable today.
USD/JPY
The pair has been range-trading with high volatility for a while now and it appears that the bearish price movement is back. The Slow Stochastic and the RSI of the daily chart are indicating an upcoming test of the 106.00 level. If that level is breached, swinging in the trend would be the best strategy.
USD/CHF
The daily chart is showing that the pair is still in the bullish configuration; however, the RSI is already floating in the overbought territory. On the contrary, the hourly's and the 4-hour chart's Slow Stochastic are both showing a bearish cross. It appears that the possible next move might be a bearish one. In that case traders are advised to swing in after the break.
The cable has breached the key Fibonacci level of 1.4000, and the break has been validated by a full bar beneath that level on the 4-hour chart. The negative slope on the daily Slow Stochastic strengthens the notion that the momentum is quite bearish. Going short might be wise today.
GPB/USD
The pair is in the middle of a very intense downtrend that still shows great momentum and on a bigger scale appears to have more room to run. In the short term, a bullish cross on the hourly chart indicates that there might be a small correction before the bearish move resumes. Selling on highs appears to be preferable today.
USD/JPY
The pair has been range-trading with high volatility for a while now and it appears that the bearish price movement is back. The Slow Stochastic and the RSI of the daily chart are indicating an upcoming test of the 106.00 level. If that level is breached, swinging in the trend would be the best strategy.
USD/CHF
The daily chart is showing that the pair is still in the bullish configuration; however, the RSI is already floating in the overbought territory. On the contrary, the hourly's and the 4-hour chart's Slow Stochastic are both showing a bearish cross. It appears that the possible next move might be a bearish one. In that case traders are advised to swing in after the break.
Economic News
Economic News
USD
USD Retail Sales and Consumer Sentiment on Tap
Yesterday the greenback saw a volatile session against most of its major currency counterparts. The USD began yesterday's trading session with rising trends as the EUR/USD dropped beneath the 1.39 level for the first time in a year. However, later on, the trend reversed, raising the pair back to the 1.40 level.
The USD appreciated with the beginning of yesterday's trading session mainly as a result of some negative data arriving from the Euro-Zone. It was enough to continue supporting the current trend of a strengthening USD. However, a batch of unfortunate data regarding the U.S economy has managed to halt the trend and launch a reversal. The most significant being the U.S Trade Balance, which dropped well below expectations in July, as the U.S trade deficit widened to $62.2B, the largest since March 2007. Another disturbing piece of news was the weekly Unemployment Claims, which slightly fell to 444,500 individuals filing new claims for unemployment insurance, counter to the forecast of a drop in 4K. Furthermore, the Labor Department also said that the number of individuals continuing to file claims for unemployment rose to 3.525 million, the highest level seen since October 2003.
Looking at today, traders can expect a steady stream of news coming from US which will increase the market's volatility. The main focus should be tuned to 12:30 GMT, when several significant indicators will be published. The most influential indicator will be the U.S Retail Sales Survey, which is expected by analysts to rise by 0.2% as opposed to the previous month. At the same time, the Core Retail Sales and the Producer Price Index (PPI) are scheduled for release; however they are expected to deliver more negative figures. If the expectations of analysts will be confirmed, the market is likely to react with fluctuating movements in light of the mixed results. This might give traders a window of opportunities to gain profits out of the volatile sessions, before the market stabilizes to continue the current trend of a strengthening USD.
EUR
ECB President Trichet Alludes to a Hike in Euro-Zone Interest Rates
The EUR underwent a volatile session yesterday within its major current pairs. At first the EUR saw bearish behavior on all fronts; however, it managed to recuperate as the day progressed.
The EUR started the day with a downward movement as a result of negative publications from Germany and France. The German Wholesale Price Index fell by 1.8% in August, well below expectations for a 0.3% drop. Later on, the French Final Non-Farm Payrolls marked a 0.2% decrease in the second quarter of the year from the previous one. As long as the strongest nations in the Euro-Zone will continue to deliver signals of contraction, the EUR will continue to drop, especially against the USD and the JPY, which have been strongly supported by the euro's downfall over the past two months. Nevertheless, as the EUR almost fell to a two year low against the JPY, it bounced back up following a hawkish speech by the European Central Bank President Jean-Claude Trichet. In his speech, Trichet said that inflation remains the bank's key focus. By saying this, Trichet alluded to the possibility of an interest rate hike in the region. In addition, a batch of unfavorable data from the U.S economy has weakened the USD, which may support the EUR in the short term.
Looking ahead to today, the European Industrial Production is due at 09:00 GMT, and analysts forecast it to fall by 0.2% from the previous month. Such a result will most likely be reflected in a bearish inclination for the EUR. Traders should also follow today's U.S leading indicators, as they will generate the largest impact on the market today.
JPY
JPY Reaches Two-Year Highs Versus a Batch of Crosses
The JPY saw mixed results yesterday as the equity markets produced varying signs of risk appetite. The day started with strong risk aversion throughout the market, resulting in bullishness for the Japanese currency. By mid-day yesterday it had gained over 100 pips against the USD, EUR, GBP and CHF and also trading near 2-year highs versus the NZD and AUD. With Japanese data having little effect on its own currency movement, it was only a matter of time before market behavior changed as the JPY forfeited most of it earlier gains before market closing. The swing in market sentiment came as Lehman Brothers announced its struggle to regain capital following their monumental losses earlier this year. The credit giant is still looking for potential buyers with the help of the US government and news of such will likely provide a huge swing of risky trading. Yesterday's local data from Japan, as mentioned earlier had little effect on its pricing. Both quarterly GDP and annual GDP price index numbers saw slight gains for this month compared to last, despite posting negative figures. Final Q2 revised GDP saw a 0.2% gain from initial expectations of -0.9% and the price index was also slightly up against forecasts.
In early morning trading the Japanese released their revised monthly Industrial Production figures which show positive growth of 1.3% last month. As expected markets reacted with little motion as JPY enthusiasts will need to look toward a full fundamental news day from global markets to map out their positions.
Oil
Against All Odds the Price of Crude Oil Continues its Decline
As Hurricane Ike inches closer to the Texan coast, oil refineries are getting shut down with blinding speed and civilians are clogging highways and draining gas stations in their attempt to flee the oncoming destruction. However, the most contradictory piece of data to emerge from this turmoil is the steady drop in the price of Crude Oil. When storms threaten major refineries, the historical impact has usually been to lower market supply and force prices to move upward as people, and nations, begin to stockpile in expectation of a shortage. As of right now, however, we are seeing the exact opposite of this outcome. Supply is being cut by suppliers and tropical storms, yet we continue to see the price of oil slip further and further reaching as low as $100.10 during yesterday's trading session.
How can this be? As no one explanation will suffice by itself, this slippage may be the result of three causes. The first is the lowering demand for pricey energy sources. As oil prices reached record highs this past July, demand for such an expensive source of energy sank. We are still feeling the effects of this slump in demand and prices are sinking to meet the appropriate level consumers are willing to pay. The second is the weakened global economy. As the value of currencies weakens during this time of global recession, it becomes harder to afford the previously expensive energy costs and countries are buying less as a result. Prices drop to meet that reality. The third cause is the impact of speculation. When the economy's bottom dropped out, commodities like gold and oil were bought up as a safety net. This drove prices higher and higher. Now, as the USD gets stronger and the economy attempts to correct itself, these commodities are dropping back to their normal market levels and speculators are selling off all their shares in these defensive commodities to escape their decreasing value, which of course forces prices to drop even further. Important for today's trading is for traders to be aware that the price of oil may resist the inclination for an increase in price given the recent news releases about supply. However, once market demand is corrected, supply will then continue to be a source of information about prices.
(FOREXYARD Daily Forex Analysis)
USD
USD Retail Sales and Consumer Sentiment on Tap
Yesterday the greenback saw a volatile session against most of its major currency counterparts. The USD began yesterday's trading session with rising trends as the EUR/USD dropped beneath the 1.39 level for the first time in a year. However, later on, the trend reversed, raising the pair back to the 1.40 level.
The USD appreciated with the beginning of yesterday's trading session mainly as a result of some negative data arriving from the Euro-Zone. It was enough to continue supporting the current trend of a strengthening USD. However, a batch of unfortunate data regarding the U.S economy has managed to halt the trend and launch a reversal. The most significant being the U.S Trade Balance, which dropped well below expectations in July, as the U.S trade deficit widened to $62.2B, the largest since March 2007. Another disturbing piece of news was the weekly Unemployment Claims, which slightly fell to 444,500 individuals filing new claims for unemployment insurance, counter to the forecast of a drop in 4K. Furthermore, the Labor Department also said that the number of individuals continuing to file claims for unemployment rose to 3.525 million, the highest level seen since October 2003.
Looking at today, traders can expect a steady stream of news coming from US which will increase the market's volatility. The main focus should be tuned to 12:30 GMT, when several significant indicators will be published. The most influential indicator will be the U.S Retail Sales Survey, which is expected by analysts to rise by 0.2% as opposed to the previous month. At the same time, the Core Retail Sales and the Producer Price Index (PPI) are scheduled for release; however they are expected to deliver more negative figures. If the expectations of analysts will be confirmed, the market is likely to react with fluctuating movements in light of the mixed results. This might give traders a window of opportunities to gain profits out of the volatile sessions, before the market stabilizes to continue the current trend of a strengthening USD.
EUR
ECB President Trichet Alludes to a Hike in Euro-Zone Interest Rates
The EUR underwent a volatile session yesterday within its major current pairs. At first the EUR saw bearish behavior on all fronts; however, it managed to recuperate as the day progressed.
The EUR started the day with a downward movement as a result of negative publications from Germany and France. The German Wholesale Price Index fell by 1.8% in August, well below expectations for a 0.3% drop. Later on, the French Final Non-Farm Payrolls marked a 0.2% decrease in the second quarter of the year from the previous one. As long as the strongest nations in the Euro-Zone will continue to deliver signals of contraction, the EUR will continue to drop, especially against the USD and the JPY, which have been strongly supported by the euro's downfall over the past two months. Nevertheless, as the EUR almost fell to a two year low against the JPY, it bounced back up following a hawkish speech by the European Central Bank President Jean-Claude Trichet. In his speech, Trichet said that inflation remains the bank's key focus. By saying this, Trichet alluded to the possibility of an interest rate hike in the region. In addition, a batch of unfavorable data from the U.S economy has weakened the USD, which may support the EUR in the short term.
Looking ahead to today, the European Industrial Production is due at 09:00 GMT, and analysts forecast it to fall by 0.2% from the previous month. Such a result will most likely be reflected in a bearish inclination for the EUR. Traders should also follow today's U.S leading indicators, as they will generate the largest impact on the market today.
JPY
JPY Reaches Two-Year Highs Versus a Batch of Crosses
The JPY saw mixed results yesterday as the equity markets produced varying signs of risk appetite. The day started with strong risk aversion throughout the market, resulting in bullishness for the Japanese currency. By mid-day yesterday it had gained over 100 pips against the USD, EUR, GBP and CHF and also trading near 2-year highs versus the NZD and AUD. With Japanese data having little effect on its own currency movement, it was only a matter of time before market behavior changed as the JPY forfeited most of it earlier gains before market closing. The swing in market sentiment came as Lehman Brothers announced its struggle to regain capital following their monumental losses earlier this year. The credit giant is still looking for potential buyers with the help of the US government and news of such will likely provide a huge swing of risky trading. Yesterday's local data from Japan, as mentioned earlier had little effect on its pricing. Both quarterly GDP and annual GDP price index numbers saw slight gains for this month compared to last, despite posting negative figures. Final Q2 revised GDP saw a 0.2% gain from initial expectations of -0.9% and the price index was also slightly up against forecasts.
In early morning trading the Japanese released their revised monthly Industrial Production figures which show positive growth of 1.3% last month. As expected markets reacted with little motion as JPY enthusiasts will need to look toward a full fundamental news day from global markets to map out their positions.
Oil
Against All Odds the Price of Crude Oil Continues its Decline
As Hurricane Ike inches closer to the Texan coast, oil refineries are getting shut down with blinding speed and civilians are clogging highways and draining gas stations in their attempt to flee the oncoming destruction. However, the most contradictory piece of data to emerge from this turmoil is the steady drop in the price of Crude Oil. When storms threaten major refineries, the historical impact has usually been to lower market supply and force prices to move upward as people, and nations, begin to stockpile in expectation of a shortage. As of right now, however, we are seeing the exact opposite of this outcome. Supply is being cut by suppliers and tropical storms, yet we continue to see the price of oil slip further and further reaching as low as $100.10 during yesterday's trading session.
How can this be? As no one explanation will suffice by itself, this slippage may be the result of three causes. The first is the lowering demand for pricey energy sources. As oil prices reached record highs this past July, demand for such an expensive source of energy sank. We are still feeling the effects of this slump in demand and prices are sinking to meet the appropriate level consumers are willing to pay. The second is the weakened global economy. As the value of currencies weakens during this time of global recession, it becomes harder to afford the previously expensive energy costs and countries are buying less as a result. Prices drop to meet that reality. The third cause is the impact of speculation. When the economy's bottom dropped out, commodities like gold and oil were bought up as a safety net. This drove prices higher and higher. Now, as the USD gets stronger and the economy attempts to correct itself, these commodities are dropping back to their normal market levels and speculators are selling off all their shares in these defensive commodities to escape their decreasing value, which of course forces prices to drop even further. Important for today's trading is for traders to be aware that the price of oil may resist the inclination for an increase in price given the recent news releases about supply. However, once market demand is corrected, supply will then continue to be a source of information about prices.
(FOREXYARD Daily Forex Analysis)
Thursday 11 September 2008
Technical News
Technical News
EUR/USD
The bearish momentum continues with full steam, and yesterday this pair breached the 1.4000 level. The 4 hour chart shows that the pair is still floating beneath the Bollinger Bands, indicating the continuation of the bearish move. Going short may be a good strategy.
GBP/USD
The bearish price movement continues full steam ahead within the bearish channel which still has yet to be breached. The daily chart is showing a strong bearish cross, and the 4 hour chart is also joining to that notion with the Slow Stochastic pointing to the continuation of the bearish movement. Next testing point should be around 1.7400. Going short appears to be preferable today.
USD/JPY
Narrow range trading continues as the pair did not make any significant move in either direction. The daily chart is showing signs of a bearish momentum. The Bollinger Bands are tightening and a breach might be imminent to any side. A good strategy might be to wait for the signal and ride the momentum.
USD/CHF
The sharp bullish channel on the 4 hour chart continues with no signs of a stop. The Slow Stochastic is showing a triple top formation with a positive slope, which indicates the possible continuation of the trend. Going long appears to be the right move today
EUR/USD
The bearish momentum continues with full steam, and yesterday this pair breached the 1.4000 level. The 4 hour chart shows that the pair is still floating beneath the Bollinger Bands, indicating the continuation of the bearish move. Going short may be a good strategy.
GBP/USD
The bearish price movement continues full steam ahead within the bearish channel which still has yet to be breached. The daily chart is showing a strong bearish cross, and the 4 hour chart is also joining to that notion with the Slow Stochastic pointing to the continuation of the bearish movement. Next testing point should be around 1.7400. Going short appears to be preferable today.
USD/JPY
Narrow range trading continues as the pair did not make any significant move in either direction. The daily chart is showing signs of a bearish momentum. The Bollinger Bands are tightening and a breach might be imminent to any side. A good strategy might be to wait for the signal and ride the momentum.
USD/CHF
The sharp bullish channel on the 4 hour chart continues with no signs of a stop. The Slow Stochastic is showing a triple top formation with a positive slope, which indicates the possible continuation of the trend. Going long appears to be the right move today
Wednesday 10 September 2008
Economic News
USD
Investment Bank has Negative Effect on USD.
The dollar fell against the EUR for the first time in almost two weeks pushing the oft traded currency pair to 1.4131. In overnight trading, the USD touched a new 11-month record of $1.4043. Moreover, the greenback traded lower against most other major currencies on Tuesday as rumors about the financial health of investment bank Lehman Brothers Holdings Inc. unnerved traders and created a downward move. The USD did see bullishness as well as it gained over 50 points against the CDN and closed at 1.0722.
Shares in Lehman Brothers Holdings fall down on concerns over its ability to raise capital after reports that talks with a Korean bank on a possible capital infusion had ended. Lehman's more than 40% drop on Tuesday, its biggest one-day decline on record, eroded the market's initial optimism about the U.S. government's weekend takeover of mortgage financiers Freddie Mac and Fannie Mae. Lehman's stock fell to its lowest price in more than 10 years as investors worried about the bank's financial soundness and ability to raise capital. The Dow Jones industrial average was off more than 220 points, or 2%, at 11,280 in late trading. This is caused by a slight drop in the USD against the other major currencies.
Today, the sole indicator for the USD will be the Crude Oil Inventories, which measure the change in the number of barrels of crude oil held in inventory by commercial firms during the past week. Analysts forecast it to descend -4.8M. Traders are advised to pay close attention to this indicator, along with Crude Oil prices, as they have proven to have a significant effect on USD pairs.
EUR
The Euro has Mixed Feelings Preceding Today's Announcements
Yesterday, the EUR saw mixed results versus most of its currency pair counterparts. The EUR underwent a bearish trend against the JPY, declining over 100 pips, and closed at 151.04. Against the GBP and the USD it mainly fluctuated within a small range.
Yesterday, the only financial indicator that was published from the Euro-Zone was the German trade balance. Germany's trade surplus shrank much more than expected in July, as imports rose at the strongest pace in more than six years to a record 72.6 billion. Also, exports fell 1.7 percent on the month in seasonally adjusted terms to 84.4 billion, and the trade surplus narrowed to 11.8 billion from an upwardly revised 18.2 billion in June. Foreign trade has been a key engine of growth for Europe's biggest economy in recent years, but the data yesterday suggested it could be a drag on growth in the third quarter, possibly tipping the economy into recession which might cause deterioration in the 15 nation currency.
A few economic figures are expected to be released today from the Euro-Zone. ECB President Trichet will be giving his testimony to Parliament's Committee on Economic and Monetary Affairs in Brussels. Today will also be an important day for the EUR as France will release their industrial production figures and trade balance. The EUR is still showing signs of resilience as it traded in a relatively close range yesterday even though there was volatility all across the board. So it will be crucial for traders to identify how the preceding economic indicators from Europe will affect their economy.
JPY
JPY Current Account Figures beat Forecast and Give a Boost to the Yen
The JPY underwent a small increase yesterday, as it appreciated against all of its major currency rivals. The JPY rose 1.2% and closed at 107.22 versus the USD in yesterday's trading session. Also, the JPY saw a significant gain against the GBP and CHF.
As the Current Account beat our forecasts, which showed an expected rise of 134T but instead reached 156T, the JPY saw slight bullishness and added to another day of surprising Japanese economic data in support of the yen. This indicator is very important because it is directly linked to currency demand. A rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country. This in turn will support the latest bullish trend for the Japanese yen in the forex market.
Today, the sole indicator for the JPY will be the Core Machinery Orders. This indicator measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. A rising trend has a positive effect on the nation's currency. When manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansion phase. Besides the JPY's crosses' trading trends, Crude Oil will be the other major influence. The yen will need the black gold's bearishness to continue in order for the JPY to keep strengthening.
Crude Oil
A Steady Decline in Price despite Call for Production Cuts.
Today could be an important day to keep an eye on the price of Crude Oil. As the OPEC meeting continues to discuss what should be done to curtail, or maintain, current production levels, the price of oil gradually slides closer to the $100 mark. It reached down to $103.42 at the end of yesterday's trading session. OPEC President and Algerian Minister of Energy, Chakib Khelil, called for a cut to production in light of falling prices. The Saudi oil minister, however, stated that his country will maintain producing its present surplus. The debate rages on. A rogue element also emerged in yesterday's meeting in the form of a Russian delegate. Russia, though not a member of OPEC, is one of the world's largest oil producers with the ability to offer a counter to Saudi Arabia's unchecked power if allowed membership into the organization. Another emergency meeting is also being proposed for November to continue discussions on production and quota levels.
Traders should take note; the recent OPEC meeting has not yet produced a decision on production levels. Russia's presence also does not signify an impact to the price of oil in the short term. Nothing suggests that the price of oil will begin to act contrary to its recent falls and will likely continue to slip toward $100. The US is also set to announce its Crude Oil Inventories later in the morning which has implications for inflation as well as growth, therefore producing mixed volatility in the market.
USD
Investment Bank has Negative Effect on USD.
The dollar fell against the EUR for the first time in almost two weeks pushing the oft traded currency pair to 1.4131. In overnight trading, the USD touched a new 11-month record of $1.4043. Moreover, the greenback traded lower against most other major currencies on Tuesday as rumors about the financial health of investment bank Lehman Brothers Holdings Inc. unnerved traders and created a downward move. The USD did see bullishness as well as it gained over 50 points against the CDN and closed at 1.0722.
Shares in Lehman Brothers Holdings fall down on concerns over its ability to raise capital after reports that talks with a Korean bank on a possible capital infusion had ended. Lehman's more than 40% drop on Tuesday, its biggest one-day decline on record, eroded the market's initial optimism about the U.S. government's weekend takeover of mortgage financiers Freddie Mac and Fannie Mae. Lehman's stock fell to its lowest price in more than 10 years as investors worried about the bank's financial soundness and ability to raise capital. The Dow Jones industrial average was off more than 220 points, or 2%, at 11,280 in late trading. This is caused by a slight drop in the USD against the other major currencies.
Today, the sole indicator for the USD will be the Crude Oil Inventories, which measure the change in the number of barrels of crude oil held in inventory by commercial firms during the past week. Analysts forecast it to descend -4.8M. Traders are advised to pay close attention to this indicator, along with Crude Oil prices, as they have proven to have a significant effect on USD pairs.
EUR
The Euro has Mixed Feelings Preceding Today's Announcements
Yesterday, the EUR saw mixed results versus most of its currency pair counterparts. The EUR underwent a bearish trend against the JPY, declining over 100 pips, and closed at 151.04. Against the GBP and the USD it mainly fluctuated within a small range.
Yesterday, the only financial indicator that was published from the Euro-Zone was the German trade balance. Germany's trade surplus shrank much more than expected in July, as imports rose at the strongest pace in more than six years to a record 72.6 billion. Also, exports fell 1.7 percent on the month in seasonally adjusted terms to 84.4 billion, and the trade surplus narrowed to 11.8 billion from an upwardly revised 18.2 billion in June. Foreign trade has been a key engine of growth for Europe's biggest economy in recent years, but the data yesterday suggested it could be a drag on growth in the third quarter, possibly tipping the economy into recession which might cause deterioration in the 15 nation currency.
A few economic figures are expected to be released today from the Euro-Zone. ECB President Trichet will be giving his testimony to Parliament's Committee on Economic and Monetary Affairs in Brussels. Today will also be an important day for the EUR as France will release their industrial production figures and trade balance. The EUR is still showing signs of resilience as it traded in a relatively close range yesterday even though there was volatility all across the board. So it will be crucial for traders to identify how the preceding economic indicators from Europe will affect their economy.
JPY
JPY Current Account Figures beat Forecast and Give a Boost to the Yen
The JPY underwent a small increase yesterday, as it appreciated against all of its major currency rivals. The JPY rose 1.2% and closed at 107.22 versus the USD in yesterday's trading session. Also, the JPY saw a significant gain against the GBP and CHF.
As the Current Account beat our forecasts, which showed an expected rise of 134T but instead reached 156T, the JPY saw slight bullishness and added to another day of surprising Japanese economic data in support of the yen. This indicator is very important because it is directly linked to currency demand. A rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country. This in turn will support the latest bullish trend for the Japanese yen in the forex market.
Today, the sole indicator for the JPY will be the Core Machinery Orders. This indicator measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. A rising trend has a positive effect on the nation's currency. When manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansion phase. Besides the JPY's crosses' trading trends, Crude Oil will be the other major influence. The yen will need the black gold's bearishness to continue in order for the JPY to keep strengthening.
Crude Oil
A Steady Decline in Price despite Call for Production Cuts.
Today could be an important day to keep an eye on the price of Crude Oil. As the OPEC meeting continues to discuss what should be done to curtail, or maintain, current production levels, the price of oil gradually slides closer to the $100 mark. It reached down to $103.42 at the end of yesterday's trading session. OPEC President and Algerian Minister of Energy, Chakib Khelil, called for a cut to production in light of falling prices. The Saudi oil minister, however, stated that his country will maintain producing its present surplus. The debate rages on. A rogue element also emerged in yesterday's meeting in the form of a Russian delegate. Russia, though not a member of OPEC, is one of the world's largest oil producers with the ability to offer a counter to Saudi Arabia's unchecked power if allowed membership into the organization. Another emergency meeting is also being proposed for November to continue discussions on production and quota levels.
Traders should take note; the recent OPEC meeting has not yet produced a decision on production levels. Russia's presence also does not signify an impact to the price of oil in the short term. Nothing suggests that the price of oil will begin to act contrary to its recent falls and will likely continue to slip toward $100. The US is also set to announce its Crude Oil Inventories later in the morning which has implications for inflation as well as growth, therefore producing mixed volatility in the market.
Tuesday 9 September 2008
Monday 8 September 2008
Saturday 6 September 2008
GBPUSD on the performance of last week, GBPUSD trend remains down, but overall, as expected shocks started up, the region is estimated to be 600 shocks, the form of sports concussion DOWN
Before landing at the bottom of the real, encountered more weeks to rebound after sell recommendations Fenggao to the detriment of effective on the break 1.7850, 1.7450 on bargain hunting buying to rebound, but not hold too long ! What time Can in the short-term holders of that time I will inform you!
GBPJPY fell as expected in the 186 and 186 also honestly from the rebound, but the GBPJPY is bottoming out? I do not, the stage is expected to be low in the vicinity of 183, while the year's low will be possible in the near 178! Rebound in the 192 to 193 will create a strong resistance, forcing GBPJPY further to test the 183 support! sold at the right path, the loss can be set at 195.50.
GBPCHF As for the species as a whole will once again lowered the low of 1995, rebound capped at 2.00 to 2.01, the key support at 1.9550! Continue to take the form of high parabolic form at the bottom of the former! , Is expected within the range of: 1.7850 - 1.7550 - 1.7250 (on strategies to support buying, selling event of resistance, technical point of stop-loss of 50 points)
GBPUSD years down the limit does not rule out the minimum target can be achieved 1.7220!
Before landing at the bottom of the real, encountered more weeks to rebound after sell recommendations Fenggao to the detriment of effective on the break 1.7850, 1.7450 on bargain hunting buying to rebound, but not hold too long ! What time Can in the short-term holders of that time I will inform you!
GBPJPY fell as expected in the 186 and 186 also honestly from the rebound, but the GBPJPY is bottoming out? I do not, the stage is expected to be low in the vicinity of 183, while the year's low will be possible in the near 178! Rebound in the 192 to 193 will create a strong resistance, forcing GBPJPY further to test the 183 support! sold at the right path, the loss can be set at 195.50.
GBPCHF As for the species as a whole will once again lowered the low of 1995, rebound capped at 2.00 to 2.01, the key support at 1.9550! Continue to take the form of high parabolic form at the bottom of the former! , Is expected within the range of: 1.7850 - 1.7550 - 1.7250 (on strategies to support buying, selling event of resistance, technical point of stop-loss of 50 points)
GBPUSD years down the limit does not rule out the minimum target can be achieved 1.7220!
Friday 5 September 2008
The current situation is the price of a return to the situation ... on the pounds for it. (The currency in the current situation on the closing line is I do foreign exchange transactions since the last 10 years, a rare big yamcandle. Since we have not seen this intensity of the killing. That we have no such contacts have not heard since the rhythm of the melody. That we have to bring this music as a kind of appreciate it and learn it .. £ current whereabouts has been an important support to the 1.72-1.70 range is a terrible and again after half a year of adjustment ... prices would also like to break 1.70 on this important first line M from the location of my basic information in it is very difficult Understanding of pounds in a few months before economic data and the current situation, However, technical charts have been patiently waiting for that all the 1.70 to 1.71 again we get the location of the profits. Currencies in the sharp rebound in the fourth quarter is looking forward to the opportunity of the current single-SELL reduction should be in a position near 1.7365 In the 1.72 to 1.70 between the end of this century to BUY for the position ... Overall STOP.1.6900. Short-term goal of 1.8500 to 1.9000 Medium-term goal .19350 ... Time will undergo four months of no way around. My style is here to the transition. First, because the work rhythm of 2 because the path is more reasonable. Let us learn from! ~ ~.
Thursday 4 September 2008
forex daily analysis
① EUR today reference 14450 - 14600 between the fluctuations.
② CHF today reference 11120 - 10980 between the fluctuations.
③ GBP today reference 17700 - 17850 between the fluctuations.
④ AUD today reference 8300 ----- 8450 between the fluctuations.
② CHF today reference 11120 - 10980 between the fluctuations.
③ GBP today reference 17700 - 17850 between the fluctuations.
④ AUD today reference 8300 ----- 8450 between the fluctuations.
Wednesday 3 September 2008
The dollar index Pressure will be near 79.
① EUR today reference 14450 - 14600 between the fluctuations. ② CHF today reference 11120 - 10980 between the fluctuations. ③ GBP today reference 17750 - 17950 between the fluctuations. ④ AUD today reference 8300 ----- 8450 between the fluctuations. ⑤ JPY temporarily wait and see.
Tuesday 2 September 2008
Analysts project
September 2 Non-dollar currencies analysis
The current round of dollar strength, not because of its economic strength, but other non-US
currencies entities financial problems. rebound the current round of the dollar index is only
121.02-70.68 between the huge decline in the amendment. Therefore, the dollar is not
reversed , Investors will be very repeated. Short-term dollar index of 78 and 80 in two major
locations will be under pressure.
① EUR today reference 14700 - 14550 - 14500 between the fluctuations.
② JPY reference to 108.50 today - 107.50 - 107.00 between volatility.
③ GBP today reference 18100 - 17850 --- 17800 between the fluctuations.
GBP still see rebound 18,300 and 18,500 two locations
Also: CHF11060/11080 can buy single region. 10830/10850 regional objectives.
For reference purposes only. Own risk
The current round of dollar strength, not because of its economic strength, but other non-US
currencies entities financial problems. rebound the current round of the dollar index is only
121.02-70.68 between the huge decline in the amendment. Therefore, the dollar is not
reversed , Investors will be very repeated. Short-term dollar index of 78 and 80 in two major
locations will be under pressure.
① EUR today reference 14700 - 14550 - 14500 between the fluctuations.
② JPY reference to 108.50 today - 107.50 - 107.00 between volatility.
③ GBP today reference 18100 - 17850 --- 17800 between the fluctuations.
GBP still see rebound 18,300 and 18,500 two locations
Also: CHF11060/11080 can buy single region. 10830/10850 regional objectives.
For reference purposes only. Own risk
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