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)
Friday, 12 September 2008
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
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