Forexyard Analysis

[forexyard]

08/01/'08 US Pending Home Sales

Economic News

USD

After, a relatively intense price action for an empty US calendar yesterday, the Greenback floats around 1.4710 against the EUR and 109.40 against the JPY. There seems to be a certain consolidation for the USD after the massive drop it had after Friday's very low release of the Nonfarm payrolls, and it seems that it is now swimming in calm water before the next key event which may push the greenback further down.

As for today, there are two key events expected to come from the US, the first one will be the Philadelphia Federal Reserve President and FOMC voting member Charles Plosser's Speech about risks to the economy, inflation, and labor markets at the Main Line Chamber of Commerce, in Philadelphia. FOMC voting members are responsible for setting the nation's short term interest rate, so traders scrutinize their speeches closely for clues regarding future monetary policy. The speech might cause choppy price movement and some abnormality in the volatility.
A bit later at 15:00 GMT, Pending Home Sales is expected to be released, as most analysts are very pessimistic about that figure and it now has a consensus release of about -0.7% which is a relatively huge drop from last month's 0.6%, and might cause the Greenback to continue dropping on the local level, and might spike the next long run drop that might take the EUR/USD into the 1.4900 levels again.

As for the rest of the week the US calendar is quite light on important events except for Friday which will have the US Trade balance. Other than that, traders will focus their attention a bit more on the Euro-Zone which has the ECB and BOE rates statements, which might contribute to the USD crisis.

EUR

Yesterday, France became the latest major European economy to warn of a period of sluggish growth and high inflation. Soaring energy prices and fresh signs that the United States may suffer a sharp slowdown are threatening to drag down European expansion.

Echoing concerns are voiced by various leaders in Germany and Britain, such as the French finance minister, Christine Lagarde, who said in an interview that the outlook for Europe had eroded rapidly as oil prices breached the symbolic $100 and with pessimistic analysts marking the $200 a barrel as the next target price for 2008. Credit markets remained nervous and the outlook for the U.S. economy darkened.
The world's top central bankers are gathered in Switzerland this week to discuss the global economy, as voices called for the European Central Bank to make growth a priority over inflation-fighting in the euro area. It is shown that everybody prefers high inflation and high growth, as opposed to stable inflation and lower growth, and expected from the economic leaders and the ECB to be adjusted to the new situation and to act accordingly.

In the euro zone, November retail sales are due, but they are not market movers. German factory orders are more interesting and following the stellar 4.0% monthly rise in October; a partial correction in November is forecasted. In the UK, the BOE interest rate announcement is expected this week, as the board will take note of the British Retail figures for the crucial month of December, released overnight. The BRC said that sales growth rose just 0.3%, compared with 1.2% in November, despite early price discounts to boost sales. The figures may give the doves on the MPC some ammunition to vote for another rate cut on Thursday.

JPY

Most Asian shares edged up today as oil prices recovered from steep falls the prior day; however Japan's Nikkei earlier hit an 18-month low as investor worries about a recession in the United States persisted. It seems that the Japanese economy is shaky as a possible US recession is possible, and investors are seeking for less risky investment alternative to put their money in. This Thursday the Leading Index is due to be out as this indicator forecasted to decrease to 10.0% compared to last month 18.2% which reflects the slowdown in the local economy. This indicator measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads.

The weak USD is hurting the Japanese economy as world importers prefer US goods instead of the Japanese goods thanks to the low cost which are caused by the weak greenback.


Technical News

EUR/USD

The bullish trend is expected to maintain its Momentum as the Slow Stochastic (41) and RSI (44) on the 4 Hour have a positive slope which supports the bullish trend as the first target price is located at 1.4738 (Fibonacci 76.4%). The daily momentum is showing that there might be a correction before the uptrend resumes at full strength. Buying on lows might be a good choice today.

GBP/USD

The cable is showing its first signs of a correction as implied by the Slow Stochastic, RSI and Momentum which have a positive slope. The 1.9780 (Fibonacci 23.6%) was breached which validates the bullishness and it seems that the cable is steadily going to the 1.9850 as the next step.

USD/JPY

A reverse Head & Shoulders structure is forming on the 4 Hour chart offering the 109.85 (Fibonacci 23.6%) as the next target price. This structure is supported by the Slow Stochastic, RSI and Momentum which all have a positive slope. It looks as if the bullish trend has been validated and that the pair will move north with a possibility of a touch at the 110.80 level.

USD/CHF

The bearish trend is expected to continue as Slow Stochastic crossed the 82 which is clearly in the overbought territory, the RSI 89 and Momentum have a negative slope offering next target price at 1.1125 (Fibonacci 23.6%). Going short might be preferable today.


The Wild Card

Gold

A tight bullish channel is establishing on the 4 Hour chart supported by the Slow Stochastic, RSI and Momentum which all have a positive slope. The top barrier is located at 863.61 and in case of a breakout next target price is located at 868.18. Forex traders should wait for the break in order to catch the profit potential from the momentum which will be created from the breach.

 

[forexyard]

09/01/'08 - US Housing Starts On Tap

Economic News

USD

The greenback came into Tuesday's trading day reeling from a string of unsupportive economic data. Information coming from the housing and credit markets continued to disappoint as Tuesday's Pending Home Sales numbers once again came back worse than the initial meager expectations. Pending Home Sales, which measures the signed real estate contracts for existing single-family homes, co-ops and condominiums, released down the previous 6 percentage points down from 3.7% to -2.6%, as expectations had the figure as low as at -0.7%.

If that wasn't enough to offset any dollar appreciation, Fed Presidents from both Boston and Philadelphia once again remained unclear regarding expected intervention by the Fed into the failing US economy as investors suspect interest rate cuts are still to come. Philly Fed Chair Prosser said he is "expecting slow economic growth for several quarters" and pointed out that "since monetary policy's effects on the economy occur with a lag, there is little monetary policy can do today to change economic activity in the first half of 2008."

The dollar suffered to establish any sort of rally as the Dow Jones returned another day of abysmal numbers as it fell 238 points to end NY trading. With a combination of negative data from most relevant economic sectors the "recessionary" jargon is slowly being revived once again. A lion's share of investors are still positive that the Fed will cut rates by anywhere between 50 and 125bp. Such failure by important markets leaves a burden on US consumers to hopefully revive the dollar and allow the Fed to cut by only 25bp.

As we look forward to the rest of today trading day, the economic calendar in the US will be rather empty as the only relevant event will be a speech by St. Louis Fed President William Poole, who will likely echo the same uncertainty as his Boston and Philadelphia colleagues. Look for the dollar to continue to struggle against its major currency counterparts.

EUR

The Euro traded on Tuesday to relatively static results, spending the day hovering above and below 1.47 against the dollar. Mixed results from a set of minor economic data kept the currency stable throughout the day.

Retail sales dropped 1.4% from the 2006 figure, which was the steepest decline in over 11 years. The lag from the 13-Nation currency did not last long as German factory orders came back considerably strong as it saw a generous November increase. The Euro has continuously avoided any real bearish activity as a combination of stable Eurozone data and disastrous US and Asian market data has proved that the European Central Bank's hawkish stance on monetary policy will likely continue.

Looking ahead, today, the Eurozone will produce economic data that should not have a very big affect on its movement. The day will see German trade balance, industrial production and retail sales, as well as general Euro GDP and the French trade balance. All should remain quiet at least until Thursday, as we await the ECB monetary policy meeting, coupled with ECB President Trichet's remarks. Look for the EUR to continue to prove its strength against its rivals.

JPY

The JPY finished Tuesday trading down against all 16 major currencies, amidst rising foreign investment by Japanese investors. These investors continue to look for more high-yielding assets as the Dow continues to fall.

With the record gold bullion numbers reached yesterday, as well as the easing of Crude Oil prices, many investors borrowed from the low-yielding Asian currency to purchase lucrative commodities.

The currency should continue to weaken against its Western counterpart's as there looks to be no change ahead, regarding Japan's benchmark interest rate. The JPY found itself trading at just under 260.50 versus the Euro, as well as 109 versus the dollar. Any thought of an interest rate hike, will likely be thwarted by rising concern in the overall health of the Japanese economy.

The JPY continues to be absent from this week's economic calendar. Look toward the Dow as well as commodity prices to define the direction of the Asian powerhouse.


Technical News

EUR/USD

The pair has been trading in a tight range for more than a week and is now showing some consolidation at 1.4717. The daily chart is quite neutral and shows no strong signal of a break direction. The hourlies support the neutral sentiment. Traders should wait for a clear signal before entering the market.

GBP/USD

The bearish channel on the daily chart continues at full strength. The cable is now floating at the upper level of the channel, and together with the slow stochastic and RSI creates a very strong bearish momentum that might take the cable to beyond the 1.9600 level by the end of this week. Being on the short side might be preferable today.

USD/JPY

The bullish correction the pair initiated at 108.00 continues with moderate momentum. The slow stochastic on the daily chart shows that there is still more room to run and that the pair might breach the 110.50 soon. Hourly studies confirm the bullish sentiment, and it appears that going long might be preferable today.

USD/CHF

The pair appears to be heading back to the 1.0900 with a relatively strong momentum, as clearly shown by the oscillators on the daily chart. The hourlies are showing a small bullish cross on the 4 hour chart that might take the pair to a correction before resuming the bearish move. Selling on highs might be a wise move today.


The Wild Card

Gold

Gold has been making an unbelievably strong bullish move to record highs, and shows no indication of a stop. It has been correcting a bit locally but the general direction is quite clearly up. This could be a great opportunity for Forex traders to join a very distinct bullish trend with great profit potential.

 

[forexyard]

10/01/'08 - BoE & ECB Interest Rate Statements On Tap

Economic News

USD

On Wednesday the greenback saw gains against its major counterparts, amidst negative world economic data. The greenback was not able to hold on to such gains as early morning trading on Thursday from Asia, saw the dollar once again slip against the Euro and the Yen.

The release of weak German industrial data along with equally poor retail numbers from the euro-zone state, sparked investors to push the EUR/USD back under 1.47, dropping as low as 1.4640 during Wednesday's trading. With continued speculation over Fed interest rate cuts, the dollar was not able to sustain its momentum as it once again crept toward 1.47 against it European rival.

Two economic events were released from the US on yesterday's calendar, as St. Louis Fed President William Poole gave a speech at the Financial Planning Association of Missouri, in St. Louis. Poole was adamant that the investors should not take the US financial market problems and assume they will bring a recession. He went on to add that "2008 looks to be a year of rising growth," as he looked to make positive light of the greenback gains during yesterday's trading. The release of Housing Starts did little to change trading behavior yesterday, as investors expected very little to begin with.

Today is a day largely dominated by European economic events with a host of important data to be released. The US will release Unemployment Claims today, at 13:30 GMT, followed by a speech at 1800 GMT by Fed Chairman Ben Bernanke. Bernanke will give a speech titled "Financial Markets, the Economic Outlook, and Monetary Policy" which should clarify a great deal regarding interest rate speculation. The dollar will most likely move in the direction that the European economic takes it. Another day of poor European economic data should spur gains in the dollar.

EUR

Europe was taken a bit off guard yesterday by a string of negative data from Germany and France as the EUR suffered some losses against the dollar. German industrial production numbers came back 1.2% below initial forecasts at -0.9%. German retail sales, which were expecting a 3.5% increase, only managed 1% as the December figure came in at -1.3%. French Trade Balance was released with an unexpected 1.2 Billion decrease to bring its total to -4.8 Billion. This data sparked a quick increase in dollar confidence, as investors questioned how much longer the ECB could keep up its hawkish stance on European monetary policy.

Today's economic calendar is posted with several important economic events form Europe. At 7:45 GMT the release of French industrial production and government budget balance is expected as industrial numbers are slated for a 2.5% decrease. The day will continue with several UK events followed by the Sterling and Euro Interest Rate Statements at 12 and 12:45 GMT, respectively. To finish up, ECB President Jean-Claude Trichet will hold a press conference in Frankfurt following the Governing Council's interest rate announcement. Expect high volatility as the Interest Rate press conference normally delivers a clear message of EU monetary policy.

JPY

The JPY traded with gains on 15 of the 16 major currencies yesterday, amidst disappointing results from the Nikkei. Investors were inclined to cut holdings in high-yielding assets that were directly being funded by Japanese loans. As Japanese stocks continue to weaken speculation over the effect on the JPY is still unclear.

Carry trades resumed heavy volume as well yesterday, as the Dow Jones Industrial average showed significant gains as it rose by 148 points. Resumption of carry trades came during a very volatile point in the market day which magnified the JPY gains in the Forex market.

The Japanese economic calendar posts no significant events today as the main focus regarding the JPY will be the movement in the Nikkei and Dow Jones.


Technical News

EUR/USD

The pair has been floating in a relatively tight range for several days and now shows some moderate bullish sentiment. There is a bearish channel forming on the 4 hour chart with a top barrier of 1.4705. A breach over that level will validate the next bullish move to 1.4800.

GBP/USD

Yesterday's bearish momentum continues to build up as the pair reached the level of 1.9550. It looks as if there isn't any bullish sentiment to indicate even the slightest corrective move, and the bearish steam appears to be blowing at full strength. It appears that going short still looks like the right choice today.

USD/JPY

The daily chart indicates that the next key level for the bullish correction move is 110.20 which are the 23.6% Fibonacci level of the 117.90/107.85 move. The will most likely test it soon, and if the breach will occur we should see the pair correcting further, possibly back to the 111.00/112.00 zone.

USD/CHF

The slow stochastic and the RSI on the 4 hour chart indicate that the local correction move still has some steam in it, as both figures float at around the 50 level. The daily chart supports the bullish notion with a slightly more moderate signal. It is advised to hold the entry for a stronger signal, as the sentiment is quite vague and a stronger one will surely appear soon.


The Wild Card

Gold

There is a very distinct and sharp bullish channel on the 4 hour chart as Gold now floats at the bottom level of it. Its inability to breach the level indicates that the very strong bullish momentum is not over yet. This could be a great opportunity for Forex traders to go long at a bottom price and enjoy the high profit potential from the technical pattern.

 

[forexyard]

14/01/'08 - Another Bearish Move For The Greenback

Economic News

USD

The Greenback started the week on the defensive side, as markets await upcoming inflation and retail sales data. Currency markets are also stressed for Fed chairman Bernanke's testimony which is expected on Thursday. It seems that the debate of whether the Feds are prepared to cut the rate aggressively has been answered, as the testimony by Fed chairman Bernanke insinuated a possible 0.5% cut. However, the statement might have a limited impact on currencies in that regard, due to an early morning market reaction which sent the dollar tumbling. Us equities have remained weak in recent days despite a possible 0.5% Fed rate cut which is almost fully priced in market prices. The greenback is highly vulnerable to disappointment, and if we will see a different rate cut that is not correlated to the market expectations we might see a major runaway and a massive actualization in the equity market. Currency markets largely ignored a blowout in the US trade deficit. The November trade report revealed surprising strength in goods imported, led by a price-induced 8.5% surge for industrial supplies. The export components revealed generally modest shortfalls following hefty gains through October. In addition the OPEC Secretary General El-Badri said that the price of oil will not collapse, even if there is a period of slower global growth. Spot gold once again saw some profit-taking ahead of $900/oz, as traders wait for this week's inflation report before deciding whether to push the commodity higher. Shanghai copper is higher on Friday's gains in the LME contract and weakness in the USD, as the metal continues to ignore concerns about slowing in the global growth.

EUR

The EUR reversed its earlier losses against the USD as the Trade Deficit widened more than expected for the month of November in the world's largest economy. Looking ahead, Industrial Production data is scheduled for release out of the EZ, with the forecast expecting to show 2.8%, a decline for the month of November (Prior: 3.8%) a better figure then expected may lead to an additional boost for the EUR against the majors and especially against the greenback and the British pound.

The GBP confirmed its fourth weekly decline versus the Euro, and second consecutive weekly decline against the greenback as traders continued to add to bets that the BoE will be forced to cut interest rates next month. On last measurement, markets are now pricing in an 88% possibility that the Central bank will loosen its monetary policy by 0.25% on the 7th of February. In other news, Manufacturing data did little to give any confidence to the pound as output decreased for the month of November fuelling the rate cut anticipations. In addition, we can note that the GBP was one of the worst performing currencies against the JPY in relation to the credit crunch pushing the GBPJPY to a low of 212.07. Looking ahead PPI data is due to be out today as traders expect to get a clearer picture of the manufacturing industry status in the UK.

JPY

The first Asia session of the week was a choppy one, as most Japanese traders were out on holiday. Liquidity issues fueled decent swings for most of the majors and the JPY crosses, while a lack of fundamental data for the session kept substantial moves at bay.

The JPY was one of the best performing currencies on Friday as signs of credit market losses worsening prompted investors to pare carry trades. As a result of significant carry trades being squared, the Japanese Yen was able to reverse its 0.4% decline versus the dollar as much of its pressure was relieved. Tomorrow, the month to month Core Machinery Orders is due to be out, as this indicator measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle, as 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. It seems that the JPY will maintain its positive momentum and will keep it's strengthening especially against the greenback and the cable.


Technical News

EUR/USD

After shooting up on Friday, the pair made an additional jump of 60 pips to the 1.4860 level. The daily chart is very bullish, and the RSI of the 4 hour chart supports the bullish notion. It appears that the next target price might be around 1.4920.

GBP/USD

The cable is in the middle of an extremely massive downtrend with very aggressive bearish momentum. There is a moderate cross on the daily chart that indicates a possible reversal that might become a more valid corrective move. It would be wise to stay out of this one until a stronger signal will be validated.

USD/JPY

The pair is currently in a strong bearish formation, and is slowly approaching the 108.00 level. The daily oscillators indicate that there is still more room to run and that if the 108.00 level will indeed be breached, we shall see the next move as valid. The 107.50 level will be a very strong support that needs to be carefully observed. In general, going short appears to be the way to go today.

USD/CHF

We have seen a very sharp move since the end of December, as the pair went down from 1.1550 to 1.0950 with very strong bearish momentum. The daily chart is showing no signs of a correction, and the hourlies support the bearish notion, at least for the next trading day. Going short might be favorable today.


The Wild Card

Gold

We saw a massive breach through the 900.00 level today. Gold is still traded within a bullish channel, as oscillators are as bullish as they can be. This could be a great opportunity for Forex traders to ride the break, with huge profit potential.

 

[forexyard]

15/01/'08 - U.S. Core Retail Sales & PPI On Tap.

Economic News

USD

The greenback continued to see significant decline yesterday, as it posted close to record lows against several major currency pairs. Concerns over the state of the US economy are still dismal, as the dovish stance taken by the Feds has done nothing to change current trends. Investors are gearing up for what most feel will be another interest rate cut from the Fed, by as much as 0.5%. With the EUR/USD already traded well within the range of its all-time high of 1.4960, speculation that it will break the 1.50 support level is gaining steam.

One of the main issues for the Feds is whether or not the problems from the failing credit and housing markets will spill over into other economic sectors, such as retail and consumer confidence. With the mostly disappointing figures that have been released in 2008 so far, there is little that can be expected in the way of drastically changing the dollar's downward pile.

Today is expected to produce a host of key economic data from the US. Events from the US start at 13:30 GMT, as the release Retails Sales, Core PPI, PPI, and the Empire State Business Conditions Index are on tap. The aforementioned events will be followed by the 14:00 GMT of Business Inventories for the month of December. The real standout figure of the bunch should be Retail Sales, which could single-handedly drive the dollar down, if already poor expectations return even worse. If US economic data returns with negative results, it could very well be the day that the EUR/USD makes a serious push toward 1.50 and even further as the market approaches the rate statement. It appears that from all points of view the greenback's near future looks extremely gloomy.

EUR

The strength of the EUR has become a point of regularity, as the 15-nation currency continues to perform well against all of its major counterparts. As the EUR/USD slowly closes in on the 1.50 level, speculation is rising as to the behavior of the ECB after such levels are achieved. Investors must question whether or not President Jean-Claude Trichet's hawkish stance toward monetary policy in the EU could continue if the Euro keeps rising toward "inflationary" levels against its counterparts. A considerable rise in the Euro could directly contribute to the slowing of Euro-zone growth, especially in industries in direct competition with the US and Asia.

As we enter the second day of what has been the busiest economic event week in 2008, we are due to hear back about two low-volatility news events today. Today at 10:00 GMT will see the release of ZEW Economic figures from Germany and the whole of Europe. Figures are expected to be positive and could help push any negative US data toward the 1.50 break point for EUR/USD. The EUR will likely take a backseat to investor's focus on the dollar today; however it will be intriguing to see if the ECB hint to any change in their current monetary policy if the Euro-zone currency continues to strengthen.

JPY

The Yen was rewarded with positive gains against all 16 major currencies, as a combination of foreign economic data and the recovery in the Dow helped instill more investor confidence. The Dow rallied yesterday to finish 171 points up, and was critical in resurrection carry trading for the day. Though the recovery did not initially affect the Yens big pairs (USD/JPY, GBP/JPY, and EUR/JPY), a string of unexpected data from the US helped the Yen sufficiently increase their gains for the day.

In addition to outside factors, news that Japan will exchange roughly sixty million dollars of coupons and principal payments to Euro, (which will be claimed by a handful of European nations this week) sparked a local growth in the Japanese currency as well. The Japanese economic calendar was empty yesterday, as the country celebrated the coming of age holiday. Today we expect to see the release of Core Machinery Orders as well as current account information. Expectations show a significant drop in Core Machinery orders as the month December failed to produce expected growth. Those news events are expected to generate relatively small interest amongst traders, as most of the focus will be on USD related events. This situation will probably be quite common in the near future, as the fate of the greenback will have much more effect on global economic events.


Technical News

EUR/USD

The pair is in the middle of a bullish trend which was initiated in the end of December. The 4 hour chart is showing a bearish cross on the slow stochastic, and a breach of the 80 level on the RSI. It looks as if there might be a bearish correction before the pair resumes the journey to 1.50.

GBP/USD

The intensive bearish trend is calming on the hourly charts, yet shows no real indication of a halt or a correction move. The cable is now at the lowest level it has been since mid August, and will probably continue its road south even further. Being on the sell side still appears to be the right move.

USD/JPY

The key level of 107.80 was breached, as this level was the last support on the daily chart which the pair touched in the middle of November. This break validates the next bearish move and might take the pair beyond the 106.50 even before the weekend.

USD/CHF

The pair is floating at a very strong support level of 1.0920 which is the bottom of the recent downtrend the pair had. A violent breach beyond that level would indicate that the bearish momentum might continue at a higher strength. Next target price appears to be around 1.0860.


The Wild Card

Gold

Gold is trading at records levels with incredible momentum, as yesterday's all time high touch strengthens the notion that we might see gold hit the 920.00 level soon. This is a great opportunity for Forex traders to enjoy the very high profit potential and enter the market on a very healthy trend.

 

[forexyard]

16/01/'08 - U.S. Core CPI & Industrial Production On Tap.

16/01/'08 - U.S. Core CPI & Industrial Production On Tap.

Economic News

USD

Yesterday the greenback continued its bearish trend against most of the majors, nevertheless it did eventually manage to rally back sharply against the EUR on the back of weak Eurozone news. The most significant news released from the U.S yesterday was the Retail Sales and PPI figures which both came in well below expectations. These soft figures once again raised concerns that the U.S economy is heading towards a recession and therefore the greenback slipped sharply on the back of these news releases, falling beyond the 1.4900 level against the EUR and continuing its dramatic slide versus the JPY. The greenback fell to a 2-1/2 year low versus the JPY yesterday as the current global growth problem is creating a risk-averse sentiment among investors and therefore we are now seeing a sustained carry trade unwind.

The greenback has been on a steep decline since last week Friday which was mainly driven by increased speculation of an aggressive rate cut by the Fed. Yesterday's weak U.S news only fuelled the fire once more as it seems that only an aggressive rate cut will save the U.S economy from increasingly likely recession. However it may not all be doom and gloom for the greenback this week as many major U.S banks will be announcing there quarterly earnings and already yesterday Citigroup reported quarterly losses which were less than what the market expected . Investors will be closely following these figures for an indication as to how deeply the credit crisis has affected some of the largest financial institutions in the U.S. The Citigroup surprise helped the greenback regain some lost ground against the EUR and if other major U.S banks also report smaller than expected losses then this will provide a boost for the U.S equitiy markets and therefore the greenback could also regain some ground against the JPY as carry trades will be back in action.

Looking ahead, there is another string of important U.S news releases today which will kick off with the CPI figures. Due to yesterday's disappointing PPI figures there is a strong possibility that the CPI figures will also release below expectations, as the producer prices are usually passed on to the consumer. This news release will be followed by the TIC Report, Industrial Production and the Capacity Utilization Rate. All these events will be closely followed by investors as any downside surprise will place the greenback firmly on the bearish express. Another important report to follow today will be the Beige Book, which is produced two weeks before each Federal Open Market Committee (FOMC) meeting to help guide the committee when setting short term interest rates. Now although the FOMC receives two other books that are not made public, the Green Book and the Blue Book and it is widely believed that the FOMC pays more notice to these private publications, investors will nevertheless be sifting through the report for future monetary policy clues. At the moment many analysts believe that the Fed will cut rates by at least 25-50bps at its next meeting on 29-30 Jan. The size of the rate cut will have a significant impact on the future direction of the greenback, so the economic indicators throughout today and leading up to that time are expected to cause sharp volatility as investors continuously adjust to the resulting ever-changing rate cut speculation.

EUR

Yesterday the main news released from the European economy was the German and Eurozone ZEW Economic Sentiment. These figures, which measure institutional investor sentiment, released at -41.6 and -41.7 respectively. This was below the forecasted figures of -40.0 and -37.8, which is an indication that at least 80% of market participants surveyed are pessimistic, in contrast to 40% that are optimistic, with regards to the European economic outlook. This negative sentiment can mainly be attributed to the fact that the strong EUR is beginning to dampen exports and therefore slowdown productivity and growth. Also the ECB is struggling at the moment to balance out growth and inflation, as the ECB has reiterated many times in its MPC meeting that inflation risks remain on the upside. Therefore on the back of this soft data the EUR depreciated sharply yesterday against most of the majors. Although it did initially bounce up beyond the 1.4900 level against the greenback on the back of weak U.S Retail Sales figures, it eventually got pulled down again as the negative sentiment surrounding the German and Eurozone economy prompted investors to sell the usually resilient EUR.

Looking ahead, the only news to be released from the Eurozone today will be the German and European CPI figures. Both these figures are expected to remain unchanged and should not have any noticeable impact on today's EUR movement, which will be more depended on some key U.S data releases. Also ECB President Trichet will give a speech later today and it will be closely followed by investors for hints on future ECB monetary policy. For the moment the main question on analysts' minds is how high the ECB will permit the EUR to rise before we see a direct policy intervention. It seems that negative U.S data could push the EUR beyond the 1.5000 level against the greenback but it is unlikely that the ECB will permit it to rise any further before intervening.

JPY

The JPY appreciated sharply yesterday on the back of the soft U.S Retails Sales figures. This negative news unsettled the global financial markets and therefore prompted carry trades to unwind further. Ever since the decline of the greenback began, the JPY has been gaining steadily all across the board and this is mainly due to the risk-averse sentiment that is got a stranglehold on carry trades. Earlier today, during the Asian trading session, there was more positive news for the JPY as the Japanese CGPI figure, which measures the rate of inflation experienced by corporations when purchasing goods, released at a beating expectations figure of 2.6%. This upside surprise is a positive sign for the Japanese economy as this rise in corporate inflation could be passed down to the consumer. The Japanese economy has been experiencing deflation in recent months and therefore this has been preventing the BoJ from seriously considering a rate hike, as an interest rate increase would further lower inflation. However if this positive CGPI figure results in an increase of consumer inflation then we may finally see a rate hike by the JPY, which will cause the Japanese currency to continue to appreciate sharply particularly against the high yielders.

There was more good news for the JPY as the Japanese Current Account released at 2.16T, beating the forecasted figure of 1.87T and this give further indication to investors that the Japanese economy is in a healthy state because such a current account surplus is mainly influenced by the large differential between exports and imports which in turn will positively influence growth. The medium term outlook for the JPY remains very much bullish and a reversal will only occur in tandem with the U.S financial sector.


Technical News

EUR/USD

The pair has corrected to the 1.4780 level, and now shows some positive momentum again. There is a bullish cross on the 4 hour slow stochastic which indicates that the bullish trend might return pretty soon. The daily chart supports the bullish notion, and it looks as if the pair is heading back to the 1.4900 level.

GBP/USD

The cable was looking for support at 1.9500 and found it, as a breach through that level was unsuccessful. It appears that a breach through that level would indeed validate an additional move, yet another failure to break might define that point as a potential reversal point for the ongoing downtrend.

USD/JPY

The very strong bearish trend continues with full steam and shows no signs of a halt. All oscillators are bearish and no bullish crosses appear in sight. It looks as if there is much more room to run and being on the short side appears to be very preferable.

USD/CHF

The very strong support level of 1.0900 was breached and validated the next move into the 1.0800 zone. Although on the short term charts there appears to be a correction up, the pair direction is down. The daily chart supports the bearish notion, and selling on highs looks like the right call today.


The Wild Card

Gold

After a very clear signal for a bullish bonanza, gold now makes a local correction, but still did not break the bottom barrier of the upwards channel on the 4 hour chart. Its inability to break the 887.00 level will provide forex traders with a great entry point for a long position with great profit potential.

 

[forexyard]

17/01/'08 - Packed US Calendar Today

Economic News

USD

Today the US calendar is packed with important releases such as the Housing Starts, Building Permits, Philadelphia Fed Manufacturing Index, and the speech by Federal Reserve Chairman Ben Bernanke, who will speak about the US economic outlook before the US House of Representatives Committee, in Washington DC.

As it seems, weaker-than-expected figures can trigger the Fed to cut interest rates by 75 basis points instead of 50, a move that will make it harder for the U.S. dollar to rebound in the midterm. It's likely, though, that the U.S. economy will be relatively weak through the first half of 2008 - and possibly for most of the year.

Inflation data was released yesterday. The U.S. government reported that the Core CPI rose just 0.2% in December, which was right in line with expectations, indicating that inflation remains in check.

December's CPI increase followed a sharp 0.8% jump in November and was modestly ahead of economists' forecasts. The department reported both food and energy costs rose during the full year of 2007 at the fastest rates since 1990. Energy costs in the last 12 months were up 17.4% while food gained 4.9%. The Federal Reserve is closely watching to see whether the jump in food and energy becomes more widespread and starts pushing core inflation higher. On the basis of yesterday's Capacity Utilization Rate report, Industrial production was unchanged in December, against the median forecast for a drop. Capacity utilization, which measures the proportion of plants in use, fell to 81.4% from 81.6% in November. Workers' salary failed to keep up with the higher inflation and Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the biggest slow down since a 1.5 percent fall in 2005. Although a local strengthening move did occur for the USD, it still appears like a minutes before the rate statement will be quite violent and the state of the greenback will continue to be quite bearish in the near future.

EUR

Yesterday, we noticed an impressive recovery of the USD versus the Cable and the 15-nation currency, this progress began after the Federal Reserve report showed the US economy increased at a humble pace at the end of 2007. The Euro traded at 1.4721, down from 1.4833 late Tuesday in New York. Later, in midday trading in New York, it reached the 1.4637 at its lowest point. An additional fact which assisted to weaken the Euro was the warning which arrived from the European Central Bank (ECB) policy maker Yves Mersch who suggested that the Euro zone economy is facing a significant faze of a slowdown, he also mentioned several dovish comments about a possible up coming risks to the Euro zone economy due to slowdown in the world's economy. As for today's European calendar, the Euro-Zone Trade Balance is expected to be released with a consensus of 3.8B after a previous release of 4.0B, and together with the ECB monthly bulletin might take the EUR further down if the trade balance comes out lower than expected. It appears that most of today's movement will derive from the US, as most of the important economic events will be coming from there, and attract most of the traders attention.

JPY

Yesterday, the Japanese Yen gained against 15 of the 16 most-active currencies after economists in the U.S. and in the European central bank said that western economic growth is slowing down. Japanese economic data was mixed with machine orders and CGPI beating expectations but the trade numbers fell short of expectations.

The yen climbed for a third day against the euro, but the most significant move was made in the USD/JPY and the NZD/JPY pairs. The Japanese currency stroke new two-and-a-half-year highs against the USD and traded around 106.00 at several points. Japan's Nikkei 225 Stock Average advanced 1.1 percent to 13,656.95, rising from its lowest close since October 2005. The Topix Index, valued at 16 times earnings compared with its average 29 times for the past four years, advanced 0.9 percent.

As for today, the Japanese calendar will be void of any major releases, which will probably cause the positive JPY momentum to continue, and for all the crosses to react more with US and EUR markets.


Technical News

EUR/USD

An opposite head & shoulders structure is forming on the daily chart which indicates on an upcoming bullish trend with a first target price of 1.4713 (Fibonacci 61.8%), and a second of 1.4811 (Fibonacci 76.4%). This trend is expected to be quite aggressive, and if key levels mentioned above will be breached the momentum will become slightly stronger.

GBP/USD

A bearish channel is forming on the 4 hour chart, indicating a continuation of the bearish trend, however 1.9633 is a key resistant level as it is considered as the top barrier of the channel. In case of a breakout, the next target price is located at 1.9794 (Fibonacci 23.6%) which will create a good entry point for a long position.

USD/JPY

The 4 hour Slow Stochastic is crossing the 68 level from above which is a classic bearish signal; however the RSI and Momentum have a positive slope which contradicts the bearish signal. The direction of the future trend is a bit vague at the moment, and traders should wait for key level breaks on both sides to better determine the trend's momentum

USD/CHF

The daily chart implies a clear bullish trend as the Slow Stochastic crossed the 8 and have a positive slope. The momentum is bullish and RSI floating in neutral territory which may indicates on a possible long position with some steam is left in it. At the moment, going long appears to be preferable.


The Wild Card

Crude Oil

Oil is floating at the bottom barrier of a downwards channel on the 4 hour chart. It also crossed a key Fibonacci level of 91.30 which indicates an increasing bullish momentum. This is a great opportunity for forex traders to enter the market with a long position, and being supported by a strong technical formation.

 

[forexyard]

21/01/'08 - US Holiday, Martin Luther King Day.

Economic News

USD

The greenback made a local correction against the EUR and the CHF on Friday, and appears to be continuing what it started at the opening of this week's trading session. The EURUSD now trades around 1.4530 and the USD/CHF went up by 150 pips to the 1.1050 area. Although on the local level things look pretty positive for the USD, most traders believe that this is merely a technical correction that would probably end towards next week's rate statement. On Friday, President Bush announced plans for a stimulus package that would put a small chunk of change into the pockets of American taxpayers. President Bush proposed a series of short-term tax cuts which will provide a boost for the struggling U.S. economy. The president did not give details of his plan but mentioned it would include tax breaks for businesses and individuals worth at least 1% of the nation's GDP, or approximately $140 billion to $150 billion. Although having some optimistic data in the U.S. economy, the U.S. economy tribulations appear to remain severe, and on the basis of this fact many traders expect the Fed to cut a further 50 basis points at its next meeting on Jan. 29-30, as bad news is expected to come from the house prices and investment banking losses. Today, the US markets will be closed for Martin Luther King Day, and no major news events are expected to come from the area. Low volatility is expected in Dollar crosses, and it looks like most of the price movement will come from Europe which will also be quite light with news.

EUR

Last week, the EUR declined to a three-week low versus the dollar on speculation that the economy of the 15-nation region will slow, leading the European Central Bank to a possible rate cut in the future. The EUR weakened against 15 of the 16 most- active currencies and at the same time it has decreased to a four-month low against the Japanese yen.

ECB council member Yves Mersch said on Jan. 16 that policy makers should use caution as risks to economic growth increase. A day later, Mersch said officials didn't discuss the option of an interest-rate cut at their meeting last month, when the central bank kept the rate at 4%.

Today's European calendar will be relatively empty aside from the Swiss PPI which is due at 8:15 GMT and has a forecast of 0.2% and a previous figure of 0.3. It looks as if the EUR will continue the weakening move up to a certain point, and will then regain the positive momentum back to the level where the expected US rate cut will be relatively encapsulated in market prices.

JPY

Last week the Japanese currency reached its highest peak versus the U.S. dollar since May 2005. The Japanese currency got stronger versus all of the 16 most- active currencies as the U.S. manufacturing index decreased to a six-year low.

The BoJ will probably keep interest rates on hold this week. Governor Toshihiko Fukui will leave the benchmark overnight lending rate at 0.5% on Jan. 22. The BoJ will publish its monthly assessment of the economy and a review of the twice- yearly outlook at 3 p.m. and Fukui will speak at a news briefing at 3:30 p.m.

Fukui repeated last week that rates need to be increased progressively on condition that the economy expands as projected. He mentioned that by keeping interest rates low for an extended period could make growth unsound. In addition, Japan's Nikkei 225 Average recovered from an early dive to end 0.6% higher, lifted by expectations that Bush will propose measures to boost the declining U.S. economy and thus bolster consumption thereby aiding the Japanese export market. It looks as if the JPY will continue its relatively strong bullish move, and if the Japanese rate will remain unchanged for an additional month, we might see carry trades resume at a moderate rate if the US equity will allow the move with a certain strengthening period.


Technical News

EUR/USD

The pair is in the middle of a very strong bearish move ever since it peaked at 1.4900, and is now traded at 1.4530. The daily cross on the slow stochastic indicates that the momentum is close to a finish, and the hourly chart supports that notion. 1.4500 will be a very strong support level that if breached will validate a stronger move into the 1.4400 levels quite quickly.

GBP/USD

The cable continues its nonstop bearish journey overlooking every possible support level and shows no sign of a stop. All oscillators are very bearish and the trend appears to have much more room to run even on the daily level. Being on the short side appears to be a wiser move this week.

USD/JPY

After reaching the 106.00 level, the pair has marked a very strong support at the level and is showing difficulties breaking it locally. If that support will sustain an additional attempt, we might see a very strong bullish correction move that might take the pair to the 108.20 level as a first step. Traders should pay close attention to that level as it holds high profit potential.

USD/CHF

The bearish move the pair is going through appears to have diminishing momentum, and lacks the ability to make a significant breach beyond the 1.0800 level. The hourly studies show mixed signals, and the daily chart is indicating a mild bearish direction. Waiting for a clearer signal on that pair appears to be a good decision today.


The Wild Card

Crude Oil

There is a very strong downwards channel pattern forming on the 4 hour chart as Oil now floats at the upper level. After a failed attempt to break the upper barrier, Oil is regaining some bearish momentum which provides forex traders with a great opportunity to enjoy a trend that might have a target price of 88.50.

 

[forexyard]

22/01/'08 - US Equity Market Falls

Economic News

USD

Continued speculation about the further slowdown in the US economy proved to be detrimental yesterday, as a large number of world markets plunged. Shortly following remarks by President George W. Bush about plans to bolster the US economy with tax breaks, markets around the world began to sink, at an alarmingly fast pace. Markets in Asia, Europe and other key regions saw sharp drops, some of which came close to all-time record lows. Markets could not withstand growing concerns that a US recession will lead to a string of recessionary issues around the globe. Investors saw the greenback make significant gains, mostly against its European counterpart, dropping under 1.45, something that had not been seen since the very end of 2007. The dollar was able to sustain positive movement due to the absence of the US stock market as the Martin Luther King Jr. Holiday was celebrated yestarday. Although it did escape the initial brunt of losses, the US stock markets should see heavy losses today, as Dow futures dropped 4.5 %. If indications stay as planned, there will be a similar drop in actual indices today.

Today's economic calendar contains no really important US news events. At 13:00 GMT, US Treasury Secretary Henry Paulson will speak in Washington D.C. followed by the 15:00 GMT release of the Richmond Fed Index. Most eyes will be on how stock exchanges in the US will react to yesterday's abysmal day, and if Asian and European markets can turn yesterday's misfortunes around.

Initial pressure from economic policy makers in the US to force a more constructive solution succeeded, as Fed Chairman Ben Bernanke's request for a stimulus package looks as if it will be granted by the Bush administration. The question for many is if it will be able to withstand mounting pressure on the US economy and the dollar. Look for the dollar to continue to make gains once again today, as we await the opening of the US stock market.

EUR

European financial markets were hit hard yesterday, as growing fears of recession in the US took its toll on stock markets within the Eurozone. UK's FTSE index dropped by over 5 % and the German DAX dropped over 7 %, its worst performance in six years. Free falling numbers like what was seen yesterday, had been absent since the 9/11.

Drops in the stock markets of Europe contributed to an even bigger drop in EUR strength, as it fell nearly 200 points. Yesterday's economic data from Europe was limited, as German PPI was the only index released. PPI numbers came back lower than expected and added to the already tense conditions in the market place. While ECB President Jean Claude Trichet has been hawkish with economic policy during the last several months, recent dovish comments by a host of ECB officials only strengthened the drop in markets and currency yesterday.

Today's economic calendar is absent of any Eurozone news, as investors brace themselves for what could be yet another record day of lows for the 13 nation currency.

JPY

The JPY was the one currency that rallied against the USD boosted by risk aversion and plunging global stocks. No surprises from the Bank of Japan which unanimously voted for unchanged rates for the 12th consecutive month. Clearly the market has been marking forward the next anticipated hike from the BOJ further and further out and now most are not expecting a hike until next year. With central banks and finance ministers all admitting that forecasts have dashed by the stronger than expected impact of the subprime induced slowdown the outlook for Japanese exporters remains bleak. The BOJ has been adamant that Japan's long, but extremely shallow, recovery is still in place. However, without the foundation of a healthy domestic economy the risks are high for Japan to return into a recession.

Today's publication of year to year Supermarket Sales in Japan released at an abysmal -1.8% as compared with forecasts calling for a -0.4% release.


Technical News

EUR/USD

The 15-nation currency is in a strong bearish momentum and losing strength versus the U.S. dollar, the daily chart is bearish, and the hourlies support the notion with a bearish cross above the 80 level on the slow stochastic. It appears that the pair is heading to the 1.4300 level.

GBP/USD

After a short correction, the pair regains the bearish path and seems to be quite confident to reach the target point of 1.9300. The hourlies are quite bearish, as the dailies produce mixed signals. At the moment, GPB/USD is trading in the 1.9250 to 1.9500 range. The volatility is high and we should expect to see also today a continuation of bearish pressure on the cable.

USD/[B]JPY [/B]

A falling wedge structure is forming on the 4 hour chart, implying on the continuation of the current bearish trend as next target price is located at 104.37. Going short seems to be preferable.

USD/CHF

The pair is still in the beginning of the uptrend correction initiated at 1.0858. Dailies are bullish, and the hourlies are a bit overbought. Buying on dips might be a preferable strategy.


The Wild Card

Gold

There is a bearish channel forming on the daily chart, as gold is floating at the upper level of it. The slow stochastic has completed the cross above the 80 level, which validates the move as bearish. This provides forex traders with a great opportunity to enter a short position with strong bearish momentum.

 

[forexyard]

23/01/'08 - US Fed Cut Rates By 0.75%.

Economic News

USD

The greenback fell sharply against most of the majors yesterday after the Fed surprised the world by deciding to cut both the Federal Fund Rate and the Discount Rate by 0.75% ahead of its next meeting on Jan 30. The Fed Fund Rate, which is the U.S inter-bank lending rate, was slashed from 4.25% to a surprising figure of 3.50%. This aggressive cut is just another in a series of last ditch attempts to help the struggling U.S economy avoid a recession by alleviating the underlying weakness that exists in the housing sector and the broader economy. Therefore the greenback depreciated sharply on the back of this rate cut because investing in the U.S economy is now less attractive to investors, so there should be a fall in the inflow of foreign funds especially now that the interest rate in the U.S has fallen below that of Eurozone, which is still at 4.00%. However carry trades and equity markets were boosted on the back of this news as investors viewed the Fed's robust attempt to stimulate the U.S economy as a positive indication that there could be a future rebound in the U.S economic outlook. Therefore the greenback and most of the other high yielders appreciated against the JPY yesterday. Now although this monetary expansion by the Fed will boost consumer spending significantly and therefore try to solve the problem of the housing sector and the credit crisis, the key question on traders' minds is whether the greenback will recover on the back of a more positive U.S economic outlook. In our opinion, the U.S Trade Balance remains the missing piece in this complex puzzle as although the greenback has been weakening against the EUR for the latter part of 2007, U.S exports only gained fractionally on the EU and therefore the Fed can now only hope that this will change dramatically as the U.S trade deficit continues to widen. So a strong greenback is not at the top of the Fed priority list at the moment as they are using all means available to minimize the risk of an economic slowdown.

Nevertheless, many analysts believe that towards the second half of 2008 the U.S economy will climb out of this deep pit and it will be accompanied by a sustained USD rally. The Fed will also be keeping a close eye on inflation as although it is expected to remain moderate over the next few months, this aggressive rate cut could cause inflation to spike especially if we see an overreaction in consumer spending. Also the Fed's objective to rebound the U.S economy will face a serious setback if commodities continue to rise any further.

Looking ahead, today there is no significant U.S data expected and the greenback should consolidate against most of the majors especially after yesterday's sharp depreciation, as traders will begin to look ahead to Thursday's key U.S Unemployment and Housing figures. However the greenback may still face some volatility today as a result of some key data releases from the Eurozone and UK. The short term outlook for the greenback remains very dark indeed, as the market prepares itself for another possible 50bps rate cut when the Fed meets next on Jan 30.

EUR

Earlier in the week the EUR was struggling against the greenback after the release of the weak Eurozone and German ZEW Economic Sentiment coupled with Monday's soft German PPI figures. However the resilient EUR rallied back yesterday on the back of the U.S Fed rate cut and it managed to pull back most of the previously lost ground . The current EUR rally can be completely attributed to the disastrous state of the U.S economy because the ECB is growing more dovish with regards to its future interest rate policy, which is diminishing the previous underlying strength of the EUR. Now although the strong EUR is causing cracks to appear in the Eurozone economy it is still in a far better state than in the U.S. So with the Fed expected to make further rate cuts at the end of the month we could see the EUR once again targeting all time highs against the greenback.

Looking ahead, today we are expecting the European Manufacturing and Service PMI figures, which measure the activity level of purchasing managers in the manufacturing and services sector, respectively. Both these figures are expected to release slightly weaker than last month but still with a reading above 50, which indicates expansion. Also President Trichet will speak today and it will be closely followed by investors, particularly after yesterday's events, because his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy. The near term outlook for the EUR, in stark contrast to the greenback, remains bright and most analysts believe that it will once again head towards the 1.5000 level against the USD. However it may slip slightly today before resuming its upward momentum as the market digests yesterday's rate cut causing some temporary greenback consolidation.

JPY

Yesterday the JPY was the only major currency to weaken against the greenback as the rate cut by the Fed induced an increased risk appetite among investors, thereby prompting carry trades. This rejuvenation of carry trades may continue for a bit longer, as earlier today during the Asian trading session, Asian stocks managed to rebound after a sustained sell-off on the back of yesterday's Fed rate cut. Nevertheless, we are now beginning to see the JPY crosses declining once again, so it may be wise to stick to the mainstream opinion that the resumption of carry trades was only a temporary phenomenon. The main news from the Japanese market today was the Interest Rate Announcement that remained unchanged at 0.50%. However BoJ Governor Fukui hinted in his speech, that followed immediately after the rate announcement, that the next move of the BoJ will be to raise the key benchmark rate. This could strengthen the JPY in the longer term. However with the Fed expected to make another rate cut towards the end of the month, this could alleviate equities and push the JPY lower. Traders should also closely follow the release of the Japanese CPI figures later this week as it will shed more light in determining the future monetary policy of the BoJ, whose hands have been tied in the past with regards to hiking rates as a result of negative inflation or so-called deflation.


Technical News

EUR/USD

After bottoming out at 1.4400 the pair is in the midst of a correction move that already broke the key Fibonacci level of 1.4584. All daily oscillators are in a bullish formation, and the hourlies are showing that there might be a moderate bearish move before the bigger bullish trend resumes.

GBP/USD

The 4 hour chart is showing the first signs of an additional bearish move after the correction that topped a bit above 1.9600. The daily slow stochastic is regaining a bearish formation, and the daily downwards channel indicates a continuation of the main downtrend that was initiated at the 2.1000 level.

USD/JPY

The pair is trading in a range for the past few days, and shows no distinct direction after a very massive bearish move. At the moment the hourly study is giving out mixed signals and the daily chart is showing moderate bearish momentum. It appears that waiting for a clearer signal or a significant break in either direction, might be the smart move for this pair.

USD/CHF

There is a bullish cross forming on the 4 hour chart indicating that we might see a delicate move before the next massive bearish move returns. The daily chart is very bearish, which makes it preferable to sell on highs. The next target price is an additional break through the 1.0900 level.


The Wild Card

Crude Oil

There is a very strong bearish channel on the 4 hour chart as crude oil now floats at the upper level. There is a fresh bearish momentum being created as the RSI and slow stochastic clearly indicate. This is a great entry point for forex traders who are looking for a swinging move with plenty of room to run.

 

[forexyard]

24/01/'08 - Will The Fed Cut Again?

Economic News

USD

The greenback is floating in relatively quite waters, after the storm caused by the fed's surprise cut of 75 basis points two days ago. When taking a deeper a look at the USD behavior post cut we can see that the reaction of the USD was in fact softer than one would expect from such a radical move that was not seen since 9/11. This could partly be explained by the fact that the cut was partly priced in, as the crisis was quite strong and traders were expecting a massive cut. Now there is a certain argument amongst some traders about whether the Fed will again lower its rates by at least a quarter of a percentage point next week. Others said it would depend on how Wall Street would perform for the rest of the week until their meeting on Tuesday.

These extreme policy changes are aimed at boosting liquidity and easing the credit crunch, restoring confidence and encouraging consumers and businesses to start borrowing, investing and spending again to keep the world's largest economy from slipping into a recession, although many predict that a recession might be inevitable.

As for today there are two major economical events expected to come from the US, the first is Unemployment Claims which is widely expected to be released at 320K after a previous figure of 301K, and the second is Existing Home Sales that is expected to remain at the 5 Million level, and will probably not generate strong volatility that is usually expected from housing data at this poor economical period.

US Treasury Secretary Henry Paulson will speak today about risk and the financial system at the World Economic Forum, in Switzerland. The speech might generate some choppy price movements, as those speeches often do. It appears that if no other surprises will be pulled from the fed's sleeve, we should see the Greenback continue to drop as a part of the ongoing attempts to initiate the healing process for the American economy.

EUR

There are many opinions as to what the ECB can do in order to help the situation in the US to cause a bigger global turmoil that could eventually lead to a world crisis. A very vivid example was given a few days ago where most of the world markets fell in an average of 5-6%. The ECB's part in all this is very important, as a rate cut on their side might ease the pressure from the US, and cause the EUR/USD to return to normal level. It could be interesting to see how fast the ECB will comply with the need to cut the rates.

However, Trichet said yesterday that a rate cut was not to be expected, which will keep the EUR afloat for now. But as rates remain at 4% in Europe as rates drop in the US, the stock market crashes may cause a reversal of fortune for the EUR by way of a correction in the coming week.

As for today, the European calendar contains several interesting events such as the German Ifo Business Climate Index at 9:00 GMT which is expected to drop a bit from 103.00 to 102.3. slightly later at 9:30 GMT we should be expecting new from the UK housing sector in the form of the British Bankers' Association (BBA) Mortgage Approvals which measures the number of home loans issued by the BBA during the previous month, and might have some impact on the ongoing weakening GBP. European Central Bank (ECB) President Jean-Claude Trichet will also speak at the World Economic Forum, in Switzerland shortly after US Treasury Secretary Paulson, and strong price movement is expected in that time frame, especially in the EUR/USD.

It looks like the EUR will continue its path of strengthening today, as it will probably do until the end of this month when the feds will indeed make a very important decision whether the US rate will be cut again or not.

JPY

The credit crunch in the U.S. and the slow growth are causing the JPY to surge, clouding the outlook for the nation's exporters. The JPY gained 5% against the dollar this year, cutting the value of overseas sales. Half of Japan's shipments overseas are settled in U.S. dollars even though the country is relying more on China and other emerging markets for trade. Gains in the currency are already hurting exporters' earnings. Toyota Motor's annual operating profit falls about 33 billion yen for every yen that the currency gains against the dollar past 115, according to Credit Suisse Group. Toyota's shares have fallen 16% this year.

It looks as if the JPY is approaching a point where companies won't be profitable. Exporters say they can make money as long as the USD/JPY is weaker than 106.06. Japan's currency is already 8% higher than the level the nation's largest exporters based their profit forecasts on for the year ending March. Today, there are two Derivatives of the Consumer Price Index (CPI) expected to be released from Japan. The first is the Core CPI y/y which is expected to rise a bit from 0.4% to 0.6%, and the second is the Core Tokyo CPI y/y which is expected to remain unchanged at 0.3%. Both releases are due at 23:30, and will probably push the JPY further up, as we have grown accustomed to in recent times.


Technical News

EUR/USD

The pair is floating around 1.4600 which is a 76.4% Fibonacci level of the 1.3388/1.4960 move. A breach through that level will validate the next bullish move into the 1.4700 zone. It looks like going long might be the better choice today.

GBP/USD

The bearish channel formation is getting tighter and appears to be approaching the melting point. The cable is floating at the top barrier of the channel, and if a break above 1.9600 will not occur on the next attempt, it appears that the bearish channel will continue with strong momentum.

USD/JPY

The attempt to break the 105.00 level has failed and the pair now consolidates around 106.00. The 4 hour chart is showing a bearish slow stochastic, and the daily RSI indicates that another attempt to break the support level is quite imminent. Target price of 105.40 appears to be a valid target for the next move

USD/CHF

The pair is in the middle of a strong bearish move, as the 4 hour slow stochastic clearly indicates. The pair has established a strong support level at 1.0850, which means that a breach through this level might unleash a much stronger downtrend that could take the pair beyond the 1.0800 level quite quickly.


The Wild Card

Crude Oil

The bearish channel on the 4 hour chart continues with no exceptional breaks. Oil is floating at the upper level of it which could be a great opportunity for forex traders to get in a short position at a very early stage, before the touch at the upper barrier may send the Oil down again.

 

[forexyard]

29/01/'08 - Market awaits tomorrow's rate cut

29/01/'08 - Market awaits tomorrow's rate cut

Economic News

USD

The greenback continued to take a hit as yesterday's New Home sales figure spurred speculation that the Federal Reserve will cut its benchmark lending rate by 0.5% this week to prop up the economy. The Fed will announce its rate decision tomorrow at the end of a two-day policy meeting. Interest Rate Futures reflect a roughly 90% chance of a 0.5% rate cut by the Fed this week.

Short-term U.S. interest rates are already among the lowest in the developed world, encouraging investors to borrow in dollars and buy another currency to profit on the difference in yields, which would put pressure on the dollar.

Data showing sales of new U.S. homes declined in December, stoking fears of an imminent economic recession. Purchases of new homes in the U.S. unexpectedly fell yesterday to a 12-year low in December, ending the worst sales year since 1963. Sales decreased 4.7% to an annual pace of 604K, according to Washington Commerce Department.

By now, markets show little willingness to force a dollar bounce ahead of a critical week of U.S. economic developments. We may see the greenback remain in a relatively narrow range against the EUR ahead of the highly anticipated U.S. Federal Reserve rate decision due Wednesday, while similarly critical Non Farm Payrolls data will be due Friday.

Today, the release of the U.S. economic data will likely highlight some of the reasons why traders are ramping up speculation that the country is in midst of a recession. Durable Goods Orders are forecasted to rise 0.1% after falling 0.8 % during the month prior. On the other hand, the U.S. Consumer Confidence is forecasted to fall to a 2 year low.

EUR

The Federal Reserve's emergency rate cut helped propel the EUR/USD up towards the level of 1.4900. However, with Fed Futures pricing in another round of rate cuts on Wednesday and the ECB maintaining a hawkish tone, it may only be a matter of time before the pair takes its rally towards the psychologically important 1.50 level.

Meanwhile, yesterday's European M3 Money Supply contracted for the first time in 4 months suggesting that the slowdown in lending and business activity is spreading across the Atlantic. The M3 indicator, which measures the value of all currency and liquid cash assets held by the public, printed at 11.5% which was considerably lower than the 12.3% forecast. The news took traders by surprise and EUR/USD immediately plummeted 30 points before stabilizing and recovering back to the 1.4700 level.

In the following days, there are only a bits pieces of potentially market moving European economic data, namely Euro zone retail PMI, German unemployment, German Retail sales and manufacturing PMI. The lack of big events on the European calendar suggests that the movements of the EUR will be largely driven by the U.S. economic data.

JPY

Fears of a U.S. recession have now spread to Japan as slowing global activity and dropping foreign demand have led to speculations of Japan also entering a recession.

As expected, the Bank of Japan kept its leading interest rate unchanged at this past week's monetary policy meeting. The central message from the BoJ remains that it believes that the current weakness in the Japanese economy is temporary, and that the next move in interest rates will probably be up.

Today there is no economic data expected to be released from the Japanese markets apart from the Industrial Production, which is expected to finally move into positive territory. The JPY may still continue to drop further downwards against the USD during the day, although it appears that the pair has apparently stabilized in the 106.00-108.00 area.

Trading the USD/JPY pair this week is likely to be dominated almost exclusively by the U.S. news flow. Therefore, traders will be looking ahead to the 2 key events on the U.S. calendar this week- the FOMC and NFP.


Technical News

EUR/USD

The pair is in the middle of an uptrend initiated at 1.4350, and appears to be having some more room to run on the daily level. On the 4 hour chart there is a bearish cross forming indicating that there might be a bearish correction before the uptrend resumes.

GBP/USD

After bottoming at 1.9360 the cable is continuing the corrective move at full momentum and is now floating around 1.9840. All oscillators show that the correction move still holds some fuel in it, and if the 1.9900 level will be breached, a new uptrend will be validated and might push the cable above the 2.0000 level once again.

USD/JPY

The pair is trading in a range for almost two weeks now, and has formed a very strong support at 105.20. The local momentum appears to be bullish but the daily trend is a very strong bearish one. Traders must look for a key break on the bearish side before considering an entry position, as the range might continue before one occurs.

USD/CHF

After several failed attempts to breach through the 1.0850 level, it appears that the pair might make an additional attempt of a break. If and when a breach of that level occurs, it will most probably unleash an intensive follow-up bearish trend that might be targeted at 1.0750 at its lowest point. Going short appears to be preferable today.


The Wild Card

Crude Oil

Oil has been traded in a very distinct bearish channel on the 4 hour chart since the beginning of January. The first breach through the upper barrier of the channel has occurred and a very strong bullish trend is expected to take Oil back into the 95.00 levels towards the beginning of next week. This is a great opportunity for forex traders to join a very strong potential trend that might yield high profits.

 

[forexyard]

30/01/'08 - US Interest Rate Statement On Tap.

Economic News

USD

Today at 19:15 GMT, we are scheduled to see the release of the US interest rate statement. The greenback was steady against its major crosses yesterday, as investors waited to see how big an interest rate cut the Federal Reserve will deliver today in its fight against the threat of a U.S. recession. With the Dow rising as well yesterday, investors look towards bullish behavior of the dollar ahead of the expected 50bp rate cut, which will likely drive the dollar's value down. Federal Reserve fund futures were pricing in a roughly 75% chance that the rate cut will come in at 50bp, with the other quarter allocated to the much more conservative and unlikely 25bp cut. A hefty cut from the current interest rate of 3.5 % could send the dollar in either direction, as lately it has slipped back towards record lows hit last year against a basket of currencies. A rate drop any bigger than 50bp would deteriorate the dollar's yield appeal for investors. A rate cut of 25bp would service as a medium between keeping with market expectations and servicing the real needs of the economy.

During yesterday's trading news events from the US came back with mixed results, nonetheless far better than what was originally expected, giving investors even more incentive to push the dollar up. Durable goods returned roughly 3% higher than initially forecasted, as the 5.2% mark, coupled with solid core durable goods figures gave a much needed boost to the dollar in afternoon trading. National HPI Composite and Consumer Confidence figures were released as well yesterday to predicted negative results, preventing any real significant gains in the greenback.

Before the evening release of the US interest rate, we will see several key US figures. The 15:30 GMT release of ADP Non Farm Employment Change is expected to stay put at 40K, ahead of Friday's non farm payroll data. Also, an advanced release of quarterly GDP and the GDP deflator is scheduled to come back with negative results. If today's economic data comes back with better than expected results, the dollar and the US economy as a whole will see some much needed relief.

EUR

The EUR saw a slowdown toward the top of its week long rise against a basket of currencies, ahead of today's Fed rate cut. As investors turned their attention across the Atlantic, a small set of Eurozone data was released in line with expectations, but saw unexpected responses from investors in the market. Eurozone current account info came back with negative results, which should have resulted in bearish Euro behavior. Instead, the EUR stayed relatively unchanged against the dollar, due in large part to the tight monetary policies issued by the ECB. ECB President Jean Claude Trichets' speech from last week once again reiterated the hawkish stance from the ECB, as no interest rate cut should be expected in the near future. This should keep the EUR in line for steady progress in the future against a basket of currencies including the greenback.

Today there are no events on the European calendar, as all eyes will be focused on news from the US. We should expect a slight strengthening of the 13 nation currency today, unless news from the US comes back better than expected.

JPY

Japan's industrial production rose less than expected in December, as the Japanese government downgraded its assessment on industrial production. Initial reports showed a moderate rise in output trends; however the decline in production numbers resulted in a flattening out of trends. The index for industrial output in December was released at 111.9, Japan's second-highest reading since January '98, also reached briefly in August of last year. Industrial production rose 0.7% in December from a year earlier, as the figure has risen consistently for over 2 years. Manufacturers' output is expected to drop 0.4% in January and a further 2.2% in February, according to the survey.

Yesterday, the JPY made gains on most of its major currency crosses, as Asian stock markets continue to fall ahead of today's Federal Reserve statement. Looking ahead, Japan will release its Manufacturing PMI today at 23:15 GMT; the data is forecasted to stay close to last month's figure of 52.3, and should not affect JPY prices by that much.It is unclear to how the JPY will respond to today's news events as it has range traded for most of January.


Technical News

EUR/USD

The pair is in a consolidation formation on the 4 hour chart, and is accumulating fresh momentum towards the next bullish move. An upcoming bearish cross might be forming on the daily chart indicating that the bullish move might not be very strong and could be subject to a corrective move soon.

GBP/USD

The bullish corrective move continues with strong momentum, as the daily chart indicates no sign of a halt. Hourlies studies support the bullish notion, as RSI and slow stochastic both indicate that the bullish trend might very well continue uninterrupted. Being on the buy side appears to be preferable.

USD/JPY

As the pair continues to be traded in relatively tight range, no distinct direction is being observed on the hourly and daily studies. The pair might continue to linger in neutral territory until a more distinct signal will be formed. It is advised to stay out of this one until the smoke of uncertainty clears.

USD/CHF

The very strong support level of 1.0850 has not yet been breached as the pair shows some mixed price momentum. The overall momentum is bearish, and traders should pay attention to a breach of the key support to enjoy a very strong additional bearish move that might take the pair into the 1.0750 area quite quickly.


The Wild Card

Gold

Gold is in the midst of a very strong uptrend that shows very small will to stop. All oscillators support the bullish bonanza, and it appears that an all time high breach might be quite imminent. This could be a great opportunity for forex traders to enjoy the road to a record high with very strong profit potential.

 

[forexyard]

31/01/'08 - Greenback on its way down.

Economic News

USD

Yesterday the greenback slipped sharply against most of the major currencies on the back of the news that the Fed had slashed the Fed Fund Rate and the Discount Rate by an additional 0.5%. The Federal Funded rate, which is the U.S inter-bank lending rate, was cut from 3.50% to 3.00%. While the Discount Rate, which is the rate at which U.S banks can borrow funds directly from the Reserve Bank, was slashed from 4.00% to 3.50%. The Fed has been continuously slashing the interest rate over the last few months in an attempt to stabilize the faltering U.S economy and to stave off a recession. Yesterday's rate cut comes just over a week after the Fed surprisingly cut its benchmark lending rate by 0.75%, in order to stimulate the economy. This series of aggressive monetary expansion by the Fed will significantly boost U.S consumer spending, which will mean that the number of unsold U.S homes will decrease thereby alleviating the housing slump and loosening the persistency of the recent credit crisis. However the Fed will have to keep a close eye on future inflation figures, particularly since the recent Personnel Consumer Expenditure figure released above expectations. The PCE figure is not relied upon by many economists and therefore it's is widely believed that inflation is not a major concern and that yesterday's 0.50% rate cut was absolutely necessary in order to prevent the U.S economy from spiraling into recession. Inflation is expected to remain moderate in the near term, although there is a slight risk of it spiking on the back of the rate cuts. Nevertheless, stagflation is highly unlikely and it seems that the worst case scenario for the U.S economy will be a recession.

In other U.S news yesterday, the Annualized GDP quarterly figure released at 0.6%, which was well below the forecasted figure of 1.2%, giving further indication of slowing U.S economy. Also released yesterday was the ADP report, which has some predictive value for the Non-Farm Payrolls report which is to be released this Friday. The ADP report surprised on the upside, coming in at 130K and far-surpassing the expected figure of 40K. Therefore looking ahead, traders will now begin to shift their focus on Friday's NFP report, which is usually a major market mover. The greenback may be able to pull back some lost ground on Friday as according to the ADP report we may see a positive surprise for the significant NFP report. Nevertheless, due to instability in the U.S financial markets coupled with slowing growth the short term outlook for the greenback remains very bleak. However we remain optimistic longer term and believe that towards the second half of 2008 the U.S economy will climb out of this deep pit and it will be accompanied by a sustained USD rally.

EUR

There was no significant Eurozone news yesterday as all attention shifted to the U.S interest rate announcement. The EUR rallied sharply against the greenback on the back of the Fed rate cut and it reached above the 1.4900 level. The EUR also rallied strongly against the GBP, as the BOE still struggles to balance rising inflation and slowing growth. However, the European currency had a mixed trading day against most of the other majors. Looking ahead to today, there will a host of Eurozone news which will be released kicking off with the German Retail Sales and Unemployment Rate. The German economy, which is heavily reliant on exports, remains resilient despite the recent appreciation of the EUR. The other key news today will be the Eurozone CPI, which will give some indication as to the inflationary pressures that the ECB may have to face. Many analysts believe that the strong EUR will eventually take its toll on the European economy and that it may take more hawkish comments from the ECB with regards to inflation in order for the EUR to keep its bullish momentum.

The near term outlook for the EUR, in stark contrast to the greenback, remains bright and most analysts believe that it will once again head towards the 1.5000 level against the USD. However it may slip slightly this week before resuming its upward momentum as the market digests yesterday's rate cut causing some temporary greenback consolidation.

JPY

The JPY rallied sharply yesterday on the back of the Fed rate cut as investors pared off any risky positions thereby causing carry trades to unwind further. The current uncertainty in the global financial markets is causing all the high yielding currencies to depreciate sharply and we should see the JPY continue its bullish momentum as risk seeking investors run for the hills. The Japanese economy is showing moderate growth and it is finally beginning to experience some positive inflation, so this could be a good launching pad for a future rate hike from the BoJ. In the meantime a rate hike remains unlikely due to possible deflationary pressures and there will need to be sustained expansion before the BoJ can consider a rate hike. The outlook for the JPY remains very bullish particularly as global market instability and currency volatility continue to drive risk-aversion. However, as soon as the U.S economy is back on its feet, investors will once again be willing to take risks and this could pull the JPY off the bullish express.


Technical News

EUR/USD

The 4 Hour chart indicates that there is still room for the pair to reach new heights, particularly after breaching the key 1.4850 resistance level yesterday. Both the RSI and momentum are indicating that this pair should continue its bullish rampage. Oscillators show that a breach through 1.4950 will validate an additional bullish move into the 1.50 levels.

GBP/USD

The cable is trading in a very unstable and choppy manner in the past few days. The daily studies show a slight bullish momentum and the hourlies show mixed signals. The RSI and Momentum on the daily chart are positively sloped indicating that this pair still has steam left in its bullish movement. However the 4 Hour chart is slightly bearish, so a preferred strategy for today might be to buy on dips, as the daily movement should still be bullish.

USD/JPY

The breach through the wide range is showing the full power of the bearish momentum. The pair is traded at the 106.50 levels, and another bearish move is quite imminent. All the indicators are showing that the bearish momentum has not yet said its last word, and a target price of 105.00 will no be a big surprise.

USD/CHF

This pair is still in the midst of a steady downtrend which is not yet showing any sign of leveling out. The RSI and Momentum are still negatively sloped indicating that there is still plenty of steam left in this bearish move. The oscillators show that a positive breach is quite unlikely, and the daily charts are also showing bearish momentum. Going short still might be a preferable strategy.


The Wild Card

Gold

This commodity has been on a sharp rise over the last week and this bullish trend is likely to stick around in the near future. All charts are still giving a strong bullish signal, however there might be short term corrections during this uptrend. forex traders can maximize profits by buying on a dip and taking advantage of a sharp bullish trend.

 

[forexyard]

04/02/'08 - Will the Greenback Maintain It's Recovery?

Economic News

USD

After a week full of mixed U.S. economic data, a steady stream of negative news from the U.S. housing sector and even after the reduction of the interest rate, the greenback is only marginally lower. Friday's dismal U.S. Non Farm Payrolls report sent the USD near record-lows against the EUR. The highly-anticipated NFP report showed that employers shed 17K jobs through the month of January - the first negative figure in 4 years. However, an impressive recovery eventually left the USD slightly higher through the late Friday New York trading session. The U.S. currency rose against the EUR after a report showing the U.S. manufacturing sector expanded in January, helping the greenback to recover from news of the contraction in the labor market. Nonetheless, the overall U.S. economy is cooling. The loss of 17K of jobs, as was reflected by the NFP report, makes it difficult to argue that the U.S. economy is not already in a recession. The forecast is that the Federal Reserve will need to continue to lower interest rates and unless there is a strong rebound in job growth during this month, it is realistic to expect an additional 0.25% point rate cut somewhere in the next 2 months.

Today the most significant news to come out of the U.S. will be the Factory Orders figures. The figure is expected to release at 2.3%, almost twice higher than in the prior month. During the week, traders will also closely follow the figures of the Nonfarm Productivity index as well as Unemployment Claims and the Pending Home Sales indices.

It appears that the negative US releases will cause the greenback to continue its bearishness, at least until a spur of positive releases will hit the board.

EUR

During the previous week European economic data was stronger than expected and the U.S. data was weak, but still the EUR failed to close above 1.49. Last Friday, the EUR fell to $1.4805, down 0.4% from its mid-week trading levels, reversing course after touching a two-month high of $1.4952 earlier in the session. While the Fed cuts the rate twice in 9 days, the ECB continues to dwell on inflation keeping its benchmark rate unchanged at a 7 year high of 4%. On Feb. 7th, ECB officials will be meeting to decide on interest rates and even though rates are expected to be left unchanged for the 8th consecutive month, all traders should keep an eye on the comments made by ECB President Trichet at the accompanying press conference. From a strategic point of view, the medium-term outlook continues to be dominated primarily by the deterioration of the macroeconomic environment and the flow of disappointing news. Analysts predict that the worsening U.S. economy will likely be the main factor in the currency market in the months ahead. As conditions currently stand, the EUR seems destined for a further short-term correction before making another substantive run at the $1.5000 mark.

JPY

The JPY was slightly down in the early Monday session, trading at 106.90 against the USD and continuing to move in lock-step with equity markets.

The coming week holds at least a few indicators of interest. The preliminary Leading Economic Index for December will be posted on Wednesday. This indicator has been bouncing off its record lows over the past few months, so a notable print may be in order. On the following day, the Machine Tool Orders figure will define expectations for foreign demand and shipments. Finally, Friday brings the Economy Watchers Current survey. This indicator measures the current mood of businesses that directly service consumers and isn't considered to be a big price mover, yet it holds considerable potential nonetheless.


Technical News

EUR/USD

The pair is starting to move back up, after a choppy session on Friday, and a small correction afterwards. The 4 Hour Slow Stochastic crossed at 13 and is supported by the RSI which shows a positive slope. The momentum is bullish, and the next target price appears to be 1.4900.

GBP/USD

The 4 Hour Slow Stochastic crossed at 8 implying an upcoming bullish trend with an initial target price of 1.9801. Although the daily momentum is bullish, the hourly momentum is starting to form. Forex traders should wait for Momentum and RSI to have a positive slope before initiating any action and going long.

USD/JPY

A slightly bearish narrow channel is forming on the 4 Hour chart as the next target price is located at 106.16, in case of a breach through the bottom barrier, 105.53 will be the next target price. There is still a possibility of a bullish breach as well, so a preferable strategy could be to wait for a clear signal before entering the market.

USD/CHF

There is a bearish cross forming on the slow stochastic of the 4 hour chart. In addition we see that there are three consecutive doji bars, which indicates that the bearish break might be quite imminent. Going short appears to be the right direction today.


The Wild Card

Gold

Gold has been on a sharp rise during the last week and this trend is expected to continue in the short term. The bullish signal is still strong; however there might be short term corrections during the uptrend. Forex traders can maximize profits by buying on a dip and taking advantage of a sharp bullish trend with a relatively good entry price.

 

[forexyard]

05/02/'08 - ISM Non-Manufacturing on Tap

Economic News

USD

Yesterday, saw a return to mixed results by the greenback against its most commonly traded currency pairs, as the week continues to be driven by how world economies react to the unstable and disappointing US economy. Last Friday's release of the Non Farm payrolls could still have a lasting effect on dollar value, as the 17K job loss from January had initially ravaged the greenback, leaving some uncertainty as to if and for how long it will be a factor.

A large portion of the focus for this week will not be on US economic data alone, but outside data which in large part will be reacting to last week's full schedule from the US.

Interest rate statements will be announced this week in Australia, Europe and Great Britain, each of which are expected to react differently to the greenback's 125bp cut over the last 2 weeks by the Federal Reserve. Firstly, Australia is expected to raise their interest rate to 7%, a 25bp bump from its benchmark rate, as Australian economists expect to see record highs for the Aussie dollar against the USD, which could breach the 90 cent mark today. The British, on the other hand, seem to be leaning toward rate cuts to try and revive the British economy. As the week continues on, a small collection of important US economic data will be released. Pending Home Sales, Unemployment claims, Non-Farm Productivity are all set to individually push the greenback forward. On tap today is the release of ISM Non-Manufacturing Index for the month of January. The 15:00 GMT release is expected to fall slightly from 54.4 to 53.0 but should not cause as much volatility as usual, due to the small expected change. The manufacturing figure, coupled with 3 less significant figures to be released today, will likely keep the dollar trading within a small range.

EUR

With all the talk of movement in world interest rates, such as cuts in Britain and the US and hikes in Australia, the ECB continues its hawkish stance regarding it currency and will more likely than not keep rates the same ahead of Thursday's scheduled Interest Rate announcement. ECB President Jean-Claude Trichet, seems keen on keeping the thriving 15 nation currency intact, keeping rates at 4% flat. PPI and Consumer Confidence both returned negatively yesterday, having little effect on the EUR currency crosses.

As Thursday's interest rate announcement slowly approaches, today could be an important one for the EUR, as most of its significant data for the week is on today's schedule. First is the 8:55 GMT release of German Service PMI, which is forecasted to lose 0.7 points. That will be followed by a 10:00 GMT announcement of Retail Sales for the month of January, which is forecasting at 0.2%, 7 percentage points up from its last measurement. These two figures should set the tone for the next couple of days, as all other EUR data will not appear until Thursday.

It is no surprise that the EUR continues to dominate the USD, with elections and uncertainty still a big factor regarding the dollar; we should begin to see a bigger push by the EUR as it moves toward $1.50. If economic data returns with better than expected results, we could very well get to that mark faster than expected.

JPY

The JPY saw a decline in value yesterday versus most of its major counterparts as carry trading slowly picked up pace ahead of expected Australian interest rate hikes. Another interesting trend has been the relationship between the JPY and the global stock markets, as the Japanese currency gets its most movement when responding to global financial trends. More importantly has been the direct relationship between carry trading and the Dow Jones. The two used to be directly correlated as one dictated the others movement in the opposite direction; however in recent days the trend seems to be changing. Yesterday the JPY spent a good portion of its time, in the midst of growing carry trade behavior, whereas the Dow Jones slowly fell all day long. Such behavior has forced investors to retool their strategies regarding the JPY.

Today, the Japanese economy will be absent on the economic calendar as we look ahead towards Wednesday's Leading Index and Thursday's Machine Tool Orders.

As the Aussie dollar continues to strengthen, this could push the JPY down further and further. This will likely be the case until at least the end of this week.


Technical News

EUR/USD

After a relatively choppy session overnight the pair now consolidates around 1.4820. The momentum on the 4 hour chart is mixed with a slight bullish tendency, as the daily chart indicates a stronger bullish momentum. It is advised to wait for a break above 1.4830 before initiating a long position.

GBP/USD

The cable bottomed at 1.9350 and since, is showing bullish momentum that appears to be continuing with little interruption. The hourlies are moderately bullish, and the daily chart is showing that a bullish break might be imminent. Going long appears to be the right choice today.

USD/JPY

The pair is still floating in a range with no distinct direction or momentum. The hourlies are floating in neutral territory and the daily slow stochastic is showing a slightly bullish momentum. Forex traders are advised to wait for a clear signal before entering in any direction.

USD/CHF

The pair has started to accumulate bullish momentum as the 1.0900 level was breached. The 4 hour slow stochastic is showing a growing bullish momentum as the daily chart supports the bullish notion. A breach through 1.0940 will validate this move and might take the pair back to the 1.1000 levels again.


The Wild Card

Gold

Gold has made a failed attempt to breach through the 898.60 level which is a key Fibonacci support level. The inability to breach that level generates fresh new bullish momentum with a target of 907.00 at the local level. This could be a great opportunity for Forex trader to enjoy a very strong reversal move.

 

[forexyard]

06/02/'08 - USD Correction Continues...

Economic News

USD

It has been a long time since we have seen a broad based greenback rally, including against the JPY, where despite a widespread liquidation of carry trades, the USD/JPY barely budged. The USD rose yesterday despite a surprise drop in the ISM non-manufacturing index. Trading was volatile largely on the back of a significant contraction in ISM services figures which came in at 41.9, the lowest reading since Oct 2001.
That intensifies concerns of a recession in the U.S. economy, pressuring the Fed to cut rates further. Currently, the Fed Fund Futures are pricing a 70% chance of another 50bp cut next month.

Along with this, it's important to mention that there are signs in the FOMC policy statement from last week according to which, the Fed may moderate its aggressive policy actions. Nevertheless, if the U.S. financial markets will destabilize once again, there is no doubt that Federal Reserve will cut again. The U.S. economy is in trouble and it seems as if the recession has hit. The continuing deterioration of the labor market, housing market and now the service sector, leaves little doubt that the biggest economy is falling into a recession. As for today's' U.S. calendar, expect Nonfarm Productivity and Unit Labor Costs indices on tap. Both of these indicators are due to be released at 13:30 GMT. Later today, the Philadelphia Fed President Plosser is scheduled to deliver a speech. It appears that the greenback might continue yesterday's correction move before probably initiating another bearish move.

EUR

The EUR fell yesterday against USD. The European currency lost yesterday some 180 pips, which makes it the biggest move in the pair since the Fed surprised the markets with a 75bp intermeeting rate cut. The EUR particularly dropped after the German Services PMI and Retail Sales fell more than expected, indicating that the U.S. economic slowdown is spreading to Europe. This is a reliable indication that the Euro zone is heading towards a period of significantly weaker growth during the remainder 2008. The poor PMI Services data, which was released at 50.6, the lowest figure since July 2003, prompted speculations that the ECB will be forced to trim its growth forecast and eventually ease monetary policy this year. Also yesterday, the Euro zone Retail Sales fell short of expectations in the month of December as weak consumption in Germany offset stronger spending in France.

Overall, the EUR traded with a low of 1.4620 and a high of 1.4834 before closing the day at 1.4648 in the New York session. As for today, there is no economic data due to be released from the Euro zone. Although the EUR slipped yesterday, it is too early to eulogize the European currency. The accelerating U.S. economic recession leaves quite a little doubt that the EUR will head back up after the current correction will lose its steam.

JPY

Despite a widespread liquidation of carry trades, the JPY was little changed against the USD yesterday. The JPY rallied against a number of majors due to continued concerns surrounding the U.S. economic slowdown. Overall the USD/JPY traded with a low of 106.60 and a high of 107.74 before closing the day at 106.73 in the New York session.

This morning, the Japanese index of Leading Economic indicators released inline with expectations at 40%, but still the number stands much below 50% (the acceptable minimum for a growing economy). The data suggest that downside risks to the Japanese economy are increasing. Recently released industrial output figures showed negative production forecasts for January and February.

Today is expected to be a devoid of data so we should see the JPY continues on its bearish path.


Technical News

EUR/USD

The pair dropped more than 200 pips since the beginning of the week, and it looks as if the corrective move might continue. The 4 hour chart shows a bullish cross that might slow down the downtrend locally, yet the daily chart confirms that the bearish move is valid. Next target price might be 1.4580.

GBP/USD

The cable dropped massively in the last 48 hours yet failed to breach the 1.9600 level. The 4 hour slow stochastic indicates a moderate bullish momentum, however the daily studies show distinct bearish notion. Selling on highs might be wise today.

USD/JPY

The pair has traded in a tight range for a while with no distinct direction. The Bollinger Bands are getting tighter, and the 4 hour Slow Stochastic is showing a bullish cross. Oscillators strengthen the notion that if a sharp break will occur, it will most likely be bullish. Forex traders are advised to wait for the break and swing with it.

USD/CHF

After spiking through the 1.0750 level without a significant breach, the pair is in the middle of a correction that appears to have some more steam in it. The slow stochastic and RSI of the 4 hour chart show that a reversal cross is not due today, which means that the bullish momentum might continue.


The Wild Card

Crude Oil

Oil is correcting down with great momentum and initiated the first step in a bearish channel formation. The 4 hour chart is showing strong bearish momentum, and the lack of a cross in the daily slow stochastic should strengthen Forex trader's confidence in the bearish trend. Next target price might be 87.00$ a barrel.

 

[forexyard]

07/02/'08 - The U.S. Pending Home Sales on Tap.

Economic News

USD

The greenback has been appreciating sharply against the EUR since the release of the surprisingly weak U.S NFP report last Friday. Many analysts are still at odds as to why the greenback appreciated last Friday since the weak NFP report should have added to the existing bearish dollar sentiment. Also there was more significant negative data for the greenback this week as the ISM Non-Manufacturing Index released on Tuesday at 41.9 which indicated a sharp contraction in every major component of the report from new orders, to employment and to business activity. This negative data should have thrown the greenback to the bears as these disappointing key economic figures practically assure another Fed rate cut at the next FOMC meeting in March. This rate cut in March may once again be 0.50% as the Fed will make a last ditch attempt to pull the U.S economy out of a recession. Therefore this weeks' greenback rally against the EUR is somewhat of an economic phenomenon from the fundamental perspective. Also the greenback continued its rally against the EUR yesterday as traders remained cautious ahead of todays ECB Interest Rate Announcement. The main theory as to why the greenback is currently rallying against EUR on the back of this weeks' very negative U.S data, is that many analysts expect the U.S economy to rebound in the second half of 2008 while Euro-zone growth is believed to be heading for a freefall. Also the Fed is prepared to continue slashing rates in order to prevent the U.S economy from slipping into recession, while the ECB may stick to its hawkish stance with regards to its monetary policy today amid signs of slowing economic growth in the Euro-zone. So on a broader and longer term scale it seems that the when the U.S economy will be in reparation phase the Euro-zone economy may very well be falling into the dark pit of slowing growth and rising inflation. This is one of the main explanations for this weeks' greenback rally as at the end of a dark tunnel there is always light. Also the fact that the greenback is currently appreciating while there is very negative U.S data is another sure sign that this rally could be the beginning of a longer term trend.

Yesterday there was no real market moving news from the U.S and traders will shift all their attention to today's interest rate announcements by the ECB and the BoE, therefore the greenback is likely remain relatively flat leading up to the announcements and the speech by President Trichet. However there could be sharp volatiliy on the back of these economic announcements. Traders should remain cautious as we could be at the beginning of a rallying greenback trend, which is not sufficiently justifiable at the moment.

EUR

There was no significant data released from the Euro-zone yesterday but the EUR continued to depreciate as traders remained cautious ahead of today's ECB meeting. The Euro-zone economy suffered a solid blow on Tuesday when the Euro-zone PMI released unexpectedly weaker, indicating a serious deterioration in demand and that the U.S economic slowdown is now spreading into the Euro-zone. The ECB is expected to keep interests rates unchanged at 4.00%, despite falling growth as it maintains its hawkish stance with regards to inflation. However as a result of falling growth the ECB will encounter criticism and an overly tight monetary policy may damage the ECB's credibility. Also investors will closely watch President Trichet's speech that will follow the interest rate announcement for clues on future monetary policy and how the ECB is planning on tackling the issue of slowing growth and rising inflation. This is a very pivotal moment for the Euro-zone economy as growth is slowing so today's monetary policy by the ECB will have tremendous significance in determining the future direction of the EUR. The EUR should experience some sharp movement all across the board on the back of these news events today. Elsewhere, the BoE will also announce its benchmark interest rate and it is expected to cut rates by 0.25%, from 5.50% to 5. 25%. The UK economy has been severely hit by the spreading credit crisis, particularly the Northern Rock Bank, which is one of the major UK banks. Therefore the UK economy has been on slumping ever since the credit crisis emerged and so the BoE may attempt to stimulate the economy by cutting rates and thereby making credit more available. However the BoE will struggle to balance slowing growth and keeping inflation within targets. The GBP has been weakening steadily throughout this week against the greenback and once today's rate cut is behind us the GBP should consolidate in the near term.

JPY

The JPY continued its bullish surge yesterday as carry trades continued to unwind ahead of today's two major interest rate announcements by the BoE and the ECB. Also another major contributor to the current carry trade unwind was the fact that Asian stocks posted their biggest loss in over two weeks as a result of concerns over the state of the global economy. The JPY is likely to continue to appreciate as long as risk-aversion maintains a strangle hold on investors. Earlier today during the Asian session the only news released out of Japan was the Machine Tool Orders figure, which measures the total value of new orders placed with machine tool manufacturers, and it remained unchanged at 3.7%. The only other important news to be released from the Japanese economy this week will be the Core Machine Orders, which measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. This figure is expected to come in significantly better than last month's figure of -2.8%, at -1.0%. This is very positive for the Japanese economy as when manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansion phase. However this data is unlikely to cause any sharp movements in the JPY as the JPY gains remain consistent with the current situation of higher risk aversion.


Technical News

EUR/USD

The pair is trading in a range for the past three days showing after the previous sharp bearish correction and is now consolidating around 1.4620. The 4 hour chart is showing first buds of a bullish momentum whereas the daily chart is still bearish. Selling on high might be preferable today.

GBP/USD

The 4 hour chart is showing that the bearish momentum is regaining strength. The slow stochastic indicates that this trend might continue until the cable reaches the 1.9520 level. The daily studies confirm the bearish notion, and it appears preferable to go short today.

USD/JPY

The ongoing tight range continues without a break of any significant importance. The daily chart is maintaining a slightly bearish indication yet with no distinct conclusion. The Bollinger Bands are tightening which indicates that the break might be imminent. Traders are advised to hold for the break and then swing into it.

USD/CHF

Due to high momentum, it looks as though the bullish correction will continue. The RSI and slow stochastic of the 4 hour chart are showing a floating status which strengthens the notion that the bullish move might continue. The current target price is around 1.1040.


The Wild Card

Crude Oil

There is a narrowing bearish channel forming on the 4 hour chart as Oil now floats on the upper level of it. All oscillators show that an additional bearish break through the 86.20 level will unleash a much stronger bearish move which can provide Forex traders a great opportunity of a strong swing.

 

[forexyard]

11/02/'08 - UK's PPI Input & Trade Balance.

Economic News

USD

The greenback began the week on a slight downward trend following some concerning news from the G7 over the weekend. After a meeting of the leading industrial nations in Tokyo, the G7, without specifically singling out a specific country voiced its growing concerns over the trembling global market. The US economy, while not being the sole catalyst has magnified the situation that much more, as the housing and credit crisis in America continues to press on. These issues coupled with the uncertainty of financial markets contributed to losses for the dollar against its major rivals as the new week began. The greenback was down nearly 25 pips in early Monday trading against the EUR at 1.4529 following a positive showing on Friday which saw the currency dip below the 1.45 EUR/USD support level ahead of the G7 meeting over the weekend. Similar results were seen against the Sterling, and while not nearly as significant, the move still concerns some dollar enthusiasts as most good performances by the dollar lately have not lasted very long. With another week of essential economic data on tap, many investors expect a bearish dollar trend to develop.

The US is expected to release a batch of important economic data that will likely map the near future for the dollar. Retails Sales, Trade Balance, TIC Net Long-Term Transactions and Consumer Sentiment are only some of the more standout figures expected to affect trading throughout the currency market. Thursday, traders should expect a speech from Fed Chairman Ben Bernanke, which according to the results from the aforementioned data, could dictate the reaction by the Fed as it tries to ease pressure off the greenback.

The dollar faces significant risk over the next week or so if it can't pose a big enough rally, as the EUR, Sterling and JPY will continue to eat away at gains made at the end of last week. Barring a standout result from economic data and consumer confidence from the US, the dollar could face another costly drop this week, especially with the ongoing rise of gold prices.Today's US calendar has no economic data scheduled for release.

EUR

The EUR spent most of last week fighting off a string of negative data and rising concerns of a heavy slowdown in the Eurozone economy. As production numbers throughout the major European nations continued to be released the EUR managed to slip over 300 points against its staunch rival the greenback before ending Friday trading just above 1.45.

The weakening state of the Eurozone economy has convinced many that ECB President Jean-Claude Trichet will cut interests rates to ease growth related pressure. This would be a move in a different direction as the hawkish stance held by the ECB had led many to believe that if any action was taken, it would have been a rate hike.

The week ahead will produce a set of economic data that should help the EUR recover from last week's turbulent performance. French Nonfarm Employment, French and German GDP, Industrial Production, German ZEW Economic Sentiment are all on tap, as the week will begin with today's release of French Industrial Production. As data is expected to disappoint, two separate speeches by ECB President Trichet later this week should give us an idea how serious the Eurozone slowdown is.

JPY

Despite the fact that U.S. stocks continued to weaken and last Fridays' Eco Watchers Survey printed at weaker than expected, carry trades have since stabilized. Overall, the JPY finished off trading last week 0.2% higher at 107.32, as investors looked across the water to Europe and the U.S. to find more attractive returns on their money. According to the latest Tankan survey most Japanese corporations forecast the value of USD/JPY in 2008 to be at around 113.00. With the pair now trading at 107.30 those hedges are deep in the red indicating that profit margins for exporters will suffer.

Today, the Japanese market will be closed due to the National Foundation Day. Currency markets are expected to be relatively quiet with Japan on a holiday, and there probably will not be too much volatility in the wake of Friday's Interest Rate Announcement and the BoJ Monthly Report. In the week's Japanese economic calendar, we will also see the release of GDP numbers as well as several industrial figures.


Technical News

EUR/USD

An ascending triangle structure is forming on the daily chart which implies a bullish comeback with a first target price of 1.4623. The ascending triangle may offer even more significance as the top barrier is located at 1.4878 and the Slow Stochastic was crossed at 12, indicating that there is more room for the bullish trend.

GBP/USD

The daily chart is bullish as the Slow Stochastic crossed at 10 and the RSI shows a positive slope. The next resistance level is located at 1.9568, and the next support level is at flat 1.9400. If the cable drops sharply beyond that level, a strong bearish move might be in place.

USD/JPY

The trendless tight range the pair has been going through continues with no hint of a distinct direction. The 4 hour chart is indicating that locally the move within the channel is bearish. Traders must wait for a significant break on any side in order to swing back in.

USD/CHF

The 4 hour chart is showing a classic reversal formation in the form of an upwards channel. The channel is supported by a cross in the slow stochastic which indicates that the bullish move might be quite imminent. Going long appears to be the right move today.


The Wild Card

GBP/JPY

There is a very distinct downwards channel forming on the 4 hour chart as the pair now floats around its upper level. The RSI and slow stochastic are floating in the mid section which indicates that the next move would be towards the bottom of the channel. This could be a great opportunity for forex traders to enter the market on a short position with a chance that a bearish break beyond the channel will unleash an even stronger move.

 

[forexyard]

12/02/'08 - Greenback Indifferent to Poor US Data.

Economic News

USD

In spite of last week's disappointing US economic calendar, with most of its indicators printing much worse than expected, the greenback is behaving as if there were no fundamental data at all. Through the last week, the USD gained 300 points in a near vertical fashion as market sentiment changed completely from focusing on US economic woes to worrying about the slowdown in the rest of the world. The string of negative data from the US markets leaves little doubt that the Fed will probably continue to lower its interest rates, perhaps to 2% by the middle of this year.

The U.S. economy has benefited substantially from increased trade and from the rapid growth of exports. Changes in terms of trade associated with recent exchange rate trends made American goods cheaper relative to those of some other countries. But the overall U.S. Economic growth in the fourth quarter of 2007 slowed to a 0.6% annualized pace, and U.S. employers cut jobs in January for the first time in four years, raising concern about a possible recession. Indeed, President George W. Bush's administration predicted U.S. economic growth will weaken in the first half of 2008 and accelerate later this year, buoyed by exports and tax rebates.

Today, for the second consecutive day, there is no economic data expected to come out of the US markets. It's most likely that the greenback will perform solidly today against the majors. As for the rest of the week, the fundamental data could play a much more critical role as traders will get a look at Retail Sales, Trade Balance and TICS. Federal Reserve Board Chairman Ben S. Bernanke is scheduled to testify Feb. 14th on the condition of the economy and financial markets to the Senate Banking Committee.

EUR

Over the weekend, ECB President Jean-Claude Trichet attempted to refocus markets on Euro zone inflation, however market skepticism continued as a string of weak economic data hurt the EUR. Steep declines within the service sector were one of the main catalysts behind the bearish trend of the 15- nation currency. It was the first time in 2008 that the market saw credible evidence that the EZ economy is not immune to the US slowdown and that an interest rate cut within the near future is unavoidable.

Lately, the Forex market has reflected that leading economies cannot tolerate a weaker greenback, as it is noticeable that in spite of negative figures from the US economy the greenback is strengthening. This behavior is indication that the weakness of the Euro zone economy is legitimate and should continue to reduce EUR value.

Traders should pay attention to the fact that the Euro zone's building price pressures are hurting consumer income and piercing profit margins for businesses, as this is only the beginning of what could be even more detrimental losses. The European Commission's flash estimate for January CPI surprisingly rose to a 14 year high of 3.2%, which puts the European Central Bank into a tight corner and stifles their ability to maneuver regarding monetary policy. Today, the German ZEW survey is due to be released as well as Euro zone Investor Sentiment, which is anticipated to deteriorate even more, as another fall for the ninth straight month is expected. The figure is forecasted at -45.0, the lowest number in almost 15 years.

Forex traders are expecting the Euro zone GDP on Thursday, which will hold as a good measure of the negative impact being experienced as a result of the US slowdown. GDP data is forecasted at 0.4%, down from the last figure of 0.8%, as the market already expects more lethargic growth. If however, the data comes back with on the upside, some of the major concerns facing the EUR could slowly fade away.

JPY

General market unease helped the JPY continue to benefit from heightened global risk aversion, edging higher yesterday against the USD at 106.30. Last weekends' Group of Seven Industrialized Nations meeting in Tokyo offered little news for foreign exchange markets. Finance leaders' focus on the crumbling U.S. housing market and its impact on world economic conditions and bank lending added to risk aversion, thus helping the JPY.

Today, will be very light on market moving news from Japanese markets with only CGPI and Current Account due to be released at 23:50 GMT. The CGPI, Corporate Goods Price Index, measures the rate of inflation experienced by corporations when purchasing goods. The Current Account measures the quarterly difference in value between imported and exported goods, services, income flows and unilateral transfers. Both of the indices are not considered to be market movers. Today, the USD/JPY still remains vulnerable to risk aversion sell-offs. The JPY should continue to range trade at current levels and may even retreat slightly.

The week ahead will feature several key pieces of data from Japan, including January consumer confidence,Q4 GDP, industrial capacity and more importantly, the Bank of Japan monetary policy decision. Also, the BoJ will release its February monthly report.


Technical News

EUR/USD

The pair is in the middle of a corrective move which seems to have some more steam in it. The slow stochastic and RSI are floating around 50 in the 4 hour chart. The break beyond the 1.4500 was validated which indicates that the next target price might be 1.4590.

GBP/USD

The daily chart indicates on a strong bullish reversal after a very long and consistent downtrend. The bullish cross on the daily slow stochastic together with positive slope of the 4 hour chart, indicates that the cable might be testing 1.9700 quite shortly.

USD/JPY

The pair marked more than a month of a very tight range trading with no significant breaks. The Bollinger bands are tightening on the daily chart which indicates that a break is quite imminent. The positive slope on the daily slow stochastic indicates that the break might very much occur on the bullish side, with a target price of 108.50.

USD/CHF

The corrective move which was initiated in 1.0760 is losing momentum. The 4 hour chart is showing that there is little room left for the move, and the daily chart is showing its first signs of a reversal. A preferred strategy might be to wait for a clear bearish signal before entering the market.


The Wild Card

GBP/JPY

The sharp bullish move that can be seen on the 4 hour chart indicates that the positive momentum is back with regenerated energy. All oscillators are supporting the bullish notion and forex traders can enjoy the regeneration of oil's ongoing journey to the 100$ level.