ForexYard's Commentaries - page 16
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08/04/'08 - FOMC Meeting Minutes
Economic News
USD
The USD rose against the EUR yesterday on speculation the Fed is close to ending the biggest series of Interest Rate reductions since 1984. Stability in equity and credit markets raised optimism that the worst of the financial crisis might be over, encouraging investors to buy riskier assets. Yesterday, the U.S. currency advanced 0.3% to 1.5693 vs. the EUR, however later deteriorated and closed trading at 1.5718. The greenback has been receiving support after the recent stabilization of the financial markets, as seen by Lehman Brothers, UBS and now Washington Mutual having the ability to raise cash, will allow the Fed to refrain from further rate cuts.
While sentiment toward the dollar had improved, worries about the overall health of the U.S. economy continued to cast a shadow over the market, restricting the greenback's gains. The U.S. central bank has reduced the federal funds rate by 3% since September, pumped $628 billion through the financial system, and allowed securities firms to borrow directly from it for the first time since its creation in 1913. Rate futures are pricing in a roughly 36% chance of a 50 basis points rate cut at the end of this month. Traders await this Friday's G7 meeting in Washington, D.C. to see if policymakers will agree on a plan to support the dollar because rising exports may be the only blessing of a weak currency in a slowing economy.
As for today's calendar, we expect Pending Home sales to have improved slightly in February to a level of 86.3 from 85.9 in the previous month. We also expect the FOMC Meeting Minutes which will contain detailed record of the committee's interest rate meeting held about two weeks earlier and might shed some light on future monetary policy. The USD, and US equity markets will most probably sail quiet waters until the release of the FOMC March meeting minutes at 14:00 EDT, which will than might push the greenback further up.
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EUR
Traders supported the 15-nations currency on possible grounds that the ECB is widely expected to leave its key interest rate on hold without any reduction at 4 %. If the ECB does not reduce the key interest rate as widely forecasted, it will be an additional indicator for the wealth of the EUR-zone economy compared to the US, insuring again that the Euro-zone economy was not that badly affected by the financial crisis in the US markets. However, it seems that the UK economy was badly affected by the US's financial crisis. The Bank of England, which also meets on Thursday, is expected to cut the country's key interest rate by 25 basis points to 5%, trying to avoid a local rescission and to stop the effect of the financial crisis over the Atlantic. There is no expected important economic Data release in the Euro-zone today. Traders should follow the US's Pending Home Sales report release at 14:00 GMT and the FOMC Meeting Minutes at 18:00 to adopt a wide direction of the EUR/USD today.
JPY
The yen decreased against all of the major currencies as a rally in stock markets worldwide encouraged investors to buy higher-yielding assets funded by loans in Japan. The yen fell 1.2% to 102.67 against the dollar at 12:30 p.m. in New York, from 101.47 on April 4. Japan's currency declined 1% against the euro to 161.30, from 159.69. Data released in Japan overnight saw the February leading index of economic indicators rise to 50.0 from a revised 36.4 in January while the Coincidence Index improved to 44.4 from 20.0 in January.
The Bank of Japan Rate decision on April 9 will most probably keep its target lending rate unchanged at 0.5%, the lowest among industrialized countries, as economic expansion cools, according to all 41 economists surveyed by Bloomberg News. Traders see a 59% chance the bank will cut the benchmark rate by year-end, according to JPMorgan Chase calculations. The tight expected monetary policy and few optimistic opinions on the future status of the US equity market will probably take the USD/JPY to a moderate bullish trend as the Japanese economy continues to weaken steadily.
Technical News
EUR/USD
The daily chart is still very bullish as both the slow stochastic and the RSI are floating in mid level of 50. The 4 hour chart is showing a moderate bearish reversal signal, and the 1 hour chart is indicating an imminent bearish trend. Buying on dips with a very tight stop might be a smart strategy.
GBP/USD
The cable is testing the key Fibonacci level of 1.9810 and is the middle of a very strong bearish trend. A breach through that level will validate a much stronger bearish trend that might take the pair to the 1.9730 zone. Going short might be the right path today.
USD/JPY
The bullish channel continues at full steam, as the 4 hour chart is showing that there is still much steam in the trend. The daily chart is showing a double doji formation with a bearish cross on the slow stochastic which might indicate a moderate corrective move before the bullish trend resumes. Buying on dips might be a great strategy for that pair.
USD/CHF
The daily chart is showing that the pair has been range trading with no distinct direction for a while now. The 4 hour chart is showing no clear signals as the RSI and the slow stochastic are floating on neutral territory. Traders are advised to wait for a clear signal before entering the market.
The Wild Card
Gold
There is a very distinct bullish channel forming on the 4 hour chart as gold now floats on the bottom barrier of it. It appears that if a significant breach through the 919.00 will not occur, the bullish channel will resume at full steam. This is a great opportunity for forex traders to swing into the bullish trend at a great entry price.
09/04/'08 - Ears Poised For Bernanke's Speech
Economic News
USD
Yesterday, the Greenback spent most of the trading day with bullish momentum against a majority of its currency pairs and crosses. This despite a day of disappointment from US economic news. As the financial world awaited the results of the Federal Open Market Committee (FOMC) Meeting Minutes, the assumption amongst investors was that the summary of the news would be so bad for the US economic outlook, that the dollar would suffer big losses. Though the meeting minutes were released and gave no real positive outlook for future economic progress, a sense of urgency still exists amongst investors regarding a slowdown in growth. Still though it is unknown what the real catalyst behind the bullishness has been.
One of the key points of the FOMC Meetings was the discussion of the value of the Dollar and the need or lack there of for another rate cut. Two of the more hard-line Fed bosses, have not shied away form their suggested 75bp rate cut, but instead have embraced what seems to be the foundation of a successful direction for the dollar. It would still be irresponsible for any analysts to use such contrasting results as reasoning for greenback movement. Also released yesterday was the index for Pending Home Sales, as the figure returned to its lowest point since as the creation of the index in 2001. Sinking just under 2% in one month, this figure could once again stir up some uncertainty about the ailing housing market.
The current credit crisis and housing issues have become indefinite realities as the US braces itself for more economy changing news throughout the week. As we look ahead to Friday and the beginning of the G-7 Meetings, it is important to note that amidst all the poor economic data of the past week and a half, including a record drop in Non-Farm Payrolls, the greenback is still being traded with confidence.
Today, we await several events on the US economic calendar. Crude Oil and Wholesale Inventories are both expected today and should have little change in market conditions, barring any drastic movement in the inventory figures. The more relevant events of the day will come from two of the FOMC's more influential title holders, as we expect speeches from Dallas Fed President Fisher and Fed President Ben Bernanke. These two should contribute directly Dollar movement, as history has shown us in the past. Expect dollar movement to be some what unknown until midday, where the release of events to come will likely shape the outlook of the day for the dollar.
EUR
The EUR spent most of Monday range trading due to the absence of any Euro-Zone related events on the economic calendar. It has become evident that the EUR is notching a dominant line in the battle for the world's most appealing currency. As we are less than one day away from EUR and GBP Interest Rate announcements it is clear to see the difference between the two currencies, and coupled in with the USD, the issue is only magnified. The British currently find themselves in a position similar to that of America, as a slow-down in growth is currently pushing investors further and further away from GBP and USD and closer to the EUR. As we await the commencement of the G-7 conferences, Expect the EUR, amidst reoccurring hawkish monetary policy from the E-Z to make slow strides against its most oft traded pairs.
On tap from the Euro-Zone today, we await the release of two mildly relevant events. Euro-Zone quarterly GDP and German Trade Balance figures will likely contribute little to EUR movement in the currency market. It is likely that the EUR will respond to outside news events in a positive manner throughout the day, and will see small rises if any in its value.
JPY
Risk behavior returned to the market yesterday as a wide range of economic data provided mixed results regarding the credit crisis being felt around the world. There looks to be a concerted effort by world financial organizations to stamp out the credit crisis once and for all. To do so would be a naturally risky move, one that would bring great liquidity to the Japanese market and the JPY.
The intervention of the IMF into global matters concerning the sub-prime crisis, suggests that the severity of the problem is far deeper than most would think. The near 1 Trillion dollars in losses that financial institutions could be forced to suffer is something that needs to be avoided, but not at the expense of any other economic aspect. The JPY now becomes a centerpiece, as carry trading is one of the more lucrative moves in the currency market and almost always includes the JPY. In other JPY related news, the Japanese Government approved the permanent appointment of Massaki Shirakawa. The appointment comes after weeks of tug-o-war within the Japanese Government. What can be said is that any stability from the office of the BoJ should contribute to possible JPY bullishness.
Today, we can expect a host of Japanese events. The BOJ Monthly Report, Machine Tool Orders, Core Machinery Orders, Current Account and M2+CD Money Supply are all expected to be released to mixed results. The JPY is poised for a breakout, the question simply becomes when. Today we also expect Interest Rate Announcements for the JPY, as expectations have the benchmark 0.50% rate staying put, as the current state of the BoJ is still unsure.
Technical News
EUR/USD
The pair is consolidating at 1.5710 and appears to be accumulating momentum ahead of the next break. The 4 hour chart is showing moderate bullish momentum, and the daily chart is showing that there is still more room to run, probably towards the 1.5800 zone.
GBP/USD
The cable is in the middle of a very sharp bearish trend after the breach through the 1.9800 level. The slow stochastic is showing a negative slope on the daily chart, and it appears that the bearish trend will continue. Going short might be a very wise choice today.
USD/JPY
The pair is still traded within the bullish channel as the direction is currently unclear. No significant breach has been made in either direction, yet there is a bearish hint in the form of a cross on the 4 hour Slow Stochastic. The Bollinger Bands are tightening which indicates that the break is near. Going short with tight stops might be smart today.
USD/CHF
There is a very distinct flag forming on the daily chart as the pair now floats at the tip of the flag. The slow stochastic is showing a bearish cross which might result in a breach through the bottom section of the flag. Traders are advised to wait for the bearish breach before swinging into the trend.
The Wild Card
Gold
The very accurate bullish channel has been breached, and gold is now in the middle of its bearish corrective journey. All oscillators are bearish, and forex traders have a great opportunity of taking advantage of this sharp technical event. Going short appears to be the right direction today.
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14/04/'08 - U.S. Retail Sales On Tap.
Economic News
USD
Last week we saw the return of significant volatility to the Forex market. Amidst fears of Recession in the US, due to the housing and credit crisis as well as poor labor numbers, investors once again became weary of the dollar. The last part of March heading into April saw the greenback swing up and down after a host of key events and interest rate cuts dictated its movement. Different to last week, was the concern voiced by top US officials about Recession, this was also accentuated by what experts have called the most concerned American consumer base in the last 25 years. In response to worries, the dollar fell against most of its major currency rivals, seeing record lows versus the EUR. The $159.13 rate had some believing the dollar would see drastic losses, as the week ended the pair closed at a little over 1.58.
This weekend saw the Group of Seven (G-7) Finance Ministers and Central Bankers met in Washington D.C. Economic leaders from the United States, Japan, Germany, United Kingdom, France, Italy, and Canada met to discuss a host of economic issues. Surprising to some was the amount of concern held toward currency values and interest rates. It is no secret that the US and to some extent the UK have has to use interest rate cuts as last resort solutions to stopping the economic crisis that face their nations, especially in the US. The concern voiced over the dollar sent a shockwave through the currency markets, as weekend movement helped the opening of the EUR/USD pair in the Forex market to drop 150 pips.
The specific concern is the fear that unstable exchange rates will retard the world economies marketplaces. Also becoming increasingly worrisome is the rise in food prices around the globe. Essentials like Rice and Wheat have seen abnormal price gains, to the extent that countries both rich and poor are feeling the effects. As a result of the development from these meetings, investors are expecting more dollar bullishness mainly against the EUR. Investors will likely look to buy dollars to recover losses felt from the weekend shift in prices.
Looking ahead to this week, we expect to see a host of key economic data from the US which if positive could contribute even more to dollar bullishness. With intervention unlikely at this point by the G-7, US data will likely drive market trends. This week we expect to see a wide range of figures from all economic and production sectors in the US. Most notably, we await the release of the Empire State Business Conditions Index, PPI, TIC Net Long-Term Transactions, Core CPI, Industrial Production, Unemployment Claims and the Philadelphia Fed Manufacturing Index, all of which can contribute to movement in the market. These will be headed by today's release of Core Retail Sales, as the index is expected to show that last month saw a small rise in retail sales. We can also expect Business Inventories and a speech by Fed Governor Warsh. Volatile movement surrounding the Retail Sales release is likely; as a result bullish dollar behavior should be expected.
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EUR
The EUR spent most of last week gaining against most of its currency rivals, namely the dollar, as a combination of positive Euro-Zone figures and poor US data sent the 15-Nation currency to record highs versus the greenback as the pair hit 1.59 and above.
Amongst last weeks volatility in American and Asian markets, the Euro-Zone showed once again that though inflationary concerns loom, stability and growth are helping carve out a reputable name for the EUR. ECB President Jean-Claude Trichet was steadfast with his hawkish stance on Euro-Zone monetary policy as yet another EU interest rate announcement passed by with no change. Last week the release of German wholesale numbers came back higher than expected, as it reaffirmed the one slight concern in the Euro-Zone which is inflation. As stated earlier, the G-7 meeting changed quite a lot as the EUR saw the greenback leap 150 pip to open Sunday's trading session, as other EUR crosses saw steady results. This week will be a news event dominated by the US as only significant European data will be the German Ifo Report. We should expect steady EUR growth, except for the famed EUR/USD which should continue to fall.
JPY
Despite broadly weak data the JPY managed to gain last week, as unsavory conditions for the carry trade weighed on the USD/JPY following the G7 finance ministers statement that global economic prospects have weakened and financial market losses will continue.
The Yen also rose against all of the major currencies as General Electric Co.'s first quarterly decline in profit since 2003 led to sharp declines in stocks and encouraged investors to reduce holdings of higher-yielding assets. The JPY first dropped to as low as 101.97, down from around 101.00 level in late New York trade, but later trimmed its losses and stabilized around 100.89.
In the next 48 hours, there is no fundamental data expected to come out of the Japanese market. Later, on Thursday, the news suggests that Japanese Industrial Production and the Household Confidence will remain low for the foreseeable future. Today, traders should keep an eye on the U.S. Retail Sales data as higher then forecasted printing might pull the U.S. currency up against the JPY.
Technical News
EUR/USD
After a very sharp drop at the opening session which took the pair on a dip of 150 pips, there is a certain consolidation around 1.5720. The daily chart is showing renewed bullish momentum, and the hourlies support. It appears that going long might be the better choice today.
GBP/USD
There is a narrowing bearish channel forming on the daily chart, as the cable now floats in the middle of it. The slow stochastic shows a negative slope and indicate a possible continuation of the bearish trend. If the cable will breach the 1.9680 level, we should be expecting a very sharp bearish drop to follow the breach.
USD/JPY
The momentum which was created after the pair breached through the very accurate bullish channel continues with full steam. All oscillators are showing very bearish momentum and it appears that the pair might have a target price of 100.00 on this move.
USD/CHF
The range trading continues without a distinct breaking direction. The daily chart is giving mixed signals and is mostly floating in neutral territory. The hourlies are showing moderate bearish momentum. It appears that going short with very tight stops might be a good decision today.
The Wild Card
GBP/JPY
There is a very interesting widening bearish channel formation on the 4 hour chart as the pair now approaches the bottom section. The momentum is very bearish according to all oscillators, which provides forex traders with a great opportunity to swing into what appears to be a very strong bearish move with a potential to be even stronger.
16/04/'08 - US Core CPI
Economic News
USD
Yesterday, the Greenback spent most of the trading day with bullish momentum against the majority of its currency pairs and crosses on the back of surprisingly strong U.S inflation and manufacturing data releases. The greenback added 0.35% to its value against the EUR locking the session below the rate of 1.58, after the first day this week for the USD to appreciate. Also, the strong U.S data release assisted the USD recovery against the Sterling and the JPY, stopping the bearish momentum which characterized the USD since Bernanke's speech last Wednesday.
We see yesterday's surprisingly strong U.S. economic data as a benchmark in the US financial crisis calendar. Those figures could be the first that clearly indicate that the US market is better condition than previously perceived.
March's PPI release yesterday came at the reading of 1.1%, well above February's inflation rate of 0.3%. Also, the important figure of the Empire State Business Conditions Index, which measures the general business conditions of manufacturers in New York State in March, showed a much higher than expected level of general business activity at the rate of 0.6, well above February's reading of -22.2. The figures released yesterday, combined with higher than expected cross-border foreign and domestic purchases of long-term securities in March, raise speculations that the sharp financial crisis in the U.S. seems to be controlled and finally restrained by the Fed's actions and interest rate cuts. Those positive figures also assist strong probabilities that the Fed is not likely to cut the key interest rate more than 0.25pts at the next FOMC meeting, if there will be a rat cut at all.
Today's colander is full of figures that could continue the USD bullish momentum and send the greenback prices even higher. March's Core CPI release is expected to show a 0.2% increase from February. Moreover, the value of output produced by factories, mines, and utilities in March, measured by the Industrial Production report released at 16:15 GMT today, is expected to rise by 0.4% from February. Forex traders should follow this figure release because it could supply many indicators for USD behavior. It is also interesting to mention Oil prices, that hit a new record, above $114 a barrel, on supply issues and rising demand in China. But the main factor contributing to high Oil prices is the weak dollar itself. The greenback is currently trading around the 1.58 level against the EUR; making safer commodities like Oil more attractive for dollar investments. In addition, due to oil being dollar denominated, as the dollar weakens, Oil prices should increase by relatively the same percentage. Also today, traders will await the Fed's report on regional economic activity, known as the Beige Book. As a summary of economic conditions throughout each of the 12 Fed districts, the report could give key insight into how the FOMC will vote on April 30. Overall, the outlook for the USD seems favorable. The latest positive fundamental data signals that the Fed cannot keep cutting Interest Rates aggressively while the economy is not deteriorating as fast as it was previously expected.
EUR
The EUR dropped from an intraday high of 1.5875 after the ZEW Economic Sentiment showed investor confidence unexpectedly fell this month. The European currency also fell vs. the greenback on surprisingly strong U.S. inflation and manufacturing data. The EUR/USD last traded down 0.3% at 1.5802, following an overnight peak of 1.5875. The economic data from the Euro zone continues to suggest that the region is beginning to feel the impact of its relatively high exchange rates and slowing global growth. As the ZEW demonstrated, European consumer are becoming concerned about the inflation and impact of higher food and energy costs on European consumers. Today all attention will be focused on the Euro zone CPI inflation data. The market is expecting the figure to be left unrevised at 3.5%, the highest record level recorded since the launch of the EUR. However, if the indicator surprises with stronger then expected figures, it might further continue to support the EUR. Given market expectations for the ECB to maintain its focus on inflation and leave the Interest Rate policy unchanged - traders may expect the EUR bullish trend to continue during the near future. Overall, today's data may not make much of a dent and the EUR/USD could spend the rest of the day in a tense standoff between the bulls and the bears as traders search for the best opportunities to enter the market.
JPY
The JPY fell vs. the greenback on the release of strong U.S. inflation and manufacturing data. The positive outlook for the dollar was also supported by the market belief that the Fed may not need to cut rates as aggressively. The carry trade has been restored and risk appetite seems to have returned to the market.
Both the Bank of Japan and the Japanese government recently noted increasing economic risks in the U.S. and their negative effects on Japan's economy. This suggests the BoJ will not be raising the overnight interest rate from 0.50% anytime soon. In the following days, the Japanese currency will continue to heavily depend on the volatility of the equity markets.
There was no significant economic news coming out of Japan yesterday and today is also devoid of data. We should see the JPY continue on its bearish path. Forex traders should keep an eye on the economic events around the world, as today could prove to be another very volatile day for the Japanese currency.
Technical News
EUR/USD
The pair has been range trading with high volatility for a while now, and it appears that the bullish price movement might be back. The Slow Stochastic of the 4 hour chart indicates an upcoming test of the 1.5895 level. If that level is breached, swinging in the trend would be the best strategy.
GBP/USD
The bearish flag pattern still remains intact on the daily chart, as the cable now makes a local correction. If the 1.9720 level is not breached we should expect the bearish trend to continue back to the bottom barrier of the flag. Selling on highs might be a good choice today.
USD/JPY
The pair has been showing stable bullish movement since the end of March with very few corrective anomalies. The Slow Stochastic of the 4 hour chart is showing a triple top formation with a positive slope, which indicates that the price movement might still be bullish, but is approaching its final stage. Going long with very tight stops might be a good strategy today.
USD/CHF
The daily chart is showing that the pair still does not have a distinct direction, as the chart appears to be quite horizontal for the past month. The Bollinger Bands are very tight, and the 4 hour Slow Stochastic is showing a bearish cross. It appears that the possible next move might be a bearish one. In that case traders are advised to swing in after the break.
The Wild Card
Crude Oil
The very important resistance level of 113.00 was breached and the bullish move has been validated. The Slow Stochastic of the 4 hour chart is showing that oil still has plenty of steam in that move. forex traders have a great opportunity to join this very strong key break and enjoy the rest of the bullish momentum.
23/04/'08 - The USD Reaches All Time Low
Economic News
USD
The U.S. economy is facing fresh difficulties that will probably further dampen the national currency. Yesterday, the greenback tumbled to fresh lows trading as low as 1.6022 vs. the EUR after the European Central Bank policy makers signaled they may raise Interest Rates due to inflation concerns. The USD extended its drop against the EUR following the low printing of the US Existing Home Sales in March. Falling house prices and rising mortgage risks continue to slow the U.S. economic growth. As a result of shrinking sales, builders are forced to pare back construction and reduce prices. A tumbling dollar also prompted investors to purchase commodities. U.S. Crude Oil rose yesterday to a record 119.90 a barrel in New York, gaining on a Nigerian supply disruption and a U.K. refinery strike threat. Crude from Nigeria, Africa's biggest producer, is low in sulfur and is prized by U.S. refiners because of the proportion of high-value gasoline it yields. The falling dollar and higher global demand for raw materials have led to records this year for commodities including gold, corn, soybeans and rice. Today, there is no significant news expected from the U.S. markets. Traders should closely watch the fundamental data from the Euro zone as it may determine the future USD direction. Today, we may expect another volatile trading session for the greenback. There is a possibility that the dollar will further weaken, finally stabilizing above the 1.60 mark against the EUR.
EUR
The EUR rallied against the USD yesterday and traded above 1.60 after ECB officials said they are ready to increase Interest Rates if inflation doesn't slow. The EUR reached the 1.6022 level, but later gave back some of its gains, finally closing at 1.5978. A European Union report showed last week that annual inflation rose to a 16-year high of 3.6% in March. The ECB's concerns over inflation have increased with the recent rise in Oil prices and it has therefore sharpened its tone. Yesterday, ECB Member Noyer stated that the bank would do what is needed to bring inflation back to its target of just below 2%, adding the central bank would move rates if needed. Still, the ECB is seen keeping rates at least at a 6 year high of 4.0% for a while. In contrast, markets expect the Fed to lower benchmark U.S. rates further from the current 2.25% at a policy meeting expected on April 29-30. Today's European fundamental calendar is relatively stuffed with events. Service and Manufacturing PMI numbers will shed more light on how well the Euro zone economy is holding up given current market conditions. Also, ECB President Trichet is expected to deliver a speech later today in Spain. The speech will be closely followed by investors for hints on future ECB monetary policy. Today, we may see the EUR extending its gains vs. the USD if the Euro zone news will indeed surprise on the upside.
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JPY
The JPY depreciated vs. the USD yesterday after Oil prices hit a record high of $119.90 a barrel. The Yen tested bids around the 102.80 level and was capped around the 103.50 level.
The relatively strong Yen and the rise in raw materials costs is the worst combination the Japanese economy could wish for. The weak dollar continues to weigh heavily on exporters in general and Japan's automakers in particular.
Traders are also closely watching the food situation in Japan. Asian demand for rice remains very high. On one hand, Japan is facing a major food shortage, while on the other hand it imports more than half of the food it consumes. Yesterday's Trade Balance released at 0.77T, well below the forecasted figure of 0.89T. bLater today, we will see the All Industries Activity and the CSPI indices posting there results. Apart from that, Forex traders should keep an eye on the economic events around the world, as today could prove to be another very volatile day for the Japanese currency.
Technical News
EUR/USD
After a touch at the all time high of 1.60, and a failed attempt to validate a breach, the pair consolidates around 1.5980. The daily oscillators are very bullish, and indicate the continuation of the bullish trend. The hourlies are still moderately neutral and a local correction might be in place. Waiting for the validated breach beyond 1.60 and swing should be a very good strategy today.
GBP/USD
The 4 hour chart is showing a strong bearish cross on the Slow Stochastic and RSI is floating around 50. The daily chart is in neutral territory with no distinct signal on any side. Waiting for the bearish momentum to grow before entering the market could be a good choice today.
USD/JPY
There is a very distinct bullish channel forming on the daily chart, as the pair now floats in the middle of it. The daily Slow Stochastic is bullish, and the hourlies confirm the bullish notion. Going long appears to be a preferable strategy today.
USD/CHF
The range trading the pair is going through in the past month is forming into a horizontal narrowing flag, as the pair now approaches the end of it. The momentum is moderately bullish, and the Bollinger Bands are very tight, which together indicate a potential move quite shortly. Traders are advised to wait for the breach through the flag before swinging, as it might be quite strong when it occurs.
The Wild Card
Crude Oil
The violent bullish trend continues at full steam without showing the slightest pause for consolidation. A fresh all time high has breached on a daily basis, and the end doesn't appear to be close. Forex traders are advised to join the bullish trend with relatively loose stops, until the first signal of a slowdown is received.
24/04/'08 - USD Saga Continues.
Economic News
USD
Yesterday, the Greenback spent most of the trading day with bullish momentum against the majority of its currency pairs and crosses. The USD gained almost 0.9% and closed trading around 1.5850 vs. the EUR after it previously dropped to 1.6019, the lowest level ever. The dollar gained after a weak printing of the European manufacturing activity suggested that economic growth in the Euro zone is starting to slow.
European Economic data and official comments start to turn against the Euro and in favor of the US dollar. Comments made by the ECB Governing Council member Noyer yesterday, dampened speculation of the possible Interest Rate increase in Europe, giving the USD another push forward. Fed fund futures are currently pricing in an 82% chance of a quarter point rate cut next week with the remaining 18% probability in favor of no rate cut at all. This is a sharp change from just a week ago when the market was estimating a 76% chance of a 25bp cut and a 24% chance of a 50bp cut. The only reason for this dramatic shift in expectations is the increased inflationary pressures.
Today, we await several events on the US economic calendar. Durable Goods Orders and Unemployment Claims are expected to show improvement from the previous month. Later today, the New Home Sales figures are also expected to attract trader's attention. Earlier this week we had better than expected US housing market numbers. We would not be surprised to also see a recovery in new home sales. These two should contribute directly USD movement, as history has shown us in the past. Expect the USD to have another volatile trading session today. The release of today's fundamentals will likely shape the near tem outlook for the greenback.
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EUR
The EUR spent another day on the bearish side of trading yesterday, as it lost ground for the second day against the US dollar closing at 1.5873. During the week the EUR/USD broke new records going above the 1.60 mark which slowly hurts Euro-economic zone. With a full schedule of events from Wednesday, a basket of mixed results sent the EUR falling most notably against the Greenback. The downturn has been largely due to internal economic issues over the strength of the EUR. Manufacturing PMI numbers suffered yesterday and forecasts point toward business confidence sharing the same fate.
Today, German IFO Business Confidence Indexes are coming out, and the forecasts expect a decline for the month of April. IFO Climate and Expectations figures will must likely drop the EUR down further. The problems with the Euro-Zone now have some questioning the benefits of such a strong current. At 8 GMT along with the German IFO numbers we will get Euro-Zone Current Account details, which should not contribute to volatility. Later on in the day European Central Bank President Jean-Claude Trichet is expected to speak. His remarks generally bring volatility to the market. Looking forward to Friday's events, expectation for the M3 money supply are quite negative and with today's result might bring EUR/USD to new records.
JPY
The JPY saw mixed results yesterday as Dow Jones prices sparked some renewed interest in carry trading. While most JPY crosses lagged, the USD/JPY did rise 0.7 percent to 103.76 yen, from 103.02. Risk appetite has stalled in general, as many are still not seeing proper Equity market movement to take risks with the low-yielding currency.
Yesterday saw the release of CSPSI figures as well as the All Industries Activity Index. Both came back with negative results but had little effect on the market, as most of the movement came from global news events. Later today Japan's Core CPI and Core Tokyo CPI will be posted; expectations are mixed. And Friday will be a slow news day.
With rice achieving new records on the Chicago Mercantile Exchange going as high as $894 per metric ton, consumers in the United States are being limited in their purchasing ability. This new record is caused due to poor harvests and is derived from the laws of supply and demand. Given the published indicators from yesterday, the Yen's bearish movement, high rice prices and the expectations today we should assume a continuation in this downward direction.
Technical News
EUR/USD
The pair has made a substantial bearish correction, and is now floating around a key Fibonacci level 1.5850. The hourly chart is showing a bullish cross with growing bullish momentum, which indicates that if a bearish breach through that level will not occur, we shall probably see the bullish trend resumes. Traders are advised to hold for the breaching attempt before making an entry.
GBP/USD
The 4 hour chart is showing that the bearish momentum is back with full steam ahead, as the cable lost more than 200 pips in the last 48 hours. The daily Slow Stochastic is showing no crosses, which indicate the continuation of the bearish trend. Going short appears to be preferable today.
USD/JPY
There is a very distinct bullish channel forming on the daily chart, as the pair now floats in the middle of it. Both the daily RSI and Slow Stochastic are showing that there is still plenty of room to run up, and that the next target price might be 105.00. Going long appears to be the right choice today.
USD/CHF
The range trading on the daily chart is starting to form into a narrowing bullish channel. The pair if approaching the upper level of it, and with the very tight Bollinger Bands, the possible test of the 1.0230 appears to be quite imminent. Traders must pay attention for a possible breach which could create a great buying point for a strong potential bullish momentum.
The Wild Card
Crude Oil
The very strong bullish trend continues uninterrupted for the past month, as oil keeps ignoring all technical indications. The daily oscillators are showing a very bullish three top formation with a positive slope on the Slow Stochastic. This is a great opportunity for Forex traders to join the still very strong trend when the steam is still quite high.
28/04/'08 - USD Gaining Power
Economic News
USD
Last Friday, the greenback kept up its sharp bullish momentum against most of its major rivals. The USD gained as a result of favorable economic data, which was released from the US during the last week, combined with disappointing indicators released from the Euro-zone. The USD added almost 1% to its value against the EUR, appreciating from Wednesday's all-time low of 1.6017. The greenback also climbed to a 2 months' high vs. the JPY when it closed trading at 104.80.
By midday Friday, the USD strengthened against the EUR, trading in a range of 156.55 to as low as 155.90. Speculations on the FED halting Interest Rate cuts and a rally on the dollar during the week, which may have led investors into taking profit ahead of the weekend, supported the dollar during trading session.
It's a major shift in sentiment regarding the outlook of Interest Rates and we may see the dollar strengthening until the next Fed meeting. The perceived odds of the Fed keeping its benchmark Interest Rate unchanged at 2.25% at its meeting next week rose to about 26%, according to the futures. Just over a week ago, futures were evenly split between a 25- and a 50-basis-point cut.
Also, a number of important growth data will be released this week, including Q1 GDP, ISM Manufacturing and Non-Farm Payrolls. NFPs are expected to fall negative for the 4th consecutive month, indicating that consumer spending will continue to deteriorate as record high energy and food prices sap disposable income. Tuesday'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. Markets are expecting some poor numbers which does not leave much room for a downside surprise.
Until then, we expect last week's positive indicators to keep supplying traders with reasons to buy USD.
EUR
Last Wednesday the EUR reached a new all time record, rising as high as 1.6017 vs. the USD. That move took place after 3 bullish days for the 15-nation currency, mainly due to strong German data releases. However, between Wednesday and Friday, the EUR lost 2.7% of its value after weak indicators release increased inflation speculations from the Euro-zone. The EUR bearish movement came also as a result of strong economic data coming from the US. Recent positive US fundamental printings contributed to a stronger dollar momentum especially vs. the EUR.
The only important data released on Friday was March's German Import Price Index, which came out well above the expectations of 1.1%. This indicator, combined with the previous CPI and PPI reports from the Euro-zone countries, depicts a rather melancholic picture regarding the inflation rate in Europe, leaving investors with no choice but to go short on the EUR. As a result, the EUR/USD pair locked the session at the rate of 1.5627, losing 0.7% on Friday alone.
Looking ahead, this week will supply traders with many figures that may allude to the size of the impact of the US financial crisis over the Euro-zone economy, and could give traders a vision of the EUR direction for the short term. Today, March's CPI report is due to be published. The report is expected to show an extremely high rate of inflation in the Euro zone, 3.5% higher than last year's. Aside from that, traders should mainly focus on U.S developments. The U.S has a bundle full of data planned for this week. Traders should stay keen as this week is expected to turn extremely volatile.
JPY
The JPY depreciated sharply against the USD on Friday, as a part of the global bullish trend of the USD. The USD\JPY opened the trading session at the rate of 104.36, and locked at the rate of 104.70, growing 0.2% in one single day.
Japan's economy supplied traders with almost only negative data, raising speculations that the country is currently on the fast lane to local financial crisis and even a sharp recession, even though the world's economy starts to blossom and is showing signs of recovery. March's Tertiary Industry Activity Index, released on Sunday, came well bellow expectations with a reading of -1.7%, showing a deep damage to the services sector.
Also, Tuesday's Trade Balance report showed a non-expected sharp decrease in value between imported and exported goods and services. Last week's figures drew a very gloomy picture, reminding us of the late 80's financial crisis in Japan.
Considering that Japan is mainly affected by the Asian markets, and that its limited to only 3% imported rice, it is very interesting to see how the Bank of Japan will handle the increasing prices of cereals and meat. The BoJ have nothing to do with the increasing inflation rate and there is no key rate cut possible for the country. Today there is no trade in Japan due the Showa Day; traders may expect the Yen to remain calm and to be mostly sensitive to US data release. March's Industrial Production report, which is expected to be released tomorrow, is forecasted to show a 0.7% decrease in value of output produced by factories, mines, and utilities in Japan.
Technical News
EUR/USD
After bottoming at the key Fibonacci level of 1.5550, the pair is showing regenerated bullish momentum. The 4 hour Slow Stochastic is showing a bullish cross, and it appears that on the hourly level the next target price is 1.5680. Going long appears to be preferable today.
GBP/USD
The bullish momentum which was created after the breach of the flag is slowly diminishing. The daily chart is showing a increasing bearish momentum and the hourly Slow Stochastic is strengthening the bearish notion. With an estimated target price of 1.9710, it appears that going short might be a better choice today.
USD/JPY
The bullish channel on the daily chart is getting tighter, and the pair now floats near the upper section of it. The general momentum is very bullish, yet the hourlies are indicting a possible correction. It appears that buying on dips should be the best strategy today.
USD/CHF
The bullish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily Slow Stochastic is showing the continuation of the trend, and the hourly studies confirm the bullish notion. Going long might be the right choice today.
The Wild Card
Crude Oil
The failed attempt to breach through the bullish channel from the bottom section has caused the bullish momentum to regain its strength. Crude Oil is now showing extremely strong bullish momentum as seen by the hourly oscillators. This is a great opportunity for forex traders to join the trend, with fresh all time highs being breached on a daily basis.
29/04/'08 - U.S. Consumer Confidence On Tap
Economic News
USD
Yesterday the greenback showed off a bullish trend against its major currency rivals. It went through a bullish volatile session vs. the EUR, yet it lost strength against the GBP and the JPY. Even though the USD went through mixed trends yesterday, its main goal remained in tact as it kept a steady rate within the EUR\USD pair, trading around the 1.5645 range.
The most significant unfavorable news for the USD came from Japan. The Japanese who hold 12% of U.S government debt (over $550 billion) have suffered their worst quarter in treasuries in the last 10 years because the USD\JPY recently depreciated to its lowest rate since 1995. As a result, more and more Japanese investors are looking for different currencies to invest in, especially the EUR. Crude Oil seems to be another factor in the greenback's trend as it reached an all time high of $119.93 yesterday.
As for today, very meaningful data is scheduled at 14:00 GMT as the Consumer Confidence survey results are due. The figures are forecasted to decrease by 2.5 points, from 64.5 down to 62.0. The main reasons for the lower confidence are the worrisome employment situation, which count greatly in the survey, and the rising price at gas pumps, that rose by $19 over the last month. Lower reading points demonstrate certain pessimism by U.S consumers regarding the American economy, which may very well create bearish inclination within USD pairs.
Traders should stay tuned to the ongoing data releases from the U.S as it's looking to be a crucial point for greenback's future. Bullish behavior is imperative for the USD at the moment, as continuity of bearish trends might result in a long term falling trend for the greenback.
EUR
The EUR saw falling trends against its major counterparts yesterday, following a negative 0.2% decline in the German Consumer Price Index. Forecasts had the German CPI rising 0.2% this month after a previous 0.5% increase in March, however results were surprisingly worse than expected and the EUR had a bearish trend against the USD, slightly falling to the 1.5650 range after ending the previous trading day at a day high of 1.5680. President of the European Central Bank, Jean-Claude Trichet reiterated in a speech yesterday that the ECB considers that its current monetary policy stance, with its main interest rate at %4, will help achieve its medium-term price stability target and anchor long-term inflation expectations. Trichet pointed out that the ECB has injected a large amount of liquidity into the money market to ease tensions, yet it is focused on containing the inflation and will avoid changing its monetary policy stance and it seems that the interest rate will remain unchanged. It should be pointed out that the German Consumer Confidence did beat expectations and was announced at a rate of 5.9 vs. forecasts of 4.6; nonetheless this positive announcement was not enough to help the EUR rise after subpar German CPI results.
As for today, there are no significant economic results expected to be announced for the EUR currency. Traders should keep a close look at the result of the U.S. Consumer Confidence Index, which is expected to weaken compared to last month's results, and might reach one of its lowest readings in the last 5 years. If the Index declines significantly, the EUR will pick up a bullish trend against the USD. On the EUR's behalf, European Central Bank's Vice-President, Lucas Papademos will hold a press briefing in Frankfurt to present the second annual report on "Financial Integration in Europe", which should hint at the European Union's expectations of its economic growth.
JPY
The Yen appreciated versus its major currency competitors yesterday. This is reversal of the Yen's bullish trend from last week. The most notable gain was against the CHF as the CHF lost more than %1 against the JPY. In other important economic news from Japan, on Sunday Retail Sales rose slightly over the forecast to 1.1%. This increase was assisted by greater spending on fuel, due to higher global prices of Crude Oil. This rise is the eighth consecutive month in which Retail Sales increased, including a 3.2% rise from last February. Showa Day was observed in Japan on Monday and economic indicators were not published. Today the most important notable figure to be released is the Industrial Production, which measures the total value of output produced by industrial companies. The forecast is for it to come in as low as -0.7%, which should cause the JPY to trend downwards. The Japanese, who own 12% of U.S. government debt (586.6 Million), lost nearly 7% in the first quarter of the year when the Dollar fell to lowest levels since 1995 versus the Yen. Forex traders should expect a continuation of yesterday's bullish trend for the first half of the day, and a negative trend during the second half of the day after the publication of the new economic indicators. Volatility should be the name of the game today.
Technical News
EUR/USD
The pair has been going through a strong corrective move for the past week while breaching through several key Fibonacci levels. The bearish breach through 1.5670 has been validated, and fresh bearish momentum has been created. The next test should be around 1.5580 and if breached will cause the continuation of the bearish move.
GBP/USD
The 4 hour chart is showing the early stages of a bearish channel with the cable still floating near the upper barrier of it. The local momentum is still quite bullish and it appears that a test of 1.9920 might be quite imminent. A failure in the breach will probably lead to a fresh bearish move, with very high momentum potential.
USD/JPY
There is a very distinct flag formation on the 4 hour chart, as the pair is now bouncing up from the bottom of it. All oscillators are pointing up and the momentum is very bullish. It appears that the next target price might be around 104.95. Going long might be preferable today.
USD/CHF
The momentum which was created by the breach through the upper barrier of the channel on the daily chart continues with full steam. The 4 hour chart is still very bullish, as the daily chart is showing its first signs of a halt. Going long with very tight stops might do the job today, incase a bearish reversal will occur.
The Wild Card
Crude Oil
Breaching all time highs appears to be Oil's routine lately, and the today is no different. There is local bearish momentum created on the 4 hour chart, yet the daily momentum is still very high. Forex traders should look for a good dip to go long at, as the direction appears to be up.
15/05/'08 - Volatile Expected a Mixed Heavy News Day
Economic News
USD
Yesterday the greenback had a volatile trading session against its major currency rivals. It underwent contrasting trends vs. the EUR and the GBP and was bullish vs. the JPY. The main news from the US economy revolved around the Consumer Price Indices. The Consumer Price Index was released at 0.2%, a little bit lower than last month's 0.3% mark. The Core Consumer Price Index was also slightly lower than last month's 0.2% mark as it came in at 0.1% for April. The biggest repercussion from the reports is that the Fed can now cut rates once again if needed, rather than worry about rising inflationary trends. This very understanding might be what reversed the USD bullish trend into a bearish one.
Today, an extremely intensive news day can be expected for the US economy. First off on the day will be the Empire State Business Conditions Index. The index measures the general business conditions of manufacturers in New York State. Although the survey is limited to New York only, it's highly important as the New York Federal Reserve report serves as a precursor for national manufacturing numbers. Later on, the Treasury International Capital (TIC) Net Long-Term Transactions will be published. Analysts forecast it to release at 63.6B, well below last month's 72.5B mark. Such a descent should have negative effect on the USD. At 13:30 (GMT) Fed Chairman Bernanke will deliver a speech in Chicago on Risk Management in Banking Organizations. As always, Bernanke's speeches are very intriguing, as clues regarding interest rate changes might be scattered throughout. Considering that analysts predict an interest rate cut to be imminent, this particular speech could be vital. At 14:00 (GMT) The Philadelphia Fed Manufacturing Index will be published. Just like the New York Index, its importance derives from the fact that it's released weeks before other major reports on manufacturing.
Today will be a fascinating day for traders, yet it obligates them to stay fully alert. For today, trading the USD could create significant profits as high volatility is expected throughout most of the day.
EUR
Yesterday the EUR saw volatile trends within its major pairs. The EUR\USD began the day with a falling trend as it hit a daily low of 1.5413, yet it promptly rose up to 1.5473. The only significant gain for the EUR came against the JPY. European news from yesterday included the French Consumer Price Index. This Index which measures the rate of inflation came out at 0.3%, lower than last month's 0.8% figure. Later on in the day, the European Industrial Production report was published, and released at -0.2%, better than the expected -0.3% mark, yet lower than last month's 0.3%. Also yesterday, the Council of Economics and Finances Ministers held a meeting, where all of the Euro-Zone financial chiefs expressed concerns over the growing levels of inflation, yet they admitted their appreciation to the European Central Bank (ECB) reactions to the rising commodities prices, and stated they have full confidence that it will continue to act this way.
As for today, a bundle of data is expected for the EUR. The German, French and European Gross Domestic Product (GDP) reports are scheduled. These reports measure the total value of all goods and services produced by an economy. Analysts forecast positive results in all three reports, and rising trends are likely in light of these forecasts, as GDP is the primary gauge of an economy's health. Later on, the ECB President Jean Claude Trichet will deliver a speech. Trichet has avoided manipulating the European interest rate for the last month, despite rising commodities prices. Investors will follow his speech very closely, in the event that he gives any clues regarding a rate change, as it should instantly affect the EUR.
Traders should remain very keen today, as high volatility is expected. Lots of data coming from the Euro zone and the U.S should create fluctuation in the market. Traders should use this opportunity to create short-term profits.
JPY
Yesterday was an extremely bearish day for the JPY as it saw falling trends against most of its major counterparts. It has continued it's freefall since the beginning of the week vs. the USD, the EUR and the GBP. The only news regarding the JPY that came out yesterday was Core Machinery Orders, which reflected an 8.3% fall in March, making the value of orders in March the smallest since May 2005. It is the second straight monthly fall following a 12.3% decline in February, and for now it seems that the JPY is continuing to nurture its deterioration. On tap for today, the Japanese Gross Domestic Product is scheduled. This survey measures the total value of all goods and services produced by the economy. Analysts forecast it to come in lower than last month, and such unfavorable results will probably continue to contribute to the JPY downfall.
Traders should bear in mind that the Gross Domestic Product results will be published only at 23:50 (GMT). Hence until then the JPY will be mostly influenced by global economic developments, especially from the U.S. This day is promising to be a very volatile day for the Forex market, and the JPY shouldn't be any different.
Technical News
EUR/USD
The pair's bullish move is approaching the testing point of 1.5500 which is a key Fibonacci level of the entire bearish corrective move. The momentum is quite bullish and if a breach through the key level occurs, we might see the pair generate fresh momentum with a target price of 1.5580.
GBP/USD
There is a very distinct flag forming on the 4 hour chart, as the cable now approaches the upper level close to the tip of the flag. The local momentum within the flag is moderately bullish yet a very strong cross is imminent on the daily chart, which indicates that the bearish move might return shortly with strong steam.
USD/JPY
The pair is in the midst of the fifth consecutive day of appreciation and according to the daily chart there is still much more room to run. The hourlies are supporting the bullish notion, and it appears that going long might be the preferable strategy today.
USD/CHF
The pair has been ranging for a while now after the strong bullish move, and it appears that today the local momentum might be moderately bearish. Although the signal is not strong the pair might have a local target at 1.0450, which might make it feasible for forex traders to go short with very tight stops.
The Wild Card
Gold
The flag formation on the daily chart still remains intact, as gold now floats in the middle of it with moderate bullish momentum. The upcoming cross on the daily Slow Stochastic is showing that the bearish trend will probably resume quite shortly. This could be a great opportunity for forex forex traders the take a position before the technical signal is fully unraveled.
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