forex analysis ‏29-May-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 GDP Report on Tap - Will USD Weakness Continue?
 The U.S. Dollar traded weakly in yesterday’s session as it witnessed depreciation against all of its currency rivals. Plunging toward the critical levels of 1.4000 against the EUR and 1.6000 against the GBP, the greenback’s recent weakness doesn’t appear to have an end in sight for today.

With an expectant worry that today’s data releases will put investor focus on America’s increase in debt issuance, thus resulting in a higher Treasury yield; the market may continue to go bearish on the USD. As expected, higher yielding assets and currencies like the EUR and GBP may then gain significantly from these speculations. Positive economic data in Europe throughout the week has also resulted in dramatic investment shifts towards a diversified portfolio for many traders who wish to increase their risk and pull away from safe-haven investments.

Looking forward to today, forex traders will no doubt be marking the multitude of European data releases as Britain’s HPI housing report may show a sudden return to market weakness, and the Euro-Zone’s M3 money supply report has the potential of showing a drop in the level of currency available throughout the European forex market. In the United States, the Preliminary GDP report is scheduled to be released at 12:30 GMT and may show the U.S. economy shrinking less than last quarter, a sign that the economy could be entering a solid recovery. With a focus on America’s debt issuance, USD weakness is anticipated to continue throughout the end of the week.
 EUR
 EUR’s Recent Gains on Unsteady Ground
 The EUR has been the beneficiary of the market’s recent increase in risk appetite considering it has appreciated against almost all of its currency rivals over the past week. The 16-nation currency climbed towards the psychological barrier of 1.4000 against the USD, temporarily breaching the resistance line before falling back under the mark. With the recent dash to sell off the JPY, the EUR apparently received the bulk of investor flight, climbing as high as 135.40 against the island currency.

With the surge of consumer confidence in some of Europe’s largest economies, there exists a moderate level of hope in a speedy recovery for the Euro-Zone’s regional economy. German market data has displayed a wide array of positive results which have helped convince many weary traders that the worst may indeed be over. In a rush to diversify trading portfolios for riskier assets, the EUR appears to have been one of the primary choices for this move. The question remains, however, as to whether this move towards Europe will continue. Some analysts say it marks the beginning of a recovery, but will not sustain itself at this pace in the short-term.

As for today, there are two important data releases which forex traders need to keep an eye on. The first is the Nationwide HPI report in Britain which may show the housing market declining once more. This report is scheduled to be released at 6:00 GMT. The second is the report on the M3 money supply in circulation throughout the Euro-Zone. With a direct correlation to interest rates, the money supply is an important gauge of currency valuation. With negative results, we could see a temporary reversal to the EUR’s recent trends through the end of today’s trading.
 JPY
 JPY-Funded Carry Trades Returning?
 The Japanese Yen saw one of its most bearish sessions in months. Dropping back towards the 97.00 level against the USD, and the 155.00 level against the GBP, the island currency witnessed a rash sell-off in Thursday’s mid-day trading sessions. There was a growing concern that Japanese equities were more resilient than previously forecast which led to an increase in risk appetite for many safe-haven investors. This generated an investment flight towards Europe in search of higher yielding assets. Some analysts believe the JPY-funded carry trade may be on the return, which will eventually push the value of the Yen towards the lows of 2007-2008.

As for today, there aren’t many data releases expected from Japan. However, last night’s consumer pricing reports indicated a decrease in price for Japanese goods and services, highlighting a weakened demand for these sectors of Japan’s economy. This may also have generated a strengthened push to flee from JPY safe-haven investments. Unless news from the Euro-Zone or U.S. comes out highly negative throughout the day, the JPY will likely continue getting weaker.
 Crude Oil
 Crude Oil Price Meets Little Resistance
 After climbing to a record high not seen since November, the price of Crude Oil has stabilized for the moment. With a sudden flight from safe-haven investments such as the JPY and USD, commodity prices appeared to gain a strong boost from the weakness of the Dollar. Crude Oil spiked to the price of $65 a barrel in mid-day trading yesterday. Only in today’s early trading hours did the price begin to settle just under this price barrier.

The Organization of Petroleum Exporting Countries (OPEC) agreed not to change production levels for the time being, with the assumption that doing so may destabilize weakened economies. A report showing a sharp decline in oil inventories also supported this move as a boost to demand and consumption is expected in the coming weeks. With this information in mind, forex traders may understand that long-term pressure continues to show upward momentum, meaning the price of oil may continue on up towards $75 a barrel in the coming months.
 => Technical News
 
 EUR/USD
 The bullish trend is loosing its steam and the pair seems to consolidate around the 1.3980 level. The pair currently sits near the upper border of the daily chart’s RSI, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
 GBP/USD
 The 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart’s RSI is already floating in the overbought territory indicating that a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
 USD/JPY
 There is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the downward breach occurs, going short with tight stops appears to be preferable strategy.
 USD/CHF
 The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4-hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.
 => The Wild Card
 
 Crude Oil
 Crude Oil prices rose significantly in the last two weeks and peaked at $65.30 per barrel. However, the daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

forex analysis ‏28-May-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 Dollar Rises on Positive Economic Data
 The Dollar rallied yesterday against most of its major counterparts after data suggesting the slowdown in the U.S. housing market has bottomed out gave support to the U.S. currency as a safe-haven. The Dollar has been sold off recently partially due to growing optimism about the outlook for the U.S. economy. The USD finished yesterday’s trading session 150 pips higher against the EUR at the1.3819 level.

The major economic event that came out of the U.S yesterday was the Existing Home Sales data release. Home resales in the U.S. probably rose in April as foreclosure auctions and improved affordability spurred bargain hunters. Moreover, record-low mortgage rates, tax credits and falling prices may keep boost demand of unsold homes. In turn, a pickup in sales may help stem the slump in property values, which is key to shoring up household finances and construction as the economy begins to emerge from the recession.

The Dollar also extended its gains against the EUR yesterday after an auction of fresh five-year Treasury debt attracted solid demand, easing fears that U.S. deficits have soured foreigner’s appetite for U.S. assets.

USD trading will be interesting today as important economic data is expected to be released. From 12:30 GMT a series of economic indicators will be released, starting with Core Durable Goods figures, Unemployment Claims and the New Home Sales. Surprisingly, almost all of these releases are expected to be higher than their previous figures, meaning the USD could continue to show further bullishness today. Traders should stay close to the market today, as there is a strong chance to capitalize on the fluctuations which will likely follow these releases.
 EUR
 The EUR Loses Momentum
 The EUR lost momentum during yesterday’s trading session, correcting the sharp gains against the Dollar and JPY seen last week. This was following comments by a European Central Bank policymaker suggesting further Interest Rate cuts could not be ruled out, and profit-taking after a rally last week hurt the European currency. By yesterday’s close, the 16 nation currency fell sharply against the USD, pushing the oft-traded currency pair to 1.3819. The EUR experienced similar behavior against the JPY and closed at 1.3300.

However, the Pound Sterling was the biggest mover amongst the majors, propelled higher by receding pessimism about the UK economy and financial sector. This was boosted by a general move into riskier assets as equity markets rose after a pick-up in U.S. consumer confidence. The Pound outperformed the EUR, hitting $1.60 for the first time in almost seven months as investors continued to pare back the large bets against the currency built up after the collapse of Lehman Brothers last year.

Looking ahead to today, the most important economic indicator scheduled to be released from the Euro-Zone is the German Unemployment Change at 8:00 GMT. Analysts are forecasting this figure to slightly increase from its previous reading. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the EUR in the short-term. Traders are also advised to follow the CBI Realized Sales figures coming out of Britain at 10:00 GMT, and the Unemployment Claims figures coming out of the U.S. at 12:30 GMT as these results may set the EUR’s main currency crosses going into next week.
 JPY
 Yen Experiences Mixed Results against the Majors
 The Yen completed yesterday’s trading session with mixed results versus its major currency pairs as investors chose the Dollar over the Yen for a safe-haven trade. The JPY fell against the USD and closed around 95.25. However, the Japanese Yen rose almost 40 pips versus the EUR, closing at 133.00.

The major economic event that came out of Japan yesterday was the Retail Sales figures. Retail Sales fell for an eighth month in April as worsening job prospects and declining wages deterred shoppers. The deep recession is spreading to households, whose outlays account for more than half of the economy. Japan will struggle to return to a sustainable growth path as long as companies from Toyota Company keep cutting jobs to minimize losses.
 Crude Oil
 Crude Oil Approaches the $63 Price Level
 Crude Oil prices experienced another day of appreciation as the oft-traded commodity nearly hit $63 during yesterday’s trading session. This has been compounded by a weaker Dollar in recent weeks, causing investors to flee to commodities such as Crude Oil. Furthermore, if the U.S. continues to publish more positive economic news, and if the American government continues to be aggressive in tackling the current financial crisis, then Crude prices may hit $75 by the 4th quarter of 2009.

Expectations that consumers may once again want more Oil when the recession bottoms out have also fueled the rally, with traders watching the stock market for economic telltales. There is a reasonable possibility that Oil prices will continue to be bullish going into next week, providing that the economic situation of the leading economies continues to rapidly improve.
 => Technical News
 
 EUR/USD
 The pair has experienced high volatility in the past day. The 1-day oscillator fails to show a clear direction for the pair. However, the 1 hour and 1 day chart’s RSI signals that the pair is set for some bullish momentum today. Going long with tight stops could turn out to be a good strategy today.
 GBP/USD
 The 4-hour and 1 day chart’s Slow Stochastic indicates that the pair is set for bearish behavior today. However, the 1-hour, 4-hour and 1 day chart’s RSI backs bullish momentum for the near future. Waiting until the signals are clearer may be a wise choice until entering this pair.
 USD/JPY
 The pair has experienced much bullish behavior in the past week. The 4-hour and daily chart’s Slow Stochastic indicates that a bearish cross is imminent. However, the 1 day chart’s RSI shows that there is still much bullish momentum for the upcoming day. Going long with tight stops may be the correct pick for today.
 USD/CHF
 In the past several weeks the pair seems to have been oversold. Therefore, the pair’s behavior in the past few days points to a bullish correction. The 1-hour and 1 day chart’s Slow Stochastic points to a continuation of a short-medium term bullish correction. It may be a wise choice to enter a popular trend as the pair could surpass the 1.1000 mark in the foreseeable future.
 => The Wild Card
 
 Crude Oil
 Crude Oil is currently undergoing a bullish correction as it approaches $65 a barrel. The pair is approaching the upper boarder of the chart’s 1 day Bollinger Bands. The bullish trend is likely to continue as the commodity approaches the 70 line on the 1 day chart’s RSI. Entering this popular trend now seems to be a good option today for forex traders.

forex analysis ‏26-May-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 Is a USD Rally in the Making?
 The Dollar rose marginally against the European currency as the economic calendar in the U.S. was blank due to a bank holiday. The knock-on effect of this was a forex market with less volatility than usual. In reality this translated into little fluctuations in the USD and its main crosses.

Many analysts have been worried about the greenback’s rapid deterioration in value in the past several weeks. They are beginning to ask themselves, “Is a reversal in the making?” In Monday’s trading, the EUR/USD rate reached as high as 1.4028. However, the pair ended up lower by 15 pips for the day at 1.3974. Against the Pound, the USD was unchanged at 1.5877. The Dollar gained versus the JPY by 10 pips to close at 94.73.

This behavior shows that in late trading hours, the Dollar reversed some of its losses, and started gaining against the major currencies. This may be due to 2 main factors. Firstly, the Dollar has been over-sold lately, and is under-valued. Secondly, the bank holiday in the U.S. made the forex market more flat than it would have been under normal market conditions. The slightly negative German Ifo Business Climate news release from Germany may have also helped weaken the EUR in late trading. This is compounded with the fact that other major economies are in even more dire straits than the U.S.

Looking ahead to today’s news, the most important economic news release coming out of the U.S. is the CB consumer confidence figures at 14:00 GMT. The release is a top measure of U.S. consumer spending. Therefore, the results are likely to be pivotal in driving the direction of the market both before and after the data release. Traders are advised to take-up positions in the majors, while volatility is still low, in order to make some profits in the USD and its dominant crosses.
 EUR
 EUR Declines against Greenback
 The EUR slipped slightly against the Dollar as the markets failed to take a clear direction yesterday. It can be said that speculation alone cannot drive the EUR higher due to some of the recent data releases. This was shown when the German Ifo Business Climate report put some downward pressure on the EUR as investors realized that the Euro-Zone currency may be slightly overvalued against the USD, and other major currencies.

The Dollar gained 15 pips against the EUR, reversing a near-2-week trend to close at 1.3974. The EUR/GBP cross finished yesterday’s trading to close marginally lower at 0.8799. The EUR/JPY pair was virtually unchanged at 132.36. The question now is can the EUR return to its bullish run against the greenback? It is valid to say that there is more to back the EUR in theory than the USD or the GBP. Both the U.S. and Britain have lower Interest Rates than the Euro-Zone. Additionally, Europe has been more conservative than her 2 economic rivals in printing money. Furthermore, Britain and the U.S. have mounting deficits, whereas the Euro-Zone doesn’t. It seems reasonable to say that the long term bullishness may belong to the EUR, rather than to her main currency rivals.

Today, there are plenty of economic indicators from the Euro-Zone that are likely to help determine the EUR’s main crosses going into mid-week trading. The Current Account and Industrial New Orders are set to be published at 8:00 and 9:00 GMT respectively. The impact of these releases will show forex traders the health of the Euro-Zone economy. This could signal if the European currency is overvalued, and if it can uphold its bullish run against the Dollar. The impact of this will be increasingly felt, especially as the markets moved little in yesterday’s trading due to British and American bank holidays. Traders are advised to open positions now, in order to make profits when volatility kicks in.
 JPY
 JPY Strength Uncertain, Heavy News Week may Help
 The Yen failed to topple the Dollar yesterday, despite a bearish Dollar in the last few weeks. The pair actually closed up 10 pips at 94.73. The release of the worse-than-forecasted CSPI figures in late trading helped prevent the JPY from gaining bullish momentum against its major currency pairs.

There was very little movement in the EUR/JPY pair as it closed at 132.36. However, the Yen lost a bit of ground against the British currency to finish trading at 150.45. These small forex market currency fluctuations were largely owed to the British and American bank holidays yesterday. Nevertheless, markets are set to be much more volatile today, as forex market volatility returns to more normal conditions in the coming hours.

The short-term future of the JPY depends on the speed of the global economic recovery. If things do improve quicker than many analysts anticipate then the Yen may start to go bearish. This is increasingly the case if the U.S. raises Interest Rates before all of the other industrialized countries. Today, in late trading the Monetary Policy Meeting Minutes and Trade Balance figures at 23:50 GMT are likely to help determine the JPY’s strength going into mid-week trading. A 95.50 USD/JPY rate may be a possible by tomorrow’s close. However, it is wise to open positions in the JPY now as news from the Euro-Zone and U.S. is published.
 Crude Oil
 Crude Oil Prices Decline 1%
 The price of Crude Oil tumbled 1% in yesterday’s trading to $60.90. This comes despite increased optimism from the Organization of Petroleum Exporting Countries (OPEC) recently. However, many analysts expect the price of Oil to climb through the long-term as market conditions return to normal. Many analysts believe that the long-term prospects for Crude Oil are between $75-80.

In the meantime, the price of Crude Oil may only start going bullish again when the Dollar continues its decline, and if OPEC makes no output increases in their next meeting in Vienna, Austria on the 28th of May. In today’s trading, the economic figures coming out of the U.S. and Euro-Zone are likely to impact the volatility of oil prices and traders would be wise to enter the market before this volatility kicks off.
 => Technical News
 
 EUR/USD
 The sustained upward movement these past few trading days has apparently generated a bearish cross on the daily chart’s Slow Stochastic, indicating a longer-term downward correction may occur shortly. As the weekly Momentum oscillator begins to turn a corner, we may very well be seeing a reversal in the making. Going short to enter this new trend may be a wise move today.
 GBP/USD
 The price of this pair appears to be floating in the over-bought territory on the RSI of the daily chart, signaling long-term downward pressure. A fresh bearish cross on the daily chart’s Slow Stochastic supports this notion. A downward correction may be in the works for this pair in the medium-term. Entering with short positions directly after the downward breach may be a smart decision today.
 USD/JPY
 There appears to be a head-and-shoulders formation on the hourly and 4-hour charts for this pair, signaling an imminent, rapid downward movement. However, the Slow Stochastic on the hourly chart shows a fresh bullish cross, signaling the next movement may be upwards. With the price floating near the over-sold territory on the daily chart’s RSI, the longer-term trend may be up. Waiting for a clearer signal might not be a bad choice today.
 USD/CHF
 The price appears to have just exited the over-sold territory on the 4-hour chart’s RSI indicating the upward correction may be running out of steam. However, the daily chart’s Slow Stochastic appears to have a fresh bullish cross, which signals further corrective movement may be in the works. Going long with tight stops might be a solid decision throughout the day.
 => The Wild Card
 
 USD/TRY
 There appears to be a fresh bullish cross on the 4-hour chart’s Slow Stochastic for this pair, signaling an upward movement may be in the making. With its sustained downward movement over the past weeks, this pair is overdue for a rebound. With fresh bullish crosses on the MACD for the hourly, 4-hour and daily charts, this rebound may indeed be developing. Forex traders can definitely take advantage of this swing by buying this pair now, and at a great entry price.

Euro Rises on positive German ZEW survey

Posted by admin as Forex News

There was little in the way of news overnight but markets generally kept the faith and held in taking on a decided more “normal” look as VIX broke back below 30 for the first time since September. Data was in the news (probably because there was little else to draw attention) but different interpretations of it probably make any strong conclusions hard to draw. US Housing Starts and Building…

forex analysis ‏21-May-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 USD in Down-Trend since April
 The USD witnessed a steady depreciation against most of its major currency counterparts on Wednesday. The Dollar has lost ground for 3 straight sessions against the EUR, and 3 of the last 4 sessions against the Yen. The USD was trading at 1.3604 per EUR and 94.85 per Yen at the close of Wednesday’s trading sessions.

According to the FOMC meeting minutes there is willingness by the Federal Reserve to go beyond the $1.75 trillion it has already committed to purchasing, and increase the amounts of mortgage and Treasury securities-purchase programs. The Fed made a similar announcement on March 18, stating it would buy $300 billion in Treasuries; this announcement led to the U.S. Dollar plunging. Purchase of Dollar-denominated debt can have a negative affect on the value of the currency since the Fed pays for these purchases by printing more money and therefore devaluing the currency. In addition, the U.S. recession appears to be deeper than expected and a slower recovery is being factored in over the next two years since labor markets remain under pressure.

While the USD recovered some of its immediate losses since the release of the FOMC meeting minutes, it has been declining significantly since the start of the week and shown a downward trend since mid-April. This is due in part to the recovery in equities markets, which increased traders risk appetite. Important economic indicators to watch today are the Unemployment Claims, to be released at 12:30 GMT, and Fed Chairman Ben Bernanke’s speech tomorrow. Positive news will put further pressure on the Dollar.
 EUR
 EUR Benefits from Heightened Risk Appetite
 Yesterday’s release of the U.S. Federal Open Market Committee’s (FOMC) meeting minutes sent the EUR to its highest level against the USD since early January. The EUR advanced 1% to 1.3768 from 1.3630 yesterday. Earlier the EUR touched the 1.3830 price level, the highest since Jan 5th. However, the EUR slid against the USD slightly after a German report showed producer prices fell at the fastest rate in almost 22 years. The EUR also decreased 0.2% to 130.51 yen from 130.81 Wednesday.

Currently there is a shift into a risk-taking environment spurred by a rally in the stock markets and a decrease in volatility. The USD is the anti-risk currency. It also appears that investors are still confident that the U.S. is set first for a recovery compared to others like Japan, the U.K or the Euro-Zone. According to the International Monetary Fund (IMF), the Euro-Zone regional economy will contract 4.2% this year, more than the projected 2.8% contraction in the U.S. and the 4.1% fall in the U.K.

The EUR may gain for a 4th day versus the USD as the Flash Manufacturing PMI and the Flash Services PMI (German, French and Euro-Zone) reports are due to be released today at 7:30 and 8:00 GMT, respectively, and may show that the region’s manufacturing and service sectors contracted at the slowest pace in 7 months.
 JPY
 Yen Rises after News of Japan’s Record Economic Contraction
 The Yen rose versus all 16 of the most-traded currencies yesterday after Japan reported that its economy shrank at a record pace. The Japanese currency advanced to 130.04 per EUR, up from 130.77 yesterday. The Yen appreciated 1.3% to 94.75 per Dollar, up from 95.97 Wednesday.

The JPY gained modest ground after Japan’s Cabinet Office said the economy shrank an annualized 15.2% in the 3 months ending March 31st, following a revised 14.4% contraction in the previous quarter. Japanese Gross Domestic Product (GDP) fell 3.5%, the most since records began in 1955. Speculations that the recession in the U.S, the world’s largest economy, is far from over helped to further boost demand for the Japanese currency as a refuge from the international downturn. However, there are signals that the U.S. currency may have fallen too quickly against the Yen and could strengthen.
 Crude Oil
 Crude Oil Surges above $62 a Barrel
 Crude Oil surged yesterday above $62 a barrel, increasing by $1.94 in a relatively short time-frame. This marks one of the largest price jumps seen in almost 6 months! However, early this morning, Crude Oil for July delivery dropped as much as 69 cents, or 1.1%, to $61.35, breaking three days of gains. This was due to a decline in U.S. stocks after the Federal Reserve predicted a deeper recession and a government report showed a drop in fuel demand.

Prices also climbed after refinery fires and unrest in Nigeria threatened supplies. A falling Dollar further assisted the price increase. However, U.S. oil demand hardly improved, and remained 7.6% weaker than a year ago when Americans were already consuming less. There is doubt that the fundamentals of the oil market can support prices above $60 a barrel since there isn’t any improvement in demand and no sign the Organization of Petroleum Exporting Countries (OPEC) is likely to reduce output any further in their meeting at the end of this month.

Monday’s Memorial Day holiday signals the unofficial start of the U.S. summer driving season. So far gasoline demand gained 3.6% this past week. A continued increase in demand will help push the Oil price further up, however, with the latest report from the Federal Reserve a quick economic recovery in the U.S seems less likely.
 => Technical News
 
 EUR/USD
 This pair has witnessed a sustained upward movement for many days now. This movement has pushed the price of this pair into the over-bought territory on the RSI of the 4-hour chart, signaling that there may be a medium-term downward correction. However, the longer-term trends still appear to be pointing up. Going long appears to continue being the solid choice today.
 GBP/USD
 This pair’s strong bullish behavior has resulted in most oscillators indicating that a correction is imminent. While this has been the case for the past two days, it remains to be so. The RSI on the hourly, 4-hour and daily charts all show this pair floating in the over-bought territory, and there are bearish crosses forming on the 4-hour and daily charts’ Slow Stochastic. Waiting for the downwards breach and then entering the correction may be wise today.
 USD/JPY
 There appears to be a fresh bullish cross on the Slow Stochastic of the 4-hour chart, signaling an upward correction may be experienced soon. The price appears to be floating in the over-sold territory on the RSI of the hourly and 4-hour charts as well, which supports the above notion. Going long with tight stops might be a decent strategy today.
 USD/CHF
 Even though a sustained downward movement like the one this pair has seen typically pushes the price into levels which indicate a correction, that does not seem to be the case here. Most oscillators for this pair are signaling neutrality. The price does, however, appear to be in the over-sold territory on the 4-hour chart’s RSI, which may indicate an impending upward correction. Going long with tight stops might be wise today.
 => The Wild Card
 
 Gold
 The strong bullish movement in the price of Gold recently has pushed the price of this pair into the over-bought territory on the RSI of the hourly, 4-hour, and daily charts, signaling strong downward pressure. There also appears to be a fresh bearish cross on the Slow Stochastic of the hourly and 4-hour charts, which supports this notion. Considering the potential downward correction, forex traders may have a fantastic opportunity to join this trend reversal at a very early stage and with a great entry price.

Shift In Global View on Weak GDP Figures

Posted by admin as Forex News

The release of German GDP on Friday, which showed a contraction of -3.8% q/q, took the wind out of the EUR and the “Green Shoots” theory. Pundits over the weekend, such as Times columnist Anatole Kaletsky, described the data as “arguably the most catastrophic economic statistics produced by any official institution in the capitalist world since 1945″. We see such comments as overdone, but it…

forex analysis ‏18-May-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 USD Rallies - Benefits from Safe-Haven Appeal
 The USD has experienced a positive day of trading during the today’s early morning hours. Closing last Friday slightly up versus the majority of its currency pairs and crosses, the USD continued this bullishness and appears poised to maintain its recent momentum. Gaining against the EUR, the greenback is currently trading near the 1.3435 price level, and even climbing as high as 1.1240 against the Swiss Franc, a high not seen since 10 days ago.

As U.S. data illuminates the economy in a positive glow, large exporting countries like China have begun to purchase more and more U.S. Treasury Notes despite the various cautions for doing so. A number of negative results from the European economies, and even Canada last Friday, have pushed many investors into the safe-haven of the USD and JPY. Again, despite some warnings that the USD’s safe-haven is not as stable as many believe, traders continue to purchase the greenback for portfolio protection. Without a strong shock to forex trader confidence, this behavior will likely continue throughout the next few trading days.

With a severely lacking mix of indicators being released from the U.S. economy this week, the likely mover behind the forex market in the coming days appears to be the EUR. However, there does appear to be 2 indicators worth marking in your calendars. On Tuesday we are expecting the Building Permits report which may actually, for the first time in months, show that the housing sector is on the rebound. This could help the Dollar’s rally continue through to the second indicator due to be released on Thursday. The Unemployment Claims report on Thursday may be more important than most expect considering last month’s Non-Farm Payroll report indicated a sharper contraction in employment than most expected. This could prove to be USD-negative.
 EUR
 Euro-Zone Fundamentals Weak as GDP Shrinks
 Across-the-board weakness may be the best way to describe the EUR’s activity in today’s early trading sessions. Losing strength to every major currency pair, the EUR is a little worse for wear. Dropping to 1.3435 against the USD, 127.30 against the JPY, and even as low as 0.8870 against the Pound Sterling, the 16-nation currency has been on the receiving end of negative news since last Friday’s GDP figures illustrated a larger regional contraction than most analysts had foreseen.

As was illustrated by the various reports from countries within the European Monetary Union (EMU), the national and regional economies throughout the Euro-Zone suffered a deeper economic contraction than was forecast, and the EUR is suffering the consequences. This growing weakness doesn’t seem to be abating either.

With a heavy news week ahead, the EUR will no doubt be steering this week’s forex market. However, most expectations are for a continuation of the recently poor showing of Euro-Zone fundamentals. The weakness in regional GDP means that the 16-nations of the EMU are struggling to produce the jobs, manufacturing, and industrial output to remain as competitive as is necessary. With French and German manufacturing and services data expected on Thursday, this week’s data has the potential to show that the Euro-Zone is indeed still within a deep recession and not yet on its way out. The other possibility is for a sudden surprise batch of news which shows the regional economy rebounding strongly, in which case the EUR may go bullish.
 JPY
 Yen Out-Performs Other Currencies
 The Yen has out-performed all of its competitors in recent days. Regaining most of the strength lost in the previous few weeks, the JPY has now fought back to some of the highs not seen in months. Climbing to 94.80 versus the USD, a level not seen since mid-March, the Yen actually appears to have regained its safe-haven status. It also climbed to the 127.30 level against the EUR, a range not seen since late-April.

This week also appears to be an exciting news week for the JPY, a statement not often made by economic analysts in the forex market. With 2 large indicators due to be published, the Yen may actually be a driving force in this week’s market. On Tuesday, the Japanese Cabinet Office will release its preliminary GDP figures which are expected to show that the Japanese economy may have shrunk by 4.2% in the first quarter of 2009. Also due this week is a decision by the Bank of Japan (BoJ) on its short-term interest rates. As rates are still near 0%, a reduction seems unlikely. The information released by the BoJ, however, may give traders and indication of the future monetary policy decision to come.
 Crude Oil
 Has the Price of Oil Reached its Peak for 2009?
 The price of Crude Oil in recent weeks has been on a steady bullish trend. However, last Friday this trend may have been breached with a downward correction resulting from a decline in stock markets. With regional stock markets declining since last Friday, market demand for oil has come under scrutiny. While the United States may have published a series of positive growth data, the Euro-Zone illuminated its continued weakness with low GDP figures. Mixed with poor performing markets, economic growth and energy demand seem higher than they should be.

Most analysts are now backtracking by stating that the uptrend in oil seen over the previous weeks was due to a surge in market optimism that saw stock markets soaring and the USD dropping. However, as markets inevitably correct themselves after optimism has run its course, true values return. The sad truth is that demand for Crude Oil is still at an all-time low, and some analysts are reducing their 2010 forecasts. If this keeps up, the current price of $57.00 a barrel may be a high point in the coming weeks.
 => Technical News
 
 EUR/USD
 There is a fresh bullish cross forming on the 4- hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the hourly chart’s Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be preferable strategy.
 GBP/USD
 The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.
 USD/JPY
 The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.
 USD/CHF
 The price of this pair appears to be floating in the over-bought territory on the hourly chart’s RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
 => The Wild Card
 
 Gold
 Gold prices rose significantly in the last week and peaked at $933 for an ounce. However, the daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

forex analysis ‏12-May-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 Dollar Volatility Calms as Markets Falter
 The Dollar experienced a mild trading session in yesterday’s trading. The USD experienced a relatively flat day as it steadily rose against all of its major currency pairs, except for the Japanese Yen. There was a quiet day of news from the U.S. as there were no economic data releases on the calendar. However, Federal Reserve Board Chairman Ben Bernanke spoke about the state of the U.S. economy and the stress test for banks. He pointed out specifically that he was pleased with banks for raising capital. Investors were optimistic as he said that additional capital from the Federal Reserve will be provided if needed.

Despite this positive news from Bernanke, the stock market in the U.S. and around the world experienced heavy losses. However, part of this may be the start of a correction to the global stock market rally in recent weeks. As a result, the Dollar gained against most of its major currency pairs. The USD took 70 pips from the EUR to close at 1.3591 and a healthy 125 pips from the Pound to close at 1.5095. However, against the JPY, the Dollar lost 100 pips, extending its 3 day loss vs. the Japanese currency. The USD gained against the former 2 currencies due to fears of economic instability.

Today we can expect a higher amount of volatility and instability when it comes to trading with the Dollar and its main currency crosses. This may be even more so due to a heavy schedule of economic data releases and the ambitious economic recovery plan of President Barack Obama. The Trade Balance figures will be published at 12:30 GMT, IBD/TIPP Economic Optimism figures are expected to be released at 14:00 GMT, and the Federal Budget Balance results are scheduled to be published at 18:00 GMT. Positive figures may help spur a stock market rally. At the same time, the Dollar may go bearish, as investor fears dissipate and the global economy continues its slow recovery.
 EUR
 EUR Stumbles Against Dollar
 The European currency stumbled against the Dollar in Monday’s trading, ending its 3 day winning streak against the USD. This comes around the same time the President of the European Central Bank (ECB), Jean Claude Trichet, stated that the main developed economies are starting to show signs of growth. For example, The Organization for Economic Co-operation and Development (OECD) recently released figures showing that Britain, France, and Italy’s economies recorded some growth in the previous month. However, Germany continues to lag behind in negative territory. This may be one of the factors that could prevent the EUR from gaining the long-term confidence of investors.

As long as Germany, Europe’s largest economy, is deep in the red there will continue to be a prolonged burden on the Euro-Zone and its currency. The EUR slipped 70 pips vs. the Dollar to finish yesterday’s trading at 1.3591. The EUR slid by a dramatic 200 pips vs. the JPY to 132.23. The 2 reasons for these results are the overvalued EUR/JPY as of late, and the safe-haven bullish JPY. The Japanese currency also experienced similar behavior against the Pound as fears grew yesterday. The EUR/GBP rate rose by a moderate 30 pips, as traders continue to weigh in on the health of the British and Euro-Zone economies.

In today’s forex trading, traders are advised to follow economic news releases from the Euro-Zone and Britain closely as the results will help determine the bullishness of the Pound and EUR in today’s trading. The most important news events from Britain are the release of the Manufacturing Production and Trade Balance figures at 8:30 GMT simultaneously. From the Euro-Zone, the most important news events are German Final CPI at 6:00 GMT and the speech by Budesbank President Axel Weber at 15:00 GMT. Forex traders are also advised to follow unexpected speeches by President Obama or Ben Bernanke, as this could have a strong impact on trading in the forex market for the main currencies.
 JPY
 JPY Gains Ground Versus Dollar
 The JPY made moderate gains against the Dollar in yesterday’s trading as there was panic when global stock markets made heavy losses as a correction may be under way, and as the banking system continues to be unstable. The Yen was also boosted by the weak Japanese economic figures, prompting investors to put money into the Yen. Thus the Yen returned yet again to the forefront as a safe-haven currency. This was compounded by HSBC announcing that despite high profits, the coming year will be a tough. This helped push down other banking stocks, and stocks such as Sony, Toyota, and Mitsui, as they also lost some ground in Monday’s trading.

The Yen took nearly 100 pips away from the Dollar to close up 1% at 97.29. The JPY made large inroads into the EUR to close up nearly 200 pips at 132.23. The gains against the GBP were even more impressive at 250 pips to close at 147.08. This all comes about as the fears of economic uncertainty fail to disappear. Thus if there is a stock market correction in the coming weeks, then there is a likelihood that the Yen will continue its bullish trend in the medium-term. If this is the case, then within the next several days, the USD/JPY rate may hit below 96.00. As of today, traders are advised to follow the Current Account and Bank Lending data releases at 23:50 GMT.
 Crude Oil
 Oil Fails To Hit $60
 Crude Oil yet again failed to hit the $60 mark as the commodity recorded a relatively flat session on Monday. It rose by a healthy 30 pips to $58.31 a barrel. Considering there was a global stock market slump yesterday, this was actually a good result. The reason why the price of Crude Oil continues to be solid lately is due to renewed investor’s confidence that the developed world is starting to show signs of economic recovery. This in turn translates into industry growth and increased demand for oil.

In order for the price of Crude to continue its bullish run the main global economies will need to continue to show positive signs. However, if by the 3rd quarter this is not the case, then Crude may start to slide below $50 a barrel again. In the meantime, it is advisable to follow economic news coming out of the U.S., Japan, and China very closely in order get an accurate picture of which direction the global economic situation is heading.
 => Technical News
 
 EUR/USD
 The price of this pair appears to be floating in the over-bought territory on the RSI of the 4-hour chart, signaling a downward correction may still be relevant. The imminent bearish cross on the daily chart’s Slow Stochastic supports this notion. Going short might be a wise choice today.
 GBP/USD
 The Bollinger Bands on the hourly chart appear to be tightening in expectation of a volatile movement. As the daily chart’s RSI shows the price of this pair floating in the over-sold territory, and as the recent bearish crosses on that chart’s Slow Stochastic demonstrate, we may be in for a sharp downward movement. Going short with tight stops might be a good strategy.
 USD/JPY
 The recent bearish run for this pair may be coming to an end. There appears to be a bullish cross on the 4-hour chart’s Slow Stochastic signaling upward movement is imminent. The price also appears to be floating in the over-sold territory on the 4-hour chart’s RSI. With a bullish cross also forming on the daily chart’s Slow Stochastic, going long might not be a bad choice today.
 USD/CHF
 The price of this pair appears to be floating in the over-sold territory on the RSI oscillator of the 4-hour and daily charts. As the Bollinger Bands on the hourly chart begin to tighten, the impending volatile movement may very well be in an upward direction. Going long might be a wise choice throughout the trading day.
 => The Wild Card
 
 Crude Oil
 After a few days of sustained upward movement, the price of this commodity now appears to be floating in the over-bought territory on the RSI of the 4-hour, daily and weekly charts, signaling a downward correction is long overdue. There also appears to be fresh bearish crosses on the daily chart’s Slow Stochastic, which signifies that forex traders may be capable of entering the impending downward correction at a great entry price by going short on this commodity today.

forex analysis ‏11-May-2009

Posted by admin as Daily forex analysis, Forex News

 => Economic News
 
 USD
 Weakening USD May Signal the Final Stage of Recession
 Last week may have signaled a change in the Dollar’s value against the major currencies, as the USD lost a significant portion of its value despite, or maybe as a result of rather positive data from the U.S economy.

All the significant and influencing data published from the U.S economy last week delivered better figures than those expected by analysts. The Pending Home Sales showed a positive mark for the second time in a row, stating that maybe the housing sector is beginning to stabilize after a long period of crashing. This data has an immense impact on the U.S economy as the mortgage issue was the first catalyst for the current recession. An improving housing sector might be the first sign to tell us that people have regained their faith in the American economy.

Even the poor employment condition is starting to see the light at the end of the tunnel. True, we are still in a situation in which more people are losing their jobs than those who are being hired, but at least the pace of job losses is slowing down. The Non-Farm Employment Change report showed that 539,000 individuals lost their jobs during April, but this is the best figure since January’s publication.

The influence of such news usually has a very “easy to predict” impact on the Dollar - it strengthens it; however, the exact opposite has happened, the greenback has dropped on all fronts.

If you remember, the EUR/USD for example, was traded almost at the 1.6000 level before the financial crisis outburst, and once it did, the EUR/USD dropped to almost 1.22. The rally of all the major currencies against the Dollar could be stating that the forex market is finally correcting itself, meaning that the major economies are finally climbing over the hill.

As for the upcoming week, a batch of data is expected from the U.S economy, and traders are advised to focus their attention to the U.S. Trade Balance report which is expected on Tuesday, the Retails Sales indices on Wednesday and unemployment figures on Thursday, as these indicators are expected to dictate the Dollar’s movements for this week. Will the USD’s weakness continue?
 EUR
 Interest Rate Cut Had the Opposite Effect on EUR
 Traders who went long on the EUR last week saw significant profits as the European currency saw bullish trends within all of its major currency pairs and crosses. The EUR rose over 400 pips against the Dollar, over 200 pips against the Pound and close to 500 pips against the Yen!

The sharp jump in the EUR’s value came at the least expected timing. On Thursday, at 11:45 GMT, the European Central Bank (ECB) published that it cut European Interest Rates to 1.00% from 1.25%. One of the reasons that drove the ECB to cut rates was to further weaken the EUR, as it will serve the European exporters and, by doing so, could improve dramatically the Euro-Zone’s regional economy. For several weeks now, the entire world is looking forward to see the ECB becoming more active in the effort to fight the financial crisis, and it was widely expected that an interest rate cut will take place.

It could even be said that the 1.00% rate was already accepted in the market, which operated as if the decision was already taken. This initiated a bullish trend for the EUR over the past few weeks, and thus all we’re experiencing right now is merely a technical correction to the ECB’s publication which came about two weeks after the European markets had accepted the yet unreleased lower rates.

As for the week ahead, a lot of important data will be released from the Euro-Zone; however, the most vital one will be the German Preliminary Gross Domestic Product (GDP). This indicator measures the change in the value of all goods and services produced by the economy. Considering that Germany holds the strongest economy in the Euro-Zone, its health is vital for the valuation of the entire region, and thus this publication tends to have a great impact on the EUR. In case the real result will indeed show another negative result from this report, the EUR’s bullish trend could reverse as a result.
 JPY
 Yen Slides on Inflation Concerns
 Last week the Yen mainly saw bearish trends against its major currency counterparts. The JPY underwent sharp downtrends against the EUR and the GBP, and experienced a volatile session against the USD during the past week.

It appears that the Bank of Japan’s (BoJ) statement on Thursday was interpreted by investors as a warning sign that inflation in Japan could rise dramatically over the next few weeks. The initial reaction was to avoid holding the JPY. That may have been the exact purpose of the BoJ’s statement.

It is no secret that the Japanese economic chiefs are holding the stand that a weak currency is one of the main keys to pull the local economy out of recession. This is largely due to the support of the exporting sector which has an immense influence over the Japanese economy. The easiest way to try and manipulate the currency value is by cutting interest rates. However, Japan is currently holding the lowest Interest Rates in the industrial world - 0.10% - and it would be difficult to go lower. This leaves the BoJ no choice but to create speculations on rising inflation that has the potential of weakening the JPY, and it seems that they have done just that.

As for the week ahead, traders should focus their attention on statements made by BoJ Governor Masaaki Shirakawa on Wednesday. As proven this week, the BoJ is using its last resort in order to control the economy’s condition, and that is done by speeches and statements. Any update on the BoJ’s plans for the future will probably have an imminent impact on the Yen, and traders should be ready.
 Crude Oil
 Will Crude Oil Reach $60 a Barrel this Week?
 Crude Oil continues its straight bullish trend, and last week a barrel of oil saw a record price of $58.20 a barrel; a price not seen in about six months.

The first reason beyond any doubt to Crude Oil’s surprising rise is the sharp drop in the U.S Dollar this week. Crude Oil is valued in Dollars and as such, any sudden movement in its value is being immediately reflected in the commodity’s value as well, especially when the change is so unexpected. In addition, it has been proven over the past few months that the price of Crude Oil is highly correlated with the American equity markets. The relatively solid week that equity markets saw in the U.S had also a direct effect on oil prices, which helped it reach close to $60 a barrel.

The main question now is whether a barrel of Crude Oil will rise over $60 a barrel this week, and the answer is probably no. Current forecasts are assuming that the traveling expenses this summer will drop significantly as opposed to previous years. This will have a devastating impact on oil’s value. If the upcoming weeks won’t show a massive increase in traveling package orders, then a drop is Crude Oil’s prices is probably just a matter of time.
 => Technical News
 
 EUR/USD
 Last week’s sharp upward movement appears to have pushed the price of this pair into the over-bought territory on the RSI of the 4-hour and daily charts, indicating a downward correction may be due. The volatile breach of the upper border on the 4-hour chart’s Bollinger Bands also signals strong downward pressure. Going short might be a wise choice today.
 GBP/USD
 The price of this pair appears to be floating in the over-bought territory on the RSI of both the hourly and daily charts, indicating that we could see a downward correction in the nearest future. The bearish cross on the 4-hour chart’s Slow Stochastic supports this notion. Going short might be a good strategy today.
 USD/JPY
 There appears to be a bullish cross on the hourly chart’s Slow Stochastic for this pair, indicating an upward correction may be imminent. The recent bullish cross on the 4-hour chart’s Slow Stochastic supports this notion. Going long might not be a bad idea today.
 USD/CHF
 After the volatile downward movement last week, this pair seems poised for a modest correction today. The price currently floats in the over-sold territory on the RSI of the hourly, 4-hour and daily charts, and there is a fresh bullish cross on the 4-hour chart’s Slow Stochastic. All of this information leads to the idea that going long might be a wise strategy throughout the day.
 => The Wild Card
 
 Silver
 The continuous upward trend in this commodity appears to be running out of steam lately. The highs of the upswings have begun to diminish in size and the longer-term oscillators are beginning indicate an imminent correction. There appears to be a bearish cross on the daily chart’s Slow Stochastic, and the weekly Momentum oscillator has turned downwards. Forex traders have a great opportunity to enter this possible trend reversal at a fantastic price and capture the impending price swing.

China’s Growth Outlook Helps Optimism but Event Risks Will keep Sentiment Capped

Posted by admin as Forex News

The markets are off to a roaring start as strong numbers from China have helped buying in risk correlated assets. Risk appetite continues to be the main theme, equity markets in Asia and Europe resuming their rebound. China Purchasing Manager’s Index (PMI), a major indicator of the manufacturing sector, climbed for the fifth consecutive month to 53.5% in April. With equity markets having had…