forex analysis 03-Jun-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 ADP Non Farm Employment Report on Tap - Will USD Weakness Continue?
 The dollar dropped against most of its major currency rivals yesterday, as strong U.S. housing sales data reinforced optimism about the health of the global economy, sapping safe-haven demand for the greenback. All good news aside, by yesterday’s close, the USD fell sharply against the EUR, pushing the oft-traded currency pair to 1.4310. The dollar experienced similar behavior against the GBP and closed at 1.6588.

The dollar had begun the day staging a modest recovery after Monday’s steep drop, but the trend changed quickly as U.S. stocks turned higher, helping to renew the recent rally in higher risk currencies. Analysts said the dollar’s failure to recover shows that investors are convinced the we have seen the worst of the global crisis, and only have room to improve, which is encouraging them to buy higher risk currencies and assets. A leading indicator released yesterday was the Pending Home Sales report. The figure saw its biggest monthly gain in 7.5 years which indicated that the U.S recession was easing. However, it failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies. Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the ADP None-Farm Employment Change at 12:15 GMT. Analysts are forecasting this figure to decrease from its previous reading. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Federal Reserve Chairman Ben Bernanke’s testimony at around 14:00 GMT. This testifies is very important as it is very likely to Impact the Dollar volatility. Traders are advised to watch closely, as this is likely to set the pace of the Dollar going into the rest of the week’s trading.
 EUR
 Will the EUR Hold its Recent Gains?
 The EUR was affected by two main things in yesterday’s trading; the global stock market rally and mixed feelings ahead of Thursday’s Interest Rate decision by the European Central Bank (ECB). The U.S. stock market rally led investors to buy-back into the EUR, and dropped the Dollar, as investors looked for returns on risky investments in Tuesday’s trading. The EUR appreciated by around 120 pips versus the USD to close at 1.4300 in yesterday’s trading. The EUR/GBP pair closed almost unchanged at 0.8631 ahead of Thursday’s Interest Rate decisions for both the Euro-Zone and Britain. Overall, the EUR, which for the last few months has been sold by most traders, is seeing these sell-positions unwind and is now making a small recovery. The question now is can EUR bullishness continue versus the Dollar? Sentiment in the Euro-Zone economy has brightened in the past week following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-Euro crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., Japanese, and other key economies will affect their positions.
 JPY
 Yen Experiences Mixed Results against Major Currencies
 The Yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the EUR yesterday and closed its trading session at around the 136.60 level. The JPY also saw bullishness against the USD as it jumped around 70 points and closed at 95.70. The Bank of Japan needs to keep an eye on the global economy as the Japan’s finance minister, Kaoru Yosano, said the country’s worst post-war recession has already hit bottom. But a full recovery might not come until early 2010 as manufacturers gradually lift output from very low levels. Traders today have very little fundamental news emanating from Japan as the only indicator being released is the capital spending report. Analysts forecast the figure to decrease from its previous reading. This indicator typically generates small amounts of volatility. However, the GBP and the USD appear to be clutching the reins of today’s market. Traders would be wise to note its future direction as it usually carries a heavy impact on the other currencies.
 Crude Oil
 Traders Await Crude Oil Inventory Report
 Crude oil rebounded from the day’s lows, finishing little changed at $68.20, as the dollar weakened against the EUR, bolstering the appeal of commodities as an alternative investment. Oil prices have risen every day since May 21 on snips of moderately good news from manufacturers, home builders and the U.S. government. Today, the release of crude oil inventory is likely to help determine the market’s next direction for Black Gold. Oil inventories have fallen in each of the previous three reports from the Energy Information Administration but remain close to an 18-year high. The result of this was a dramatic increase of commodity prices. A release of a string of positive economic figures could help continue its bullishness. Therefore, traders are advised now to make some profits as the price of Crude Oil is set to remain volatile in the short-medium term.
 => Technical News
 
 EUR/USD
 The pair continued with the bullish trend, as it’s now being traded around the 1.4300 level. The 4-hour chart’s MACD is reaching the 0.010 level, suggesting that the bullish momentum has more steam in it. Going long seems to be the preferable choice today.
 GBP/USD
 There is a very accurate bullish channel formed on the daily chart as the Cable is now floating in its upper section. Currently, as all oscillators on the 4-hour chart are pointing up, it seems that another bullish session could take place today.
 USD/JPY
 After three failed attempts to breach through the 95.30 level, it appears that the pair has resumed its bullish activity. A bullish breach at the 4-hour chart’s Slow Stochastic also supports that notion. Going long with tight stops appears to be the right choice today.
 USD/CHF
 The pair continued its freefall as yesterday it dropped below the 1.0650 level. However, as a bullish cross is taking place on both the 4-hour and the daily charts, it seems that a bullish reversal might take place today.
 => The Wild Card
 
 Gold
 Bullish trends were initiated around the $880 level, and have continued with full steam as currently an ounce of gold is valued at $985. Currently, gold is reaching towards a very strong resistant level placed at the $989 level. If the resistant level will be breached, another sharp bullish move might take place. This could be a great opportunity for forex traders to join a very popular trend.

Risk Appetite surges after stronger than expected China PMI - USD Falls

Posted by admin as Forex News

The USD has begun the new month on a weak footing, as news from the automotive sector has increased the risk premium on the greenback. It’s all but certain that the US largest car manufacturer, GM, will enter bankruptcy protection today. Proceedings should go relatively quickly as negotiations have proceeded for some time and we expect the impact on the market sentiment to be tempered. Risk…

forex analysis 02-Jun-2009

Posted by admin as Daily forex analysis, Forex News

  => Economic News
 
 USD
 Dollar Moves on Release of Strong Economic Data
 The release of strong economic data from the U.S. economy led to a stock market rally in the U.S. and the rest of the world. This led to strong implications for the Dollar. The Dollar rose against the Yen, whilst dropping against the British Pound. However, there was very little movement against the EUR. The main factors affecting Dollar volatility yesterday were the release of optimistic manufacturing, personal income, and construction figures from the U.S. This led traders to the conclusion that the worst of the economic downturn in the U.S. is over.

The results of the data releases led the Dollar to tumble to an 8-month low against the Pound. The pair closed higher by nearly 230 pips at 1.6445. The greenback rose by nearly 140 pips vs. the Yen to 96.37, as investors dropped the JPY for higher-yielding assets. The Dollar’s behavior against the EUR was more stable as the pair remained virtually unchanged, up barely 10 pips at 1.4154. This was mainly due to traders putting their money into riskier investments on both sides of the Atlantic, leading to low volatility in the EUR/USD currency cross.

Looking ahead to today, there are 2 important news events coming out of the U.S. These are the Pending Home Sales data set to be released at 14:00 GMT, and the Total Vehicle Sales figures that will be released throughout the afternoon. Forex traders are advised to take up their positions in the Dollar and its major crosses early in the day as markets are likely to go volatile as Europe also publishes unemployment data later in the day. Additionally, investors are likely to weigh-in on the real value of the U.S. Dollar as the forex market still reacts to Monday’s U.S. data.
 EUR
 Pound Climbs to an 8-Month High Versus the Dollar
 The Pound climbed to an 8-month high in Monday’s trading versus the Dollar. This was in part due to a global stock market rally, led by the U.S. that was sparked by the release of highly optimistic U.S. economic data. This was what the GBP needed to extend its rally against the Dollar. However, investors dropping lower-yielding currencies such as the Dollar, for higher-yielding ones such as the Pound led to a very bullish Pound yesterday. The GBP also recorded great volatility and gains versus its other major currency pairs.

The Pound rose by a massive 230 pips against the Dollar to around 1.6445. The GBP recorded massive gains vs. the JPY to close nearly 400 pips higher at 158.24, as traders dropped the safe-haven JPY currency for the GBP. The Pound also gained an impressive 100 pips against the EUR to close at 0.8618. These results show a resurgent British Pound, as the global economic situation improves in Britain and the rest of the developed economies. Therefore, as long as long as the global economic situation improves, then the Pound is likely to reap the benefits.

Today is set to be another congested news day for the British economy and the Pound. There is the release of Construction PMI at 7:30 GMT, Net Lending to Individuals and Mortgage Approvals at 8:30 GMT and Nationwide Consumer Confidence figures at 23:01 GMT. It would be a wise move for traders to open their GBP positions both prior to and after these economic data releases, as the pound is likely to be volatile throughout the trading day.
 JPY
 JPY Tumbles Against its Major Currency Pairs
 The JPY tumbled against its major currency pairs yesterday as the Japanese Stock market made big gains. This was ignited by a release of a string of strong economic figures from the U.S. immediately fueling a rally on Wall Street. Japanese shares, especially the automakers, such as Toyota were boosted by the General Motors bankruptcy. This led to signs of optimism that Japan will gain a higher global market share of the auto industry.

The Yen declined by about 440 pips vs. the GBP to close at 158.24. The Yen also made steep declines against the Dollar to close about 140 pips lower at 96.37. The EUR/JPY pair finished higher on Monday by over 200 pips at 136.47. This market behavior came about as traders dropped the Yen for higher-yielding currencies in yesterday’s trading. The repercussions of a weaker Yen in the long-term may turn out to be fruitful for the Japanese economy as competitiveness returns to Japan’s export market

 Crude Oil
 Crude Oil Eyes $70 a Barrel
 Crude Oil recorded another day of bullishness on Monday, as the black gold extended its bullish run. Crude closed up $1.25 or 2% in yesterday’s trading. This came about as the U.S. released impressive economic data, indicating that the U.S. economy will continue to beat many analysts’ expectations. Traders are also still taking into account the optimism of the OPEC meeting from the latter part of last week.

The price of Crude Oil is only likely to keep on rising as long as the global economic situation continues to pick up. In recent months the U.S., Euro-Zone, British, and Chinese economies have signaled that they are getting back on track. This is despite rising unemployment. If the trend continues, then OPEC’s forecast may be correct and we may see Crude at $75-$80 sooner rather than later.

 => Technical News
 
 EUR/USD
 After the sharp rise in price yesterday, the pair has been down-correcting to find its true value. With most oscillators beginning to go neutral, the daily chart’s RSI still shows this pair in the over-bought territory, meaning there is still room for a downward correction. The Bollinger Bands are tightening on the hourly chart. As such, we might be seeing some downward movement today. Going short might be a wise choice.
 GBP/USD
 This pair appears to be floating in the over-bought territory on the hourly and daily charts’ RSI, indicating a downward correction may be impending. The bearish cross on the daily chart’s Slow Stochastic also supports this notion. However, there does appear to be a bullish cross on the 4-hour chart’s Slow Stochastic, which demonstrates that this pair may actually be range trading with clear ups and downs. Buying on lows and selling on highs could be a good move throughout the day.
 USD/JPY
 The recent uptrend has pushed the price of this pair into the over-bought territory on the RSI of the 4 hour chart, signaling an imminent downward correction. A bearish cross may also be forming on the 4 hour charts’ Slow Stochastic, which would support the notion of a downward move. Going short with tight stops might be a wise choice today.
 USD/CHF
 With relatively flat movement over the past several days, this pair has remained in a range-trading pattern for some time. Most oscillators are giving off neutral indicators, but there was a recent bullish cross on the daily chart’s Slow Stochastic, signaling a correction to the sharp downward movement from last week. With the weekly Momentum oscillator still showing an upward direction, going long with tight stops may be a wise choice today
 => The Wild Card
 
 NZD/USD
 This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross forming on the hourly charts’ Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.