Global Equity Slump Props USD

Posted by admin as Daily forex analysis, Forex News

Risk aversion propped the dollar higher against the majors in Wednesday trading amid a retreat in the global equity markets – with Shanghai’s Composite Index plummeting by 5% overnight. Commodities also slumped with gold falling to its lowest level in 2-weeks just above the $927 per ounce level and crude oil sliding to below $64 per barrel. The greenback pushed the euro toward the 1.40-figure and the Swiss franc around the 1.09-handle.

US economic reports released this morning saw durable goods orders decline sharply in June, posting a monthly decline of 2.5% versus a downwardly revised increase of 1.3% from May. The excluding transports durable goods orders improved to 1.1% compared with a downwardly revised 0.8% increase a month prior. The Fed’s Beige Book revealed the pace of economic decline had moderated or stabilized at a low level in most districts adding that the manufacturing sector remained subdued but slightly more positive than in the past. The Fed said there was still slack in the labor markets, with most sectors reducing jobs or holding steady and net employment falling.

Meanwhile, NY Fed President Dudley expressed optimism over the economy, saying he expects moderate growth in the second half of this year, albeit considerably slower than in past recoveries. Dudley said “the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation”, suggesting that the Fed will likely maintain low interest rates for some time to come. Lastly, he said that “if the recovery does, in fact, turn out to be lackluster, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low” in the near-term.
The euro plummeted to a 2-week low just above the 1.40-figure as traders dumped riskier assets in favor of safe-haven currencies. In the coming session, economic data from the Eurozone consist of Germany’s July unemployment rate, unemployment change, Eurozone economic sentiment, business climate and consumer sentiment.

With the EURUSD pair failing to break above the upper range of its consolidation above the 1.43-level, the single currency could drift towards the lower trendline in the coming weeks, which rests near the 1.3930-figure.

EUR/AUD - Euro Australian Dollar, American Session - 30/07/09

Posted by admin as Daily forex analysis, Forex News

1,7050. EUR AUD is in an downtrend directed by 4H exponential moving averages. The volatility is high. Bollinger bands are parallel and form the trend. ForexTrend 1H, 4H, daily (Mataf Trend Indicator) is in a bearish configuration. 1H, 4H, daily ForexSto (Modified Stochastic) indicate a bearish pressure on EUR AUD. The downtrend should continue on 1,6650 support (400 pips).

Resistances

1,7100 - 1,7170

Supports

1,7035 - 1,7000

Daily Analysis - July 29, 2009

Posted by admin as Daily forex analysis, Forex News

EUR/USD

Yesterday the pair tested the lows in the current range at 1.4120. So far that level has held. A break below indicates a swing down, although a move below 1.4100 would help confirm.

1.4060 is the next support level, and a push below that level likely to test 1.4010-1.4000.

On the upside, resistance is at 1.4200, 1.4220, 1.4260 and the highs of the range just beyond 1.4300.

—

USD/JPY Swing Down?

The pair broke below support yesterday signaling at least a short-term swing down. Although trendline support at 94.00 needs to be broken to confirm.

Support is at 94.00-93.80, 93.40 and then 93.00.

A push back above 94.80 would indicate a likely test of recent swing highs at 95.20-95.40. A break above that area indicates another move higher.

USD – Dollar Goes Volatile on Optimistic Homes Sales Data

Posted by admin as Daily forex analysis, Forex News

Economic News

USD – Dollar Goes Volatile on Optimistic Homes Sales Data

The U.S. Dollar experienced an extremely volatile trading day on Monday, as the New Home Sales data was released from the U.S. economy. The result was a better-than-forecast 384,000 homes versus the previous release of 346,000 homes. This is a whopping 11% increase, the biggest monthly increase since December 2000. This led to many analysts stating that this is the end of the U.S. housing slump. The result led to volatile USD trading. Moreover, the Dollar closed lower against some of its main currency pairs, due to optimistic data from regions such as the Euro-Zone.

At one point in trading the USD actually reached a 7-week low vs. the EUR at 1.4299. This was following the extremely optimistic German consumer confidence figures. However, the pair finally closed 33 pips higher at the 1.4246 level. The USD recorded its second daily loss in a row of 30 pips against the British Pound, as the GBP/USD finished trading at the 1.6484 level. This comes about as optimistic data from Britain continues to drive up the British currency. The USD/JPY pair finished higher, to close at the 95.17 rate. This comes about as the Yen falls from higher risk appetite.

Looking ahead to today, forex traders can expect plenty of news coming out of the U.S. The most important of this being the CB Consumer Confidence figures at 14:00 GMT, the speech by Federal Reserve Chairman Ben Bernanke at 22:00 GMT, and the speech by Treasury Secretary Timothy Geithner from 23:00 GMT. These 3 events are set to determine the level of the Dollar as Tuesday’s trading takes off. The big 3 pairs to watch today are the EUR/USD, GBP/USD, and USD/JPY, as traders anticipate a weaker U.S. currency as the U.S. economy continues to recover.

EUR – EUR Boosted by German Consumer Confidence Figures

The EUR hit a 7-week high versus the USD in Monday’s trading, following the Gfk German Consumer Climate figures. The result showed a 14 month high 3.5, significantly higher than the forecasted 2.9. This helped the EUR strengthen throughout Monday’s trading. The reason why this data is so significant is due to Germany being the largest economy in the Euro-Zone. The EUR also was helped as U.S. New Home Sales jumped 11%. The EUR is likely to continue benefiting from the optimistic economic news.

The EUR/USD cross hit 1.4299, before closing 33 pips higher at the 1.4246 level. However, the European currency fell by 15 pips vs. the British Pound to 0.8635. This may be due to investors buying-up Pounds as risk appetite increases with more and more signs of global economic recovery. The EUR/JPY pair climbed by over 35 pips to the 1.3532 level, as traders continued to ditch the JPY due to preferring riskier assets, such as the EUR and GBP. Therefore, overall, the EUR did make some reasonable gains in Monday’s trading.

Today, we won’t be expecting much economic news coming out of the Euro-Zone. However, Britain and Switzerland are likely to be the key drivers of the European currencies later today. Britain is set to release the CBI Realized Sales figures at 10:00 GMT. Switzerland is scheduled to publish the UBS Consumption Indicator at 06:00 GMT. The results of both of these are set to drive both the GBP and CHF in today’s trading. Additionally, the EUR will go volatile on both of these publications, and on key data coming out of the U.S. throughout today’s trading.

JPY – Yen Falls to 3-Week Low vs. Dollar

The Yen fell to a 3-week low against the Dollar yesterday, in response to the rise in new U.S. home sales. The Yen also weakened on speculation that declines in currency volatility will spur carry trades. In carry trades, investors borrow at a low rate in one country and invest in another country with higher returns. This behavior is likely to continue as the main economies improve, and traders sell-off the safe-haven JPY. Thus the Japanese currency fell over 30 pips against the USD, EUR and GBP.

It is likely that the Yen will continue to decline today, as forex traders continue to take into account the optimistic economic data that was published from the U.S. and the Euro-Zone. The JPY will go very volatile in late trading, as Japanese Retail Sales are published at 23:50 GMT. It would be a wise choice for forex traders to open their JPY positions now in order to have the opportunity to profit from volatile market behavior as Tuesday’s trading commences.

Crude Oil – Crude Oil Hits 3-Week High

Crude Oil hit a 3-week high of $68.94 a barrel on Monday, as the USD declined in response to positive housing data from the U.S. However, weaker earnings figures in some instances pushed Oil down from its peak, as the commodity finished trading at about $68.06 a barrel. Crude was also helped by a weaker Dollar in earlier trading due to positive economic news from Germany. However, it seems that in this instance, risk appetite wasn’t strong enough to hold-up the value of Crude Oil on Monday.

As for today, Crude prices may rise if the USD weakens considerably, and there is increasingly optimistic economic news led by the U.S. Additionally, traders need to feel that there is enough demand to support Crude Oil at its current price level. In order to take advantage of the current trends, it is advisable for forex traders to begin opening their positions in Crude Oil and other commodities prior to volatile market conditions.

EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4385	1.6660	96.05	1.0750	0.8400	0.8685
	1.4355	1.6585	95.75	1.0735	0.8370	0.8670
	1.4300	1.6545	95.40	1.0715	0.8345	0.8645
Support	1.4225	1.6485	94.90	1.0653	0.8250	0.8615
	1.4185	1.6400	94.60	1.0630	0.8200	0.8600
	1.4165	1.6360	94.25	1.0600	0.8175	0.8580

Technical News

EUR/USD

The latest upward movement has pushed this pair into the over-bought territory on the hourly and daily charts, signaling an impending downward correction. As the price hovers near the upper border of the daily chart’s Bollinger Bands, the downward pressure may be gaining strength. Going short might be a wise choice today.

GBP/USD

Since Friday’s trading session the Cable recouped losses, appreciating to 1.65. The Slow Stochastic of the 4 hour chart is showing no crosses in the horizon, and the bullish momentum there appears to be intact as well. Daily chart’s oscillators also support this notion. Placing long positions might be a right choice for today.

USD/JPY

The hourly and the daily charts indicating that the bullish trend has not yet said its last word as this currency pair is in the midst of a strong upward trend. However the 4 hour chart’s RSI and Slow Stochastic indicators are pointing down. A preferable strategy might be waiting for a clearer signal before entering the market on this pair.

USD/CHF

The pair is continuing its downtrend with full steam, and is now traded around the 1.0690 level. As the current price on the daily chart has dropped beneath the Bollinger Bands’ lower boarder, another bearish session could take place. Going short might be a good strategy today

The Wild Card

NZD/USD

It seems that the bullish momentum is back again as the carry trade pair is heading up with plenty of room to run. All of the technical oscillators on the hourly and the daily charts are giving a bullish signals and this pair’s target today might be the 0.6670 level. This gives forex traders a great opportunity to rejoin the market at an excellent entry price.

FOREX-U.S. dollar rallies from six-week lows vs euro

Posted by admin as Daily forex analysis, Forex News

Bernanke gives less bullish outlook on U.S. economy

* Caterpillar posts strong Q2 earnings

* Sterling down, Bank of Canada holds rates steady (Updates prices, adds quotes)

By Gertrude Chavez-Dreyfuss

NEW YORK, July 21 (Reuters) - The dollar rebounded from six-week lows against the euro on Tuesday after Federal Reserve Chairman Ben Bernanke gave a cautious assessment on the U.S. economy, which curbed risk appetite.

Risk appetite had improved the last few sessions after a string of stronger-than-expected U.S. corporate earnings for the second quarter.

Bernanke, in his testimony before the House Financial Services Committee, said unemployment was likely to remain high into 2011, which he warned could undermine consumer confidence and derail a recovery. See [ID:nWEQ001226].

Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Connecticut, said Bernanke’s “cautious tone” threw the dollar a lifeline, especially against the euro, which had earlier climbed to its highest level since early June.

“His bottom-line assessment that the U.S. economy is still nowhere near ready for a policy reversal flew in the face of equity market investors who have been busily discounting a return to growth,” said Wilkinson.

In midday New York trading, the dollar fell 0.9 percent against the yen to 93.33 .

The euro turned lower against the dollar, falling 0.2 percent to $1.4197 and erasing gains that took it to six-week highs earlier in the day at $1.4277 , according to Reuters data.

The ICE futures’ dollar index <.DXY> ,a measure of the greenback’s value against a basket of six currencies, was little changed at 78.872. Earlier, the index had fallen to 78.591, its lowest since early June.

FEW SURPRISES IN BERNANKE TESTIMONY

Overall, Bernanke’s remarks provided few surprises, analysts said, especially after his essay in Tuesday’s Wall Street Journal, in which he said the Fed does have an exit strategy plan from the U.S. central bank’s quantitative easing measures.

But Bernanke’s comments on unemployment and consumer spending undercut the euro and high-yielding currencies such as the Australian and New Zealand dollars.

Earlier in the day, investor appetite for risk was evident in equity markets, especially after Tuesday’s generally strong earnings. Heavy equipment maker Caterpillar ,for instance, posted a second-quarter profit and gave an upbeat earnings outlook for 2009. [ID:nWNAB9306].

Some analysts, however, sounded a note of caution on recent U.S. earnings.

“I would say that the earnings beats were the slightest of margins. There were a couple of misses on the revenue side,” said Jacob Oubina, senior currency strategist, at Forex.com in Bedminster, New Jersey.

“So a lot of the earnings generated in the second quarter were due to cost-cutting measures, mainly on the employment side. The sustainability of the beats as we head into the fourth quarter is therefore questionable,” Oubina said.

The U.S. dollar, meanwhile, retraced losses against the Canadian dollar to trade flat on the day at C$1.1063 . The greenback had earlier fallen to session lows at C$1.0967 after the Bank of Canada left interest rates at a historic low of 0.25 percent and gave an upbeat economic forecast. [ID:nBAC000314].

Sterling underperformed, trading down 0.8 percent at $1.6418 after public finances data showed the worst June performance on record, with net debt standing at 56.6 percent of gross domestic product. (Editing by Leslie Adler)

Forex: GBP/USD recovery finds resistance at 1.6265

Posted by admin as Daily forex analysis, Forex News

FXstreet.com (Córdoba) – The Pound is recovering today from yesterday losses. GBP/USD rose today reaching an intra-day high at 1.6265 after the BoE interest rate decision. The pair failed to break above the resistance zone at 1.6270 and weakened. The pair is pulling back now after the opening bell at Wall Street and is approaching to the 1.6200 zone. So far today the pair is 1.01% above today’s opening price.

According to Greg Holden, technical analyst at ForexYard: “The bullish trend is loosing its steam and the Cable seems to consolidate around the 1.61 level. The pair currently sits near the upper border of the hourly 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.”

G8 Meeting to Spur Forex Market Volatility

Posted by admin as Daily forex analysis, Forex News

At the beginning of this week, the forex market appears flatter than usual. Most currencies have leveled off and there appears to be quite a few consolidation trends on the technical charts. No doubt this pressure is building up towards this week’s G8 meeting in which the world’s financial leaders will discuss economic recovery plans. The participants typically reveal the summit’s main talking points to reporters throughout the various meetings which start this Wednesday in L’Aquila, Italy, and the impacts vary depending on the statements

Fundamental Outlook for US Dollar: Neutral

Posted by admin as Daily forex analysis, Forex News

The US dollar ended the past week as the strongest of the majors, but it certainly wasn’t due to fundamental reasons. Instead, risk aversion reared its head once again following disappointing US news, triggering sharp declines in the US stock markets and FX carry trades, as well as increased demand for low-yielding currencies like the US dollar and Japanese yen. Using the DJIA as a barometer, there is potential for “risky” assets to fall again in the near term as the daily charts reflect a maturing head and shoulders pattern.

The data the recent moves came from the US non-farm payrolls report, which showed that the pace of job losses had accelerated, rather than slowed, during June at a rate of 467,000. Meanwhile, the unemployment rate rose to 9.5 percent from 9.4 percent and average hourly earnings growth stagnated during the month, bringing the annual rate down to a nearly 4-year low of 2.7 percent from 3.0 percent. All told, the continued deterioration in the labor markets that has led to more job losses and falling wages does not bode well for consumption growth, which composes roughly 70 percent of US GDP, through the rest of the year.

Looking ahead to Monday, data may show that conditions in US non-manufacturing sector - which accounts for approximately 70 percent of total economic activity in the country and includes retail, services, and finance - improved somewhat in June as the Institute for Supply Management index is estimated to rise to 46.0 from 44.0. However, consumer confidence has shown emerging pessimism, primarily on the economic outlook, as the Conference Board’s measure surprisingly fell to 49.3 in June from 54.8.  Since risk trends have proven to be the greater driver of price action in the forex markets, a weaker than expected result could trigger flight-to-quality and thus, gains for the US dollar.

On Thursday, wholesale inventories are expected to fall negative for the ninth straight month and could register a 1 percent drop for the month of May. That said, this is a very lagging indicator and may simply continue to signal that businesses are cutting back on supplies in anticipation of weaker demand down the road. On Friday, the trade deficit may widen for the third straight month in May to $30 billion as exports continue to dive. Finally, the preliminary reading of the University of Michigan’s consumer confidence index for July is projected to fall very slightly to 70.6 from 70.8. However, there is downside potential in light of the sharp drop we saw in the Conference Board’s surprise drop in consumer confidence during June.

Dollar steady on lower US Consumer Confidence

Posted by admin as Daily forex analysis, Forex News

The Canadian dollar fell against the U.S. currency on Tuesday as lower U.S. consumer confidence data for June dampened hopes for an early economic recovery, and pushed the market toward safer havens. Sterling reached an eight-month high against the dollar on Tuesday due to surprisingly strong UK house price data, but its gains fizzled out after a moderating decline in U.S. home prices which later…