Month: March 2009

By GCI Fx Research

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3340 level and was supported around the US$ 1.3175 level.  Data released in the eurozone overnight saw flash March eurozone consumer price inflation recede to its lowest level ever, declining to 0.6% from 1.2% in February – much lower than expected.  EMU-16 inflation remains in a downward trend and this will likely provide the European Central Bank with more scope to reduce interest rates in the near term.  It is possible the ECB will reduce its main refinancing rate by 50bps on Thursday from the current 1.50%.  Notable, the ECB has already reduced rates by 275bps since October and there is widespread speculation the ECB may adopt a quantitative easing framework that could involve the purchase of sovereign debt in the secondary market.  Eurogroup chairman Juncker said the European Union’s €200 million fiscal stimulus plan will not have a “tangible immediate” impact on the economy and sees a greater impact in 2010.  Other eurozone data saw German unemployment rise in March, up 69,000 to around 3.586 million.  In U.S. news, St. Louis Federal Reserve President Bullard expressed concen with the rapid growth in the U.S. monetary base.  Data released in the U.S. today saw the 20-city January S&P Case-Shiller home price index off 19.0% while the average price of U.S. homes dipped to 2003 levels.  Data to be released today include March consumer confidence and March Chicago PMI.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥98.65 level and was supported around the ¥97.20 level.   There is talk that Japan may have decided to move forward with its third fiscal stimulus plan.  Today is the last day of Japan’s fiscal year and many data were released overnight.  First, February all household spending was off 3.5% y/y.  Second, February construction orders were off 24.9% y/y to ¥916.8 billion.  Third, February housing starts were off 24.9% y/y to 62,303 units.  Fourth, the February jobless rate rose to 4.4%.  The Nikkei 225 stock index lost 1.54% to close at ¥8,109.53.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.55 level and was supported around the ¥128.20 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥141.35 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥86.65 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8330 in the over-the-counter market, down from CNY 6.8331.

₤

The British pound strengthened vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4345 level and was supported around the $1.4240 level.  Bank of England Deputy Governor Tucker indicated implement countercyclical regulations is “incredibly ambitious.”  London will host the Group of Twenty meeting over the next couple of days and traders are paying attention to some key themes. First, dealers want to see if the eurozone is cajoled into increasing the size of its fiscal stimulus by U.S. officials.  Second, dealers want to see if there is any movement afoot to create an international reserve currency much as China and Russia have suggested.  Third, dealers are waiting to see if the global financial community tried to implement an international regulatory framework, a plan that is being sharply resisted by Germany and some other nations.  Data released in the U.K. today saw the January index of services worsen to -1.3% from -0.8%.  Also, the GfK NOP consumer confidence figure improved to -30 from -35 in February.  Cable bids are cited around the US$ 1.4085 level.  The euro rallied vis-à-vis the British pound as the single currency tested offers round the ₤0.9315 level and was supported around the ₤0.9240 level.

CHF

The Swiss franc appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1355 level and was capped around the CHF 1.1515 level.  Swiss National Bank is expected to continue pursing quantitative easing measures by conducting franc-selling intervention in the foreign exchange markets.  Data released in Switzerland today saw the February UBS consumption indicator decline to 0.89.   U.S. dollar bids are cited around the CHF 1.1165 level. The euro came off vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5140 level while the British pound lost ground vis-à-vis the Swiss franc and tested bids around the CHF 1.6260 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

Turmoil in the U.S. auto industry had currency traders moving into safe haven positions of the Dollar and Yen. Further equity losses also contributed to a lack of confidence in the global economy and lower risk taking.

Economic News

USD – Threat of Auto Bankruptcy Spurs Dollar Buying

The Dollar continued its appreciation yesterday as fears of bankruptcy filings in the U.S. auto industry sparked safe haven currency bets. Losses in U.S. equity markets triggered by autos and bank worries also helped to bring traders to the Dollar. The EUR/USD finished the day at 1.3190 from 1.3268, while the GBP/USD ended at 1.4256 from 1.4276.

Yesterday there was little reason for Forex Traders to take positions in riskier currencies. Over the weekend Treasury Secretary Geithner said some banks may need further capital injections. Also shaping the markets was the Obama administration’s position that it may prefer a bankruptcy filing of an auto maker versus further bailouts. Now a looming threat of a General Motors or Chrysler bankruptcy filing hangs over the head of the market. A situation like this could have a detrimental effect on the financial markets as the debt of these two companies is widely held throughout the global financial system.

Looking to today’s trading, traders should be aware of the release of Canadian monthly GDP at 12:30 GMT. The USD/CAD appreciated by 1.2% today as the market anticipates a contraction of Canadian GDP by 0.6% in January. If the result comes in worse than the forecasted value, look for the USD/CAD to rise close to the 1.2700 resistance level.

EUR – Is Inflation a Concern for the EUR?

The EUR appears to be in a correction as the currency’s gains on the Dollar are unraveling. The currency has slid the past 2 days amid concerns of future monetary policy moves by the European Central Bank (ECB) and a drop in risk tolerance. Yesterday the EUR finished lower against the Dollar while the EUR/GBP fell to 0.9250 from 0.9312.

Market forecasts have the ECB slashing rates by another 50 basis points later this week. However a debate still rages whether the ECB will take further measures to ease the strained European credit markets through a program of buying long term government bonds. This would follow a move taken by the U.S. Federal Reserve and Bank of Japan. Yesterday ECB President Trichet addressed the European Parliament and said that the European economy has weakened since the beginning of the year. Also notable was the downgrade of the sovereign debt rating of Ireland.

Today the EUR may be impacted by the release of the yearly CPI Flash Estimate. It is an early indicator of inflation in the EU. Trichet yesterday mentioned that there is no significant risk of deflation and the ECB has set a target rate of inflation near 2%. The Flash Estimate is forecasted to rise by 0.7%. A higher number that contradicts Trichet’s statement yesterday may hurt the EUR further during today’s trading.

JPY – Yen Boosted by Risk Adverse Trades

Yesterday the USD/JPY saw heavy volatility on the heels of the Obama administration favoring an orderly bankruptcy of the American auto manufactures and large losses in equity markets. The pair ended at 98.15 from 97.75. The EUR/JPY also experienced heavy volatility yesterday, reaching as low as 126.40 to close at 130.05 from an opening price of 129.76. This was the strongest the Yen has been against the EUR in the past 11 days.

In early morning hours of the Japanese trading session, the Yen began to slip after Japanese unemployment numbers came in worse than expected. Some economists believe that unemployment rates may not yet have peaked. As the number of Japanese exports continues to decline, manufacturers will eventually cut back on costs in the form of further workforce reductions. Traders will be watching for the release of the Tankan Manufacturing Index later today. It is a key gauge of market sentiment in the Japanese economy. The release of poor results for this indicator could send the Yen lower against the other majors.

Oil – Crude Drops below $50

The price of Crude Oil has once again dropped below the psychological price level of $50. Crude Oil shed 4.5% yesterday as fears of bankruptcy for the Big 3 American auto manufacturers hurt the demand for Crude and sent equity markets lower. The recent recovery in the Dollar has also been a source of restrain in the price of Crude Oil.

The market has once again sent the price of Crude lower as the global economy shows very few signs of recovery. Continued job losses and equity losses have dropped the price of Crude Oil from last week’s high of $54. Traders may not see any support today as the U.S. CB Consumer Confidence will be released today at 2:00pm GMT. Don’t be surprised to see a gloomy reading from American consumers. This may send Oil lower today, near the $48 price level.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-sold territory on the 4-hour chart’s RSI indicating an upward correction may be imminent. The upward direction on the daily chart’s Slow Stochastic also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

GBP/USD

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the Hourly 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

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. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.1480 level. The 4 hour chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

Oil prices are once again dropping, and a barrel of oil is currently traded around $48.93. And now, all oscillators on the 4- hour chart are giving bullish signals, indicating that oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By GCI Fx Research

€

The euro fell vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3160 level and was capped around the US$ 1.3285 level.  Traders will pay close attention to the Group of Twenty meeting in London on 2 April amid widespread doubt as to how much officials can realistically expect to accomplish this week.  One key theme being watched closely is any indication that Europe will not give in to the Obama administration’s putative calls for more fiscal stimulus.  Another key theme this week will be any sort of reaction to China’s and Russia’s calls for a new international reserve currency, possibly to the detriment of the U.S. dollar.  The Obama administration is said to be forcing General Motors Chief Executive Officer Wagoner to step down from his post with one report suggesting the government believes a “quick and surgical bankruptcy” may be the best way to rescue the ailing company.  In eurozone news, European Central Bank President Trichet is scheduled to speak later in the day.  The European Commission’s economic sentiment indicator for the eurozone fell to 64.6 in March from 65.3 in February – the lowest print since 1985 as the new orders sub-index fell to -57.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.95 level and was capped around the ¥98.30 level.  Data released in Japan overnight saw February industrial output off 9.4% m/m, worse-than-expected and marginally better than January’s record 10.2% pullback in the sector.  Notably, exports were off 49% y/y in February and these data may collectively force the Aso government to broaden the fiscal stimulus plan it is availing to counter the massive recession in Japan.  Other data saw the trade balance print at ¥217.26 billion between 1 – 10 March.  Japan’s fiscal year ends tomorrow.  The Nikkei 225 stock index lost 4.53% to close at ¥8,236.08.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥126.40 level and was capped around the ¥130.55 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥135.70 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.40 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8331 in the over-the-counter market, up from CNY 6.8280.  Chinese ambassador to the U.K. said China is not calling for a replacement of the U.S. dollar.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4110 level and was capped around the $1.4295 level.  Data released in the United Kingdom overnight saw February net lending to individuals increase to ₤1.3 billion and February mortgage approvals reached their highest level in nine months, up to 38,000 from 32,000 in January.  Overall mortgage lending activity expanded to ₤1.5 billion in February from ₤1.1 billion in January.  Additionally, M4 money supply growth rose 18.7% in February.  Cable bids are cited around the US$ 1.4085 level.  The euro rallied vis-à-vis the British pound as the single currency tested offers round the ₤0.9340 level and was supported around the ₤0.9275 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1515 level and was supported around the CHF 1.1440 level.  Swiss National Bank is expected to continue pursing quantitative easing measures by conducting franc-selling intervention in the foreign exchange markets.  U.S. dollar bids are cited around the CHF 1.1165 level.  The euro came off vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5125 level while the British pound lost ground vis-à-vis the Swiss franc and tested bids around the CHF 1.6230 level.

A$

The Australian dollar moved lower vis-à-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.6765 level and was capped around the $0.6925 level.  Data released in Australia overnight saw HIA new home sales up 3.9% m/m.  Australian dollar bids are cited around the US$ 0.6690 level.

C$

The Canadian dollar came off vis-à-vis the U.S. dollar today as the greenback tested offers around the C$ 1.2535 level and was supported around the C$ 1.2380 level.  Bank of Canada Governor Carney speaks today.  U.S. dollar bids are cited around the C$ 1.2065 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The Dollar rose 0.2% against the EUR as weaker than expected Euro-Zone industrial orders and German inflation data undermined recent investor confidence and favored the safe haven greenback. The ECB is pressured to follow the Federal Reserve in buying bonds to lower Interest Rates, a policy known as quantitative easing. Along expectations that it will cut its main policy Rate by half a percentage point to a new record low of 1%, the market is keen to see how far it might follow other central banks such as the Fed in taking unconventional steps to shore up the economy.

Economic News

USD – Could the Dollar Continue Its Bullish Trend?

Last week gave some extraordinary opportunities for Forex traders to make profits from going long on the U.S Dollar. The two leading fronts on which the USD marked unique gains are against the EUR and the GBP.

It appears that the USD saw this bullish trend as a result of some unexpected positive news, especially regarding the housing sector. Last week, both the Existing Home Sales, and the New Home Sales, delivered better than expected figures, reflecting in 4.72M residential buildings that were sold during February, and in 337K new single-family homes that were sold during February as well. This data came as a big surprise, as analysts had quite gloomy predictions for the two reports, and therefore turned a very strong uptrend for the Dollar. In addition, as you all must remember, this entire recession began as a result of a deep crisis in the U.S home sector, and now a series of positive result from that sector has managed to elevate the USD so rapidly. Another positive data which came last week were the Durable Goods Orders indices which delivered both much better than expected figures. Whilst analysts anticipated negative growth in the total value of new purchased orders for durable goods during February, the real figures showed almost 4.0% growths.

As for the week ahead, two major events will most likely determine the Dollar’s direction for the upcoming week. The first will be the Pending Home Sales which is currently expected to continue to positive line of the housing sector; however a surprising negative result could create some worries among investors regarding the U.S economy. The second major news event will of course be the Non-Farm Employment Change, expected on Friday, 12:30 GMT. as proven many times before, investors are putting a lot of faith in the credibility of this survey, and as such react immediately to its results.

Traders are advised to follow those two leading economic indicators as they are likely to set the tone for the USD trading this week.

EUR – Would the ECB Cut Interest Rates to 1.00% Later On This Week?

An extremely volatile week, which included many ups and downs, concluded with a deep drop for the EUR. The EUR/USD dropped to almost 1.32, and the EUR/JPY fell below 129.50.

The first reason for the EUR drop was the strengthening Dollar, which rose against the EUR as well. The second and even greater reason was the unwillingness of the European Central Bank (ECB) to create a rescue plan for the European Nation, which could somehow imitate the American plan. Investors are now seeing the U.S economy as a dynamic, flexible economy, in which its leaders are doing all they can in order to salvage the situation while they can. On the other hand, the European monetary system is beginning to be seen as a conservative organization, which is reluctant to react to the rapidly changing conditions of the global economy. Investors are thirsty for a European rescue plan, and if one shall arrive, it will probably signal an uptrend for the European currency.

As for this week, the ECB will announce the new Minimum Bid Rate on Thursday, and is widely expected to cut Interest Rates by 0.5% to merely 1.00%. Some might say that this move is too little, too late, as the U.S, Japan and Great Britain have all lowered their Rates below 1.00%, without succeeding in making a real change in their economies. Nevertheless, if indeed the ECB will decide to cut Interest Rates, an immediate reaction of a drop in EUR value is expected.

Forex traders are also advised to follow Jean-Claude Trichet’s speech on Monday, as he may discuss the possibility of cutting Interest Rates. Such comments could have massive influence on the market. 

JPY – The JPY Looks to Halt Its Bullish Momentum

Over the last trading week the JPY saw rising trends against the EUR and the GBP, and experienced mixed results vs. the USD. The JPY underwent it most remarkable bullish trend against the EUR, as the EUR/JPY dropped to the 129.40 level.

Last week the Japanese Trade Balance showed a difference of -0.04T between exported to imported goods during February. Although this is a negative figure, it was much better than the -0.29T which was expected. This indicator has an immense impact on the Japanese economy as it relies greatly on its export activity. Also last week, the Tokyo Core Consumer Price Index, which measures the change in price of goods and services, rose by 0.4% in March, also indicating that the Japanese economy is on the phase of expanding, and not contracting.

As for the week ahead, most of the impacting data will be delivered from the Euro-Zone and the U.S economy. Nevertheless, traders should follow the Tankan Indices, which are expected on Tuesday night. These surveys cover a wide range of the local manufacturers, and thus have a large impact on the Yen. Analysts forecast extremely negative figures for the indices, and such result might generate a bearish trend for the JPY.

OIL – Will Crude Oil Reaches Below $50 a barrel?

Crude Oil prices has dropped dramatically just before the weekend. After peaking at over $54 a barrel, Crude Oil is currently traded for $51.50 a barrel. Crude Oil prices fell predominantly as a result of the surging Dollar. Crude Oil is priced in Dollars, and as such, a rising trend for the USD tends to have to opposite affect on Crude Oil. 

Another data that helped to lower Oil prices was the U.S Crude Oil Inventories indicator from Wednesday, which came higher-than-expected, reflecting 3.3M additional barrels of Crude Oil held in inventory by commercial firms from the previous week. The combination of high supply and strong Dollar are a simple formula for dropping Crude Oil prices.

As for this week, traders should follow global economic news, especially from the U.S, as they are likely to determine Oil prices. Traders are advised to keep notice that for as long as the USD continues to appreciate, Crude Oil prices might continue to decline, as low as $50 a barrel! 

Technical News

EUR/USD

The 4 hour chart is showing that the pair is still floating within its bearish channel. However, the RSI on the daily has crossed the 30 line, indicating that the market is oversold. The Slow Stochastic on the 4 hour chart is also showing a fresh bullish cross, suggesting that a bullish trend might take place. Going long with tight stops appears to be preferable.

GBP/USD

The bearish trend continues with plenty of steam as the pair now floats around 1.4210. The RSI of the hourly charts indicates that there is still more room to run. The next target price might be 1.4143. Going short with tight stops seems like the right choice today.

USD/JPY

The 4 hour chart is showing mixed signals with its Slow Stochastic 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. Going short with tight stops appears to be preferable strategy.

USD/CHF

There is a very distinct bullish formation continues on the hourly level, as the pair is now floating in its lower section. In addition, all oscillators on the daily chart are pointing up, suggesting that the bullish move might extend. Going long might be the right strategy today.

The Wild Card – Oil

This commodity has been on a sharp sinking movement over the weekend and this bearish correction is likely to stick around in the near future. All charts are still providing a mild bearish signal; however, there may be short-term corrections during this downtrend. Therefore, forex traders can maximize profits by selling on highs and taking advantage of this bearish trend. 

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The United Kingdom Gross Domestic Product fell a bit more than expected in the fourth quarter of 2008 according to a report by the Office of National Statistics today. The U.K. preliminary estimate showed that quarterly GDP fell by 1.6 percent in the October through December quarter of 2008 following a revised decline of 0.7 percent in the third quarter. The previous release on fourth quarter GDP had shown a 1.5 percent decline.

The fourth quarter GDP decline brought the U.K. economy into its first recession since 1991 and the 1.6 percent GDP decline marked the sharpest quarterly fall in GDP since the second quarter of 1980. The generally accepted definition of a recession is negative GDP growth for two consecutive quarters and the U.K. joins other major economies such as the U.S. and the Eurozone in recession.

On an annual basis, the fourth quarter GDP fell by 2.0 percent from the level of the fourth quarter of 2007 and marked the largest annual decline since the 1991 recession. Today’s data just surpassed economic forecasts which were expecting the quarterly GDP to decline by 1.5 percent and the annual GDP rate to fall by 1.9 percent.

Contributing to the contraction in GDP was a decline of total production output in the fourth quarter by 4.5 percent after falling by 1.8 percent in the third quarter. Construction activity fell by 4.9 percent while total services output saw a decline by 0.8 percent in the fourth quarter and surpassing the 0.5 percent decline in the third quarter. Household spending declined by 1.0 percent in the quarter.

Overall for the 2008 year, U.K. GDP increased by 0.7 percent after advancing by 3.0 percent in 2007 and marked the slowest growth pace in 17 years. The U.K. trade deficit narrowed to 7.6 billion pounds in the fourth quarter from 9.9 billion pounds in the third quarter.  Exports decreased by 3.9 percent while imports also decreased by 5.9 percent for the quarter.

British Pound Sterling mixed in Forex Trading versus majors.

The British pound has been mixed today in forex trading against some of the other major currencies.

The pound is lower versus the US dollar today for the third straight day as the GBP/USD trades at the exchange rate of 1.4305 at 3:03pm EST after opening the day at 1.4481(00:00GMT) according to currency data by Oanda.

The euro has lost ground today versus the pound as the EUR/GBP trades at 0.9298 after opening the day at 0.9368. The pound has advanced versus the Swiss franc as the GBP/CHF has gained approximately 65 pips from its opening rate of 1.6276 to trading at 1.6341.

The pound, meanwhile, is trading lower against the Japanese yen today with the GBP/JPY falling from 142.43 to trading at 140.24. Against the Canadian dollar, the pound is falling for the third straight day as the GBP/CAD has fallen from the 1.7776 opening rate to trading at the exchange rate of 1.7680 CAD per GBP.

EUR/GBP Chart – The Euro falling today against the British Pound but the EUR/GBP pair is still trading above the 21-day moving average(green) on the daily chart. (55-day moving average in red, 100-day moving average in blue)

By GCI Fx Research

€

The euro fell sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3290 level and was capped around the US$ 1.3590 level.  Stops were reached below the $1.3435 level as the common currency reached its lowest level this week.  Italian bank Monte dei Paschi di Siena SpA sought government aid after announcing its Q4 2008 profit plunged 47%.  Data released in the eurozone today saw January industrial new orders decline 3.4% while France reported its Q4 2008 gross domestic product was off 1.1% q/q and 0.9% y/y.  Bank of Italy reported the EMU-16 economy contracted at a slower pace in March.  Germany reported January import prices were off 0.5%.  In U.S. news, traders will pay close attention to the meeting in Washington, D.C. today between President Obama and the chief executives of several financial institutions.  Some U.S. banks are now trying to return the TARP funds they borrowed last year or withdrawing their TARP applications.  The other big news in Washington, D.C. continues to be Treasury Secretary Geithner’s plans to enhance regulation of derivatives and seek power to seize troubled financial institutions.  Data released in the U.S. todays saw February personal spending climb +0.2% while personal income was off 0.2%.  Also, the personal consumption expenditures core price index was up +0.2% m/m and 1.8% y/y.  Additionally, final March University of Michigan consumer sentiment printed at 57.3, up from 56.3 at the end of February.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.10 level and was capped around the ¥98.85 level.  Sentiment in global equities markets soured overnight and the yen moved higher as risk aversion increased.  Data released in Japan overnight saw February retail sales decline 5.8% y/y, the sharpest decline since February 2002 and the fifth consecutive monthly decline.  Also, February core consumer prices were flat y/y but most economists expect annualized rates of inflation to turn negative soon.  Core consumer price inflation for the Tokyo area softened to a preliminary 0.4% in March.  Many traders believe Bank of Japan will soon increase its purchase of asset-backed securities to try and ease credit strains.  Japan’s fiscal year concludes on 31 March and some financial institutions may receive subordinated loans from the central bank to bolster temporary liquidity demand.   The Nikkei 225 stock index lost 0.11% to close at ¥8,626.90.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥129.35 level and was capped around the ¥133.85 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥139.00 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.05 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8280 in the over-the-counter market, down from CNY 6.8304.  People’s Bank of China called for enhanced international financial regulation to arise from the G20 meeting in London next week.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4265 level and was capped around the $1.4495 level.  Bank of England Chief Economist Dale reported said the central bank may only need to purchased a “relatively small” amount of corporate bonds as part of its quantitative easing strategy.  BoE has purchased ₤13 billion in government bonds and ₤128 million in corporate bonds to date.  Yields on gilts have declined 40-60 basis points since the BoE announced it will purchase government debt.  Dale also sees an economic recovery materializing by the end of the year.  Chancellor of the Exchequer Darling said the government will likely hold a “significant” stake in the U.K. banking sector for years to come.  The government has injected ₤37 billion of capital into major banks and offered insurance against toxic assets worth hundreds of billions more. Data released in the U.K. today saw the Q4 current account deficit narrow more than expected to ₤7.6 billion.  Prime Minister Brown indicated the government will not implement a broad second fiscal stimulus next month when the Budget statement is released.  Cable bids are cited around the US$ 1.4085 level.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.9275 level and was capped around the ₤0.9420 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1440 level and was supported around the CHF 1.1220 level.  Data released in Switzerland today saw the March KOF leading indicator decline to -1.79.  U.S. dollar bids are cited around the CHF 1.1165 level.  The euro came off vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5175 level while the British pound gained ground vis-à-vis the Swiss franc and tested offers around the CHF 1.6385 level.

A$

The Australian dollar moved lower vis-à-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.6900 figure and was capped around the $0.7030 level.  Australian dollar bids are cited around the US$ 0.6785 level.

C$

The Canadian dollar came off vis-à-vis the U.S. dollar today as the greenback tested offers around the C$ 1.2410 level and was supported around the C$ 1.2265 level.  U.S. dollar bids are cited around the C$ 1.2065 level.

Daily Market Commentary provided by GCI Financial Ltd.

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Source: ForexYard

The Dollar has seen increased strength as rising U.S. equity markets helped to erode the dramatic price declines from the previous week. Trading will end this week as a slue of economic data due to be released today will provide ample opportunities for traders to enter the market on higher than normal volatility.

Economic News

USD – Dollar Recovery Continues

The Dollar rose yesterday against most of its major rivals as riskier currencies fell out of favor. Despite strong gains in U.S. equities, the Dollar gained ground as the likelihood of further European Interest Rate cuts loom over the currency markets. At the end of the Thursday’s trading, the EUR/USD was little changed, despite high volatility most of the day. The USD/JPY closed higher at 98.32 from 97.77. Against the Pound the Dollar also finished higher at 1.4481 from 1.4585.

The dramatic sell off of the Dollar appears to have ceased as yesterday’s trading was characterized by reduced market risk and future Interest Rate levels. The Dollar was sold heavily last week, sparked by the announcement that the Federal Reserve will begin a quantitative easing program. Slowly the currency markets are returning to relatively normal trading patterns as traders see little reason to take risks on higher yielding currencies in the face of the economic downturn.

Today’s trading may be characterized by a glut of economic indicators surrounding consumer spending and attitudes. Due today are personal spending numbers and a revised consumer sentiment report. A better than expected result in the data releases could provide another boost to the Dollar as the currency continues to recoup its losses from last week. Look for the EUR/USD to drop below the 1.3500 level today.

EUR – EUR Set for Further Rate Cuts

The EUR experienced mixed results yesterday as the market begins to price in potential Interest Rate cuts to the European currency. Minor declines were seen against the Dollar, but the EUR climbed consistently against its other currency crosses. The EUR/JPY finished the day higher at 133.41 from 1.3267, and the EUR/GBP ended up at 0.9368 from 0.9301.

Market participants are set to start pricing in the potential for another Interest Rate cut by the European Central Bank (ECB). The ECB is scheduled to meet next week to decide if European Interest Rates will need to be trimmed from their current rate of 1.5%. One politician weighing in on the matter was British Prime Minister Gordon Brow. In a press conference; Brown said he expects that the European benchmark rate would fall below its current level. Perhaps Prime Minister Brown is short on the EUR for obvious reasons.

Traders today will want to pay attention to a few important releases from the Euro-Zone economy and Britain. From Europe we will see new industrial order numbers. This indicator is forecasted to show worsening numbers that highlight the deep recession that plagues Europe. Also we will have Britain’s current account figures released. This number may have the potential to surprise the market. Better than expected results could add some buoyancy to the GBP against the EUR in today’s European trading session.

JPY – Yen Foresees New Resistance Level

The Yen suffered during yesterday’s trading; sliding against the Dollar, but in early morning hours of the Japanese trading session the trend began to reverse. Recent gains in equity markets have proven to be troublesome for the Yen. The Japanese currency has traditionally been used as a safe haven asset, but recent safe haven currency movements have not been kind to the Yen. Perhaps this is due to the underlying weakness in the Japanese economy and the rapid decline of the country’s export sector.

The Yen slid against the Dollar to 98.32 from 97.77. Against the Pound the JPY finished down slightly at 142.40 from 142.63. The JPY’s most notable loss was against the EUR, as the EUR/JPY level finished up 74 pips at 133.41. The financial year in Japan wraps up at the end of March. With the New Year coming, so may be the 100.00 Yen mark against the Dollar. The resistance level is significant as the USD/JPY has not touched on this valuation since the beginning of November.

Crude Oil – Crude Oil Prices Soar

The price of Crude Oil soared in Thursday’s trading session, adding to big gains in the past several weeks. Crude prices finished up slightly over $1.50 or 3% at $53.81. Helping the commodity continue its price appreciation has been the recovery of U.S. equity markets from their New Year lows. What has also helped Crude prices as of late is the increased optimism by from investors, which was initiated last week by a string of positive economic data releases from the U.S.

An uptrend is showing in the last two weeks of trading with a host of a number of factors working in favor of rising Crude Oil prices. The rally in stocks has correlated with the rise in price of Crude Oil. It has also raised hopes that a spike in demand may be coming along with it. Adding support to the price appreciation has been the steadfast commitment by OPEC to continually reduce the supply of Crude Oil. Combine this with a weak U.S. Dollar and it makes for a rally in the price of Oil. Traders may look for a short term price cap of $55 to take profits.

Technical News

EUR/USD

The typical range trading on the 4 hour chart continues. Both the hourly RSI and Slow Stochastic are floating in 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.

GBP/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.4480 level. The 4 hour chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, 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. In that case traders are advised to swing in after the breach takes place.

USD/CHF

The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI indicating an upward correction may be imminent. The upward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

Oil prices rose significantly in the last two week and peaked at $53.75 per barrel. However, daily charts’ 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.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The New Zealand economy decreased for the fourth straight quarter in the fourth quarter of 2008 according to a release today by Statistics New Zealand. The GDP report showed that the Gross Domestic Product declined by 0.9 percent in the October to December quarter following a GDP decline in the third quarter by 0.4 percent. On an annual basis, the GDP declined by 1.1 percent over the fourth quarter of 2008 following an annual decline of 0.1 percent in the third quarter.

Economic forecasts had expected that the GDP would decline by 1.1 percent for the fourth quarter and by 2.0 percent annually over the fourth quarter of 2007.

The fourth quarter GDP was the lowest quarterly reading since the December of 2000 quarter when the GDP contracted by 0.8 percent. Contributing negatively to the GDP decline for the quarter was a decrease of 3.8 percent in the manufacturing sector.

A separate report by New Zealand Statistics showed that exports and imports declined in February compared to February of 2008.  Exports fell by 6.6 percent on an annual basis over the February 2008 level and marked the first annual decline since August 2007.  Imports decreased by 14.2 percent on an annual basis and registered the largest decline in 16 years in February. Contributing to the lower imports was a decrease in oil imports by 70.1 percent.

New Zealand’s trade balance registered a surplus of $489 million NZ dollars in February.

The report also commented on the New Zealand currency stating, “The New Zealand exchange rate as measured by the Reserve Bank’s Trade Weighted Index (TWI) has fallen 28.3 percent since February 2008.”

More information on the NZ TWI can be found here.

The U.S. economy contracted in the fourth quarter of 2008 by more then previously reported according to the latest release by the U.S. Commerce Department.  The final estimate report released today showed that the U.S. Gross Domestic Product contracted at an annual rate of 6.3 percent in the October to December 2008 quarter.

Today’s report surpassed February’s preliminary estimate of a 6.2 percent GDP decline and marks the largest quarterly GDP fall since 1982. The third quarter of 2008 GDP fell by 0.5 percent while the second quarter GDP grew by a 2.8 percent. Today’s data did manage to surpass economic forecasts that were expecting a decrease of 6.6 percent in the fourth quarter.

Contributing largely to the decreased GDP for the fourth quarter was a second consecutive quarterly decline in consumer spending which makes up approximately two-thirds of U.S. economic activity. Consumer spending decreased by 4.3 percent in the fourth quarter after decreasing by 3.8 percent in the third quarter and produced the lowest reading since 1980.

Exports declined sharply from the third quarter as exports of goods and services decreased by 23.6 percent in the fourth quarter after increasing by 3.0 percent in the third quarter. Imports declined in the fourth quarter by 17.5 percent following a decline of 3.5 percent in the third quarter.

Weekly Jobless Claims rise.

Weekly U.S. initial jobless claims rose in the week that ended on March 21st according to the U.S. Labor Department today. Jobless claims totaled 652,000 unemployed workers edging up by 8,000 from the week prior that had 644,000 initial jobless claims.  The 4-week moving average of unemployed workers fell by 1,000 from the prior week to 649,000 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending March 14th grew by 122,000 workers to a new record high total of 5,560,000 unemployed workers. The four week moving average of continuing claims grew by 123,750 workers from the previous week to 5,331,250 workers.

Forex Market – US Dollar mixed in Fx Trading today.

The U.S. dollar has been mixed in forex trading today against the other major currencies. The dollar has gained so far against the euro, British pound, Swiss franc and Japanese yen while decreasing versus the Australian, New Zealand and Canadian dollars today.

The euro is lower versus the dollar today as the EUR/USD has declined from today’s 1.3568 opening(00:00 GMT) to trading at approximately 1.3529 in the afternoon of the US trading session at 3:43pm EST according to currency data by Oanda.

The British pound has fallen so far today versus the American currency from the 1.4584 opening to trading at 1.4447 dollars per pound and is falling for the second consecutive day.

The dollar is trading higher against the Japanese yen after falling yesterday as the USD/JPY has gained slightly from its 97.79 opening to trading at 98.77 yen per usd. The dollar has declined against the Canadian dollar after opening at 1.2313 earlier today to trading later at 1.2293.

The USD has gained against the Swiss franc after opening at 1.1227 to trading at the 1.1284 exchange rate. The Australian dollar has also gained ground as the AUD/USD has advanced from 0.6993 to 0.7022 while the New Zealand dollar has been virtually unchanged from its opening.  The NZD/USD trades at 0.5746 after opening the day at 0.5745.

GBP/USD Chart – The British Pound declining against the US Dollar in Forex Trading for the second consecutive day(Hourly Chart).