Month: May 2009

By GCI Fx Research

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The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3425 level and was supported around the US$ 1.3210 level.  The common currency has been bid higher over the past several sessions as U.S. equity markets have staged a recovery.  The S&P has erased its year-to-date losses. Data released in the U.S. today saw March 2009 total construction activity up +0.3% m/m and off 11.1% y/y.  Additionally, March pending home sales were up +3.2%. Federal Reserve Chairman Bernanke testifies tomorrow and traders will be closely scrutinizing his comments to learn his current assessment of the economy.  More importantly, dealers want any information they can glean about the results of the banks’ stress tests.  In addition to indications that Citigroup and Bank of America will be forced to obtain additional capital, there is talk that Wells Fargo may be forced to seek more capital.  In eurozone news, German finance minister Steinbrueck said he is concerned with the rise in unemployment in several European Union countries.  German economics minister Guttenberg said Germany must reach a solution “rather quickly” to establish bad banks to acquire banks’ toxic assets.  Data released in the U.S. today saw EMU-16 April manufacturing contract to 36.8, marginally better than expected.  Also, the EU Sentix investor confidence indicator improved to -34.3 from -35.3 in April.  It was also reported that German March retail sales were off 1% from February.    Euro bids are cited around the US$ 1.2765 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.70 level and was capped around the ¥99.55 level.   Japanese Golden Week holidays continue and liquidity is reduced in the Tokyo market.  Finance minister Yosano said major economies must support demand by taking appropriate “fiscal and monetary measures” to counter the global economic recession.  Last month, the government announced an economic stimulus package valued at about ¥57 trillion that included about ¥15.4 trillion in fresh spending and tax cuts.  Bank of Japan is expected to continue its quantitative easing policies for several months.  The Nikkei 225 yesterday stock index will next reopen at ¥8,977.37.  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 ¥132.85 level and was supported around the ¥131.30 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.15 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.10 level.  In Chinese news, the U.S. dollar ended at CNY 6.8225 in the over-the-counter market.

₤

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5020 level and was supported around the $1.4835 level. Cable approached its highest level since 12 January.  Cable bids are cited around the US$ 1.4735 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8945 level and was supported around the ₤0.8885 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.

U.S. Pending Homes sales rose more than expected in the month of March according to the monthly report produced by the National Association of Realtors. The NAR report showed that pending home sales contracts signed by buyers increased by 3.2 percent in March following a revised 2.0 percent gain in February. Market forecasts had predicted the sales data would show no change or remain flat for the month. The pending home sales level is 1.1 percent above the March 2008 level.

NAR chief economist Lawrence Yun commented in the report about the increased sales figures this month, “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment.”

Regionally, pending home sales increased the most in the southern United States with a 8.5 percent rise in March.  Sales also increased in the west by 3.9 percent while decreases were seen in the northeast by 5.7 percent and the midwest by 1.0 percent for the month. On an annual basis, sales gains were registered in the south, west and midwest by 7.7 percent, 1.7 percent and 8.2 percent, respectively.  The northeast pending home sales have fallen by 24.1 percent on an annual basis.

US Dollar lower in forex trading.

The U.S. dollar has been trading lower in forex trading against the major currencies in the US morning session today. The dollar has fallen against the euro, Australian dollar, British pound, Japanese yen, Swiss franc and Canadian dollar while trading about unchanged against the New Zealand dollar.

The euro has advanced versus the dollar as the EUR/USD has gone from today’s 1.3323 opening exchange rate at 00:00 GMT to trading at approximately 1.3364 in the morning of the US trading session at 11:41am EST according to currency data by Oanda.

The British pound has increased today versus the American currency from 1.4959 to trading at 1.4984 dollars per pound. The dollar has decreased against the Canadian dollar after the USD/CAD’s opening at 1.1819 earlier today to trading at 1.1781 later.

The Australian dollar has also traded higher versus the USD as the AUD/USD trades at 0.7386 after opening today at 0.7348 while the New Zealand dollar is virtually unchanged versus the USD and trades at 0.5742 after opening at 0.5741.

The dollar has decreased against the Japanese yen today as the USD/JPY has come down from its 99.46 opening to trading at 99.10.

Meanwhile, the USD has fallen against the Swiss franc today as the USD/CHF has declined from the 1.1338 opening to trading at 1.1280.

GBP/USD Chart – The British Pound Sterling advancing today against the US Dollar in Forex Trading and looking to advance above the notable 1.5000 exchange rate level.

By Fast Brokers

Today’s early rally in gold is selling off as the upward movement failed to attract substantial volume.  Meanwhile, the precious metal is drifting below the highly psychological $900/oz mark and 4/29 highs.  Gold remains lodged in our downtrend dating back to February with the S&P futures approaching their own highly psychological 900 level.  What should stick out are the counterbalancing momentums as the negatively correlated investment vehicles battle with their respective critical levels.  With the upward momentum seemingly on the side of U.S. equities, it is difficult to have a positive outlook on the precious metal right now trend wise.  However, the performance of gold has been particularly unpredictable, so there may be more reliable investment vehicles out there.  To the downside, the next stop for gold appears to be our 2nd tier uptrend line and our $884.70/oz support.  If the precious metal can manage to climb back above today’s high, then the next meaningful barrier would likely be our $897.30/oz resistance.

Today’s activity should come down to the Pending Home Sales data release from the U.S.  Even though we maintain our bearish outlook on gold trend-wise, we wouldn’t be surprised to see a near-term pop in the precious metal should U.S. equities hesitate at 900.

Fundamentally we find resistances of $894.04/oz, $897.30/oz, $899.72/oz, $903.59/oz, and $906.42/oz.  To the downside, we see supports of $889.87/oz, $887.31/oz, $884.70/oz, $882.53/oz, and $880.03/oz. Gold is currently trading at $890.65/oz.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The USD/JPY is trying to build on Friday’s bounce, flirting with the idea of retesting 100 while the S&P futures battle their own demons at 900.  Unfortunately, yesterday’s run was backed by light volume, meaning the currency pair’s current upswing could be short-lived.  The USD/JPY encounters its first test in our 3rd tier downtrend line, followed by March highs.  We notice a head and shoulders formation with the USD/JPY on its right shoulder as we type.  Therefore, bulls will be looking for any near-term upward movement to be supported by heavy volume if the currency pair is ready to surpass 100 and April highs.

While the upside has its apparent hurdles, the downside is backed by our 2nd tier uptrend line and the resilience the uptrend has shown thus far in 2009.  The USD/JPY’s re-approach of 100 comes with the S&P futures attempting to climb above their critical 900 level.  Therefore, the significance of the moment is relayed by each as investors await Thursday’s ECB meeting and the release of America’s stress test results.

Fundamentally, we find resistances of 99.79, 100.56, 101.43, 102.14, and 103.15.  To the downside, we see supports of 99.20, 98.56, 97.98, 97.11, and 96.33.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 99.42.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The rally in the Cable is pulling back after Friday’s insufficient volume failed to push the GBP/USD above the highly psychological 1.50 mark and April highs, the two barriers to a lasting uptrend.  If volume wanes, we wouldn’t be surprised to see more profit-taking in the currency pair.  The Cable has ducked back below our 3rd tier uptrend line while our 2nd tier uptrend and downtrend lines reach an inflection point.  There is plenty of room between present price and our 2nd tier uptrend line, meaning the GBP/USD could have overextended itself.  Therefore, if our present 1.4826 support doesn’t hold, it looks like the next stop for the Cable could be our 1.4730 level.  Despite near-term downward pressure, momentum remains to the upside since we saw some encouraging data again from Britain last week.  Furthermore, the GBP/USD remains positive correlated with the S&P futures, which made some impressive strides of their own last week.

While volume could be light today, action should pick up as we approach Thursday’s ECB press conference and the release of the highly anticipated stress test results.  Britain has a banking holiday today, meaning we won’t see any data until tomorrow’s Halifax HPI, Construction PMI, and Nationwide Consumer Confidence.  The Halifax HPI comes a day after America’s Pending Homes Sales release, so we will get a better picture of the housing industry in both economies.  If the data points come in better expected then we could see a nice boost to the upside in the GBP/USD.

Fundamentally, we find resistances of 1.4880, 1.4905, 1.4951, 1.5009, and 1.5059.  To the downside, we see supports of 1.4826, 1.4773, 1.4730, 1.4677, and 1.4626.  1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4856.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The EUR/USD is selling off Monday after the currency pair failed to get follow-through volume to the upside during Friday’s trading session.  Hence, the EUR/USD has failed to tackle 4/30 highs, and could be declining to set a 3rd bottom in a head and shoulders formation.  The keys to success in a continuation of the uptrend will be staying above 4/30 and 3/30 lows.  If the 2nd key doesn’t hold, we could witness a subsequent sharp movement to the downside.  Intraday, we are seeing the inflection point of our 3rd tier downtrend line and 2nd tier uptrend line.  The inflection point occurs just below our 1.3208 support and just above 4/30 lows, highlighting the near-term significance of this level.  Meanwhile, the EUR/USD will need a surge in volume to the upside to plow through 4/30 highs.  Although we may see further weakness in the near-term, we maintain our bullish outlook on the EUR/USD until the aforementioned keys are broken.

The EUR/USD released weaker than expected German Retail Sales and Sentix Investor Confidence numbers earlier today.  However, we don’t view the data as game changing, particularly German Retail Sales since it tends to fluctuate within a reasonable range and the German economy is more manufacturing-focused.  FX investors will be paying closer attention to America’s Pending Home Sales release in a few hours.  Analysts are expected continued stabilization in this area, and the data is heavily-weighted since the economic crisis began with a malfunctioning housing market.  We expect to EUR/USD to remain positive correlated with the S&P futures for the next few sessions as investors eagerly await the ECB’s meeting on Thursday.

The ECB’s meeting on Thursday will be critical since the ECB governors have offered various opinions as to the direction of the central bank’s monetary policy.  The ECB has maintained its benchmark rate at a respectable level while avoiding liquidity measures such as quantitative easing.  The uncertainty among investors could keep any uptrend in check as investors eagerly await results from the meeting.  The ECB’s announcement will come on the same day as America’s stress test results, meaning we expect to see a large spike in volatility on Thursday.

Fundamentally, we maintain resistances of 1.3236, 1.3295, 1.3329, 1.3389, and 1.3420.  To the downside, we hold supports of 1.3208, 1.3170, 1.3127, 1.3089, and 1.3039.  The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.3231.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Source: ForexYard

The U.S. dollar approached a 3 week low against the EUR as better economic data worldwide saw investors grow increasingly confident that the worst in the global economy may be past, boosting risk appetite. The Dollar recent losses however, may be tempered before the Federal Reserve and U.S. banking regulators reveal the results from stress tests on the nation’s 19 biggest banks this week. The results of the U.S. banks’ stress tests may pose downside risks for the markets, and as such, the dollar may garner support as a safe- haven currency.

Economic News

USD – Bank Stress Test may Suppress USD

A deeper look into forex market activity since Friday indicates two primary forces driving the USD in today’s early trading hours. The first is news that the recent bank stress test results will be published later this week, the second is the continuation of the swine flu epidemic of fear that has apparently gripped the attention of many investors. Losing ground against most of the major currency counterparts, the USD could potentially dig itself deeper in the hole in the coming weeks.

After the market opened for today’s early trading session, the USD apparently dropped towards 1.3330 against the EUR and as low as 1.4960 against the Pound Sterling, breaking last week’s low against that pair. As many analysts are anticipating results from the bank stress test to show that the USD is not as safe an investment as many think, traders could see a sudden flight from the greenback in the coming weeks as banks attempt to determine its true value. Just how low will the Dollar drop in such a situation?

Considering that much of the economic data being released from the United States has been relatively positive, it seems strange that an out-flux from the USD will occur, but if market forecasters foresee doom in the Dollar’s future, the predictions of a 1.4500 mark against the EUR and 1.5100 mark against the Pound, may very well be reached in the weeks ahead. Other data, if it continues to show positive results, may also signal a flight from the forex market in exchange for the higher yielding assets of the stock markets, thus resulting in further depreciation in common safe-havens such as the greenback.

EUR – EUR Benefits from Recent Market Fears

The EUR may well have been last week’s victor in the forex market, making solid gains against all of its currency rivals. The EUR started this week up against the USD near the 1.3330 price level, and started climbing back towards 0.8950 against the GBP in today’s early trading hours.

As fear of the international swine flu outbreak proceeds, investors are finding ways out of their typical safe-haven assets as they appear to be the primary targets of investment flight. Also, with the US releasing information about its recent bank stress test this Thursday, market analysts are predicting a heavy downfall for the US Dollar, the typical safe-haven of choice for many investors. As Euro-Zone economic data has shown lately, its economy may be on a more solid track to recovery than many had anticipated. This unexpected result has made the EUR the primary beneficiary of safe-haven flight. Many expect this to continue through this week as well.

One of the main beneficiaries for the 16-nation currency this week is the fact that it has a very low news week ahead, and most news emerging from the Euro-Zone’s primary contender – the United States – is forecast to show negative results. Typically a low news week damages a currency as other markets take the wheel, but a dead news week in light of the US’s bank stress test may very well prove positive for the EUR. Traders may want to look to an appreciating EUR over the coming week; a price level near 1.3600 against the greenback may not be wholly unrealistic.

JPY – Yen’s Fate may be Tied to USD; Bad News Ahead?

The Japanese Yen has taken a heavy toll against all of its currency rivals over the previous few trading days. The market shows the Yen near the 100.00 mark against the USD and the 132.60 mark against the EUR, an ominous signal for the island currency. As Japan’s economy continues to shrink, and as investors flee from traditional safe-havens in light of the outbreak of swine flu internationally, the JPY may be taking the worst beating of all. Many wonder how long this negative turn can last for Japan’s currency.

With the US set to release data on its recent bank stress test the bad news for the Dollar which many expect may take some of the downward pressure off of the Japanese Yen, but even this is doubtful. With hardly any economic news coming out this week, the JPY may be tied to the fate of the US Dollar. If the greenback indeed depreciates in the days ahead this could signal a tidal shift away from common safe-havens and a reinvestment into less traditional banking systems, such as those in Europe recently. Whatever the outcome, many traders appear ready to sell the JPY this week.

OIL – Crude Price Goes Up as USD Comes Down

As last week’s trading session came to an end, the price of Crude Oil appeared to make a rather abnormal upward turn. Starting near $50.50, the price rose just above $53.00 during the last remaining trading hours on Friday. As today’s trading session began, the price of oil appeared to remain in place above the $53 mark. What may have caused such a movement?

Glancing over the fundamentals doesn’t appear to provide a clear-cut indication for this upward movement. However, there does appear to be one trend which may have pushed the price of oil higher: the USD’s depreciation. Crude Oil is sold in US Dollars, which means the two are negatively correlated. As the USD depreciated from numerous factors, such as the swine flu outbreak and increase in risk appetite, the price of Crude Oil likewise moved positive. However, the price has yet to breach any real significant barriers. If Crude Oil’s price moves beyond the $54 mark in this week’s trading, investors may look to buy this commodity as it discovers its new price level. Also, if the USD does go weaker in the days ahead, traders should look to buy Crude Oil as a relatively safe investment.

Technical News

EUR/USD

The price of this pair is floating near the upper border of the Bollinger Bands on the hourly and 4-hour charts, signaling moderate downward pressure. With the price currently floating in the over-bought territory on the hourly chart’s RSI, the notion of a downward correction appears to be getting stronger. Going short with tight stops might be a wise choice today.

GBP/USD

There is a very accurate bullish channel forming on the 4 hour chart as the pair is now floating in the middle of it. 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. Going short with tight stops appears to be preferable strategy

USD/JPY

The sustained upward movement of this pair has begun to push the long-term oscillators, such as the 4 chart’s RSI, into the over-bought territory. This appears to be putting downward pressure on the price of this pair as it has begun to level off. As momentum shifts into a downward posture, going short with tight stops might be a good strategy.

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The hourly 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 – EUR/GBP

After a sharp bearish move that took place last weekend, the pair is showing potential for a reversal. The bullish momentum was originated at the lower border of the Bollinger Bands, meaning that there is still more room left for this trend. forex traders might have a great opportunity to enter the trend at a very convenient entry price.

Forex 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 moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3325 level and was supported around the US$ 1.3220 level.   Risk appetite returned to the market ahead of Monday’s release of banks’ stress tests results in the U.S.  There is speculation that Citigroup and Bank of America will be strongly encouraged to raise additional capital by the U.S. Treasury and there are whispers that four other U.S. banks may be forced to seek additional capital.  Data released in the U.S. today saw the April ISM manufacturing index print at 40.1, up from 36.3 in March and above expectations.  The prices and employment sub-indices also improved.  Additionally, March factory orders were off 0.9%, March building permits were upwardly revised to -8.5%, and final April University of Michigan consumer sentiment improved to 65.1 from 57.3 in March.  In eurozone news, European markets were closed for the May Day holiday.  The European Central Bank is largely expected to reduce its main refinancing rate target by 25bps next Thursday and may announce some quantitative easing measures.  Euro bids are cited around the US$ 1.2765 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.55 level and was supported around the ¥98.50 level.   Data released in Japan overnight evidenced a dramatically weakening economy.  First, unemployment climbed to its highest level in four years, printing at 4.8%.  Second, the March core consumer price index fell 0.1%, the first year-over-year decline since late 2007 and these data evidence a greater potential of a deflationary spiral.  Collectively, these data suggest Bank of Japan may need to provide additional monetary stimuli and this will likely increase pressure on the government to provide more fiscal stimuli.  The Nikkei 225 yesterday stock index climbed 1.69% to close at ¥8,977.37.  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 ¥132.35 level and was supported around the ¥130.30 level.  The British pound moved higher vis-à-vis the yen as sterling bstested offers around the ¥148.30 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.60 level.  In Chinese news, the U.S. dollar ended at CNY 6.8230 in the over-the-counter market.

₤

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4935 level and was supported around the $1.4750 level.  U.K. markets were opened today during the May Day holiday but will be closed on Monday.  Data released in the U.K. today saw the April CIPS manufacturing survey rally to 42.9 from 39.5 in March, an indication the manufacturing sector’s weakness may be abating.  Other data saw March total consumer lending growth reach a new all-time low as the increase in mortgage lending nearly halved from February’s level.  In contrast, however, mortgage approvals increased for the fourth consecutive month.  Total consumer lending expanded by ₤885 million in March and mortgage lending expanded by ₤757 million.  Also, March M4 money supply growth printed at 0.2% m/m and 17.8% y/y.  Cable bids are cited around the US$ 1.4735 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8885 level and was capped around the ₤0.8985 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.

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity failed to grow in April for the fifteenth straight month but improved to its highest level since September. April’s ISM Report On Business index reading for economic activity climbed to its highest level since late 2008 at 40.1 percent following March’s 36.3 percent level.

The April score surpassed economic forecasts that were expecting the ISM index reading to register 38.4 percent. A score above 50 percent is considered to be growth and less than 50 percent is considered to be a contraction.

Norbert J. Ore, chair of the ISM Business Survey Committee, commented on the report saying, “The decline in the manufacturing sector continues to moderate. After six consecutive months below the 40-percent mark, the PMI, driven by the New Orders Index at 47.2 percent, shows a significant improvement. While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again.”

Just about all of the manufacturing sectors tracked for April showed improvement over the March report with the exception of customer inventories which decreased by 4.5 percent for the month.

New orders, production, employment, supplier deliveries, inventories, prices and the backlog of orders all showed increased readings for April. The exports index registered a 5.0 percent increase for April while imports also increased by 9.0 percent.

UMichigan/Reuters Consumer Sentiment survey rises.

The final consumer sentiment survey by the University of Michigan and Reuters also rose to its highest level since September in April. The consumer sentiment survey increased to a 65.1 score in April after a score of 57.3 in March and recorded the largest monthly rise since October 2006. April’s score surpassed market forecasts that had predicted the final monthly survey would come in at a 61.9 score.

The expectations index, which measures future economic sentiment, increased from 53.5 in March to 63.1 in April. The current conditions index, which measures current economic sentiment, increased from 63.3 in March to 68.3 in April. The 1-year inflation expectation gained a bit from 2.6 in March to 2.8 in April.

Richard Curtin, Director of the survey, commented on the survey that, “Two-thirds of all consumers anticipated that the economic policies of the Obama administration will be effective in improving national economic conditions, with most of the gains anticipated over the next several years.” On the current economic landscape Curtin furthered that, “Consumers continued to report that their finances remained dismal and their buying plans were still on hold due to concerns about their future job and income prospects.”

Forex Market – US Dollar falling in Forex today.

The U.S. dollar has been a bit lower in forex trading today from the beginning of the day at 00:00 GMT. The dollar has fallen versus the euro, pound, franc, aussie, kiwi and loonie while gaining versus the yen.

The euro has advanced slightly versus the dollar today as the EUR/USD has risen from today’s 1.3253 opening(00:00 GMT) to trading at approximately 1.3268 in the afternoon of the US trading session at 2:32pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency from the 1.4775 opening to trading at 1.4907 dollars per pound.

The dollar has gained against the Japanese yen as the USD/JPY has gained  from its 98.89 opening to trading at 99.38 yen per usd. The dollar has fallen against the Canadian loonie dollar after opening at 1.1929 earlier today to trading later at 1.1836.

The USD is falling against the Swiss franc after opening at 1.1392 to trading at the 1.1355 exchange rate.

The Australian dollar has advanced as the AUD/USD has gone from 0.7266 to trading at 0.7313 while the New Zealand dollar has climbed from 0.5649 usd per nzd to trading at 0.5697.

EUR/USD Chart – The Euro trading edging up a bit against the US Dollar in Forex Trading today and looking to gain for the second straight week versus the USD(Hourly Chart).

Source: ForexYard

The Dollar is likely to go volatile during and following the ISM Manufacturing PMI release today at 14:00 GMT. Meanwhile, forex traders are advised to take positions on trades, as a string of data releases coming out of Japan and Britain are likely to affect the greenback’s main currency crosses.

Economic News

USD – Greenback Rebounds on U.S. Jobless Claims Data

The U.S. dollar rose against the Japanese yen and other major currencies on Thursday after data showed a decline in jobless claims, suggesting that the worst of the American recession may be over. The USD was last up 0.2% against the EUR at $1.3235 while against the Yen the Dollar was 0.9 percent higher at 99.00 yen.

U.S. weekly jobless claims decreased in the latest period even as continued claims notched a fresh record high, a sign some investors took as stabilization of the labor market. Analysts said that given the latest sustained stabilization of the U.S. economy, the dollar may begin to perform better due to investors’ overall demand for the greenback.

The U.S. central bank’s stance was consistent with data showing that the U.S. economy remained on track to improve later this year despite a surprisingly steep 6.1% fall in national activity in the first quarter. Market players were watching Chrysler’s efforts to avoid bankruptcy ahead of a government imposed restructuring deadline later in the day. The company’s bankruptcy may reduce the appeal of the U.S. currency as a refuge. Economists said that if Chrysler LLC will go bankrupt, the dollar may face even stronger selling pressure.

EUR – EUR Is Pressured By High Unemployment Figure

The European currency reversed its early gains against the dollar on Thursday, slipping into negative territory with traders citing profit taking following the single currency’s gains earlier in the day. In volatile trading, the EUR fell 0.2% to $1.3224. Earlier, the currency fell to an intraday low of $1.3190.

Unemployment in the Euro-Zone rose to 8.9% in March, slightly higher than in February, the statistics agency Eurostat said. A rise in unemployment data from an upwardly revised 8.7% in February underlined the view that the European economy remains weak. Other data showed that Euro-Zone inflation remained at a record low of 0.6% year-on-year in April. The European Central Bank, which meets on Interest Rates on May 7, wants to keep inflation just below 2% and is expected to cut its refinancing rate to 1.0%.

The British pound remained flat against the dollar at $1.4783. British consumer confidence posted its third monthly rise in April, continuing a slow rebound from an all-time low notched last summer, market research firm GfK NOP reported Thursday.

JPY – The Yen Fall to 2 Week Low on Jobless Rate Numbers

As expected, the Bank of Japan on Thursday left official Interest Rates unchanged and reduced its expectations for economic growth in fiscal year 2009 as exports continued to suffer from the weak global economy. The central bank also said it expects overseas economies to start recovering in the latter half of the fiscal year.

The Japanese currency fell against all of the 16 most actively traded currencies except the New Zealand dollar as a decline in foreign-exchange fluctuation encouraged investors to engage in carry trades, in which they buy higher-yielding assets after borrowing in countries with lower interest rates. The yen declined 0.6% to 130.42 per EUR, from 129.61 yesterday. The JPY also slid 1% to 98.72 against the Dollar.

Data from Japan Friday highlighted economic weakness there, with the March jobless rate coming in at 4.8% while the March core consumer price index fell 0.1% on year, the first negative reading in a year and a half and a sign the nation might have entered a long period of deflation.

Crude Oil – Crude Reverses Losses on Economic Recovery Optimism

Crude Oil prices rose higher on Thursday to $50.92 a barrel as gains in wider global markets offset rising energy inventories and slumping demand. Oil prices had been buffeted earlier this week on speculation that global health concerns about the spread of swine flue would trim demand for fuel.

The number of U.S. workers filing new claims for unemployment aid fell unexpectedly last week, suggesting the pace of layoffs was easing, helping to lift the U.S. stock market ahead of the settlement in oil prices.

Markets were also eyeing the flu outbreak as officials urged increased worldwide precautions against an imminent pandemic and Mexico began shutting down parts of its economy to slow the spread of the new flu strain. Analysts have said the flu could hurt jet fuel demand by curtailing travel.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-bought territory on the hourly chart’s RSI indicating downward correction may be imminent. The downward direction on the daily chart’s Momentum oscillator also supports this notion. 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, there is a fresh bullish cross forming on the hourly chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. In that case traders are advised to swing in after the breach takes place.

USD/JPY

The bullish trend is loosing its steam and the pair seems to consolidate around the 98.80 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/CHF

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.1390 level. The 4-hour chart’s Slow Stochastic is showing a fresh bearish cross suggesting that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card – Gold

Gold prices are once again dropping, and it is currently traded around $885 per ounce. And now, the daily chart’s Slow Stochastic is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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