Month: June 2009

By Fast Brokers – The EUR/USD topped-out yesterday and is heading back towards our 1st tier uptrend line, or the neck of its head and shoulders pattern.  Gold just collapsed beneath its own neckline, which could be foreboding of a similar occurrence in the EUR/USD due to their strong positive correlation.  Therefore, investors should keep a close eye on our 1st tier uptrend line, which just reached an inflection point with our 1st tier downtrend line.  Meanwhile, the currency pair is trading back below the psychological 1.40 level.  We can’t forget how we’ve seen stronger volume to the downside than the upside over the past week.  Additionally, analysts are voicing their belief that U.S. equities are due for a healthy pullback themselves.  In all, we have little reason to alter our negative near-term outlook on the EUR/USD since there aren’t any positive indicators we can find out there at present.  If our 1st uptrend line doesn’t hold, we believe there could be a brisk pullback.

Meanwhile, investors should keep a close eye on the S&P futures.  The S&P futures are testing their own 1st tier downtrend line.  A break beneath here and May 7 highs could be accompanied by a hurried appreciation of the greenback across the board.  Regardless of the near-term downward pressure, the EUR/USD’s medium-term uptrend line is safe for now.  There are plenty of safety nets we can map out on the way down, so we aren’t overly concerned at the moment.  As for the upside, if the 1st tier uptrend line can hold this would be a definite plus.  After all, the EU had a light week news-wise, so the currency pair could hold on to see how next week pans out.  Speaking of data, the EU industrial production number came in well below expectations.  However, we saw that one coming and investors shouldn’t be surprised since both Germany and France reported released disappointing industrial production data earlier this week.

Present Price: 1.3975

Resistances: 1.4020, 1.4056, 1.4105, 1.4139, 1.4175

Supports: 1.3964, 1.3921, 1.3860, 1.3807, 1.3759.

Psychological: 1.40, 1.45

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 Cable is deflecting off our 3rd tier uptrend and downtrend lines as the S&P futures battle their 1st tier uptrend line.  Weakness in the GBP/USD also comes in reaction to a large pullback in gold.  Since Britain is quiet on the economic data front, the Cable is taking its cue from correlations.  Meanwhile, the Cable continues to flex its relative strength as anticipated.  Since we’ve seen a little more data from the rest of the world this week, investors are eating off of the plate of outperforming data we’ve seen from Britain over the past 5 or 6 weeks.  However, investors should take note of the fundamental downward movement in gold today.  The precious metal is normally positively correlated with the EUR/USD and GBP/USD, so the pullback in gold could be indicating further strength in the Dollar.

The key for relative stability in the Cable will likely be the ability for the S&P and crude futures to hold onto their positive momentum.  For if these investment vehicles make sizable movements to the downside, the GBP/USD would likely be inclined to follow suit, though to a lesser degree.  Meanwhile, the GBP/USD has plenty of uptrend lines and the psychological 1.60 level to rely upon to the downside.  Therefore, the medium-term uptrend is padded and investors should be too concerned about near-term weakness.  The only thing that could knock the GBP/USD off its horse would likely be a large, consistent contraction in future economic data.

Present Price: 1.6395

Resistances: 1.6412, 1.6498, 1.6572, 1.6631

Supports: 1.6371, 1.6315, 1.6263, 1.6210, 1.6141

Psychological: 1.65, 1.60

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 continues to hit a brick wall at our 3rd tier downtrend line, revealing the significance of the obstacle.  Investors were ambivalent about a better than expected Final GDP from Japan, and the USD/JPY is creeping back into its downtrend as U.S. equities rise.  Hence, we are witnessing the theme of a broad based depreciation of the Dollar once again.  Though movement in the USD/JPY is less extreme, its recent tendency to have a negative correlation with the GBP/USD and EUR/USD says wonders.  Hypothetically, the USD/JPY should be rising with equities due to the global economic recovery taking place.  However, the USD/JPY’s tendency to head south with rising equities shows us there is rampant concern surrounding the greenback.  Furthermore, the longer the Yen trades at a relatively appreciated level, the longer Japanese exporters and manufacturers will struggle.  We could see the USD/JPY remain within its trading range developed over the past few months until our downtrend lines finally collide with price.  By then, the USD/JPY will likely be forced to make another directional decision.  As for now, the medium-term downtrend is in place and will remain so until we see a game-changing move to the upside.

Present Price: 98.18

Resistances: 97.98, 98.66, 99.49, 100.06, 100.74

Supports: 97.45, 96.90, 96.33, 95.82, 95.20

Psychological: 95, 100

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.

EUR/USD has just broken through the bottom it’s recent support line (noted in BLUE on the below image). The start of that support is the same level (1.3780 – 1.3800) as we say as a launching pad for EUR/USD back in late May (see BLUE circle on below image.) We suspect that the pair will re-test those levels by Tuesday of next week.

Importantly, if the 1.3780 level is breached and holds below that for day or so, we suspect that we will see a slow move down towards the 1.3600 level which is the midpoint of a previous range seen in mid-May.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions and Accucharts for the below image.

Source: ForexYard

Today’s upcoming G20 Summit of the 20 most industrialized nations in Berlin, Germany today is set to dominate USD trading. Additionally, the forex market is set to go very volatile on the publication on the U.S. Import Prices indicator at 12:30 GMT, and the publication of the U.S. Consumer Sentiment indicator at 13:55 GMT. Forex traders are advised to open their Dollar positions now in order to make profits as today’s events unravel.

Economic News

USD – Dollar Drops despite Positive Data from U.S

The Dollar’s downtrend continued yesterday as the USD dropped against all the major currencies. The Dollar’s most distinct bearish trend was marked against the GBP, as the pair was traded as high as the 1.6620 level.

In accordance to what appears to be developing into a pattern, the USD dropped in spite of some positive figures published from the US economy yesterday. The weekly Unemployment Claims report, which measures the number of individuals who filed for unemployment insurance for the first time during the past week, dropped for the fourth time in a row, this time to 601K. The figure is still quite large, and is far from depicting a strong, recuperating economy. However, the trend surely seems to favor the U.S. economy.

The U.S. Retail Sales figures were also published on Thursday, showing a 0.5% increase in the total value of sales at the retail level. This figure reflect a state of mind in which US consumers feel more comfortable to spend, which means they have more confidence that their financial status will improve with time. This kind of behavior is imperative in order to pull the economy out of recession, as only a better cycling of funds has the ability to create a real change in the current gloomy economic conditions.

As for today, there is the G20 Summit in Berlin Germany. Additionally, a batch of data is expected from the US economy, and traders are advised to focus on two main reports. First, the Import Prices which is scheduled for 12:30 GMT. This is one of the earliest publications that try to predict the level of inflation. Traders should also follow the Consumer Sentiment report, as analysts forecast another positive figure for this indicator, which can further support the notion that the U.S. economy returns to the fast lane.

EUR – EUR Looks to Finish the Week Strong

EUR trading on Thursday was highlighted by the EUR/USD climbing back above the 1.4100 level. In a week that was showing bearish movement on the oft-traded pair, the Euro rallied to make up ground on last weeks closing, as it trumped both the greenback and the Yen. Yesterday’s push came shortly after the release of US economic data. Positive change in US Retails Sales and Unemployment Claims did not impress enough to drop the EUR for the USD, as the pair went bullish, as traders bought back into higher-yielding assets.

Early Thursday morning, saw the release of the European Central Bank’s (ECB) Monthly Bulletin, which reveals data gathered by the ECB Governing Board on the state of the Euro-Zone economy. The report helped get the ball rolling on a bullish EUR trading day.
Traders can look toward Industrial Production at 9:00 GMT and a speech by ECB President Jean-Claude Trichet at 11:30 & 15:30 GMT for some indication to how the rest of the day will go for the EUR. Traders should also follow news from the opening of the G20 Meeting in Berlin, Germany throughout the day for any clues on policy that could add volatility to the forex market.

JPY – JPY Moves on Market Volatility

The Yen’s high volatility continued yesterday, as it saw contradicting trends against the major currencies. On one hand, the JPY rose 15 pips against the USD yesterday, as the pair closed at the 97.75 level. On the other hand, the Yen dropped over 50 pips against the EUR, closing at 137.86 level.

It appears that lately the Yen is mostly affected by its counterpart currencies. The USD is currently very weak, and thus the Yen consistently appreciates against it. However, the EUR seems quite strong, and its recent appreciation has pushed down the JPY.

Looking ahead to today, traders are expected to follow the main news events from the US and Western Europe, and the commencement of the G20 Meeting in Germany later today. Traders are advised to follow these events very closely as they may set the pace for JPY trading later today.

Crude Oil – Oil Eyes $75 a Barrel

Crude Oil’s bullish trend continues as the price of Crude continues to rise. Oil rose 42 cents to finish trading at $72.39 yesterday. The main reason for Crude’s bullishness was the positive economic data released from the US economy. The weak Dollar also helped push up Oil prices yesterday. In addition, the International Energy Agency corrected its demand projection and increased it to 120,000 more barrels a day.

The bullish trend of Crude Oil looks to continue, with the potential of reaching $75 a barrel. Traders should follow the data published from the US, and news coming out of the G20 Meeting later today, as these factors are set to play into Crude Oil’s bullishness later today.

Technical News

EUR/USD

The hourly chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bearish cross forming on the 4-hour chart’s Slow Stochastic implies that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be the preferable strategy.

GBP/USD

The price of this pair appears to be floating in the over-bought territory on the 4-hour chart’s RSI indicating a 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 the preferable strategy.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Slow Stochastic is providing us with mixed signals. The 4-hour chart does not provide a clear direction as well. Waiting for a clearer sign on the hourly chart might be a good strategy today.

USD/CHF

The typical range trading on the daily chart continues. Both the hourly RSI and Slow Stochastic are floating in neutral territory. However, the pair currently sits near the bottom border of the 4-hour chart’s RSI, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

Crude Oil prices rose significantly in the last month and peaked at $72.40 per barrel. However, the daily chart’s RSI is floating in an overbought territory, suggesting that the recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Forex 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 Fast Brokers – The EUR/USD registered rising volume to the downside again, showing there is more interest on the sell-side these days.  The currency pair managed to bounce off our 1st tier downtrend line, and is presently hovering just above 1.40 while knocking at our 2nd tier uptrend line.  We notice a head a shoulders pattern forming, with yesterday’s highs possibly serving as the peak of the right shoulder.  Therefore, our 1st tier uptrend line takes on greater responsibility since it forms the neckline of the pattern.  If the neckline breaks, we could witness accelerated losses to the downside.  As for the upside, the 2nd tier downtrend line appears to present the most formidable obstacle to a reactivation of the uptrend.  Unfortunately for bulls, the 2nd tier downtrend line hangs far in the distance, meaning we would likely see quite a bit of consolidation before a collision.

Speaking of collisions, if the EUR/USD continues to gravitate around our 2nd tier uptrend line, the inflection point of our 2nd tier uptrend and downtrend lines could serve as a breakout point.  Once again, we are speaking of the distant future.  As for now, the currency pair is exhibiting inconsistent behavior as the S&P inches up slowly.  It seems the EUR/USD may remain within a wide trading zone until either key resistances or supports are broken.  While there is a near-term downtrend tendency in the currency pair, the medium-term uptrend has much more foundation at this time.

The EU will release its industrial production number tomorrow.  Since both German and French industrial production releases were well below analyst expectations this week, we wouldn’t be surprised to see a similar showing in the EU’s number.  Hence, investors probably won’t react too strongly if the data misses expectations.  That being said, the data from the EU continues to come in mixed, resulting in a relative weakness in the Euro.  Losses accelerated in the EUR/GBP as we anticipated, and the downturn in this currency pair should carry on as long as Britain’s economic data outperforms the EU’s.

Present Price: 1.4072

Resistances: 1.4105, 1.4139, 1.4185, 1.4220, 1.4249

Supports: 1.4056, 1.4020, 1.3964, 1.3921, 1.3862.

Psychological: 1.40, 1.45

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 Cable continues its brisk climb, forming a v-shaped recovery from last week’s pullback.  The currency pair is making the most of yesterday’s manufacturing production report and the fact that we’re witnessing a broad depreciation of the Dollar.  Britain’s data has continued to recover well as compared to the U.S. and EU, giving a relative strength to the Pound.  However, there is still a force acting to the downside, and the Cable will need to overcome our 3rd tier downtrend line and previous June highs before we feel comfortable again with a bullish stance.

Some analysts predict we may see a sizeable pullback in U.S. equities soon due to the fact that the present run may be overextended.  This would likely imply a deflection from our 3rd tier downtrend line and an ensuing pullback in the Cable due to their positive correlation.  The currency pair did register noticeable volume to the downside last week, but this doesn’t necessarily imply a protracted downturn.  In fact, we should note that the volume we saw on June 4th was the most action the currency pair has registered since mid-December of 2008.  The market could be sending us a message, and volatility should ensue for the near-term.

An interesting conversation these days involves U.S. Treasuries and the response of equities.  If Treasury yields continue to climb and this has a large, negative impact on equities, there’s the possibility of the GBP/USD and EUR/USD changing their positive correlation with the S&P as investors lose confidence in the Dollar.  However, this is merely speculation and the positive correlation should be intact for the foreseeable future, just something to keep an eye on.  The medium-term uptrend of the Cable is alive and well, and the currency pair should continue to exhibit relative strength since its economic data is out of the way for the week.  If the GBP/USD can get above our top-end resistance near-term gains could accelerate.
Present Price: 1.6542

Resistances: 1.6574, 1.6626, 1.6686, 1.6723

Supports: 1.6497, 1.6458, 1.6412, 1.6371, 1.6315

Psychological: 1.65, 1.70

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 continues to hit a brick wall at our 3rd tier downtrend line, revealing the significance of the obstacle.  Investors were ambivalent about a better than expected Final GDP from Japan, and the USD/JPY is creeping back into its downtrend as U.S. equities rise.  Hence, we are witnessing the theme of a broad based depreciation of the Dollar once again.  Though movement in the USD/JPY is less extreme, its recent tendency to have a negative correlation with the GBP/USD and EUR/USD says wonders.  Hypothetically, the USD/JPY should be rising with equities due to the global economic recovery taking place.  However, the USD/JPY’s tendency to head south with rising equities shows us there is rampant concern surrounding the greenback.  Furthermore, the longer the Yen trades at a relatively appreciated level, the longer Japanese exporters and manufacturers will struggle.  We could see the USD/JPY remain within its trading range developed over the past few months until our downtrend lines finally collide with price.  By then, the USD/JPY will likely be forced to make another directional decision.  As for now, the medium-term downtrend is in place and will remain so until we see a game-changing move to the upside.

Present Price: 97.85

Resistances: 97.98, 98.66, 99.49, 100.06, 100.74

Supports: 97.45, 96.90, 96.33, 95.82, 95.20

Psychological: 95, 100

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.

CountingPips.com

U.S. Retail Sales increased in May and reversed two consecutive monthly declines according to a report by the U.S. Commerce Department released today. Advance estimates of May retail sales showed that sales rose by 0.5 percent to $340.0 billion following a revised 0.2 percent decline in April. On an annual basis, retail sales have declined by 9.6 percent from the May 2008 level following April’s 10.0 percent annual decline. Today’s data matched the market forecasts expecting a 0.5 percent monthly sales gain.

Retail sales, minus automobiles, also increased by 0.5 percent in May after a 0.2 percent revised decline in April. This data surpassed market forecasts that were predicting a 0.2 percent gain for the month.  On an annual basis, sales minus autos is 7.3 percent lower than the May 2008 level following April’s annual decline of 7.3 percent.

May’s retail sales numbers were boosted by a 3.6 percent increase gasoline station sales. Despite the monthly increase, gasoline station sales are 33.8 percent below the May 2008 level when gas prices were on a steep incline towards record high prices. Also positively contibuting to the retail sales for May was a 1.3 percent increase in building material & garden eq. & supplies dealers while health & personal care store sales rose by 0.7 percent and motor vehicle & parts dealers sales grew by 0.5 percent.

The largest negative contributors to the retail sales data in May were miscellaneous store retailers with a 1.3 percent decline, sporting goods, hobby, book & music stores with a 0.8 percent decrease and electronics & appliance stores with a 0.5 percent decline.

Weekly Jobless Claims fall, continuing claims at record high.

Weekly U.S. initial jobless claims fell in the week that ended on June 6th according to the U.S. Labor Department today. Jobless claims totaled 601,000 new unemployed worker claims, a decline of 24,000 from the week prior that had a revised 625,000 initial jobless claims.  This is the lowest new claims level since January and was better than forecasts expecting approximately 615,000 claims for the week. The 4-week moving average of unemployed workers fell by 10,500 workers from the prior week to 621,750 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending May 30th grew by 59,000 workers to a total of 6,816,000 unemployed workers and marked a new record high for continuing claims.  The four week moving average of continuing claims grew by 57,250 workers from the previous week to 6,750,500 workers.

Forex Market – US Dollar falling in Forex today.

The U.S. dollar has been falling lower in forex trading today after the positive retail sales news. The dollar has fallen versus the euro, pound, franc, aussie, kiwi and loonie while gaining versus the yen.

The euro has advanced versus the dollar today as the EUR/USD has risen from today’s 1.4028 opening(00:00 GMT) to trading at approximately 1.4101 in the afternoon of the US trading session at 12:59pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency as the GBP/USD has gone from the 1.6407 opening to trading at 1.6549 dollars per pound.

The dollar is virtually unchanged against the Japanese yen at the time of writing as the USD/JPY trades near its 97.89 opening exchange rate.

The dollar has fallen against the Canadian loonie dollar after opening at 1.1048 earlier today to trading later at 1.0976.

The USD is falling against the Swiss franc after the USD/CHF’s opening at 1.0778 to trading at the 1.0709 exchange rate.

The Australian dollar has advanced as the AUD/USD has gone from 0.8090 to trading at 0.8227 while the New Zealand dollar (NZD/USD) has climbed from 0.6359 usd per nzd to trading at 0.6458.

EUR/USD Chart – The Euro advancing against the US Dollar in Forex Trading today and trading back over the 1.4100 threshold above the 21-day moving average in green.

We are going to keep an eye on the Canadian Dollar today. The Bank of Canada’s governor is giving a speech today in New York and the text of the speech will be released at 13:35 EST.

Bank of Canada has released statements in the last few weeks that the recent strength of the Canadian Dollar may hurt Canada’s economic recovery prospects.

With this pending speech in mind, we took a look at some charts and found a favorable set up in EUR/CAD. Our chart below seems to be setting up for one of our favorite technical plays, the false break out. We will watch this chart throughout the morning to see if we can confirm a move higher in EUR/CAD (which means a lower Canadian Dollar). If so, we will go long just before the governor’s speech is released.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions and Accucharts for the below images.