Month: June 2009

By GCI Fx Research

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The euro lost ground-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3870 level and was capped around the $1.4000 figure.  Traders were unable to push the common currency above the psychologically-important US$ 1.4000 figure despite gains in U.S. equities markets and crude oil prices.  Many data were released in the U.S. today.  First, weekly initial jobless claims climbed 3,000 to 608,000 from a revised 605,000 while continuing jobless claims printed at 6.687 million from a revised 6.835 million the prior week.  The modest improvement in continuing claims and small rise in initial claims could be a positive for the troubled U.S. employment sector.  Second, the May index of leading indicators climbed 1.2%, above expectations.  Third, the June Philadelphia Fed index of manufacturing activity improved more than expected to -2.2 from -22.6 in May.  Traders are still talking about the government’s plan to enact major changes at the Federal Reserve, including adding the mandate to become a prudential systemtic risk regulator and reducing or taking away its consumer finance mandate.  In eurozone news, the German Chancellor Merkel pledged support for new rules on financial markets supervision and said they must be “common and binding.” The German government reported it plans to issue €310 billion in new debt through 2013.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥96.70 level and was supported around the ¥95.60 level.  Bank of Japan and the Japanese government upgraded their assessments of the Japanese economy, lending credence to economists’ view the economy may have already bottomed out.  There are tentative signs that industrial production and the export sector are improving.  The central bank is expected to keep its overnight call rate target unchanged at 0.10% for the foreseeable future.  The Nikkei 225 stock index lost 1.39% to close at ¥9,703.72.  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 ¥135.00 figure and was supported around the ¥133.00 figure.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥158.45 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.35 level. In Chinese news, the U.S. dollar weakened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8337 in the over-the-counter market, down from CNY 6.8360.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6185 level and was capped around the $1.6470 level.  Data released in the U.K. today saw CML May gross mortgage lending decline to ₤10.3 billion.  Also, May retail sales were off 0.6% m/m and 1.6% y/y, a stark contrast with April’s 0.9% m/m and 2.6% y/y increases.  Third, May public sector borrowing reached a record net ₤19.9 billion.   Fourth, the May CBI industrial trends survey rallied to -51 from -56.  Cable bids are cited around the US$ 1.6110 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8605 level and was supported around the ₤0.8490 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.

By James Woolley

Many people new to share trading overcomplicate the whole process. They load their charts with lots of fancy technical indicators and are constantly testing out new systems in order to try and find that holy grail trading system that’s going to make them rich. However it should be pointed out that the most basic systems are often the most profitable.

If you look at the price patterns of various different companies you will generally see that when a stock is trending upwards it will never go up in a straight line. Even when there is a very long-term upwards trend there will always be pull-backs along the way.

So therefore if you are looking to trade these long-term trends then a very simple but effective trading strategy would be to wait for one of these pull-backs and then enter a long position as soon as the price moves back up again.

To help you with this strategy you may like to use a technical indicator or two to help you. For example two indicators I like to use are the exponential moving averages (5 and 20) and the parabolic SAR.

So what you do is you identify shares that are in established upward trends, then you wait for a pull-back where you should hopefully see the EMA (5) cross below the EMA (20) and the parabolic SAR turning red. Then you simply what for the price to reverse back up again and resume it’s upward trend which is often signalled by the parabolic SAR turning green again and the EMA (5) crossing back up through the EMA (20).

To give you a real-life example just take a look at the daily chart of Amazon (AMZN). You will see that it trended upwards between November 2008 and May 2009. The price then pulled back and we saw both the parasolic SAR turning red and the EMAs crossing downwards. Now this may have signalled the end of the upwards trend but as it turned out the EMAs crossed back upwards and the parabolic SAR turned green which was an excellent opportunity to go long again. As a result the price raced through the $80 level and went all the way up to around $88.

So you can see that this very simple trading strategy can produce some excellent results and it’s a lot more effective than most of the overcomplicated systems that a lot of traders use. Successful share trading isn’t really that difficult. You simply need to look for shares that are trending either upwards or downwards and then find a way of profiting from this trend, which you can do by using a simple system such as the one above.

About the Author

Click here to read a review of Tradefair and to read a full Zecco review.

By CountingPips.com

The U.S. Leading Indicators Index published by the Conference Board today increased for the second straight month in May. The Leading Indicator Index, which measures future economic activity, registered a 1.2 percent increase in May following a revised increase of 1.1 percent in April. The index had declined by 0.3 percent in March. May’s increase beat the market forecasts which were predicting a gain of 1.0 percent for the month.

Consumer expectations, real money supply, stock prices, building permits, interest rate spread, supplier deliveries and manufacturers’ orders for nondefense capital goods helped positively contribute to the leading index.  Manufacturers’ new orders for consumer goods & materials, weekly jobless claims and average weekly manufacturing hours were negative sectors impacting the leading index.

The coincident index, which is viewed as a measure of the current economic activity, decreased by 0.2 percent in May after falling in April by 0.3 percent while the lagging index also decreased by 0.2 percent after declining by 0.8 percent in April.

Weekly jobless claims show small rise, continuing claims decline.

Weekly U.S. initial jobless claims edged up in the week that ended on June 13th according to the U.S. Labor Department today. Jobless claims totaled 608,000 unemployed workers, an increase of 3,000 from the week prior.  The 4-week moving average of unemployed workers fell by 7,000 from the prior week to 615,750 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending June 6th decreased by 148,000 workers to a total of 6,687,000 unemployed workers. This was the first decline in continuing claims since early in January and the largest decline in over seven years. The four week moving average of continuing claims grew by 2,250 workers from the previous week to 6,757,500 workers.

US Dollar mixed in Forex Trading today.

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

The euro has fallen versus the dollar today as the EUR/USD has gone from its 1.3958 opening(00:00 GMT) to trading at 1.3898 in the afternoon of the U.S. trading session at 2:42pm EST according to currency data from Oanda.

The British pound has fallen today as the GBP/USD has declined from its 1.6392 opening exchange rate to trading at 1.6325 usd per gbp. The dollar has gained versus the Japanese yen and trading at 96.52 after opening at the day at the 95.78 exchange rate.

The dollar has advanced versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.1340 after opening the day at 1.1310.

The dollar has increased against the Swiss franc as the USD/CHF trades at 1.0867 after opening at 1.0796 today while the dollar has been weaker against the Australian dollar and New Zealand dollar. The AUD/USD trades at 0.8004 after a 0.7958 opening while the NZD/USD trades at 0.6395 today after opening at the exchange rate of 0.6330.

GBP/USD Chart – The British Pound falling today versus the US dollar in forex trading and moving below its 100 hour moving average (red).

By Mark Galasiewski

This article was originally published as a special Interim Report of EWI’s Asian-Pacific Financial Forecast on March 23, 2009. Since then the SENSEX has risen as much as 65%. For a limited time, Elliott Wave International is offering a full 10-page issue of the Asian Pacific Financial Forecast, Discover The Bull Markets You’re Missing, free.

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Prices in India’s SENSEX have just broken above a downtrend line, imitating a pattern from 2004 that led to a strong rally. This interim report updates our wave count for India, since its wave pattern in particular may offer investors a rewarding long-term opportunity.

In the March 2009 issue of The Asian-Pacific Financial Forecast, we showed how pattern, price, time and sentiment considerations were pointing to the end of multi-month, five-wave declines in most major Asian-Pacific indexes by late March. In most cases, those lows have likely been achieved.

Although we have looked for a fifth wave down to below the October low in the SENSEX, it has failed to materialize. That failure plus the recent sharp reversal rally prompts our return to an earlier wave count. The daily SENSEX chart shows how the decline since the 2008 high can be counted as three waves. A three-wave decline opens the possibility of a rally back to near the 2008 highs. But there is reason to set our sights even higher.

Perhaps the best argument for a bull market in Indian stocks is the potential fractal relationship we identified in the November 2008 issue, published just four days after the October low. The weekly chart below is an updated version of the one we showed at that time. Here is our analysis from the November
issue:

“The Wave Principle teaches that the stock market is a self-similar fractal. That means that some pieces of its price record—which Ralph Nelson Elliott called waves—resemble other pieces elsewhere in that record. The weekly chart of India’s SENSEX shows just such an example.Notice how the up-down sequence labeled Intermediate waves (1) and (2) (in the small red box) is a microcosm of the larger up-down sequence from the 2003 low to the present (i.e., waves and , in the large black box). In both cases, the wave-two correction retraced approximately 50% of the wave-one advance. (We have calculated those retracements using the same logarithmic scale shown in the chart: logarithmic charting displays equal percentage moves proportionally).

“If we have identified this “nested fractal” relationship correctly, it means that Indian stocks are about to begin Primary wave of the bull market that began in 2003. Waves and lasted more than four times the duration of waves (1) and (2). If that same proportion holds going forward, the SENSEX may continue advancing for 15 years before reaching the end of wave .”

Since then, the analogy to the 2004 period (“The 2004 Analog”) has become even more interesting.

Just as then, prices have broken down from an apparent triangle, and then reversed and broken out above the downtrend line. In 2004, prices never looked back after the breakout. As long as prices do not fall back below the low of today’s breakout bar, we will assume that the 2003-2008 bull market will continue to provide a road map to the future of India’s stock market.

For more information emerging opportunities in Asian markets, download Elliott Wave International’s free 10-page issue of the Asian Financial Forecast.

About the Author

Mark Galasiewski is the editor of Elliott Wave International’s Asian-Pacific Financial Forecast and member of EWI’s Global Market Perspective team covering Asian stock indexes.

By Fast Brokers – The USD/JPY finally yielded to our 3rd tier downtrend line after knocking on the door for several days.  The currency pair proceeded to drop through our 3rd tier uptrend line without hesitation on rising volume.  However, volume did not reach an abnormal level, and the USD/JPY is finding support once again at our 2nd tier uptrend line.  Our 2nd tier uptrend line continues to be a reliable defense, and the USD/JPY may very well bobble between our trend lines as they reach their respective inflection points.  Though the currency pair is trending up at a crawl pace, the medium-term downtrend continues to bear down on price. Our 5th tier downtrend and 1st tier uptrend lines should prove to be the true tests as far as a longer-term trend is concerned.  Meanwhile, the USD/JPY remains in its indecisive state, apparently waiting to see whether the global economic recovery is for real.  A significant break to the downside could cripple Japanese manufacturers and the nation’s economy, whereas a breakout to the upside would likely indicate comfort in the concept of stability and future growth in the U.S.  Meanwhile, if our 2nd tier uptrend line doesn’t hold, the pullback could pick up momentum towards our 1st tier uptrend line with a retest of May 22 lows.  A contraction such as this would likely require a sizeable drop in U.S. equities, and the ability of the S&P to hold 900 remains to be seen.

Present Price: 96.02

Resistances: 96.33, 96.90, 97.45, 97.58, 98.66

Supports: 95.82, 95.20, 94.45, 93.76, 93.32

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.

By Fast Brokers – The Cable has pulled back to our 3rd tier uptrend line after investors reacted negatively to today’s data from Britain.  Most analysts are highlighting the report showing negative growth in retail sales over the past month.  However, viewing the data from a more historical perspective, British retail sales tend to deviate from 0% in both directions during good and bad economic times.  Additionally, the -0.6% decline we saw today is certainly a negative indicator, but nothing too abnormal.  The more disconcerting data releases today were the M4 money supply and CBI industrial order expectations.  The less than anticipated growth in the M4 money supply supports the concept of deflationary pressures, taking a bite out of corporate earnings in the process.  Additionally, the industrial order expectations number is still at a shockingly low level.  Therefore, orders aren’t picking up as quickly as manufacturers would have hoped, indicating the global economy is recovering at a slow pace.

Despite Thursday’s disappointing showing so far, yesterday’s releases showed considerable progress concerning Britain’s fight against unemployment.  The CCC is falling at an encouraging rate while average earnings are back in the green.  If we continue to see a downtrend in CCC and uptrend in average earnings then retail sales should trend upwards as well.  Therefore, even though the Cable is weakening today, we believe that Britain remains in an advantageous position economically as compared to the U.S. and EU.  Even though we’ve seen some negative pressure on the GBP/USD lately, bulls continue to come to the defense of the currency pair, preventing the Cable from retesting 1.60 for the time being.

However, should the S&P futures pull back further, the GBP/USD would likely participate to a certain degree due to their positive correlation.  Should near-term weakness in the Cable continue, the currency pair has considerable support between1.5850-1.60.  Therefore, there would need to be a decisive turn to the downside in U.S. equities for the Cable to leave behind this trading range.  This line of defense is represented by our 2nd tier uptrend line.  The GBP/USD is getting squeezed between our 3rd tier uptrend and 2nd tier downtrend lines as they approach their inflection point.  We notice a similar inflection point in the EUR/USD.  If the Cable reacts negatively to the collision, we could view a pullback towards our 2nd tier uptrend line.

That being said, we believe there is still a reasonable downward pressure on the Cable due to the present weakness in U.S. equities.  Therefore, a retracement towards 1.60 would not be surprising.  Regardless, the medium-term uptrend is in good shape due to the progress the GBP/USD has made since January lows.  With Britain’s economic data out of the way for the week, movement in the Cable will likely rely more upon its positive correlation with U.S. equities.  Hence, investors should keep a close eye on the S&P and its ability to hold 900 should it be tested.

Present Price: 1.6299

Resistances: 1.6315, 1.6371, 1.6412, 1.6498, 1.6574, 1.6620

Supports: 1.6263, 1.6210, 1.6141, 1.6080, 1.6013

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 EUR/USD popped slightly yesterday as Tuesday’s positive economic sentiment data carried over into Wednesday’s session.  However, Wednesday’s rise failed to touch 1.40 and the EUR/USD is consolidating around our 3rd tier uptrend line right now.  When viewing the 1-hour, we notice the currency pair continues to register larger volume to the downside than the upside.  Therefore, we believe considerable momentum to the downside remains.  The near-term test will be the ability of the EUR/USD to stay above our 2nd tier downtrend and uptrend lines.  These two trend lines are reaching an inflection point within the next 24-48 hours, highlighting the importance of the moment.

Meanwhile, the S&P futures are drifting lower with a retest of 900 in the making.  Even though the psychological 900 level should prove to be a reliable near-term cushion, a sizeable pullback could be approaching.  Due to the positive correlation between the EUR/USD and U.S. equities, the fact that the S&P’s fundamentals are deteriorating certainly doesn’t bode well for the EUR/USD’s upside, particularly at a T-Junction like now.  If the EUR/USD’s 2nd trend lines don’t hold, we could witness another hefty pullback towards 1.35.  While we have a negative mentality in regards to our near-term outlook for the EUR/USD trend-wise, the uptrend beginning in October 2008 still has quite a few lines of defense to rely upon.  As for the upside, if the EUR/USD can climb above 1.40 we could see a near-term pop towards our 3rd tier downtrend line.

The EU won’t release any more economic data until Friday’s German PPI.  Data from the EU continues to be mixed, yet has come in positively lately, giving the EUR/GBP a bit of a pop.  Investors will be paying more attention to the behavior of U.S. equities over the remainder of the week as they watch the S&P’s reaction to 900 should it be reached.

Present Price: 1.3856

Resistances: 1.3954, 1.4019, 1.4052, 1.4111, 1.4148

Supports: 1.3894, 1.3847, 1.3807, 1.3759, 1.3724

Psychological: 1.40, 1.35

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 market is set to go increasingly volatile today on the publication of U.S. Unemployment Claims at 12:30 GMT and the Philly Fed Manufacturing Index at 14:00 GMT, and Treasury Secretary Timothy Geithner’s speech at 13:30 GMT . In turn this economic news will help determine the strength of the Dollar versus its major currency pairs going into end of week trading. In order to take advantage of the forex market now, traders are advised to start opening their USD positions now, prior to the release of this crucial data.

Economic News

USD – USD Weakens on Weak U.S. Inflation Data

The Dollar fell for a second day against most major currencies on Wednesday after lower than expected U.S. inflation data reduced speculation the Federal Reserve would raise Interest Rates in the near future. The Dollar was at ¥95.78 Wednesday, down from ¥96.62, and at $1.3955 per EUR. The Dollar was at 1.0793 Swiss Francs, down from 1.0865 Swiss Francs.

Rising equity markets and positive economic data in recent months had led to speculations the U.S recession will end soon, and the Federal Reserve will need to raise Interest Rates by the end of the year. Concerns of rising inflation have also helped fuel these speculations. However, the U.S. Consumer Price Index (CPI) increased only 0.1% in May, falling 1.3% in the past 12 months, the biggest decline in almost 60 years.

Federal Reserve Board officials may be using next week’s policy statement to suppress any speculation of an upcoming Interest Rate increase. This may signal that the underling U.S economy is still weak, resulting in long term downward pressure on the Dollar. Adding to the downward pressure on the currency are concerns over the Dollar’s role as a global reserve currency as the leaders of Brazil, Russia, India and China, known as the BRIC group, called for a “more diversified international monetary system” Wednesday.

With several important economic indicators to be released Thursday, including U.S Unemployment Claims at 12:30 GMT, GBP Retail Sales at 8:30 GMT, and the SNB Monetary Policy Assessment at 7:30 GMT, traders can expect a volatile trading day, and a possible continuation of the Dollar’s downward trend.

EUR – EUR Jumps On Increased Optimism

The EUR strengthened against the Dollar Wednesday after the release of disappointing U.S. data. The EUR closed at $1.3947 from $1.3863, and at ¥133.68 from ¥133.98. The Pound Sterling weakened as much as 1.2% to 85.36 pence per EUR yesterday, the biggest decline since June 4, but was little changed against the USD at $1.6391 from $1.6410 Wednesday.

The Pound’s drop came after a retreat in the stock market and Bank of England (BoE)) Governor Mervyn King’s speech stating that Britain’s banking system may need to raise more capital to finance the economic recovery amidst a unanimous vote by BoE officials to continue their asset purchasing program.

A rise in a number of U.S stocks helped drive the EUR higher versus the Dollar, improving risk appetite in general, and reducing the Dollar’s demand as a safe-haven. A report showing the U.S. current account deficit narrowed in the first quarter added to optimism in the currency market.

Traders should pay attention to the release of the U.S Unemployment Claims at 12:30 GMT, GBP Retail Sales at 8:30 GMT, and the SNB Monetary Policy Assessment at 7:30 GMT, as the results will determine the direction of the EUR, GBP and CHF for the newt few days.

Yen – Yen Rises Against the USD

The Japanese currency rose against the USD Wednesday, benefiting from its safe- haven status as Standard & Poor’s (S&P) downgraded or lowered its outlook on almost two dozen U.S banks. The Dollar was at 95.78 Yen yesterday, down from 96.62 Yen. This came one day after S&P said European banks face higher credit losses, a statement that also resulted in gains for the JPY.

As the economic outlook is still positive overall, the Yen fell against most other major currencies since the Yen is often used as a funding currency for higher yielding assets. A report showed that Japanese investors have purchased more oversees assets than they sold also added to the downward pressure on the Yen.

Crude Oil – Crude Oil Rises on Improved Demand

Crude Oil for July delivery rose 48 cents to end trading at $71.51 a barrel on Wednesday. In a volatile trading day, Crude closed higher after a mixed Energy Department report showed a bigger than expected drop in Crude supplies, and an increase in gasoline demand along with higher than expected rise in inventories. Signs of improving Oil demand offset the negative side of the report. Options expiration also played a role in the rally as July options expired Wednesday.

Crude’s rally over the past several months was supported by a weakening Dollar, and fears of inflation that pushed investors to buy commodities as a hedge. However, concerns of inflation in the near future subsided as the U.S. CPI (Consumer Price Index) increased by only 0.1%. As Crude inventories remain at very high levels, and the USD is showing signs of stability, another rally for Oil may be unlikely in the short-term.

Technical News

EUR/USD

The pair has been experiencing increased bullishness in the past 2 days. The 4-hour chart’s MACD and the daily chart’s RSI supporting a signal that the pair may be in for another bullish trading day. It may be a wise move for traders to enter the trend now.

GBP/USD

The pair has maintained its bullish momentum in the past several weeks and has been range trading between the 1.6200 and the 1.6620 levels in the past several days. The daily chart’s RSI supports another bullish move for the pair today. However, the hourly chart’s RSI and weekly chart’s Stochastic Slow support a Bearish move. Entering the pair when the signals are clearer may be a wise choice today.

USD/JPY

The USD/JPY pair has experienced much bearishness in the past few days. However, it seems that this bearish behavior may be running out of steam, as the pair stands at the 95.75 level. The 4-hour chart’s RSI and Slow Stochastic support a bullish reversal anytime soon. Entering the possible bullish reversal early on could turn out to pay off in today’s trading.

USD/CHF

The USD/CHF pair has been pushed up recently, reversing the bearish trend that the pair experienced previously. The MACD, RSI, and Stochastic Slow of the hourly and daily charts support a further bullish move for the USD/CHF pair. Going long with tight stops may turn out to be a wise choice today.

The Wild Card – Gold

Prior to this week, Gold went through a bearish run for the previous 2 weeks. However, Gold is now on for a 3 day winning streak, as the commodity benefits from the volatile forex market. The daily chart’s RSI and Slow Stochastic signal that there is plenty of steam ahead for Gold’s bullish run to continue, as we reach end of week trading. Entering the popular trend now may not be a bad choice at all.

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 gained significant ground-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3985 level and was supported around the $1.3805 level.  Several factors contributed to the dollar’s demise today. First, May headline consumer price inflation was up 0.1% m/m and off 1.3% y/y with the ex-food and energy component up +0.1% m/m and +0.8% y/y.  The headline year-over-year decline was the sharpest in some 60 years.  Second, it was reported the Federal Reserve may try to manage interest rate expectations with a more direct message when Federal Open Market Committee policymakers convene next week.  Fed officials are undoubtedly uncomfortable with the recent rise in interest rates across the Treasury curve and may try to craft the message that expectations of a rate hike to withdraw some monetary stimuli are premature.  Some economists believe the Fed may even adopt a similar tactic that Bank of Canada recently employed in suggested rates are unlikely to move higher before late 2010.  Third, other data released in the U.S. today saw the current account deficit decline to –US$ 101.5 billion in the January – March quarter, down from –US$ 154.9 billion in Q4 2008, but still above economists’ expectations.  In eurozone news, European Union finance officials will convene tomorrow and Friday to discuss stronger supervision of European financial markets.  Data released in the eurozone today saw the April EMU-16 global trade balance print at €2.7 billion, up from March’s surplus of €1.8 billion.   Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.50 level and was capped around the ¥96.75 level.  The Japanese government upgraded its overall economic assessment of the economy for the second consecutive month in June, reporting that exports and industrial production are improving.  Notably, the government did not report the economy is “worsening” for the first time since December.  Bank of Japan also raised its assessment of the economy, reporting the economy has “begun to stop worsening.”  Finance minister Yosano said the BoJ and government “share the exact same view on economic conditions” and added the “January – March period was clearly the bottom” for the current economic cycle.  The government, however, noted capital expenditures and housing starts are “decreasing at a fast pace” and said the employment situation is “severe and worsening rapidly.” Data released in Japan overnight saw revised May machine tool orders off 79.2%.  The Nikkei 225 stock index climbed 0.90% to close at ¥9,840.85.  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 ¥134.60 level and was supported around the ¥132.35 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥155.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.25 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8360 in the over-the-counter market, up from CNY 6.8330.

₤

The British pound lost ground vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6220 level and was capped around the $1.6480 level.  North American dealers lifted cable from intraday lows.  Data released in the U.K. today saw May jobless claims rise 39,300 while the claimant count rate of unemployment printed at 7.2%.  Sterling was dented during European dealing after a report from Bank of England suggested further sterling strength would “reduce the boost to net trade arising from (sterling’s) depreciation since summer 2007.”  On the other hand, BoE added sterling’s recent appreciation “may reflect the unwinding of some excess pessimism” about the U.K.  Traders await comments from Chancellor of the Exchequer Darling at his annual Mansion House speech later in the session.  BoE Governor King was quoted today as saying the U.K. banking system is too large, as are some U.K. banks.  He also reported “There are certainly grounds for believing that the rapid falls in activity are coming to an end. But there are some equally solid reasons for believing that the path to full recovery could be protracted.”  Cable bids are cited around the US$ 1.6110 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8535 level and was supported around the ₤0.8425 level.

Daily Market Commentary provided by GCI Financial Ltd.

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By CountingPips.com

A report from Statistics Canada today showed that the Leading Indicators index declined for the ninth straight month in May. The Leading Indicator Index, which measures future economic activity, fell by 0.1 percent in May following a revised decline of 0.9 percent in February. The May decline was the smallest of the last nine months and the 0.8 percent change from April marked the biggest turnaround for a month since December 1965.  May’s data, despite the decrease, was better than expected as market forecasts were calling for a 0.6 percent decline.

Contributing heavily to the overall index decline was a decrease in new orders for durable goods which fell by 11.6 percent. Shipments fell by 0.03 percent for the month while furniture & appliance sales declined by 1.0 percent and other durable goods sales slumped by 0.6 percent.  On the positive side, the stock market index rose by 3.2 percent, the housing index increased by 1.0 percent and the money supply increased by 0.8 percent.

Also out of Canada today, Statistics Canada reported that wholesale prices fell by 0.6 percent in April following a revised decline of 0.4 percent in March.  The data slightly beat forecasts expecting a 0.5 percent decline.

Canadian dollar mostly lower in currency trading.

The Canadian dollar has been mostly lower today in the currency markets against the major currencies.  The U.S. dollar is trading virtually unchanged at time of writing against the Canadian loonie as the USD/CAD opened trading today at 1.1313 at 00:00GMT and trades at 1.1307 at 3:04pm EST in the US session according to currency data from Oanda. The USD/CAD reached an intraday high of 1.1449 before retreating lower.

The euro has gained against the loonie as the EUR/CAD trades at the 1.5781 level after opening the day at 1.5683 and reached an intraday high of 1.5861.  The loonie has fallen versus the Japanese yen today as the CAD/JPY has edged down to the 84.66 yen per loonie level after opening at 85.41.

The British pound is trading virtually unchanged versus the loonie today as the GBP/CAD trades at 1.8565 level after opening the day at 1.8567.

The Australian dollar is higher against the loonie as the AUD/CAD pair trades at 0.8995 from today’s opening rate of 0.8963 while the New Zealand dollar has also gained against the CAD as the NZD/CAD trades at 0.7179 from 0.7130 earlier today.

EUR/CAD Chart – The EUR/CAD advancing higher today in currency trading and touched its highest exchange rate in roughly a month(4H Chart).