Month: August 2009

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$ 1.4365 level and was supported around the $1.4255 level.   The European Central Bank convenes on Thursday and is not expected to change monetary policy at that meeting.  The ECB today released a report that notes there is systemic risk in the credit default swaps market because the ten most active counterparties account for up to 72% of default swap exposure surveyed by lenders.  Data released in the eurozone today saw the August consumer price index improve to -0.2% from July’s -0.7% decline.  The decrease in disinflationary pressures suggests inflation may increase in the coming months.  Recent economic activity in the eurozone has been on the upswing but there is a sizable chance the recent economic improvement could falter.  French finance minister Lagarde was on the wire today saying the economies of the eurozone are stabilizing.  In U.S. news, data released in the U.S. today saw the August Chicago PMI index print at 50.0, up from the prior reading of 43.4.  Also, the New York NAPM activity improved for the first time in three months in August.  Recent economic data in the U.S. have been on the upswing and dealers are interested to see if recent housing and and other economic data can continue the uptrend.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥92.55 level and was capped around the ¥93.55 level.  As expected, the Democratic Party of Japan won a landslide victory in yesterday’s general election over the long-incumbent Liberal Democratic Party of Japan.  The DJP won 308 seats in the lower house of parliament and the LDP’s representation fell to 119 from 300.  Traders are carefully assessing the election results to determine how well the DPJ will be able to control spending and manage the government.  There is widespread speculation the DPJ will attempt to inflate public spending through new Japanese government bond issuance, possibly increasing social spending.  There is also skepticism that the yen’s post-electoral gains will be sustainable.  Some believe former Ministry of Finance official “Mr Yen” Sakakibara will get a portfolio in the new government.  Data released in Japan overnight saw July construction orders off 42.8% y/y to ¥660.9 billion while July overall housing starts were off 32.1% y/y to 65,974.  Other data released tonight saw July wages decline 4.8% y/y while July overall retail sales were off 2.5% y/y.  Additionally, July industrial output was up 1.9% m/m.  The Nikkei 225 stock index lost 0.40% to close at ¥10,492.53.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥132.15 level and was capped around the ¥133.85 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥132.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.20 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8290 in the over-the-counter market, up from CNY 6.8256.  Chinese equities were off more than 6% today and closed at levels not seen since May.  It was reported that new yuan loans made by Chinese lenders in August were likely to fall below ¥300 billion from ¥356 billion in July and ¥1.53 trillion in June.

₤

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6300 figure and was supported around the $1.6180 level.  Bank of England Monetary Policy Committee member Besley reported he sees economic growth returning by the end of the year during a period of “recuperation and recovery.”  He added he sees “some sort of growth” in 2009 and 2010.  Data released in the U.K. today saw August house prices rise 0.1% m/m, the first rise since July 2007, and were off 6.7% y/y.  Cable bids are cited around the US$ 1.6030 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8825 level and was supported around the ₤0.8775 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.

Today, we are very happy to publish a new forex interview with the terrific forex blogger Adam Kritzer. Adam writes for forexblog.org and covers just about all areas of the global forex and economic landscape. Adam is based in China and was kind enough to share some of his views as they pertain to the forex market.

How did you become involved in the forex world? Was there something particularly attractive to you about the forex market?

It happened by chance. I had studied economics in university, and had been exposed to forex mainly on a theoretical level. After graduating, I was offered a job as a forex journalist, and that led to the Forex Blog. That being said, I find forex more interesting than the capital markets, because it lends itself to a more big-picture approach. I was never one to drill down into specific data, which I think is necessary if you want to be a successful investor in stocks, bonds, etc.

Could you elaborate a little bit on how you got your “forex” education?

As I said, I studied economics in university, so I had a pretty strong theoretical foundation. Unfortunately, practical forex is much different, and often contradictory to, theoretical forex. For example, the economics of currencies is grounded largely in the notion of interest rate parity, which purports that currencies tend to move inversely with interest rates. In practice, however, the so-called Fisher effect has been observed, whereby money moves from low-yielding currencies into higher-yielding currencies, brought about by carry trading. In short, I educated myself simply by paying attention to the markets.

How often do you trade, are you a full-time trader? Do you trade longer or shorter times? Do you have any preference on the currency pairs you trade?

I invest in currencies via ETFs, since I think leverage is both dangerous and unnecessary. I will usually maintain positions for at least a year, just like any other investors. If I spot an opportunity, however, I will invest for shorter durations. Usually, I stick to the major currencies, which are most liquid and transparent.

Do you use more technical analysis or fundamental analysis, both? Do you have any favorite indicators, economic or technical? and why?

I rely mainly on fundamental, economic analysis. I think trade/current account/capital account data is the most useful predictor of a currency’s long-term health, because it indicates whether investors/businesses (as opposed to speculators) think about a currency. I rarely use technical analysis, at least not in the conventional sense of charting and relying on arcane indicators. That being said, a good investor must always be cognizant of market psychology (which technical analysis implicitly aims to capture), so you could say that the “spirit” of technical analysis still plays a role in my approach to forex.

Is there any one aspect that you find the most challenging?

Sometimes, currencies appear to move somewhat nonsensically. As a journalist/analyst, it’s my job to try to discern trend(s), but sometimes there are multiple, contradictory trends, which can have a confounding effect on the markets, making it difficult to understand what’s going in. Sometimes, you just have to sit back and be patient, and wait for a dominant trend to emerge.

On the forex market What do feel is the major theme playing out right now in the forex markets? Can we look forward to any changes? Particularly on the US Dollar outlook, do you have any thoughts on whether we will see continued Dollar weakness or maybe there will be a turnaround?

The forex markets continue to be dominated by the ebb and flow in risk appetite, as investors move funds out of so-called safe-haven currencies and into higher-yielding alternatives. Investors are desperately searching for signs of recovery, but so far, the data just isn’t there. A few weeks ago, analysts thought that US labor market data was a precursor for economic recovery and consequent interest rate hikes, but only a few days later, they had already accepted this as erroneous. Until, there is more clarity on the economic front, I think the markets will continue to favor an approach based on risk tolerance.

We have seen Central Banks keep interest rates at extremely low levels since the financial crisis, do you feel that we can look forward to rates starting to rise?

No, I don’t think western Central Banks will begin to hike rates for at least six months, and in the case only the Bank of Australia will hike. For the Fed, it will be another year. For banks who were slower to cut rates, they are further out on the curve, and it could be late 2010 before they follow suit.

On your blog (forexblog.org), you have written about many exotic and emerging market currencies, do you recommend any currencies to watch that you think have the potential to do well over the rest of the year or in the future?

I think emerging market currencies have outperformed over the last few months as a result of the return of the carry trade. However, in most of these cases, economic fundamentals have played only a marginal role. With the exception of China, almost every country will still contract in 2009, on an annualized basis. When this micro-bubble pops
is anyone’s guess, but I think we are due for a correction.

I read on another interview that you live in China, could you comment on the current Chinese economic climate? How about the Yuan, is there ever any talk about letting the currency float more freely?

Yes, I am based in China. To be honest, if I hadn’t been monitoring the economic crisis as it bears on forex markets, I might not have known that it was so severe in the rest of the world. People say that it’s more difficult to find a (high-paying) job here than it was last year or the year before, but otherwise I think the crisis has already passed in China, and that notion is also born out by the data. I live in an area that is frequented by tourists, and I can say that  domestic Chinese tourism this year probably set another record.

With regard to the Yuan, I don’t expect it will float freely anytime soon. I think the government will allow it to resume its modest upward appreciation as soon as the economy officially exits the recession.

Finally, do you have any advice to anyone starting out in forex trading? Is there anything in particular that you wish you had learned when you started out?

I am generally skeptical of the idea of expertise, especially when applied to forex or any other part of the capital markets. There are certainly investors who have better track records than others, and analysts who seem to have a better idea of what’s going on, but at the end of the day, everyone is “feeling their way through the dark.” In other words, I think it’s important to understand the basics – forex terminology, the mechanics of the market, the mainstream theories that seem to govern the performance of currencies. In the end, I think every investor has to develop his own approach, since there’s no such thing as a hard-and-fast rule.

Thank you Adam for taking part in this forex interview. To read Adam’s latest blog posts go to forexblog.org.

By CountingPips.com

The Canadian Gross Domestic Product increased in June for the first monthly gain in almost a year while second quarter GDP fell less than the first quarter. Canadian GDP increased in June by 0.1 percent following a decline of 0.5 percent in May according to a report by Statistics Canada released today. The June GDP rise marked the first monthly increase since July of 2008. The GDP rise failed to surpass market forecasts that were expecting a 0.2 percent gain for the month.

The second quarter of 2009 GDP registered a decline of 0.9 percent following the first quarter’s 1.6 percent contraction and marked the third straight quarterly GDP decline. On an annual basis, the second quarter saw a 3.2 percent GDP fall from the second quarter of 2008 after the first quarter contracted by 2.3 percent. The annualized change (growth rate compounded annually) was a contraction of 3.4 percent in the second quarter after a annualized 6.1 percent fall in the first quarter.

Contributing to the GDP gain in June was an increase in service industry output by 0.4 percent. Oil and gas extraction increased by 1.3 percent following three straight declining months while wholesale trade increased by 1.3 percent for the month. Also showing a gain in June was real estate agent and brokers activities which increased by 8.3 percent.  Contributing negatively to the GDP in June was a decline by 0.6 percent in goods-producing industries with a 0.5 percert fall in construction and a 0.7 percent drop in manufacturing.

By Fast Brokers – The EUR/USD gave us a head-fake to the topside yesterday, instead deciding to submit to the downward force of its trading range.  The EUR/USD is fighting to stay above our 2nd tier uptrend line and previous bottom-end support of 1.4281 as investors digest the nearly -7% decline in China’s SCI.  The EUR/USD’s inability to charge past our 4th tier downtrend line despite solid buy-side volume is a bit disconcerting.  However, the EUR/USD continues to flex its relative strength after the EU’s CPI Flash Estimate came in two basis points ahead of analyst expectations.  The recovery in the EU’s Flash CPI is a positive turn of events since spiraling prices have been the sore thumb in the EU’s economic recovery.  It will be interesting to see if the EU’s PPI can register a similar stabilization once it rolls around.  Even though the Flash CPI is showing improvement, EU prices continue to decline at a historic rate.  However, today’s reading could buy the ECB some more time as the central bank tries to avoid another injection of liquidity.  The CPI number comes just in time since the ECB will be making a monetary policy decision on Thursday.  Although analysts aren’t expecting any further liquidity injections at this week’s meeting, investors should still be on their toes since the ECB has been prone to deliver monetary shocks in the past.  In fact, the ECB may be uncomfortable with the rate the Euro is appreciating against the Pound, and could be tempted to deliver a shock to depreciate the Euro a bit and level the playing field.

Meanwhile, the EUR/USD is right in the gut of the trading zone created by our trend lines.  The EUR/USD is relaying the message of a consolidating S&P.  However, should the S&P futures follow the SCI lower, the EUR/USD may have little choice but to drop back towards our 1st tier uptrend line.   On the other hand, we don’t expect that investors will send the EUR/USD through any significant technical areas until we receive the next couple sessions of EU data, including German Retail Sales and Unemployment Change on Tuesday and the EU’s Revised GDP on Wednesday.  If the EU’s data comes in better than expected, investors may price in a neutral monetary stance at Thursday’s ECB meeting by appreciating the Euro against the Dollar.  We will see how the condition develops over the next 24-48 hours.

We still believe our 4th tier downtrend line plays an important role to the topside, and investors should keep in mind the currency pair has been experiencing more buy-side than sell-side activity as of late.  A majority of the EU economic data has been outpacing analyst expectations except for prices, which registered an about face today.  Therefore, there is little reason to be fundamentally negative on the EUR/USD right now.  It would take a blatantly negative turn of events in both EU and U.S. economic data this week to send the EUR/USD tumbling below our first tier uptrend line.  Even if the EUR/USD should decline below our 1st tier uptrend line, we can form several more trend lines beneath, not to mention the currency pair has its highly psychological 1.40 level hanging far below present price.  As for the topside, our 4th tier downtrend line plays an important technical role along with 8/27 highs.  Meanwhile, the EUR/USD is a leg up away from a substantial breakout since July highs are within reach.

Present Price: 1.4288

Resistances: 1.4297, 1.4310, 1.4327, 1.4340, 1.4360

Supports: 1.4281, 1.4262, 1.4254, 1.439, 1.4219

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 GBP/USD is finding support in our 2nd tier turned 3rd tier uptrend line once again as the Greenback depreciates across the board.  The Dollar’s broad-based depreciation is a bit odd considering the crude and the S&P futures are moving lower today in reaction to the SCI’s freefall during the Asian trading session.  Since we haven’t witnessed any discernable deterioration in economic data today, we are attributing the S&P’s decline as a psychological reaction to the downturn in the SCI.  Hence, investors should refrain from reading too far into the S&P’s present pullback.  We can tell you theme today is one of a weaker Dollar, highlighted by large gains in the EUR/USD and losses in the USD/JPY.  Meanwhile, gold is caught in the headwinds with little sense of direction.

Investors are becoming more comfortable with the GBP/USD after Britain’s GDP number came in one basis point above expectations on Friday.  However, investors should keep in mind the rest of Britain’s data was disappointing, including disconcerting outlooks for both consumer sentiment and business investment.  As a result, the Pound continues to experience a relative weakness, signified by the incessant rise of the EUR/GBP.  Britain will have a chance to redeem itself tomorrow when it releases its Halifax HPI, Manufacturing PMI and Net Lending to Individuals data points.  While we expect the Halifax data to impress since British housing data has been a bright spot lately, the more significant event will be to see whether Britain’s Manufacturing PMI can expand on its return to growth.  If so, the Pound may receive a boost of buy-side activity.

Technically speaking, the GBP/USD must deal with our 2nd and 3rd tier downtrend lines along with 8/28 highs.  After these technical barriers, the currency pair should have a clear shot at its psychological 1.65 level.  However, even if the Cable’s upward momentum should carry the currency pair beyond these resistances, we can create many more downtrend lines if need be.  This is the price the Cable must pay for experiencing such an aggressive pullback over the past month.  Britain’s mixed data won’t cut it, and the GBP/USD will need an impressive showing on all fronts to piece together a more meaningful rally.  As for the downside, the Cable has a little our 2nd and 3rd tier uptrend lines along with 8/27 lows to fall back on.  If these technical cushions don’t hold, the GBP/USD should experience considerable support in its psychological 1.60 level.  Meanwhile, investors should take note that our 3rd tier uptrend line is reaching an inflection point with our 1st and 2nd tier downtrend lines over the next 24-48 hours, indicating a forthcoming area of high volatility.  The multiple inflection points are not surprising considering the important British data hitting the wire soon.

Present Price: 1.6277

Resistances: 1.6294, 1.6313, 1.6340, 1.6379, 1.6416

Supports: 1.6251, 1.6212, 1.6181, 1.6146, 1.6119

Psychological: 1.60, 1.65

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 reacting negatively to the inflection point of our 2nd tier uptrend and downtrend lines.  Investors continue to favor the Yen in the wake of a shift in Japanese governmental power to the DPJ.  Investors are speculating the DPJ’s more conservative fiscal stance will result in a stronger Yen as we recognize similar pullbacks in both the EUR/JPY and GBP/JPY despite the Greenback’s broad-based depreciation.  To exacerbate the rush to the Yen, Japan reported some positive economic data today for a change of pace.  Prelim Industrial Production, Retail Sales, and Average Cash Earnings all exceeding analyst expectations.  Hence, investors have just another incentive to favor the Yen over the Dollar.  However, investors should keep in mind Japan’s wave of economic data over the past week has been negative for the most part.  Investors will be paying close attention to China’s Manufacturing PMI data late Monday.  If China’s economic data continues to cool down, the USD/JPY may hit a bottom since investors will be concerned about the impact this will have on China’s demand for Japanese exports.

Meanwhile, the USD/JPY is drifting uncomfortably far away from our 1st tier and 2nd tier uptrend lines, indicating a retest of July lows.  As a result, it will important to see whether the USD/JPY can recover from today’s pullback and climb into the safety of our 1st tier uptrend line.  Regardless, the USD/JPY is burning bridges while flirting with the idea of retesting yearly lows.  Therefore, it’s safe to say the USD/JPY’s downward momentum is in the driver’s seat.  The currency pair has quite a battle ahead of itself to the topside.  Focus will return to China, the U.S. and Britain with Japanese elections and economic data out of the way.  As a result, we will monitor which correlations come into play over the next 24 hours.

Present Price: 92.73

Resistances: 92.98, 93.17, 93.27, 93.54, 93.74

Supports:  92.73, 92.55, 92.36, 92.08, 91.91

Psychological: 95, 90

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 dollar was slightly more volatile over the past week than usual, and the explanations for this have been getting trickier by the day. As for this week, forex traders are advised to take positions on trades, as a string of data releases coming out of U.S., Europe and Japan are likely to affect the greenback’s main currency crosses.

Economic News

USD – Dollar Finishes a Volatile Week Ahead of the Non-Farm Payrolls

The Dollar underwent a volatile trading week against the major currencies. The EUR/USD was traded between the 1.4200 and 1.4400 levels without showing a clear direction. The Dollar continued the rising trend against the Pound, yet saw bearish activity against the Yen.

The greenback’s unstable trading week took place largely due to the mixed results published from the U.S economy. While the Consumer Confidence report showed a surprising improvement in consumers’ confidence regarding their financial outlook. Also, the housing sector continues to show signs of recovery as 433,000 New Home Sales were sold during July, marking a 9-month record. The Preliminary Gross Domestic Product (GDP) dropped by 1.0% in the second quarter of the year, showing that the American economy continues to contract, despite some optimistic reports.

In addition, the weekly Unemployment Claims report showed that 570,000 individuals have filed for unemployment insurance for the first time during the past week, questioning that the employment conditions in the U.S have entered a recovery process.

Looking ahead to this week, many impacting data is expected from the U.S economy, and above all the Non-Farm Employment Change report which is expected on Friday. The main publications for this week will include the Pending Home Sales on Tuesday. A positive result could strengthen the notion that the housing sector is recovering, which could boost the Dollar. The Manufacturing Purchasing Managers’ Index on Tuesday is also likely to create strong volatility in the market. Yet the Non-Farm Payrolls on Friday is likely to affect the Dollar the most. Traders are also advised to follow the ADP forecast on Wednesday, as its results have proven to impact the Dollar in the short-term.

EUR – EUR Recovers before the Weekend on Positive German Data

Last week, the Euro saw volatile activity against the major currencies. The EUR first dropped against the Dollar, just to rise back up. The EUR saw a strong bullish trend against the Pound, as the EUR/GBP pair rose over the 0.8820 level. However, the Euro dropped almost 400 pips against the Yen.

The EUR began last week’s trading with falling trends largely due to the positive economic data published from the U.S economy. However, as the week proceeded, a batch of positive economic data saw light from the Euro-Zone as well, jumping the Euro back up. The German Business Climate report saw an 11-month high, proving that businesses in Germany feel the economy is on the right track to recover from the global crisis.

Also last week, the German Consumer Climate index rose by 3.7 points, marking a 15-month record, supporting the sentiment that the German economy could be the first leading economy to pull out of recession. Considering that Germany holds the largest and strongest economy in the Euro-Zone, a continuation of such data is likely to strengthen the Euro against the major currencies.

As for this week, many interesting publications are expected from the Euro-Zone. The German Retails Sales is scheduled on Tuesday 06:00 GMT. This report measures the total value of inflation-adjusted sales at the retail level, and is considered to be a reliable indication for an economy’s health. A positive data is likely to boost the Euro. Another publication that traders are advised to focus on is the Revised Gross Domestic Product (GDP) expected on Wednesday. Current expectations are that the European GDP has dropped by 0.1% during the second quarter of the year. However, a surprising result is likely to affect the Euro, and traders should be prepared.

JPY – Japanese Elections Support Yen Towards 7-Week High against USD

Last week, traders that went long on the Yen saw nice profits. The Yen rose close to 300 pips against the Dollar, sending the USD/JPY towards the 92.50 level. The JPY also rose against the Euro, and marked over 600 pips rise against the Pound.

It seems that the Yen was boosted last week much due to the end of election uncertainty following a win for the opposition Democratic Party of Japan. The elections’ end even supported the Yen up to a seven month high against the Dollar. Another reason for the Yen’s appreciation last week is the trade balance report which was published on Tuesday. This report measured the difference in value between imported and exported goods during July, and delivered a 0.19T figure. This means that the Bank of Japan (BoJ) is succeeding in its target to recover the Japanese economy with strong exporting activity. The BoJ keeps its low interest rates mainly for this purpose, and it seems that as long as Japanese exports will continue to expand, the Yen is likely to rise further and further.

As for the week ahead, a batch of data is expected from the Japanese economy. Traders are advised to focus on the monetary Base and the Capital Spending reports, as they are likely to create large volatility in the market. The Capital Spending report measures the total value of new capital expenditures made by businesses, and thus tends to have a large impact on the Yen.

Crude Oil – Crude Oil Recovers to $73 a Barrel

After starting last week with sharp losses, Crude Oil managed to recover and to resume towards $73 a barrel. Two main reasons led to Crude Oil’s recovery since mid-week. First, optimistic data from Germany and the U.S have increased speculations that demand for energy will rise. A very relieving assumption is that as the global economies’ condition will improve, demand for oil will rise in accordance. The other reason was the drop of the Dollar against the Euro and the Yen. As a commodity, Crude Oil is traded in Dollars, and thus a drop of the Dollar usually leads to a rising trend for oil, and vice versa.

As for the week ahead, traders are advised to follow the leading publications from the major economies, as they are likely to dominate Crude Oil’s value. Traders should also bear in mind that positive data from the major economies is likely to create speculations regarding energy demand which tends to boost crude oil. In addition, the Crude Oil Inventories report is scheduled for Wednesday. This report is also likely to have a large impact on crude oil’s value and traders should follow its outcomes.

Technical News

EUR/USD

The typical range-trading on the hourly chart continues. The daily RSI is floating in neutral territory. However, there is a fresh bullish cross forming on the 4-hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. Going long might be a wise choice.

GBP/USD

There is a fresh bullish cross forming on the 4-hour Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the daily MACD also supports this notion. When the upward breach occurs, going long with tight stops appears to be a preferable strategy.

USD/JPY

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Slow Stochastic signals that a bullish reversal is imminent. An upward trend today is also supported by the 4-hour chart’s Slow Stochastic. Going long with tight stops may turn out to pay off today.

USD/CHF

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 charts oscillators are not providing a clear direction either. Waiting for a clearer signal on the hourly chart might be a good strategy today.

The Wild Card – Gold

Gold prices rose significantly in the last week and peaked at $955.45 an ounce. However, the 4-hour chart’s RSI is floating in the overbought territory suggesting that the recent upwards trend is losing 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 GCI Fx Research

€

The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4320 level and was capped around the $1.4390 level.  Data released in the U.S. today saw July personal income growth at 0.0%, up from June’s revised -1.1% decline.  July personal spending printed at +0.2%, down from June’s revised print of +0.6%.  Also, the July personal consumption expenditures deflator was off 0.8% y/y, worse than the 0.4% June reading.  At the core level, the July core rate up 0.1% m/m and 1.4% y/y.  Finally, the University of Michigan consumer sentiment indicator came in at 65.7, above the prior mid-August reading of 63.2 but below the July reading of 66.0.  The common currency failed to sustain its gains through the North American session as U.S. equity prices retreated in the session.  St. Louis Fed President Bullard was on the wires earlier and dovishly said the Fed needs to see much more “convincing” economic data before contemplating an increase in rates.  In eurozone news, the European Commission’s economic sentiment indicator improved to 80.6 from a reading of 76 in July.  Many economists believe the eurozone economy will expand around 0.5% q/q in the third quarter.  Bundesbank reported German banks expect a modest increase in lending volumes in the second half of 2009 and in 2010, corroborating the central bank’s assessment there is no credit crunch in the eurozone’s largest economy.  German Chancellor Merkel today reported the German economy might contract 5% or 6% in 2009.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥93.40 level and was capped around the ¥94.05 level. All eyes are focused on this weekend’s general election in Japan where the long-incumbent Liberal Democratic Party looks poised to lose its stronghold on power to the Democratic Party of Japan.  Some Japan-watchers believe this will result in increased Japanese government bond issuance to finance the expected increase in public works spending.  It is unclear how a DPJ victory would impact the yen.  Japan is expected to battle deflation through early 2012 and will need all the help it can get from its slumping export sector through a weaker yen.  Many data were released in Japan overnight.  First, the July unemployment rate rose to 5.7% from 5.4 in June, the largest print since World War II and significantly above expectations.  Second, the July nationwide consumer price index was off 0.3% m/m and off 2.2% y/y with the core rate off 0.2% m/m and 2.2% y/y.  The Tokyo-area August consumer price index was up +0.3% m/m and +0.1% y/y with the core component flat m/m and off 0.2% y/y.  Other data saw July all household spending off 2.0% y/y while the trade surplus for the first ten days in August printed at ¥48.08 billion, off 69.2% y/y.  The Nikkei 225 stock index climbed 0.57% to close at ¥10,534.14.  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 ¥134.00 figure.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥153.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.90 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8256 in the over-the-counter market, down from CNY 6.8273.  Chinese Premier Wen this week said the markets need to avoid being “blindly optimistic” about the global economic recovery and added China must maintain its “moderately loose” monetary policy and “active” fiscal policy.  PBoC has reported it will ensure “reasonable and ample” liquidity.

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By Fast Brokers – The USD/JPY is weakening despite disappointing Japanese data combined with positively mixed U.S. numbers.  This combination of economic data would normally be a positive catalyst for the USD/JPY due to the outperformance of the U.S. economy vs. the Japanese economy.  Furthermore, the added signs that the global economic recovery is spreading would usually lead investors to sell the Yen and snatch up riskier currencies.  However, the trading today seems to be more focused on the governmental election taking place in Japan.  It seems the LDP will lose power for the first time in 50 years.  Investors are speculating that the DPJ’s more conservative fiscal approach may result in a stronger Yen.  Hence, we see the Yen appreciating not only against the Dollar, but also against the Pound and the Euro as well.  Furthermore, even though we’ve received some positive economic data from the West, the consumption-oriented numbers left something to be desired.

U.S. and British consumer confidence readings showed little improvement while U.S. Unemployment Claims and Personal Spending remain at discouraging levels.  Furthermore, Core Durable Goods Orders came in two basis points below analyst expectations earlier this week.  Lastly, China has decided to reign in its liquidity to try and deflate asset bubbles.  The combination of these economic developments does not bode well for the demand for Japanese exports.  Hence, Japan’s struggling economy may not have much relief in sight.  Japanese consumer prices are sinking while household spending declines, both are ramifications of rising unemployment.

Negative economic data and a shift in governmental power seem to have investors favoring the Yen.  The USD/JPY is trading back below our 1st tier and 2nd tier uptrend lines, a risky move technically.  All of the sudden the USD/JPY is reconsidering a test of July lows.  Meanwhile, the
USD/JPY has several difficult downtrend lines bearing overhead, telling us momentum is turning in favor of the bears again.  Japan will release more important economic data to kick off the next trading week, including Prelim Industrial Production, Retail Sales, and Average Cash Earnings.  The combination of a governmental election and more key economic data should result in rising volatility.  Additionally, investors will receive important economic data from the U.S., China, and the EU.  Therefore, investors should fasten their seatbelts and keep an eye on the shifting fundamentals.

Present Price: 93.52

Resistances: 93.42, 93.27, 93.08, 92.85, 92.68

Supports:  93.47, 93.88, 94.08, 94.25, 94.44

Psychological: 95

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 has popped above our key 4th tier downtrend line after the combination of better than expected U.S. and British GDP data with an encouraging EU Services Confidence number has motivated bulls to re-enter the risk pool.  The S&P futures are knocking at the door of their previous 2009 highs while the 30 Year T-Bond futures drop like a rock.  To top the cake, gold is registering an explosive move to the topside.  As a result, all of the EUR/USD’s correlations are indicating a bullish movement approaching.  It appears the volatility we were anticipating is finally kicking in.  The EUR/USD’s ascent past our 4th tier downtrend line is a key technical move in our eyes since it runs through August highs.  Hence, the EUR/USD may be headed for a larger leg up with a high probability of retesting these August 5th highs.  We notice volume is picking up on the buy-side, highlighted by the 1-hour chart.

Even though America’s better than expected GDP number passed by without a flinch, Britain’s GDP number is driving home the fact that the global economy is stabilizing.  However, there are a few cautionary notes hiding behind the silver lining.  U.S. Unemployment Claims aren’t dropping as quickly as projected and Japan’s economy is taking a beating.  Furthermore, it remains to see what impact tighter liquidity in China will have on the EU’s manufacturing base.  If China cools down, the EU’s rebound may hit a speed bump since Chinese demand has been fueling the global economic recovery. Regardless, the S&P futures may be the driving force behind the EUR/USD’s next leg up as they distance themselves from 1000 and head to new highs.  Investors aren’t discouraged by the mixed economic data and are buying into the concept of a lasting recovery.  Hence, even though China may tap on the brakes, rising U.S. demand for EU exports could more than compensate from the slowdown in the East.

The EUR/USD’s technical obstacles to the topside will likely be August highs and the meat of the 8/3-8/6 trading range.  Beyond these levels the next level of significance is the currency pair’s psychological 1.45 level.  As for the downside, the EUR/USD has multiple uptrend lines, intraday lows, and our support levels to fall back on.

Present Price: 1.4367

Resistances: 1.4373, 1.4383, 1.4397, 1.4410, 1.4424

Supports: 1.4340, 1.4327, 1.4310, 1.4297, 1.4281

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.