Month: August 2009

By Fast Brokers – The Cable has finally found bottom on our 2nd tier uptrend line, logging encouraging movements to the topside as the EUR/GBP pulls back.  Despite mixed economic data, investors are choosing to run with the better than expected GDP data from both Britain and the U.S.  As we anticipated, the flush of British data is appeasing Cable investors by taking their minds off of the BOE’s recent injection of liquidity into Britain’s QE package.  The fact Britain’s GDP came in a basis point better than expectations shows the BOE’s monetary shock may be more cautionary than preventative.  However, Britain’s stream of data comes with a red flag since CBI Realized Sales, Prelim Business Investment, and GfK Consumer Confidence were all weaker than analyst expectations yesterday.  Hence, British consumption is still struggling to approach pre-crisis levels, and the sharp decline in business investment is certainly disconcerting.  Therefore, we’re not sure how long the Pound’s resurgence will last, and the excitement surrounding an oversold Cable may fade quickly.  On the other hand, the S&P futures are knocking on the door of their previous 2009 highs while gold surges well past $950/oz.  Since the Cable is positively correlated with both of these investment vehicles, the currency pair should be inclined to participate with any immediate-term run to the topside in either U.S. equities or precious metals.

Technically speaking, the GBP/USD must deal with our 3rd tier downtrend line and 8/25 highs.  After these technical barriers the currency pair will need to overcome its psychological 1.65 level, no easy feat.  Furthermore, 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 more breathing room for now.  The GBP/USD has 8/17 and 8/27 lows along with our 1st and 2nd tier downtrend and 1st tier uptrend lines serving as technical cushions.

Britain will keep the data train rolling next week by releasing its Halifax HPI, Manufacturing PMI, and Net Lending to Individuals on Tuesday.  Additionally, we’ll receive more economic data from the U.S., Japan, China, and the EU.  Least we mention there is an ECB monetary policy decision on Thursday.  Hence, today’s volatility should carry over into the next trading week.

Present Price: 1.6341

Resistances: 1.6367, 1.6394, 1.6410, 1.6427, 1.6455

Supports: 1.6337, 1.6302, 1.6277, 1.6261, 1.6247

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 CountingPips.com

The United Kingdom Gross Domestic Product fell for the fifth straight quarter but was revised slightly better than previously esimated according to a report by the Office of National Statistics. The U.K. GDP data showed that quarterly GDP fell by 0.7 percent in the April through June quarter following a decline of 2.4 percent in the first quarter of 2009. The second quarter GDP contraction was previously estimated in a July report to have fallen by 0.8 percent. The first quarter decline had marked the largest decrease since the 2.6 percent fall in the second quarter of 1958.

On an annual basis, the second quarter GDP fell by 5.5 percent from the level of the second quarter of 2008 and marked the largest annual decline since 1955 when records were first kept. The 2009 first quarter had registered an annual decline of 4.9 percent.

Contributing to the decline in GDP was a decrease in total production output by 0.6 percent. Despite this decrease, the production output was significantly better than the 5.1 percent decrease of the first quarter. Also contributing to the second quarter’s GDP fall was a construction output decrease by 2.2 percent while services output fell by 0.6 percent and manufacturing declined by 0.2 percent. Household expenditures decreased by 0.7 percent while government expenditures rose by 0.8 percent in the second quarter.

Source: ForexYard

Forex trading to today are set to be driven by a batch of data from both the U.S. and Britain. The main release from the U.S. today that traders are waiting for is the Consumer Spending, also known as the Personal Spending report from the U.S. at 12:30 GMT. Forecasts put the figure at roughly 0.2% in July, about half the increase of June. However, the rise is mainly owed to the cash-for-clunkers program. Despite this, a positive figure may actually hurt the USD, as such a result could increase risk appetite. Therefore, in order to take advantage of end-of-week market behavior, open your positions in the USD, EUR, and GBP now.

Economic News

USD – USD Falls Steeply on Thin Trading and Market Optimism

After a period of steady appreciation, the USD took a sharp nose dive at the end of European market hours to close yesterday’s trading at 1.4364 versus the EUR, 1.6284 against the Pound, and 1.0877 against the CAD. The greenback fell due to several reasons that are linked to thin summer trading.

First, with Crude Oil advancing from industrial growth worldwide, the USD is experiencing some downward pressure from commodity purchases. With growth being forecast on the horizon, safety investments like the USD are losing some of their appeal. While the Gross Domestic Product (GDP) of the United States shrank less than expected, many economists are anticipating a rally in US stocks, Crude Oil prices, and riskier investments. These all point to further downward pressure on the Dollar in the days ahead. As such, yesterday’s sharp drop was inevitable.

If today’s figures on Personal Income and Personal Spending in the US confirm the rising trend of growth, the USD could see some added downward pressure. The University of Michigan’s Consumer Sentiment report will also give credibility to these assumptions if it reveals market optimism is on the rise. Traders may anticipate a bearish Dollar if economic news continues to support these latest trends.

EUR – EUR Remains Bullish at End of Month Trading

The EUR’s bullish rally against all major currency pairs continued yesterday with a surprising reversal to the EUR/USD’s recent downtrend coming at the close of European markets. Closing at a surprising 1.4364 against the greenback, the EUR made significant gains on recent boosts to market optimism, risk appetite, and thin market trading. As the month comes to an end, a significant level of position shifting takes place and some trends may see a reversal at the start of September.

Market data from the Euro-Zone and Britain has lately put a positive spin on the 16-nation currency. Germany’s Ifo Business Climate report on Wednesday showed an improvement to investor confidence in the German economy and other data yesterday continued adding momentum. While Britain’s economic figures may also show positive data, the level of confidence in the British banking system, as well as their influx of cash from their quantitative easing program, has put a downward spin on the GBP. This trend may not come to an end anytime soon, but end of month trading usually generates enough volatility to surprise even the most veteran traders.

As for today, the Euro-Zone isn’t scheduled to release any significant reports, but the British government will release its Revised GDP figures showing that Britain’s economy likely shrank by 0.8% last quarter. Switzerland will also publish its KOF Economic Barometer today, measuring the relative strength of the Swiss economy. This report has the potential to add a level of volatility to the CHF not typically experienced in the average trading week.

JPY – JPY Ends August with Batch of Poor Data

Yesterday was a day of bearishness for the Japanese Yen. Losing on all fronts, the JPY finished the day at 134.48 against the EUR, 152.35 versus the GBP, and stable at 93.64 against the Dollar. With the recent surge in market optimism, combined with thin trading at the end of the month, the Japanese Yen has faced surmounting downward pressure as safe-havens are losing their appeal.

Adding to this downward momentum was a batch of negative data releases from Tokyo at the start of Friday’s trading session. Household spending, Japanese CPI, and Japan’s Unemployment Rate all showed worse than expected numbers, with unemployment climbing to 5.7% last month. Closing out the month with such abysmal data definitely does not help the JPY’s strength.

Crude Oil – Crude Oil’s Appeal as Alternative Investment on the Rise

The appeal of Crude Oil investments rose yesterday after the US Dollar weakened on thin trading, growing risk appetite, increasing demand for energy, and end of month investment shifting. As Crude Oil prices rose for the first time in 3 days, investors flocked to the commodity as an alternative investment. Failing to breach the $70 support level, the price of a barrel of Light Sweet Crude subsequently rose back to $72.68 by the end of Thursday’s trading hours.

With global economies beginning to show signs of recovery, and countries such as Australia already on their way to substantial growth, energy prices are expected to pick up in the near future. Likewise, as strength returns to the market, the safety of the US Dollar will fall alongside it, adding further support to Crude Oil prices. A near-term target of $75 a barrel has become a popular goal for many speculators as a result.

Technical News

EUR/USD

The pair soared yesterday by 115 pips to the 1.4356 level. The 4-hour and daily chart’s oscillators seem to be showing misleading signals. However, the RSI of the hourly chart shows the pair above the 70 mark, signaling that a downward reversal is imminent. The MACD of the hourly and weekly charts also support a downward correction for the pair today. Going short with tight stops may turn out to pay off today.

GBP/USD

Despite much Bearishness in this cross this week, the GBP/USD cross went higher yesterday. On the one hand the daily chart’s Stochastic Slow supports this upward correction to continue. However, on the other hand, the RSI and MACD of the hourly chart and the Stochastic Slow of the 4-hour chart supports a bearish reversal for today. Going short with tight stops may bring big profits today.

USD/JPY

The USD/JPY pair has been range trading between the 93.19 and 94.56 levels in the past several days. The Stochastic Slow of the daily chart and RSI of the daily chart support a bullish move for today. However, the MACD of the daily charts supports a possible bearish trend for today. Entering the pair when the signals are clearer seems to be the right choice for traders today.

USD/CHF

The pair went through a dramatic bearish correction yesterday. This was despite rising over the previous several days. The RSI of the weekly chart supports a further drop in the pair for Friday’s trading. This move is also backed up by the MACD of the weekly chart and Stochastic Slow of the daily chart. Entering the popular trend now doesn’t seem to be a bad idea at all.

The Wild Card – Crude Oil

Crude Oil has resurrected yet again as the top bullish commodity in Thursday’s trading. The black gold currently stands at the $72.60 level. Today’s technical data supports another possible upward move for Crude. This is mainly supported by the hourly chart’s Stochastic Slow and 4-hour chart’s MACD. So if you forex traders want to take advantage of this popular commodity now, then enter Crude as soon as possible as end-of-week trading kicks in.

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$ 1.4220 level and was capped around the $1.4280 level.  U.S. equity markets were pinched lower as traders continue to speculate the Chinese government may try to slow its industrial sector, probably to the detriment of global growth.  Richmond Fed President Lacker hawkishly said the Fed may not need to purchase the entire US$ 1.25 trillion in mortgage-backed securities it has been authorized to purchase by the end of the year.   Data released in the U.S. today saw second quarter gross domestic product decline an annualized 1.0%, unchanged from the previous estimate, while the second quarter GDP price index fell to 0.0% from 0.2%.  Additionally, core personal consumption expenditures were unchanged at 2.0%, matching forecasts.  Other data released today saw weekly initial jobless claims fall to 570,000 from a revised 580,000 while continuing jobless claims printed at 6.133 million, down from 6.252 million.  This week’s U.S. economic data have added to the perception that the U.S. economy has likely bottomed out, though some bears are quick to note that the impact from the pending commercial real estate crisis has not been fully discounted by markets.  The Federal Reserve is seeking a delay in the disclosure of the identity of companies that received funds from its emergency lending programs.  In eurozone news, GfK reported German September sentiment improved to 3.7 from 3.4 in August.  Also, Germany’s inflation rose unexpectedly improved to 0% in August on a harmonized basis after declining an annualized 0.7% in July.  Other data released today saw loan growth to private sector borrowers in the eurozone decelerate significantly, off 0.4% m/m. Additionally, the ECB reported its annual M3 money supply indicator grew 0.3% last month.  ECB policymakers this week have been quite cautious in their assessments of the economy, noting it is unlikely they’ll move to unwind their monetary stimuli anytime soon.  ECB rate-setters will next convene on 3 September and are unlikely to change monetary policy at that time.  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 ¥93.35 level and was capped around the ¥94.30 level.  The yen strengthened across the board as traders were loath to assume too much risk during a period of decreased market liquidity.  Vice finance minister Tango reported G20 central bankers and finance ministers will discuss the global economy and regulation of the financial markets when officials convene in London next week.  Ongoing concerns that China will curb excess growth in the industrial sector continue to result in yen weakness.  China remains a major engine of global growth and a weakening in industrial activity could precipitate slower global growth, thereby decreasing demand for higher-yielding assets.  The repatriation of overseas yen assets back to Japan is also benefiting the yen.  On the political front, Democratic Party of Japan leader Yukio Hatoyama published an editorial that suggested Japan should work with other Asian countries to create a single regional currency “and aspire to move toward regional currency integration.”  It is likely that Hatoyama will become the next prime minister on 30 August if his Democratic Party of Japan defeats the long-incumbent Liberal Democratic Party.  There is growing speculation the Bank of Japan may extend its forecast for the end of deflation into early 2012 from early 2011, and this suggests the central bank will keep its ultra-easy monetary policy unchanged from quite some time.  The Nikkei 225 stock index lost 1.56% to close at ¥10,473.97.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥132.90 level and was capped around the ¥134.45 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥151.05 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.30 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8273 in the over-the-counter market, up from CNY 6.8266.  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.

₤

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6155 level and was capped around the $ 1.6245 level.  Cable reached its lowest level since 13 July.  Bank of England Deputy Governor Bean reported it may take years to assess the efficacy of the central bank’s ₤175 billion asset purchasing program on account of “transmission lags.”  Bean added the impact of the bond purchase program has been “moderately encouraging.”  Cable offers are cited around the US$ 1.6355 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8820 level and was supported around the ₤0.8770 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0660 level and was capped around the CHF 1.0705 level.  UBS reported buying back assets from the Swiss National Bank is not an “immediate concern.”  Swiss National Bank member Jordan this week reported it “isn’t time yet” to reverse its expansionary monetary policy, adding interest rates “will remain low.”  He also verbally intervened against further franc strength, saying it will be prevented “resolutely.”  U.S. dollar offers are cited around the CHF 1.0790 level.  The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.5240 level while the British pound moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.7255 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 CountingPips.com

The U.S. economy’s annual pace of contraction in the second quarter of 2009 was better than expected, potentially signaling that the economy’s deep recession may be subsiding according to the U.S. Commerce Department. The annualized GDP report released today showed that the real U.S. Gross Domestic Product contracted by 1.0 percent in the April to June 2009 quarter from the second quarter level of 2008. This contraction was unchanged from the original GDP estimate released in July. Economic forecasts were expecting the GDP decline to be approximately 1.5 percent for the quarter. The second quarter GDP is a significant improvement from the revised real 6.4 percent contraction in the first quarter of 2009.

Contributing to the second quarter GDP fall was a decrease in consumer spending, exports and nonresidential fixed investments.  Exports of goods and services decreased by 5.0 percent after falling by 29.9 percent in the first quarter. Imports fell by 15.1 percent following a 36.4 percent decline in the first quarter. Consumer spending, which makes up approximately two-thirds of U.S. economic activity, decreased in the second quarter by 1.0 percent after increasing in the first quarter by 0.6 percent.

Weekly Jobless Claims decline.

Weekly U.S. jobless claims declined in the week that ended on August 22nd according to a release by the U.S. Labor Department today. New weekly jobless claims fell by 10,000 workers to a total of 570,000 unemployed workers. The decrease in claims failed to surpass economic forecasts that were predicting a decline to 565,000 jobless claims for the week. A 4-week moving average of new claims decreased by 4,750 from the previous week to 566,250 unemployed workers.

Workers seeking continuing claims for unemployment benefits for the week ending August 15th decreased by 119,000 to total 6,133,000 unemployed workers. The four week moving average of continuing benefits claims decreased by 27,000 workers to total 6,241,750 workers seeking continued unemployment benefits.

US Dollar weaker in Forex Trading today.

The U.S. dollar has been mostly lower in forex trading today against the other major currencies from the day’s opening at 00:00 GMT. The dollar has been weaker versus the euro, Australian dollar, Swiss franc, Canadian dollar and New Zealand dollar while gaining slightly versus the Japanese yen. The American currency has been about unchanged against the British pound from its opening at 2:02pm ET in the US trading session.

Source: ForexYard

The U.S dollar gained ground Wednesday against the EUR and the British pound, after strong data on orders for new U.S.-made durable goods and new home sales comforted expectations of an improvement in the economy. The greenback traded higher after the durable-goods orders report said orders for July rose by 4.9%, the largest increase in 2 years. Investors will be watching for the new U.S. jobs report today before making significant moves.

Economic News

USD – Dollar Rises on Signs of Economic Recovery

The Dollar rallied yesterday against most of its major counterparts after data suggesting the slowdown in the U.S. housing market has bottomed out. A better-then-expected result gave further support to the U.S. currency. The Dollar has been sold off recently partly due to growing optimism regarding the state of the U.S. economy. The USD finished yesterday’s trading session about 50 pips higher against the EUR at the1.4249 level.

Yesterday’s main U.S economic event was the New Home Sales data. New U.S. home sales hit its highest level in 10 months in July. Orders for Long-Lasting Manufactured Goods also surged yesterday and are interpreted by traders as fresh evidence of a modest economic recovery. Sales of “New Single-family Homes” rose by 9.6% from June, the highest rate since September. It is in fact the biggest percentage gain since a matching increase in February 2005, another indication that housing activity had stabilized after a three-year slump.

Looking ahead to today, there are few important news releases coming out of the U.S. These include the Prelim GDP and Unemployment Claims at 12.30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost the USD in the short-term. On the other hand, if the results turn out to be lower than forecast, then the Dollar may record a fairly bearish session in today’s trading.

EUR – EUR Records Mixed Results against the Majors

The EUR finished yesterday’s trading session with mixed results versus the major currencies. The 16-nation currency extended gains versus the Sterling on Wednesday, to trade above $0.8775 amid a broad sell-off in the GBP. The EUR experienced similar behavior against the CHF as the pair rose from 1.5185 to 1.5220 by days end. The EUR did see bearishness as well against the USD as it lost over 50 pips and closed at 1.4249.

A leading indicator released yesterday from Europe was the German Ifo Business Climate report. Germany holds the largest and strongest economy in the Euro-Zone, and thus the relevant publications from this economy usually have a hefty impact over the EUR. This indicator jumped to 90.5 in August from 87.4 in July, above economists’ expectations. Analysts said that this is a plus for the European economy, and it’s a sign confirming that the real economy is starting to get out of the period of freefall.

Sentiment in the Euro-Zone economy has brightened in the past month following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-Euro crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., Japanese, and other key economies will affect their positions.

JPY – The Japanese Yen Extends its Bullish Run

The Japanese yen rose for a second day against the EUR amid concerns financial losses will delay a recovery in the global economy, boosting demand for Japan’s currency as a safe haven. The Yen also rose to a 5-week high against the British pound as a smaller-than-expected July trade balance data from Japan prompted investors flee from riskier-assets.

The outlook for economy in Japan is still doubtful as Japan’s export slump deepened in July, indicating the boost in demand that helped pull the country out of its recession last quarter may be short-lived. Shipments abroad fell 36.5 % from a year earlier, steeper than June’s 35.7% drop

Crude Oil – Crude Oil Falls 1.4% on U.S Inventory Data

The price of Crude Oil fell 1.4% or $1.00 to $71.20 yesterday, as the latest inventory numbers from the U.S. Energy Information Administration (EIA) showed an increase in crude oil stockpiles. The EIA reports that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 200,000 barrels in the week ending August 21, from the previous week.

Crude Oil also declined on concern China may cut back on industrial investment, slowing demand for fuels in the world’s second-largest energy user. Crude traded low after China said it was studying curbs on overcapacity in industries including steel and cement. Some analysts said the failure to break through the key level of $75 may signal that prices have topped out, with demand for oil still depressed by the global economic slowdown and murky signs of a broad recovery.

Technical News

EUR/USD

After failing to breach the 1.4400 level, the pair has lost its bullish momentum and is currently traded around the 1.4230 level. The daily chart’s RSI has dropped below the 70 line, signing that the bearish move might be extended. Going short could be the right choice today

GBP/USD

There is a very accurate bearish channel formed on the 4 hour chart, as the pair is now floating in its lower section. In addition, a bearish cross on the 4-hour chart’s MACD suggests that the bearish momentum has more steam in it, with the potential of reaching the 1.6160 level.

USD/JPY

After the volatile downward movement in the last 3 days, this pair seems poised for a modest correction today. The price currently floats in the over-sold territory on the RSI of the hourly, 4-hour and daily charts, and there is a fresh bullish cross on the 1-hour chart’s Slow Stochastic. All of this information leads to the idea that going long might be a wise strategy throughout the day.

USD/CHF

It appears that the pair has resumed its bullish activity, as it’s testing the 1.0710 level. Currently, a bullish cross on the daily chart’s Slow Stochastic is suggesting that the uptrend could go farther. Going long might be the preferable choice today.

The Wild Card – Gold

There is still a bearish configuration on the daily chart, indicating that the momentum is still down. However, hourly chart’s Slow Stochastic is about to enter an oversold territory, indicating that there might be a minor bullish correction before a broader bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a general bearish trend.

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$ 1.4205 level and was capped around the $1.4350 level.  Data released in the U.S. today saw July headline durable goods orders print at 4.9%, up from a revised -1.3% in June, while the ex-transportation component was up +0.8%, below forecasts and below the strong June revision of +2.5%.  Additionally, MBA mortgage applications expanded 7.5%, up from the previous reading of 5.6%.  Moreover, July new home sales were up an annualized 433,000, exceeding forecasts and the positive June revision of 395,000.  This 9.6% m/m increase in housing data is consistent with other numbers released recently including yesterday’s Case-Shiller data and evidence an improvement in the long-beleaguered sector.  Collectively, recent economic data have evidenced a U.S. economy that appears to have bottomed out.  Nonetheless, there is now some talk that the global economy may have come too far, too fast and resulted in overvalued equities markets.  The euro has been highly correlated with equities prices and a move lower in share prices could put the common currency on the backfoot. In eurozone news, the German Ifo’s August business climate index rallied to 90.5, its highest level since September 2008.  Data released in the eurozone yesterday saw German second quarter gross domestic product growth expand 0.3%, confirming the provisional estimate from 13 August.  ECB policymakers this week have been quite cautious in their assessments of the economy, noting it is unlikely they’ll move to unwind their monetary stimuli anytime soon.  ECB rate-setters will next convene on 3 September and are unlikely to change monetary policy at that time.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.55 level and was supported around the ¥93.85 level.  The yen was otherwise stronger across the board as risk appetite weakened on ongoing concerns that some asset prices are overvalued.  The big news in the market today was a report that China may move to curb some industrial overcapacity in industries such as steel and cement that has been precipitated by this year’s record credit expansion.  Any indication that China may seem to reduce economic growth and contain its liberal credit policies could result in yen appreciation on the premise that the resulting impact on global growth will slow.  All eyes will watch this weekend’s general election in Japan with the Democratic Party of Japan poised to dislodge the Aso government and long-incumbent Liberal Democratic Party from power.  The Nikkei 225 stock index climbed 1.36% to close at ¥10,639.71.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥133.90 level and was capped around the ¥135.10 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥152.20 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.95 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8266 in the over-the-counter market, down from CNY 6.8267.  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.

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 CountingPips.com

U.S. durable goods orders increased by the largest amount in two years in July according to a report released by the U.S. Commerce Department today. Durable goods orders in the United States advanced by 4.9 percent in July to a total of $168.4 billion after declining by a revised 1.3 percent in June. Durable goods orders have now increased in three of the last four months and July’s data was spurred higher by a increase in aircraft orders. Today’s data beat market forecasts that had been expecting that durable goods orders would increase by approximately 3.0 percent for the month.

New orders for durable goods excluding transportation gained by 0.8 percent in July following a revised increase of 2.5 percent in June and marked the third straight monthly gain. Market forecasts were predicting an increase of 0.9 percent in durable goods minus transportation.

Shipments of durable goods increased in July by 2.0 percent and rose for the second straight month. Unfilled orders decreased by 0.1 percent in the month while durable good inventories decreased by 0.8 percent and have now declined for seven straight months. July nondefense orders for new goods grew by 8.6 percent while defense orders for capital goods rose by 14.8 percent.

U.S. New Home Sales jump higher in July.

New Home Sales in the United States increased the most in four years in July according to data released by the Department of Commerce today. Purchases of new single family homes rose to an annual rate of 433,000 in July and making a 9.6 percent advancement following June’s 9.1 percent revised gain. July’s annual rate of new homes sold, despite the increase, is still 13.4 percent lower than the July 2008 level.

July’s results were much better than market forecasts which were expecting a 1.6 percent increase in sales for an annual rate of 390,000 new homes sold. The median sales price of new homes in July fell by 12 percent on an annual basis to $210,100 while the average sales price came in at $269,200.

Contributing to the gain in July was a 32.4 percent increase in new homes sold in the Northeast while the South saw a 16 percent rise and the West rose by 1.0 percent.  The Midwest realized a 7.6 percent decline for July.

US Dollar rises in Forex Trading today.

The U.S. dollar has been on the rise in forex trading today on the back of the positive U.S. durable goods and new home sales news.  The American currency has gained against the euro, British pound, Australian dollar, Canadian dollar, Swiss franc and New Zealand dollar while trading almost unchanged versus the Japanese yen.

The euro has fallen in trading versus the dollar from today’s 1.4302 opening at 00:00 GMT to trading at approximately 1.4244 in the afternoon of the US trading session at 3:34pm EST according to currency data by Oanda.

The British pound has lost ground to the dollar as the GBP/USD has gone from its 1.6331 opening rate to trading at 1.6243 in the U.S. session.

The dollar has been virtually unchanged against the Japanese yen as the USD/JPY has gone from its 94.18 opening to trading at 94.17.

The Australian dollar has fallen versus the USD with the AUD/USD trading at 0.8277 after opening today at 0.8372. The New Zealand dollar has also lost ground versus the US dollar as the NZD/USD trades at 0.6808 after opening the day at the 0.6870 exchange rate.

Against the Swiss franc, the USD has been gained ground today as the USD/CHF has risen from its 1.0621 opening to trading at 1.0682. The dollar has increased against the Canadian dollar after the USD/CAD opened at 1.0858 earlier today to trading at 1.0979.

AUD/USD Chart – The Australian Dollar declining against the US Dollar in Forex Trading today and falling under the 200-hour simple moving average in blue.

By Robert Folsom

Editor’s Note: The following article discusses Robert Prechter’s view of the Efficient Market Hypothesis. For more information, download this free 10-page issue of Prechter’s Elliott Wave Theorist.

When a maverick idea becomes vindicated, there’s a good story to tell. It usually involves a person (or small group of people) who courageously challenge the orthodoxy of the day — and, over time, the unorthodox yet better idea prevails.

A “good story” of this sort has surfaced during the current financial crisis. A chapter of the story appeared in a recent New York Times article, “Poking Holes in a Theory on Markets.” The theory in question is the efficient market hypothesis (EMH), which the article suggested is so hazardous that it “is more or less responsible for the financial crisis.” This quote tells you most of what you need to know:

“In the last decade, the efficient market hypothesis, which had been near dogma since the early 1970s, has taken some serious body blows. First came the rise of the behavioral economists, like Richard H. Thaler at the University of Chicago and Robert J. Shiller at Yale, who convincingly showed that mass psychology, herd behavior and the like can have an enormous effect on stock prices — meaning that perhaps the market isn’t quite so efficient after all. Then came a bit more tangible proof: the dot-com bubble, quickly followed by the housing bubble. Quod erat demonstrandum.”

In case your Latin is rusty, Quod erat demonstrandum means “which was to be demonstrated.” Its abbreviation (QED) appears at the conclusion of a mathematical proof. In this case, the massive financial bubbles of recent years are the proof that refutes the efficient market hypothesis, which argues that markets move in a “random walk” and are not patterned.

Similar articles in the financial press have reported the demise of the EMH. Just this week an Economist magazine blog included this bold declaration:

“No one has yet produced a version of the EMH which can be tested and fits the evidence. Thus, the EMH must logically be discarded, as a valid hypothesis must be testable.”

QED, indeed — I agreed years ago that the random walk was implausible. But I didn’t come to this view because of behavioral economists, although their work over the past decade has certainly been valuable. Instead, I was persuaded by the work of someone who first challenged the financial orthodoxy more than three decades ago, specifically April 1977. As a young technical analyst at Merrill Lynch in New York, his research circulated among several of Merrill’s clients. His name for these studies was the Elliott Wave Theorist: the April ’77 study was a detailed analysis of the 1975-76 stock market, which offered this comment on the random walk model:

“If market moves are arbitrary (as the random walk proponents suggest), then internal components would rarely ‘make sense’ mathematically, and then only by statistically insignificant fluke occurrences. However, there seems to be enough evidence that mass psychology, as recorded in the Dow Jones Industrials, form patterns that are uncannily interrelated….At least this much can be fairly reliably stated as a result of this work: This idea that the market is a ‘random walk’ is probably false.”

Robert Prechter left Merrill soon after; he has published the Elliott Wave Theorist in every month since. Every issue has, in one way or another, “convincingly showed that mass psychology, herd behavior and the like can have an enormous effect on stock prices.”

So while there may be a good story to tell about behavioral economists, I trust you see why I believe there is a vastly better one to tell.

The “enormous effect” of “mass psychology” and “herd behavior” is exactly what explains the financial downturn that began in late 2007. Prechter’s Elliott Wave Theorist anticipated the crisis and warned subscribers beforehand. Likewise, he alerted them to the bear market rally that began last March.

For more information from Robert Prechter, download a FREE 10-page issue of The Elliott Wave Theorist. It challenges current recovery hype with hard facts, independent analysis, and insightful charts. You’ll find out why the worst is NOT over and what you can do to safeguard your financial future.

By Fast Brokers – The EUR/USD is heading south towards the lower end of its weekly trading range after U.S. Core Durable Goods Orders came in two basis points below analyst expectations.  The durable goods number is outweighing a better than expected German Ifo Business Climate release.  Referring to yesterday’s post, we explained that U.S. demand for durable goods has a strong influence on the EU economy since EU GDP is highly reliant on exports and manufacturing.  Hence, investors are sending the EUR/USD lower since the Core DGO release takes a bite out of the optimism surrounding the concept of an economic recovery.  However, the Euro is holding up a lot better than the Pound since Germany’s Ifo Business Climate release continues the theme of stronger than expected economic data from the EU over the past couple weeks.  One needs to look no further than the high flying EUR/GBP for confirmation of a strong Euro.  The Euro will be tested tomorrow since the EU will print Germany’s Prelim CPI and the EU region’s M3 Money Supply.  Weak CPI growth and a large contraction in the EU’s money supply has been a thorn in the EUR/USD’s side.  Declining prices and the dwindling supply of Euros gives the EU little room to tighten its monetary policy.  Hence, the EU’s commitment to keep liquidity in control comes at a cost.

Meanwhile, the Core DGO number is not the best way to set the table for tomorrow’s key releases, most notably America’s Prelim GDP and Unemployment Claims data.  If these two data releases also disappoint, the S&P futures could experience a brisk selloff and result in a broad-based appreciation of the Dollar.  However, the continuation of the theme of stronger than expected data from the EU could help the Euro maintain its relative strength.  As for today, we could witness continued preference for the Dollar as investors head for safety.  However, if New Home Sales come in better than expected later this morning, the EUR/USD can regain its footing and consolidate ahead of tomorrow’s wave of key economic data.  On the other hand, weak New Home Sales would only perpetuate the EUR/USD’s present pullback.

The key for the EUR/USD will be staying above our 1st tier uptrend line.  If not, the currency pair could head for its next technical cushion, 8/20 lows or 1.42.  Meanwhile, the EUR/USD is experiencing multiple trend line inflection points, indicating today’s session could turn out to be a volatile one.  Since the session has started off on a sour note, this combination of events may not bode well for the bulls.  As for the topside, our 2nd-4th tier downtrend lines continue to serve as important technical barriers preventing a large breakout in the EUR/USD.  Since data is already mixed today, positive New Home Sales data may not be enough to send the EUR/USD to a break out to the topside.

Present Price: 1.4264

Resistances: 1.4283, 1.4297, 1.4308, 1.4327, 1.4347

Supports: 1.4254, 1.4230, 1.4210, 1.4199, 1.4180

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.