Month: August 2009

Source: ForexYard

Yesterday’s sudden boost in equity markets world-wide has helped drive many of the riskier currencies, such as the EUR and GBP, higher versus their primary currency rivals. Safe-havens such as the Dollar and Yen took a small beating yesterday as well from this news. With investor confidence on the rise in Europe, a rally for the European currencies may be overdue. This in turn could also push commodity prices higher in the short-term.

Economic News

USD – Dollar Plummets on U.S. Equity Market Rally

The Dollar fell during much of Tuesday’s trading against a number of its major currency pairs, as U.S., European and Japanese equities rallied. This was partially sparked by a sharp increase in German investor confidence, and better than forecast earnings from top U.S. companies such as Target and Home Depot. Demand for the greenback slumped versus a number of major currencies in early trading, as the rally in equities led to a fall in demand for safe-haven assets.

The USD declined against the British Pound by a massive 200 pips to 1.6550. This performance was owed to mounting British inflation. Against the EUR, the USD also saw much bearishness, as the EUR/USD pair slided significantly in early trading. However, this was in some senses short-lived, as U.S. Building Permits and other
weak housing data poured some demand back into the USD. Thus the
USD did make a short recovery, as the EUR/USD cross finished trading at the 1.4128 level. The USD/JPY pair finished even for the day at 94.75, as demand for these low-yielding currencies was lower yesterday.

Looking ahead to today, there is much data that is likely to determine the volatility of the forex market, and the strength of the U.S. Dollar; the most important of these being the publication of U.S. Crude Oil Inventories at 14:30 GMT. A lower figure could help push-up Oil prices, whilst putting downward pressure on the USD. The opposite result could in-turn strengthen the USD. Data from across the Atlantic, such as British CBI Industrial Orders Expectations and the Current Account publication from the Euro-Zone is also likely to have important implications for the USD in Wednesday’s trading.

EUR – Pound Climbs on Higher Inflation Figures

The Pound climbed yesterday on higher inflationary figures, as the Office for National Statistics reported that the Consumer Price Index was at 1.8% in July, significantly higher than the forecasted 1.5%. This proves that the Pound has been far more resilient in this economic crisis than many analysts had forecast. This led currency analysts to the conclusion that the Bank of England (BoE) may come up with a much more disciplined monetary policy in the near future.

The British currency jumped against the Dollar by 200 pips to the 1.6550 level, and the GBP/JPY pair rose by 200 pips to the 157.00 level, as demand for the lower-yielding/safe-haven JPY fell in Tuesday’s trading. The GBP gained about 90 pips vs. the EUR, as the pair reached the 0.8535 level. Much of this was owed to data from Britain. Also, it proves that even the strong European economic data on Tuesday was unable to help the EUR make inroads into the GBP. The EUR/USD finished trading slightly higher near the 1.4130 level, despite making inroads into the Dollar in earlier trading.

Today, there are several economic publications that are expected to drive-up the GBP and EUR crosses. From Britain, there is the MPC Meeting Minutes and CBI Industrial Order Expectations at 08:30 GMT and 10:00 GMT respectively. From the Euro-Zone, there is the release of the German PPI figures at 06:00 GMT, and the publication of the Current Account at 08:00 GMT. These key releases are expected to set the trend for both the British and Euro-Zone currencies in today’s trading. In order to make big profits today, it’s advised that you open your EUR and GBP positions now.

JPY – Yen Collapses against the Pound

The Yen collapsed against the Pound on Tuesday, as the pair finished 200 pips higher at the 157.00 level. This rise in the GBP and fall in the JPY was largely due to higher than expected GDP figures from Britain. However, the JPY bearishness yesterday was also owed to global stock market rallies owed to higher than forecast earnings for a number of top U.S. companies. This reduced the demand for lower-yielding assets, such as the JPY.

The JPY actually finished trading almost unchanged against the USD, but lower vs. the EUR. There have been fears recently that the Yen may be in for a steep decline if Japan doesn’t continue increasing its exports. These fears have been exasperated despite the Japanese economy officially rising out of recession in the previous quarter. The JPY is set to move today on important economic releases from Britain, the U.S. and the Euro-Zone.

Crude Oil – Crude Oil Soars to Over $72 a Barrel

The price of Crude Oil soared by about $3.25, or over 4%, to just over $72 a barrel, reversing 3 consecutive days of losses. Crude was boosted as the Dollar was bearish in much of Tuesday’s trading, which increased demand for commodities. The weakened USD was caused by global stock market rallies led by the U.S. This was also caused by optimistic economic data from Germany, the largest economy of the Euro-Zone. Furthermore, the weak USD led to higher demand for riskier assets.

Oil prices may continue rising for a number of reason’s in today’s trading. We have seen the commodity over-sold in recent trading days. Additionally, many optimistic signs from leading and fast-growing global economies have led many investors to realize that there may be a big jump in Crude Oil demand in the near future. Additionally, as long as market optimism stays high, so will the demand for Crude Oil.

Technical News

EUR/USD

This pair has been trading inside a bullish channel for the past two days and appears poised to continue doing so today. Short-term indicators show neutrality while the 4-hour MACD signals a bullish cross. However, long-term indications point slightly downward. Staying within the current channel might be wise. Traders should buy on lows and sell on highs within this trend.

GBP/USD

There appears to be a fresh bearish cross on the hourly MACD and 4-hour Slow Stochastic, giving off strong indications for an impending bearish movement. Weekly momentum remains flat signaling that there may be a lack of real pressure in either direction, which adds weight to the other technical indicators. Going short might be preferable today.

USD/JPY

This pair’s indicators are showing signs of an imminent bullish movement. The daily Slow Stochastic recently formed a bullish cross and the 4-hour MACD has done so as well. With other indicators turning into an upward posture, it is clear that going long might be the best strategy today.

USD/CHF

This pair’s mild bearish channel continues unabated today. All indicators are showing neutrality with the MACD on the hourly and 4-hour charts floating near 0.0. Weekly momentum has also turned downward from the recent uptrend seen last Friday. Trading within this range may not be a bad choice today.

The Wild Card – Crude Oil

There seems to be a fresh bearish cross on the hourly MACD, 4-hour Slow Stochastic, and daily MACD, each signaling that a downward correction is imminent. With the price floating near the over-bought territory on the 4-hour RSI, this downward movement may indeed be on its way. Forex traders should try to not miss out on the opportunity to call the reversal and ride out the crashing wave for profits.

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 CountingPips.com

U.S. housing starts, building permits and housing completions increased in the month of July according to data released by the Commerce Department on new residential construction. Housing Starts fell by 1.0 percent in July to a seasonally adjusted annual rate of 581,000  following June’s total of a revised 587,000 starts.  July’s total is down 37.7 percent on an annual basis when compared with July of 2008. The decline in housing starts was below the 598,000 annual rate the market forecasts were expecting for the month.

Building permits statistics, used as a predictor of future construction, showed a seasonally adjusted annual rate of 560,000 permits in July. This was a decrease of 1.8 percent compared to June and a 39.4 percent drop from July 2008 level. The July data in building permits was also below the market forecasts that were expecting permits to number approximately 576,000 for the month.

Housing Completions for July decreased when compared to June as completions fell to an annual rate of 802,000 privately-owned housing completions. This is an decrease of 0.9 percent when compared to June’s completion totals and is 26.4 percent below the July 2008 level.

Producer Prices fall after three months of increases.

The Producer Price Index, released in a separate report by the Department of Labor, fell more than expected in July. Producer prices fell by 0.9 percent in the month of July following an increase of 1.8 percent in June and an increase of 0.2 percent in each of May and April. The annual rate of change for July showed that producer prices were 6.8 percent lower than the July of 2008 level following June’s annual rate that registered a 4.6 percent decrease. Market forecasts were expecting monthly producer prices to fall by 0.2 percent in July and the annual rate to register a 5.8 percent decline.

Helping to contribute to the lower ppi in July was the energy index which decreased by 2.4 percent for the month after increasing by 6.6 percent in June. Consumer food prices also dropped by 1.5 percent in July after gaining by 1.1 percent in June.

Core producer prices, excluding food and energy prices, fell by 0.1 percent in July following a rise of 0.5 percent in June. On an annual basis, core producer prices advanced by 2.6 percent for July compared with an increase of 3.3 percent in June. Market forecasts were expecting a 0.1 percent gain in monthly core prices and a 2.8 percent annual increase.

Dollar is lower in Forex Trade Today.

The U.S. dollar has been lower against the other major currencies in forex trading today.  The dollar has been weaker versus the euro, British pound, Australian dollar, Japanese yen, Swiss franc, New Zealand dollar and the Canadian dollar at 3:19 pm ET in the US trading session.

USD/CAD Chart – The US Dollar falling today versus the Canadian Dollar in forex trading and trading around 1.1012 after reaching a high of 1.1124 yesterday.

By Fast Brokers – The Cable has popped nicely from Monday lows and is trading back above the psychological 1.65 level.  Both Britain’s CPI and RPI indexes came in 3 basis points ahead of analyst expectations, contradicting fear over deflation caused by the BOE’s recent injection of liquidity to its QE package.  The Pound is experiencing considerable relative strength today in reaction to the data since investors punished Britain’s currency in reaction to the BOE’s actions.  The improvement in pricing gives investors hope that the BOE may cap its QE package from here on out.  Furthermore, the liquidity will only improve inflation, putting the BOE in a position to tighten liquidity sooner rather than later should the global economy continue to recover.

Despite today’s recovery in the GBP/USD, the currency pair still faces challenging near-term obstacles to the upside.  The Cable must deal with the lid of its 7/20-7/28 trading range, our 3rd tier downtrend line as well as 8/13 highs.  Additionally, the S&P futures are experiencing sizable downward pressure due to today’s weak pricing and housing numbers along with last week’s disappointing consumption data.  Hence, the GBP/USD’s barriers may prove challenging should the S&P futures not turn around due to their positive correlation.  On the plus side, the Cable is back above our 1.65 and our 2nd tier uptrend line, meaning the Pound should prove resilient if U.S. equities continue their slide.  Tomorrow Britain will release CBI Industrial Order Expectations along with the MPC’s Meeting Minutes.  Should these data points impress investors, the GBP/USD could continue to experience some immediate-term upward mobility.

Present Price: 1.6533

Resistances: 1.6537, 1.6562, 1.6593, 1.6611, 1.6633

Supports: 1.6505, 1.6482, 1.6455, 1.6428, 1.6398

Psychological: 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 bottomed out yesterday despite the pullback in U.S. equities since investors were reacting to weaker than expected GDP data from Japan.  The setback in Japan’s GDP gave investors a good reason to halt the Yen’s appreciation and favor the Dollar.  However, today’s pop has failed to breach the USD/JPY’s important 1st tier uptrend line.  U.S. data has also come in below analyst expectations today, putting the economic comparison between the two nations in a deadlock.  Therefore, it seems the USD/JPY could follow the S&P futures closely for the immediate-term, particularly to the downside.  Further deterioration in U.S. equities could motivate traders to head for safety and favor the Yen.  The USD/JPY should ultimately correlate to the performance of economic data.  Disappointing U.S. data would likely knock equities lower and appreciate the Yen.

Meanwhile, bulls will attempt to build a new base above the psychological 95 level and get the USD/JPY back above our 1st tier uptrend line.  However, it seems the downside has more momentum for the time being.  The USD/JPY will look to our 1st tier uptrend line, May lows and March lows for support.  The next data release having an impact on this currency pair will be U.S. weekly Unemployment Claims on Thursday.

Present Price: 94.70

Resistances: 94.95, 95.15, 95.44, 95.65, 96.08

Supports:  94.52, 94.36, 94.08, 93.88, 93.52

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 – Gold is finding support in our 2nd tier uptrend line as the precious metal avoided an encounter with 7/29 lows.  We notice a similar development with the EUR/USD and its own 7/29 lows, telling us the EUR/USD may be a stronger immediate-term read on gold.  The Greenback is balancing across the board following its swift appreciation, giving gold a boost due to its negative correlation with the Dollar.  Remember that gold is following the Greenback more closely than U.S. equities these days, though the movement of the S&P does have a moderate influence on the direction of the precious metal.  Therefore, present weakness in the S&P futures could limit upward mobility in gold as the Pound and Euro appreciate.

Consolidation could be the theme in markets over the next session or two as investors take a breath and digest the pullback in U.S. equities.  Since this week’s economic data out of the EU and Britain have been positive, investors may be second-guessing their instinct to follow the negative tide of news surfacing from the U.S.  However, near-term pressure does remain to the downside since we’ve noticed increasing sell-side activity along with a collapse of the psychological $950/oz level.  Gold has something to prove to the upside, beginning with our 1st tier downtrend and 3rd tier uptrend lines along with 7/29 highs and the psychological $950/oz zone.  As for the downside, the precious metal has technical cushions in our 2nd tier uptrend line, Monday lows and 7/29 lows.

Present Price: $936.85/oz

Resistances: $938.54/oz, $939.68/oz, $941.20/oz, $942.47/oz, $944.12/oz

Supports: $936.39/oz, $934.74/oz, $932.46/oz, $930.31/oz, $928.16/oz

Psychological: $950/oz

Market Commentary provided by Fast Brokers.

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

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

By Fast Brokers – EUR/USD is looking to recoup some of yesterday’s losses after ZEW Economic Sentiment data blew past expectations and registered expansion (50+).  However, gains are being contained by weak PPI and housing data from the U.S.  The S&P futures have also been under considerable downward pressure as investors cash in on overbought conditions.  Europe’s impressive sentiment reflects the better than expected GDP data we saw last week.  Therefore, EU economic prospects are improving as prices contract and expenses become more reasonable.  Unfortunately, U.S. numbers are crashing the party and the S&P futures are back below 1000 again.  Hence, the EUR/USD’s upward mobility could be limited until U.S. equities settle down.

Meanwhile, the EUR/USD has managed to avoid a retest of its highly psychological 1.40 level as sell-side volume remains on the tame side.  The currency pair is balanced on our 1st tier uptrend line as it approaches an inflection point with our 1st tier downtrend line.  Our 1st tier uptrend line carries some weight since it connects through July lows.  Hence, a collapse of our 1st tier uptrend line could signal a retreat towards 1.40 and 7/29 lows.  Fortunately for bulls, 1.38-1.40 has a lot of historical consolidation, meaning this trading zone should prove to be reliable if it is encountered.  As for the upside, there are considerable barriers due to the EUR/USD’s recent deterioration.  These include our 1st and 2nd tier downtrend lines along with intraday highs and the 1.4180-1.42 area.

The S&P futures could have some more room to go to the downside if they don’t make a solid effort to pop back above our 2nd tier uptrend line.  Furthermore, crude has had a difficult time as of late.  Therefore, the next two sessions will be important for the EUR/USD and its correlations to regain their footing in order to build a new base for a leg up.  The EU will release some more PPI and current account data tomorrow.  However, investors will likely look forward to Friday’s slew of PMI data along with U.S. Existing Home Sales.  The breather could help the EUR/USD stabilize before Friday’s busy session.

Present Price: 1.4113

Resistances: 1.4120, 1.4138, 1.4155, 1.4164, 1.4180

Supports: 1.4108, 1.4092, 1.4070, 1.4060, 1.4043

Psychological: 1.40

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 Adam Hewison – They Say That Timing In Life Is Everything.

Well here I am at my vacation home in Maine watching the markets go crazy. Yes, we are so lucky to have access to the Internet and to the markets themselves no matter where we are in the world.

I didn’t plan on doing a video today, but the market action left me no choice. Today we witnessed an important “Trade Triangle” signal in this major index that should not be ignored.

In my new video, I share with you this same signal that thousands of MarketClub members witnessed and will discuss some of the potential downside targets for this index.

This is a video that is worth watching as I think we should all be prepared for what lies ahead.

See the New Video Here…

There is no need to register for this video and of course you can watch it with my compliments. Enjoy the video and please give us your feedback on our blog.

All the best,

Adam Hewison
President, INO.com
Co-Creator, MarketClub

Source: ForexYard

The U.S dollar came slightly off highs against major counterparts on Monday, after a report that showed improved manufacturing conditions in the New York region in August. The Dollar earlier received a boost as commodities sold off following a sharp drop in Chinese equities overnight. Today the greenback declined before the Commerce Department reports housing data at 12:30 GMT on speculation the U.S recession probably eased further. The impact of a stronger- then-expected number will be positive from a risk point of view, analysts said, hence reducing demand for the dollar as a refuge.

Economic News

USD – Dollar Gained from Drop in Equities However the Correction Is Imminent

Yesterday’s trading experienced a moderate level of bullishness for the USD with the sudden weakness in equity markets bringing back a level of risk aversion. Expectations for a bearish Dollar in the optimistic environment that emerged at the start of this month have now begun to dwindle as stock markets continue to get squeezed. The safety of currencies such as the USD and JPY has grown throughout the beginning of this trading week.

Climbing as high as 1.4048 against the EUR, and as high as the 1.6275 price level against the Pound, the greenback is finally starting to show signs of bearishness after a long day of upward trading. Market fundamentals may have less to do with today’s early morning movement, however, as economic data shows a continuation of yesterday’s trends. A technical correction is underway, but data releases expected at the opening of European and American markets should drive some volatility in today’s trading.

The opening of the European markets will reveal consumer sentiment in Germany and the Euro-Zone in the form of the ZEW sentiment reports at 9:00 GMT today, while the US markets will release data concerning inflation and the number of building permits issued last month for the construction of new homes. These will mark the important calendar events for today and traders should be on guard for further USD depreciation if a market correction is indeed underway.

EUR – EUR Dampened from Risk Aversion; ZEW Report on Tap

After the recent drop in equities, the EUR has fallen off its latest gains against its primary currency counterparts. While still holding above the 1.40 level against the USD, the EUR was nevertheless trading at a two-week low versus the greenback yesterday. On the other hand, the EUR continued to out-perform the British Pound, climbing as high as 0.8645 before the opening of European markets yesterday. Versus the Yen, the EUR also suffered a set-back from equity losses, trading as low as 132.50.

On the positive side, Euro-Zone exports have risen, signaling growth in the troubled region and pointing to future appreciation for the EUR against most of its rivals. However, the demand for riskier assets took a beating yesterday after the sharp fall in global stock markets. Most information regarding the 16-nation currency this week point to sharp movements in both directions following individual data releases. EUR traders should anticipate the heavy news week ahead and prepare for volatility.

Being released today at 9:00 GMT are the ever-important ZEW economic sentiment reports from Germany and the Euro-Zone. Both reports are expected to show an increase from the previous reading, while remaining below the significant 50.0 mark. This sends the mixed signal of demonstrating growth in optimism, but a modicum of hesitation about market strength as well. British inflationary data may also generate volatility for the GBP, but traders should focus more closely on the ZEW reports as these will drive today’s market

JPY – JPY Correction Due, European Confidence Deciding Factor

As one of yesterday’s leading currencies following the sharp drop in equity markets worldwide, the JPY is now experiencing a distinct technical correction. Whether this recent downward move will sustain itself may depend largely on the data releases at the opening of the European and US markets for each of the Yen’s currency rivals individually.

Climbing as high as 94.20 against the USD, 132.50 against the EUR, and 153.50 versus the Pound, things now appeared to have reversed ever since this morning’s trading witnessed a sharply declining JPY opposite these leading currency rivals. If market optimism is shown to have increased in Europe following the ZEW sentiment reports at 9:00 GMT, the JPY could continue to see sharp losses versus its rivals as risk aversion begins to abate.

Crude Oil – Oil Slumps below $68 a Barrel, but Returning to Bullishness

After last Friday’s surge above $73 a barrel, Crude Oil now trades near the $69 price level with a few bullish signals being provided by the market. Yesterday’s drop in equities, and subsequent boost in the value of the USD, helped drive oil prices below $70 a barrel, but this morning’s rally in risk appetite is proving positive for commodity prices. Since the start of today’s trading, Crude Oil has climbed over $1.00 and continues to experience bullishness.

With European consumer sentiment reports expected, there is the possibility that a growth in optimism will help rally investors to riskier assets, thus lowering the Dollar in today’s trading. With the greenback losing value, Crude Oil could gain strength on the USD’s behalf. Traders should be on the lookout for any signs of positive growth in the Euro-Zone as this may trigger a return to risk appetite, and a potential sell-off of USD, helping to push oil prices higher.

Technical News

EUR/USD

The Slow Stochastic and the RSI on the hourly chart are showing a continuation of the current bearish correction. There is also a very accurate bearish channel forming on the daily chart. In addition, all indicators on the hourly chart are pointing down. Going short might be the right choice today.

GBP/USD

The Cable is in the middle of a very intensive downtrend that started a week ago and shows great momentum that on a bigger scale appears to have more room to run. In the shorter time frame a bullish cross on the 30 min chart indicates that there might be a minor correction before the bearish move resumes. Selling on highs appears to be preferable today.

USD/JPY

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 94.80 level. The hourly chart’s Slow Stochastic is showing a fresh bearish cross suggesting that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/CHF

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

The Wild Card – GOLD

Gold prices are once again dropping, and it is currently traded around $937 per ounce. And now, the 4 hour chart’s Slow Stochastic is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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 came off sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4045 level and was capped around the $1.4195 level.  The common currency extended recent losses on account of stronger than expected U.S. economic data and a pullback in U.S. equity prices.  Data released in the U.S. today saw the Federal Reserve Bank of New York’s Empire State manufacturing index improve to 12.1 from -0.6 in July.  Other data saw the August NAHB housing market index print at +18, up from +17 in July, while June net long-term TIC flows printed at US$ 90.7 billion, much stronger than expected and above the revised May print of –US$ 19.4 billion.  In contrast, however, total net TIC flows came in at –US$ 31.2 billion, an improvement from the revised –US$ 65.86 billion May print but below the US$ 23.0 billion forecast.  Global equity markets were given today after Asian markets suffered a sell-off.  The Federal Reserve today extended an emergency program by three to six months called the Term Asset-Backed Securities Loan Facility (TALF) that is designed to cushion the commercial real estate market.  In eurozone news, the EMU-16 trade surplus registered a two-year high in June.  European Central Bank member Weber reported the German economy is likely to perform better than expected in the third quarter.  The ECB today reported the Eurosystem has purchased €7 billion in covered bonds.  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 ¥94.20 level and was capped around the ¥94.85 level.  The yen was up strongly across the board as a downturn in global equities dampened demand for higher-yielding currencies.  Data released in Japan overnight saw Q2 gross domestic product expand 0.9% q/q, less than expected but the first improvement since Q1 2008.  The improvement means Japan is no longer in a technical recession but many economists believe economic growth may slow to an annualized 2.9% pace in the three months ending 30 September.  On the political front, Prime Minister Aso’s Liberal Democratic Party is likely to lose the upcoming lower house election to the Democratic Party of Japan.  Policymakers including Bank of Japan Governor Shirakawa have warned Japan’s domestic demand is likely to remain very weak.  The Nikkei 225 stock index lost 3.10% to close at ¥10,268.61.  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 ¥132.50 level and was capped around the ¥134.50 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥153.45 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 6.8332 in the over-the-counter market, up from CNY 6.8314.  Chinese equities realized their worst decline since November on account of declining commodities prices and concerns that People’s Bank of China will tighten liquidity measures.

₤

The British pound extended recent losses vis-à-vis the dollar today as cable tested bids around the US$ 1.6275 level and was capped around the $1.6515 level.  Bank of England Monetary Policy Committee member Sentance reported the U.K. economy is expected to return to economic growth in the second half of the year and said global economic growth will in part depend on Asian economies.  Data released in the U.K. overnight saw the Rightmove August house price index off 2.2% m/m and 3.1% y/y.  Cable is now off seven big figures over the past ten days.  Sterling remains pressured by BoE’s announcement that it is expanding its bond-buying operations by ₤50 billion.  Sterling is also being pressured by increased borrowing and deficit spending.  Cable bids are cited around the US$ 1.5975 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8645 level and was supported around the ₤0.8585 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 Japanese economy grew in the second quarter of 2009 to lift the world’s second largest economy out of its deep recession.  Japan’s GDP grew by 0.9 percent in the April through June quarter following a first quarter decline in GDP by a revised 3.1 percent according to data from the Economic and Social Research Institute.  Japan’s economy had contracted for four consecutive quarters through the first quarter of 2009 and marked the deepest recession since World War II.  Today’s data almost matched market forecasts that were expecting the GDP data to grow by 1.0 percent. On an annual basis, Japan’s GDP is 3.7 percent higher than the 2nd quarter of 2008 level following a revised annual decrease of 11.7 percent in 1st quarter.

Contributing to the growth in GDP was an increase in exports by 6.3 percent for the second quarter.  Exports had fallen by 22.5 percent in the first quarter and by 13.6 percent in the fourth quarter of 2008.  Japan’s government stimulus also played a role in the GDP gain as public investment increased by 8.1 percent in the quarter after an expansion of 2.6 percent in the previous period.  Consumer spending, which accounts for approximately 50 to 60 percent of Japan’s economic activity, rose by 0.8 percent in the quarter after falling by 1.2 percent in the first quarter and by 0.7 percent in the fourth quarter of 2008.

Japanese Yen, US Dollar gain in Forex Trade.

Forex Trading so far today has seen US dollar and Japanese yen strength against most of the other major currencies. The yen has increased against the euro, British pound, Australian dollar, US dollar, Canadian dollar, New Zealand dollar and the Swiss franc as of 12:44pm ET. The US dollar, meanwhile, has advanced in trading today versus the euro, British pound, Swiss franc, Canadian dollar and New Zealand dollar while falling against the Japanese yen and trading virtually unchanged versus the Australian dollar.

USD/CAD Chart – The US Dollar gaining against the Canadian Dollar today in forex trading and trading over the 1.1000 level (1Hour Chart)