Month: August 2009

By Fast  Brokers – Gold is dipping back towards $950/oz and our 1st tier downtrend line as both the GBP/USD and EUR/USD contract.  Gold managed to propel from our 1st tier uptrend line yesterday in reaction to a rally in U.S. equities along with a deflating Greenback.  However, volume is declining on the buy-side while our 3rd tier uptrend and 1st tier downtrend lines reach tier inflection point.  We believe this collision could carry some weight since we notice trend inflection points in the GBP/USD, EUR/USD, and USD/JPY as well.  Furthermore, volatility is picking up in U.S. equities and the S&P futures are still debating 1000 as crude battles $70/bbl.  Therefore, a sizable breakout in either direction over the next few trading sessions wouldn’t be uncalled for considering markets are at a critical juncture.

Meanwhile, investors should continue to monitor developments in both the EUR/USD and GBP/USD since gold has been tightly correlated with these currencies lately.  Gold’s psychological $950/oz zone should continue to play a factor for the near-term so long as the precious metal is constrained by our trend lines.  Gold still faces our 2nd and 3rd tier downtrend lines along with August 3rd and 7th highs.  Meanwhile, the precious metal is being sucked back under the lid of its 7/20-7/28 trading range.  Gold has some strong immediate-term technical cushions in our 2nd and 3rd tier uptrend lines along with $950/oz.  Consolidation in the precious metal is likely for the immediate-term as investors await more defining global economic data.

Present Price: $956.35/oz

Resistances: $957.74/oz, $958.77/oz, $959.66/oz, $960.94/oz, $962.22/oz

Supports: $956.33/oz, $954.93/oz, $953.77/oz, $952.37/oz, $950.70/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.

Plain and sinply put, the higher lows that we see in EUR/USD on the below daily chart bode well for our long-standing view of EUR/USD breaking higher. We continue to target the 1.47xx handle.

Sentiment seems to be changing ever since last Friday’s NFP data, with more and more traders and analysts looking to short EUR/USD. But the chart and some data this morning out of Eurozone (better than expected growth rates in France and Germany) remind us that some of the best indicators of medium term currency movements is reverse sentiment indicators.

A look at the below daily chart shows higher lows for EUR/USD in since early July. We added in Bollinger Bands to verify and note that a close today above the midline (approx 1.4234) will further validate our bias towards higher EUR/USD.

Our Stop Order for our full long EUR/USD position (see previous posts at www.backbayfx.com/blog.php) is presently on a daily close below 1.3750. We will move that level up today if the market closes above 1.4234.

Stay Nimble!

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

Thanks for FX Sol for the below image!

Boston August 13 10:06 EST

We noted John Auther’s piece in the Financial Times on July 30. He pointed out the sharp drop in Chinese Equities which are widely considered one of the riskier asset classes. Mr. Authers further pointed out that Chinese Equities were a foreboding frontrunner to the collapse of the global equities markets starting in late 2007 and even more so in the first half of 2008.

Chinese equity indices gave up another 4.6% or so this morning. With this coming just before a US FOMC meeting results and after the Bank of England admitted that their quantitative easing has not helped as much as they expected, it is a worrying sign for global equities bulls. It seems that many assets considered risky have been in a bit of a holding pattern since this past Friday’s US NFP release…….should make for an interesting read from the FOMC this afternoon.

As it related to the currency markets, we have seen EUR/USD sitting quietly since Friday’s US NFP, and the yield on the US 10 year note is slowing it’s ascent. If the Fed’s release today indicates positive signs for the us economy, we expect traders to continue their buying spree of risky assets; EUR/USD should rise and GBP/JPY should move higher in coming days. But any signs of negativity in the Fed’s release may pave way for lower EUR/USD in the next day or two.

We remain in our full long EUR/USD position with a Stop Order only on a daily close below 1.3750. Short term we will day trade GBP/JPY. We will go into the Fed’s release with a small long position and see where it takes us.

Stay Nimble!

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

Source: ForexYard

After suffering a mild setback following the release of yesterday’s Federal Funds Rate policy statement, the USD now seems poised for a come-back. At the opening of the US market today at 12:30 GMT, traders will catch a glimpse of US retail sales and unemployment claims which are both expected to show a continuation of growth in the United States helping the USD regain some of yesterday’s losses.

Economic News

USD – Dollar Down on All Fronts Except JPY Following Fed Statement

The U.S. Dollar trimmed earlier losses against major counterparts on Wednesday after the Federal Reserve left Interest Rates unchanged, near zero percent. The Dollar pared earlier losses versus the EUR in the first 20 minutes after the Fed’s statement on optimism that the end of the purchase program would reduce the risk of inflation, which erodes the purchasing power of the greenback. However, the USD resumed its decline afterwards as stocks gained.

Against the Japanese yen the U.S. Dollar kept broad gains after the Federal Reserve painted a less gloomy outlook for the U.S. economy, an assessment that led investors to return to commodity-linked currencies in droves. The Federal Reserve has also said it would slow the pace at which it buys Treasuries by extending the duration, but not the size, of its $300 billion program to buy long-term government securities.

Analysts have said that while sentiment toward riskier assets has improved, there was a general degree of caution on the Fed’s move to extend the time-frame of asset purchases as it indicated that the economy was still vulnerable. Today, forex traders will catch a glimpse into US Retail Sales and the weekly unemployment claims report. If sales continue to grow in the US, as is forecast, the USD may be capable of going bullish later in the day.

EUR – The Sterling Remains under Downward Pressure

The European currency gained for a 3rd consecutive day against the U.S Dollar before the European Union’s statistics office releases its 2nd quarter Gross Domestic Product numbers in Luxembourg. GDP in the 16-nation Euro-Zone shrank 0.5% after a 2.5% contraction in the 1st quarter, according to economist predictions.

The EUR also advanced against 13 of the 16 major currencies before the release of a U.S. report that may show retail sales gaining for a third straight month, prompting investors to seek higher-yielding assets.

The British currency had weakened yesterday ahead of the release of the Bank of England’s (BOE) quarterly inflation report. The Pound fell against the Dollar after the BOE said it may miss its inflation target amid a slow recovery. Fear of undershooting the target means the central bank is more likely to hold off on increasing rates, analysts have said.

Britain’s currency also dropped versus the Yen after the central bank’s governor said it was more likely that inflation will slow below 1% this year and unemployment may reach a 14-year high.

JPY – Yen Falls on Low Safe-Haven Demand

The Yen fell for a 2nd consecutive day against the EUR after the Federal Reserve said economic activity is leveling out, sapping demand for Japan’s currency as a refuge. The Yen depreciated to as low as 96.23 from 95.51 vs. the US Dollar at the close of Tokyo stock trading. A weaker domestic currency increases the value of overseas sales at Japanese companies when repatriated.

The JPY also weakened against all 16 major currencies as Asian stocks extended a U.S. equity rally on signs the global slump is abating, encouraging investors to buy higher-yielding securities. For today, most attention will be paid to the New Zealand Dollar (NZD) following the evening release of its retail sales reports. With a recently bullish NZD, this report has the potential of creating a reversal to this trend if it comes out worse than forecast.

Crude Oil – Oil Prices Rebound above $70 a Barrel

Crude Oil ended higher Wednesday as a rally on Wall Street and sudden Dollar weakness overshadowed government data showing a bigger-than-expected rise in crude supplies. While the fundamental picture is bearish, Crude is being supported by a weaker U.S Dollar and stronger equity markets. Traders appeared to shrug off government data showing a build-up in crude supplies. Oil’s strength came despite a report from the U.S. Energy Information Administration (EIA) showing U.S. Crude Oil Inventories rose 2.5 million barrels in the week to August 7, well over analysts’ expectations.

Oil trimmed gains after the U.S. Federal Reserve in its policy statement said the U.S. economy is leveling out and that it was extending purchases of long-term U.S. Treasury debt to the end of October. Crude also rose as the International Energy Agency (IEA) boosted its oil-demand outlook for this year and next. In its report yesterday, the IEA said that the world will need 85.25 million barrels of oil a day next year, 70,000 barrels more than previously estimated.

Technical News

EUR/USD

There appears to be a bearish cross forming on the 4-hour Slow Stochastic while the 4-hour RSI is just entering the over-bought region, signaling a downward correction may be in order later in the day. The hourly MACD supports this notion with its own bearish cross. Going short may be the preferable strategy today.

GBP/USD

Short-term indicators are beginning to level-off showing signs of neutrality. On the other hand, there is a very clear bullish cross on the 4-hour MACD and daily Slow Stochastic, pointing to the notion of an upward correction in the mid- to long-term for this pair. Waiting for the upward move and then entering long positions could be a good way to make money on this pair.

USD/JPY

A bullish cross has just formed on the hourly MACD and Slow Stochastic, signaling a fast upward tick may be in the works. However, longer-term indicators are showing downward signals. This pair may be range-trading in consolidation towards the 95.75 price level before making a volatile jump. Waiting for the breach and then entering the new trend early may be a wise choice.

USD/CHF

The price appears to have entered the over-sold territory on the 4-hour RSI, but it still points downward, indicating that the downward movement may not have finished just yet. The bearish cross on the 4-hour MACD supports this notion. Staying short on this pair for the time being may not be a bad tactic today.

The Wild Card – NZD/USD

This pair has been in a steady bullish channel for a number of months now with hardly any signs of stopping. However, the daily and weekly charts show the price floating in the over-bought territory of their respective RSIs. A bearish cross on the weekly Slow Stochastic has also just formed, indicating that this pair is due for a strong downward movement giving forex traders a great opportunity to call the reversal and ride out the downward wave for some hefty 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

The U.S. Federal Open Market Committee announced today that it is holding the U.S. interest rate steady at its record low level and would be ending its purchases of Treasury securities in October. The FOMC had last cut the interest rate to the target range of 0 percent to 0.25 percent in December and today’s decision to keep the rate unchanged was widely expected by market forecasts.

On the economy, the FOMC statement marked a more optimistic tone than prior statments and said that, “Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”

The statement also said that the FOMC policy of buying $300 billion worth of Treasury securites would most likely finish in October. The Fed program’s to buy $200 billion of agency debt and $1.25 trillion of mortgage-back securities would still go on throughout the end of the year. Interest rates will likely not move for a little while as the Fed statement said that despite expecting “a gradual resumption of sustainable economic growth,” interest rates would probably be at or near the zero level for “an extended period.” Read the full Fed statement here.

Also, released out of the United States today was that the trade deficit edged up in June as imports rose according to a release by the Commerce Department today. The U.S. trade deficit increased to $27.0 billion in June following a revised deficit of $26.0 billion in May. The trade balance data was less than the approximately $28.7 billion deficit that market forecasts were expecting for the month.

The U.S. had a total of $125.8 billion worth of exports which was an increase of $2.4 billion from May’s total.  June also saw a gain in imports as it totaled $152.8 billion worth of imports compared with $149.3 billion in May for a increase of $3.5 billion for the month.

The U.S. trade deficit with China increased in June with a $18.4 billion shortfall after a deficit of $17.5 billion in May. Other notable deficits in June were with the European Union at $4.5 billion, Mexico at $3.4 billion, Japan at $3.7 billion and OPEC at $5.9 billion. The U.S. trade surpluses with other countries for June included Hong Kong at $1.4 billion, Australia at $1.0 billion, Singapore at $0.5 billion and Egypt at $0.2 billion.

Forex Market – US Dollar lower in Forex Trading today.

The U.S. dollar has traded lower in forex trading today after gaining in the early part of the week.  Immediately after the interest rate announcement, the dollar spiked higher but has since come down from those levels.  Overall today, the dollar has lost ground to the euro, British pound, Canadian dollar, Swiss franc, Australian dollar and the New Zealand dollar while the USD has shown gains against the Japanese yen as of 3:31pm ET in the afternoon of the US trading session.

AUD/USD Chart – The Australian Dollar trading higher today versus the US Dollar after two straight declining days.

Source: ForexYard

During yesterday’s trading, the Yen continued to be the dominant currency in the forex market. Whilst most of the major currencies tended to fluctuate without marking a sustained trend, the JPY strengthened on all fronts, and currently looks to be this week’s top investment. During today’s trading, the most fascinating data will come at 18:15 GMT, as the Federal Funds Rate for August will be announced. The main question is whether the Fed will hike rates in light of recent positive economic data. Such a turn of events could create mayhem in the market, and traders are advised to be prepared.

Economic News

USD – USD Sees Mixed Trading Ahead of FOMC Statement

The Dollar experienced a mixed trading day Tuesday ahead of today’s FOMC meeting, continuing its rally against its commodity based counterparts while slipping slightly against the EUR and dropping sharply against the Yen. The Dollar traded at 95.80 Yen early this morning, from 95.99 yesterday, after falling 1.2%. The U.S. currency was at $1.4161 per EUR from $1.4149 yesterday.

The highly anticipated FOMC meeting statement is due to be released today at 18:15 GMT. Breaking with its trend throughout the recession, the Dollar unexpectedly rose Friday following a surprisingly strong U.S employment data release. This was seen as a signal that the recession is coming to an end and the Dollar might start benefiting from positive U.S data. This statement will be the first test of whether this trend will persist and the Dollar’s strength can be maintained on positive economic data.

While no interest rate changes are expected, any clues as to the progress or end of the quantitative easing program will likely cause great market volatility. The statement is expected to provide an assessment of the current economic condition in the world’s largest economy and more importantly provide an economic outlook, therefore, likely setting short-term direction for the USD.

EUR – EUR Continues its Decline against the Yen

The EUR continues to decline versus the Yen pushing its loss to 1.9%. The decline was exacerbated after consumer prices in Germany posted their first annual decline in more than 22 years in July, boosting speculations the European Central Bank (ECB) will keep interest rates at a record low. The EUR was at $1.4154 from $1.4142 late Monday and was at 135.74 yen, down from 137.32.

The Pound continues its decline against the Dollar, reaching a low of $1.6476. Pushing down on the Pound was a worse then expected trade balance as well as falling stock markets, prompted by declines in financial stocks. With the financial sector being the largest sector in the British economy, equity market movements tend to have major affects on the GBP’s value. Furthermore, investors are staying cautious ahead of today’s BOE inflation statement.

A heavy news day is expected today from the U.K which will likely set the direction for the Pound for the rest of the week with the Claimant Count Change to be released at 8:30 GMT along with the Average Earnings Index and the BOE Inflation statement. at 9:30 GMT. These will provide an assessment of the current economic conditions in the U.K as well as provide an outlook on the prospects of recovery. The Euro-Zone Industrial Production report is also due to be released at 9:00 GMT, worse than expected results will likely put further downward pressure on the EUR.

JPY – The JPY Gains against all Major Currencies

The JPY traded at its highest level in a week against the EUR yesterday on concern the improvement in financial companies’ earnings will stall. The Yen traded at 135.82 per EUR early today, following a 1.1% gain yesterday. Japan’s currency traded at 95.96 per USD and 158.17 against the Pound, both up from yesterday’s figures.

Disappointing Chinese economic data and dropping stock prices on global exchanges soured risk appetite. Expectations that the Japanese economy will pull out of the recession ahead of the U.S have also helped push up the JPY against the greenback as investors turned to Japanese assets.

With no major news releases from Japan today, the Yen’s short term direction will likely be set by the news coming from the U.S and Europe, mainly the FOMC statement minutes.

Crude Oil – Crude Falls below $70 a Barrel

Light Sweet Crude for September delivery settled down $1.15, or 1.6%, at $69.45 a barrel on the New York Mercantile Exchange (NYMEX) yesterday as U.S. equities dropped ahead of a government report forecasting an increase in crude supplies in the biggest energy consuming nation. This was the lowest settlement since July 31. It was the fourth straight daily decline and the first time oil settled below $70 this month.

While global economic recovery is impending, demand is still contracting sharply, collapsing faster than anyone expected. Traders should follow today’s release of U.S Crude Oil inventories as any bearish number could prompt a further decline in prices.

Technical News

EUR/USD

The pair continues its range-trading activity, and is now traded around the 1.4150 level. Currently, a bullish cross is taking place at the 4-hour chart’s MACD, suggesting that a trend reversal might be impending. It seems that a breach of the 1.4220 level will further indicate a bullish reversal.

GBP/USD

The pair’s volatility continues, as the cable is now traded around 1.6480. After dropping close to 600 pips, the pair seems to be stabilizing at its current level. However, as a bearish cross is taking place at the daily chart’s MACD, the pair might continue the bearish trend, with the next target price located near 1.6375.

USD/JPY

Ever since peaking at the 97.75 level, the pair has been constantly dropping and is currently trading around the 95.50 price range. As all oscillators on the 4-hour chart are pointing down, it seems that the pair’s downtrend could extend today.

USD/CHF

The pair continues to show mixed results, without marking a sustained trend. A triple doji pattern, formed at the 4-hour chart indicates that a sharp movement is impending. As the daily chart’s Slow Stochastic shows a bearish cross, it seems that the next move might be downward.

The Wild Card – Crude Oil

Crude Oil’s downtrend continues, as a barrel of crude oil is now traded for less then $70. As all oscillators on the daily chart are pointing down, it seems that another drop in prices might happen today. This might be a great opportunity for forex trader to join 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 gained marginal ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4185 level and was supported around the $1.4110 level.  Most traders believe the Federal Open Market Committee will keep interest rates unchanged when its policy decision is announced tomorrow.  Many economists believe the FOMC will keep interest rates unchanged through at least 2010 on account of the global credit crisis.  Traders are curious to see if the Fed changes any significant verbiage in its statement and gives any further clues about unwinding its massive monetary stimuli.  The Fed’s balance sheet is currently right around the US$ 2 trillion level and has been declining over the past few weeks, an indication it is gradually reducing some of its quantitative easing programs.  One program that traders are paying close attention to is the Fed’s purchase of U.S. Treasury securities.  It is expected the Fed will allow its current US$ 300 billion purchase program to expire when that amount is reached, likely in September.  There is speculation the Fed will be actively discussing pending problems in the U.S. commercial real estate market.  There is an expectation the sector could worsen significantly early next year.  Fed Chairman Bernanke recently noted the Fed is “paying very close attention” to the sector and highlighted “increased vacancy, declining rents, and falling prices.”  Data released in the U.S. today saw Q2 non-farm productivity improve 6.4% from a downwardly revised Q1 reading of 0.3%.  While these data mean U.S. workers are becoming more productive, they also signify higher productivity is coincident with considerably higher unemployment.  Q2 labour costs were off 5.8%, down from a revised -2.7% in Q1, and June wholesale inventories were off 1.7%, down from a revised -1.2% in May.  In eurozone news, the German July wholesale price index was off 0.5% m/m and 10.6% y/y while the July consumer price index was unchanged m/m and off 0.5% y/y.  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 ¥95.75 level and was capped around the ¥97.15 level.  The yen extended recent gains across the board with U.S. equities under pressure and risk appetite lower globally, favouring the yen.  As expected, Bank of Japan’s Policy Board voted unanimously to keep the overnight call rate target unchanged at 0.10% and kept its economic assessment unchanged.  BoJ Governor Shirakawa pessimistically noted “Even if we have a recovery, I don’t think its strength will be impressive. I can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course.”  The central bank reiterated it remains concerned about “downside risks to economic activity and prices” and merely noted the economy has “stopped worsening.”  Data to be released next week may show Japan’s economy expanded around 4.0% in the three months that ended 30 June.  Deflationary pressures have returned to the economy.  Consumer prices excluding fresh food fall a record 1.7% in June and this may pressure policymakers into keeping rates low through 2011.  Data released in Japan overnight saw the government’s consumer sentiment index improve to 39.4 from 37.6 in June, its highest level since November 2007 and the seventh consecutive monthly improvement.  The Nikkei 225 stock index climbed 0.58% to close at ¥10,585.46.  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 ¥135.25 level and was capped around the ¥137.40 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥157.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.40 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8355 in the over-the-counter market, up from CNY 6.8313.  Data released in China overnight saw July exports decline a staggering 23% y/y while July factory output was up a weaker-than-expected 10.8%.  Also, July CPI was off 1.8% y/y and July PPI was off 8.2% y/y with July retail sales up 15.2% y/y.

₤

The British pound lost minor ground vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6430 level and was capped around the $1.6520 level.  Traders await the release of Bank of England’s quarterly inflation report tomorrow.  Data released in the U.K. today saw the June DCLG house price index off 10.7% while the June goods trade deficit increased to ₤6.5 billion from ₤6.2 billion.  Other news out of the U.K. today suggests the BoE earned more than a 10% return on its ₤918 million portfolio of corporate bonds.  Cable bids are cited around the US$ 1.6215 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8615 level and was supported around the ₤0.8560 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 Fast Brokers – The EUR/USD is trying to balance on our 2nd tier uptrend line after reacting negatively to the collision of our 3rd tier uptrend and 1st tier downtrend line.  Meanwhile, the EUR/USD is hanging out just above the bottom of the 7/20-7/28 trading range.  On a positive note, volume on the sell-side is declining, meaning the currency pair could attempt to stabilize soon.  The Euro is experiencing relative weakness today after the credit ratings of Latvia and Estonia were downgraded, damaging EU organizations financial exposed to the Eastern European countries.  However, the EUR/USD is holding up well considering the S&P futures are under considerable selling pressure this morning.  We’re going to monitor the EUR/USD’s behavior today should the S&P’s downturn accelerate.  If the Dollar depreciates noticeably and the S&P futures tumble, this would add evidence to the argument that the Greenback’s correlation with U.S. equities is shifting.  However, if the EUR/USD flat lines or decline and the S&P futures decline sharply, then we may conclude that the depreciation of the Dollar over the past two sessions indicated a pullback in equities.

Meanwhile, the EUR/USD’s medium-term uptrend still has two uptrend lines and the psychological 1.40 acting in its defense to the downside.  As for the upside, the EUR/USD will just build more obstacles the more it declines.  The immediate-term hurdles to the upside are intraday highs and our 1st tier downtrend line.  A recovery into the meat of the 7/20-7/28 trading range could be a positive develop and allow the EUR/USD to build a new base.  However, Friday’s high volume shows immediate-term momentum is still in favor of the downside.

Though investors will be looking for EU Industrial Production to stay positive tomorrow, the focus will be on British employment data and the conclusion of the Fed’s monetary policy meeting.  If Bernanke states that the U.S. economy continues to improve and there are no plans to add further liquidity to the system, it will be interesting to see whether this results in a stronger or weaker Dollar.  While one may normally expect a weaker Dollar since such an announcement will ideally lift U.S. equities, we could witness the Greenback appreciate across the board should such a decision be made.  However, we will have to see how tomorrow’s meeting pans out before we get too far ahead of ourselves.
Present Price: 1.4119

Supports: 1.4132, 1.4154, 1.4165, 1.4182, 1.4200

Resistances: 1.4116, 1.4094, 1.4082, 1.4063, 1.4042

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 Fast Brokers – The Cable’s decline carried on Monday before finding comfort in the 1.65 area as anticipated.  Both the housing price and retail sales data points came in better than anticipated late Monday, helping the Cable find a bottom.  Investors are ignoring the slight pullback in Britain’s Trade Balance this morning and the Cable is balancing on our 1st tier uptrend line.  Meanwhile, the S&P futures are experiencing a sizable pullback.  Though the reversal in correlation between the Cable and the S&P futures continues today, it remains to be seen whether this behavior will be temporary or long-lasting.  After all, the recent appreciation of the Dollar could have just been an indicator for today’s pullback in U.S. equities.  Therefore, we’ll need to monitor the correlation behavior for a few more sessions before drawing any conclusions.  The reaction of the Dollar and equities to tomorrow’s monetary policy decision by the Fed could paint a clearer picture.

In addition to the Federal Reserve’s monetary policy decision, Britain will also release its CCC number, the Average Earnings Index, and the BOE will print its Inflation Report.  Therefore, Wednesday’s session should be volatile for the Cable.  Should Britain’s CCC number come in lower than expected while the BOE’s Inflation Report shows modest inflationary pressure, this could give the Pound relative strength and boost the GBP/USD.  Declining unemployment and rising inflation indicates further improvement in Britain’s economy, giving the BOE room to rope in some of its liquidity in the foreseeable future.

Despite today’s consolidation in the GBP/USD, present momentum remains to the downside due to Friday’s pullback on considerable volume.  However, the 1.65 area should continue to be a reliable defense since the currency pair has battled with this psychological zone in the past.  The GBP/USD also has our 1st tier uptrend line and intraday lows acting as immediate-term technical cushions.  As for the upside, the GBP/USD has an uphill battle.  The Cable must deal with our 2nd tier uptrend line and the lid of its 7/20-7/28 trading range.

Present Price: 1.6490

Resistances: 1.6504, 1.6521, 1.6545, 1.6567, 1.6591

Supports: 1.6486, 1.6467, 1.6447, 1.6427, 1.6410

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’s pullback has picked up traction, dropping below 2nd tier uptrend and 3rd tier downtrend lines.  Continued strength in the Yen comes after stronger than expected economic data from Japan to kick off the week.  Meanwhile, the S&P futures are logging considerable declines today, giving investors more incentive to favor the Yen and head for safety.  However, today’s pullback in the S&P comes on limited news, indicating a case of overbought conditions.  Therefore, it seems the USD/JPY’s positive correlation with U.S. equities is back in full swing.  Volatility in the USD/JPY has really picked up considering its dormant behavior as of late.

Despite today’s setback, the USD/JPY remains well above our 1st tier uptrend line and the psychological 95 level.  Therefore, bulls shouldn’t throw in the towel just yet.  Our 1st tier uptrend line has proven reliable recently.  However, the USD/JPY’s August highs are beneath its June highs, setting up the possibility of a head-fake and a retreat into the grips of its downtrend.  Therefore, we’ll have to monitor how the USD/JPY’s support system holds up.

Present Price: 95.85

Resistances: 96.10, 96.47, 96.81, 97.10, 97.47

Supports:  95.75, 95.61, 95.30, 94.99, 94.69

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.