Month: September 2009

By John Rivera, DailyFx

This is article is released weekdays under the heading “Daily Forecasts” at 5pm EST on www.dailyfx.com

The EUR/USD continues to see risk sentiment have the greatest influence on price action as movement in the DJIA is explaining 41% of overall direction. However, U.S. interest rate expectations are starting to increase in importance as they have become a weighing factor with a -0.24 correlation.
EUR/USD

The EUR/USD continues to see risk sentiment have the greatest influence on price action as movement in the DJIA is explaining 41% of overall direction. However, U.S. interest rate expectations are starting to increase in importance as they have become a weighing factor with a -0.24 correlation. Many expect that the Fed will start tightening sometime next year and as we get closer to that possibility traders may begin to hedge their bets developing bullish dollar sentiment. Meanwhile, the ECB has clearly signaled that it will also wait until 2010 before considering tightening which has made yield expectations for the region a non-factor in recent price action.

ECB Interest Rate Expectations

Overnight index swaps are pricing in 87 bps of rate hikes for the ECB over the next twelve months which is near the highest levels since June, 2008. That is when we saw surging oil prices push inflation to uncomfortable levels. Currently we are not seeing consumer prices anywhere near those levels. In fact today’s Euro-Zone CPI-estimate unexpectedly fell to -0.3% from -0.2% which is well below the central bank’s 2% target. Therefore, policy makers will remain reluctant to initiate a tightening policy unless there is a viable threat of inflation. Until then we may see interest rate expectations have little impact on overall price action for the Euro. The producer price report for August is due out on Friday and is expected to show a 0.4% gain. If businesses are able to pass on their increasing costs to consumers than we may start to see the outlook for monetary policy change and grow in importance.

FOMC Interest Rate Expectations

Fed funds futures are currently pricing in a 2.0% chance of a rate hike by the end of the year which is slightly higher from a month ago. Interest rate expectations have started to rise after they reached as low as zero following the FOMC’s rate decision. Nevertheless, policy makers will most likely refrain from raising rates until the economy starts to see job growth. Therefore, this week’s U.S. employment data will go a long way toward influencing future policy decisions and their impact of the EURUSD’s price action. We have already seen the ADP private jobs report disappoint with a expected job loss of 254K versus 200K. A similar result from Friday’s NFP report could significantly sink yield expectations.

Risk

Equity markets stumbled early today on the back of a disappointing Chicago PMI reading which showed that activity in the region unexpectedly contracted. The 46.1 reading missed early estimates of 52.0 and raised questions about future domestic growth. Markets were also unnerved by the larger than expected job loss in the ADP private jobs report which is an early indicator for Friday’s NFP report. However, markets have erased earlier losses which could be a bullish sign considering the weak data. Yet, we are starting to see a developing bearish channel which could be a sign of future weakness which could weigh on the EUR/USD.

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By GCI Fx Research

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The euro strengthened vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4675 level and was supported around the $1.4575 level.  The common currency appears poised to close at its highest quarter-ending level since Q4 2008.  Mixed global economic data fueled some of the euro’s ascent.  The flash EMU-16 September consumer price index wasoff 0.3% y/y, lower than August’s -0.2% y/y decline.  Nonetheless, many economists believe this pullback in CPI is temporary and are forecasting a recovery in November.  Other data released overnight saw German September unemployment decline 12,000 with the unemployment rate at 8.2% while August plant and machinery orders were off 43% y/y.  Eurogroup Chairman Juncker reiterated the European Central Bank is unlikely to implement an exit strategy before 2010.  ECB member Kranjec reported the ECB’s liquidity tender shows “the system is liquid enough” while ECB Vice President Papademos added monetary policy can be used to ensure price stability and lessen asset-price bubbles.  In U.S. news, the September ADP private employment report came in worse-than-expected at -254,000, down from an upwardly revised -277,000 for August.  Also, second quarter gross domestic product came in better than expected at -0.7%, up from the prior reading of -1.0%, while the Q2 GDP price index was unchanged.  The Q2 core PCE reading was also unchanged at +2.0% q/q and the September purchasing manager index came in less-than-expected at 46.1, down from the prior reading of 50.0.  Friday’s non-farm payrolls report will be closely watched with some private forecasts calling for job losses below -200,000.  Philadelphia Fed President Plosser said the Fed will need to prevent a recurrence of “great inflaton” while Atlanta Fed President Lockhard noted he favours a sustained stimulus until final private demand expands.  Fed Governor Kohn cited inflation as “subdued” and said the Fed “can’t predict” how rapidly it will have to raise rates but added low rates will likely be warranted for an extended period.  Nonetheless, Kohn said rates will need to rise before the economy overheats.  Former Fed Chairman Greenspan reported U.S. economic growth should average 3% – 4% in the next six months and said the U.S. economy should not return to recession next year.  Group of Seven officials convening in Istanbul this weekend are not expected to issue a statement after their meeting.
Euro bids are cited around the US$ 1.4445 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.35 level and was capped around the ¥90.40 level.  Traders are talking about rumours that Bank of Japan will decide as early as October to let its corporate debt purchase programs expire.  The central bank has been supporting the corporate bond and commercial paper market and the emergency purchase programs are schedule to expire at the end of December.  BoJ officials are concerned the continuation of these programs could distort the proper functioning of the markets.  Recently, on 18 September, BoJ found no lenders that were offering to sell commercial paper to the central bank. BoJ will release its quarterly Tankan survey of business sentiment overnight and it is expected to evidence an improvement in business confidence.  BoJ’s Policy Board convenes on 14 October and 30 October and will publish its twice-yearly economic growth and inflation forecasts at the latter.  Finance minister Fukii reported he will not discuss currencies at the Group of Seven meeting in Istanbul this weekend.  Data released in Japan overnight saw August construction orders decline 25.2% y/y while August overall housing starts were off 38.3% y/y.  Additionally, August industrial output was up 1.8% m/m and manufacturing PMI rose to 54.5.  Dealers continue to cite continued yen repatriation flows even on the last day of Japan’s fiscal year-end.  The Nikkei 225 stock index climbed 0.33% to close at ¥10,133.23.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥130.60 level and was capped around the ¥132.00 figure.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥142.85 level while the Swiss franc moved lower vis-à-vis the yen and tested offers around the ¥85.90 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8244 in the over-the-counter market, up from CNY 6.8230.  People’s Bank of China reported it will continue its “moderately easy” monetary policy “while highlighting the role of domestic consumption in pushing the economy.”  Chinese financial markets will be closed from 1 October through 8 October for the National Day’s holiday.  Some banks are predicting China will register consumer price inflation growth in November.  Some PBoC-watchers believe the central bank is not doing enough to prevent an asset bubble.

₤

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6125 level and was supported around the $1.5945 level.  Data released in the U.K. today saw GfK September consumer confidence improve to -16 from -25 in August.  Also, service sector output fell 0.2% in the three months to July following a 0.6% decline in the three months to June.  Chancellor of the Exchequer Darling discussed the government’s new policies regarding bankers’ pay.  Bank of England Monetary Policy Committee member Miles said the central bank’s asset purchase facility program is supporting spending and added the BoE’s rate cuts have not been enough to offset credit tightening.   Leading City economists met with the Bank of England yesterday and reported the central bank is not planning an imminent move to a Riksbank-style policy mechanism where overnight deposits would be subject to a tax in an attempt to stimulate spending.  .  Cable bids are cited around the US$ 1.5720 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9160 level and was supported around the ₤0.9075 level.

CHF

The Swiss franc came off vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0445 level and was supported around the CHF 1.0280 level.  The pair moved higher as dealers reported the Swiss National Bank likely sold francs for euro and possibly the U.S. dollar via the Bank for International Settlements.  SNB member Jordan last week said the central bank would act “with full force” to avoid the franc’s appreciation.  Data released in Switzerland today saw the September KOF leading indicator climb to 0.85 while data released in Switzerland yesterday saw the August UBS consumption indicator decline to 0.66 from 0.75 in July.  U.S. dollar offers are cited around the CHF 1.0490 level.  The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.5235 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6730 level.

Daily Market Commentary provided by GCI Financial Ltd.

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By CountingPips.com

Economic news released out of the United States today showed that the contraction in spring economic activity was less than previously reported, potentially signaling that the economy’s deep recession may be subsiding, while an important employment report fell by more than expected.

The U.S. Commerce Department’s Real Gross Domestic Product report showed economy’s annual pace of contraction in the second quarter of 2009 slowed as the annualized GDP contracted by 0.7 percent in the April to June 2009 quarter from the second quarter level of 2008. This contraction was updated from previous estimates of a 1.0 percent GDP contraction. Economic forecasts were expecting the GDP decline to grow to approximately 1.2 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 4.1 percent after falling by 29.9 percent in the first quarter. Imports fell by 14.7 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 0.9 percent after increasing in the first quarter by 0.6 percent.

ADP Employment falls more than expected.

U.S. employment data, released today in the form of the ADP National Employment Report, showed that U.S. private employment declined by more than expected in September. The nonfarm private employment decreased by 254,000 workers in September following the revised August decline of 277,000 jobs. August’s data was revised downwards from the original release of 298,000 jobs lost. September’s data was worse than the decline of roughly 200,000 jobs that market forecasts were expecting but September also marked the smallest monthly job decline since July 2008.

The goods-providing sector showed the largest decline for the month with a loss of 151,000 jobs while the service-producing sector had a decline of 103,000 jobs. The manufacturing sector had a loss of 74,000 jobs while construction jobs fell for the 32nd straight month with a decline of 73,000 workers. All size of businesses continued to cut jobs in August as large businesses lost 61,000 jobs, medium sized businesses shed 93,000 jobs and small businesses dropped 100,000 jobs.

US Dollar mixed in Trading.

The U.S. Dollar has been mixed in forex trading today against most of the major currencies. The dollar has gained some ground against the British pound and Swiss franc (on speculated SNB intervention) while losing ground to the euro, Australian dollar, Canadian dollar, Japanese yen and New Zealand dollar in the US trading session at 1:47pm EDT according to according currency data by Oanda.

The U.S. stock markets have been fluctuating session today and for the most part have stayed in positive territory at time of writing with the Dow advancing by approximately 5 points, the Nasdaq increasing 4 points and the S&P 500 has been almost unchanged.  Oil has traded higher by $3.01 to $69.72 while gold has traded higher by $14.90 to $1008.00 per ounce.

Swiss National Bank Intervention in Fx Markets today?

Watching the price action in two major Swiss franc pairs today has shown that probable Swiss National Bank intervention action has taken place.  The EUR/CHF and USD/CHF surged higher in moves reminiscent of prior SNB interventions although not quite as high.  The Bank recently reiterated it’s intention to sell francs in order to fight the effects of deflation in Switzerland. The SNB has not commented today on the market action according to Reuters.

EUR/CHF Hourly Chart – The Euro flies higher versus the Swiss Franc this morning in Forex trading on possible SNB intervention.

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By Fast Brokers – Today’s rally in the EUR/USD has hit a roadblock after America’s ADP Non-Farm Employment Change number came in well below analyst expectations.  Today’s release couples with yesterday’s disappointing CB Consumer Confidence release.  Therefore, the U.S. continues to send negatively mixed signals, hampering the global economic outlook.  In contrast to weak U.S. data, Germany’s Unemployment Change number came in below analyst expectations, reading negative for the third straight month.  Hence, Germany’s employment market is firming up more quickly than America’s.  However, last week’s wave of negative EU PMI data from Germany dampens our future outlook for German unemployment.  Regardless of the future outlook, today’s positive employment data from Germany is helping weather negative U.S. data, limiting present selling pressure.  Unfortunately for bulls, we’re not sure how lasting this strength will last.

ECB President Trichet voiced his preference for a stronger Dollar earlier this week.  Trichet’s statement is juxtaposed to the ECB’s comparatively hawkish monetary stance throughout the year.  Hence, it seems both the EU and Britain may now favor a stronger Dollar.  We believe both central banks are realizing that if they don’t support the Dollar, a new monetary union will take shape with the East pulling power from the West.  However, it remains to be seen whether Trichet’s public contemplation will result in concrete action.  Trichet’s surprising support of the Dollar is undoubtedly creating a drag on the EUR/USD right now which could accelerate should U.S. equities experience a selloff.

Meanwhile, the EUR/USD still faces several downtrend lines with limited EU economic data on tap this week.  Therefore, there seems to be little ammo to turn the tide and continued near-term weakness could be in order.  The EUR/USD’s dip below our 1st tier uptrend line was a risky move since it runs through 9/8 levels.  Although the currency pair climbed back above our 1st tier, a more definitive retracement could send the currency pair tumbling below the psychological 1.45 level.  Hence, investors should keep a close eye on the EUR/USD’s interaction with our 1st tier uptrend line.  Since EU econ data will be light, the EUR/USD’s near-term performance will likely rely on the S&P’s ability to stay above our 1st tier uptrend line (see S&P commentary) and the 1050 level.  Continual strength in the S&P would likely help keep the EUR/USD’s head above water and 1.45.  However, our outlook on the EUR/USD is becoming increasingly negative by the day.  As for the topside, the EUR/USD faces multiple downtrend lines, 9/28 highs, and 9/17 highs.  Our 3rd tier downtrend line is the key barometer for the EUR/USD’s uptrend since it runs through September 23rd highs.

Present Price: 1.4618

Resistances: 1.4634, 1.4656, 1.4677, 1.4703, 1.4724

Supports: 1.4608, 1.4580, 1.4563, 1.4541, 1.4519, 1.4501

Psychological: 1.45

Market Commentary provided by Fast Brokers.

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

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

By Fast Brokers – The Cable recovered nicely from Monday lows, feeding off of a combination of oversold conditions, positively mixed British econ data, and reassuring comments from the BoE.  Britain’s Current Account came in weak as we anticipated, fueled by consumption in light of a stronger Pound.  Net Lending to Individuals made an encouraging improvement, showing banks are finally letting loose some of their pent up liquidity.  The BoE helped the Pound’s rally by stating they have no present intention to lower the discount rate while they hope to keep the Pound’s broad-based depreciation within a reasonable level.  King’s retraction concerning lowering the discount rate charged on reserves is probably attributed to the improvement in net lending.  Hence, the BoE has managed to value the Pound via psychological forces over the past month without taking any concrete action.  However, despite this week’s comments from the BoE, we believe the central still favors a weaker Pound in order to stimulate external demand for British services and manufactured goods.

Investors will get a better picture of the demand for British manufactured goods tomorrow upon the release of Manufacturing PMI data.  We expect Manufacturing PMI data to come in weak, supporting the BoE’s dovish monetary actions.  The more interesting data tomorrow will be Britain’s Halifax HPI data.  We’ve recently seen signs of a cool down in Britain’s housing recovery.  British housing data has been the one consistent bright spot amid Britain’s negatively mixed data over the past few months.  Therefore, a pullback in housing could inflict further damage upon the Cable. Tomorrow’s British data will be coupled with important econ data from the U.S. as well, making for another volatile 24-48 hours.

Meanwhile, the Cable is trading back above June and July lows as well as the psychological 1.60 level.  However, Monday’s crash below June lows was certainly a very negative technical sign.  Therefore, we maintain our negative outlook trend-wise on the GBP/USD.  As far as the bulls are concerned, it will be important for the Cable to consolidate and build a new base above our 1st tier uptrend line and the psychological 1.60 level.  If the Cable can weather the downward momentum for the time being, the currency pair may be able to put together a near-term uptrend.  Volume is picking up from the summer doldrums, yet we saw equally as strong sell-side action today as we saw on the buy-side yesterday, indicating the importance of present levels.  The GBP/USD has quite a few barriers to overcome before piecing together a meaningful uptrend beginning with our multiple downtrend lines and intraday highs.

Present Price: 1.6024

Resistances: 1.6045, 1.6090, 1.6112, 1.6132, 1.6169

Supports: 1.6016, 1.5978, 1.5950, 1.5921, 1.5900

Psychological: 1.60

Market Commentary provided by Fast Brokers.

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

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

By Fast Brokers – The USD/JPY is heading south again after failing to break our 2nd tier uptrend line.  The psychological games continue at central banks across the globe, and the BoJ is no exception.  The BoJ revised their previous hawkish statements by saying they would consider intervening if the Yen appreciated to unhealthy level.  However, what exactly these levels are remains to be seen.  We believe the BoJ’s most recent statement was made with the intention to appease manufacturers and exporters when the true intention is likely to have a stronger Yen over the long term.  Strength in the USD/JPY from the BoJ’s comments didn’t last long.  Today Bloomberg released an article stating ‘The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire…’  If this is true, the BoJ is clearly favoring a hawkish monetary policy.  The USD/JPY is weakening below 90 once again in reaction to the news.

In addition to the flood of psychological monetary news, America’s CB Consumer Confidence number came in below analyst expectations yesterday.  This weak CB number tags onto the disappointing durable goods data last Friday, indicating U.S. consumption continues to drag.  The continual deterioration of U.S. consumption isn’t good news for a beleaguered Japanese manufacturing industry.  In addition to the disappointing U.S. data, Japan’s Industrial Production and CPI numbers both came in a basis point below analyst expectations.  The combination of declining prices and industrial production coupled with a more hawkish monetary stance from the BoJ is certainly a troublesome development for Japan’s economy.  Therefore, all eyes will be on Japan’s TMI data Wednesday night PST.  It’s hard to believe Japan’s TMI will come in positively considering the state of global consumption, but we will have to wait and see.

Technically speaking, we have little reason to be positive on the USD/JPY trend-wise.  The currency pair continues to travel south from all of our note-worthy uptrend lines.  The only technicals working in the USD/JPY’s favor right now are intraday and January 2009 lows.  However, we did previously note that the 88.50-90 level should prove to be a reliable supportive trading range.  Therefore, we wouldn’t be surprised to see the USD/JPY hang in this area over the next 24-48 hours.  On the other hand, traders should remain on their toes since the FX markets are very dynamic right now.  The question becomes whether U.S. equities and gold can keep upward momentum intact.  As for the topside, the USD/JPY faces numerous downtrend lines along with the highly psychological 90 level.  Therefore, the USD/JPY has quite a few large obstacles to overcome to the topside.

Present Price: 89.78

Resistances: 89.80, 90.03, 90.45, 90.73, 90.96, 91.32

Supports:  89.42, 89.15, 88.89, 88.60, 88.25, 87.97

Psychological: 90, 2009 and 2008 lows

Market Commentary provided by Fast Brokers.

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

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

Source: ForexYard

The U.S. currency may be headed for a quarterly decline against 14 of 16 major counterparts before report this week forecast to show American employers cut fewer jobs, boosting demand for higher-yielding assets. Although the greenback posted small gains against major rivals Tuesday, edging higher on the Japanese currency, the currency may reverse its earlier gains on speculation a Federal Reserve official will reiterate today that record-low Interest Rates will be unchanged for an extended period.

Economic News

USD – Lower U.S. Consumer Confidence Figures Boost the Dollar

The Dollar soared yesterday on lower U.S. Consumer Confidence figures of 53.1, rather than the forecasted 57.0. The Dollar rose to a near 2-and-a-half-week high vs. the EUR to 1.4526 at its highest point yesterday. It should be pointed out that the data from the U.S. seemed to lead to a decrease in demand for riskier assets that are funded by borrowing the U.S. Dollar.

The EUR/USD cross fell by nearly 70 pips on Tuesday to finish trading at the 1.4592 level. The EUR fell, despite positive economic news from the Euro-Zone. The Dollar fell for the second day against the GBP, as the pair finished trading at 1.5969. The USD went volatile vs. the Pound, due to the British currency rising as the Bank of England (BoE) announced that it had no plans for lowering bank reserve rates. With regards to the JPY, the USD to make some inroads as the cross closed at 90.15. This may be partially owed to Japan’s government wanting to abandon a strong Yen.

Looking ahead to today’s trading, there is plenty of economic news that is expected to be published from the U.S. economy. The most important of these is expected to be the ADP Non-Farm Employment Change at 12:15 GMT. Also, amongst the other important data releases from the U.S. are the Final GDP figures at 12:30 GMT and the Chicago PMI at 13:45 GMT. As you forex traders can see, there is no break expected from trading today. In addition, due to the high volatility expected, it is encouraged that you buy-up large USD positions now, as today’s trading takes off.

EUR – EUR Tumbles to 2-Week Low against the Dollar

On Tuesday, the EUR tumbled to a near 2-and-half-week low against the Dollar. This came about even though the EUR experienced a day of positive data publications. The bearish EUR occurred as demand for riskier assets dropped. This was initiated by U.S. Consumer Confidence falling significantly yesterday. On the other hand, the British Pound actually rose vs. its key currency pairs, as the Bank of England (BoE) revealed to economists that it doesn’t intend to lower the rates on the reserves of banks.

The EUR fell by about 70 pips vs. the USD on Tuesday to the 1.4592 level. The GBP/USD cross finished trading notably higher at 1.5969. The news in Britain helped the EUR/GBP fall for a second day in a row to the 0.9132 level. The news in Britain also led support to the GBP in regards to the GBP/JPY cross, as the pair rose by over 100 pips to the 144.40 level. It seems that on all fronts that the cable was unaffected by the pessimistic news in the U.S. With regards to the European currency, many traders were surprised by the pace of its decline in yesterday’s trading.

Today’s trading offers promising opportunities for forex traders. There is much data that is expected to be released from Britain, the Euro-Zone and Switzerland. The German Unemployment Change figures are expected to be published at 07:55 GMT and the CPI Flash Estimate at 09:00 GMT. From Britain, the Index of Services results are set to be released at 08:30 GMT. The KOF Economic Barometer is scheduled to be released from Switzerland at 09:30 GMT.

JPY – Strong Yen under Downward Pressure

The strong Yen has recently come under a lot of pressure lately, as the Japanese economy gets hit by deflation. For example, the Core Inflation tumbled by nearly 2.5% in September. This is the largest drop in the past decade. This comes as we have seen the JPY rise significantly vs. the GBP, USD and EUR since the start of the financial crisis. Due to the deflation problem, the new Democrats party has u-turned on Japan’s policy of upholding a strong Yen.

The news seemed to put some downward pressure on the Japanese currency. The USD/JPY cross rose by about 20 pips to the 90.15 level. The GBP/JPY cross rose over 100 pips to the 144.40 level. The JPY’s downward trend may continue if investors continue to lose confidence on an extremely battered economy. Market players should be paying a close attention to the upcoming releases: Tankan Manufacturing Index, Japanese Retail Sales and the Tankan Non-Manufacturing Index at 23:50 GMT.

OIL – Crude Oil Hits the $67 Mark

Crude Oil prices rose to over $67 to the $67.26 level, before falling to $66.75. This behavior was owed to a weak Dollar in early trading. However, the U.S. currency gained significantly on Tuesday ever since the negative U.S. Consumer Confidence figures were released. In turn, this put downward pressure on Crude prices. Thus as the USD strengthened, Crude Oil prices went lower.

Oil prices are set to encounter another exciting day of trading. The most important release today is the publication of Crude Oil Inventories at 14:30 GMT. The other important release that is set to impact the value of Crude today is the U.S. ADP Non-Farm Employment Change, as Crude is priced in U.S. Dollars. If you want to make profits from Oil today, then you should open your trades as soon as possible.

Technical News

EUR/USD

The sustained upward movement of this pair has begun to push the long-term oscillators, such as the daily chart’s RSI, into the over-bought territory. This appears to be putting downward pressure on the price of this pair as it has begun to level off. As momentum shifts into a downward posture, going short with tight stops might be a good strategy.

GBP/USD

This pair’s recent drop in value continues to hold the price in the over-sold territory on the RSI of the daily chart, signaling upward pressure. While the momentum appears to remain downward, we may likely see a number of upward corrections throughout the day. Buying on the lows and selling on the highs of these fluctuations will be a good strategy today

USD/JPY

There is a very accurate bearish channel forming on the 30 min. chart as the pair is now floating in the bottom of it. Currently, as all oscillators on the daily chart are pointing down, it seems that the downtrend will extend. Going short might be a good strategy today

USD/CHF

An imminent bullish cross on the hourly Slow Stochastic suggests that an upward movement is on the way. As the price recently exited the over-sold territory on the hourly RSI, there may be only a small amount of momentum for this impending bullish movement. Going long with tight stops may be the safest bet for today

The Wild Card – AUD/USD

The price of this pair currently floats in the over-bought territory of the 30 min. chart’s RSI, indicating a downward pressure. The impending bearish crosses on the hourly MACD and Slow Stochastic both support the notion of a downward move. Those participating in the forex market today would be wise to pay attention to this pair as the downward pressure appears to be getting stronger and a bearish move may be impending.

Forex Market Analysis provided by Forex Yard.

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Is The EUR/USD now Approaching a Possible Turning Point?

After a lackluster session, the major U.S stock indices yesterday’s trading day in negative territory. Even though Monday’s impressive session had a positive effect on the start of yesterday’s trading day, economic data showed a mixed picture, putting a halt on the rally. The S&P500 finished the day with a mild loss of -0.22%, while the Nasdaq dropped by 0.31%

Economic data has an impact on the session, sending mixed signals. On one hand, the S&P/CS Home Price Indices Composite, showed that the housing sector in the U.S is slowly improving, as it came out at -13.50%, compared to a consensus -14.50%. On the other hand, CB consumer confidence showed a disappointing result, coming out below expectations, at 53.1.

The major mover of the day was CIT Group Inc, increasing by 31.74%. The move came as news headlines reported that the company is planning a unique plan that would eliminate more than 40% of its debt. According to Reuters, the plan will offer bondholders new debt secured by CIT assets, preventing their investments from getting wiped out.

The stock jumped throughout the session, on high volume, breaking resistance of $1.86.

The Dollar Presents Mild Strength

On the Forex market the Dollar index has climbed over the last week, but has lost its momentum as the trading days have progressed. One must note that the major U.S stock indices are still showing positive signs, something that is having a negative effect on the U.S Dollar.

Even though officials have stressed the importance of a stable and strong Dollar; ECB President Jean Claude Trichet stated on Monday that a strong Dollar is essential for an economic recovery, while Japan’s finance minister expressed concerns about the recent volatility in the markets and the high level of the Yen, the Dollar is failing to present any major strength.

The GBP/USD retraced, bouncing off support during yesterday’s session, while the AUD/USD continued to climb higher. The EUR/USD has now reached a possible support level, whereas stabilization could present a turning point, sending the EUR/USD higher. When taking a glance at the chart below, one can see that the EUR/USD has now touched its 50% Fibonacci retracement level, which coincides with trend line support. A stronger equity market could have a positive effect on this pair, driving it higher.

EUR/USD- Daily Chart

Market Data to Watch Out For

Even though a wave of data is expected to be released today, the two major events will be released during U.S hours.  To start, ADP employment data will be released and is expected to show a major decrease of job losses. The expected result is currently showing a -200.00 figure, while last month’s figure came out at a whopping -298.00. Furthermore the U.S will release its awaited GDP result. The quarterly result is currently expected to show further contraction and come out at -1.2%.

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Source: ForexYard

The USD and JPY maintain their rallies over their riskier counterparts as traders try to decipher officials’ comments regarding exit strategies and interest rate hikes for the near future. Today sees the first day of important economic news form the U.S since the G20 summit, which will likely cause volatility for the Dollar and set its course for the week.

Economic News

USD – USD Advance Continues; JPY Still Outpacing Dollar

The USD has continued its advance from last Friday and currently trades near the 1.4620 level against the EUR, and near the 1.5900 mark versus the British Pound. The only currency to gain against the greenback so far has been the Japanese Yen, which saw an 8-month low of 88.22 at the start of this week’s trading. The USD/JPY is currently trading just below the 90.0 price level.

Rising optimism in the American economy was fueled by the recent rise in futures on the stock market, which highlights the growing tendency to buy American in times of crisis. The only currency, as mentioned earlier, which has outpaced the Dollar has been the JPY. Statements made by Japanese Finance Minister Fujii have many traders wondering if Japan will follow through on its promise not to intervene in its currency’s recent appreciation. If it chooses not to, the target for the USD/JPY may be close to 82.00 in the coming weeks, according to a number of analysts.

The most important event to watch today, however, will be the Conference Board’s (CB) release of their Consumer Confidence report at 14:00 GMT. As the trend is currently pointing towards rising optimism in the US, there is the potential for a bearish USD session following such positive news. Risk appetite has been on the flutter, and a boost of this kind, coupled with the confidence in Europe associated with Angela Merkel’s recent victory in Germany, could return investors to the riskier currencies such as the EUR, and even the Pacific and Scandinavian currencies.

EUR – EUR Sliding Against Rising Safe-Havens; Near Parity with GBP

While the electoral victory for Angela Merkel’s Christian Democratic Union party in Germany had the EUR on a short bullish run, the momentum has apparently shifted back in favor of the safer currencies such as the Dollar and Yen. The EUR/USD dropped as low as 1.4563 in yesterday’s early morning hours, before correcting slightly back towards 1.4620. The EUR continues to outpace the Pound, which is getting closer to parity with each passing day.

The currency markets appear to be awaiting the string of important US employment data due this week before jumping into a clear direction. In such times of uncertainty, the traditional safe-havens begin gaining ground, as many traders have witnessed these past few days with the USD and JPY. Risk appetite has started waning as last week’s housing data from the US kicked off a retreat from higher yielding currencies. The slump in commodity prices also put downward pressure on the riskier European currencies.

Today’s data releases are aimed more at the British Pound and US Dollar than anything else, so the EUR will likely take a passenger-side role in today’s market. Traders should not be deceived, however, as no news in such uncertain times can often appear as good news. Current trends for the day do not appear to be threatened by today’s releases, and traders should feel safe to jump into current trends but stay safe by getting out by day’s end. Tomorrow kicks off the hectic forex schedule regarding the first week of a new month’s employment reports from the US.

JPY – Finance Minister Fujii’s Statements Implicate Future Yen Movements

Many traders are anxious to see if Japanese Finance Minister Hirohisa Fujii can follow through on his commitment to keep the Bank of Japan (BOJ) out of any interventionist policies on the recently rising Yen. In official statements, he declared that the recent surge in the island currency is a natural fluctuation of the market, yet made a remark about the one-sided nature of the rise to a smaller, more select audience.

Few can doubt the Yen’s recent rise, hitting such marks as 88.22 against the USD, an 8-month high, and 129.82 versus the EUR, a price not seen since mid-July. But Japan’s economy is heavily dependent on exports, which depend on a weak currency. With Japan being one of the worst-hit economies in the recent recession, a non-interventionist stance on this issue appears contrary to Japan’s needs. However, if Fujii can follow through on his promise, then the Yen may hit as high as 82.00 against the USD, according to some analysts.

Crude Oil – Oil Prices See Minor Upward Correction, but Still Bearish

Many traders were not expecting much pressure to be on Crude Oil prices following the flare-up of 2 oil refineries in California, and the test firing of mid-range missiles in Iran, over the weekend, but the recent upward movement has left few inspired. Many analysts now claim that Crude Oil prices may indeed be in for more slumps as there appears to be little demand in the market to justify prices over $68 a barrel.

With prices hovering just under $67, this week’s prominent employment data from the US – the Non-Farm Payroll report – may carry the biggest impact on oil prices. Last week’s rise in inventories helped lower oil prices in the short-term, but longer-term implications may be carried by the growth, or contraction, of the world’s largest energy consumer. It appears as if USD trends are going to affect Crude prices more this week than the few weeks prior and any indication of a continuation for USD strength may help lower the price of oil towards $60 a barrel in the near future.

Technical News

EUR/USD

The pair appears to be trading within its recent range on the hourly charts; however, a bullish cross is forming on the daily Slow Stochastic as well as the MACD chart. Going long for the day may be a good option.

GBP/USD

The pair is showing several mixed signals. A bearish cross is forming on the hourly, 2 and 4 hour Slow Stochastic as well as a breach of the upper Bollinger Band on the hourly chart. Furthermore, both the hourly and 2 hour RSI are floating in the overbought territory. The 4 hour MACD, however, is showing a fresh bullish cross forming, as well as the daily Slow Stochastic with the daily RSI floating in the oversold area. Going long with tight stops may be a good choice for today.

USD/JPY

The 2 and 4 hour Slow Stochastic shows a fresh bearish cross forming. A bearish cross is also apparent on the 4 hour MACD while the hourly RSI is floating near the overbought territory. Going short for today may be advised.

USD/CHF

The pair is floating in neutral territory on the hourly charts. The daily chart, however, the daily chart is showing a bearish correction on the MACD chart as well as an impending bearish cross on the Slow Stochastic. Going short for today may be advised.

The Wild Card – NZD/JPY

A bearish cross is evident on the hourly, 2 and 4 hour Slow Stochastic charts, with a bearish cross also evident on the 4 hour MACD. Furthermore, the hourly and 2 hour RSI is floating in the overbought territory. Forex traders are advised to go short for today.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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