Month: September 2009

By Fast Brokers – The EUR/USD experienced a heightened selloff Tuesday despite the German Unemployment Change coming in below analyst expectations and the EU Unemployment Rate satisfying estimates at 9.5%.  Instead of holding steady, the EUR/USD plunged below all of our previous uptrend lines on climbing sell-side volume.  The EUR/USD was following crude and the S&P futures lower as global equity markets were under selling pressure.  The mystifying part of yesterday’s selloff in the EUR/USD was the Euro’s relative weakness compared to the Pound.  The EUR/GBP registered a sharp contraction even though Britain’s Manufacturing PMI and Net Lending to Individuals data came in short of analyst expectations.  Hence, one would expect further relative weakness in the Pound when the opposite proved to be true.  What we can take from yesterday’s currency interaction is that investors decide to snap up an oversold Pound and let the Euro ride with U.S. equities.

The EUR/USD is trying to stabilize today despite weak ADP employment data from the U.S.  The EU’s Revised GDP came in line with analyst expectations today, continuing the theme of solid data from the European region.   However, there has clearly been a shift of momentum towards the downside as investors begin to question the strength of the global economy recovery.  Yesterday we saw large sell-side action in both the S&P and crude while the 30 Year T-Bond futures wrestle free of their July highs.  The one odd correlative occurrence today is the large pop in gold.  The precious metal has been positively correlated with the EUR/USD, so gold’s topside momentum is interesting.  Meanwhile, investors should keep a close eye on the S&P’s interaction with its highly psychological level.  If the S&P gives up on 100 and heads towards August lows the EUR/USD will likely follow.  Considering the huge spike in volume yesterday, we believe the S&P could be in the midst of a sizable leg down.  Therefore, it is becoming increasing difficult to be positive on the EUR/USD for the near-term.

We’ve readjusted our trend lines to account for yesterday’s volatility.  The key will be for the EUR/USD to hold out 1st tier uptrend line should it be tested.  If our 1st tier uptrend line doesn’t hold, a retest of August lows and the highly psychological zone is probable.  The 1.40 trading zone would likely prove to be a solid cushion should the EUR/USD decide to extend its pullback.  As for the topside, bulls will look to keep the EUR/USD 1.4200-1.4250 zone to try and create a new base.  The EUR/USD has added topside obstacles including our 1st-3rd downtrend lines.  The EUR/USD may opt to stabilize today considering the ECB will announce its monetary policy decision tomorrow.  Even though the ECB is not expected to any drastic changes in its monetary policy, now would be an opportune time to administer a monetary shock considering the neutral outlook of analysts and the rising uncertainty among investors.  In addition to tomorrow’s ECB decision, the U.S. will release more ISM data and its weekly Unemployment Claims data along with a couple key releases from Britain.  Therefore, the EUR/USD certainly has enough data tomorrow to create a new bottom should the numbers impress.  On the other hand, disappointing data would only add fire to the EUR/USD’s downward momentum.

Present Price: 1.4210

Resistances: 1.4225, 1.4236, 1.4251, 1.4271, 1.4282

Supports: 1.4197, 1.4182, 1.4170, 1.4155, 1.4132

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 CountingPips.com

Our friends over at Elliott Wave International have announced they will keep Bob Prechter’s recent 10-page market letter free until September 9. If you missed earlier announcements, now is the time to download it free.

In this issue, Bob gives a warning he’s never had to include in 30 years of publishing – namely, that the doors to financial safety are closing all over the world. There are but a few opportunities left and little time to take them. Even as this happens, the terrible irony is that so many people believe the conventional wisdom, which claims “the worst is over.”

Act now before this 10-page issue returns to full retail price.

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About the Publisher, Elliott Wave International

Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private

Source: ForexYard

The greenback firmed on Tuesday as share prices fell, prompting investors to shed perceived riskier currencies. Despite better than expected numbers from the Institute for Supply Management, shares on Wall Street showed only muted enthusiasm to the data and quickly lost ground, lifting the U.S dollar, which has tended to be used as a safe haven against losses in equities. Ahead of the U.S. jobs data later today, traders said players were anxious about any negative surprises. As the market has become less sensitive to positive surprises from the U.S economic data, the effect of any weak figures would be bigger than the effect of any positive numbers.

Economic News

USD – Dollar Rises on Optimistic Manufacturing Data

The U.S dollar rose against most of its major currency pairs yesterday as sharp losses in global stock markets offset stronger-than-expected U.S. manufacturing data and boosted the greenback’s safe-haven appeal. As a result, the USD finished yesterday trading session 150 pips higher against the EUR at the1.4216 level. The greenback also saw bullishness against the GBP and closed at 1.6155.

The main factors effecting Dollar volatility yesterday were the releases of optimistic U.S manufacturing data and Pending Home Sales figures. The U.S. manufacturing sector expanded in August for the first time in 19 months, while home sales contract hit a two-year high in July, helping lead the economy out of the worst recession and thus boosted the demand for the Dollar. Factories and builders, which have accounted for half of all the jobs lost since the recession began in December 2007, may keep growing in coming months as sales rise.

Traders will be keeping a close eye on U.S. Non-Farm Employment Change data due at 12:15 GMT, which is expected to decrease to -250K from -371k. Special attention should also be given to the Crude Oil inventory which is expected to decrease from previous reading. Investors pay close attention to this figure as it has a strong correlation with the value of the U.S. Dollar.

EUR – EUR Erases Gains After High Jobless Figures

The EUR was little changed, erasing earlier gains, after figures showing Europe’s manufacturing industry continued to contract in August stoked investor concern that the global recession has further to run. The EUR fell against the USD, pushing the oft-traded currency pair to 1.4220. Despite positive data on Tuesday that showed Euro-Zone purchasing managers’ index (PMI) rise and German unemployment unexpectedly fell in August, the EUR failed to make headway on the data as falls in equities weighed.

The Sterling erased its early gains against the U.S dollar and the EUR after an unexpected dip in UK manufacturing activity in August, stoking concerns about the pace of recovery in the British economy. The GBP was down 0.8% at $1.6152 and was little changed against the EUR at 88.04 pence.

Looking ahead to today, the most important economic indicator scheduled to be released from the Euro-Zone is the Revised GDP at 9:00 GMT. Analysts are forecasting this figure to be unchanged from its previous reading. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the EUR in the short-term. Traders are also advised to follow the Construction PMI figures coming out of Britain at 8:30 GMT, and the ADP Non-Farm Employment Change figures coming out of the U.S. at 12:15 GMT as these results may set the EUR’s main currency crosses going into today’s trading.

JPY – The Yen Spikes to a 7 Week High

The JPY experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The Japanese yen traded near a 7 week high against the Dollar amid speculation asset prices are overblown, boosting demand for the relative safety of the Japanese currency.

The Yen was close to its strongest level versus the U.S dollar in more than a month after Asian shares slumped and CIT Group Inc. deferred interest payments on subordinated bonds. The Yen tends to gain in times of financial turmoil as Japan’s trade surplus reduces reliance on foreign capital, while the Dollar benefits from its status as the world’s main reserve currency.

Traders expect the Yen to continue benefiting for the rest of the week amid growing concern that any more pullback in equities could be a further drag on a global economic recovery.

Crude Oil – Crude Declines 3% As Stocks Drop and USD Strengthens

Crude Oil experienced another day of depreciation as prices fell nearly 3% to $68.04 in this morning’s early trading session. Oil prices traded down for the second straight day yesterday as economic concerns sent investors into safer havens, outweighing positive U.S. manufacturing and home sales data. The declines came after U.S. stocks dropped as renewed worries about the health of the U.S. financial sector shook investor confidence.

As for today, the Crude Oil inventories figures will be released. Expectations show a drop to -0.8M from last week’s of 0.2MM. Traders can, and should, expect wide market volatility around the 14:00 GMT release of these inventories figures because of Crude Oil’s recent importance to today’s market.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-bought territory on the daily chart’s RSI indicating downward correction may be imminent. The downward direction on the hourly chart’s Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

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

USD/JPY

The bullish trend is loosing its steam and the pair seems to consolidate around the 92.80 level. The 4 hour chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/CHF

The pair has experienced much volatility recently, as it currently trades around the 1.0668 level. The weekly chart’s Stochastic Slow signals that the pair will drop in the short-term. However, this is contradicted by the daily chart’s RSI and MACD. Entering this pair when the signals are clearer may turn out to be a wise choice in today’s trading.

The Wild Card – Oil

Crude Oil prices are once again dropping, and it is currently traded around $68.60 a barrel. And now, the 4 hour chart’s Slow Stochastic is giving bullish signals, indicating that Oil 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 CountingPips.com

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity increased in August for the first time in nineteen months. August’s ISM Report On Business index readings for economic activity registered a 52.9

percent score following July’s 48.9 percent level and marked the first time since June 2007 the score has surpassed a 50 percent reading. A score above 50 percent is considered to be economic growth and less than 50 percent is considered to be a contraction. The August score was better than economic forecasts which were expecting the ISM index reading to register 50.5 percent for the month.

Norbert J. Ore, chair of the ISM Business Survey Committee, commented on the report saying, “The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July. While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth.”

Pending Homes Sales in US increase.

U.S. Pending Homes sales rose for the sixth straight month in July according to the monthly report produced by the National Association of Realtors. The NAR report showed that pending home sales contracts signed by buyers increased 3.2 percent in July following a 3.6 percent increase in June. July marked the first time since the beginning of the NAR index in 2001 that pending home sales have increased for six consecutive months. On an annual basis, the pending home sales level has increased to 12.9 percent above the July 2008 level.

Market forecasters had predicted the sales data would show an increase of approximately 1.5 percent for the month.

NAR chief economist Lawrence Yun commented in the report about the increased sales figures this month, “The recovery is broad-based across many parts of the country.  Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit.”

Contributing to the sales rise for June was a 12.1 percent monthly gain in the West while sales of new homes in the South advanced by 3.1 percent. Pending home sales fell by 3.0 percent in the Northeast and by 2.0 percent in the Midwest.

US Dollar gains in Forex Trading today.

The U.S. dollar has traded sharply higher in forex trading today against the major currencies after mostly losing ground in yesterday’s trading. The dollar has gained ground versus the euro, British pound, Canadian dollar, Swiss franc, Australian dollar and the New Zealand dollar while the dollar has edged lower versus the Japanese yen according to currency data from Oanda at 2:07pm EDT in the US trading session.

EUR/USD Chart – The Euro falling sharply today versus the US Dollar and threatening to fall below the 1.4200 level (hourly chart). The EUR/USD has fallen approximately 150 pips today after gaining in yesterday’s trade.

Source: ForexYard

There were more signs that the U.S. economy was improving, as a string of positive data was released yesterday from the U.S. the most significant was the Chicago PMI, which printed higher-than- expected figures in the month of August. This indicator is a primary gauge of manufacturing sector, acting as the main driver of the U.S. economy. On top of this good news, a rise in demand for U.S. goods from abroad is also likely to help boost the U.S. economy in the coming months.

Economic News

USD – Chicago PMI Data Pushes the USD Lower

Evidence is increasing that the worst of the global recession is passed. Business activity in the U.S., the world’s biggest economy, rose more than economists forecast in August, the Institute for Supply Management-Chicago Inc. said Monday. The Chicago PMI report is further indication that the U.S. economy is starting to improve; the data eased risk aversion among investors analysts said, with positive data negative for the Dollar and Yen.

The USD fell against a basket of currencies due to the decline in U.S. equities, as fears that the recent rally has overheated. This decline was led by the 7% fall in China’s stock market index. As a result, the Dollar was hurt as traders fled to currencies such as the GBP and EUR. The greenback fell by about 50 pips to the 1.4336 level vs. the European currency. Against the British Pound, the Dollar slid by over 50 pips to 1.6283. The USD did make some gains, as the USD/JPY cross rose by 30 pips to the 92.95 level. Note, this is the first time in 3 days that the USD closed higher against the JPY.

Looking ahead to today, there is some pivotal news that is set to be released from the U.S. economy. The ISM Manufacturing PMI and Pending Homes Sales figures are set to be published simultaneously at 14:00 GMT. These results are even more important than usual due to the recent turmoil in equity markets and commodity markets, therefore all eyes are on the Dollar as the U.S. economic situation is set to improve further. It is advised that traders open their USD positions now, as this trading day is set to become very volatile in the coming hours. Furthermore, today’s results are set to drive the forex market for the rest of this week.

EUR – EUR Rises as Inflation Eyes Positive Territory

The EUR’s experience with negative inflation may be coming to an end very soon, as yesterday’s figures showed a smaller-than-forecast yearly fall in prices in the Euro-Zone in August. The CPI Flash Estimate showed that prices were only -0.2% lower than August 2008. However, in July the figure was -0.7%. The deflation in the Euro-Zone has been owed to a drop in consumer goods prices, especially the price of Oil. Monday’s figures indicate that inflation may be positive again by the end of this month.

The European currency rose against most of its major currency crosses in yesterday’s trading. Starting with the GBP, it rose only 5 pips to the 0.8802 level. This comes as the pair has started to see more bearishness recently. Yesterday’s behavior within the pair may be largely owed to the lack of volume in some GBP pair, due to the bank holiday in Britain. With regards to the EUR/USD pair, the European currency rose 50 pips to the 1.4336 level. The GBP/JPY cross jumped by 100 pips to the 151.50 level.

Today, the news coming from the Euro-Zone is also set to be a driving force in helping determine the EUR’s main crosses, as mid-week trading approaches. There is the German Retail Sales at 06:00 GMT and the Unemployment Rate at 09:00 GMT. Data form Britain is also set to help determine the strength of both the EUR and GBP today, such as the Mortgage Approvals and Manufacturing PMI figures. So if you want to make some high returns today, open large positions in EUR and GBP as soon as possible.

JPY – Yen Falls on All Fronts

The Yen slipped on Monday, as a slump in global equities led by the U.S. and China reignited fears about Japan’s fragile economy. It seems the recent lift from the landslide election victory of the Democratic Party in Japan’s election (DPJ) failed to help the Japanese currency yesterday. The Japanese currency fell against the USD by 30 pips. It also fell vs. the GBP and EUR.

It seems in the longer term, however, the important election of the DPJ may help the JPY if it sticks with its election promise to increase consumer spending, which in turn will push Japan back to positive inflation. Additionally, the Yen could also gain if the DPJ sticks to its other pre-election promises, such as reversing the current purchasing of U.S. Dollar based debt.

OIL – Oil Plummets Amid Global Equity Slump

Crude Oil prices plummeted by nearly $3 to $69.86, which is the biggest drop in 2 weeks. This comes about as a 7% dive in china’s main stock index led to a bearish global equity market yesterday. This was initially sparked by concerns about a slowdown in lending that is likely to negatively impact the global economic recovery in China, which is the second largest energy consumer.

Crude’s dive was also owed to fears that Japan’s economy is destabilizing, as housing and other important data showed that Japan’s economy is still very volatile. Therefore, this is important as Japan is the world’s second largest Crude Oil consumer. Traders are advised to follow the next OPEC meeting on September 9th, which will be crucial in determining future Crude prices.

Technical News

EUR/USD

The price appears to be floating in the over-bought territory on the daily chart’s RSI, indicating a downward correction may occur later today. However, the hourly chart’s Slow Stochastic indicates a recent bullish cross, signaling a possible continuation of the upward movement. In the short-term traders however may expect a downward correction, but longer-term traders may want to maintain their long positions today.

GBP/USD

Most oscillators display this pair floating in neutral territory at the moment, indicating a lack of direction. The hourly chart’s Slow Stochastic indicates that the price may hit a bullish cross in the near future, but the weekly chart’s Momentum oscillator is still showing steep downward pressure. Waiting for a clearer signal might be the right strategy today.

USD/JPY

It appears that little by little that pair has lost strength over the past few days, as it is now testing the 92.80 level. A bearish cross on the hourly chart’s Slow Stochastic implies that the down trend could even deepen today. Going short with tight stops could be a good strategy today.

USD/CHF

The sharp bearish move that took place during the past couple of days seems to have more steam in it. The RSI on the hourly charts is crossed above the 40 line, suggesting that the pair may fall further. The bearish move on the daily’s Slow Stochastic also supports this notion. Next target could be 1.0490.

The Wild Card – AUD/USD

It appears a bearish cross has recently formed on the 4-hour chart’s Slow Stochastic, indicating that this pair’s recent downward correction may still have some steam. Now would be a great time for forex traders to join this recent run and capture the remaining profits before the rising trend continues.

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.