Month: July 2010

Source: ForexYard

The U.S. Core CPI is the primary publication today that is set to determine the level of the dollar when the report is released at 12:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the dollar and euro is the publication of the U.S. TIC Long Term Purchases and Prelim Consumer Sentiment at 13:00 GMT and 13:55 GMT respectively. Traders may find good opportunities to enter the market following these vital announcements.

Economic News

USD – USD Falls on Negative Economic Data

The dollar fell broadly against most of its major currency pairs on Thursday, as soft inflation and manufacturing data added to concerns about the strength of the U.S. economy. By yesterday’s close, the dollar fell around 1.5% against the EUR to 1.2940, a 2-month low. The dollar experienced similar behavior against the GBP and closed at 1.5455.

U.S. producer prices declined for a third straight month. The data came just a day after minutes of the Federal Reserve’s latest meeting revealed that policy makers think they may need to do more to boost the economy if a sputtering recovery slows any further. The news helped push the EUR to its highest against the dollar since May.

Another leading indicator released yesterday was U.S. Unemployment Claims. This number handedly beat last week’s result but failed to provide strength to the dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

As for today, data releases are expected from the U.S. economy. These figures are expected to set the tone for the USD’s pairs and crosses. Special attention should be given to the Core CPI which is expected to be unchanged from its previous reading. Traders pay close attention to this figure as it has a strong correlation with the value of the U.S. dollar. Also today, the Prelim UoM Consumer Sentiment is scheduled and should also have an impact on the market because if it delivers unfavorable figures it will validate a problematic U.S. economy, and the USD is likely to weaken as a result.

EUR – EUR/USD Hits 2-Month High

The EUR strengthened against most of its major counterparts yesterday, continuing to prove for the time being that this is a solid currency that traders can rely on to provide them with steady profits. The 16 nation currency extended gains versus the USD on Thursday, nearing 1.2940 for the first time in 2 months after the Philadelphia Federal Reserve’s business conditions index fell sharply in July. The EUR experienced similar behavior against the JPY and closed up at 113.10.

Weakness in the Philadelphia’s Fed’s mid-Atlatnic district added to concern about the U.S. economy, which has been heightened in recent days by a clutch of disappointing inflation, manufacturing and retail sales data.

The single currency, which slid below $1.19 in June on euro-zone debt trouble, has since risen by more than 8% after smooth government debt auctions in Greece, Portugal and Spain eased concerns.

JPY – Yen Experiences Mixed Results against Major Currencies

The yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the CHF yesterday and closed its trading session around the 83.85 level. The JPY also saw bullishness against the USD and closed at 87.50.

The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today, especially the U.S Core CPI at 12:30 GMT. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

OIL – Oil Prices Fall Based on Weak U.S. Data

Oil fell below $77 a barrel on Thursday after disappointing U.S. economic data curbed expectations for future demand growth. Oil prices fell as low as $75.80 before it rebounded again and closed at $77.35

Oil has traded between $70 and $80 this month as investors ponder how much a pullback of government stimulus spending could undermine global economic growth and crude demand in the second half.

However, Crude oil prices were supported by the weekly inventories report from the Energy Department’s Energy Information Administration on Wednesday, which showed crude supplies shrank more than analysts had forecasted, a sign demand may be improving.

Technical News

EUR/USD

Bullishness in the pair continues as the price breached and closed above the upper channel line that the pair has been trading in since early June. The close was also above the 100-day simple moving average line. The 10-day RSI is sloping sharply higher, indicating that the momentum is to the upside. Near term resistance for the pair rests just below 1.3100.

GBP/USD

The pound was a strong mover in yesterday’s trading as the cable closed above the 23.6% Fibonacci retracement level for the long term downward trend, as well as a close above the long term downward sloping trend line that began in July of 2008. Traders should be long on the pair with a minimum target at the resistance level of 1.5520.

USD/JPY

A significant drop in the value of the pair was registered yesterday as the pair fell as low as the support level at 87, the year to date low. The downward momentum looks to continue as an absence of technical resistance on the charts could move the pair as low as 84.80, the November 2009 low.

USD/CHF

Yesterday the pair breached below the near term resistance levels of 1.0480 and 1.0430, ending the short term consolidation that the pair had experienced. The next target for the pair will be the 74.6% Fibonacci retracement level from the previous bullish trend at a price of 1.0350.

The Wild Card

Oil

The daily chart shows two candlestick patterns that hint to a slowdown of the recent bullishness of spot crude oil. Wednesday’s trading ended slightly higher but formed a doji candlestick, signaling potential short term weakness. Yesterday’s trading was more volatile with the pair falling as low as the support level of 75.80 and rising as high as 78.06, forming a long legged doji candlestick. This shows indecisiveness on the part of traders and signals wavering support for the bullish move. CFD traders may want to tighten their stops on any long positions they may have in spot crude oil.

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 eToro – The Euro soared as dollar sentiment declined and investors jumped into the Euro.  The Euro broke through resistance levels and is closing in on the 1.30 resistance mark. Click here to read the full daily Review

Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

USDJPY broke below 88.00 key support, suggesting that a cycle top has been formed at 89.15 level on 4-hour chart. Now the fall from 89.15 is treated as resumption of downtrend from 92.88 (Jun 4 high). Deeper decline is still possible later today and next target would be at 86.00 area. Key resistance is now at 88.00, only rise above this level could indicate that lengthier consolidation of downtrend is underway, then range trading between 86.96 and 89.15 could be seen.

Daily Forex Forecast

By Adam Hewison – The sharp upward rally in the S&P 500 surprised many people,
myself included. However, the rally did not change the “Death
Cross” which we pointed out as being a negative and significant
market event that does not occur very often.

This market’s rally also did not change our weekly and monthly
“Trade Triangles” which are still red and indicating that the
trend is headed lower.

In this short two minute video, I show you some other aspects of
the S&P 500 that I think you should be watching.

As always our videos are free to watch and there are no registration
requirements.

I would love to hear your comments about this or any of
our other market videos.

Watch the New Video Now…

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

By CountingPips.com

The US dollar has been trading lower versus the other major currencies today in forex trading while US stocks have tumbled after a number of US economic news releases. The dollar has been on the downside today against the euro, British pound sterling, Japanese yen, Australian dollar, New Zealand dollar and the Swiss franc while gaining ground versus the Canadian dollar.

The European common currency reached its highest trading level in two months against the dollar today as the euro/dollar pair ascended above the 1.2900 level the first time since May 10th when the pair was on its way down to a four-year low in early June. The EUR/USD has been a remarkable bull run since the June 7th lowpoint and has gained by approximately 1000 pips from that point.

Meanwhile, the US stock markets have been weaker today with the Dow Jones industrial average falling by over 50 points at time of writing. The NASDAQ is also lower by almost 15 points and the S&P 500 has decreased by almost 8 points. Gold has risen today by approximately $2.80 to level at $1209.60 while oil has edged lower by $0.82 to trade at the $76.22 threshold.

Manufacturing activity falls, Jobless Claims decrease

Economic news releases out today showed that manufacturing activity fell by more than expected in the Empire State manufacturing survey and the Philly Fed survey. The Empire State Manufacturing Survey showed that the general business index in New York dropped to a 5.08 score in July from a 19.57 score in June and much lower than the 18.00 forecasted score. The lower score still showed manufacturing growth for the month but at a slower pace.

The business outlook from the Philadelphia Federal Reserve released today also showed that manufacturing activity slowed in July. The Philly Fed index of current activity fell from a score of 8 in June to a score of 5.1 in July to mark a second consecutive monthly decline. This was worse than the economic expectations of a increase to a 10.0 score.

Weekly jobless claims fell in the week that ended on July 10th, according to data from the Department of Labor. Initial jobless claims declined by 29,000 workers to a total of 429,000 while the four-week moving average dipped by 11,750 workers from the previous week. Workers seeking continuing unemployment insurance increased for the week ending on July 3rd by 247,000 workers from the previous week while the four-week moving average of continuing claims bumped up by 22,000 workers.

Also released in a separate report today by the Department of labor was the producer price inflation report that showed producer prices fell for the third straight month in June. The producer price index declined by 0.5 percent in June following a decline of 0.3 percent in May and a 0.1 percent decrease in April. The largest contributor to the decline was a 2.2 percent shortfall in prices for consumer foods while prices for finished energy goods decreased by 0.5 percent for the month. Economic forecasts were expecting a 0.1 percent decrease.

Core producer prices, excluding food and energy, edged up by 0.1 percent in June following a 0.2 percent increase in May. The core increase matched economic forecasts.

By CountingPips.com

A Chinese government release today showed that China’s gross domestic product grew at a slower pace than expected in the second quarter of 2010. The Chinese economy grew by 10.3% on an annual basis in the April to June quarter following an 11.9% annual advance in the first quarter. This was slightly lower than the economic forecasts that were expecting an approximate 10.5% year-over-year rise in China’s GDP.

The second quarter GDP rise brought the size of China’s economy to US$2.553 trillion or 17.284 trillion Chinese yuan.

Also reported today by the National Bureau of Statistics of China showed that Chinese consumer inflation slowed down a bit in June. The consumer price index increased by 2.9% in June following a 3.1% increase in May and came in below market forecasts that were expecting inflation to increase to 3.3% per month.

Meanwhile, Chinese producer price inflation increased by 6.4% on an annual basis through June following a gain of 7.1% in May. This release was below market forecasts expecting a 6.8% increase.

By Adam Hewison – Here’s an ETF that you may want to take a look at…

I just finished a new short video on an ETF that’s looking very interesting.
The video runs a little over two minutes and gets right to the meat and potatoes
of this market.

This particular ETF is leveraged and trades almost 2,000,000 shares a day, so
it is nice and liquid. What makes this ETF so interesting, is that it plays such a big
part on the financial world stage.

As always our videos are free to watch and there are no registration requirements.

Watch the ETF Video Now…

All the best,
Adam Hewison
President of INO.com

Good day forex peeps! Here’s my ‘weekly’ update on the USDCHF pair. As you can see from the chart, the pair has returned back in the area of the inverted head and shoulders after it broke out and reached a high of 1.1731 last June 1. It then suffered 5 straight weeks of heavy declines after reaching the mentioned high (click here to see my previous post). At present, the pair is hanging on the 1.0500 support. Should this support gives way, the pair could race towards its previous low just below 1.0200. The swissy could even be on parity again with the greenback if the pair breaks below 1.0200. A couple of indicators, though, indicate that it could head higher. During the past two weeks, the pair has drawn a bullish hammer and a doji, both of which suggest a possible reversal to the upside. The presence of a bullish divergence, where the price goes higher and the stochastics go lower, also suggest a likely move north. But if the pair indeed rebounds, it could still meet some resistance at the neckline of the former inverted head and shoulder. A break above this could send it back to its 1.1731 high.

On the fundamental front, despite the recent favor for the greenback due to the markets’ present bullish outlook and the US’s firms’ expected stellar earnings reports, the Swissy could still lose some support if the Swiss National Bank (SNB) decides to interfere in the forex market to weaken the CHF. The SNB, for those who does not know, is very notorious in doing so. In fact, interfering in the markets is one of its major tools in keeping the Swiss economy in check. The SNB favors a weak currency because Switzerland is highly dependent on exports. A strong currency, therefore, could dampen the country’s exports market. In the bank’s last statement, it mentioned that the strength of the CHF has not affected the economy in a negative sense. but that was then. After the USDCHF pair marked a 1.1731 high, the Swissy has rebounded strongly by about 1,200 pips. Therefore, there’s always an outside chance that the bank could sooner or later purposely weaken its currency. If it does not, then the CHF could continue its upside ride as the global market rebounds.

More on LaidTrades.com …

By ForexYard – The Australian dollar (AUD) erased the 0.5% point loss against the US dollar that it had made after an official Chinese paper reported the economy may slow more sharply than expected in the second half of this year.

The Japanese yen, on the other hand, rose slightly against the US dollar and euro in Asia today as weaker-than-expected Chinese economic data added to uncertainty over the global economic outlook, prompting some investors to buy the JPY. Sliding regional stock markets also supported the yen by fanning concerns over global growth. Some traders said the Japanese currency could gain more ground if stock prices fall worldwide.

China’s economic growth slowed to 10.3 percent in the second quarter from 11.9 percent in the first quarter in response to the fading of government fiscal and monetary stimulus as well as a high base of comparison a year earlier. With Chinese data now out of the way, the market’s focus is likely to shift back to the strength of US economy, traders are now saying.

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.

Market Analysis by Finexo.com

The Dollar continues to remain under extensive selling pressure as it is becoming increasingly apparent that the U.S economic recovery may be slowing down.  Yesterday’s FOMC Minutes revealed that Fed officials had lowered their outlook for the economy for the first time since last April, projecting that GDP would expand by 3-3.5%, while stating that the risks to recovery have increased. Moreover, fuelling concerns that the U.S economic recovery may be stalling and adding to negative Dollar sentiments, retail sales showed a drop of 0.5% in June.  According to the Commerce department, weak receipts at automotive dealers and gasoline stations pulled sales down for the second straight month following seven consecutive increases.

EUR/USD

The Euro continues to hover around to a 2-month high of $1.2788, and has produced a solid support just under $1.2700, which if holds could lead to further gains.  Up ahead, traders will want to watch today’s U.S Jobless Claims figure, which if better than expected could relieve some Dollar concerns and push the EUR/USD down. However, if results are better than expected and the EUR/USD successfully holds on to its recent gains it could signal a strong buying support for the pair.
Support/Resistance 1.2685/1.2776

GBP/USD

The British Pound touched on a 10-week high versus the Dollar yesterday as stronger than expected UK employment data fueled speculation that the Bank of England may soon need to raise interest rates.  Yesterday’s Claimant Count Change showed that the number of jobless benefits dropped to 20.8K, its lowest level in a year (versus an expected 20.1K and a prior reading of 31.1K). The Unemployment rate for the past three months slipped to 9.7% from 9.8% last month. Following the unemployment data the Sterling appreciated by 0.2% against the Dollar and traded at $1.5254.

Following this stronger than expected unemployment figures, it seemed as if the GBPUSD would pull off one of its trademark 100+ pip breakouts. However, while the Sterling appreciated by 0.2% to rise to $1.5254, it was unable to break the 1.5300 barrier. The pair has since become range bound between 1.5200 and 1.5300. Nevertheless, with current Dollar sentiments remaining negative, a move above 1.5300 seems more likely than a drop below 1.5200.
Support/Resistance 1.5200/1.5290

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.