Month: July 2010

Source: ForexYard

Both the euro and British pound fell against the safe haven currencies yesterday, following a speech from FED Chairman Bernanke which caste doubt over the pace of the global economic recovery. While the euro has traded steadily against the U.S. dollar in overnight trading, it continues to fall against the yen.

Economic News

USD – USD Sees Moderate Gains Following Return to Risk Aversion

The U.S. dollar broke the bearish trend it had been experiencing since early last month yesterday, following a speech by the Fed Chairman which led to gains for safe haven assets. The speech from Chairman Bernanke was unlike his more recent statements, in that it did not paint a solid picture of the global economic recovery. Following the speech, investors dumped riskier currencies in favor of the greenback.

Both the euro and British pound tumbled versus the dollar. EUR/USD has dropped over 100 pips over the last 24 hours, and currently stands at the 1.2768 mark. GBP/USD dropped close to 200 pips over the course of yesterday’s trading session, before staging a slight comeback. At the moment, the pair is trading around the 1.5180 level.

While risk aversion appears to be the predominant market sentiment at the moment, investors will be cautiously awaiting several U.S. economic indicators set to be released today. At 12:30 GMT, the weekly U.S. unemployment figures are set to be released. With analysts predicting a slight increase in unemployment over last week, investors may continue to buy up safe haven assets in the afternoon, thereby boosting the dollar.

In addition, traders will also want to pay attention to the existing home sales report set to be released at 14:00 GMT. A decrease in home sales from last month is predicted, which if true will likely lead to further risk aversion. That being said, any unexpected increase in the home sales figure may lead to gains for the euro against the greenback.

EUR – Euro Breaks its Bullish Streak. Falls Against Yen

After a more than two month bullish streak, the euro saw serious losses against the safe haven currencies throughout the day yesterday. In addition to the 100 pip loss against the U.S. dollar, the euro also fell versus the yen. EUR/JPY has fallen over 200 pips in the last 24 hours. Analysts attribute the drop to a speech yesterday from the Fed Chairman, in which he made statements that created doubt in the pace of the global economic recovery.

Today, the euro may be able to recover some of its losses depending on the results of the French and German manufacturing data, set to be released at 07:00 GMT and 07:30 GMT, respectively. Analysts are forecasting both figures to show expansion in the manufacturing sectors of France and Germany. If the predictions turn out to be true, investors may be enticed to buy up some of the riskier currencies like the euro in morning trading. At the same time, U.S. data set to be released later in the day, are expected to show further declines in the American economy. If true, the euro may see some more losses against the dollar and yen.

JPY – Yen Soars Against Majors as Risk Aversion Returns

Following yesterday’s gains, the yen continued its bullish trend against the majors in overnight trading. Since 20:00 GMT last night, GBP/JPY has tumbled around 85 pips to its current level of 131.33. Meanwhile, it appears that the JPY has fully confirmed its status as the premier safe-haven currency by making substantial gains against the U.S. dollar. The dollar dropped some 60 pips during overnight trading against the yen. Currently USD/JPY is trading around the 86.50 level.

Today, a lack of Japanese news events means that yen values will likely be determined by U.S. economic indicators. Traders will want to pay attention to the U.S. Fed Chairman’s testimony at 13:30 GMT and the Existing Home Sales Report at 14:00 GMT. Should either of these events lead to further uncertainty in the pace of the global economic recovery, the yen will likely continue its bullish trend as a result.

OIL – Oil Prices Tumble Following Surprise Increase in Reserves

Investors were surprised to learn of an increase in U.S. crude oil supplies yesterday. The news indicated that oil demand in the world’s largest energy consuming country was less than originally thought, causing oil prices to tumble. Since yesterday afternoon, the price of crude oil went from 78.60, to its current level of 76.40.

Analysts are predicting a further drop in prices today, assuming the U.S. unemployment data and existing home sales figure come in as forecasted. Both news events are expected to illustrate the slow pace of the U.S. economic recovery. Typically, during times of economic uncertainty, oil prices tend to fall. At the same time, should any of the American data come in better than expected, the price of crude may rise as a result.

Technical News

EUR/USD

The pair slipped yesterday to the minor support level near 1.2770 following the bearish engulfing candlestick pattern on the daily chart. Despite the change of the trend to the upside, current momentum is lessening, shown by the falling Momentum (14) indictor and a Slow Stochastic that is also heading lower. The next support for the pair rests at the 1.2670 level.

GBP/USD

Yesterday’s price action presents two key points on the daily chart. The price of the cable rose as high as the lower channel line which was previously broken and is now being used as a resistance barrier. Despite the sharp drop in value of the pair, the price managed to close above the 20-day simple moving average (SMA). Traders can use the SMA as a support level and as a basis for an entry long on the pair with a target at the 1.5300 level.

USD/JPY

The Relative Strength Index on the 4-hour chart shows an acceleration of the downtrend for the pair and could lead to a further drop in the price. The pair is currently testing the support level at 86.25. A breach below this level could take the pair to the 84.80 level as the daily chart shows a lack of technical support between the two levels.

USD/CHF

Tuesday’s trading ended slightly lower for the day but formed a hanging man candlestick pattern, signaling an end to the upward movement in the pair. Yesterday’s bearish move in the pair confirms the correction has run its course and the pair looks to head lower to its next support at 1.0400.

The Wild Card

Oil

Yesterday’s sharp drop in price may have made for a good entry opportunity to go long on spot crude oil. The price closed at $76.35, near the 38.2% Fibonacci retracement level from the previous bearish trend. A breach back above this price could give CFD traders an opportunity to enter long with a target at the resistance level of $78.10.

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 – Trepidation related to the stress test announcement lead the Euro lower against the dollar.  The Euro has moved to support and should grind higher. 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.

USDCAD is forming a triangle pattern on daily chart. Resistance is at the upper boundary of the pattern, now at 1.0605, a clear break above this level will indicate that the uptrend form 0.9930 has resumed, then another rise towards 1.0852 (May 25 high) could be seen. Support is located at the lower boundary of the pattern, now at 1.0321, a clear below this level could bring price towards 1.0000 area.

Daily Forex Forecast

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2750 level and was capped around the $1.2910 level.  The common currency came off after Federal Reserve Chairman Bernanke reported the economic outlook remains “unusually uncertain” in Senate testimony and reiterated the Fed’s plan to keep interest rates at very low levels for an “extended period.”  Bernanke also noted the Fed is “prepared to take further policy actions as needed” to support the U.S. economic recovery but stopped short of noting what those actions may include.  Bernanke drove home the point that the U.S. economy is likely to avert a double-dip recession but made it clear the Fed continues to view economic output as “fragile.”  Some traders believe the Fed might reopen some of its emergency lending and stimulus programs if the economic situation worsens and economic growth is jeopardized.  U.S. equities were higher before Bernanke spoke but lost momentum and sank given the uncertain outlook on the economy.  Data released in the U.S. today saw MBA mortgage applications move higher by +7.6% in the latest week.  Last week, the Fed released updated economic projections that evidenced forecasts for low growth, high unemployment, and muted inflation.  Bernanke also provided support for the new financial regulatory legislation that President Obama signed into law today.  In eurozone news, there were no major data released today.  The big day for markets is Friday when the results from stress tests on up to 91 eurozone banks will be released.  It has already been reported in the media that some banks have failed their stress tests.  PMI data will be released in the eurozone tomorrow.  Euro offers are cited around the US$ 1.2830 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥86.85 level and was capped around the ¥87.50 level.  The pair continues to inch lower to levels where some traders believe the government may intervene, specifically around an ¥85 handle.  An anonymous Bank of Japan source this week suggested the central bank may intervene around the ¥85 level if the pair depreciates to that area and continues to trade there.  Japanese monetary authorities have not officially intervened for years but they will clearly not want the pair to risk a move below the ¥80 figure.   The pair briefly traded below this level in 1995 before a massive dollar-buying intervention was implemented to boost the greenback.  Data to be released in Japan overnight include all industry activity.  The Nikkei 225 stock index lost 0.23% to close at ¥9,278.83.  U.S. dollar bids are cited around the ¥86.29 level.   The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥110.80 level and was capped around the ¥112.805 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥131.70 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.50 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.7767 in the over-the-counter market, down from CNY 6.7783.  Prime Minister Wen this week warned the Chinese property market may be in for difficult times.  The Chinese government now accounts for about one-third of global economic growth and economists fear a crash in the housing sector there may result in significant problems for global output.

£

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5155 level and was capped around the US$ 1.5335 level.  Sterling tracked the euro lower following Bernanke’s speech but the big news in the U.K. today was the release of the minutes from the July Bank of England Monetary Policy Committee meeting in which policymakers voted 7-to-1 to keep the Bank rate unchanged at 0.5%.  The minutes read “On balance, most members thought that it was appropriate to leave the stance of monetary policy unchanged. The committee considered arguments in favour of a modest easing in the stance of monetary policy. The softening in the medium-term outlook for GDP growth over recent months would put further downwards pressure on inflation, once the impact of temporary factors had waned.” MPC member Sentance voted again to raise interest rates.  There is talk of a possible three-way split on the MPC this year if one or more policymakers voted to expand policy accommodation.  Some believe the MPC may resort to increasing its asset purchase program. Cable bids are cited around the US$ 1.5140 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the £0.8505 level and was supported around the £0.8425 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

The US dollar has traded higher today in the forex markets against the other major currencies while the US stock markets declined following the US Federal Reserve Chairman’s semiannual testimony in front of Congress. The dollar has advanced higher versus the euro for a second straight day while also gaining against the British pound sterling, Australian dollar, New Zealand dollar and the Canadian dollar. The American currency has lost ground to the Japanese yen while trading virtually unchanged against the Swiss franc.

The largest economic event of the day was Fed Chairman Ben Bernanke’s testimony at Congress in which the chairman conveyed a cautious tone on the economy. Bernanke said that the US economy is expanding at a “moderate pace” with rising demand from households and businesses but stated that current high unemployment will be a drag on the economy. Bernanke expects it will take “a significant amount of time” to bring back jobs to the majority of unemployed and that the unemployment rate will likely still be above 7 percent by the end of 2012.

Looking forward, the Fed expects real GDP growth of 3.0 to 3.5 percent for 2010 with expectations of GDP growth increasing to 3.5 to 4.5 percent in both 2011 and 2012. As for possible continued quantitative easing programs from the Fed, Bernanke kept the options open saying “we remain prepared to take further policy actions as needed to foster a return to full utilization” while also reiterating the pledge to keep interest rates low for “an extended period”.

The US stock markets started trending down during the testimony and closed lower on the day. The Dow Jones industrial average fell by 109.43 points or 1.07 percent to level at 10,120.53 while the NASDAQ declined by 35.16 points to level at 2187.33. The S&P 500 decreased by 13.89 points or 1.28 percent and now stands at 1069.59.

In commodities trade, both oil and gold have been relatively unchanged on the day as oil stands at $77.44 per barrel and gold trades at $1191.60 per ounce.

Tomorrow provides a full economic calendar for the markets to digest with releases that include New Zealand consumer confidence, United Kingdom retail sales, Canadian retail sales, US weekly jobless claims, US leading indicators, US existing home sales and the second day of Ben Bernanke’s congressional testimony.

Be Prepared!

German Ifo Business Climate Expected on Friday, 23 July 2010

At ForexYard we encourage our customers to closely follow major market events. You need to be prepared!   As such, you should know that the German Ifo Business Climate is expected Friday, July 23rd, at 8:00 GMT

Market events like the German Ifo Business Climate Report can either:

1. Cause significant changes to current currency trends
2. Drive current trends even furth

Let me show you how the team of FOREXYARD Analysts can help you benefit from this information.

How Can You Take Advantage of this Report?

The German Ifo Business Climate report is a strong indicator of market sentiment as well as current conditions and future expectations in one of the world’s largest economies. As such, this report carries a monumental impact on the value of the EUR as Germany remains Euro-Zone’s largest and most influential economy.

Business climate surveys have very broad implications for analysts. For instance, if Business Climate improves, we can deduce that business conditions have improved and economic activity such as hiring and investment is likely to grow in the near future. Improved economic condition may also imply exports are growing, which means more demand for German goods and thus more demand for the common currency (EUR). If businesses feel more confident about their future economic standing they will be more willing to hire more people which will affect future employment levels as well as consumer demand. These are major factors in economic growth and stability. Confidence in sustainable economic recovery is important as this may allow the Central Bank to raise interest rates; this tends to boost the values of the currency as it becomes more valuable to investors.

Of course, if Business Sentiment is declining we can deduce the opposite market behavior as what’s described above. Having this information is crucial to understanding how to trade EUR-linked pairs before and after its release.

Stay Informed!

In June, the German Ifo Business Climate improved slightly, after a decline the previous month. Expectedly, we’ve seen the value of the EUR appreciate as well. This is encouraging news as it indicates the German economy remains resilient despite the sovereign debt crisis.

This month, however, The Ifo institute in Munich is expected to state that the business climate index fell back to 101.5 in July from 101.8 in June.

Despite this possible decline, the index is still positive and has been growing steadily over the past few months. This indicates the strength of the German economy compared to other Euro-Zone members. This minor fluctuation is unlikely to derail the EUR from its recent rally versus the USD. A better than expected result might even help push the EUR to new highs versus its counterparts.

Keep in Contact!

You can keep yourself updated with the latest Ifo Business Climate news direct from the FOREXYARD Analyst team by following our blog and joining us on Twitter, Facebook, YouTube, and LinkedIn. We use these channels to frequently post news updates and market analysis reports.

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 Russell Glaser – Spot crude oil prices have risen to their highest level in the past 3-weeks as the market braces for further signs of tightening in crude oil supplies and a storm in the Caribbean threatens to disrupt production. Currently the commodity is looking to break above the long term moving average line.

The price of spot crude oil has risen to a high today during the European trading session of $78.28, after opening the day at $77.52. This is the highest the commodity has traded since the end of June.

Traders are anticipating the release of the weekly crude oil inventory report from the U.S. Energy Information Administration. Market expectations are for a decrease of 1.1m barrels in crude oil stocks from the previous week. The weekly report has consistently reported a drop in crude oil stocks for the past 3 weeks. These reductions in supplies have also been significantly underestimated. Thus the report has provided a bullish fundamental for crude oil trading.

The weekly crude oil inventory report will be released today at 14:30 GMT time.

Also influencing the price of spot crude oil is a storm that is brewing in the Caribbean that could make landfall in Texas and Louisiana, areas that have make up significant portion of U.S. refinery capacity.

The daily chart below shows the recent bullish trend of spot crude oil prices. A long term trend line has been drawn underneath the recent price action with prices rising since the end of May. If the gains in the price of spot crude oil can hold throughout the day, this would represent a close above the 200-day simple moving average. Further tests of the short term resistance levels of $78.10 and $80 should be in traders’ sights. A long term price target could be the $87 price level.

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.

Johnson and Johnson’s (J&J) or JNJ in the New York Stock Exchange disappointed those who are long on the stock when the company, global pharmaceutical and consumer goods manufacture firm, posted a 5.4% decline in the sales of their consumer products for the second quarter of the year. Much of the company’s slide in profits could be attributed to the closure of its Pennsylvania plant due to the failure of its 40 children products to meet the US FDA’s quality control standards. Still, the company earned $3.45 billion in the second leg of the year which was better than the $3.21 billion it had during the previous period. Nonetheless, the slide in their sales resulted to a 1.5% drop in the valuation of their stocks.

Technically, the shares of JNJ likewise gapped down following the company’s less-than-stellar sales figure. In the process, their stocks broke below its short term uptrend line and also fell under its 50-day and 200-day moving averages. So in order for it to be on the positive path again, it now needs to move past the former uptrend line and the 2 MAs. With the RSI falling less than 50 and the MACD just turning negative, the stock would more likely head lower. And if and when it does, its next support would be at 57.50.

More on LaidTrades.com …

Delta Air Lines, Inc. or DAL as listed in the New York Stock Exchange posted a $467 million profit for the second quarter of 2010. It made up for the $257 million loss it incurred a year ago. However, its stock price fell by 2.9% to $11.38 during yesterday’s trading session. So here we have another case of stocks which failed to ascend upon releasing the good news (kindly check here: 1, 2 for the recent cases I posted on). No wonder many people are keen on using technical analysis more than fundamentals. Personally, I think it’s better to use both. Anyway, Delta Air Lines’ merge with Northwest Air Lines dated almost 2 years back make them one of the world’s largest commercial carrier. Delta Air and its subsidiaries cater to 66 countries in all continents. They are also the largest fleet of Wi-Fi-equipped aircraft in the world.

Currently, the stock chart of Delta Air Lines is on a 16-month uptrend. The immediate resistance it could encounter is $12.40. Once the stock price passes above that, the next resistance could be the $14.48-15.00 area. If the DAL stocks fail to push higher, the immediate support could be the uptrend. Upon breaking below the uptrend could drop the stock value to the next support at $10.40. As long as the uptrend remains intact, being exhausted to push higher is less likely.

More on LaidTrades.com …

The shares of International Business Machines or IBM in the New York Stock Exchange failed to impress the market despite the 13% rise in the company’s second quarter income. IBM, which is the largest IT company in the world, boosted their EPS to $2.61. Its net income for the quarter jumped by 9% from last year to $3.4 billion. Its total revenue, however, fell short of the market’s $24.17 billion estimate with only $23.7 billion. This was perhaps the main reason why investors still sold of the stocks of IBM despite having a much better EPS.

In fact, the shares of IBM gapped down following the earnings report, losing by about 4%. As you can see from its chart, IBM has been consolidating within a triangle pattern for the last several weeks. Yesterday’s gap down, though, sent it below both the 50-day and 200-day moving average. Given this, it would need a lot more buying interest for it to rise again as it first need take out the mentioned moving average resistances. A couple of indicators also signifying some bearishness. The RSI has just fallen below 50, indicating that its downward momentum is gaining speed. The MACD is also about to make a bearish crossover with its histogram in the verge of turning negative. The only thing that is keeping it alive is the triangle’s support. A break of this support could send it down to 116.00 so watch out!

More on LaidTrades.com …