Month: August 2010

Hello forex peeps! On today’s fx feature is the 4-hour chart of the fiber or the EURUSD pair. In my previous post about it (please see it here) last August 3, I mentioned that as long as its uptrend holds, it would continue to move higher… and it did. As you can see, the pair had consolidated into a symmetrical triangle after reaching a high of 1.3262 on August 3. It then broke out to the upside after finding support at the uptrend line. The presence of a hidden bullish divergence (where the price moves higher and the stochastics moves lower) and its oversold condition when it fell back to the uptrend support could have also led the investors to buy up the euro in exchange of the USD. Still, the pair is facing some heavy selling pressure at 1.3300. Given this, it might a harder time in moving above the mentioned level. It would more likely consolidate again or even retrace before it shoots up again. A break, however, of the uptrend line could push the EURUSD back to 1.3100. But since it is on an uptrend, a move higher is more likely to take place.

The euro’s recent jump was due to the dismal result of the US’s non-farm payrolls (NFP) report. Imagine, US firms about 131,000 jobs in Jul which was far worse than the expected 63,000 job cuts. The country’s unemployment rate, though, managed to remain at 9.5%. Nonetheless, the worse-than-projected NFP count spurred some risk aversion in the market. The difference this time though is that the euro, as mentioned, soared against the greenback. Usually, the EUR gets sold off whenever there is risk aversion in the markets since investors generally seek shelter under the safety of the USD whenever these happen. But apparently, the market is already becoming wary of the US’s recovery which in turn leads them to question the viability of the US dollar.

For the past week, I have observed that the movement of the USD has been more or less positively in line with the US’s fundamentals.Will this trend continue? We will see. If it does then any weak economic update from the US next week could push the EURUSD higher. The Fed is scheduled to release its interest rate decision on Tuesday (August 10) while the US’s inflation and retail sales numbers are due on Friday (August 13). watch out for any downbeat outlook and dovish statements by the FOMC and/or weak inflation and retail sales numbers!

More on LaidTrades.com …

By CountingPips.com

The US dollar has been on the defensive today against the other major currencies in the forex market following the eagerly awaited government employment report that showed US jobs fell for a second straight month. The dollar has lost ground against the euro, British pound sterling, Japanese yen, Australian dollar, New Zealand dollar and Swiss franc while trading higher against the Canadian dollar in the early going of the US trading session.

The US stock markets, meanwhile, have also started off the day with declines as the Dow Jones industrial average fell lower by over 100 points while the NASDAQ and S&P 500 have declined by approximately 35 points and 15 points, respectively. Gold has made gains higher by $13.50 to trade at the $1210.70 level while crude oil has been declining to the $80.99 level.

The US government nonfarm payrolls report, released by the US Department of Labor, showed that US jobs declined by 131,000 workers in July following the revised decline of 221,000 workers in June. The July report was worse than expected as market forecasters were looking for 65,000 jobs lost and marked the second consecutive month of job losses following five straight monthly increases. June’s report was revised from the original 125,000 jobs.

The unemployment rate remained the same at 9.5% after falling from 9.7% in June as the total number of workers looking for work was essentially unchanged at 14.6 million workers.

The private sector created 71,000 jobs in July but that was offset by a decline in the temporary census government worker positions by 143,000 jobs. The private sector increase for July follows a revised gain of 31,000 private sector jobs for June. Overall for 2010, the private sector employment payrolls have increased by 630,000 workers.

The goods producing sector increased by 33,000 jobs in July as manufacturing jobs added 36,000 workers while construction jobs decreased for third straight month by 11,000 positions. Mining and logging also managed to add 8,000 workers to the goods producing sector.

The service sector added 38,000 jobs for the month with healthcare positions increasing by 27,000 workers. Professional and business services cut 13,000 workers and financial activities lost 17,000 workers.

Government employment decreased by 202,000 workers for the month as the loss of temporary centers workers contributed heavily to this category and to the overall monthly job loss. This is a second straight month the government payroll has lost over 200,000 workers following June’s decline of 252,000 workers as the temporary census jobs end.

FOREX: EUR/USD Daily Chart – The Euro (EUR/USD) continuing to advance higher today versus the US dollar to above the 1.3300 exchange rate for the first time since early May. This marks a new 3-month high and has the Euro increasing against the dollar for the sixth straight week.

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By Yan Petters – The GBP/JPY pair saw a sharp bullish movement during the past couple of weeks. Over this time period the pair gained over 700 pips, and soared from the 131.00 level to the 137.50 level. Currently, the pair is trading near to the 136.80 level, yet as several technical indicators show, another bullish movement could be impending.

• The chart below is the GBP/JPY 4-hour chart.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD and the Relative Strength Index (RSI).
• As demonstrated on the chart, a flag pattern has been formed. This indicates that further bullishness could be expected.
• The Slow Stochastic has completed a bullish cross, indicating that the bullish move might be imminent.
• The RSI is pointing upwards, providing yet another signal that the pair might be boosted soon.
• The next resistance levels are placed at the 137.50 and the 138.00 levels.
• The next support levels are placed at the 136.50 and the 135.80 levels.

Forex Market Analysis provided by ForexYard.

© 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 – Yesterday’s weaker than expected unemployment data from the U.S. may have been a prelude to today’s key non-farm employment change. Traders will be watching both the overall estimate for job losses at -63k, but also private job additions which are forecasted to come in at +100k.

Key Data Releases:

GBP – 08:30GMT – PPI Input m/m
Expectations: -0.4%. Previous -0.2%.

Inflation concerns are growing in the UK as the Bank of England (BOE) has kept interest rates at an all time low of 0.5%. Yesterday the BOE reaffirmed it’s commitment to low interest rates by holding the rate steady while maintaining its balance of bonds on account.

Currently the Cable is testing the 61.8% Fib retracement from last August’s high. The GBP/USD has failed to break this level twice this week. A breach above this price should take the pair to the resistance level at 1.6070.

USD – 12:30GMT – Non-farm employment change
Expectations: -63k. Previous -125k.

All eyes will be on the non-farms report from the Bureau of Labor Statistics. As mentioned above, traders will also be following the private job additions. If the U.S. economy adds more than 100k new jobs, the greenback should strengthen against the majors. Given the month long trend of negative U.S. economic data, along with a rebound of the euro, this scenario seems unlikely. Resistance levels for the EUR/USD come in at 1.3270 and 1.3350.

Forex Market Analysis provided by ForexYard.

© 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.

Source: ForexYard

Weekly U.S. unemployment numbers sent the dollar lower during U.S. trading hours today as applications for unemployment insurance rose to a three month high. The negative employment data comes prior to today’s release of the all important non-farm payrolls.

Economic News

USD – Weak Data Hurts Dollar

The dollar fell following the release of disappointing U.S. weekly employment numbers, only a day before the release of the high impact non-farm payrolls report. The weak economic data serves as a reminder of the recent trend of disappointing economic reports stemming from the U.S. economy. Speculation of further easing in monetary policy by the Federal Reserve is also fueling weakness in the greenback.

Yesterday the EUR/USD rose to 1.3180, following an opening day price of 1.3146. The Cable was unchanged at 1.579. The yen continued to strengthen as the USD/JPY fell to 85.88 after opening yesterday’s trading at 86.04.

A Wall Street Journal article outlined steps the Federal Reserve could take to increase quantitative easing in light of the recent downturn of the U.S. economy. The Fed is not expected to begin tightening interest rates until 2011 and may be searching for new ways to stimulate the struggling U.S. economy.

Today’s release of the critical U.S. non-farm payrolls report will be the highlight of today’s trading. The jobs data will provide more clarity to the extent of the U.S. economic recovery along with more speculation on just what the Fed will do next. Expectations are for a decline of 63K jobs for the month of July. Worse than expected results would show further deterioration in the U.S. economy and could send the dollar lower versus the major currencies. Resistance levels for the EUR/USD come in at 1.3270 followed by 1.3350.

EUR – No Change to European Interest Rates

Yesterday both the European Central Bank (ECB) along with the Bank of England (BOE) held their key interest rates steady as market reaction to announcements were muted with key players awaiting jobs data from the U.S.

The Cable was unchanged on the day while the EUR/GBP was higher 0.8295, from an opening day price of 0.8277. The EUR/JPY also ended the day unchanged.

In his comments following the interest rate decision, ECB President Jean-Claude Trichet described a rosier picture for the European economy. Economic growth was better than expected during the second quarter but he also warned markets of slowing growth in the second half of the year.

The BOE signaled its intention to hold both its interest rate along with its bond purchases at the current levels. An increase in purchases would constitute further monetary policy easing by the BOE Monetary Policy Committee. As expected, interest rates were held at a record low of 0.5% following signs of an improving British economy. Last week Q2 GDP was reported unexpectedly higher by 1.1% and has fueled a rally of the pound versus the dollar.

British manufacturing and inflation data are due to be released this morning. Traders will be following these two releases, in particular the inflation numbers. Positive outputs could send the GBP/USD higher above the resistance line at 1.5970 which coincides with the 61.8% Fibonacci retracement level from the high last year in August.

JPY – USD/JPY Forms Tweezer Candlestick Pattern

The yen continues to strengthen versus the dollar as weak U.S. unemployment numbers pushed the USD/JPY lower in line with the long term trend of the pair.

The USD/JPY finished the day down at 85.84, after opening the day at 86.04. The GBP/JPY was unchanged at 136.45, as was the EUR/JPY at 113.15.

Following the release of the weekly U.S. unemployment claims, the USD/JPY slumped below the 86 level to a low of 85.70 before recovering somewhat. The long term downward trend of the pair appears to be increasing as the 20-day simple moving average is sloping sharply lower. However, traders should be aware of the tweezers candlestick pattern that has formed from the lows of Tuesday and Wednesday at the price of 85.31. This is considered a potential reversal pattern and should serve as short term support for the pair. In light of this reversal pattern, stops should be tightened on any short positions

Traders should be eyeing the release of the U.S. non farm payrolls report today. If the result fails to meet the market’s expectation of a decline of 63K jobs, the USD/JPY should continue its bearish trend.

Crude Oil – Crude Unchanged Following Disappointing U.S. Employment Data

Spot crude oil prices were unchanged in yesterday’s trading. The price of spot crude reached a high of 82.38, but was knocked down due to the weak U.S. employment numbers and finished the day at the opening price of $82.15.

Weak unemployment data has hurt prices of spot crude oil as continued high unemployment numbers reduce future demand for crude oil. Also a strong dollar for part of the day’s trading sapped momentum from the commodity’s bullish run.

A short trading range for today’s prices also indicates indecision on the part of crude oil traders as they await the outcome of today’s U.S. non-farm employment change. A positive data release could send the price of the commodity to its next resistance level which rests at a price of $83.00, followed by $84.30. Spot crude oil prices failed to breach the $83 level on Tuesday. The next support levels rest at $81.50 followed by $80.

Technical News

EUR/USD

After several days of bullish movements, the pair remained at a relatively stabile level yesterday. Currently, a bearish cross that takes place on the daily chart suggests that a bearish correction may take place today, with potential to reach the 1.3100 level.

GBP/USD

The Cable continued with the flat trading during yesterday’s session. The Cable has tested the 1.9565 level for several times during the last few days, yet did not manage to breach this level. As the 4-hour chart’s MACD continues to point down, the pair might see a modest drop today.

USD/JPY

There is a very accurate bearish channel formed on the daily chart, as the pair is now floating in the middle of it. Nevertheless, as all indicators on the 4-hour chart are now pointing up, a bearish correction may take place today. The next key level looks to be placed at the 87.00 price.

USD/CHF

The pair erased some of its gains during yesterday’s trading session. After peaking at the 1.0550 level, the pair saw a bearish movement, and is currently trading near the 1.0480 level. The bearish momentum might continue today, with potential to reach the 1.0370 level.

The Wild Card

Gold

Gold saw very peaceful trading during the past two days, and the commodity has consolidated around the $1,195 level. However, as both the MACD and the RSI on the daily chart are providing bearish indications, a downtrend could be impending. This might be a good opportunity for forex traders to catch the trend at its beginning.

Forex Market Analysis provided by ForexYard.

© 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 – Solid German manufacturing data along with positive statements from the IMF helped the Euro gain some ground.  Continued robust economic news is likely to continue to push the Euro toward 1.33 resistance.

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.

Being supported by the lower border of the rising price channel on 4-hour chart, EURUSD rebounded from 1.3119. Range trading between 1.3119 and 1.3261 would more likely be seen later today. Key support is now at 1.3119, as long as this level holds, the price action in the trading range is treated as consolidation of uptrend from 1.2732, and another rise towards 1.3350 is still possible. However, below 1.3119 could indicate that lengthier consolidation of uptrend is underway, then deeper decline could be seen to 1.3000 area.

Daily Forex Signals

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

USD

Yesterday dollar exchange rates reacted quite notably to the surprisingly strong ISM non-manufacturing release. The dollar was able to appreciate notably against the EUR as well as the JPY. This reaction was all but expected. After all there had been doubts recently as to whether the Fed would react appropriately to a positive performance of the US economy (see yesterday’s Daily Currency Briefing). These doubts are however clearly not dominating. Market reaction to tomorrow’s labour market report is likely to be decisive in the end. As a result we will have to wait and see today. Neither new highs nor a significant continuation of the correction seem likely today. During this interim phase between correction yesterday and important data tomorrow nobody is likely to have an appetite for a fundamental re-positioning. It is therefore difficult to see what would provide momentum for a larger EUR-USD move today.

EUR

We do not expect any change in ECB policy as a result of today’s policy decision, and our team do not foresee an actual rate hike until Q2. At the subsequent press conference, ECB President Trichet will likely remain cautious despite recent improvements in Eurozone economic data. Trichet is also likely to be questioned about plans for future ECB tenders, and especially whether these will continue to be conducted on a full allotment basis. His interpretation of recent bank stress test results will also likely be of interest.

JPY

USD-JPY is trading close to the 85 mark, which many analysts consider the beginning of the area where the BoJ might begin to intervene. The reasons for the strength of the yen are above all fears of a double dip and a continued zero interest rate policy in the US. If that was to happen the US would be so similar to Japan that a risk premium for the Japanese currency would no longer be justified. But a stronger yen is not in the interest of Japan. It puts pressure on the export sector and threatens economic recovery. And what is even worse, it creates further deflation pressure. We should not be misled by yoy rates: Reflation has lost momentum since the beginning of the year (see chart). A strong yen makes the fight against deflation even more difficult though. So the BoJ would have every reason to intervene – and it would be able to. It would not have to worry about sterilising the newly created yen. Every yen added to the central bank money supply should please them. Political considerations are one argument against interventions, though. The US Congress is considering harsh measures against countries who “manipulate” the exchange rates of their currencies. Even though this is only referring to China at present, in their eagerness the members of Congress could easily tar Japan with the same brush. However, the further USD-JPY falls the more urgent the need for interventions becomes. Minister of Finance Yoshihido Noda is already gradually stepping up his rhetoric: Yesterday he said the USD-JPY moves were “a bit one-sided”. This is the first and very careful step towards verbal interventions. If USD-JPY continues to fall, further interventions are likely to follow.

GBP

Our team does not expect the BoE to change policy at the upcoming meeting, in line with consensus. Should that be the case, there will be no accompanying statement. Our current forecast is for the first policy rate to be first hiked in Q1 2011 despite some difference of opinion within the MPC as of late. In data releases, services PMI was softer than expected at 53.1 (cons.54.5), though Halifax housing prices jumped 0.6%m/m (cons. -0.3%m/m).

TECHNICAL OUTLOOK

EURUSD NEUTRAL Upside potential toward 1.3511 with next resistance lying at 1.3692. Near-term support comes in at 1.2981 ahead of 1.2737.

USDJPY BEARISH Bearish trend continues with focus on 84.83, break of which would expose next support at 81.85. Near-term resistance holds at 86.66 ahead of 88.12.

GBPUSD BULLISH Bull trend approaches 1.5969 Fibonacci level, with upside potential targets 1.6069 and 1.6458 next. Near-term support is at 1.5696 ahead of 1.5400.

USDCHF BEARISH Currently holds support at 1.0348 with near-term resistance at 1.0581 ahead of 1.0676. Overall focus on 1.0131; break of the level would expose 0.9918.

AUDUSD BULLISH Momentum is positive; expect the gains to target 0.9389 ahead of 0.9850. On the downside, initial support lies at 0.8896 ahead of 0.8634.

USDCAD BEARISH Negative trend eyes 1.0139; violation of the level would open up the way towards 0.9931 key low. Initial resistance is at 1.0274 ahead of 1.0396.

EURCHF BULLISH Need a break above 1.4041 to confirm the bullish trend. Initial support lies at 1.3730 ahead of 1.3511.

EURGBP BEARISH Outlook is bearish with focus on 0.8252 break of which would expose 0.8068 ahead of 0.7809. Near-term resistance lies at 0.8416 ahead of 0.8532.

EURJPY NEUTRAL Motion is sideways; 115.49 and 110.02 mark the near-term directional triggers. 107.32 defines a key support 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.