Month: August 2010

Good day FX friends! On today’s fx menu is the daily chart of the cable or the GBPUSD pair. In my last post about the pair back in July 16 (kindly see it here), I took note of the British pound’s bullish streak over the greenback. Though at that time I mentioned that it could meet some selling pressure at 1.5500. For a time it did but it used the former downtrend line to propel itself above the mentioned level. And after it broke above the 1.5500 marker, it never looked back. As you can see, the pound has continued to pound the US dollar. However, the Sterling pound could be encountering some resistance just below 1.6000. Notice that around this level had been an area of interest before. Given this and the cable’s overbought condition (as indicated by the stochastics), the pair could dip for awhile or move sideways before moving north again. If it retraces, it could fall back to 1.5600, 1.5500 or right at the uptrend line.  A break of 1.6000, on the other hand, could push it all the way to 1.6400.

Fundamentally, the pound has been getting the nod from the general public due to the rally in the global equities market. This rally, of course, has been buoyed by a combination of profit taking from short positions, renewed confidence in the market, better economic data from the major economies like the US and euro zone, and upbeat earnings from European and US firms.

The highlight of this week, though, for the UK and the GBP, will be the monetary policy decision of the Bank of England (BOE) tomorrow at 11:00 am GMT. The central bank is generally expected to hold its interest rate at a low of 0.50% and its asset purchase facility at £200 billion. Sir John Gieve, a former deputy Governor of the BOE, and Charles Goodhart, a previous member of the bank’s Monetary Policy Committee, however, say that the interest rate could be hiked sooner than initially projected to control inflation. Both even noted that the rates could go somewhere between 1.00% to 1.50% by the same period of the next year. A rate hike, of course, would make investments in the UK more attractive, thus, increasing the demand for the GBP as well.

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By Russell Glaser – The Cable is testing the 61.8% Fibonacci retracement level from the August 2009 high.

Following this week’s bullish movement in the GBP/USD, the pair has broken past a previous resistance level at 1.5820, which has now become a near term support level (S1). The GBP/USD is currently testing the 61.8% Fibonacci retracement level (1.5960). This is a retracement from the August 2009 high to this year’s low.

The GBP/USD failed to breach this resistance level both yesterday and today. A move above this line would target the short term resistance at 1.6065 (R2), followed by the January high at 1.6450 (R3).

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.

Source: Forex Yard

Negative economic data, as well as speculation regarding further monetary easing by the Federal Reserve, pushed the USD to its lowest level since April. Markets await the release of the Non-Farm Payrolls (NFP) data due Friday for signs of the economic conditions in the US.

Economic News

USD – USD Falls on Negative Economic Data

The US dollar fell against its major counterparts after disappointing US economic data prompted speculation that the Federal Reserve could take additional monetary measures to boost the sluggish economy. The USD dropped to an 8-month low versus the Japanese yen over concerns about the economic recovery in the US, as well as to a 3-month low versus the euro.

US factory orders fell by more than expected in June from May, while pending home sales dropped an unexpected 2.6% in June, after declining 30% in May. Furthermore, a report was published by the Wall Street Journal suggesting that the Federal Reserve may prevent monetary tightening and start a bond purchasing program once again. The continuous flow of negative US economic data exacerbates concerns that the Fed will have to take monetary action soon.

Investors are keenly awaiting the Non-Farm Payrolls (NFP) data due this Friday to better gauge the pace of US economic recovery. Today traders should follow the release of the ADP Non-Farm Employment Change Estimate due at 12:15 GMT as a prelude to Friday’s release, as well as the ISM Non-Manufacturing PMI at 14:00 GMT. Better than expected results may provide the greenback with a much needed boost.

EUR – British Pound Rises on Bank of England Comments

The euro rose to a 3-month high against the USD Tuesday after a slew of negative economic data dampened demand for the greenback. The EUR rose to $1.3234, up from $1.3183 late Monday; rising as far as $1.3261, the highest level since May.

The euro has been gaining strength as signs continue to mount that the economic recovery in the US is stagnating. Also, speculation has arisen that the Fed might announce further bond purchases in order to stimulate the US economy, a monetary measure which would pump more greenbacks into the market, intentionally reducing its value.

The British pound rose to $1.5946 Tuesday after former Bank of England (BOE) Deputy Governor John Gieve reassured investors about the of British economic recovery, stating that further monetary loosening may not be required.

Today, investors are advised to follow the release of the Helifax HPI at 6:00 GMT as well as any data coming from the US.

JPY – Yen at 8-Month High vs. USD

The Japanese yen rose to an 8-month high against the greenback as concern the Federal Reserve may take up additional stimulus measures to boost the sluggish US economy.

Japan’s currency rose against all of its 16 major counterparts after the release of disappointing US economic figures. Data has shown US factory orders and existing-home sales fell in June while consumer spending stagnated. Japan’s currency gained 0.8% to 85.50 per USD. The yen also rose 0.5% to 113.12 per EUR.

Crude Oil – Spot Crude Oil Breaks above $82 a Barrel

Crude Oil futures rose above $82 a barrel for the first time since May despite disappointing US economic data. Crude’s rally was boosted by a weak US dollar, as oil is denominated in dollars and is therefore cheaper for investors. An expectation of a decrease in oil supply further boosted Crude Oil prices.

Light Sweet Crude for September delivery settled up 1.5%, or $1.21, at $82.55 a barrel on the New York Mercantile Exchange yesterday, the highest settlement since May 4. Today investors should follow any news release from the US as well as the Crude Oil Inventories report to be released at 14:30 GMT.

Technical News

EUR/USD

The pair has been experiencing some very bullish behavior in the past week, as it currently stands around the $1.32 level. The main oscillators of the daily chart indicate this trend may continue into the near future. However, the hourly Slow Stochastic reveals that a bearish cross is about to occur, indicating that a bearish correction may be imminent. Now may be a ripe time to take advantage of the situation at an early stage.

GBP/USD

The cross has received increasing support as of late, as this pair approaches new highs. The continuation of the bullish trend is supported by the 1-day and 1-week charts’ MACD. On the other hand, the 4-hour and 1-day charts’ Slow Stochastic seems to contradict this. It may be wise to open a long position with tight stops before the bullish trend comes to an end.

USD/JPY

The pair has been going through much bearish behavior in the past several days. The MACD of the 1-hour chart fails to show a clear signal as to the future direction of this pair. However, the 1-day Stochastic Slow and RSI show that this pair is still likely to go lower before making a bullish correction. Traders should take advantage of this bearish trend now while it still carries steam.

USD/CHF

The 1-day Stochastic Slow shows that the pair may continue its downward trend into the near future. This is also supported by the 4-hour charts’ MACD. However, the 4-hour Stochastic (slow) seems to indicate that a bullish cross is imminent. It may be a wise move for traders to open a long position with tight stops when this bullish cross is completed.

The Wild Card

Gold

Gold prices have been increasing rapidly lately, as they stand at over $1,191 per ounce. The 1-day and 1-week chart shows that this bullish trend is set to continue. This is also supported by the 1-hour and 4-hour MACD oscillator. It may be a wise move for forex traders to enter this very popular trend as it shows no sign of stopping anytime soon.

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 Natalie R. – Following the flow of recent negative economic data, the US dollar dropped to its lowest level in 4 months, prompting speculations the Federal Reserve may renew its monetary easing and start its bond purchasing program again.

The most anticipated news event this week is the Non-Farm Payroll (NFP) report due out this Friday; today investors should follow the release of the ADP Non-Farm Employment Change Estimate at 12:15 GMT as well as the ISM Non-Manufacturing PMI at 14:00 GMT.

Economic news are expected to dominate market sentiment this week as investors attempt to gauge the strength of the US economy recovery which continues to shows signs of slowing. Any negative economic data will put further downward pressure on the dollar.

Today’s leading news events:

12:15 GMT: USD – ADP Non-Farm Employment Change Estimate

– Automatic Data Processing (ADP) issues its national employment report for July later today. This much-maligned measure of the growth of jobs in the US private sector will garner much attention ahead of Friday’s big jobs report from the US Bureau of Labor Statistics. The expectation is for a gain of 39,000 private sector jobs, after the report showed an increase of 13,000 in June.

– Given the latest string of reports from the US which has shown a slow-down of recovery, this report has the potential to add some positive sentiment if the results come in line with, or above, the estimated figure. As a result, the USD could pare some of its recent losses in the short-term. However, Friday’s NFP report will be the primary market mover this week.

14:00 GMT: USD – ISM Non-Manufacturing PMI

– The ISM services index will provide a fresh read on the services sector, which are about two-thirds of US GDP. The expectation is that the index will arrive at 53.1 and a number over 50 represents growth for this sector. The Institute for Supply Management’s index of non-manufacturing activity declined to 53.8 in June, compared with 55.4 in May. If this figure shrinks once more today we could see some sell pressure on the USD.

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.

Forex Market Review & Analysis by Finexo.com

The Dollar fell yesterday against most of its major counterparts amid concerns that Europe’s and Asia’s economic recovery will outpace that of the U.S. Moreover, two reports yesterday, a drop in pending home sales and dip in factory orders, have added to the recent string of disappointing U.S data.  The number of contracts to purchase previously owned houses fell 2.6% in June, signifying that demand continues drop since the expiration of a homebuyer tax credit. Analysts had expected the index to fall 0.5%; however, June’s figure is substantially better than the 30% drop seen in May. Meanwhile, U.S Factory Orders fell 1.2%, more than then expected dip of 0.2%.

Up ahead today, the U.S will release its ADP Non-Farm Payroll, a report showing the change in the number of jobs in the private sector. Generally, considered a predictive index for Friday’s Non-Farm Payroll report, the ADP index rose a disappointing 13K last month. This time around, analysts predict a larger gain – 38K.

EUR/USD

The Euro fell against its American counterpart in this morning’s session, slipping from a 3-month high, as concerns escalated over strength of the U.S. economic recovery. The single European currency touched on $1.3203 in the late Asian trade, a daily low. Yesterday the Euro rose above the $1.3200 mark after rebounding at $1.3180. The single European currency hit $1.3240 during the New York session, 0.30% above today’s opening price.

Fundamentally, the ADP figure could have a strong impact, by molding expectations for Friday’s highly awaited Payroll figure. Therefore, any significant deviations on the upside could boost the Dollar and lead to declines for the pair.

GBP/USD

The Pound managed to return above the $1.59 level, after slipping from $1.5969, a 6-month high, following the U.S’s pending home sales report. The British currency hit $1.5905 during European sessions, up 0.12% after falling from a daily high of $1.5967. Up ahead today, the UK will release its Service PMI. Last month, this service indicator slipped to 54.4; this time around, analysts expect a slight increase to 54.8.

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.

By eToro – Continued distain for the dollar helped push the EUR/USD above 1.32.  The Euro is likely to continue to press higher and test the 1.33 resistance level.

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.

USDCHF traded in a narrow range between 1.0347 and 1.0475. As long as 1.0475 resistance holds, the price action in the trading range is treated as consolidation of downtrend from 1.0639, and another fall towards 1.0200 area is still possible later today. However, a break above 1.0475 could indicate that a cycle bottom has been formed at 1.0347 level on 4-hour chart, then the following upward movement could bring price back to re-test 1.0675 key resistance.

Daily Forex Analysis

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3260 level and was supported around the $1.3145 level.  The common currency rocketed to its highest level since May of this year and tested a major resistance level at US$ 1.3265, representing the 76.4% retracement level of the move from $1.3690 to $1.1875.  Improving global demand for riskier assets propelled the pair higher to multi-week highs.  Data released in the U.S. today saw June personal income decline to +0.0% while personal spending also came in at +0.0%.  The June PCE deflator shrank to +1.4% y/y from the prior reading of 2.1% and core PCE was up 0.0% m/m and 1.4% y/y.  These data will stoke a discussion about the possibility of deflation in the U.S. economy but most economists are reporting this is simply a disinflationary period.  Other data saw June factory orders off 1.2%, an improvement from the prior reading of -1.8%, while June pending home sales were off 2.6% m/m and down 20.1% y/y, underscoring ongoing problems in the U.S. housing sector.  Data to be released tomorrow include MBA mortgage applications, July Challenger job cuts, July ADP employment data, and July ISM non-manufacturing data.  There is ongoing speculation the Federal Reserve may be forced to resume its asset-purchase programs to provide additional liquidity and support to the U.S. economy at a time when the Fed is trying to reduce its balance sheet.  Fed Chairman Bernanke yesterday reported that consumer spending “is likely to pick up” amid a “moderate” expansion.  Last week, Philadelphia Fed President Plosser said additional calls for Fed stimulus “are premature.”  Two-year U.S. Treasury yields fell to a record low today at 0.51%.  Most dealers expect the Federal Open Market Committee will keep monetary policy unchanged next Tuesday.  In eurozone news, eurozone June producer price inflation was up 0.3% m/m and 3.0% y/y.  Many traders believe the Fed will be more proactive about stimulating the economy through monetary policy measures than the European Central Bank and this perception of declining U.S. yields is adding to the euro’s gains.  Eurogroup Chairman Juncker said policymakers are “satisfied” with Greek financial reforms undertaken so far.  Euro offers are cited around the US$ 1.3505 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥86.65 level and was supported around the ¥85.65 level. Central bank officials from Japan, China, and South Korea convened today to discuss the regional economy.  Traders continue to test the Japanese government’s resolve by pushing the pair back to the ¥85 handle.  There continues to be chatter that Japanese monetary authorities will conduct yen-selling intervention if the pair weakens much more.  Ten-year Japanese government bonds yields declined further today to 1.03%, an indication that traders expect the continued downward pressure on markets borrowing costs.  Bank of Japan Policy Board member Miyao warned the yen’s appreciation may damage the Japanese economy and impact the central bank’s economic outlook.  Data released in Japan overnight saw the July monetary base climb 6.1% y/y.  The Nikkei 225 stock index climbed 1.29% to close at ¥9,694.01.  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 ¥113.10 level and was capped around the ¥114.15 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥136.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.45 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.7734 in the over-the-counter market, down from CNY 6.7745.  Data released in China overnight saw the July non-manufacturing PMI survey tick higher to 60.1 from the prior result of 57.4. HSBC July PMI services data will be released overnight.  Former People’s Bank of China adviser Yu warned he “does not think U.S. Treasuries are safe in the medium-and-long run.”

£

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5965 level and was supported around the US$ 1.5860 level.  Sterling pushed higher after former Bank of England Deputy Governor Gieve reported the central bank should not loosen monetary policy further or increase its asset-purchase program.  Also, dealers pushed sterling higher on news that government-owned mortgage lender Northern Rock registered its first profit.  BoE’s Monetary Policy Committee convenes on Thursday and while it is not expected to raise rates, there may be more than one policymakers who votes for higher rates.  Data released in the U.K. today saw July PMI construction decline to 54.1.  The BRC July shop price index will be released tonight.  Cable bids are cited around the US$ 1.5270 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the £0.8315 level and was supported around the £0.8270 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0415 level and was supported around the CHF 1.0345 level.  Data released in Switzerland today saw July consumer price inflation off 0.7% m/m and up 0.4% y/y.  Data released in Switzerland yesterday saw June retail sales decline to +0.9% y/y from the revised prior print of +3.9% y/y.  The July PMI manufacturing survey improved to 66.9 from the prior reading of 65.7.  July consumer price inflation data will be released tomorrow.  Other data released yesterday saw the SNB July quarterly KOF employment indicator improve to 11.2 from a revised 3.8 in April.  U.S. dollar offers are cited around the CHF 1.0980 level.  The euro appreciated vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.3750 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6580 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 euro has continued to climb higher in forex trading against the U.S. dollar today as the EUR/USD currency pair touched its highest level since May 3rd. The European common currency is increasing for a second straight day vs. the dollar to start the week as it continues its impressive rebound off of the four-year lowpoint reached on June 7th at the 1.1876 exchange rate. The EUR/USD opened the day near the 1.3171 mark and dipped in early trading to 1.3146 before finding support and advancing above the 1. 3200 threshold for the first time since early May.

Economic news released today showed that euro zone producer prices edged up by 0.3% in June while increasing by 3.0% on an annual basis through June. The data failed to surpass economic forecasts that were expecting a 0.4% increase for the month while showing a 3.1% increase on an annual basis.

Out of the United States today, the important consumer spending report showed that household purchases were flat in June while personal incomes were also unchanged, according to the report by the Department of Commerce. Consumer spending makes up roughly 2/3 of US economic activity and June’s data follows a 0.1% uptick from May. Personal income data had risen by 0.3% in May. Market forecasts were expecting consumer spending to rise by 0.1% and personal incomes to increase by 0.2% for the month.

Pending home sales in the US fell in the month of June and dropped to the lowest level on records, according to the latest report from the National Association of Realtors. Pending home sales declined by 2.6% in June following a revised 29.9% decrease in May. On an annual basis, pending home sales fell by 20.1% from the June 2009 level and declined to the lowest level since sales records began in 2001 for the index.

EUR/USD Hourly Chart – The EUR/USD continuing to advance higher over the past week to the 1.3200 exchange rate for the first time since early May. The pair yesterday overcame the Fibonacci 61.8 percent retracement level (near 1.3075) on the decline from 1.3691 on March 17 to 1.1876 on June 7th.