The US dollar faced correction on overnight trading on Tuesday as China reported the increase of 4.9 percent in its consumer price index as compared to analysts’ expectations of 5.4 percent. The dollar index DXY which measure greenback’s movement versus its six major rival currencies declined to 78.50 in overnight trading as compared to 78.602 on Monday’s North American trading session.

The Australian dollar also advanced 0.2 percent to 1.0039 against the US dollar on the positive news of less increase in Chin’s CPI index.

On the other hand analysts are expecting a rise of 0.6 percent in US retail sales for the month of January as compared to nil growth in the prior month. The surge in retail sales is expected on the basis of increase in core spending and food and energy prices.

The Euro also rose to 1.3510 against the US dollar as compared to1.3484 on Monday despite the negative sentiments about euro zone’s sovereign debt situation.  Investors were also uncertain about the future outlook of WestLB one of the Germany’s major financial institutions however analysts believe that Germany’s economy is the only factor which can provide support for the single currency.  Economists are expecting strong economic data for the quarter by Germany.

The British Pound also gained against the US dollar to 1.6047 in overnight trading as compared 1.6036 on late Monday.

However the greenback advanced to 83.46 versus the Japanese Yen in Asian trading session as compared to 83.26 on Monday’s North American trading session despite the factor that Japanese central bank managed to kept the overnight call rate to very low level which is expected by most analysts.

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Daily forex trading news written by Rehan from DailyForexTrade.com

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

Dollar performance was mixed during the Asia session with losses incurred against the euro, while further gains were made versus the yen. EURUSD traded 1.3473-1.3528, USDJPY 83.20-83.56. AUDUSD was temporarily supported by China’s CPI print, which was more benign than consensus forecasts. An uneventful BoJ policy announcement had no currency impact. There were no major data releases in the US overnight, but today should be more eventful. Advance retail sales are due and the winter weather in January could make it a more volatile release. We are looking for +0.1% on the headline release vs. consensus of +0.5%, largely due to bad weather. A disappointing headline print could knock the dollar and Treasury yields lower. But our economists note that even if the data comes in around their lower estimate, their forecast is consistent with total real consumer spending (including services), staying largely unchanged on the month.
EUR

A regular monthly meeting of Eurozone finance ministers broke up as expected without any agreement on how Europe’s existing financial rescue mechanism might be enhanced over the coming weeks. However, Eurogroup president Juncker said agreement had been reached on the size of the ESM – the permanent mechanism that is due to take over in 2013. Juncker said the EU’s contribution to the ESM would ensure an effective EUR500 bn lending capacity, and said the IMF will make contributions on top of that. Juncker also said there could be an extra Eurogroup meeting on March 21, ahead of the end of month EU leaders summit.
The ECB revealed it had purchased no sovereign bonds under the Securities Markets Program by Tuesday of last week.
JPY

The BoJ kept the policy rate unchanged and continues to target a range of 0-0.1%. No changes were made to any of the asset purchase or lending facilities.
GBP

We expect another above-target CPI print of 4.00% y/y, in line with consensus, which could keep BoE rate hiking expectations elevated.
CHF

We raise our 3m EURCHF forecast to 1.35 to reflect that Swiss outperformance may be coming to an end as the global economy reflates and as the SNB continues to ease rates.
AUD

The RBA minutes from the Feb 1 meeting provided little in the way of additional insight into the policy board’s current thinking. The key message was that recent consumer caution and lower than expected CPI have convinced the RBA that it need be in no hurry to hike again. Our Australian economists continue to see the first 2011 policy rate hike in August/September.

TECHNICAL OUTLOOK
EURUSD 1.3428 support.
EURUSD NEUTRAL Move below 1.3428 would expose 1.3364. Initial resistance at 1.3621.
USDJPY BULLISH Resistance at 83.68 continues to hold; push above the level would expose 84.51. Support at 82.71.
GBPUSD BULLISH While support at 1.5922 holds, expect recovery towards 1.6138 and 1.6186.
USDCHF BULLISH Break through 0.9776/84 would expose 0.9852. Support is at 0.9575.
AUDUSD NEUTRAL Model is neutral; 1.0137 and 0.9961 mark the near-term directional triggers.
USDCAD BEARISH Support at 0.9832/20 zone holds; break through this would expose 0.9712. Near-term resistance at 0.9918.
EURCHF BULLISH Clearance of 1.3086 exposes 1.3015. Resistance at 1.3206.
EURGBP BEARISH Momentum is negative; eyes 0.8389/77 support zone. Near-term resistance is at 0.8462.
EURJPY BULLISH Rise above 113.44 would expose 114.01/94 resistance area. Support lies at 112.06.

Forex Daily Market Commentary provided by GCI Financial Ltd.

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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 Anton Eljwizat

In the last three weeks trading, the GBP/JPY experienced much bullishness, as it stands now at 135.40. However as I demonstrate below, it seems that the pair’s bullish run may have run of steam, and a bearish correction could be underway soon. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

• Below is the 8-hour chart of the GBP/JPY currency pair.

• The technical indicators that are used are the William Percent Range, Relative Strength Index (RSI), and Slow Stochastic.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates an impendin bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: Williams Percent Range also supports the upward direction.

GBP/JPY 8-Hour Chart

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

A news heavy trading day saw sharp rallies in the pound while the Aussie dollar traded lower.

Economic News

USD – Dollar Shrugs Off Poor Retail Sales

Traders overlooked disappointing January retail sales numbers as the dollar was mixed versus the major currencies. Retail sales for the previous month failed to meet economists’ expectations, positing a 0.3% increase on expectations of a 0.5% jump. December’s sales numbers were revised lower to 0.5% from 0.6%, underscoring the negative tone of the report.

Other US economic data showed investors continued to increase their purchases of long term US securities as the TICS capital flow report released results showing 69.5B USD in purchases. Expectations were for purchases to total 91.3B.

When discussing the President’s Federal budget plan, Treasury Secretary Timothy Geithner said the budget problems cannot be ignored and are not a result stemming from the financial crisis. A return to financial prudence will be needed and US deficits are too high at this time.

At the end of the trading day, the dollar was mixed with gains coming versus the euro and the Aussie dollar. The EUR/USD finished at 1.3485 after opening the day at 1.3507. The dollar was up sharply versus the yen as the USD/JPY closed near its high of 83.80 from its opening day price of 83.40. The AUD/USD fell below parity to 0.9980 from 1.0041.

Today traders will be focusing on the release of key US economic data as well as the release of the Fed Meeting Minutes. At 13:30, monthly building permits will be released and also month over month PPI. Inflationary pressures are nonexistent in the US and traders will focus on the housing data and any changes in the Fed’s economic expectations.

The EUR/USD is currently trading in a bearish channel after turning lower following its failure at 1.3860. Further declines are expected with a possible target at 1.3250, the 61.8% retracement of the January to February move. Support is found at the bottom channel line at 1.3390. Resistance comes in at 1.3570 followed by last week’s high at 1.3740.

EUR – Pound Rises on Interest Rate Expectations

The pound traded higher following the fifth consecutive letter from BOE Governor Mervyn King to the Chancellor of the Exchequer on why inflation is higher than expected. King’s comments highlighted the uncertainty surrounding future British inflation levels that have been primarily driven by rising commodity prices and an increase in UK VAT. The letter also highlighted the view of higher inflation above targets forecasted by the BOE.

In light of the letter, traders bid the pound higher on expectations of an interest rate increase by the BOE in the near term.

The GBP/JPY added 1.3% in value and closed higher at 135.46 from 133.51 while GBP/USD rallied to a closing price of 1.6140 after opening the day at 1.6044.

Traders will once again be focusing on comments by BOE Governor King in the morning.

The move higher by the Cable was enough to breach above the declining wedge pattern that has held the GBP/USD in check since failing to breach the 1.6280. Judging from the consolidation pattern, an estimate following the breach should target this previous resistance level.

JPY – Dollar Continues to Book Gains Versus the Yen

In yesterday’s trading the greenback strengthened against the yen to a level not seen over the past two months. As traders shrugged off poor performing US retail sales numbers, they continued to buy dollars and sell yen as expectations for an improving US economy takes shape.

At the close of yesterday’s New York trading session, the USD/JPY was trading near its session high of 83.80 from its opening day price of 83.40.

Continued gains have been booked in the USD/JPY following a breakout of the triangle consolidation pattern. The pair’s appreciation stymied at the 200-day moving average which comes in at 83.90. A breach above this level should then target the December high of 84.50, followed by the September high at 85.90. Support for the pair is found at this week’s low of 83.10 followed by the descending leg of the triangle which comes in today at 82.60.

Crude Oil – Spot Crude Oil Continues to Fall

Prices for spot crude oil booked another day in the red as traders expect rising crude oil inventories in the US may off-set the recent destabilization in the Middle East. Following an $8 rally at the beginning of the Egyptian protests, spot crude oil has given back those gains and then some.

At the end of the day, spot crude oil was trading lower at $84.30 after opening the day at $85.15.

Since peaking at $93, spot crude touched a two and a half month low earlier in the day. Driving prices lower is stabilization on the Egyptian front as well as limited tensions in large oil producing nations such as Saudi Arabia. Also easing the price pressures are traders’ expectations for larger than expected US crude oil inventory numbers.

Today at 15:30, the US weekly crude oil inventory report will be released. Market expectations are for a 1.8M barrel increase. Last week the report showed a rise of 1.9M barrels.

Yesterday’s low of $83.30 and $80.25 should serve as support levels with resistance found at $89.40 and $93.00.

Technical News

EUR/USD

A close below the 1.3480 level should target the 61.8% Fib retracement at 1.3250. This level lines up nicely with the mid-January pivot of 1.3240. Resistance comes in at 1.3570 followed by last week’s high at 1.3740, though any gains in the pair should be capped by the falling trend line off of this year’s high.

GBP/USD

Yesterday’s breakout higher was enough to breach above the declining wedge pattern that has held the GBP/USD in check since failing to breach the 1.6280. Judging from the consolidation pattern, an estimate following the breach should target this previous resistance level.

USD/JPY

The pair’s appreciation stymied at the 200-day moving average which comes in at 83.90. A breach above this level should then target the December high of 84.50, followed by the September high at 85.90. Support for the pair is found at this week’s low of 83.10 followed by the descending leg of the triangle which comes in today at 82.60.

USD/CHF

With textbook precision, the USD/CHF has turned lower after retracing 61.8% of its December downtrend. An initial target for the pair looks to be the 38.2% retracement level at 0.9590 followed by the mid February low of 0.9520. Resistance for the pair comes in at 0.9720 and 0.9775.

The Wild Card

EUR/CHF

The pair has shown a propensity to be sold off when it approaches its 200-day moving average. On two prior occasions (both in November of 2010) the pair fell following unsuccessful attempts to trade above this long term moving average. The recent two day decline looks to have verified the exhaustion of the bulls, making a short setup entry opportunity for forex traders. Support is found at 1.2930, followed by 1.2770, and 1.2720.

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.

The NZD has dropped significantly versus the USD in the past 2 weeks, and it is currently traded around 0.7540. And now as evident in the data below, the daily chart is giving bullish signals, indicating that NZD/USD pair might go up. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal.

• Below is the daily chart of the NZD/USD currency pair.

• The technical indicators that are used are the William Percent Range, Relative Strength Index (RSI), and Slow Stochastic.

• Point 1: The Slow Stochastic indicates an impending bullish cross, signaling that the next move may be in an upward direction.

• Point 2: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

• Point 3: The Williams Percent Range has peaked near at the -100 marker, which means that there may actually be a strong level of upward pressure.

NZD/USD Daily Chart

Yesterday’s inflationary data from the UK should be enough to convince the market of a 25 bp rate increase by BOE in the near term, ultimately supporting the pound.

Today’s Market Events:

GBP – BOE Inflation Report-10:30 GMT

The BOE sent its fifth consecutive letter to the Chancellor of the Exchequer on why inflation was higher than expected. BOE Governor Mervyin King will explain the position of the BOE today. Further gains should be seen in the pound as traders anticipate a tightening of UK monetary policy in response to higher than expected inflation.

Yesterday the GBP/JPY broke out higher from its 5-month range trading. Initial targets should be the August high at 137.80. Support is found at 135.00, 134.20 and 133.00.

USD – Building Permits – 13:30 GMT

Expectations: 0.57M. Previous: 0.63M.

Since November US economic data has turned a corner as the economy begins to pick up steam. Employment and housing are two areas that have lagged. As such, this data piece may be a focal point as the New York trading gets underway.

USD – FOMC Meeting Minutes – 19:00 GMT

The meeting minutes for the Fed offers insight on who approved monetary policy and who dissented while shedding light on the QE II program.

Oil – Crude Oil Inventories – 15:30 GMT

Expectations: 1.8M. Previous: 1.9M.

Yesterday’s low of $83.30 and $80.25 should serve as support levels with resistance found at $89.40 and $93.00.

By CountingPips.com

Wednesday February 16th

• United Kingdom jobless claims

• Bank of England inflation report

• United States housing starts/building permits

• United States producer price index

• Canada leading indicators

• New Zealand producer prices

See full economic calendar.

GBPUSD broke above the falling price channel on 4-hour chart, suggesting that a cycle bottom had been formed at 1.5962 level. Further rise towards 1.6277 is expected later today, a break above this level will indicate that the uptrend from 1.5344 (Dec 28, 2010 low) has resumed, then next target would be at 1.6500 zone. However, as long as 1.6277 resistance holds, the bounce from 1.5962 is treated as a part of consolidation of uptrend, one more fall to 1.5800-1.5900 area is still possible.

Daily Forex Forecast

By Zac, CountingPips.com

Today, I am pleased to share a forex interview/commentary on this week’s major events and forex trends with the Senior Currency Strategist at DailyFx.com, John Kicklighter. John specializes in combining fundamental and technical analysis with money management while his analysis for DailyFx regularly includes G10 fundamental forecasts, risk sentiment analysis and carry trade analysis.

Q: There are many major data releases on the schedule this week, what do you feel may turn out to be the most important event to watch for?

There is a lot of currency-specific event risk out there that has considerable potential for generating volatility for the data’s native currency. However, if we want to see a real move (one backed by momentum); we will need something that will tap into the underlying interests of the speculative market and initiate a trend that spans the various currencies and asset classes. And, despite the importance of the data we have on deck; it doesn’t carry much promise of encouraging such a momentous shift. That said, the most charged catalyst over the week is probably the inflation picture from the UK as speculation about near-term rate hikes is so high. There will be a lot of interest specifically in the BoE Quarterly Monetary Policy Statement.

Q: What do you feel is the biggest overall theme at play in the currency markets right now?

Oddly enough, it is the lack of an overarching theme that has kept the markets back from a major trend. A steadfast build up in yield-based capital markets has kept risk trends in charge; but we have seen little progress on the investor sentiment front (consistent as it is, there is little conviction). If risk trends shifted significantly in the near future; it would almost certainly drive the entire FX market with it. A distant second theme that has raised its profile is interest rate speculation. Those at the upper end of the curve (the Aussie and Kiwi dollars) have seen their potential for further rate hikes ease off while others near the bottom of the pack (like the pound) look as if they may be closing the gap this year.

Q: Inflation data released out of the United Kingdom also looks to be a key event for the week with many market participants feeling the Bank of England will need to raise interest rates to tame increasing inflation. Would another high inflation reading likely give the British pound sterling a boost against the other major currencies?

The CPI figures did contribute to a substantial pound rally. Speculation surrounding the timing of a UK-based rate hike has grown increasingly tense over the past few months as data maintains rising price pressures and the BoE loses credibility in its projections that it is a temporary state and will ease off in the near future. That said, if the monetary policy officials continue to make accommodation for the persistent increases in inflation; then speculators will not find the vindication they need. If that is the case, they will eventually back off the trade.

Q: Overall, the US dollar has been stronger against most of the major currencies since the beginning of February. Do you feel this move has sustainability in the short to medium term? What currencies will likely see continued weakness against the dollar?

The dollar’s moderate strength since the beginning of the month seems to be more a correction of January’s sell-off rather than a self-generated recovery. The difference here is that a correction struggles for progress and is naturally limited as it is just playing off the initial drive from the originating move. Without definable fundamental support, this advance will eventually stall. If risk appetite falls apart at a controlled pace, I’d look for USDJPY and USDCHF to extend their respective drives. AUDUSD is staged for a significant medium-term bearish trend on any substantial shift in risk appetite trends. EURUSD and GBPUSD are much more data dependent.

Q: The USD/CAD currency pair continues to be an interesting one to watch with the pair trading in a fairly tight range and any moves higher seem to be beaten back down to the 0.9850 level. Do you feel it is likely this pair coming out of this range anytime soon and what could we look to as a possible catalyst either to the upside or downside?

USDCAD is a pair that is prone to congestion. It is not always carving out the most technically-consistent range; but the chop is an indelible feature of the pair’s price action. I would say the range is set between parity and 0.9850. A break from this pattern wouldn’t be too difficult; but the follow through will be a real struggle. If the dollar can jump start a substantial rally against the euro and Australian dollar; it will likely spill over to USDCAD as a general dollar bid.

Q: The AUD/USD pair last week failed to retest or surpass the 1.0255 all time high made in late December and now the pair is trading closer to its parity level vs the dollar. On a technical basis, what important levels should we be looking at to tell us whether a deeper correction is in the cards or if the uptrend will continue to resume?

AUDUSD is setting up what looks to be an ever-adapting reversal pattern.  In fact, from the beginning of October; it looks like we have setup a major head-and-shoulders pattern. Of course, the trouble is the neckline or reversal point. We could say it is the rising trendline from May that is loosely stationed around 0.9975, the 100-day SMA at 0.9920, the rising trend of lows from December 8th at 0.9900, or the congestion low from January at 0.9850/25. Momentum is the better signal here rather than a single technical level.

Thank you John for taking the time for participating in this week’s forex interview. To read John’s latest currency analysis and trading strategies you can visit DailyFx.com.

In Colombia the economy and the security policy are heading in the right direction.

Thats the conclusion in a new analysis from Jyske Bank and senior macroeconomic analyst Peter Skøttegaard Øemig.

Click here to download the report on Colombia.

Click here to se Jyske Banks investment recommondations.

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