Month: February 2011

By Russell Glaser

Rising expectations for an interest rate hike by the ECB have bolstered the euro in today’s trading. Crude oil was also a benefactor after rising off of its daily lows following an increase in Chinese interest rates.

Traders originally sold the euro following disappointing German industrial sales which contracted by 1.5%. Economists had forecasted an increase of 0.2%. However, market participants have since been encouraged by comments from ECB President Trichet that interest rates can be increased prior to the normalization of ECB monetary policy.

The EUR/CHF traded as high as 1.3100 and looks to close above the 100-day moving average at 1.3075.

The headline event of the day was an increase in Chinese interest rates as the PBOC hiked interest rates by 25 bps. The rise in the 1-year interest rate now takes the base lending measure in China to 6.0%. This move did not come as a surprise to the market which has predominantly priced in future tightening measures.

While one might be hesitant to put an exact level for future Chinese interest rate increases, most market participants are expecting further interest rate moves as well as other tightening measures to slow the rate of inflation in China.

Spot crude oil traded stronger after an initial knee-jerk reaction following the Chinese interest rate announcement when the commodity fell as low as $88.87, a price that coincides with the rising trend line from the August lows. The price then recovered and traded as high as 88.10.

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

The euro gained against the U.S. dollar and Japanese yen in late trading Tuesday as stronger Japanese equities prompted investors to buy back the risk-sensitive currency, pushing it further off the two-week low against the greenback that it marked Monday. By yesterday’s close, the euro rose to $1.3630 from $1.3590 late Monday.

Economic News

USD – Dollar Falls as Investors Turn to Riskier Assets

The U.S. dollar fell against the euro in late trading Tuesday after China announced that it would raise rates. Investors have also become less worried about the unrest in Egypt, moving away from the dollar and looking to invest in riskier currencies. By yesterday’s close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.3630.

China’s central bank said Tuesday that it would raise deposit and lending interest rates by a quarter percentage point, the second time China has raised rates in over a month.
The U.S. dollar had been gaining against the euro since late January when protests erupted on the streets of Egypt and investors were looking to invest in safe havens, such as the U.S. dollar. But investor concerns about Egypt have eased somewhat, analysts have said, pushing riskier currencies higher against the dollar Tuesday.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Crude Oil Inventories figure at 15:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Fed Chairman Bernanke’s testimony at 15:00 GMT. This testimony is very likely to impact the dollar’s volatility. Traders are advised to watch closely, as this is likely to set the pace of the dollar going into the rest of the day’s trading.

EUR – EUR Moves Up against Safe Havens

The euro recovered on Tuesday, lifted by demand from Asian central banks, and buying against the Australian dollar, after a Chinese interest rate hike fueled concerns over its growth, as well as demand for commodities. As a result, the EUR gained 0.3% versus the greenback to $1.3630 as investors booked profits on long dollar positions taken in the last four days. The 17-nation common currency experienced similar behavior against the GBP and closed at 0.8480.

Gains in the euro were muted after a weaker-than-expected reading of German industrial output for December on Tuesday. That followed a dismal industrial orders report the previous day, leading to a sell-off in the common currency and a two-week low of $1.3507 against the USD.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not commonplace and present terrific opportunities to take advantage of the price swings for large profitable gains.

JPY – Yen Sees Mixed Results vs. Majors

The Japanese yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the USD yesterday and closed its trading session around the 82.30 level. The JPY also saw bullishness against the GBP as it jumped around 60 points and closed at 1.3220.

Traders today have very little fundamental news emanating from Japan as the only major indicator being released is the Core Machinery Orders report. Analysts forecast the figure to increase from its previous reading. This indicator typically generates small amounts of volatility. However, the EUR and the USD appear to be clutching the reins of today’s market. Traders would be wise to note its future direction as it usually carries a heavy impact on the other currencies.

Crude Oil – Crude Oil Inventories Data to Drive Oil Trading Today

Oil prices fell sharply in the last few days to settle around $87.40 a barrel as concerns about Egypt’s political turmoil eased and investor focus returned to rising U.S. inventories and a tepid employment picture.

A new cabinet met in Egypt, easing investor fear that the unrest started in Tunisia could affect oil producer countries.

Today, the commodity is likely to drop further following the US Crude Oil Inventories figure, set to be released at 15:30 GMT. Typically, a surplus in US stockpiles means that the price of oil will go down, as it means that demand is down in the world’s largest crude oil consuming country.

Technical News

EUR/USD

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Slow Stochastic is providing us with mixed signals. The 4-hour charts do not appear to be providing a clear direction either. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

GBP/USD

The GBP/USD went increasingly bearish yesterday, and currently stands at the 1.6060 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the hourly chart’s RSI signals that a bullish correction could take place. Entering the pair when the signs are clearer seems to be the wise choice today.

USD/JPY

The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the 8 hour chart’s RSI is already floating in the over-bought territory, indicating a bearish correction might take place in the nearest future. In that case, traders are advised to swing in after the breach.

USD/CHF

The pair recorded much bullish behavior yesterday. However, the technical data indicates that this trend may reverse soon. For example, the 8-hour chart’s RSI signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.

The Wild Card

Crude Oil

Crude Oil prices are once again dropping, and are currently trading around $87.20 a barrel. As of this morning, the 8-hour chart’s RSI was giving bullish signals, indicating that crude oil prices might go up today. This could give forex traders a great opportunity to enter a very popular trend early.

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 US dollar declined versus the euro on Tuesday however gained versus the Japanese Yen as disappointing bond auction resulted in high US Treasury Yields.

The Dollar index DXY which measures the US dollar’s movement versus its six major counterpart currencies declined to 77.962 on Tuesday’ s North American trading session as compared to 77.994 on Monday.

The selling pressure in the US dollar was increased after China announced to increase its key interest rates against the expectations of investors who were projecting a more tightening approach from the Peoples Bank of China. This is the third interest rate hike by Chinese Central Bank since October.  According to experts measures like these are creating uncertainty among investors about China’s economy.

The Euro surged to 1.3634 versus the US dollar as compared to $1.3597 o Monday’s late trading session.

However the greenback advanced against the Japanese Yen to 82.55 as compared to 82.32 on Monday as the yields on US 10-year notes hit their highest since April which make the greenback more attractive for investors. The Yen is highly sensitive to US bond yields as Japan holds major proportion of US debts.

The British Pound declined to 1.6071 against the US dollar as compared to 1.6125 on Monday’s late trading session. The reason behind the declined in Pound Sterling was associated with the increase in tax on banks imposed by the British government.

The Australian dollar initially traded under selling pressure and declined to 1.0113 against the US dollar but later in session recovered the gained 0.3 percent to $1.0155.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

The EUR rebounded from a two-week low against the greenback on Tuesday after a Chinese interest rate hike fueled concerns over its growth. Additionally, demand for commodities prompted traders to unwind bets against the US currency.

As for today, there are several important events coming out of the U.S. and Europe, especially the U.S Crude Oil Inventories report. These events always provide for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following these vital announcements.

Here are today’s leading events:

15:00 GMT: Fed Chairman Bernanke Testifies

Federal Reserve Chairman Ben Bernanke is due to deliver a testimony on the economic outlook and monetary and fiscal policy of the United States before the House Budget Committee in Washington D.C.

There is the possibility that Bernanke will comment on a number of developments in the region and hint at future Fed policies. Speculators will attempt to use those statements as a gauge of direction for the USD in the coming weeks and adjust their positions accordingly. Therefore, this testimony will likely create volatility as it gets underway.

15:30 GMT: Crude Oil Inventories

Analysts are predicting today’s figure to come in around 2.2M, which if true, would signal a slight drop from last week’s figure of 2.6M. While this might lead some traders to believe that demand is going up in the US, and they should therefore go bullish on oil, 2.2M is still a very high figure, suggesting demand has so far failed to pick up in the world’s leading oil consumer.

GBPUSD remains in uptrend from 1.5344 (Dec 28, 2010 low). As long as the trend line support holds, the fall from 1.6277 is treated as consolidation of uptrend, and one more rise to re-test 1.6298 (Nov 4, 2010 high) is still possible after consolidation. On the downside, a clear break below the trend line support will indicate that the rise from 1.5344 had completed at 1.6277 already, then the following downward move could bring price back to 1.5600 area.

Forex Signals

By Zac, CountingPips

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See more details on MT4 from Oanda: http://fxtrade.oanda.com/trade-forex/metatrader/

Since the beginning of the month, the price of crude oil has dropped more than $5.00 based on positive US economic data that has made the dollar stronger and oil less attractive to international buyers.

Tomorrow, the commodity is likely to drop further following the US Crude Oil Inventories figure, set to be released at 15:30 GMT. Typically, a surplus in US stockpiles means that the price of oil will go down, as it means that demand is down in the world’s largest crude oil consuming country.

Analysts are predicting tomorrow’s figure to come in around 2.2M, which if true, would signal a slight drop from last week’s figure of 2.6M. While this might lead some traders to believe that demand is going up in the US, and they should therefore go bullish on oil, 2.2M is still a very positive figure.

Given oil’s bearish trend over the last week, and the USD’s overall renewal in strength, it may be wise for traders to continue to short the commodity. At the same time, should a significantly smaller than expected inventories figure come in tomorrow, and especially if the number turns out to be negative, the price of crude may stage an upward correction for the rest of the week.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar weakened during the Asia session, clocking up losses against the euro, the AUD, and the NZD. USDJPY remained tightly range-bound all night and traded 82.21-82.45. EURUSD traded 1.3544-1.3636. The S&P 500 continued its advance and finished 0.6% higher, despite thin news flow. The attention now shifts to Federal Reserve speakers, with Regional Fed Presidents Lacker (Richmond), Lockhart (Atlanta) and Fisher (Dallas) scheduled to speak. Fisher and Lacker are more hawkish and Lockhart and Lacker are non-voters this year, but their interpretation of the latest Bureau of Labor Statistics data could be an important near-term driver of the dollar. Non-voting members still participate in FOMC discussions and Lacker and Lockhart will rotate into voting positions in 2012. Fisher has already said he would be unlikely to support more easing beyond QE2 and given the current biases of these three, we could see the greatest USD reaction, if any, from Lockhart should he move away from his more neutral, cautious stance. Our economists believe payrolls should bounce back to their firm underlying trend, with some additional “payback” potentially ahead.
EUR

ECB Governing Council member Mersch said inflationary pressures have undoubtedly risen and the ECB would have to intervene if there were secondary effects from higher commodity prices. Mersch also said the ECB could hike interest rates without first exiting liquidity support measures. Mersch added that the EFSF should be able to buy bonds directly.
Irish Finance Minister Lenihan said he is negotiating with his European counterparts on the question of whether haircuts can be imposed on Irish senior bank debt which is not government guaranteed. He said the “debate is underway”.
GBP

Sterling received a brief boost on the news that the RICS house price balance strengthened to -31% in January from -39% in December. It remains in negative territory however, indicating that UK house prices are still tending to fall.
AUD

Business conditions in January showed a steep drop across employment intentions, forward orders, and capacity utilization. Our economists note that this is not entirely surprising given the impact of the Queensland floods. The AUD soon recovered from the news.

TECHNICAL OUTLOOK
USDJPY 80.93 support.
EURUSD BULLISH Focus is on 1.3741, break of this is required to refocus towards 1.3862 recent high while support lies at 1.3482.
USDJPY BEARISH Violation of 80.93 would expose 80.54 next. Resistance at 82.93.
GBPUSD BULLISH Initial resistance at 1.6186 ahead of 1.6279/99 zone. Near-term support is defined at 1.6037.
USDCHF NEUTRAL 0.9623 and 0.9329 mark the near term directional triggers.
AUDUSD BULLISH Focus is on 1.0200/56 resistance zone. Support lies at 1.0083.
USDCAD BEARISH The pair targets 0.9832/20 support zone. Near term resistance at 0.9932.
EURCHF BULLISH Pressure on 1.3069; move above this would open up the way towards 1.3118. Support at 1.2867.
EURGBP BEARISH Move below 0.8377 is required to confirm the negative trend. Resistance is at 0.8477.
EURJPY BULLISH Focus is on 112.92, break of this would confirm the uptrend and expose 114.01 next. Support zone is at 110.78/32.

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 Greg Holden

The British pound has been reaching significant resistance lines against a number of its primary currency rivals. A chance exists that the pound could see some downward retracement over the next several days as investors test the strength of these levels.

As an example, the GBP/CHF, shown on the chart below, has some revealing indicators regarding this development.

As you can see, the pair touched the long-term trend line at 1.5500 and quickly bounced off.

Now we are beginning to see the technical pressure building against any additional bullishness for this pair, symbolized by the technical oscillators on the lower portion of the chart.

The Stochastic (slow) shows a very fresh bearish cross, suggesting heavy sell pressure and what appears to be an impending downward movement that could be sustained for the next few days, even weeks.

The MACD/OsMA also shows a bearish cross, but the upward movement of the oscillator seems to be giving off mixed signals. The wide divergence on this oscillator, however, does support the downward notion.

If correct, the GBP/CHF could see some bearishness over the next few days, with targets at 1.5200 and 1.4900.

GBP/CHF – Daily 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

Yesterday’s trading began with a sharp decline for the euro, following a disappointing German Factory Orders report. However, the euro managed to correct most of its losses afterwards on speculation the ECB might hike interest rates in March, in response to accelerating inflation.

Economic News

USD – Dollar Sees Modest Gains vs. Majors

The U.S. dollar slightly gained against most of the major currencies during Monday’s trading session. The dollar began yesterday’s trading session with a 60 pip gain vs. the euro, and a 30 pip gain vs. the Japanese yen. However, by the end of the day the dollar corrected most of its gains.

The dollar’s appreciation came after Germany reported weak manufacturing data. Germany’s factory orders declined in December by 3.4 percent, more than economists estimated. The lower-than-expected figures have weakened the euro, and as a result strengthened its greatest rival, the greenback.

The dollar was also supported by the better-than-expected U.S. Unemployment Rate figures, released last Friday. The U.S. Labor Department said on Friday that the U.S. unemployment rate fell to 9 percent in January, the lowest level since April 2009. This has boosted the dollar by 120 pips against the euro on Friday, and continued to impact the greenback on Monday.

Looking ahead to today, the most significant release from the U.S. economy looks to be the Economic Optimism report. This is a survey of about 900 consumers, who are asked to rate their next six-month financial outlook. A positive publication has the potential to further strengthen the dollar.

EUR – Euro Falls on Disappointing German Manufacturing Report

The euro failed to recover from last week’s bearish session, and remained at low levels against most of its major currency counterparts in Monday’s trading. The EUR/USD pair continues to trade below the 1.3600 level, and the EUR/ JPY pair remains below the 112.00 level.

The euro fell against the U.S. dollar and the Japanese yen in early trading yesterday after Germany, Europe’s largest economy, reported weak manufacturing data. German Factory Orders fell by 3.4 percent in December, well below expectations for a 1.4 percent drop. The market promptly reacted to the disappointing release, and the euro fell about 100 pips against both the dollar and the yen.

However the euro managed to erase most of its losses on speculation the European Central Bank (ECB) will hike rates. Governing Council member Yves Mersch said yesterday that the ECB will raise rates if the increase in inflation is not temporary. He added that as there would have to be a rigorous intervention by the monetary authorities if across the second-round effects there’s the risk that this increase transforms into a plateau.

As for today, the most interesting release on the economic calendar looks to be the German Industrial Production data. Economists predict that the German industrial production grew by 0.2% on December. If the end result will provide yet another disappointing data release, then the euro might proceed with its recent bearish trend.

JPY – Yen Sees Mixed Trading

The Japanese yen saw a rather volatile trading session on Monday. The yen saw several ups and downs against the U.S. dollar, which eventually ended near to market’s opening price. The yen also saw a sharp gain of 100 pips against the euro in early trading, just to undergo a 70 pips correction afterwards.

The Japanese currency began yesterday’s trading with a rising trend following a weak German manufacturing data. German Factory Orders declined in December by 3.4 percent from November, and as a result boosted demand for safer assets, such as the yen.

Looking ahead to today, traders are advised to follow the Japanese equity markets, as no significant release is expected from the Japanese economy. Traders should also follow the leading economic releases from the U.S. and euro zone, as these usually have a large impact on yen trading as well.

Crude Oil – Crude Oil Falls To $87.20 as Tensions in Egypt Ease

Crude Oil continued to fall from its recent high of $92.80 a barrel, and is currently trading near the $87.40 level. Crude began this week’s trading session the same way it ended last week’s session, with falling prices. The price for a barrel of oil also slid yesterday as tensions in Egypt appeared to ease. It seemed as if the expectations that Egypt’s political turmoil would affect oil flows in the region have diminished.

In addition, U.S. crude oil inventories will likely show that stockpiles rose for a fourth consecutive week, contributing to the weakening oil prices. Analysts estimate that domestic stockpiles rose by 2.4 million barrels last week. This inventories figure will be released on Wednesday.

As for today, traders are advised to follow the economic releases from the U.S. and euro zone as these tend to have a large impact on crude prices. Traders should also take under consideration that as long as the tensions in the Middle East continue to ease, crude prices might face further declines.

Technical News

EUR/USD

The EUR/USD pair saw a falling trend for the past couple of days, and reached as low as the 1.3507 level. Nevertheless, it can be seen on the 4-hour chart that a double-top pattern is beginning to form, with potential to take the pair to the 1.3780 level in the short-term.

GBP/USD

The bullish trend that formed on the 4-hour chart has been breached and, ever since, the Cable has been trading near the 1.6130 level. However, as a bearish cross appears to have taken place on the daily chart’s Slow Stochastic, it seems that a bearish session might be impending. Going short might be the right choice today.

USD/JPY

The pair has been trading within a restricted range for the past three months now, trading between the 80.30 and the 84.40 levels. Currently, as both the Slow Stochastic and the MACD on the 4-hour chart are providing bearish signals, it appears that the pair might correct the past week’s gains, with potential to reach the 81.30 level.

USD/CHF

There is a very distinct bullish channel formed on the 1-hour chart, as the pair is now floating in its middle. However, the RSI on the 4-hour chart has recently dropped below the 70-line, indicating that a bearish correction might be imminent. Going short with tight stops might be the right strategy today.

The Wild Card

Crude Oil

Ever since Crude Oil peaked at $92.80 a barrel, it has seen a sharp bearish correction. Crude fell about 550 pips, and a barrel of crude is currently trading near the $87.30 level. In addition, as all the oscillators on the 4-hour chart are pointing down, it looks that the bearish correction might have more steam remaining. This might be a great opportunity for forex traders to join what appears to be a very popular trend.

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.