Month: February 2011

By Russell Glaser

The crossing of the 50 and 100-day moving averages hints at an extension of the current move.

As the EUR/USD continues to rise, the major moving averages are providing support for the move. Yesterday the 50-day simple moving average (green line) crossed above the slower 100-day moving average (red line), a signal many trending strategies use to identify the direction for trades.

Following this cross, the moving averages are now aligned in a perfect order, with the 20-day moving average above the 50, 100, and 200-day. This indicates a strong trending environment. As such, traders should be looking for further gains in the pair.

First resistance comes in at yesterday’s high of 1.3780. The next resistance level is found at the February high of 1.3860. The trend line falling off of the January 2010 line may come into play down the road. Today that level stands at 1.4150. The November 2010 high of 1.4280 would be a long term target.

Support is found at the rising trend line which comes in today at 1.3560, followed by the February low at 1.3430, and the rising trend line off of the June and January lows.

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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

Central bank expectations and yield adjustments remain the key driver for FX markets but jitters over the situation in the Middle East and its wider impact are now proving too hard to ignore. Although markets have managed to segregate event risk, Brent and WTI crude futures have broken through $110/bbl and $100/bbl respectively – levels which could prove damaging to the global economy at a particularly crucial time in the recovery. The wider fear is that central banks may need to move on policy far earlier than planned to contain inflation expectations, but risk a rise in borrowing costs that corporate and household sectors may not be prepared for. Overnight EURUSD and USDJPY both struggled to make any headway and traded in ranges of 1.3742-1.3785 and 81.96-82.52 respectively. Equities closed down almost 1% and Treasury yields finished modestly lower as they sold off following a weaker 5y Treasury auction.
The second-tier data releases and Fedspeak did not provide the dollar with broad support although existing home sales for January unexpectedly gained. Kansas City Fed President Hoenig and Philadelphia Fed President were unsurprising hawks. Plosser said tapering of QE2 is not necessary though the committee had not yet decided on an exit strategy and an early exit should not be ruled out if the economy continues to improve. Plosser also said they may need to change policy even with elevated unemployment and Hoenig warned of the dangers of loose monetary policy. US activity figures are due. Initial jobless claims are due and we are with consensus in looking for a dip down to 405k. The previous reading was the survey week for the broader Bureau of Labor Statistics payrolls report, which could mute the impact of a decrease in claims. But the resumption of a downtrend should be modestly positive for the dollar, though external developments again could be the larger driver.
EUR

German GDP for Q4 was confirmed at 4.0%y/y, 0.4%q/q, driven by strong export growth and public spending.
Yesterday’s CPI prints in France and Italy surprised to the downside, but the euro continues to be driven by policymaker comments and stays supported as the general tones remain hawkish. We believe the market right now risks being too optimistic on policy expectations, but with headline inflationary pressures rising ECB officials will likely maintain a hawkish stance but just short of the crucial “vigilance” threshold.
Slovakia Finance minister said that the next ECB President is likely to be German, unless Germany decide against this themselves.
GBP

Spencer Dale joined Martin Weale and Andrew Sentance in calling for rate hikes. Dale and Weale called for 25bp, while Sentance called for 50bp. Adam Posen continued to vote for further QE. The minutes were hawkish both on the vote front and on the tone, noting that ‘of those members not favouring a rise in Bank Rate, some thought that the case for an increase had nevertheless grown in strength’. Clearly this is a fundamental shift in stance from the BOE, and the question is now whether the hawks can entice 2 other members over to their camp. Sentance is due to leave the MPC in May so his call for 50bp of hikes suggests that he is trying to push through his policy before his departure. The key is whether they will get the two extra hawks by May, and sterling is likely to remain supported for the near-term, as speculation mounts that they might just be able to.
The BoE’s Sentance, Weale and Posen are not expected to offer any surprises at their upcoming speaking appearances. Fellow policymaker Miles said that inflation is worrying but also said there is no strong case to tighten policy faster than market rates are implying. He sees CPI falling sharply in 2012 and said it is unlikely the pound would drop due to loose monetary policy.
CBI reported sales are due today at 11:00 GMT and another decline to 28 (prev. 37) is expected.
AUD

Australian capex figures were solid, showing a rise of 1.3% in Q4 (cons. 4%) but our economists note the equipment capex rose 6.1%, and overall the result should add about 0.5% to GDP. Our economists note that the data reinforce the view that while there is some catch up needed in the economy in H1, the RBA may need to tighten further in H2, though consumers and the housing sector will feel the pressure of higher rates.
NZD

Prime Minister Key said the delay of the rebuilding of Christchurch following the recent earthquake will likely curb New Zealand’s economic recovery, though he did not expect a sovereign credit rating downgrade, in line with Moody’s comment that there would be no immediate impact on their Aaa rating.

TECHNICAL OUTLOOK
USDCHF clears 0.9329/01.
EURUSD BULLISH Rise through 1.3744 exposes 1.3826 and 1.3862 next. Near term support is at 1.3647.
USDJPY NEUTRAL Decline through 82.34 has exposed 81.78, while resistance lies at 82.89.
GBPUSD BULLISH Bullish pressure holds below 1.6279/99 resistance zone. Near-term support comes in at 1.6101.
USDCHF BEARISH Negative momentum continues; breach of 0.9329/01 support area has exposed 0.9241. Near-term resistance at 0.9506.
AUDUSD NEUTRAL 1.0158 and 0.9944 mark the near-term directional triggers.
USDCAD BEARISH Initial support is at 0.9816 ahead of 0.9745/12 area. Resistance at 0.9959.
EURCHF BEARISH Push below 1.2774 would expose 1.2709. Initial resistance at 1.2958.
EURGBP NEUTRAL Move above 0.8514 would expose 0.8533. Near-term support lies at 0.8384.
EURJPY BULLISH Focus is on 114.19, breach of this level would expose 114.94. Support holds at 112.09.

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.

In early European trading the price of spot crude oil eclipsed the psychological barrier amid global supply concerns and continued violence in Libya.

The price of spot crude oil climbed rapidly this morning to a high of $103.34 before falling back to the $101.00 level. The commodity opened the day trading at $98.64.

Strong bids were given early in the day as violent protests in the Middle East continue in the nations of Libya and Bahrain. Expectations of sustained turmoil in oil producing nations may cause a disruption in crude oil supplies, potentially derailing global economic growth.

The rise in spot crude oil prices may have technical implications as today’s high price coincides with a 61.8% Fibonacci retracement from the collapse of crude oil prices over the second half of 2008.

Trading in the major currency pairs has also been volatile this morning with the EUR/USD a one point falling as low as the 1.3700 level before rising to 1.3800. Currently the pair is trading near its opening day price 1.3775. Resistance is found at 1.3860 with support at1.3560 at the rising trend line from the February 14th low.

The pound is trading lower across the board with the GBP/USD near its daily low at 1.6157 from 1.6238. Support is found at Tuesday’s low of 1.6000 with resistance at yesterday’s high of 1.6275.

This afternoon at 13:30 GMT US weekly unemployment claims are expected to show 403K new jobless claims. The previous week posted 410K. Also on the US data calendar are monthly core durable goods orders and new home sales.

The current trend of strong US economic data has not allowed for US dollar strength with positive data feeding in to the USD selling. Expectations for a weaker dollar remain as European interest rates look to rise in the near term and risk aversion remains high.

By Greg Holden

Today promises to be a heavy trading session, as significant news out of the US is set to create major market volatility. The USD has recently seen some significant losses against its main currency rivals. Whether today’s news will help the greenback recover some of its losses is still unknown. What can be said for sure is that traders will want to keep an eye on the day’s events.

Here is a roundup of today’s main economic indicators:

13:30 GMT: USD Core Durable Goods Orders
This report is a measure in the percentage change in value of purchase orders with durable goods manufacturers, excluding the transportation industry. This report acts as a leading indicator of production as it represents the latest update on manufacturing demand in the market for the past month. Should this figure come in at or above expectations, traders may take this as a sign of a strengthening US economy and buy back into the USD prior to week’s end.

13:30 GMT: USD Unemployment Claims
The weekly US unemployment claims figure is widely considered to be one of the more significant events on the forex calendar. Unemployment remains a key stumbling block to economic recovery in the US.

Analysts are predicting today’s figure to come in slightly better than last week’s. At the moment, forecasts are for around 403K. Should the unemployment number come in at or below this number, traders can expect the dollar to make some afternoon gains, possibly recouping some of its latest losses.

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 reached its lowest in three weeks on Wednesday’s trading session as the single currency strengthened on the expectations of interest rate hike by European Central Bank to handle the euro zone’s sovereign debt problems.

Moreover ECB president Jean-Claude Trichet also emphasized on measures to find a solution for euro zone’s macro economic imbalances in a recent statement.

The dollar index DXY which measures the US dollar’s performance versus its six major counterpart currencies declined to 77.373 on Wednesday as compared to 77.784 on Tuesday’s North American trading session.

The Euro surged to 1.3749 yesterday against the US dollar as compared to 1.3661 on late Tuesday. The British Pound also gained versus the greenback to 1.6211 as compared to 1.6141 on Tuesday.

The minutes of monetary policy meeting from BOE which was released earlier this month showed that its major officials were in favor of increase in interest rates.  Currency strategist David Song from DailyFX commented, “There could be a growing shift within the BoE, with the committee continuing to show a greater willingness to gradually normalize monetary policy later this year, the central bank may see scope to lift the key rate … in the first half of 2011 in an effort to curb the risk for inflation.”

The US dollar also declined versus the Japanese yen to 82.46 on Wednesday as compared to 82.74 on Tuesday’s late trading session.

The New Zealand dollar further declined versus the greenback as decrease in interest rates is expected in by the New Zealand’s central bank in reaction to the recent earthquake.

The Australian dollar gained 0.4 percent against the New Zealand currency to 1.3413 in yesterday’s session while the greenback traded at 1.3408 versus the New Zealand dollar.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

Source: ForexYard

The US dollar slid against the euro following a rally in global equity markets. The rally prompted investors to turn to higher yielding riskier assets and away from the USD. With recent market optimism, traders may continue to see a small downward trend in the dollar as its positions are unwound in exchange for higher yielding assets.

Economic News

USD – US Dollar in Decline from Renewed Risk Appetite

The US dollar slipped against the EUR and CHF Wednesday, erasing some early morning gains after encouraging European data sent traders into riskier, higher-yielding assets. By yesterday’s close, the greenback had fallen against the EUR, pushing the oft-traded currency pair to 1.3750. The dollar experienced similar behavior against the Swiss franc, closing at the 0.9900 price level.

Existing home sales in the US rose by 5.36M last month, slightly higher than the consensus forecast of a 5.27M increase.

The economic reports from Tuesday also bolstered US Treasury yields, but weren’t enough to get active market participants to continue buying dollars. Instead, traders saw the upbeat news as a reason to search out riskier assets. American stocks and crude oil were among the biggest beneficiaries of this increased risk demand.

Looking ahead to today, the most important economic indicators scheduled to be released from the US are the Core Durable Goods Orders report at 13:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost risk appetite in the short-term.

EUR – EUR Bullish after as Regional Industries Report Growth

The euro rallied broadly against most of it major currency pairs on Wednesday as US stocks rose. The 17-nation currency extended gains against the US dollar and closed around 1.3750. The EUR experienced similar behavior against the GBP as the pair rose from 0.8420 to 0.8490 by day’s end.

The EUR was affected by a US stock market rally and a bearish dollar. Growth in stocks led investors to buy-back into the EUR, as they looked for returns on buying commodity-linked and higher-yielding currencies in Wednesday’s trading.

Turning to today, traders will want to pay particular attention to the string of data emanating from the United States, beginning with the reports on last month’s durable goods orders. Should tomorrow’s figures indicate further improvements in the US economy, the euro could maintain its current course, and may even push towards the 1.3800 resistance level against the greenback.

JPY – Yen Higher vs. Major Currency Pairs

The Japanese yen saw a relatively bullish trading session yesterday, gaining ground against most of its currency crosses. The JPY outpaced the USD and closed around 82.50. Moreover, the yen gained approximately 100 points versus the GBP, closing at 133.70 from the earlier mark of 134.65.

The JPY’s trends today will be affected by the rebounds in its primary currency pairs. It seems that the USD and EUR are expected to continue trading volatile today, especially against the Japanese currency. We could see some retracement as the day progresses.

Traders should keep a close look on the news coming from the US today as it is set to drive today’s market events. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

OIL – Crude Oil Holds above $98 a Barrel

Oil prices continued to sustain their recent surge in value as upbeat European and US industrial data reinforced optimism about economic and energy demand growth. So long as traders seek out higher yielding assets, commodities appear poised to gain ground.

Tensions spreading throughout the Middle East and North Africa are no doubt feeding this price rise. Crude prices climbed to $99.91 a barrel yesterday, its highest settlement since September 2008, before rebounding back to $98.97 at the day’s close. Industrial output in Europe accelerated in February helping to fuel a move by investors into commodity-link and higher-yielding currencies.

Technical News

EUR/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However, there is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Stochastic (slow) is providing us with mixed signals. The 4-hour chart does not provide a clear direction either. Waiting for a clearer sign on the hourlies chart might be a good short-term strategy today.

USD/JPY

The USD/JPY continues to decline after failing to move above its 200-day moving average at 84.00. The long term downtrend appears to have resumed. As such, traders should be short on the pair with a first target at the rising trend line offo fo the November and December lows.

USD/CHF

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic (slow) indicates that a bullish reversal is imminent. An upward trend today is also supported by the RSI. Going long with tight stops may pay off.

The Wild Card

Oil

Crude Oil prices rose significantly in the last two days and peaked at $92.50 a barrel. However, the 4-hour chart’s RSI is floating in the over-bought territory suggesting that the recent bullish trend is losing steam and a bearish correction may be impending. This might be a good opportunity for forex traders to enter the new trend at a very early stage.

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.

Today promises to be a heavy trading session, as significant news out of the US is set to create major market volatility. The USD has recently seen some significant losses against its main currency rivals. Whether today’s news will help the greenback recover some of its losses is still unknown. What can be said for sure is that traders will want to keep an eye on the day’s events.

Here is a roundup of today’s main economic indicators:

13:30 GMT: USD Core Durable Goods Orders
This report is a measure in the percentage change in value of purchase orders with durable goods manufacturers, excluding the transportation industry. This report acts as a leading indicator of production as it represents the latest update on manufacturing demand in the market for the past month. Should this figure come in at or above expectations, traders may take this as a sign of a strengthening US economy and buy back into the USD prior to week’s end.

13:30 GMT: USD Unemployment Claims
The weekly US unemployment claims figure is widely considered to be one of the more significant events on the forex calendar. Unemployment remains a key stumbling block to economic recovery in the US.

Analysts are predicting today’s figure to come in slightly better than last week’s. At the moment, forecasts are for around 403K. Should the unemployment number come in at or below this number, traders can expect the dollar to make some afternoon gains, possibly recouping some of its latest losses.

USDCHF continued its downward movement from 0.9774 and broke below 0.9300 (Dec 31, 2010 low) support, suggesting that the long term downtrend from 1.1730 (Jun 1, 2010 high) has resumed. Resistance is at the falling trend line on 4-hour chart, now at 0.9390, as long as the trend line resistance holds, downtrend could be expected to continue. Deeper decline could be seen in a couple of days, next target would be at 0.9200 area.

Daily Forex Forecast

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By Russell Glaser

Rising geopolitical tensions across the globe have directed safe haven flows into the Swiss franc.

The past two weeks have brought increased risk aversion to the financial markets due political unrest in the Middle East which has turned into violent clashes and all out civil war in Libya. Continued protests in Bahrain and Iran threaten stability while at the same time two Iranian naval vessels have passed through the Suez Canal, provoking regional tensions.

These events have had not only a psychological impact on the improving global economy, but have caused market players to act accordingly. Oil prices have been sent higher and equities have slumped, as have higher yielding currencies such as the Australian dollar

In a search for safe haven assets, traders have moved out of riskier, higher yielding securities. One of the main beneficiaries of these inflows has been the Swiss franc. Since February 11th, the franc has booked significant gains versus both the dollar and the euro. The turnaround in both the USD/CHF and the EUR/CHF has come at significant technical levels.

The downward movement of the USD/CHF began as the pair made a double top reversal pattern at a price of 0.9770, a price level that coincides with a 61.8% Fibonacci retracement of the December move lower. The pair is now encroaching on significant support levels. The early February low of 0.9330 and the December 31st low of 0.9300 stand out.

Looking at the EUR/CHF, the downtrend resumed as the pair failed to move above the 200-day moving average at 1.3200. Since this failure, the pair has since retraced 50% of the January to February move at 1.2800. Support in the downtrend is found at the early January high of 1.2720 with further support at the swing low on the daily chart at 1.2400.

Should the geopolitical events continue to unrest financial markets, the Swiss franc will be a significant benefactor in the search for safe haven bids.

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.