Month: March 2011

By GCI Forex Research

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)

USD

Risk sentiment has improved early Monday, mainly on signs of further progress at a crippled Japanese nuclear plant, with US Energy Secretary Steven Chu saying that the Obama administration believes the worst of Japan’s nuclear crisis is over. As a result US stock futures are trading 0.7% higher. EURUSD traded in a 1.4160-1.4181 range overnight and USDJPY traded 80.73-81.04. Japanese markets are closed for a holiday.

Military action was launched against Libya on Saturday, with US and French defense authorities saying a de-facto no-fly-zone is now in place through the country though newswires continued to report exchange of fire in different parts of the country, even though Libyan authorities once again announced a ceasefire as of 1900 GMT. Commodities are likely to remain well support amid ongoing instability in the Middle East. This week eyes will be on Europe as leaders meet to finalize arrangements for EFSF reform. The agreements from earlier in the month were welcomed by markets, but details need to be agreed and in place by Thursday if they are to be signed off at the summit and therefore put forward for ratification.

EUR

The announcement of a major M&A telecom sector deal involving a European and a US company has attracted some attention with respect to its impact on FX.. The deal, which totals USD39 bn, is planned to be settled in cash and stock. However, no details are yet available on the timing and actual settlement of the deal. The US Federal Communications Commission must approve the deal first.
As ECB expectations have been a major source of support for the euro in recent weeks, markets remain focused on central bank comments given the global economic environment has changed radically since the March ECB meeting. Nevertheless, on Friday ECB President Trichet said he had “no new message” on interest rates. He is due to speak again today at 1400 GMT. As long as risk sentiment remains stable we expect the EUR to remain driven by rate expectations. As inflation expectations are well supported on the back of firm commodity prices and with Trichet keeping his stance unchanged, the euro is likely to remain in demand.
On Friday the German Parliament voted to ban EFSF funds being utilized to buy government bonds. Our analysts note that this legislation has been in the works for a few weeks but is not legally binding. Even though steps in the right direction have been taken with regard to the Eurozone’s rescue fund, implementation risk remains.

GBP

The Rightmove House Price Index showed house prices in March increased for the third consecutive month. Average house prices rose by 0.8% m/m (prev. 3.1%) and 0.9% y/y (prev. 0.3%). The state of the housing market will feature in the BoE’s policy decisions but inflation worries seem to carry greater weight at this stage.
The BoE’s policy decision minutes will be released this week, and our economists are looking for a 6-3 vote. Crucial CPI figures will be out on Tuesday.
The 2011-12 budget will be presented by Chancellor Osborne on Wednesday along with the Office for Budget responsibility’s latest macro forecasts. Our economists note that the budget is likely to be more of an event for equity markets than gilts or FX markets.

JPY

The yen has remained capped in Asian hours. More stable risk sentiment and the high probability of coordinated G7 intervention are both limiting demand for the currency. Moody’s said the downside risks from Japan’s disasters have increased.
We expect yen downside to be limited from current levels and target USDJPY at 85.00 over one and three months.

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 GCI Forex Research

USDJPY Movement

For the 24 hours to 23:00 GMT, USD strengthened 1.79% against the JPY on Friday and closed at 80.58, as G7 countries agreed to take steps to curb the Yen’s post earthquake rise.

In Japan, on Friday, leading index stood at 101.5 in January from 100.2 in December. Meanwhile, the coincident index stood at 105.9 in January, from 103.5 in December.

In the Asian session at 4:00GMT, the pair is trading higher from the New York close, by 0.45%, at 80.94.

The first short term resistance is at 81.80, followed by 82.66. The pair is expected to find support at 80.28 and the subsequent support level at 79.62.

The currency pair is showing convergence with its 20 Hr and is trading just above 50 Hr moving average.

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.

Source: ForexYard

The price for a barrel of Light, Sweet Crude soared over the past several trading days, climbing above $103.75 in this morning’s early trading session. After approving limited action to quell Muammar Qaddafi’s assault on the Libyan rebels in Benghazi, the UN airstrikes have had the effect of pushing oil prices higher through an anticipated disruption in supply.

Economic News

USD – USD Bearish as Long-Term Investment Declines

The U.S. dollar fell against most of its major currency counterparts during last week’s trading session. It saw a 300 pip fall against the euro and a 210 pip drop against the British pound. As a result, the EUR/USD has crossed the 1.4150 threshold and the GBP/USD is trading near the 1.6220 price level.

The dollar’s weakness was brought on suddenly by disappointing economic releases from the U.S. The Long-Term Purchases report has shown that global demand for U.S. stocks, bonds and other financial assets fell in March. Net buying of long-term equities, notes and bonds totaled $51.5 billion during the month, compared with net buying of $62.5 billion in February.

In addition, the Building Permits report out of the U.S. increased less than projected in March. American housing has been steadily climbing lately, but a number of indicators have shown that the speed of recovery is slower than anticipated at almost every turn, with another wave of foreclosures nationwide dogging the housing and construction markets.

As for the week ahead, the most impacting economic releases from the U.S. look to be the Existing Home Sales and Durable Goods Orders. Traders are advised to follow these reports considering their correlation to local investment and the housing market mentioned in the above paragraphs. If we should see a continuation of last week’s trends, the USD may persist in its bearishness.

EUR – Euro Upbeat as Many Anticipate Bailout Talks at EU Summit

The euro saw a bullish trend against most of the major currencies during last week’s trading session. The euro gained about 300 pips against the U.S. dollar, and the EUR/USD pair has crossed the 1.4150 line. The 17-nation common currency also saw a 460 pip gain vs. the Japanese yen, recovering much of its losses following last week’s flight to safety by investors.

The euro strengthened last week partially due to a U.S. stock market rally. The rally has boosted risk appetite in the market modestly, and as a result increased demand for higher yielding assets, such as the euro and the British pound.

The euro was also affected by the bearish dollar. The dollar weakened last week after several economic reports have shown that the U.S. economy is recovering at a slower pace than estimated.

Looking ahead to this week, the euro actually appears relatively quiet in comparison to its currency rivals. Today’s ECOFIN meeting may produce some volatility if remarks by these economic delegates provoke any changes in risk portfolios, but otherwise little activity is due to be experienced by the EUR.

Throughout the week the euro will take a back seat to the British pound and Canadian dollar, whose respective countries will be publishing heavy reports this week. Friday’s German business climate reports, however, should be an event worth watching given their recent rise in prominence during these times of economic uncertainty.

JPY – Japanese Yen on the Defensive as Traders Test BOJ Resolve

Following Monday’s joint intervention by the G7, the Japanese yen appears to be on the defensive against unwanted volatility. The Bank of Japan’s (BOJ) policy at the moment appears to be controlling volatile price swings, but not direction. While the massive spike in yen values appears harmful to Japan’s economic recovery, it also grants the country stronger buying power in a time when it desperately needs to import reconstruction supplies and aid.

The boost to the yen’s buying power makes their earthquake and tsunami rebuilding efforts more affordable. This means the BOJ may not necessarily favor weakening the yen at the moment, but controlling for its volatility instead.

Many traders are expecting a technical buy-in on the yen as this anticipated inaction by the BOJ to control direction allows traders to capitalize on numerous issues which favor yen-buying. These factors include geopolitical instability, unwinding carry trades, risk aversion, and low liquidity given Japan’s absence from today’s market as the nation celebrates Vernal Equinox Day. Additional yen strengthening should be expected this week as a result.

Crude Oil – Crude Oil at $103.75 as Bombs Descend on Libyan Targets

The price for a barrel of Light, Sweet Crude soared over the past several trading days, climbing above $103.75 in this morning’s early trading session. After approving limited action to quell Muammar Qaddafi’s assault on the Libyan rebels in Benghazi, the UN airstrikes have had the effect of pushing oil prices higher through an anticipated disruption in supply.

Market analysts are now expecting the UN joint naval and aerial operations to provoke a longer-term decline in oil production from the region as the Libyan supplies are removed from the market share over the coming weeks, with the possibility of an even longer period if tensions are not resolved soon. So long as the battle against Qaddafi continues, and as recovery efforts in Japan get underway, traders should expect a persistent uptrend in oil prices as speculators buy into the notion of a decline on the supply side.

Technical News

EUR/USD

The surging price of this pair has not yet signaled any downward correction on the longer-term technical indicators. The RSI on both the daily and weekly chart is just shy of entering the over-bought region. However, there does appear to be a bearish cross forming on the daily and weekly Stochastic (slow), suggesting an impending downturn may be developing. Waiting for the swing and then entering short may be a wise move over the coming days.

GBP/USD

This pair is once more testing the 1.6220 price level and meeting strong resistance. There appears to have been a recent bearish cross on the weekly Stochastic (slow) and the oscillator is now moving in a downward direction. Going short on this pair appears to be preferable today.

USD/JPY

Following last week’s intense volatility in this pair, most indicators look to be leveling off in neutral territory. Not many indications are being signaled by the mid- and long-term charts. Waiting for a clearer signal may be a wise decision as a result.

USD/CHF

There seems to be a recent bullish cross on the weekly Stochastic (slow), highlighting a growing level of upward pressure on this pair. There does not seem to be much corroborating information to support this move, however. As a result, it appears keeping with the current downtrend and going short looks more probable over the coming week.

The Wild Card

Silver

Silver prices have been bouncing against the $36 an ounce price level for the past several days and failing to breach. With the US dollar in decline since Wednesday, commodity prices may find additional support this week. However, a few indicators on Silver’s long-term charts suggest that it could see another bounce off the $36 price level. If this commodity fails to breach that line once again, forex traders may be able to make lucrative profits with a short entry position near that price.

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.

EUR-JPY

After the intervention of the G7 countries in the weakening of the JPY in the weekly graph there is a creation of a major hammer which crosses the whole range at about (900 pips)

The break out of the range eventually will need to give a target of the range itself, because we can be subject to a false break out and the technical close stop to take the deep range target and thus, this is the second size of the range which will set a shorter time frame, as for example the break out in the 4 hour time frame which began to retrace the last uptrend before the closing of the week.

Potential Trade

4 hour time frame

Long in the breakout 115.60

Target is 118.10 (It is 127.20 Fibonacci of the range on the daily time frame and retraced  at 38.2 Fibonacci of all the downtrend which is preliminary- red area)

There is a stop under the channel that was created before the breakout.

Weekly time frame

4 hour time frame

EUR-GBP

The pair that broke out the upward diamond pattern reached an important resistance point between 0.8750 to 0.8800, the resistance area is also known as the “sweet zone” to the bear wolf pattern and its target can be seen in the discontinuous red line.

Since the 50^th CCI indicator is still showing an upward, high momentum, it has to integrate with the short pattern just after the decline of the CCI 50 under the 100^th level (horizontal blue line) otherwise the breakout can be expected at 0.8800 and a potential peak check of 0.8940, there it is also the full target of the break out diamond pattern.  

RISK DISCLAIMER

Forex trading involves high risk. Before any trade, you should consider carefully the investment objectives and the level of risk. The data sent by mail is not necessarily real-time data or precise. Real-Forex is not liable for the losses resulting from the utilization of the data. Real-Forex (Finnocorp Trading Solution Ltd

.) is not liable for losses or damages as a result of reliance on the information provided by e-mail or on the overall data, quotes, charts, signals buy / sell. It is hereby clarified that the investor must be aware of risks involved in trading in financial markets, which is a form of investment that may contain potential risks.

Real-Forex team

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By Cedric Welsch

We have become daredevils in the choices we make. In fact, risk taking is the drug of our choice, this has ricocheted into the stock market, and the currency market boom experienced in last decade all across the global stratum. However, when it rises there is a sailing effect without sound and when it crashes there is a thud bringing the sphygmomanometers out. Still, you would feel those who have thorough know how of market are more controlled in their reactions. They judge the reason for it in a better way and soon begin to pick up the coping mechanism for the loss.

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Currency trading courses teach you about the entry and exit point and the art of dealing in many currency pairs simultaneously. Today, internet has globalized the way we perceive world and thus you can play two to three markets at the same time without it affecting your course of movement. What may be the adequate guide? None better than technical analysis; it is the science of utilizing price and volume indices in the past to bring forth the direction in which the stocks might move. The technical analysts look at the past data and then make inferences about the support and resistance meters. The idea is to use candlestick patterns, the Bollinger lines and a lot more to create such an arithmetic enquiry.

Information related price movement also has a deep base and the courses teach us precisely that. Any big news can change the way you are looking at a currency. A flood at coastal Florida can make the Wall Street jump on its hams; thus the courses on currency education teach you to respect the news and information related currency volatility. Dealing in currency pairs can be augmented with the help of softwares and EA’s, however you must not let them supersede you.

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Last week we finally saw the EUR break, close and hold above the strong technical and psychological level of 1.40. Our earlier analysis indicated that any break above this level would lead to a move to much higher areas; after Thursdays close above the 1.40 level we on Friday saw a large move pushing the market higher. The pair managed to close above the next level of resistance which was formed by October 2010 highs. November highs of 1.4280 are the next resistance area the market must break in order to continue this Bull Run.

After a sustained period of resistance, 1.40 now sits as support and any pull backs towards this area could be seen as potential opportunities to go long. With such a bullish end to last week its very possible of a pull back towards support areas early in the coming week.

The weekly charts are showing a potential succession of higher lows and higher highs suggesting the market will continue its uptrend started mid 2010. A break above the last higher high in the pattern below will suggest we’re continuing with the uptrend. We would then need to see a pull back lower forming a higher low followed by another push up before we can fully confirm the direction of this market on the weekly time frame.

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By Terri Polk

Forex trading (also known as Forex, or FX) is a term that describes the practice of trading between different currencies across the world. It is unlike trading on the stock market in that the interaction takes place directly between the two parties doing the trading. This practice is dubbed the OTC market (Over The Counter).

When currency is traded, it is always between two different currencies, which produces what is known as a cross. The cross consists of the currency being traded and the currency it is being exchanged for (for example: the euro/US dollar is a cross, as is a Japanese Yen/Us Dollar, etc). Within the Forex market, the most volume is in the spot market, named as such because trades are settled “on the spot” (though technically, this means two banking days).

When currencies are traded, they are usually sold only when the broker expects the currency it is being bought for to increase in value relative to the currency being sold. Once the currency being purchased does increase in value, the only way to obtain profit is to sell back the other currency being traded. When only one half of the deal has been done it is referred to as an open position, meaning a specific currency cross has been brought or sold but the trader has not yet sold or bought back the other end of the deal required to “close” the trade.

Interestingly, much of Forex trading is speculative, meaning the party trading the currency does not ever take delivery of the actual currency. The trading, therefore, was based on the speculation of price shifts of that currency.

Forex trading has many advantages. For one, it can be traded 24 hours a day, 5 days a week. It is also such a large market and so liquid that there are always available buyers and sellers. Because of its liquidity, Forex trading tends to be stable in its pricing.

Forex is usually traded without commission, which broadens its appeal. Higher leverage is allowed with Forex, which means large trades can be conducted with minimal actual investments, creating potential for large profits. And speaking of profits, another big appeal of Forex trading is that it can be profitable even in failing markets, as currency is constantly changing and shifting, with each shift equating to a potential for a profitable trade.

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The volatile of the EUR/CAD pair continues to be affected by the volatile forex market. The last two weeks has seen a lot of bullish strength in the EUR/CAD pair. However, as I demonstrated below, it seems that the pair’s bullish run may have run out of steam, and a bearish correction could be underway soon. This might be a good opportunity for forex traders to enter the trend at a very early stage and at a great entry price.

• Below is the daily chart of the EUR/CAD 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 a bearish cross, signaling that the next move may be in a downward direction.

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

• Point 3: The Williams Percent Range signals further bearishness for the pair, which in turn indicates further downward pressure to occur anytime soon.

EUR/CAD Daily Chart

It’s a similar situation for the Cable as it has been since the start of Feb. We’re still in a range bound market with no clear indication as to when we’re going to ‘break out’. During the last couple of days in February and the first couple in March we saw the market break above the important 1.63 level by 50pips; however we saw the pair quickly reversed any gains and pushed back into the range consequently falling back towards the 1.6 level. Here we saw the market break lower followed by another quick reversal and a push back into the range.

Out analysis last week for the GBP suggested we may see a bullish market pushing the pair back towards the upper end of the range. The early part of the week was very choppy with little direction; a push up was followed by a push down. Finally towards the end of the week we saw some strong bullish momentum pushing the cable back towards higher ground and closing just shy of 1.63.

Price action is giving little away on the daily timeframe. We’re nearing the higher end of the range again and we may have to wait for any breaks out of this choppy market before entering any trades. The next significant levels of resistance are 1.63 – 1.6350. Any break and close above these levels will suggest more bullish momentum. Being such strong resistance areas recently we will be looking for any suggestions of rejection and opportunities to go short on the lower timeframes.

The weekly charts are showing interesting information as last week closed as an inside bar. Looking at the cable recently on the weekly timeframe we can see 2 inside bars have formed since December all of which have been continuation patterns resulting in the market continuing to push higher. The weekly timeframe suggests the same as the daily. We’re still in a very choppy market and need to be patient waiting for any confirmation signals before deciding which direction the cable is headed for

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At the start of this week, two forces appear to be converging on traders. The first is the impact of a G7 joint intervention on the forex market to lessen the Japanese yen’s volatility. Japan appears to favor a stronger currency at the moment as the increased buying power allows them to purchase reconstruction materials at a better price.

The second element is the commencement of UN-authorized aerial and naval strikes on Muammar Qaddafi’s Libyan forces. By approving a limited campaign to stem Qaddafi’s military retaliation on the rebels in Benghazi, the UN strikes have also created the conditions to shift traders in and out of riskier assets and also to drive oil prices higher through speculation of a supply disruption.

Today’s calendar events, while meaningful, will likely have less impact on the forex market than the news emerging from the above-listed global forces.

Here is a round-up of today’s events:

14:00 GMT: USD – Existing Home Sales
Previous: 5.36M. Forecast: 5.15M.

The only meaningful data release from today will be a housing figure from the United States measuring the sale of already-existing homes. The report is a leading indicator of economic health and financial recovery as the growth of the housing market has a direct correlation with multiple factors of the American economic recovery. A stronger figure should help boost the USD in the short-term.

14:00 GMT: EUR – ECB President Trichet Speaks

The European Central Bank (ECB) President, Jean-Claude Trichet, is due to testify on monetary policy before the European Parliament in Brussels today. These official testimonies are often the cause of intense volatility in EUR pairs as many investors try to speculate on future interest rate decisions based on his selection of words in describing the ECB’s position on monetary policies. No predictions on effect can be expected, but traders should expect some price swings during his testimony.