Month: April 2011

See the video archive on our blog or leave a comment

USDCHF is showing bullish divergence on the daily charts. The US Dollar index is also approaching major support so this divergence could be a useful confluent factor for any trader looking to long the Swissie. The current area is aligned with the recent swing low 0.8918 which gave a near 400 pip bounce when hit.

I will personally be looking for one push lower at these levels followed by a price action reversal signal before considering a long. With EURUSD also hitting the 1.4500 level a small corrective move for the Dollar is certainly not out of the question.

Price action early next week should give an indication of the major currencies short term direction as all of the majors are at significant levels.

For further updates check my fx currency trading blog.

Industrial production increased 0.8% nationwide in March, according to a report released by the Federal Reserve today. That was higher than the 0.6% increase economists had expected. Manufacturing makes up 75% of the measure, with mining and utility output constituting the remainder. Output of motor vehicle production climbed 3% in March after rising 4.6% in the month prior. All 12 Federal Reserve districts reported a pickup in manufacturing since the March report, with regional industries expanding including auto and auto parts, commercial aircraft and fabricated metal products, the Fed said. Manufacturing industries account for 11% of the economy, and the industry added 17,000 workers in March for the 5th straight monthly gain.

The Federal Reserve Bank of New York’s general economic index showed a rise to 21.7 in April from 17.5 in March. Economists had actually expected a decline in activity, with the median estimate for the index to report at 15.5. The so-called Empire State Index covers New York, northern New Jersey, and southern Connecticut, and measures manufacturing strength in the region. Gauges measuring orders, sales, and employment all improved this month, sign American companies are benefiting from increased business investment and the continued strong growth in developing economies. A measure of factory employment rose to 23.1, reaching its highest level since May of 2004, up from 9.1. The measure of new orders climbed to a yearly high of 22.3 from 5.8, and a measure of factory shipments jumped to 28.3 from 1.6. Prices also increased, with the index for raw material costs increasing to 57.7, the highest since August of 2008, from 53.3 in March, and the index for prices received rising to 26.9 from 20.8.

By Russell Glaser

Spot gold prices rose to a new all-time high yesterday. On rising momentum, prices should continue to rally with an initial target at $1,500.

Looking at the daily chart, spot gold prices fell back to the early March high at $1,444 before moving higher to a new all-time high at $1,479. Prices could continue to move higher with a target at the big round number of $1,500.

To the downside, the late March lows at $1,410 should prove to be resistive as well as the mid-March low of $1,380, a level that the rising trend line from the July low is encroaching upon. A break below $1,308 would unravel the longs and signal a reversal of the bullish 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.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

The pound was bid this morning versus the euro and the dollar following hawkish comments from Bank of England Monetary Policy Committee member Andrew Sentance.

Earlier today BOE MPC member Andrew Sentance said the decline in inflationary pressures may be only temporary given sterling’s deprecation. This could send inflation above 5% and increasing the need for an adjustment higher to the interest rate. Sentance claims that a weak pound has kept inflationary pressures high as imported goods continue to add to inflation levels. A stronger pound would help to counteract rising import prices as this would make imported goods less expensive

Sentance is one of the most hawkish members of the MPC and has voted to raise interest rates at every MPC meeting since June of last year.

Recent data shows inflationary pressures run high 2010 CPI rose by 4%. While the inflation level is above the target of the Bank of England the data was well below expectations for a year over year increase of 4.4%. The lower than expected inflation numbers has pushed back market expectations for a BOE interest rate increase to August from May.

Sentance expects inflation will pick up and has voiced his concerns repeatedly, but his term as an MPC member expires in May and his comments may be shrugged off by traders as the day progresses.

After the comments hit the news wires the GBP/USD traded higher at 1.6353. Support for the Cable is at last Monday’s high of 1.6180 with resistance at 1.6425 and 1.6460. The EUR/GBP was lower at 0.8824 with support found at the trend line off of the mid-February low at 0.8790. Resistance comes in at the October high of 0.8940.

This afternoon a slew of US data releases are on the calendar with the most important being the Core CPI m/m release at 12:30 GMT. Lower than expected inflationary pressures in the US should keep the dollar on its back foot going into the weekend.

Source: ForexYard

As the debate on international imbalances intensifies, China’s monetary policies are coming under direct pressure and could have significant impact on the US bond market, which may be partially behind the USD’s decline since yesterday evening.

Economic News

USD – Differing Monetary Policies in US and Europe Drags on USD

The divergence between the monetary policies of Europe and the United States has begun to cause reactionary movements in the foreign exchange market. The US dollar, recently gaining ground on positive fundamentals and rising risk aversion, now appears on the defensive as risk appetite returns.

Much of these losses may be attributed to a return of confidence in regards to the euro zone as a few analysts have begun to forecast something resembling an end to the region’s debt woes. The EUR/USD, in today’s morning hours, felt some sharp reverberations as traders shifted back into EUR positions. This has pulled down on the dollar, moving the pair back towards 1.4500. Whether or not the dollar will fall beneath this support line is anyone’s guess, but for the moment the G7 meetings appear to have produced favorable results for the European currencies.

As with yesterday’s economic calendar, today’s market events are almost exclusively American. Most important today will be the publication of the Consumer Price Index (CPI) and the University of Michigan’s (UoM) Consumer Sentiment report. Both are expected to show stability and growth, respectively, and may help the USD regain some of yesterday morning’s glory before closing out for the weekend.

EUR – G20 and IMF Meetings May Affect EUR Sharply

The euro’s return into a dominantly bullish posture in yesterday’s late trading hours is largely explained by two market forces. The first are the G20 and IMF meetings taking place since yesterday, which have been discussing the Japanese nuclear crisis in more depth, but also addressing the direction of the Chinese Yuan.

As rhetoric on international imbalances intensifies, China’s monetary policies are coming under direct pressure and could have significant impact on the US bond market, which may be partially behind the USD’s decline since yesterday evening.

The second market force boosting the EUR is a return of risk appetite as many analysts have begun to believe that Europe is handling its debt crisis effectively and may in fact raise rates once more in the immediate months ahead. Adding into the euro’s rise is also a policy of euro-buying by US reserve managers, according to a report by BNP Paribas.

European inflationary figures on the consumer side are set to be released today and may help traders gauge how effectively growth rates are maintaining throughout the region. Europe’s trade balance will also be published, but this figure has historically had little impact on the EUR. Traders will want to watch any developments out of the G20 meetings today as any direct attacks on China could undermine US bond strength, thus pushing investors into the EUR en masse prior to the week’s close.

JPY – JPY Granted Reprieve as Investors Shift Focus; Turns Bearish

The Japanese yen was trading lower this morning as Japanese pension funds and a variety of importers began to purchase US dollars with yen amid a downturn in negative news regarding Japan. The reprieve from international skepticism helped alleviate international pressures on the JPY, allowing many investors to shift direction in their portfolios heading into the early Asian session today.

Discussions about a future intervention by the Bank of Japan (BOJ) have begun to crop up lately, but many maintain the sentiment that now is not the time for Japan to intervene simply due to the international climate surrounding the G20/IMF meetings.

Japan’s currency strength has traditionally hindered its exporting capability, but at a time of national reconstruction and emergency management the increased buying power is actually helping the Japanese economy for the time being. Traders should, of course, be on the watch for any news of an intervention, but shy of such a move the JPY should continue to trade near its present value.

Crude Oil – Oil Prices Supported by Stockpile Data and G20/IMF Meetings

A decline in US crude stockpiles initially supported the price of Crude Oil, but a sudden shift in risk appetite caused a sharp downturn in oil prices back towards $106 a barrel. As of this morning, however, the price of oil received a large injection of support from economic fundamentals favoring commodity buy-ins.

Traders have been eyeing the G20/IMF meetings begun yesterday for any news regarding major oil consumers, since volatile shifts in currency values could undermine growth. So far, though, the meetings have been positive for risk appetite and thus growth, and appear to be revealing stability in the commodity markets, though with reservations about China. Today’s meetings will likely be more impactful considering the topic of discussion and traders will want to keep an eye out for any comments emerging from the discussions.

Technical News

EUR/USD

The 8-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily chart’s RSI is already floating in the overbought territory, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

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

USD/JPY

The price of this pair appears to be floating in the over-sold territory on the 8-hour chart’s RSI indicating a downward correction may be imminent. The upward direction on the daily chart’s Slow Stochastic also supports this notion. Going long with tight stops may turn out to be the right choice today.

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 signals that a bullish reversal is imminent. An upward trend today is also supported by the 8-hour chart’s RSI. Going long with tight stops may turn out to pay off today.

The Wild Card

Crude oil

Crude oil prices rose significantly yesterday and peaked at $108.70 a barrel. However, the daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the 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.

AUDUSD stays in a trading range between 1.0389 and 1.0581. As long as 1.0389 key support holds, the price action in the trading range is treated as consolidation of uptrend from 0.9704, another rise towards 1.1000 is still possible, however a break above 1.0581 is needed to confirm the resumption of uptrend. On the other side, a breakdown below 1.0389 will indicate that the uptrend from 0.9704 had completed at 1.0581 already, then deeper decline could be seen to 1.0100-1.0200 area.

Forex Signals

First Solar (FSLR) said today its president of operations, Bruce Sohn, is leaving the company effective April 30, and will not be replaced. First Solar said Sohns direct reports will continue their current responsibilities with new reporting lines, in many cases to CEO Rob Gillette.