Month: July 2011

The strength of the Russian ruble (RUS) was seen climbing over 0.3% against the US dollar (USD) today after data revealed that China was boosting its oil demand over the coming months. While experiencing a modest decline of approximately 0.5% yesterday due to risk aversion and a strengthening USD, the ruble now appears poised to pare these losses and ride the wave of profits which derive from oil exports.

Russia’s economy has been shaky over the last several years, most recently from a food crisis which saw prices begin climbing around this time last year, eventually forcing the country to severely reduce its exports. Climbing oil prices helped offset some of the economic disadvantages brought as a result of the food price crisis, but Russian business leaders, as explained in an earlier article, see less value in domestic investments.

The Russian economy cannot depend solely on the whim of oil demand to support its economic growth. The crisis of confidence revealed in the survey of Russian business leaders highlights the underlying tension which surrounds Russian investments. The ruble may make gains in the short-term from oil profits, but if steps are not taken to address the lackluster support seen at home, a longer-term bearish movement may be impending.

July 19 (Bloomberg) — Alastair Campbell, former communications chief for Tony Blair, discusses Prime Minister David Cameron’s links to former News of the World editor Andy Coulson. Campbell, speaking with Poppy Trowbridge on Bloomberg Television’s “The Pulse,” also talks about the outlook for today’s appearances by News Corp.’s Rupert and James Murdoch before a U.K. parliamentary select committee. (Source: Bloomberg)

The economic reports from the US housing sector earlier today has helped push back against some of the pessimism dominating the market lately. US housing, while still not performing at a stellar rate of growth, nevertheless appears to be holding its own.

Data from today’s housing starts and building permits reports revealed solid and stable growth, mildly above market forecasts. Expectations for both were in the ball park of 0.58M and 0.61M, respectively. Actual results were in at 0.63M and 0.62M.

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July 19 (Bloomberg) — Bloomberg’s Olivia Sterns reports on the phone-hacking scandal engulfing Rupert Murdoch’s News Corp. (Source: Bloomberg)

The euro is stronger versus both the dollar and in the crosses as Thursday’s EU summit approaches. Traders may be looking for a “buy the rumor, sell the fact” type scenario with the euro. The kiwi is now trading at a 30-year high versus the dollar on better terms of trade and growth expectations.

Yesterday’s failure of the EUR/USD to breach below the 1.4000 level has helped the euro rebound during today’s European trading session. A softening of the ECBs position against a default was perhaps hinted at by Ewald Nowotny, the governor of the Austrian Central Bank and a member of the ECB governing council. Nowotny said a “selective default” by Greece might not have “major negative consequences”. The euro later reached an intraday high at 1.4216 following mixed ZEW surveys. The German ZEW Economic Sentient survey shows analysts and investors are more pessimistic going forward. This hints at economic weakness in the euro zone for the second half of the year.

Multiple options are being considered for a second Greek bailout package and these will be debated on Thursday as the European elite are scheduled to meet in Brussels. The split between the ECB and Germany remains the biggest roadblock to any deal. Any gains in the EUR/USD may make for a selling opportunity. A breach of today’s intraday high at 1.4220 would likely test the resistance from last week’s high and the 200-day moving average at 1.4290.

The kiwi has jumped out to a 30-year high versus the USD. The New Zealand dollar has performed particularly well as a rising trade surplus and increasing GDP has boosted the commodity currency. Rising inflationary forces may also force the RBNZ to raise interest rates sooner than expected. The NZD/USD is up 19.5% since reaching a low in mid-March. In comparison, the AUD/USD is only up 10% over the same period.

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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.

By David Adams

There are a wide variety of software programs available to assist e-mini traders in their trading endeavors. Some are quite helpful, others less so. Today I intend to discuss a popular program called Decision Bar. This program is multi-featured and can provide a number of trading signals for e-mini traders to utilize. Like all programs, some of the features are very helpful, and others are less effective.

My trading style relies heavily upon plotting support and resistance. I am a little embarrassed saying that there was a time in my life (which my children referred to as the olden days) when support and resistance lines were transcribed to hand-drawn charts, which was a time-consuming and tedious chore. Additionally, it was once believed that support and resistance were static lines that remained in place throughout the course of the trading session. Modern-day support and resistance theory relative to e-mini training has adjusted to a concept based on dynamic support and resistance. In short, this means that both support and resistance adjust to differing levels throughout the course of the day. This has been a great asset for support and resistance traders, and provides e-mini traders with an up to date picture of likely movement between support and resistance.

For reasons outlined in the above paragraph, I have found Decision Bar a useful and profitable tool in my trading arsenal. The program plots past support and resistance lines along with present dynamic support and resistance. This feature allows you to effortlessly keep track of past and present lines without the tedium of manually inserting the lines. For any e-mini trader, this greatly reduces the trader’s active workload and allows him or her to concentrate on developing setups and exit strategies. In short, I have found this feature of Decision Bar invaluable in my trading.

On the other hand, Decision Bar provides buy and sell recommendations which I am less likely to utilize. This is not to say that of the recommendations are inaccurate, but I feel more comfortable with my own chart reading and trade initiation than the recommendations generated by Decision Bar. This program also has a very effective program to recommend stops, and I find this feature most helpful. As you may have already noticed, I am more interested in the raw data (in the form of old support/resistance and dynamic resistance) than the specific buy and sell signals generated by the program.

In summary, Decision Bar has some very effective strengths which I value; but it also has some features that I feel are less helpful than these support/resistance and dynamic resistance readings generated by the program. I can say that this program has been an asset to my trading and I have been a long-time subscriber. If you are looking for specific buy/sell signals in your e-mini trading, this program may not suit you. On the other hand, if you need very accurate support/resistance information, I have found no program the equal of Decision Bar.

About the Author

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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.

By ForexYard

News of debt contagion spreading across the euro zone has several economists worried that a toppling of consumer confidence may be up next, followed by additional ratings downgrades that lead into an ever deepening spiral of debt and default. With today’s ZEW reports on economic sentiment expected at 10:00 GMT, forex traders may catch a glimpse into the early evolution of the investment landscape as it turns towards another crisis.

Economic News

USD – USD Rising as Safe-Havens Soar

The US dollar (USD) was seen increasing yesterday as traders began to seek shelter following speculation that growth forecasts across Europe will become further depressed as traders flee risk. The value of safe-haven assets like the greenback and Swiss franc (CHF) have been buoyed by a shift away from higher yielding assets.

The news so far has inched traders into a position of market pessimism which has helped to lift the value of the USD as riskier currencies like the EUR take a dive. With the economies of Europe largely absent from yesterday’s calendar, little news emerged which put a dent in the amount of pessimism surrounding the forex market, particularly in the fragile euro zone.

With a heavy news day expected today, however, traders are sure to see a return of portfolio adjustment as volatility becomes elevated. The US economy will be publishing two reports on housing at 13:30 GMT. Should today’s news disappoint, there is a possibility that more investment will get pushed towards the safety of the greenback, driving USD values higher. Traders will also want to keep an eye on euro zone economic news as it may also impact risk sentiment heavily during the morning sessions.

EUR – Euro Zone Consumer Confidence under Review Today

The euro (EUR) has been seen trading lower this week as traders assess the risk sentiment across the region. Against the US dollar (USD) the euro was seen trading bearish in late trading as shifts into safe-haven investments pulled money out of the 17-nation currency and into other stores of value.

News of debt contagion spreading across the euro zone has several economists worried that a toppling of consumer confidence may be up next, followed by additional ratings downgrades that lead into an ever deepening spiral of debt and default. Rising inflation poses a threat in this scenario and the euro zone faces the debacle of lifting interest rates to quell inflation, but gouge their ability to pay off debt; or hold rates steady to allow for more growth while inflation takes off.

On tap today, traders will witness the release of two significant reports on consumer confidence. At 10:00 GMT, the organization known as ZEW will be publishing its economic sentiment reports for Germany and the broader euro zone. Should the figures reveal stagnation in consumer and business optimism, we could see heftier flights to safety in the days and weeks ahead. This would likely push the value of the EUR lower over the long-haul as traders continue to flee risk in larger numbers.

AUD – Defensive Trading Leads to Weaker AUD

The Australian dollar (AUD) was trading weaker versus most of its currency counterparts yesterday after data releases have begun to shift traders back into safety. The Aussie has been losing momentum these past few weeks as risk aversion becomes predominant in the global market. Fears of a debt contagion spreading from Greece to Italy now factor greatly into global risk assessment, as does the monetary policy of China in regards to the Pacific economies.

This movement has gouged the AUD against all of its currency rivals, especially against safe-havens like the US dollar (USD) and Japanese yen (JPY). With Australia’s central bank releasing the minutes from its latest monetary policy meeting, there is a chance that speculators will pick up on several cues to adjust their positions in regard to the Aussie. Being linked with commodity prices could also help lift the AUD in the near future, but general risk aversion is likely to push the currency lower as traders flee risk.

Oil – Oil Prices Drop as Investors Weigh Global Growth Potential

Crude Oil prices dropped moderately towards $95.10 a barrel Monday as sentiment appeared to favor a downturn in global industry alongside a slump in demand. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

As investors sought safety, the value of crude oil, which has been seen rising since the middle of last week, fell to a weekly low of $95.10 a barrel. A sudden jump in dollar values due to this week’s risk averse environment has helped many investors ram up their short-taking positions on physical assets. Should Crude Oil sentiment hold steady this week, oil prices may continue to meet resistance.

Technical News

EUR/USD

After a gapping lower to start last week the pair moved below the 200-day moving average and on the subsequent rebound the EUR/USD found resistance at its 100-day moving average, a previous level the pair struggled to close below between the months of April and July. While the rebound higher was sharp the failure of the pair to move above the 100-day moving average and to close above the opening gap signals weakness in the pair. Initial support is found at last week’s low at 1.3870 followed by the rising trend line from the June 2010 low which comes in at 1.3750. A break here is significant as it would compromise the long term uptrend for the euro, exposing the 50% retracement level at 1.3410. To the upside last week’s high at 1.4290 is the first resistance followed by the falling resistance line from the May and July highs at 1.4490.

GBP/USD

The GBP/USD price collapsed only to find support at the 38% retracement level of the May to April move at 1.5780 while the rebound higher was capped at the neckline from the head and shoulders reversal pattern. Positive divergence is found on the RSI-14 as the price made a new low but the RSI did not. This signals a potential warning sign for sterling bears. Resistance is located at 1.6230 off of the falling trend line from the April high. Above this level the previously broken trend line from the May to April move at 1.6330 will come into play. To the downside a break of 1.5780 would signal a resumption of the downtrend and would target 1.5650 which has served as both support and resistance in October and in December of last year.

USD/JPY

The USD/JPY downtrend resumed with a vengeance last week as the pair broke below the 80 yen “line in the sand” and the support from May 5th at 79.55. This level has now turned into resistance as often happens to previously broken support levels. Only last week’s low at 78.46 and the bottom of the long term wedge from Sept 2004 at 77.60 stands in the way of the all-time low at 76.11.

USD/CHF

The Swissie has moved in one direction and one direction only. The pair made a halfhearted attempt close above its 50-day moving average and moved sharply lower from there setting a new all-time low at 0.8082 which serves as the initial support level. Any move higher may find resistance at 0.8275, the falling trend line from the February high which comes in at 0.8450, and 0.8550.

The Wild Card

S&P 500

A potential head and shoulders reversal pattern has formed on the daily chart of the S&P 500 after the index failed to move above the early May high. The neckline of the pattern runs underneath the March and June lows and comes in at 1,260. A break below the neckline would confirm the reversal pattern. Another key level to watch is the 200-day moving average at 1,280. Forex traders should note that a measured move from the chart pattern shows a potential decline of 120 points.

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 European periphery continues to come under pressure with yields of Italian and Spanish debt trading at stressed levels while threats of a US rating downgrade has prevented the US dollar from making substantial gains. The Canadian dollar looks set for further gains given market positioning and increased inflationary pressures.

Today’s Key Economic Data Events:

EUR – German ZEW Economic Sentiment – 09:00 GMT
Expectations: -11.8. Previous: -9.0.
Today’s German ZEW survey is expected to show declining economic forecasts as the European debt crisis weighs on future sentiment of analysts and investors. The euro is susceptible to events surrounding the debt crisis and public comments by European leaders as Thursday’s European summit approaches. ECB President Jean-Claude Trichet was firm in his opposition to any selective default by Greece. Initial resistance for the EUR/USD comes in at the 100-day moving average at 1.4290. Support is found at last week’s low of 1.3835.

USD – Building Permits – 12:30 GMT
Expectations: 0.61M. Previous: 0.61M.
US Housing numbers are forecasted to remain week but FX investors will likely be focusing on the US debt crisis. Last week S&P put the US on credit watch with negative implications. S&P said, “There is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days.” Cable has resistance at the falling trend line from the April high which comes in at 1.6225. Support is located at last week’s low/38% Fibonacci retracement of the May 2010 to April 2011 move at 1.5780.

CAD – BOC Overnight Rate/Rate Statement
Expectations: 1.00%. Previous: 1.00%.
Consensus forecasts are for the BOC to hold Canadian interest rates steady though price action of the USD/CAD suggests the forex market expects otherwise. The BOC may use a more hawkish rhetoric given the spike in inflationary pressures during the month of May. Core CPI increased 0.5% while headline inflation jumped to 0.7%. The CFTC Commitment of Traders Report also shows speculators have once again turned bullish on the Canadian dollar. Initial support for the USD/CAD is found at 0.9520 and a break here will likely test the May low at 0.9444. Resistance comes in at 0.9780.

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