Month: May 2013

By CountingPips.com

The US dollar declined in forex market trading on Monday after a strong run throughout the last two trading weeks. The American currency fell Monday against the euro, British pound sterling, Japanese yen, Swiss franc, Canadian dollar, Australian dollar and the New Zealand Kiwi dollar, according to market data at the close of the New York trading session. The major economic events of the week start on Tuesday and will provide ammunition to see whether the dollar uptrend continues, a consolidation phase begins or the dollar starts to shed some of its gains.

Quick Major Currency Pair Analysis:

Euro/US Dollar: The euro gained against the US dollar on Monday but ran into resistance at the 1.2900 area. To see more bullish momentum to the upside, we would have to see this pair get above the 1.2900 level as well as the previous support and resistance level at 1.2930 before testing the major 1.3000 threshold. Bearish action may find support at the 1.2875 level and likely the 1.2850.

British pound sterling/US dollar: This currency pair may see action on Tuesday with producer price and consumer price data out of United Kingdom. The GBP/USD reached as high as 1.5280 on Monday before pulling back but remained above the 1.5250 support level. A fall below this level would put the cable on a course to test the 1.5225 to 1.5200 area.

US dollar/Japanese yen: The dollar fell under the 102.50 level on Monday against the yen after closing above 103 on Friday for the first time since 2008. The 101.75 to the 102 area is in focus to see whether this pair finds support and resumes its uptrend or if a deeper correction takes place.

US dollar/Swiss franc: The 0.9650 level provided support on Monday for this currency pair despite a decrease for the day. This level looks to be important support for this pair as a close below would likely open the pair to decline under 0.9600 which has been a previous support and resistance level this year. Any sharp upward movement may be capped at 0.9750 in the short-term.

US dollar/Canadian dollar: The Canadian dollar rebounded on Monday after falling sharply last week and closed under the 1.0250 level. This is a very important level in the short-term to watch and see whether the bulls or the bears are driving this currency pair. Advancement above this level will bring into focus the 1.0275 point that has provided strong resistance over the last few months.

Australian dollar/US dollar: The Aussie bounced back Monday although gains were capped above 0.9800. Further bullishness would have to get above 0.9800 and the 0.9825 price levels to challenge the 0.9900 area. Support should be seen around 0.9750.

New Zealand dollar/US dollar: This pair on Monday fit resistance coming in around the 0.8175 level which had been a common previous support and resistance point. On the downside 0.8100 looks to be a strong support level while the 0.8175 all the way to the 0.8205 area could prove to provide key resistance.

Tuesday May 21 Major Economic Events:

Australia — conference Board leading indicators
Australia — reserve bank meeting minutes
New Zealand — reserve bank 2-yr inflation expectation
United Kingdom — consumer price index
United Kingdom — producer price index

Written by Zac Storella, CountingPips Forex Blog & Currency Pair Technical Analysis

White House Press Secretary Jay Carney said on Monday that President Barack Obama is endorsing a federal shield law for reporters seeking to protect their confidential sources, and ‘is very happy to see the Senate take it up again.” (May 20)

Does the US dollar take a breather after strong couple of weeks or do we continue to see further gains?

The US dollar continued to show its strength in the currency markets last week and increased against the other major currencies across the board. Notably, the USD rose against the Australian dollar, New Zealand dollar, Canadian dollar, Swiss franc, British pound and the euro for a second straight week while advancing against the Japanese yen for third consecutive week.

Major Currency Pairs:

EUR/USD: The euro closed lower on Friday for a second consecutive weekly decline. This is the lowest weekly decline since late March. Further decline this week will bring up a test of the 1.2750 level which has been a recent support level in March and November. This price level was also a resistance level in both May and June of last year so 1.2750 is worth watching. If we see prices advancing this week, look for the 1.2875 level, 1.2930 level and the 1.3000 major levels to come into play.

GBP/USD: The British pound sterling decreased last week for a second consecutive week and closed at the lowest level since the middle of March. This pair ended the week lower than the 1.5250 level which had acted as a major previous support and resistance threshold. Looking ahead, we see overhead resistance at the 1.5220 to 1.5250 price points and lower support levels coming in around the 1.5150 and 1.5100 levels before the major psychological level of 1.5000 becomes focus.

USD/JPY: The US dollar continued its surge against the Japanese yen and closed higher for a third straight week. This pair closed over the 103 level of the first time since October 2008 as the Bank of Japan’s use of monetary policy to fight deflation has sharply weakened the yen. Short-term support for this pair looks to be 102 with major 100 level for the time being in the rear-view mirror. Further upside momentum may see the 103.50 level as potential short-term resistance level before the major 105 comes more into focus.

USD/CHF: The US dollar continued its gains against Swiss franc also for a second consecutive week. The pair topped out around the 0.9750 level before closing the week lower at 0.9720. Any further gains would have to re-test the mentioned 0.9750 level while on the downside immediate support likely comes in around the 0.9630 to 0.9650 area. Further down the line on the descent sees the 0.9550 to 0.9560 area shaping up as a support level.

USD/CAD: The US dollar rose for a second straight week last week versus the Canadian Loonie and also had its highest close in approximately 10 weeks. This currency pair on weekly chart is trading in a wedge formation that may take another few weeks to determine a breakout direction. This pair finished the week over the 1.0250 level which looks to provide the closest support on downside movement. Overhead resistance is seen at the 1.0300 price with the 1.0350 level lurking above. Any trading over the 1.0340 level will be the highest levels seen since June 2012 when this pair reached as high as 1.0441.

AUD/USD: The Australian dollar continued to sharply decreased against the US dollar closing the week below the 0.9750 level. Trading started the week right around the parity level and despite a small pause on Wednesday, the Aussie was heavily sold off most of the week. On the downside, the 0.9650 level looks to see some support before the 0.9500 major support and resistance level comes into play. Upside momentum would likely see resistance in the 0.9850 area.

NZD/USD: A similar picture to how the Aussie is trading. The Kiwi fell sharply for a second straight week and closed below 0.8100. A test of 0.8000 seems to be in the offing next week on further declines while the 0.8100 and 0.8150 areas are potential to provide resistance above.

Next Week’s Major Economic Event Highlights:

Tuesday, May 21

Australia — reserve bank meeting minutes
New Zealand — reserve bank 2-yr inflation expectation
United Kingdom — consumer price index
United Kingdom — producer price index

Wednesday, May 22

Japan — Bank of Japan rate decision
Japan — monetary policy update
United Kingdom — Bank of England minutes
United Kingdom — retail sales
United States — Ben Bernanke testimony
United States — FOMC meeting minutes
United States — existing home sales
Canada — retail sales

Thursday, May 23

United Kingdom — GDP report
China — PMI manufacturing
United States — jobless claims weekly
United States — new home sales
New Zealand — trade balance

Friday, May 24

Euro zone — Germany GDP report
euro zone — Germany business climate index
United States — durable goods orders report

see our economic calendar for full listing

Written by Zac Storella, CountingPips Forex Blog & Currency Pair Technical Analysis

By CountingPips.com

The weekly Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures traders continued to boost their total bullish bets of the US dollar last week. Total US dollar long positions have increased for two straight weeks and are now at the highest level since June 2012, according to data by Reuters.

Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, increased their overall US dollar long positions to a total of $32.27 billion as of Tuesday May 14th. This was an advance from the total long position of $26.83 billion registered on May 7th, according to position calculations by Reuters that derives this total by the amount of US dollar positions against the combined positions of euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

What is the COT Report:

The weekly cot report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Individual Currencies Large Speculators Positions in Futures:

The individual currency net speculator positions last week saw advances for the Canadian dollar and the Mexican peso while the euro, British pound sterling, Japanese yen, Swiss franc, New Zealand dollar and the Australian dollar all had a declining number of net large trader contracts for the week.

Individual Currency Charts: (Please Click on Chart to Enlarge)

EuroFX:

EuroFX: Large trader positions for the euro decreased last week for a second consecutive week. Euro contracts fell to a total net position of -46,921 contracts in the data reported for May 14th following the previous week’s total of -33,533 net contracts on May 7th.

Last Six Weeks of Large Trader Positions: EURO

British Pound Sterling:

GBP: British pound spec positions declined last week for a second straight week. British pound speculative positions decreased last week to a total of -65,355 net contracts on May 14th following a total of to -63,086 contracts reported for May 7th.

Last Six Weeks of Large Trader Positions: Pound Sterling

Japanese Yen:

JPY: Japanese yen net speculative contracts declined last week for second straight week and to the lowest overall position in the last four weeks. Japanese yen positions decreased to a total of -88,407 net contracts on May 14th following a total of -78,560 net short contracts on May 7th.

Last Six Weeks of Large Trader Positions: Yen

Swiss Franc:

CHF: Swiss franc large speculator positions declined last week and fell to the lowest level of 2013. Net positions for the Swiss currency futures decreased to a total of -15,410 contracts on May 14th following a total of -6,235 net contracts reported for May 7th. This surpasses the previous low-level of -13,488 contracts registered on March 12th.

Last Six Weeks of Large Trader Positions: Franc

Canadian Dollar:

CAD: Canadian dollar positions improved last week for a fourth consecutive week after falling to a new low level for 2013 on April 16th. Canadian dollar positions improved to a total of -44,417 contracts as of May 14th following a total of -51,916 net contracts that were reported for May 7th.

Last Six Weeks of Large Trader Positions: CAD

Australian Dollar:

AUD: The Australian dollar large speculator positions decreased sharply again last week to decline for a seventh consecutive week. Aussie speculative futures positions dropped to a total net amount of -13,450 contracts on May 14th after totaling +6,630 net contracts as of May 7th. This is the first time Aussie large spec contracts have been negative since June 26, 2012 when contracts equaled -2,159.

Last Six Weeks of Large Trader Positions: AUD

New Zealand Dollar:

NZD: New Zealand dollar speculator positions declined last week to fall for a second consecutive week. NZD contracts fell lower to a total of +23,216 net long contracts as of May 14th following a total of +28,536 net long contracts on May 7th.

Last Six Weeks of Large Trader Positions: NZD

Mexican Peso:

MXN: Mexican peso speculative contracts edged slightly higher last week after being virtually unchanged the previous week. Peso positions increased slightly to a total of +140,319 net speculative positions as of May 14th following a total of +138,441 contracts that were reported for May 7th.

Last Six Weeks of Large Trader Positions: MXN

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)

See more information and explanation on the weekly COT report from the CFTC website.

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CountingPips Forex Market Update

The US dollar has been on a bull run this week and has reached multi-months highs against some of the other major currencies. The American currency has since pulled back from the highs of the week but overall shows weekly gains. According to currency data near the end of the US trading session on Thursday, the US dollar for the week has  increased versus the euro, Japanese yen, British pound sterling, Swiss franc, Canadian dollar, Australian dollar, and the New Zealand dollar.

Updated individual currency pair analysis:

Euro/US dollar: The euro/US dollar pair has bounced off of short-term support around the 1.2850 level for second day in a row, slowing the slide of the previous two days. Any further correction upwards from here would likely bring the 1.3000 back in play later today or Friday. We would likely need to see a close above 1.30 to get bulls excited. Getting trading action below the recent support at 1.2850 would open a test of 1.2750 previous level.

British pound sterling/US dollar: The British pound is fighting back against the early downtrend that happened this week. On the weekly charts, we are trading outside the 10-week rising channel which could signal the uptrend since early March has completed. Generally, a close below the 1.5250 level would be needed to forecast a bearish push further down towards 1.5100.

US dollar/Japanese yen: The dollar may have topped out for the week against the yen on Wednesday when the pair reached as high as 102.75. The pair then closed out lower on Wednesday and looks to be taking a small step back also on Thursday. It will be interesting to see if we do get a deeper pullback here and if so, to what level do we pullback to. Do we make it all the way back to a 100/yen support level?

US dollar/Swiss franc: The dollar’s rise this week catapulted all the way to a high of 0.9746 versus the Swiss franc. This is the highest levels we’ve seen since August. From that high, prices have retraced back over 100 pips over the latter part of Wednesday and into Thursday trading. Sustained short-term franc strength would bring us to the major round number level of 0.9500 as support.

US dollar/Canadian dollar: This currency pair on the weekly charts is trading in a wedge pattern since late 2011. The USD/CAD has been on a rising trendline since making a low at 0.9631 in September of 2012. There is a major support level about 150 pips below current prices at the 1.0000 level while a weekly resistance trendline sits above at 1.0316 and has held since late 2011.

Australian dollar/US dollar: The Australian dollar bearish moves have been dramatic and quick. The AUD/USD pair has fallen below parity which confirms the Aussie has fallen out of favor substantially. If the AUD/USD can build a base of support from the 0.9800 to 0.9850 level (previous support), we could see a possible run back at parity with the 1.00 level acting as logical and heavy resistance barrier. Further downside action may bring 0.9650 and then 0.9500 support.

New Zealand dollar/US dollar: The New Zealand dollar has also fell out of favor for Forex traders rather quickly as it has followed the Aussie down to lower levels. The pair is currently trading over the 0.8160 level with 0.8150/60 area acting as key support. A break below 0.8100 area would likely propel us lower to a test of the major 0.80 level. Upside momentum will run into a previous resistance level around the 0.8350 price with psychological level of 0.8500 pending above.

Written by Zac Storella, CountingPips Forex Blog & Currency Pair Technical Analysis