InvestMacro FX

By CountingPips.com

The U.S. economy’s annual pace of contraction in the second quarter of 2009 was better than expected, potentially signaling that the economy’s deep recession may be subsiding according to the U.S. Commerce Department. The annualized GDP report released today showed that the real U.S. Gross Domestic Product contracted by 1.0 percent in the April to June 2009 quarter from the second quarter level of 2008. This contraction was unchanged from the original GDP estimate released in July. Economic forecasts were expecting the GDP decline to be approximately 1.5 percent for the quarter. The second quarter GDP is a significant improvement from the revised real 6.4 percent contraction in the first quarter of 2009.

Contributing to the second quarter GDP fall was a decrease in consumer spending, exports and nonresidential fixed investments.  Exports of goods and services decreased by 5.0 percent after falling by 29.9 percent in the first quarter. Imports fell by 15.1 percent following a 36.4 percent decline in the first quarter. Consumer spending, which makes up approximately two-thirds of U.S. economic activity, decreased in the second quarter by 1.0 percent after increasing in the first quarter by 0.6 percent.

Weekly Jobless Claims decline.

Weekly U.S. jobless claims declined in the week that ended on August 22nd according to a release by the U.S. Labor Department today. New weekly jobless claims fell by 10,000 workers to a total of 570,000 unemployed workers. The decrease in claims failed to surpass economic forecasts that were predicting a decline to 565,000 jobless claims for the week. A 4-week moving average of new claims decreased by 4,750 from the previous week to 566,250 unemployed workers.

Workers seeking continuing claims for unemployment benefits for the week ending August 15th decreased by 119,000 to total 6,133,000 unemployed workers. The four week moving average of continuing benefits claims decreased by 27,000 workers to total 6,241,750 workers seeking continued unemployment benefits.

US Dollar weaker in Forex Trading today.

The U.S. dollar has been mostly lower in forex trading today against the other major currencies from the day’s opening at 00:00 GMT. The dollar has been weaker versus the euro, Australian dollar, Swiss franc, Canadian dollar and New Zealand dollar while gaining slightly versus the Japanese yen. The American currency has been about unchanged against the British pound from its opening at 2:02pm ET in the US trading session.

Source: ForexYard

The U.S dollar gained ground Wednesday against the EUR and the British pound, after strong data on orders for new U.S.-made durable goods and new home sales comforted expectations of an improvement in the economy. The greenback traded higher after the durable-goods orders report said orders for July rose by 4.9%, the largest increase in 2 years. Investors will be watching for the new U.S. jobs report today before making significant moves.

Economic News

USD – Dollar Rises on Signs of Economic Recovery

The Dollar rallied yesterday against most of its major counterparts after data suggesting the slowdown in the U.S. housing market has bottomed out. A better-then-expected result gave further support to the U.S. currency. The Dollar has been sold off recently partly due to growing optimism regarding the state of the U.S. economy. The USD finished yesterday’s trading session about 50 pips higher against the EUR at the1.4249 level.

Yesterday’s main U.S economic event was the New Home Sales data. New U.S. home sales hit its highest level in 10 months in July. Orders for Long-Lasting Manufactured Goods also surged yesterday and are interpreted by traders as fresh evidence of a modest economic recovery. Sales of “New Single-family Homes” rose by 9.6% from June, the highest rate since September. It is in fact the biggest percentage gain since a matching increase in February 2005, another indication that housing activity had stabilized after a three-year slump.

Looking ahead to today, there are few important news releases coming out of the U.S. These include the Prelim GDP and Unemployment Claims at 12.30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost the USD in the short-term. On the other hand, if the results turn out to be lower than forecast, then the Dollar may record a fairly bearish session in today’s trading.

EUR – EUR Records Mixed Results against the Majors

The EUR finished yesterday’s trading session with mixed results versus the major currencies. The 16-nation currency extended gains versus the Sterling on Wednesday, to trade above $0.8775 amid a broad sell-off in the GBP. The EUR experienced similar behavior against the CHF as the pair rose from 1.5185 to 1.5220 by days end. The EUR did see bearishness as well against the USD as it lost over 50 pips and closed at 1.4249.

A leading indicator released yesterday from Europe was the German Ifo Business Climate report. Germany holds the largest and strongest economy in the Euro-Zone, and thus the relevant publications from this economy usually have a hefty impact over the EUR. This indicator jumped to 90.5 in August from 87.4 in July, above economists’ expectations. Analysts said that this is a plus for the European economy, and it’s a sign confirming that the real economy is starting to get out of the period of freefall.

Sentiment in the Euro-Zone economy has brightened in the past month following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-Euro crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., Japanese, and other key economies will affect their positions.

JPY – The Japanese Yen Extends its Bullish Run

The Japanese yen rose for a second day against the EUR amid concerns financial losses will delay a recovery in the global economy, boosting demand for Japan’s currency as a safe haven. The Yen also rose to a 5-week high against the British pound as a smaller-than-expected July trade balance data from Japan prompted investors flee from riskier-assets.

The outlook for economy in Japan is still doubtful as Japan’s export slump deepened in July, indicating the boost in demand that helped pull the country out of its recession last quarter may be short-lived. Shipments abroad fell 36.5 % from a year earlier, steeper than June’s 35.7% drop

Crude Oil – Crude Oil Falls 1.4% on U.S Inventory Data

The price of Crude Oil fell 1.4% or $1.00 to $71.20 yesterday, as the latest inventory numbers from the U.S. Energy Information Administration (EIA) showed an increase in crude oil stockpiles. The EIA reports that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 200,000 barrels in the week ending August 21, from the previous week.

Crude Oil also declined on concern China may cut back on industrial investment, slowing demand for fuels in the world’s second-largest energy user. Crude traded low after China said it was studying curbs on overcapacity in industries including steel and cement. Some analysts said the failure to break through the key level of $75 may signal that prices have topped out, with demand for oil still depressed by the global economic slowdown and murky signs of a broad recovery.

Technical News

EUR/USD

After failing to breach the 1.4400 level, the pair has lost its bullish momentum and is currently traded around the 1.4230 level. The daily chart’s RSI has dropped below the 70 line, signing that the bearish move might be extended. Going short could be the right choice today

GBP/USD

There is a very accurate bearish channel formed on the 4 hour chart, as the pair is now floating in its lower section. In addition, a bearish cross on the 4-hour chart’s MACD suggests that the bearish momentum has more steam in it, with the potential of reaching the 1.6160 level.

USD/JPY

After the volatile downward movement in the last 3 days, this pair seems poised for a modest correction today. The price currently floats in the over-sold territory on the RSI of the hourly, 4-hour and daily charts, and there is a fresh bullish cross on the 1-hour chart’s Slow Stochastic. All of this information leads to the idea that going long might be a wise strategy throughout the day.

USD/CHF

It appears that the pair has resumed its bullish activity, as it’s testing the 1.0710 level. Currently, a bullish cross on the daily chart’s Slow Stochastic is suggesting that the uptrend could go farther. Going long might be the preferable choice today.

The Wild Card – Gold

There is still a bearish configuration on the daily chart, indicating that the momentum is still down. However, hourly chart’s Slow Stochastic is about to enter an oversold territory, indicating that there might be a minor bullish correction before a broader bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a general bearish trend.

Forex Market Analysis provided by Forex Yard.

© 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 Fx Research

€

The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4205 level and was capped around the $1.4350 level.  Data released in the U.S. today saw July headline durable goods orders print at 4.9%, up from a revised -1.3% in June, while the ex-transportation component was up +0.8%, below forecasts and below the strong June revision of +2.5%.  Additionally, MBA mortgage applications expanded 7.5%, up from the previous reading of 5.6%.  Moreover, July new home sales were up an annualized 433,000, exceeding forecasts and the positive June revision of 395,000.  This 9.6% m/m increase in housing data is consistent with other numbers released recently including yesterday’s Case-Shiller data and evidence an improvement in the long-beleaguered sector.  Collectively, recent economic data have evidenced a U.S. economy that appears to have bottomed out.  Nonetheless, there is now some talk that the global economy may have come too far, too fast and resulted in overvalued equities markets.  The euro has been highly correlated with equities prices and a move lower in share prices could put the common currency on the backfoot. In eurozone news, the German Ifo’s August business climate index rallied to 90.5, its highest level since September 2008.  Data released in the eurozone yesterday saw German second quarter gross domestic product growth expand 0.3%, confirming the provisional estimate from 13 August.  ECB policymakers this week have been quite cautious in their assessments of the economy, noting it is unlikely they’ll move to unwind their monetary stimuli anytime soon.  ECB rate-setters will next convene on 3 September and are unlikely to change monetary policy at that time.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.55 level and was supported around the ¥93.85 level.  The yen was otherwise stronger across the board as risk appetite weakened on ongoing concerns that some asset prices are overvalued.  The big news in the market today was a report that China may move to curb some industrial overcapacity in industries such as steel and cement that has been precipitated by this year’s record credit expansion.  Any indication that China may seem to reduce economic growth and contain its liberal credit policies could result in yen appreciation on the premise that the resulting impact on global growth will slow.  All eyes will watch this weekend’s general election in Japan with the Democratic Party of Japan poised to dislodge the Aso government and long-incumbent Liberal Democratic Party from power.  The Nikkei 225 stock index climbed 1.36% to close at ¥10,639.71.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥133.90 level and was capped around the ¥135.10 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥152.20 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.95 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8266 in the over-the-counter market, down from CNY 6.8267.  Chinese Premier Wen this week said the markets need to avoid being “blindly optimistic” about the global economic recovery and added China must maintain its “moderately loose” monetary policy and “active” fiscal policy.  PBoC has reported it will ensure “reasonable and ample” liquidity.

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 CountingPips.com

U.S. durable goods orders increased by the largest amount in two years in July according to a report released by the U.S. Commerce Department today. Durable goods orders in the United States advanced by 4.9 percent in July to a total of $168.4 billion after declining by a revised 1.3 percent in June. Durable goods orders have now increased in three of the last four months and July’s data was spurred higher by a increase in aircraft orders. Today’s data beat market forecasts that had been expecting that durable goods orders would increase by approximately 3.0 percent for the month.

New orders for durable goods excluding transportation gained by 0.8 percent in July following a revised increase of 2.5 percent in June and marked the third straight monthly gain. Market forecasts were predicting an increase of 0.9 percent in durable goods minus transportation.

Shipments of durable goods increased in July by 2.0 percent and rose for the second straight month. Unfilled orders decreased by 0.1 percent in the month while durable good inventories decreased by 0.8 percent and have now declined for seven straight months. July nondefense orders for new goods grew by 8.6 percent while defense orders for capital goods rose by 14.8 percent.

U.S. New Home Sales jump higher in July.

New Home Sales in the United States increased the most in four years in July according to data released by the Department of Commerce today. Purchases of new single family homes rose to an annual rate of 433,000 in July and making a 9.6 percent advancement following June’s 9.1 percent revised gain. July’s annual rate of new homes sold, despite the increase, is still 13.4 percent lower than the July 2008 level.

July’s results were much better than market forecasts which were expecting a 1.6 percent increase in sales for an annual rate of 390,000 new homes sold. The median sales price of new homes in July fell by 12 percent on an annual basis to $210,100 while the average sales price came in at $269,200.

Contributing to the gain in July was a 32.4 percent increase in new homes sold in the Northeast while the South saw a 16 percent rise and the West rose by 1.0 percent.  The Midwest realized a 7.6 percent decline for July.

US Dollar rises in Forex Trading today.

The U.S. dollar has been on the rise in forex trading today on the back of the positive U.S. durable goods and new home sales news.  The American currency has gained against the euro, British pound, Australian dollar, Canadian dollar, Swiss franc and New Zealand dollar while trading almost unchanged versus the Japanese yen.

The euro has fallen in trading versus the dollar from today’s 1.4302 opening at 00:00 GMT to trading at approximately 1.4244 in the afternoon of the US trading session at 3:34pm EST according to currency data by Oanda.

The British pound has lost ground to the dollar as the GBP/USD has gone from its 1.6331 opening rate to trading at 1.6243 in the U.S. session.

The dollar has been virtually unchanged against the Japanese yen as the USD/JPY has gone from its 94.18 opening to trading at 94.17.

The Australian dollar has fallen versus the USD with the AUD/USD trading at 0.8277 after opening today at 0.8372. The New Zealand dollar has also lost ground versus the US dollar as the NZD/USD trades at 0.6808 after opening the day at the 0.6870 exchange rate.

Against the Swiss franc, the USD has been gained ground today as the USD/CHF has risen from its 1.0621 opening to trading at 1.0682. The dollar has increased against the Canadian dollar after the USD/CAD opened at 1.0858 earlier today to trading at 1.0979.

AUD/USD Chart – The Australian Dollar declining against the US Dollar in Forex Trading today and falling under the 200-hour simple moving average in blue.

By Robert Folsom

Editor’s Note: The following article discusses Robert Prechter’s view of the Efficient Market Hypothesis. For more information, download this free 10-page issue of Prechter’s Elliott Wave Theorist.

When a maverick idea becomes vindicated, there’s a good story to tell. It usually involves a person (or small group of people) who courageously challenge the orthodoxy of the day — and, over time, the unorthodox yet better idea prevails.

A “good story” of this sort has surfaced during the current financial crisis. A chapter of the story appeared in a recent New York Times article, “Poking Holes in a Theory on Markets.” The theory in question is the efficient market hypothesis (EMH), which the article suggested is so hazardous that it “is more or less responsible for the financial crisis.” This quote tells you most of what you need to know:

“In the last decade, the efficient market hypothesis, which had been near dogma since the early 1970s, has taken some serious body blows. First came the rise of the behavioral economists, like Richard H. Thaler at the University of Chicago and Robert J. Shiller at Yale, who convincingly showed that mass psychology, herd behavior and the like can have an enormous effect on stock prices — meaning that perhaps the market isn’t quite so efficient after all. Then came a bit more tangible proof: the dot-com bubble, quickly followed by the housing bubble. Quod erat demonstrandum.”

In case your Latin is rusty, Quod erat demonstrandum means “which was to be demonstrated.” Its abbreviation (QED) appears at the conclusion of a mathematical proof. In this case, the massive financial bubbles of recent years are the proof that refutes the efficient market hypothesis, which argues that markets move in a “random walk” and are not patterned.

Similar articles in the financial press have reported the demise of the EMH. Just this week an Economist magazine blog included this bold declaration:

“No one has yet produced a version of the EMH which can be tested and fits the evidence. Thus, the EMH must logically be discarded, as a valid hypothesis must be testable.”

QED, indeed — I agreed years ago that the random walk was implausible. But I didn’t come to this view because of behavioral economists, although their work over the past decade has certainly been valuable. Instead, I was persuaded by the work of someone who first challenged the financial orthodoxy more than three decades ago, specifically April 1977. As a young technical analyst at Merrill Lynch in New York, his research circulated among several of Merrill’s clients. His name for these studies was the Elliott Wave Theorist: the April ’77 study was a detailed analysis of the 1975-76 stock market, which offered this comment on the random walk model:

“If market moves are arbitrary (as the random walk proponents suggest), then internal components would rarely ‘make sense’ mathematically, and then only by statistically insignificant fluke occurrences. However, there seems to be enough evidence that mass psychology, as recorded in the Dow Jones Industrials, form patterns that are uncannily interrelated….At least this much can be fairly reliably stated as a result of this work: This idea that the market is a ‘random walk’ is probably false.”

Robert Prechter left Merrill soon after; he has published the Elliott Wave Theorist in every month since. Every issue has, in one way or another, “convincingly showed that mass psychology, herd behavior and the like can have an enormous effect on stock prices.”

So while there may be a good story to tell about behavioral economists, I trust you see why I believe there is a vastly better one to tell.

The “enormous effect” of “mass psychology” and “herd behavior” is exactly what explains the financial downturn that began in late 2007. Prechter’s Elliott Wave Theorist anticipated the crisis and warned subscribers beforehand. Likewise, he alerted them to the bear market rally that began last March.

For more information from Robert Prechter, download a FREE 10-page issue of The Elliott Wave Theorist. It challenges current recovery hype with hard facts, independent analysis, and insightful charts. You’ll find out why the worst is NOT over and what you can do to safeguard your financial future.

By Fast Brokers – The EUR/USD is heading south towards the lower end of its weekly trading range after U.S. Core Durable Goods Orders came in two basis points below analyst expectations.  The durable goods number is outweighing a better than expected German Ifo Business Climate release.  Referring to yesterday’s post, we explained that U.S. demand for durable goods has a strong influence on the EU economy since EU GDP is highly reliant on exports and manufacturing.  Hence, investors are sending the EUR/USD lower since the Core DGO release takes a bite out of the optimism surrounding the concept of an economic recovery.  However, the Euro is holding up a lot better than the Pound since Germany’s Ifo Business Climate release continues the theme of stronger than expected economic data from the EU over the past couple weeks.  One needs to look no further than the high flying EUR/GBP for confirmation of a strong Euro.  The Euro will be tested tomorrow since the EU will print Germany’s Prelim CPI and the EU region’s M3 Money Supply.  Weak CPI growth and a large contraction in the EU’s money supply has been a thorn in the EUR/USD’s side.  Declining prices and the dwindling supply of Euros gives the EU little room to tighten its monetary policy.  Hence, the EU’s commitment to keep liquidity in control comes at a cost.

Meanwhile, the Core DGO number is not the best way to set the table for tomorrow’s key releases, most notably America’s Prelim GDP and Unemployment Claims data.  If these two data releases also disappoint, the S&P futures could experience a brisk selloff and result in a broad-based appreciation of the Dollar.  However, the continuation of the theme of stronger than expected data from the EU could help the Euro maintain its relative strength.  As for today, we could witness continued preference for the Dollar as investors head for safety.  However, if New Home Sales come in better than expected later this morning, the EUR/USD can regain its footing and consolidate ahead of tomorrow’s wave of key economic data.  On the other hand, weak New Home Sales would only perpetuate the EUR/USD’s present pullback.

The key for the EUR/USD will be staying above our 1st tier uptrend line.  If not, the currency pair could head for its next technical cushion, 8/20 lows or 1.42.  Meanwhile, the EUR/USD is experiencing multiple trend line inflection points, indicating today’s session could turn out to be a volatile one.  Since the session has started off on a sour note, this combination of events may not bode well for the bulls.  As for the topside, our 2nd-4th tier downtrend lines continue to serve as important technical barriers preventing a large breakout in the EUR/USD.  Since data is already mixed today, positive New Home Sales data may not be enough to send the EUR/USD to a break out to the topside.

Present Price: 1.4264

Resistances: 1.4283, 1.4297, 1.4308, 1.4327, 1.4347

Supports: 1.4254, 1.4230, 1.4210, 1.4199, 1.4180

Psychological: 1.40, 1.45

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is crashing after U.S. Core Durable Goods Orders data came in two basis points below analyst expectations, countering the positive U.S. consumer sentiment data we’ve received lately.  The GBP/USD is bearing the brunt of the sell-off since Britain won’t re-enter the economic data news stream until tomorrow’s Nationwide HPI and CBI Realized Sales releases.  The data releases couldn’t come at a better time since the Pound has suffered a relative weakness among its peers since the BOE’s surprise injection of liquidity.  Investors should keep in mind Britain’s economic data was coming in strong prior to the BOE’s monetary shock, so we are operating under the belief that tomorrow’s heavily-weighted British data could help buoy the Pound.  However, negative data releases from Britain may only exacerbate the Cable’s present selloff.

It seems the BOE may be getting what it wanted after all, a depreciation of the Pound.  We believe the BOE was concerned the rapid appreciation of the Pound would place its companies in a competitive disadvantage and stymie Britain’s economic recovery, hence the use of a monetary shock.  The Pound has responded by selling off sharply against both the Dollar and the Euro.  The GBP/USD seems to have given up on its psychological 1.65 level, dropping through 8/17 and 6/23 lows in the process.  The Cable is presently hoping to find a bottom along our 2nd tier uptrend line.  If this uptrend line doesn’t hold, the GBP/USD will look to our 1st tier uptrend line and July lows for technical support along with the highly psychological 1.60 level.  Hence, even though the present pullback may have some room to go, there are a few strong supports waiting in the wings.  As for the topside, there are multiple barriers beginning with our 1st and 2nd tier downtrend lines.

Present Price: 1.6203

Resistances: 1.6224, 1.6251, 1.6286, 1.6324, 1.6367

Supports: 1.6187, 1.6163, 1.6114, 1.6093, 1.6056

Psychological: 1.60, 1.65

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY moved higher after U.S. Core Durable Goods data printed two basis points below analyst expectations.  However, the currency pair is returning some of its gains in reaction to a better than expected showing from New Home Sales.  In addition to America’s wave of data today, investors should keep in mind Japan reported a weaker than expected Trade Balance late Tuesday in the wake of light demand for the nation’s exports.  The USD/JPY’s movement in reaction to this data flow tells us the currency pair is opting to participate in broad-based Dollar sentiment rather than comparative economic performances between the two countries.  However, DGO number is certainly capping gains in the USD/JPY since it only provides less incentive for investors to favor the Dollar over the Yen.  The weak Japanese export data is disconcerting and puts more pressure on the BOJ to stimulate the economy.  Although, the BOJ likely won’t act until it sees the results of Japan’s general election.  Japan’s election will be watched closely since a defeat of the LDP would likely present a fundamental shift in political and economic policy.  The LDP has run Japan for the past 50 years, so it will be interesting to see how the Yen reacts should the LDP lose as polls predict.

Japan will release more data tomorrow including Household Spending and the Tokyo Core CPI.  Beforehand, the U.S. and Britain will release heavily-weighted data points of their own.  We recognize multiple inflection points occurring in the USD/JPY, implying volatility could increase over the next 24-48 hours.  Meanwhile, the USD/JPY continues to balance along our 1st tier uptrend and 2nd tier downtrend lines as bulls fight to get the currency pair back above its psychological 95 level.  Broad-based appreciation of the Dollar continues to be the theme around the FX markets with sizable pullbacks occurring in both the GBP/USD and EUR/USD.  The Dollar’s overall strength is helping buoy the USD/JPY, and may result in nice pop tomorrow should the pattern continue with tons of economic data and heightened volatility.  If the USD/JPY’s upward momentum should carry it beyond 95, the currency pair will have to deal with our 3rd tier downtrend line next along with 7/31 highs.

Present Price: 94.42

Resistances: 94.53, 94.71, 94.95, 95.26, 95.54

Supports:  94.08, 93.88, 93.65, 93.42, 93.27

Psychological: 95

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Adam Hewison – Imagine not having access to any financial news stories. The only information you have about the market is the market itself.

Would you be a better trader or a less successful trader?

I think you would be a better trader. I have often said that the market is the best news provider in the world. It’s up the minute and it reflects both domestic and international issues. The success of our “Trade Triangle” technology is based upon market action.

In my new short video, I’ll take a big look at the S&P 500 market and where I expect it will head in the months to come.

See the New Video here….

We all need to be prepared for what lies ahead, and this video is worth watching for that very reason.

There is no need to register for this video and you can watch it with my compliments.

All the best,

Adam Hewison
President, INO.com
Co-Creator, MarketClub

Source: ForexYard

Later afternoon trading saw the price of Crude Oil take a nose dive as traders took profit. The price of Oil stalled at the $75 resistance level and fell significantly following the failed breach. Today traders will be tracking the release of the U.S. Crude Oil Inventories data along with the New Home Sales numbers for today’s market direction.

Economic News

USD – Dollar Sees Mixed Results against the Majors

Yesterday, the Dollar saw mixed results against its major currency rivals. Against the EUR, the Dollar began the trading session with sharp drops, yet it managed to fully recover later on. The Dollar saw mixed result against the Yen as well.

The Dollar’s recovery came as a result of the better than expected Conference Board Consumer Confidence report. The report showed that the U.S. consumers’ confidence has increased in August, largely due to the labor market recovery. The report rose to 54.1, making the first gain in three months, from 47.4 in July. The most significant outcome of this result is that it shows that consumers feel their financial outlook is secure and thus allow themselves to spend more. Eventually this has the potential to elevate the economy as analysts expect.

Looking ahead for today, a batch of data is expected from the U.S. economy. Two main publications are expected to create large volatility in the market – the Durable Goods Orders indices and the New Home Sales. The Durable Goods Orders indices are expected at 12:30 GMT. Investors hold great importance to their results as they are leading indicators of production, especially the core report. The New Home Sales is scheduled for 14:00 GMT. This is one of the highest indicators of the housing sector, and thus has an immense impact on the Dollar. Analysts forecast 393K new single-family homes were sold during July, and if the end result will be similar it has the potential to boost the Dollar’s recovery.

EUR – German Business Climate on Tap

During yesterday’s trading the EUR saw volatile activity against the major currencies. The Euro saw mixed results against the Dollar and the Yen, beginning the day with rising trends yet dropping later on. However against the Pound, the Euro continued the bullish trend from the last few days.

The EUR’s rise in early trading came as a result of the positive data published from the Euro-Zone. The German Final Gross Domestic Product showed a 0.3% rise in the inflation-adjusted value of all goods and services purchased by the German economy, marking the first positive results in 5 months. This continued the recent positive figures from both Germany and France, the two largest economies in the Euro-Zone. Also yesterday, the Belgium Business Climate report delivered a better than expected figure after dropping 18.2 points, beating expectations for a 19.7 drop. This also supported the EUR during yesterday’s trading.

As for today, two main publications are expected from the German economy, the German Import Prices and the German Business Climate. The German Business Climate, published by the Institute for Economic Research, is expected to create a large impact on the EUR. It is considered to be a leading indicator of economic health because business is known to react quickly to market conditions. A positive result is likely to increase hope for an early economic recover, which has the potential to strengthen the EUR.

JPY – Yen Recovers against the Major Currencies

The Yen saw a mixed trading day during yesterday’s session. The Yen began with bearish trends against both the Dollar and the EUR. However, later on it managed to recover back to previous rates. Against the Pound, the JPY continued to strengthen and the GBP/JPY is currently traded around the 153.40 level.

The Yen recovered due to concerns that financial losses will delay a recovery in the global economy, increasing demand for the Yen as a refuge. Currently, many analysts claim that the outlook for economies around the world is still doubtful. This situation is known to create risk aversion, which leads to the purchase of the Yen.

During late trading, the Japanese Trade Balance report was released, delivering a poor result of 0.19T, lower than the 0.35T expected. The Japanese economy largely relies on its exporting, and thus this result has the potential to halt the Yen’s recovery.

As for the day ahead, no imported data is expected from the Japanese economy. Traders are advised to follow the leading publications from the U.S and the Euro-Zone as they are likely to set the tone in today’s trading.

Crude Oil – Crude Oil Drops to $71 a Barrel

Crude Oil fell close to $3 a barrel during yesterday’s trading, to the lowest price in a week, seeing the first decline in six days.

Crude Oil dropped from $75 a barrel to $71.20 on signs that reduced lending in China deceased demand for the world’s fastest-growing, energy-consuming county. Another reason for oil’s weakness is the recovering Dollar. Because Oil is valued in Dollars, the fluctuations in the Dollar’s value tend to affect oil as well. During yesterday’s trading, a U.S. Consumer Confidence report was released, providing a better than expected figure, which promptly strengthen the Dollar. This eventually had an impact on Crude Oil’s value, and led to the sharp drop.

As for today, the U.S. Crude Oil Inventories is scheduled at 14:30 GMT. This report measures the change in number of barrels of crude oil held in inventory by commercial firms during the past week. Its result tends to have an immense impact on oil’s value, and traders are advised to follow this report with extra caution.

Technical News

EUR/USD

The bearish cross on the daily Slow Stochastic has just been completed and the pair now appears poised for the subsequent downward movement. The bearish cross on the 4-hour MACD supports this notion. Going short might be wise today.

GBP/USD

The downward movement over the past few days has finally resulted in a bullish cross on the 4-hour Slow Stochastic and the hourly MACD, indicating an impending upward correction. The price also floats in the over-sold territory on the 4-hour RSI, which supports this notion. Going long with tight stops might be the preferable strategy today.

USD/JPY

With most oscillators floating in neutral territory, this pair seems to be consolidating towards the 94.00 price level. With a doji candlestick formation on the weekly chart, there is a possibility that this pair is due for an upward correction. Waiting for the breach and then joining the trend as soon as possible would be a smart tactic today.

USD/CHF

This pair is giving off a few mixed signals. The price floats in the over-bought territory on the hourly RSI, suggesting downward pressure in the short-term. On the other hand, the daily chart’s RSI is showing over-sold, and has a fresh bullish cross on the daily Slow Stochastic. Traders should watch for the small impending downward movement, but be on guard for the longer-term bullishness today.

The Wild Card – NZD/USD

A fresh bearish cross has recently formed on the hourly, daily and weekly charts’ Slow Stochastic, indicating strong downward pressure on this pair. The price also floats in the over-bought territory on the daily and weekly charts’ RSI, strengthening this notion. Forex traders may not want to miss out on this opportunity by entering the downward movement at a great entry price.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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