InvestMacro FX

During yesterday’s trading, Crude Oil dropped to $71.20 a barrel. This was largely due to the recovering Dollar. The Dollar recovery took place after a better-than-expected Consumer Confidence in the U.S. which showed that Americans consumers are regaining faith that their financial condition is likely to improve during the next few months. If the Dollar will continue to strengthen today, it could turn Crude Oil to drop below $70 a barrel.

Today’s leading publications:

German Ifo Business Climate (08:00 GMT) – This indicator is used to measure the current market conditions by asking about 7,000 businesses to rate the relative level of current business conditions and expectations for the next 6 months. If the actual result is as high as expected, it is likely to strengthen the EUR.

Durable Goods Orders indices (12:30 GMT) – These indices are used to measure the production condition in the U.S. The Core Report doesn’t include transportations items. Because orders for aircraft are volatile and can severely distort the underlying trend, investors tend to relay a greater importance to this core report, rather than the regular Durable Goods Orders report.

New Home Sales (14:00 GMT) – This report is a prime indicator for the housing sector. As you probably know, this entire crisis began due to a real-estate bubble that was shattered in the U.S. Many analysts believe that only positive result from the housing sector will truly show that the economy is recovering, and thus a positive figure from this report might boost the Dollar.

Crude Oil Inventories (14:30 GMT) – Like every week, this is one of the most impacting news event. Its publication has an immediate reaction on Oil prices, which is followed by a sharp change in currency values as well. Traders should not miss out on this publication, especially those who trade Crude Oil.

By GCI Fx Research

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The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4335 level and was supported around the $1.4250 level.  While there are growing indications the global economic freefall may be abating, 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. Data released in the eurozone today saw German second quarter gross domestic product growth expand 0.3%, confirming the provisional estimate from 13 August.  These data followed four consecutive months of contraction and reflected a 0.4% increase in government spending and a 0.7% increase in private consumption.  Yesterday, it was reported that eurozone industrial new orders registered their strongest gain in nearly nineteen months in June.  As a whole, EMU-16 GDP growth was off 0.1% in Q2.  European Central Bank policymakers continue to manage expectations regarding the sustainability of a broad economy recovery in the eurozone.  ECB rate-setters will next convene on 3 September and are unlikely to change monetary policy at that time.  One month EONIA interest rate futures prices have a downward slope between the front-month August 2009 contract and the July 2010 contract and this indicates the market anticipate a small degree of monetary tightening between now and then.  This weekend, European Central Bank President Trichet was rather cautious in his remarks at the Kansas City Federal Reserve’s annual Jackson Hole symposium.  Trichet reported “we see some signs confirming that the real economy is starting to get out of the period of freefall” but added this “does not mean at all that we do not have a very bumpy road ahead of us.”  Some ECB policymakers are thought to be questioning the sustainability of the recent improvement in eurozone economic data.  ECB’s Liikanen this weekend said there is “no need” for the ECB to reassess its policy stance and added unemployment will rise more. ECB’s Nowotny suggested the ECB won’t reverse its policy stance anytime soon.   Likewise, ECB’s Gonzalez-Paramo reported “the situation is still very uncertain” and called EMU-16 interest rates appropriate.  ECB member Mersch warned against “succumbing to optimism” about the economic recovery.  In U.S. news, it was reported the Obama administration will nominate Fed Chairman Bernanke for a second term atop the Federal Reserve. Bernanke’s star has risen in recent months as some U.S. economic problems have moderated but it does not mean he will not face a contentious fight during his congressional approval hearings.  Data released in the U.S. today saw the June S&P/ Case-Shiller home price index off 14.92% from a revised 19.11% while August consumer confidence rallied to 54.1 from a revised 47.4.  Also, the August Richmond Fed manufacturing index was unchanged at +14 and June house prices were up 0.5% m/m from a revised +0.6% in May.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥93.80 level and was capped around the ¥94.60 level.  The yen was stronger across the board as risk appetite weakened on escalating concerns that some asset prices are overvalued.  China Construction Bank Chairman Guo Shuqing reported excess cash has resulted in asset bubbles.  Traders also pared risk after Atlanta-based SunTrust Banks warned U.S. financial institutions may report additional credit losses stemming from commercial real estate. A greater resumption of risk appetite could result in more demand for short yen carry trades in which the yen is used as a financing vehicle to invest in assets with greater yield spreads.  Vice finance minister Tango yesterday reported Japan needs to limit Japanese government bond sales as much as possible.  Tango’s comments are topical because the Liberal Democratic Party of Japan may lose this weekend’s general election with the Aso government conceding the LDP’s stronghold on power to the rival Democratic Party of Japan.  DPJ leader Hatoyama was on the tape yesterdat saying the DPJ does not plan to increase JGB issuance, contrary to public chatter that the liberal DPJ will expand public works projects.  Bank of Japan Governor Shirakawa spoke at the Fed’s Jackson Hole symposium this weekend and said monetary policy “should avoid inflating asset bubbles by keeping interest rates low for too long.”  The Nikkei 225 stock index lost 0.79% to close at ¥10,497.36.  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 ¥133.95 level and was capped around the ¥135.25 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥153.60 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.30 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8267 in the over-the-counter market, down from CNY 6.8267.  Chinese Premier Wen yesterday 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 reported it will ensure “reasonable and ample” liquidity.

₤

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6340 level and was capped around the $1.6425 level.  Sterling has been weaker for three consecutive trading days and has fallen from its perch above the $1.70 handle this month. Sterling is still on the defensive after minutes from Bank of England Monetary Policy Committee’s meeting from August revealed BoE Governor King voted unsuccessfully in the minority to expand its bond-buying program by ₤75 billion to ₤200 billion.  Instead, the central bank voted to expand the quantitative easing operation by ₤50 billion to ₤175 billion.  August GfK consumer confidence will be released on Thursday.  Cable bids are cited around the US$ 1.6215 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8745 level and was supported around the ₤0.8705 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0570 level and was capped around the CHF 1.0640 level.  Swiss National Bank Governing Board member Hildebrand said the derivatives market needs to be regulated better.  Swiss National Bank’s next interest rate decision is expected on 17 September. The three-month Swiss franc Libor target is currently at 0.325 and the front-month September 2009 futures implied rate is trading at 0.290.  Data released in Switzerland yesterday saw the July UBS consumption indicator fell to 0.77 from a revised 0.95 in June.  UBS warned “unemployment is likely to continue to increase significantly in the coming months.”  U.S. dollar offers are cited around the CHF 1.0670 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5150 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 1.7325 level.

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. Consumer Confidence rose more than forecast after two months of declines according to the Conference Board Consumer Confidence Index released today. The consumer index, representing responses from 5,000 U.S. households, showed that consumer confidence increased to a 54.1 score this month following a revised 47.4 score in July. The increase easily surpassed market forecasts that were expecting consumer confidence to post a 47.9 score for the month.

The other two parts of the survey also saw increases in August.  The present situation section of the index increased to 24.9 from 23.3 in July while the expectations index jumped from 63.4 in July to 73.5 this month.

Lynn Franco, the Director of The Conference Board Consumer Research Center commented in the report on the increased readings, “Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend. The Present Situation Index increased slightly, mainly the result of an improvement in consumers’ assessment of the job market. The Expectations Index improved considerably and is now at its highest level since December 2007 (Index, 75.8). Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. And, as long as earnings continue to weigh heavily on consumers’ minds, spending is likely to remain constrained.”

Also released out of the US today was the Standard & Poors/Case-Shiller house price index.  The results for the second quarter of 2009 showed that while house prices have still declined at a high rate, the pace of decline has cooled off compared to the previous quarter.  The April to June quarter house prices fell by 14.9 percent after a decline of 19.1 percent in the first quarter.

On a monthly basis, both the 10-city composite index and the 20-city composite index increased by 1.4 percent in June after gaining by 0.5 percent in May. On an annual basis, the 10-city composite index fell by an annual 15.1 percent and the 20-city composite index declined by an annual 15.4 percent. The decreases were slightly better than forecasts were expecting and marked the second straight month of improvement in prices after a run of 16 straight months of new record lows.

David M. Blitzer, Chairman of the Index Committee at S & P, commented in the report saying, “The U.S. National Composite rose in the 2nd quarter compared to the 1st quarter of 2009. This is the first time we have seen a positive quarter-over-quarter print in three years. Both the 10-City and 20-City Composites posted monthly increases, as did most of the cities. As seen in both seasonally adjusted and unadjusted data, as well as the charts, there are hints of an upward turn from a bottom. However, some of the hardest hit cities, especially in the Sun Belt, show continued weakness.”

US Dollar mixed in Forex Trading today.

The U.S. dollar has been mixed today in forex trading against the other major currencies since the start of the day at 00:00GMT. The American currency has been trading higher versus the British pound, Canadian dollar and Japanese yen while trading lower versus the euro and Swiss franc.  The dollar is trading virtually unchanged against the Australian dollar and New Zealand dollar at 2:36pm ET according to currency data from Oanda.

GBP/USD Chart – The British Pound continued to fall today versus the US dollar in forex trading and decreased to trading under the 1.6350 exchange rate. The GBP/USD had reached a high of 1.7043 on August 5th before retreating lower.

By Fast Brokers – The EUR/USD is recovering from earlier losses, bouncing from our 2nd tier uptrend line as the S&P futures float well above their psychological 1000 mark.  The Euro has exerted incredible relative strength lately, exhibited by the breakout in the EUR/GBP.  Euro bulls were inspired by Friday’s EU PMI data coupled with yesterday’s better than expected Industrial Production release.  Industrial Production registered its strongest level of growth since August 2007 as global stimulus packages and auto purchase programs ignite EU factories.  However, despite the EUR/USD’s resilience, the currency pair still faces our 2nd-4th tier downtrend lines.  We believe out 4th tier downtrend line should be a key player since it runs through August highs.  Hence, if the EUR/USD can take our 4th tier downtrend line, the currency pair will likely continue its upward momentum by retesting its previous 2009 highs.

Although we are receiving some important housing and consumer confidence data from the U.S. this morning, investors may wait until tomorrow’s German Ifo Business Climate release before dislodging the EUR/USD from its recent consolidative pattern.  In addition to tomorrow’s Germany Ifo number, the U.S. will release Durable Goods Orders and New Home Sales.  The Durable Goods Orders data could have a large impact on the EUR/USD since it implies consumption and demand for the EU’s durable goods.  Since manufacturing plays such a large role in both the German and French economies, better than expected durable goods data could send the EUR/USD past our 4th tier downtrend line, and vice-versa.

Meanwhile, economists are cautioning of asset bubbles caused by the global injections of liquidity, keeping the Dollar at bay and U.S. equity gains capped despite better than expected global economic data.  However, although the liquidity measures surely pose a longer-term threat, we believe the immediate and near-term economic data releases should continue their theme of recovery and slight expansion.  On the other hand, liquidity injections could come back to haunt the FX markets at the end of the 3rd quarter since investors will expect a growth in corporate earnings and  shouldn’t be too impressed by gains from cost-cutting.

In all, investors should keep a close eye on the currency pair’s interaction with our downtrend lines.  Near-term momentum remains to the upside despite investor uncertainty since economic data points have been outperforming expectations.  However, if this week’s economic data comes in shy of analyst expectations the EUR/USD may opt to test the patience of our 1st tier uptrend line.

Present Price: 1.4325

Resistances: 1.4327, 1.4347, 1.4360, 1.4375, 1.4405

Supports: 1.4315, 1.4304, 1.4294, 1.4272, 1.4254

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 recovering above 8/17 lows as investors headed to the Dollar with uncertainty rising in reaction to the words of caution from economists around the world.  The Pound has been under considerable relative weakness the last week.  Investors continue to punish the Pound amidst the confusion surrounding the BOE’s decision to inject 50 billion more into its QE package, not to mention King’s vote to tack on an addition 25 billion to the tab.  However, the Pound may experience a reversal in fortune with some key British economic data on the way.  Britain hasn’t released very much economic data since the BOE’s monetary policy decision, so investors seem to have forgotten that British economic data was beating analyst expectations before the BOE delivered its monetary shock.  In fact, analysts were caught a bit off-guard by the BOE’s decision since Britain’s data had been encouraging.  Our reaction to the BOE’s policy decision was one of belief that the central bank is attempting to devalue the Pound to keep currency from getting ahead of economic growth so as not to place British companies at a competitive disadvantage.  Today’s BBA Mortgage Approvals number beat analyst expectations, supporting the argument that Britain’s housing market is in the midst of a remarkable recovery.  Investors also shouldn’t forget Britain’s employment market has made vast improvements from the height of the economic downturn.

Though Britain won’t release anymore economic data today, we will receive Nationwide HPI and CBI Realized Sales on Thursday followed by Revised GDP on Friday.  All of these data points are normally market-movers, allowing investors to value the Pound more on fundamentals than the negative psychological impact of the BOE’s injection of liquidity.  We expect Britain’s data to continue to outperform, re-energizing the Pound and sending the Cable back towards the lid of its 8/13-8/21 trading range.  However, if British and U.S. economic data underperforms the GBP/USD could test the patience of 8/17 lows.  In the meantime, 1.65 should continue to have a psychological impact on the Cable as the currency pair waves between 1.64 and 1.66.

Present Price: 1.6399

Resistances: 1.6407, 1.6430, 1.6458, 1.6508, 1.6544

Supports: 1.6380, 1.6366, 1.6342, 1.6311, 1.6278

Psychological: 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 – Investors are nibbling on the USD/JPY after America’s HPI data came in nine basis points ahead of analyst expectations.  The USD/JPY has experienced encouraging support in our 1st tier uptrend and 2nd tier downtrend lines while bulls work to avoid a retest of July lows.  It remains to be seen whether the USD/JPY will opt to participate in a broad-based depreciation of the Dollar or choose to recover with U.S. equities.  The decision will likely depend on the comparative performance of U.S. and Japanese economic data.  Thus far, America’s economic data hasn’t been faring much better than Japan’s.  Therefore, the Yen has appreciated against the Dollar despite breakouts in the S&P futures.  Speaking of which, the S&P futures are separating themselves from 1000, and it will be interesting to see if the USD/JPY participate to the topside should U.S. equities continue their impressive climb.

Japan will release its Trade Balance during America’s evening session, creating the possibility of heightened volatility in the USD/JPY.  Japan will also deliver Household Spending and its Tokyo Core CPI data points on Thursday.  Investors will be eyeing tonight’s Trade Balance data to see whether there is a noticeable improvement in demand for Japan’s exports.  A larger than expected surplus coupled with an outperformance in exports could help fuel an immediate-term global equity rally.  However, it remains to be seen whether stronger Japanese data would have a positive or negative impact on the USD/JPY.  While investors would expect the USD/JPY to exhibit a positive correlation with U.S. equities should Japan’s data beat expectations, investors could opt to favor the Yen over the Dollar instead.  On the other hand, underperformance of Japan’s economic data coupled with rising U.S. equities would likely result in a healthy rise in the USD/JPY.

Meanwhile, the USD/JPY faces sizable medium-term downward pressure considering all of our downtrend lines the currency pair faces, not to mention the highly psychological 100 level waiting patiently in the distance.  If our 1st tier uptrend line doesn’t hold, the USD/JPY could experience another leg down.  As for the topside, bulls are hoping to get the USD/JPY back above its psychological 95 level.  Regardless, we anticipate heightened near-term volatility with the flood of economic data.  Our prediction is reinforced by the inflection points of our 1st tier uptrend and 2nd tier downtrend lines and our 2nd tier uptrend and 3rd tier downtrend lines.

Present Price: 94.22

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.

Source: ForexYard

Today’s U.S. Consumer Confidence data release is set to dominate the trading between the Dollar and its major currency pairs. A number of other factors are also likely to impact the forex market today, such as the British BBA Mortgage Approvals at 8:30 GMT. The results of today’s data are likely to determine the USD’s trend going into rest of the week’s trading.

Economic News

USD – The U.S Dollar Strengthens Against Most Rivals

The greenback rebounded versus major currencies Monday, from a string of recent declines after signals at the weekend that most key central banks backed a policy of keeping their Interest Rates low for the foreseeable future.

Analysts continue to anticipate that at some point signs of strength in the U.S. economy will be read as positive for the nation’s currency, ending an inverse relationship since the credit crisis began, where negative news triggered safe-haven buying of the U.S Dollar. That relationship still held back the Dollar’s gains on Monday.

The USD also advanced yesterday vs. the EUR and Japanese yen as Wall Street surrendered earlier gains and traders repositioned themselves ahead of U.S. consumer and Housing data due this week. Solid U.S. data and an upbeat assessment on the economy from Federal Reserve Chairman Ben Bernanke over the weekend earlier pushed investors to take on riskier investments at the expense of the low-yielding Yen and Dollar.

EUR – Sterling Pressured; Hits 11 Week Low vs. the EUR

The EUR erased its gains versus the Dollar yesterday as Treasury yields fell and the European Central Bank (ECB) policy makers warned against succumbing to optimism with regard to the economic situation in Europe. The EUR also reversed again versus the Japanese yen after the Euro-Zone industrial orders came in much higher than expected.

But investors are keen to see how the Euro-Zone economy fares, especially after higher-than-forecast purchasing managers’ index readings last week. Traders expect Germany’s Ifo survey of business sentiment to be the key event for the European currency this week.

The British pound dropped yesterday against 14 of the 16 most-traded counterparts on speculation the Bank of England will depress yields on gilts, making the U.K.’s assets less attractive to foreign investors. The Sterling declined yesterday to an 11-week low versus the EUR as much as 0.6%, the weakest level since June 8th. Analysts have said that the EUR was pushed past a key options barrier at 87 pence, setting up further gains in the pair, while traders said expectations for persistently low UK Interest Rates were weighing on the British currency.

JPY – The Yen Advances as Stocks Extend Losses

The Japanese yen was broadly firmer on Tuesday as investors took a pause from a recent rush to stocks and higher-yielding currencies, with focus shifting to U.S. data later in the day for clues on an uncertain economic recovery. The low yielding Yen tends to gain when stocks and higher-yielding currencies fall or when weak economic data highlights a long and uncertain road for global recovery.

The JPY rose against all of the 16 most-active currencies after Atlanta-based SunTrust Banks Inc., Georgia’s biggest lender, said U.S. financial institutions may report more credit losses as commercial real estate falters. Worries are re-emerging that regional and local banks in the U.S. may be facing more loan losses, hence causing risk aversion and buying of the Yen.

Crude Oil – Oil Trades Near 10-Month High on Economic Optimism

Crude Oil prices rose Monday, briefly touching their highest level in 10 months, as optimism about a rebound in the global economy boosted energy prices. The gains came alongside strength on Wall Street, where the stock market also briefly touched 10-month highs before pulling back slightly after a 4 day rally.

Commodities markets have tracked stocks indexes closely in recent months as dealers view equities as a leading indicator of economic performance. Oil dealers said many investors were also using commodities as a hedge against the U.S Dollar, particularly oil, as OPEC producers work to restrain supply.

However, Crude reduced its earlier gains in afternoon trade as U.S. stocks turned lower. With demand remaining weak and supplies standing abundant, the crude market could be ready for a quick and sharp downward movement.

Technical News

EUR/USD

The typical range-trading on the hourly chart continues. The 4-hour chart’s RSI is floating in neutral territory. However, there is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.

GBP/USD

The cross experienced much bearishness yesterday, and currently stands at the 1.6415 level. There is plenty in the chart’s oscillators that supports a possible bullish correction today. Going long with tight stops may turn out to bring big profits today.

USD/JPY

There is a fresh bullish cross forming on the 4- hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the daily chart’s Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The 4-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 oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be a preferable strategy.

The Wild Card – Crude Oil

Crude Oil prices rose significantly in the last month and peaked at $74.10 per barrel. However, there is a bearish cross on the daily chart’s Slow Stochastic suggesting that the recent upwards trend is losing 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 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$ 1.4280 level and was capped around the $1.4360 level.   The common currency failed to sustain intraday gains after it was reported that eurozone industrial new orders registered their strongest gain in nearly nineteen months in June.  European Central Bank President Trichet was rather cautious in his remarks this weekend at the Kansas City Federal Reserve’s annual Jackson Hole symposium.  Trichet reported “we see some signs confirming that the real economy is starting to get out of the period of freefall” but added this “does not mean at all that we do not have a very bumpy road ahead of us.”  Some ECB policymakers are thought to be questioning the sustainability of the recent improvement in eurozone economic data.  ECB’s Liikanen said there is “no need” for the ECB to reassess its policy stance and added unemployment will rise more.  In U.S. news, the Chicago Fed’s Midwest manufacturing index improved 2.6% in July, the first monthly gain since June 2008, and was off 22.8% y/y.  Fed Chairman Bernanke was more optimistic than Trichet in his remarks at the Jackson Hole symposium.  Vice Chaiman Kohn reiterated “the commitment to low rates is designed to keep inflation from falling and falling persistently below what we might want it to be for a long time.”  Data to be released in the U.S. tomorrow include the June S&P/ Case Shiller home price index.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥95.05 level and was supported around the ¥94.25 level.  The yen was mixed across the board as risk appetite improved somewhat, encouraging some to chase higher-yielding assets.  A greater resumption of risk appetite could result in more demand for short yen carry trades in which the yen is used as a financing vehicle to invest in assets with greater yield spreads.  Vice finance minister Tango reported Japan needs to limit Japanese government bond sales as much as possible.  Tango’s comments are topical because the Liberal Democratic Party of Japan may lose this weekend’s general election with the Aso government conceding the LDP’s stronghold on power to the rival Democratic Party of Japan.  DPJ leader Hatoyama was on the tape earlier saying the DPJ does not plan to increase JGB issuance, contrary to public chatter that the liberal DPJ will expand public works projects.  Bank of Japan Governor Shirakawa spoke at the Fed’s Jackson Hole symposium this weekend and said monetary policy “should avoid inflating asset bubbles by keeping interest rates low for too long.”  The Nikkei 225 stock index climbed 3.35% to close at ¥10,581.05.  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 ¥135.00 figure and was capped around the ¥136.05 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥154.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.90 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8267 in the over-the-counter market, down from CNY 6.8269.  Chinese Premier Wen 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.

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

Canadian Retail Sales increased by more than expected in June according to the monthly report released by Statistics Canada today. Retail sales increased by 1.0 percent to C$34.4 billion in June following a revised decrease of 1.1 percent in May.  The rise in retail sales surpassed economic forecasts that were predicting only a 0.1 percent increase for the month.

Core retail sales, excluding automobile sales, also advanced by 1.0 percent in June following a revised decline of 0.6 percent in May. The gain in core sales  surpassed forecasts that were expecting a 0.2 percent increase.

Contributing to the rise in the retail sales numbers was an increase in the automotive sector by 2.1 percent with gasoline station sales increasing by 4.7 percent for the month. The food and beverages stores sector saw a 1.3 percent rise while furniture, home furnishings & electronic stores increased by 0.6 percent and pharmacies and personal care stores advanced by 0.8 percent. Negatively contributing to the monthly retail sales were decreases in general merchandise stores and in building & outdoor home supplies stores.

Canadian Loonie rises in Currency Trading.

The Canadian loonie dollar has been stronger today in the currency markets versus the major currencies after the higher retail sales data. The Canadian currency has increased versus the euro, British pound, U.S. dollar, Australian dollar and New Zealand dollar while trading almost unchanged versus the Japanese yen.

The U.S. dollar has declined today against the Canadian loonie as the USD/CAD pair trades at the 1.0743 in the US session at 11:39am EST. The USD/CAD opened the day trading at 1.0790 at 00:00GMT according to currency data by Oanda.

The euro has decreased against the loonie as the EUR/CAD trades at the 1.5380 level after opening the day at 1.5469. The loonie has traded almost unchanged versus the Japanese yen as the CAD/JPY trades at the rate of 87.99 yen per loonie level after opening the day at 87.92.

The British pound has fallen versus the loonie today as the GBP/CAD trades at the 1.7627 level after opening the day at 1.7829.

The Australian and New Zealand dollars have also lost ground today versus the Canadian currency as the AUD/CAD trades at 0.9131 after opening at 0.9057 while the NZD/CAD trades at 0.7386 after opening the day at 0.7397.

EUR/CAD Chart – The Euro falling versus the Canadian Dollar today in Currency Trading today (1-hour chart).

Source: ForexYard

Last week marked a sharp drop in the Dollar’s value, especially against the EUR and the CHF. The biggest question for this week is whether the Dollar will continue to see bearish trends against the major currencies, or reverse. It seems that the upcoming data from the U.S. economy will play a main role in this week’s trading, and traders are advised to follow these main publications closely.

Economic News

USD – Dollar to Go Bearish on Strong Equity Market

The positive homes sales and manufacturing figures from the U.S. last week helped increase risk appetite resulted in the Dollar dropping significantly against the EUR. The bullish equity markets also continued to drive the greenback lower last Friday. The EUR/USD pair was trading as high as the 1.4374 level on Friday, and now trades at 1.4330. The GBP/USD cross began Friday’s trading at 1.6442, and now stands at the 1.6535 level. This in itself indicates the very high volatility that the forex market has been going through in recent weeks.

The key meeting in the latter part of last week in Jackson Hole, Wyoming, is likely to play a key role in USD trading for today and this week. Traders should follow news still flowing from the developments from this meeting that was attended by central bankers and key financial experts. Additionally, forex traders need to pay close attention to economic news that will come out of Britain and the Euro-Zone, as news from these 2 regions will help establish the greenback’s dominance against its main currency pairs today.

Looking ahead to this week, there are many economic data releases which will affect the Dollar. This includes CB Consumer Confidence, New Homes Sales, Prelim GDP, and Unemployment Claims. Also, the USD may indeed continue to go bearish if the equity market continues to rise rapidly. This could happen if traders continue to increase their risk appetite. In addition, the Personal Spending and Revised UoM Consumer Sentiment figures at 12:30 and 13:55 GMT on Friday are set to dominate the mind of traders at the conclusion of this trading week.

EUR – EUR Rises on Increased Optimism

The EUR/USD rate reached as high as 1.4374 last week, and it now stands at 1.4330. This has come about as the U.S. economy and other leading global economies, such as Germany and France continue to rise out of the recession. On the other hand, the British economy hasn’t been fairing well as of late, as the EUR/GBP rate opened at 0.8608 last Thursday. However, it now stands at 0.8680, which signals a loss in confidence in the GBP since the beginning of Thursday’s trading.

Due to the more optimistic patterns that we have seen from Germany, France, Japan and even the U.S., the EUR continues to strengthen as a response. However, Britain is lagging far behind, as she has a fragile banking system, debt is 60% of GDP and the printing of money is out of control. Things are so bleak that even the Governor of the Bank of England (BoE), Mervyn King, has run out of ways to stimulate the British economy. This may explain the GBP’s weakness against the EUR and CHF last week.

Leading analysts forecast the possibility of a sell-off of the GBP at the commencement of this week. Nevertheless, this may actually reverse as the week drags on. Today, there is much important economic news coming out of the Euro-Zone, including Industrial New Orders at 9:00 GMT. Furthermore, there is a lot of data coming out of the Euro-Zone during the coming trading week. Thus the EUR is set to be a key currency in the forex market this week.

JPY – Yen to Lead Forex Trading This Week!

Recently, Japan’s economy rose out of recession, beating even the best of estimates. Moreover, we saw some bullishness in the previous week for the Yen. For example, the Japanese currency rose heavily vs. the USD. There may be a number of reasons for this. Mixed figures from the U.S. played a role, as pessimistic unemployment figures from the U.S. economy, and increased risk appetite hurt the USD. The USD/JPY cross went was as low as 93.46 last week, and it is currently trading at the 94.60 level.

As there are many important data releases coming out of Japan this week, there is great potential for volatility in the Yen. A number of releases, such as the Trade Balance, Household Spending and Tokyo Core CPI figures are scheduled to be released this week. These releases will help forex traders get a taste of the health that the Japanese economy currently is in. Therefore, it is reasonable to suggest that the Yen will have a crucial role in leading forex trading this week.

Crude Oil – Oil Set to Hit $75 a Barrel?

Oil recorded a good trading week overall, as the commodity now stands at $74.30 a barrel. Crude prices were helped by a number of different factors last week. Improvements in data coming out of the leading global economies did help. A weak Dollar last week also helped push up the price of Crude, as the commodity itself is priced in Dollars. Additionally, the Crude Oil Inventories figures plummeting last week also drove-up the price of Crude.

Last week’s behavior contradicted many people’s expectations, as they expected Crude Oil to have another bearish trading week. However, last week shows that the black gold still has much support. Trading on Friday saw Crude rise by $1.75, which was probably due to the weak USD. If the U.S. continues to release positive economic news and the USD continues to weaken, we may see Crude prices hit $75 a barrel very soon.

Technical News

EUR/USD

The pair’s bullish trend is showing its first signs of halting. The 4-hour chart is currently showing a quartette doji formation, indicating that the price has stabilized around the 1.4300 level. Furthermore, as the 1-hour chart’s RSI has risen above the 70 line, it appears that a modest bearish correction might take place today.

GBP/USD

The cable continues to show mixed results without marking a distinct trend, and the pair is currently traded around the 1.6520 level. As a bullish cross is taking place on the 4-hour chart’s Slow Stochastic, it looks that a bullish movement could be impending. Going long with tight stops might be the right strategy today.

USD/JPY

The pair is in the midst of a very sharp upward movement. The pair is currently traded near the 94.80 level, and the next significant resistant level seems to be placed at the 95.30 level. If the pair will manage to breach through this level, it may have the potential to climb up towards 96.30.

USD/CHF

The 4-hour chart’s bearish channel is showing its first signs of a breach, as the pair rose close to 50 pips and is now traded around the 1.0600 level. Currently, as a bullish cross is taking place on the daily chart’s Slow Stochastic, it seems that a bullish correction might be imminent, with the potential of reaching the 1.0680 level.

The Wild Card – Gold

Gold prices saw a bullish trend during last week’s trading session, and an ounce of gold is currently traded for over $952. However, as a bearish cross is taking place at the 4-hour chart’s Slow Stochastic, it appears that a bearish correction might take place soon. This might be a good opportunity for forex traders to catch the trend at its beginning.

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.