InvestMacro FX

By CountingPips.com

The U.S. Federal Open Market Committee announced today that it is holding the U.S. interest rate steady at its record low level and would be ending its purchases of Treasury securities in October. The FOMC had last cut the interest rate to the target range of 0 percent to 0.25 percent in December and today’s decision to keep the rate unchanged was widely expected by market forecasts.

On the economy, the FOMC statement marked a more optimistic tone than prior statments and said that, “Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”

The statement also said that the FOMC policy of buying $300 billion worth of Treasury securites would most likely finish in October. The Fed program’s to buy $200 billion of agency debt and $1.25 trillion of mortgage-back securities would still go on throughout the end of the year. Interest rates will likely not move for a little while as the Fed statement said that despite expecting “a gradual resumption of sustainable economic growth,” interest rates would probably be at or near the zero level for “an extended period.” Read the full Fed statement here.

Also, released out of the United States today was that the trade deficit edged up in June as imports rose according to a release by the Commerce Department today. The U.S. trade deficit increased to $27.0 billion in June following a revised deficit of $26.0 billion in May. The trade balance data was less than the approximately $28.7 billion deficit that market forecasts were expecting for the month.

The U.S. had a total of $125.8 billion worth of exports which was an increase of $2.4 billion from May’s total.  June also saw a gain in imports as it totaled $152.8 billion worth of imports compared with $149.3 billion in May for a increase of $3.5 billion for the month.

The U.S. trade deficit with China increased in June with a $18.4 billion shortfall after a deficit of $17.5 billion in May. Other notable deficits in June were with the European Union at $4.5 billion, Mexico at $3.4 billion, Japan at $3.7 billion and OPEC at $5.9 billion. The U.S. trade surpluses with other countries for June included Hong Kong at $1.4 billion, Australia at $1.0 billion, Singapore at $0.5 billion and Egypt at $0.2 billion.

Forex Market – US Dollar lower in Forex Trading today.

The U.S. dollar has traded lower in forex trading today after gaining in the early part of the week.  Immediately after the interest rate announcement, the dollar spiked higher but has since come down from those levels.  Overall today, the dollar has lost ground to the euro, British pound, Canadian dollar, Swiss franc, Australian dollar and the New Zealand dollar while the USD has shown gains against the Japanese yen as of 3:31pm ET in the afternoon of the US trading session.

AUD/USD Chart – The Australian Dollar trading higher today versus the US Dollar after two straight declining days.

Source: ForexYard

During yesterday’s trading, the Yen continued to be the dominant currency in the forex market. Whilst most of the major currencies tended to fluctuate without marking a sustained trend, the JPY strengthened on all fronts, and currently looks to be this week’s top investment. During today’s trading, the most fascinating data will come at 18:15 GMT, as the Federal Funds Rate for August will be announced. The main question is whether the Fed will hike rates in light of recent positive economic data. Such a turn of events could create mayhem in the market, and traders are advised to be prepared.

Economic News

USD – USD Sees Mixed Trading Ahead of FOMC Statement

The Dollar experienced a mixed trading day Tuesday ahead of today’s FOMC meeting, continuing its rally against its commodity based counterparts while slipping slightly against the EUR and dropping sharply against the Yen. The Dollar traded at 95.80 Yen early this morning, from 95.99 yesterday, after falling 1.2%. The U.S. currency was at $1.4161 per EUR from $1.4149 yesterday.

The highly anticipated FOMC meeting statement is due to be released today at 18:15 GMT. Breaking with its trend throughout the recession, the Dollar unexpectedly rose Friday following a surprisingly strong U.S employment data release. This was seen as a signal that the recession is coming to an end and the Dollar might start benefiting from positive U.S data. This statement will be the first test of whether this trend will persist and the Dollar’s strength can be maintained on positive economic data.

While no interest rate changes are expected, any clues as to the progress or end of the quantitative easing program will likely cause great market volatility. The statement is expected to provide an assessment of the current economic condition in the world’s largest economy and more importantly provide an economic outlook, therefore, likely setting short-term direction for the USD.

EUR – EUR Continues its Decline against the Yen

The EUR continues to decline versus the Yen pushing its loss to 1.9%. The decline was exacerbated after consumer prices in Germany posted their first annual decline in more than 22 years in July, boosting speculations the European Central Bank (ECB) will keep interest rates at a record low. The EUR was at $1.4154 from $1.4142 late Monday and was at 135.74 yen, down from 137.32.

The Pound continues its decline against the Dollar, reaching a low of $1.6476. Pushing down on the Pound was a worse then expected trade balance as well as falling stock markets, prompted by declines in financial stocks. With the financial sector being the largest sector in the British economy, equity market movements tend to have major affects on the GBP’s value. Furthermore, investors are staying cautious ahead of today’s BOE inflation statement.

A heavy news day is expected today from the U.K which will likely set the direction for the Pound for the rest of the week with the Claimant Count Change to be released at 8:30 GMT along with the Average Earnings Index and the BOE Inflation statement. at 9:30 GMT. These will provide an assessment of the current economic conditions in the U.K as well as provide an outlook on the prospects of recovery. The Euro-Zone Industrial Production report is also due to be released at 9:00 GMT, worse than expected results will likely put further downward pressure on the EUR.

JPY – The JPY Gains against all Major Currencies

The JPY traded at its highest level in a week against the EUR yesterday on concern the improvement in financial companies’ earnings will stall. The Yen traded at 135.82 per EUR early today, following a 1.1% gain yesterday. Japan’s currency traded at 95.96 per USD and 158.17 against the Pound, both up from yesterday’s figures.

Disappointing Chinese economic data and dropping stock prices on global exchanges soured risk appetite. Expectations that the Japanese economy will pull out of the recession ahead of the U.S have also helped push up the JPY against the greenback as investors turned to Japanese assets.

With no major news releases from Japan today, the Yen’s short term direction will likely be set by the news coming from the U.S and Europe, mainly the FOMC statement minutes.

Crude Oil – Crude Falls below $70 a Barrel

Light Sweet Crude for September delivery settled down $1.15, or 1.6%, at $69.45 a barrel on the New York Mercantile Exchange (NYMEX) yesterday as U.S. equities dropped ahead of a government report forecasting an increase in crude supplies in the biggest energy consuming nation. This was the lowest settlement since July 31. It was the fourth straight daily decline and the first time oil settled below $70 this month.

While global economic recovery is impending, demand is still contracting sharply, collapsing faster than anyone expected. Traders should follow today’s release of U.S Crude Oil inventories as any bearish number could prompt a further decline in prices.

Technical News

EUR/USD

The pair continues its range-trading activity, and is now traded around the 1.4150 level. Currently, a bullish cross is taking place at the 4-hour chart’s MACD, suggesting that a trend reversal might be impending. It seems that a breach of the 1.4220 level will further indicate a bullish reversal.

GBP/USD

The pair’s volatility continues, as the cable is now traded around 1.6480. After dropping close to 600 pips, the pair seems to be stabilizing at its current level. However, as a bearish cross is taking place at the daily chart’s MACD, the pair might continue the bearish trend, with the next target price located near 1.6375.

USD/JPY

Ever since peaking at the 97.75 level, the pair has been constantly dropping and is currently trading around the 95.50 price range. As all oscillators on the 4-hour chart are pointing down, it seems that the pair’s downtrend could extend today.

USD/CHF

The pair continues to show mixed results, without marking a sustained trend. A triple doji pattern, formed at the 4-hour chart indicates that a sharp movement is impending. As the daily chart’s Slow Stochastic shows a bearish cross, it seems that the next move might be downward.

The Wild Card – Crude Oil

Crude Oil’s downtrend continues, as a barrel of crude oil is now traded for less then $70. As all oscillators on the daily chart are pointing down, it seems that another drop in prices might happen today. This might be a great opportunity for forex trader to join a very popular 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

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The euro gained marginal ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4185 level and was supported around the $1.4110 level.  Most traders believe the Federal Open Market Committee will keep interest rates unchanged when its policy decision is announced tomorrow.  Many economists believe the FOMC will keep interest rates unchanged through at least 2010 on account of the global credit crisis.  Traders are curious to see if the Fed changes any significant verbiage in its statement and gives any further clues about unwinding its massive monetary stimuli.  The Fed’s balance sheet is currently right around the US$ 2 trillion level and has been declining over the past few weeks, an indication it is gradually reducing some of its quantitative easing programs.  One program that traders are paying close attention to is the Fed’s purchase of U.S. Treasury securities.  It is expected the Fed will allow its current US$ 300 billion purchase program to expire when that amount is reached, likely in September.  There is speculation the Fed will be actively discussing pending problems in the U.S. commercial real estate market.  There is an expectation the sector could worsen significantly early next year.  Fed Chairman Bernanke recently noted the Fed is “paying very close attention” to the sector and highlighted “increased vacancy, declining rents, and falling prices.”  Data released in the U.S. today saw Q2 non-farm productivity improve 6.4% from a downwardly revised Q1 reading of 0.3%.  While these data mean U.S. workers are becoming more productive, they also signify higher productivity is coincident with considerably higher unemployment.  Q2 labour costs were off 5.8%, down from a revised -2.7% in Q1, and June wholesale inventories were off 1.7%, down from a revised -1.2% in May.  In eurozone news, the German July wholesale price index was off 0.5% m/m and 10.6% y/y while the July consumer price index was unchanged m/m and off 0.5% y/y.  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 ¥95.75 level and was capped around the ¥97.15 level.  The yen extended recent gains across the board with U.S. equities under pressure and risk appetite lower globally, favouring the yen.  As expected, Bank of Japan’s Policy Board voted unanimously to keep the overnight call rate target unchanged at 0.10% and kept its economic assessment unchanged.  BoJ Governor Shirakawa pessimistically noted “Even if we have a recovery, I don’t think its strength will be impressive. I can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course.”  The central bank reiterated it remains concerned about “downside risks to economic activity and prices” and merely noted the economy has “stopped worsening.”  Data to be released next week may show Japan’s economy expanded around 4.0% in the three months that ended 30 June.  Deflationary pressures have returned to the economy.  Consumer prices excluding fresh food fall a record 1.7% in June and this may pressure policymakers into keeping rates low through 2011.  Data released in Japan overnight saw the government’s consumer sentiment index improve to 39.4 from 37.6 in June, its highest level since November 2007 and the seventh consecutive monthly improvement.  The Nikkei 225 stock index climbed 0.58% to close at ¥10,585.46.  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 ¥135.25 level and was capped around the ¥137.40 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥157.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.40 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8355 in the over-the-counter market, up from CNY 6.8313.  Data released in China overnight saw July exports decline a staggering 23% y/y while July factory output was up a weaker-than-expected 10.8%.  Also, July CPI was off 1.8% y/y and July PPI was off 8.2% y/y with July retail sales up 15.2% y/y.

₤

The British pound lost minor ground vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6430 level and was capped around the $1.6520 level.  Traders await the release of Bank of England’s quarterly inflation report tomorrow.  Data released in the U.K. today saw the June DCLG house price index off 10.7% while the June goods trade deficit increased to ₤6.5 billion from ₤6.2 billion.  Other news out of the U.K. today suggests the BoE earned more than a 10% return on its ₤918 million portfolio of corporate bonds.  Cable bids are cited around the US$ 1.6215 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8615 level and was supported around the ₤0.8560 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 Fast Brokers – The EUR/USD is trying to balance on our 2nd tier uptrend line after reacting negatively to the collision of our 3rd tier uptrend and 1st tier downtrend line.  Meanwhile, the EUR/USD is hanging out just above the bottom of the 7/20-7/28 trading range.  On a positive note, volume on the sell-side is declining, meaning the currency pair could attempt to stabilize soon.  The Euro is experiencing relative weakness today after the credit ratings of Latvia and Estonia were downgraded, damaging EU organizations financial exposed to the Eastern European countries.  However, the EUR/USD is holding up well considering the S&P futures are under considerable selling pressure this morning.  We’re going to monitor the EUR/USD’s behavior today should the S&P’s downturn accelerate.  If the Dollar depreciates noticeably and the S&P futures tumble, this would add evidence to the argument that the Greenback’s correlation with U.S. equities is shifting.  However, if the EUR/USD flat lines or decline and the S&P futures decline sharply, then we may conclude that the depreciation of the Dollar over the past two sessions indicated a pullback in equities.

Meanwhile, the EUR/USD’s medium-term uptrend still has two uptrend lines and the psychological 1.40 acting in its defense to the downside.  As for the upside, the EUR/USD will just build more obstacles the more it declines.  The immediate-term hurdles to the upside are intraday highs and our 1st tier downtrend line.  A recovery into the meat of the 7/20-7/28 trading range could be a positive develop and allow the EUR/USD to build a new base.  However, Friday’s high volume shows immediate-term momentum is still in favor of the downside.

Though investors will be looking for EU Industrial Production to stay positive tomorrow, the focus will be on British employment data and the conclusion of the Fed’s monetary policy meeting.  If Bernanke states that the U.S. economy continues to improve and there are no plans to add further liquidity to the system, it will be interesting to see whether this results in a stronger or weaker Dollar.  While one may normally expect a weaker Dollar since such an announcement will ideally lift U.S. equities, we could witness the Greenback appreciate across the board should such a decision be made.  However, we will have to see how tomorrow’s meeting pans out before we get too far ahead of ourselves.
Present Price: 1.4119

Supports: 1.4132, 1.4154, 1.4165, 1.4182, 1.4200

Resistances: 1.4116, 1.4094, 1.4082, 1.4063, 1.4042

Psychological: 1.40

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’s decline carried on Monday before finding comfort in the 1.65 area as anticipated.  Both the housing price and retail sales data points came in better than anticipated late Monday, helping the Cable find a bottom.  Investors are ignoring the slight pullback in Britain’s Trade Balance this morning and the Cable is balancing on our 1st tier uptrend line.  Meanwhile, the S&P futures are experiencing a sizable pullback.  Though the reversal in correlation between the Cable and the S&P futures continues today, it remains to be seen whether this behavior will be temporary or long-lasting.  After all, the recent appreciation of the Dollar could have just been an indicator for today’s pullback in U.S. equities.  Therefore, we’ll need to monitor the correlation behavior for a few more sessions before drawing any conclusions.  The reaction of the Dollar and equities to tomorrow’s monetary policy decision by the Fed could paint a clearer picture.

In addition to the Federal Reserve’s monetary policy decision, Britain will also release its CCC number, the Average Earnings Index, and the BOE will print its Inflation Report.  Therefore, Wednesday’s session should be volatile for the Cable.  Should Britain’s CCC number come in lower than expected while the BOE’s Inflation Report shows modest inflationary pressure, this could give the Pound relative strength and boost the GBP/USD.  Declining unemployment and rising inflation indicates further improvement in Britain’s economy, giving the BOE room to rope in some of its liquidity in the foreseeable future.

Despite today’s consolidation in the GBP/USD, present momentum remains to the downside due to Friday’s pullback on considerable volume.  However, the 1.65 area should continue to be a reliable defense since the currency pair has battled with this psychological zone in the past.  The GBP/USD also has our 1st tier uptrend line and intraday lows acting as immediate-term technical cushions.  As for the upside, the GBP/USD has an uphill battle.  The Cable must deal with our 2nd tier uptrend line and the lid of its 7/20-7/28 trading range.

Present Price: 1.6490

Resistances: 1.6504, 1.6521, 1.6545, 1.6567, 1.6591

Supports: 1.6486, 1.6467, 1.6447, 1.6427, 1.6410

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 – The USD/JPY’s pullback has picked up traction, dropping below 2nd tier uptrend and 3rd tier downtrend lines.  Continued strength in the Yen comes after stronger than expected economic data from Japan to kick off the week.  Meanwhile, the S&P futures are logging considerable declines today, giving investors more incentive to favor the Yen and head for safety.  However, today’s pullback in the S&P comes on limited news, indicating a case of overbought conditions.  Therefore, it seems the USD/JPY’s positive correlation with U.S. equities is back in full swing.  Volatility in the USD/JPY has really picked up considering its dormant behavior as of late.

Despite today’s setback, the USD/JPY remains well above our 1st tier uptrend line and the psychological 95 level.  Therefore, bulls shouldn’t throw in the towel just yet.  Our 1st tier uptrend line has proven reliable recently.  However, the USD/JPY’s August highs are beneath its June highs, setting up the possibility of a head-fake and a retreat into the grips of its downtrend.  Therefore, we’ll have to monitor how the USD/JPY’s support system holds up.

Present Price: 95.85

Resistances: 96.10, 96.47, 96.81, 97.10, 97.47

Supports:  95.75, 95.61, 95.30, 94.99, 94.69

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

Traders moving assets to safer, lower yielding currencies appear to be playing a factor in the correction of the major crosses. The USD and JPY, which are seen as a safer bet than others currencies in times of market stress, will likely keep drawing demand as investors stay away from riskier assets.

Economic News

USD – Dollar Extends its Gains against the EUR and Pound

The U.S. Dollar extended its gains against the EUR and Pound yesterday. The Dollar Index, which tracks the USD vs. its 6 most traded currencies, such as the EUR, Pound and Yen, showed a 0.4% increase to 79.31 on Monday. This added to last week’s rise of 0.8% in the index. Monday’s USD trading behavior was due to last week’s better than expected unemployment, manufacturing, and consumer confidence figures. Adding to the USD’s gains yesterday was the increased speculation that in the long run, the U.S. economy is likely to grow at a faster pace than the Euro-Zone, Britain and Japan.

The realization that the USD is much undervalued against the EUR was one of the main reasons for the extension of the USD’s bullishness vs. the EUR yesterday. The pair fell by 70 pips to 1.4130 at yesterday. The greenback also made great inroads into the British Pound yesterday, as British banking woes reemerged, and deflation fears kicked in. This led to a massive slide in the GBP/USD pair by 235 pips to 1.6475. The USD also rose against the Canadian Dollar, as the CAD slid on the much weaker metals and energy sectors yesterday, which Canada’s economy is highly dependent upon.

Looking ahead to today, we can expect much volatility in the forex market following yesterday’s bullish trend in the USD. Today, unlike yesterday, the U.S. will be present when it comes to economic news. The major news events to drive USD trading today are the release of Prelim Nonfarm Productivity and Prelim Unit Labor Costs data both at 12:30 GMT, and Wholesale Inventories at 14:00 GMT.

EUR – Pound Slides on Fears of Worsening British Economy

The Pound slid dramatically against it major currency pairs yesterday, as fears increased over the health of the British economy. The Bank of England’s (BoE) decision to increase quantitative easing last week, and the collapse of British banking and energy stocks on Monday raised fears that the British economy may yet again fall into the abyss. With regards the Euro-Zone, the EUR fell on the assumption that Europe’s economy will grow at a slower pace than the U.S. This resulted in higher demand for the USD yesterday, adding to the EUR’s losing streak.

The EUR/USD pair plummeted to the 1.4170 level yesterday. This came about as the latest misfortune for the EUR against the USD possibly signals that the best is over for the European currency. This comes about as German banks face the threat of corporate downgrades. The GBP/USD pair fell by a massive 235 pips yesterday, as the British economy is fairing worse than the U.S. at the current time. It seems that the behavior that we see now in the forex market signals that conditions may be favoring a possible Dollar rally in the medium term against the GBP and EUR.

Today we may see a further bearish move for both the EUR and GBP against the most traded currencies. This is provided that economic conditions continue to favor the USD. There are plenty of economic news events today that may determine this. These include the Trade Balance and the DCLG HPI figures from Britain at 08:30 GMT. Coming out of the Euro-Zone are the German Final CPI and German WPI at 06:00 GMT, and the French Gov Budget Balance at 06:45 GMT. These figures are likely to determine the EUR and GBP crosses in todays trading.

JPY – JPY Soars against the Major Currencies

On Monday, Japan recorded a better than expected increase in Machinery Orders in June, the first increase in 4 months. However, other data showed that the Japanese economy was still in dire straits. Despite this, the Yen gained against its most traded currencies yesterday. For example, the GBP/JPY cross fell by 280 pips to the 159.74 level. This occurred as a decline in global equity markets led to a decline in riskier currencies, such as the GBP. Also, yesterday’s gains mark a correction from the bullishness we have seen in the GBP/JPY and USD/JPY crosses in the past few weeks.

Today, there is yet another opportunity for the Yen to build on its recent gains as the global economy destabilizes yet again. This is despite the fact that growth is expected to return to the U.S. economy in the 3rd quarter. There are 3 vital news events coming out of Japan that are expected to drive JPY trading for much of the day. These include the Monetary Policy Statement, Overnight Call Rate and the BOJ Press Conference. The results of these publications may see the JPY go bullish yet again today against the greenback, British Pound and EUR.

Crude Oil – Crude Oil Slips Below $71

Crude Oil slipped 40 cents to $70.70 a barrel yesterday, as the Dollar rebounded against the EUR, which in turn reduced the need for commodities as an alternative investment. Crude’s fortunes were further dampened yesterday, as there was a slump in equities in both the U.S. and Europe. Additionally, commodities also suffered in yesterday’s trading. One of the main reasons for this was the strong USD, which is highly important, as Crude Oil itself is priced in Dollars.

The black gold may be helped today, if we see a fall in the value of the USD. Playing on Crude Oil’s downside too is the fact that demand can’t keep up with prices. Moreover, it seems that the price of Oil may have been overvalued as of late, and a slight correction in the market may take place in order to determine the real value of this commodity.

Technical News

EUR/USD

The typical range trading on the hourly chart continues. The daily RSI is floating in neutral territory. However, the 4-hour RSI is already floating in the over-sold 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 preferable strategy.

GBP/USD

There is a fresh bullish cross forming on the daily chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the 4-hour chart’s Momentum oscillator also supports this notion. Going long with tight stops might be the right strategy today.

USD/JPY

The USD/JPY has gone increasingly bearish in the past 2 days, and currently stands at the 96.66 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 4-hour chart’s Stochastic Slow signals that a bullish reversal may take place today. Entering the pair when the signs are clearer seems to be a wise choice.

USD/CHF

The hourly chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, the 4-hour chart’s RSI is already floating in the over-bought territory indicating that a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card – Gold

Gold prices dropped significantly yesterday and peaked at $945.60 an ounce. However, the 4-hour chart’s RSI is floating in the over-sold territory suggesting that a bullish correction is impending. This might be a great 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 CountingPips.com

The US Dollar has continued to show strength in the forex market today against the other major currencies after rallying at the end of last week.  The dollar gained sharply on Friday after the  government non-farms employment data came in better than expected with a decline of just 247,000 jobs following June’s 443,000 decrease.  The unemployment rate also edged down for the first time in fifteen months.

Today, the dollar has increased versus the euro, British pound sterling, Swiss franc, Australian dollar and Canadian dollar while falling against the Japanese yen and trading virtually unchanged versus the New Zealand dollar.

The EUR/USD pair has declined from today’s opening rate of 1.4202 at 00:00GMT to trading to 1.4131 at 2:50pm ET in the U.S. trading session according to currency data by Oanda.

The GBP/USD has sharply declined from today’s opening level at 1.6713 to trading today at 1.6456 for over a 200 pip loss.

The US dollar has fallen today against the yen as the USD/JPY opened today at 97.27 and has advanced to trading at 97.04. The dollar has bumped up today versus the Swiss franc as the USD/CHF has gone from the 1.0811 opening rate to trading at 1.0865.

The dollar has increased today against the Canadian loonie by almost 100 pips as the USD/CAD has advanced to trading around the 1.0909 level today after opening at 1.0818.

The Australian dollar has fallen versus the US dollar today as the AUD/USD has declined to the 0.8342 level after opening at 0.8392. The New Zealand kiwi has traded almost unchanged against the dollar as the NZD/USD has edged up to the 0.6741 level today after opening the day at 0.6734.

GBP/USD Chart – The British Pound falling sharply today against the US Dollar in Forex Trading and the GBP/USD has declined by more than 200 pips.

By Fast Brokers – The USD/JPY is reversing from 98 and our 4th tier downtrend line after Friday’s encouraging rise.  The currency pair is now bouncing between our 4th tier downtrend line and 2nd tier uptrend line as they approach their inflection point.  Today’s appreciation of the Yen comes with much better than expected Core Machinery Orders and Current Account data points from Japan.  Investors are favoring the Yen and the Japanese economy in reaction, particularly after economist Paul Krugman cautioned that the U.S. economic recovery has a long road ahead.  The improvement in Japan’s economic data is certainly encouraging, especially the sizable rise in the nation’s Current Account balance.  The pickup in Japan’s Current Account balance is likely due to the economic recovery taking place in China.  Therefore, better than expected economic data from China tomorrow could add further near-term downward pressure since this news would favor Japan’s economy.

Despite today’s pullback, the USD/JPY made encouraging headway on Friday.  The currency pair finally woke from its hibernation, heading back into contention for 100.  However, the USD/JPY faces new immediate-term foes, including our 4th tier downtrend line and Jen highs.  Regardless, the USD/JPY is in an opportunistic position to extend its near-term breakout.  Furthermore, any eclipse of our 5th tier downtrend line could signal a longer uptrend line with a retest of 100 likely.  On the other hand, should our 2nd tier uptrend give way, the USD/JPY’s immediate-term pullback could pick up speed towards the 96.42-96.74 zone.

Present Price: 97.30

Resistances: 97.37, 97.78, 98.09, 98.54, 98.90

Supports:  97.05, 96.74, 96.42, 96.02, 95.75

Psychological: 95, 100

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 snapped after August 3rd lows failed to hold their ground.  Friday’s sell-side action was simply too much for the currency pair to handle, and the GBP/USD has proceeded to flop towards the 1.66 area as we anticipated.  There’s continual downward pressure on GBP/USD and EUR/USD as FX investors head for safety.  Meanwhile, the Pound is experiencing relative weakness in light of the BOE’s $84 billion QE injection last week, as indicated by an upturn in the EUR/GBP.  However, even though further immediate-term losses in the GBP/USD appear likely, the currency pair has a strong support zone approaching.  The Cable has experienced immense consolidation around the 1.65 level in the past, and there’s no reason to believe this behavior should change any time soon.  Therefore, with 1.65 and our 1st and 2nd tier uptrend lines within reach, we believe any immediate-term losses could be halted by these technical cushions.  In the meantime, crude and the S&P futures are consolidating above their respective psychological levels, $70/bbl and 1000.  As long as these investment vehicles hold strong, the Cable should forego any further technically significant setbacks.  Meanwhile, investors should keep an eye on sell-side action to deem whether the Cable’s pullback has the juice to drop below its aforementioned technical cushions.

All is quiet on the data front until Britain releases its BRC Retail Sales Monitor and RICS House Price Balance numbers late Monday.  A continual rise in housing prices could help solidify a temporary bottom in the Cable.  Furthermore, investors will keep a close eye on key Chinese economic data.  We could witness a broad-based Dollar depreciation if the Chinese numbers come in better than expected.  China is helping pull the entire global economy out of the gutter, so outperformance in China could lift both the Pound and the Euro.  Meanwhile, we’ll monitor the Cable’s correlation with the S&P futures since we witnessed a large appreciation of the Dollar on Friday despite stability in U.S. equities.  Though we are not tossing the GBP/USD’s positive correlation with the S&P futures, we are certainly monitoring the situation closely.

As for the upside, an encouraging development would be for the GBP/USD to solidify above our 3rd tier uptrend line.  However, the Cable has quite an uphill battle, including July 31st highs and our 2nd tier downtrend line.  On the other hand, any climb above our top 1.6651 resistance could result in an additional immediate-term pop in the Pound.  We maintain our negative immediate-term outlook on the GBP/USD, though losses should be limited with strong supports on the horizon.  The Cable’s medium-term uptrend is still safe, and the currency pair would need a hefty technical reversal to alter its path.

Present Price: 1.6570

Resistances: 1.6572, 1.6591, 1.6612, 1.6637, 1.6651

Supports: 1.6544, 1.6521, 1.6504, 1.6486, 1.6467

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.