InvestMacro FX

Source: ForexYard

Traders witnessed one of the first vital pieces of information from the Euro-Zone which actually put a dent in the plans of the EUR. The German Ifo Business Climate report failed to meet expectations and slightly lowered investor confidence in the 16-nation currency. As a result, traders may indeed see a reversal in the making for the EUR/USD unless today’s news puts a halt to the correction. Sticking close to the calendar today and betting on news releases would be a wise move for the weary trader today as the movements of the forex market are not yet stabilized.

Economic News

USD – Is a USD Rally in the Making?

The Dollar rose marginally against the European currency as the economic calendar in the U.S. was blank due to a bank holiday. The knock-on effect of this was a forex market with less volatility than usual. In reality this translated into little fluctuations in the USD and its main crosses.

Many analysts have been worried about the greenback’s rapid deterioration in value in the past several weeks. They are beginning to ask themselves, “Is a reversal in the making?” In Monday’s trading, the EUR/USD rate reached as high as 1.4028. However, the pair ended up lower by 15 pips for the day at 1.3974. Against the Pound, the USD was unchanged at 1.5877. The Dollar gained versus the JPY by 10 pips to close at 94.73.

This behavior shows that in late trading hours, the Dollar reversed some of its losses, and started gaining against the major currencies. This may be due to 2 main factors. Firstly, the Dollar has been over-sold lately, and is under-valued. Secondly, the bank holiday in the U.S. made the forex market more flat than it would have been under normal market conditions. The slightly negative German Ifo Business Climate news release from Germany may have also helped weaken the EUR in late trading. This is compounded with the fact that other major economies are in even more dire straits than the U.S.

Looking ahead to today’s news, the most important economic news release coming out of the U.S. is the CB consumer confidence figures at 14:00 GMT. The release is a top measure of U.S. consumer spending. Therefore, the results are likely to be pivotal in driving the direction of the market both before and after the data release. Traders are advised to take-up positions in the majors, while volatility is still low, in order to make some profits in the USD and its dominant crosses.

EUR – EUR Declines against Greenback

The EUR slipped slightly against the Dollar as the markets failed to take a clear direction yesterday. It can be said that speculation alone cannot drive the EUR higher due to some of the recent data releases. This was shown when the German Ifo Business Climate report put some downward pressure on the EUR as investors realized that the Euro-Zone currency may be slightly overvalued against the USD, and other major currencies.

The Dollar gained 15 pips against the EUR, reversing a near-2-week trend to close at 1.3974. The EUR/GBP cross finished yesterday’s trading to close marginally lower at 0.8799. The EUR/JPY pair was virtually unchanged at 132.36. The question now is can the EUR return to its bullish run against the greenback? It is valid to say that there is more to back the EUR in theory than the USD or the GBP. Both the U.S. and Britain have lower Interest Rates than the Euro-Zone. Additionally, Europe has been more conservative than her 2 economic rivals in printing money. Furthermore, Britain and the U.S. have mounting deficits, whereas the Euro-Zone doesn’t. It seems reasonable to say that the long term bullishness may belong to the EUR, rather than to her main currency rivals.

Today, there are plenty of economic indicators from the Euro-Zone that are likely to help determine the EUR’s main crosses going into mid-week trading. The Current Account and Industrial New Orders are set to be published at 8:00 and 9:00 GMT respectively. The impact of these releases will show forex traders the health of the Euro-Zone economy. This could signal if the European currency is overvalued, and if it can uphold its bullish run against the Dollar. The impact of this will be increasingly felt, especially as the markets moved little in yesterday’s trading due to British and American bank holidays. Traders are advised to open positions now, in order to make profits when volatility kicks in.

JPY – JPY Strength Uncertain, Heavy News Week may Help

The Yen failed to topple the Dollar yesterday, despite a bearish Dollar in the last few weeks. The pair actually closed up 10 pips at 94.73. The release of the worse-than-forecasted CSPI figures in late trading helped prevent the JPY from gaining bullish momentum against its major currency pairs.

There was very little movement in the EUR/JPY pair as it closed at 132.36. However, the Yen lost a bit of ground against the British currency to finish trading at 150.45. These small forex market currency fluctuations were largely owed to the British and American bank holidays yesterday. Nevertheless, markets are set to be much more volatile today, as forex market volatility returns to more normal conditions in the coming hours.

The short-term future of the JPY depends on the speed of the global economic recovery. If things do improve quicker than many analysts anticipate then the Yen may start to go bearish. This is increasingly the case if the U.S. raises Interest Rates before all of the other industrialized countries. Today, in late trading the Monetary Policy Meeting Minutes and Trade Balance figures at 23:50 GMT are likely to help determine the JPY’s strength going into mid-week trading. A 95.50 USD/JPY rate may be a possible by tomorrow’s close. However, it is wise to open positions in the JPY now as news from the Euro-Zone and U.S. is published.

Crude Oil – Crude Oil Prices Decline 1%

The price of Crude Oil tumbled 1% in yesterday’s trading to $60.90. This comes despite increased optimism from the Organization of Petroleum Exporting Countries (OPEC) recently. However, many analysts expect the price of Oil to climb through the long-term as market conditions return to normal. Many analysts believe that the long-term prospects for Crude Oil are between $75-80.

In the meantime, the price of Crude Oil may only start going bullish again when the Dollar continues its decline, and if OPEC makes no output increases in their next meeting in Vienna, Austria on the 28th of May. In today’s trading, the economic figures coming out of the U.S. and Euro-Zone are likely to impact the volatility of oil prices and traders would be wise to enter the market before this volatility kicks off.

Technical News

EUR/USD

The sustained upward movement these past few trading days has apparently generated a bearish cross on the daily chart’s Slow Stochastic, indicating a longer-term downward correction may occur shortly. As the weekly Momentum oscillator begins to turn a corner, we may very well be seeing a reversal in the making. Going short to enter this new trend may be a wise move today.

GBP/USD

The price of this pair appears to be floating in the over-bought territory on the RSI of the daily chart, signaling long-term downward pressure. A fresh bearish cross on the daily chart’s Slow Stochastic supports this notion. A downward correction may be in the works for this pair in the medium-term. Entering with short positions directly after the downward breach may be a smart decision today.

USD/JPY

There appears to be a head-and-shoulders formation on the hourly and 4-hour charts for this pair, signaling an imminent, rapid downward movement. However, the Slow Stochastic on the hourly chart shows a fresh bullish cross, signaling the next movement may be upwards. With the price floating near the over-sold territory on the daily chart’s RSI, the longer-term trend may be up. Waiting for a clearer signal might not be a bad choice today.

USD/CHF

The price appears to have just exited the over-sold territory on the 4-hour chart’s RSI indicating the upward correction may be running out of steam. However, the daily chart’s Slow Stochastic appears to have a fresh bullish cross, which signals further corrective movement may be in the works. Going long with tight stops might be a solid decision throughout the day.

The Wild Card – USD/TRY

There appears to be a fresh bullish cross on the 4-hour chart’s Slow Stochastic for this pair, signaling an upward movement may be in the making. With its sustained downward movement over the past weeks, this pair is overdue for a rebound. With fresh bullish crosses on the MACD for the hourly, 4-hour and daily charts, this rebound may indeed be developing. Forex traders can definitely take advantage of this swing by buying this pair now, and at a great entry price.

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.

Source: ForexYard

Many forex traders witnessing the strong bearish trends across the USD pairs and crosses have been wondering when it will come to an end. As last week’s U.S. housing market data and unemployment figures proved worse than forecast, mixed with a boom in confidence for Euro-Zone economies such as Germany, the USD went negative. However, this week’s data forecasts could create the rumblings of a reversal for the greenback. This exciting volatility is where money is made in the forex world; don’t miss out!

Economic News

USD – Dollar Drops on Poor Data

The American Dollar saw an extremely bearish session during last week’s trading as it dropped in value against all the major currencies. The EUR/USD actually rose to the 1.4000 level for the first time in 5 months!

It appears that two main economic indicators have initiated the USD’s downfall on all fronts throughout last week. For starters, the U.S Building Permits report revealed that hopes for an improvement in the U.S housing sector are currently unrealistic, as only 490,000 new residential building permits were issued during April. Many analysts have assumed that the first significant step in pulling out of the recession will be shown from the housing sector. The reason is very simple, it was the mortgages crisis that caused this gloomy economic condition, and a real improvement in the housing sector would have shown that both investors and the major banks have regained confidence in American real-estate, which should be a sign for all others that the economy is recuperating.

In addition, on Thursday, the weekly Unemployment Claims showed that 631,000 individuals have filed for unemployment insurance for the first time, making it the 16th week in a row on which over 600K people have done so. The combination of these two publications had a very clear effect on the Dollar, and its drop in value was only a matter of time.

As for the week ahead, a bundle of data is expected from the U.S economy, and traders should take notice of all of the major indicators. The Consumer Confidence report is expected on Tuesday, and analysts predict that the best result in six months may be published. This has the potential effect of reversing trends in the forex market, as it will show that people are regaining their confidence in the US economy, and in their government to improve the situation in the near future. The New Home Sales on Thursday will probably steal all of the attention on a busy news day, as the housing sector seems to have the biggest impact on the USD for the moment.

EUR – The EUR Soars amid Positive German Data

Last week the EUR saw bullish trends against most of its major currency counterparts, as its most significant appreciation was against the USD. The EUR/USD rose to over 1.4000, marking a 5-month record.

Last week’s trading was highly impacted by the positive signals from the German economy. Germany is the biggest and strongest economy in the Euro-Zone, and thus has the most influence on the region’s currency. On Tuesday, the German ZEW Economic Sentiment report was published with an amazing 31.1 mark. The Economic Sentiment is a diffusion index based on surveyed institutional investors and analysts. The 31.1 figure was the most positive figure seen since June 2007. What was so incredible about this result was that it followed a series of negative publications and was really “out of the blue.” This had an immediate reaction on the EUR and a strong bullish trend, especially against the USD, took place. Later on last week, the German Manufacturing Purchasing Managers’ Indices were release, both with better than expected figures, further strengthening the EUR.

Looking ahead to this week, the most important data expected from the Euro-Zone will be published later on today, at 08:00 GMT. The German Ifo Business Climate, which is derived from about 7,000 businessman who are asked to rate the level of current business conditions, has proven before to have a significant impact over the EUR, especially when analysts forecast that the positive signs from Germany will continue with a 85.1 figure. If the real result will be similar, another bullish trend might take place for the EUR, and the EUR/USD may hit as high as 1.4200 this week.

JPY – JPY Provides Mixed Results against the Majors

The Yen saw mixed results during last week’s trading. While rising sharply against the USD, the JPY dropped against the EUR and underwent a volatile session against the GBP.

It seems that the negative results coming from the Japanese economy are the main reason for the Yen’s volatile behavior. Last week it was released that the Japanese Preliminary Gross Domestic Product (GDP) had dropped by 4.0% in March, making it 4 consecutive months on which the value of all goods and services produced by the Japanese economy dropped. The Tertiary Industry Activity, which measures the change in the total value of services purchased by businessman, has also decreased by 4.0% in March. In addition, the Bank of Japan (BoJ) has decided to leave Interest Rates at 0.10% as it cannot drop it farther and is unwilling to raise it at the moment. On normal conditions, all this should have led to a significant drop for the JPY against every major currency; however, the bearishness of the Dollar was the leading force in the forex market last week, and thus even the weak Yen rose against the USD.

As for the week ahead, a batch of data is expected from the Japanese economy. The Trade Balance scheduled for Tuesday will be one of the most impacting publications as the Japanese economy relies greatly on its exports, and this report is one of the best ways to estimate this nation’s economic condition. Traders should also consider the Retails Sales and the Household Spending indicators which could possibly dictate the Yen’s movements later this week.

Crude Oil – $60 a Barrel Might Be a Solid Price for Crude Oil

Last week was a relatively calm week for Crude Oil. A barrel of oil was traded within the $59 to $62 price range, and wasn’t too affected from the large fluctuations of the leading currencies.

Recent Notifications suggest that the Organization of Petroleum Exporting Countries (OPEC) desires to see Crude Oil reaching $70 a barrel; however, it is currently reluctant to cut supplies as demand for oil still hasn’t shown real signs of recovery from the current world-wide economic crisis. In spite of OPEC’s will, it appears that investors are pretty cautious on putting their faith in Crude Oil. Even in a week like the last one, on which the Dollar dropped on all fronts, Crude Oil barely rose by $2 a barrel. This could be interpreted as a clear sign of investors that for now the price around $60 a barrel correctly reflects the market value.

Technical News

EUR/USD

The Bollinger Bands on the hourly chart for this pair appear to be tightening in expectation of a volatile price movement. With a recent bearish cross on the 4-hour chart’s Slow Stochastic, and a brand new bearish cross on the daily chart’s, this pair may be due for a strong downward correction. With the RSI of the 4-hour chart floating in the over-bought territory, going short may indeed be a wise choice today.

GBP/USD

There appears to be a fresh bearish cross on the daily chart’s Slow Stochastic, signaling a bearish correction may take place this week. As the price floats in the over-bought territory on the daily chart’s RSI, and the 4-hour chart’s Slow Stochastic shows fresh bearish crosses, going short with tight stops throughout the day may be a solid move.

USD/JPY

The technical oscillators on this pair primarily indicate neutrality as a clear direction is refusing to reveal itself. However, the price does appear to be floating near the over-sold territory on the daily chart’s RSI. Longer-term pressure may be upward and going long with tight stops may therefore be a good decision.

USD/CHF

The price of this pair is apparently floating in the over-sold territory on the 4-hour chart’s RSI, signaling upward pressure. With a fresh bullish cross on the daily chart supporting this notion, going long may indeed be a wise choice today.

The Wild Card – Gold

There appears to be a “head-and-shoulders” formation taking shape on the hourly chart. With the price in the over-bought territory on the 4-hour and daily charts’ RSI, and a fresh bearish cross on the daily chart’s Slow Stochastic, the subsequent movement once the “head-and-shoulders” is completes will likely be a volatile downward correction to the recent upward movement. Forex traders should try not to miss out on this impending move and join the new trend at an 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.

The United Kingdom’s Gross Domestic Product fell by the most in twenty years in the first quarter of 2009 according to a report by the Office of National Statistics today. The U.K. GDP data showed that quarterly GDP fell by 1.9 percent in the January through March quarter following a decline of 1.6 percent in the fourth quarter of 2008. The 1.9 percent GDP decline marked the largest decrease in quarterly GDP since the third quarter of 1979 and matched the government’s previous 1st quarter estimate released last month.

On an annual basis, the first quarter GDP fell by 4.1 percent from the level of the first quarter of 2008 and marked the largest annual decline since 1980. The 2008 fourth quarter registered a decline of 2.0 percent.

Contributing to the contraction in GDP was a record decline in business inventories and a slowdown in consumer spending. Business inventories fell by the most on record since 1948 and amounted to a 0.6 percent decrease in the GDP for the quarter. Consumer spending, which was the lowest since 1980, fell by 1.2 percent in the first quarter and by an annual rate of 2.8 percent from the 1st quarter of 2008.

Total production output in the first quarter decreased by 5.3 percent after falling by 4.5 percent in the fourth quarter. Construction activity fell by 2.4 percent while manufacturing output declined by 5.5 percent. Total services output saw a decline by 1.2 percent in the first quarter after a 0.8 percent decline in the fourth quarter while exports fell by 6.1 percent and imports decreased by 5.9 percent.

Contributing positively to the GDP data was government spending which increased by 0.3 percent in the quarter and climbed by 3.5 percent on an annual basis from 2008.

GBP Pound Sterling mixed in FOREX Trading.

The pound sterling has been mixed in forex trading today against the other major currencies. The British currency is trading higher today versus the US dollar and Japanese yen while trading lower against the Swiss franc, euro and Canadian dollar.

The GBP/USD has advanced from the day’s opening exchange rate of 1.5854 at 00:00 GMT to trading at 1.5909 in the US session at 12:33pm according to currency data from Oanda. The pound is on its way to increasing versus the dollar today for the fifth straight day after paring early losses yesterday to finish higher.

The euro has increased versus the pound as the EUR/GBP trades at the 0.8809 exchange rate after opening the day at 0.8785. The euro is on its way to its second straight daily gains against the GBP.

The pound has increased versus the yen today as the GBP/JPY has advanced from the 149.32 opening rate to trading later at 150.33 exchange rate.

The pound is trading lower against the Swiss franc for the second day in a row as the GBP/CHF trades at 1.7252 after opening at 1.7291.  The pound has also decreased today against the Canadian dollar as the GBP/CAD trades at 1.7876 after opening the day at the 1.7973 level.

GBP/USD Chart – The British Pound is trading higher today against the US Dollar in forex trading and is on its way to increasing versus the dollar today for the fifth straight day after paring early losses yesterday to finish higher.

Source: ForexYard

The USD’s volatility is set to continue today as forex trader’s eye Federal Reserve Chairman Ben Bernanke’s speech as 6 GMT. In the meantime, however, it would be a wise move for investors to open some important positions as they can take advantage of the forex market prior to and after this main news event. Key economic data releases from the leading economies should also be a vital inspiration for traders today.

Economic News

USD – Dollar Tumbles to a 5 Month Low

The U.S currency continued to slip against the EUR yesterday, dropping 1% to as low as 1.3950. It also dropped to its lowest this year against many of its other major currency pairs as worries about swelling U.S. deficits soured investor’s appetites on U.S. assets.

The Dollar has fallen every day this week against the EUR and Pound Sterling, and it marked its third straight daily decline against the Japanese Yen yesterday. Analysts attributed the fall in the Dollar, which has been treated as a lower risk, safe-haven investment, to growing optimism that the worst of the financial crisis has passed. This has caused investors to unwind positions in favor of the U.S. currency built up when fear was widespread, credit was frozen and stock markets were in free fall.

A leading indicator released yesterday was U.S. Unemployment Claims. This number handedly beat last week’s result. However, it failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

Looking ahead today, the news event that may have a very large impact on the Dollar and its main currency pairs in today’s trading is Federal Reserve Chairman Ben Bernanke’s speech at around 18:00 GMT. This speech is very important as it is very likely to Impact the Dollar volatility. Traders are advised to watch closely, as this is likely to set the pace of the Dollar going into next week’s trading.

EUR – The EUR Continues to Strengthen against the USD

The EUR rallied yesterday against the Dollar as encouraging news about the European economy emerged. This sparked hope that the 16-country Euro-Zone may be emerging from the depths of recession. The EUR touched a 5- five month high versus the Dollar to above the 1.3950 level. The European currency finished around 80 pips higher against the JPY to finish yesterday’s trading session at the 131.19 level.

The Euro-Zone’s manufacturing and services sector recorded their best performance in 7 months, suggesting the Euro-Zone economy will shrink only slightly in the 2nd quarter after a record slump in the 1st quarter. The survey showed a significant improvement, thereby boosting hopes that the rate of decline in the Euro-Zone economy is now moderating after a particularly torrid 4th quarter of 2008 and 1st quarter of 2009. The reduced contraction in manufacturing activity in May suggests that the sector is starting to benefit from the massive de-stocking that has taken place.

Sentiment in the Euro-Zone economy has brightened in the past week 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 – JPY Slides against EUR and Spikes versus the Dollar

The Japanese Yen completed yesterday’s trading session with mixed results versus the major currencies. The JPY fell against the EUR yesterday, pushing the oft-traded currency pair to 131.19. The JPY slipped only marginally yesterday against the GBP to the 149.31 level. The JPY did see some bullishness as well as it gained 35 pips against the USD and closed at 94.17.

The Japanese market should have a heavy effect on the JPY versus its major currency counterparts, as the Overnight Call Rate will be announced today. The rate is expected to remain unchanged, but traders should pay close attention to the BoJ Press Conference that will follow to look for expectations of Japan’s economic future. A bullish statement from the BoJ could lead some traders to believe the BoJ is forecasting a rosier financial climate in Japan.

Crude Oil – Crude Oil Rises Despite Economic Concerns

Crude Oil rose slightly by 21 pips to $61.63 a barrel yesterday, continuing its comeback. This was despite the U.S. Federal Reserve cutting its forecast for the economy of the U.S., the world’s biggest energy-consuming country. Crude is trading for less than half year-ago levels, as demand has softened with the economic crisis. Expectations that consumers may once again want more Oil when the recession bottoms have partly fueled the rally, with traders watching the stock market for economic telltales.

Concerns about the reliability of supply also have begun to creep into the market, highlighted by an escalating conflict between rebels and security forces in Nigeria’s Oil-rich southern region this week. There is a reasonable possibility that Oil prices will continue to be bullish going into next week, providing that the economic situation of the leading economies continues to rapidly improve.

Technical News

EUR/USD

The pair has been experiencing some very bullish behavior in the past week, as it currently stands between the 1.3900-1.3950 levels. The main oscillators of the daily chart indicate this trend may continue into the near future. However, the 4-hour Slow Stochastic reveals that a bearish cross is about to occur anytime soon, indicating that a bearish correction may be imminent. Now may be a ripe time to take advantage of the situation at an early stage.

GBP/USD

The cross has received increasing support as of late, as this pair approaches new highs. The continuation of the bullish trend is supported by the 1-day and 1-week charts’ MACD. On the other hand, the 4-hour and 1-day charts’ Slow Stochastic seems to contradict this. It may be wise to open a long position with tight stops before the bullish trend comes to an end.

USD/JPY

The pair has been going through much bearish behavior in the past several days. The MACD of the 1-hour chart fails to show a clear signal as to the future direction of this pair. However, the 1-day Stochastic Slow and RSI show that this pair is still likely to go lower before making a bullish correction. Traders should take advantage of this bullish trend now while it still carries steam.

USD/CHF

The 1-day Stochastic Slow shows that the pair may continue its downward trend into the near future. This is also supported by the 4-hour charts’ MACD. However, the 4-hour Stochastic slow seems to indicate that a bullish cross is imminent. It may be a wise move for traders to open a long position with tight stops when this bullish cross is breached.

The Wild Card – Gold

Gold prices have been increasing rapidly lately, as they stand at over $951 per ounce. The 1-day and 1-week chart shows that this bullish trend is set to continue. This is also supported by the 1-hour and 4-hour MACD oscillator. It may be a wise move for forex traders to enter this 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

€

The euro appreciated sharply vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3925 level and was supported around the US$ 1.3730 level.   The common currency reached its highest level since 5 January and some dealers believe traders may use the reduced liquidity over the long U.S., U.K., and European holidays to make a run at the psychologically-important US$ 1.4000 figure, a level it’s not traded above since the end of last year.  Data released in the U.S. today saw April leading indicators rise 1.0% from a revised 0.2% decline in March, the first improvement in seven months.  These data suggest the U.S. economy is inching closer to an economic recovery.  Weekly initial jobless claims were off 12,000 to 631,000 in the week ended 16 May while continuing jobless claims were up 75,000 to 6.662 million.  Other data saw the May Philadelphia Fed manufacturing survey improve to -22.6.  In eurozone news, the EMU-16 May composite Purchasing Managers Index improved to an eight-month high of 43.9 from 41.1 in April with improvements in both the manufacturing and services PMI indices.  Similarly, German flash May PMI data suggest that country’s economy may be past the worst.  It was also reported that France’s economic contraction moderated in May as its flash PMI rose to 46.1 from 43.8 in April.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.00 figure and was capped around the ¥95.25 level.  The pair extended its recent sell-off and reached its lowest level since 19 March as risk aversion returned to the market ahead of the long holiday weekend in Europe and the U.S.  Data released in Japan overnight saw the March tertiary index print at 100.8, off 4.0% m/m and worse than February’s 1.3% decline.  The tertiary index was also off 3.2% q/q in the January – March quarter, worse than the 1.7% pullback in the October – December period.  The March leading index and coincident index will be released in Japan overnight.  The Nikkei 225 yesterday stock index lost 0.86% to close at ¥9,264.15.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.50 level and was supported around the ¥129.85 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.85 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.50 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8250 in the over-the-counter market, up from CNY 6.8215.

₤

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5890 level and was supported around the $1.5515 level.  Cable weakened earlier in the day after Standard & Poors changed its outlook on the U.K. government’s debt to negative from stable, the first time it’s been negative since 1978.  S&P is projecting that public sector debt will near 100% of gross domestic product over the medium-term.  Even though the government’s sovereign AAA credit rating remains intact, today’s news is a blow for beleaguered U.K. Prime Minister Brown who has about one year before he must call an election.  Sterling absorbed this news and rocketed to its highest level since 6 November.  April retail sales were up 0.9% m/m after an upwardly revised 1.1% increase in March.  Also, CML April gross mortgage lending printed around ₤10.4 billion and April public sector net borrowing reached ₤8.5 billion.  Additionally, the M4 money supply was up 0.1% m/m and 17.4% y/y and Q1 business investment was off 5.5% q/q.  Cable bids are cited around the US$ 1.5315 level.  The euro gained ground vis-à-vis the British pound as the single currency tested offers around the ₤0.8870 level and was supported around the ₤0.8720 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 Adam Hewison

The gold market sprang into life yesterday (5/20) as it closed in on $940 level which brings it back to its best levels since March 20th. We last looked at the gold market shortly after my return from New Zealand on May 5th. At that time, Gold (xauusdo) was trading at $902 you can see that all on my earlier video. Presently we are trading around $937 zone and it looks as though we can see further upside action in this market.

I think you’ll find this new video very informative and you may watch with my compliments. There are no registration requirements. Please enjoy and give your feedback on our blog. Thank you.

See the new video here…

All the best,

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

By Adam Hewison

Today we’re going to be looking at the S&P 500 market. We last reviewed this market back on May 12th when it was trading at 908. Here we are two weeks later and the market is at 914.

That doesn’t seem like a big move, but we’ve had some pretty big moves in the interim both on the upside and downside.

I think you’ll find this new video interesting and informative. In addition to the two trend lines that I graphically illustrate in the May 12th video, I’ll share with you today two other tech indicators that I’ve been watching.

See the new video here…

You can view this new video with my compliments. There are no registration requirements. Please enjoy and give your feedback on our blog. Thank you.

All the best,

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

Retail Sales data was released today out of the United Kingdom and showed that retail sales rose more than anticipated according to a report by National Statistics. April’s retail sales increased by 0.9 percent following up a revised increase of 1.1 percent in March. March’s retail sales data was revised higher after originally registering an increase of 0.3 percent.

On an annual basis, April’s retail sales were 2.6 percent above the April 2008 sales level following an annual increase of 1.5 percent in March. The monthly and yearly increases beat market forecasts that had expected a monthly increase of 0.5 percent and a yearly gain of 2.4 percent in April.

Contributing to the retail sales increase was a rise for predominantly non-food stores by 1.5 percent in April while sales in predominantly food stores increased by 0.5 per cent. Note: National Statistics has announced changes in the methodology in calculating the retail sales data in order to provide more accurate numbers. You can see the article here.

GBP Pound Sterling mixed in Currency Trading

The pound sterling has been mixed in currency trading today against some of the other major currencies. The pound fell sharply in the European trading session after the Standard & Poor’s rating agency changed its outlook on Britain’s debt from stable to negative.  The British currency is lower today versus the US dollar, Japanese yen, Swiss franc and the euro while trading higher against the Canadian dollar.

The GBP/USD has fallen from the day’s opening exchange rate of 1.5787 at 00:00 GMT to trading at 1.5721 in the US session at 10:43am according to currency data from Oanda. The GBP/USD is climbing higher after falling to an intraday low of 1.5514 early this morning.

The euro has increased versus the pound as the EUR/GBP trades at the 0.8755 exchange rate after opening the day at 0.8733. The pound has fallen versus the yen as the GBP/JPY has declined from the 149.25 opening rate to trading later at 148.92 exchange rate.

The pound is also slightly lower against the Swiss franc as the GBP/CHF trades at 1.7341 after opening at 1.7360.  Meanwhile, the pound has increased against the Canadian dollar as the GBP/CAD trades at 1.8011 after opening the day at the 1.7972 level.

GBP/USD Chart – The British Pound is trading lower today against the US Dollar in currency trading but is in the process of paring most of its losses and remains in an hourly uptrend versus the American currency.

Source: ForexYard

With recent market volatility, the price level for a few currencies and commodities have begun to see prices not seen since last year. For instance, the price of the EUR/USD pair has now risen to a level not seen since the first week of January, 2009. Crude Oil has also shocked the market lately with a continuous uptrend, rising above $62 for the first time since last November. With rallies this large, the forex market becomes more predictable, and traders can reap the benefits!

Economic News

USD – USD in Down-Trend since April

The USD witnessed a steady depreciation against most of its major currency counterparts on Wednesday. The Dollar has lost ground for 3 straight sessions against the EUR, and 3 of the last 4 sessions against the Yen. The USD was trading at 1.3604 per EUR and 94.85 per Yen at the close of Wednesday’s trading sessions.

According to the FOMC meeting minutes there is willingness by the Federal Reserve to go beyond the $1.75 trillion it has already committed to purchasing, and increase the amounts of mortgage and Treasury securities-purchase programs. The Fed made a similar announcement on March 18, stating it would buy $300 billion in Treasuries; this announcement led to the U.S. Dollar plunging. Purchase of Dollar-denominated debt can have a negative affect on the value of the currency since the Fed pays for these purchases by printing more money and therefore devaluing the currency. In addition, the U.S. recession appears to be deeper than expected and a slower recovery is being factored in over the next two years since labor markets remain under pressure.

While the USD recovered some of its immediate losses since the release of the FOMC meeting minutes, it has been declining significantly since the start of the week and shown a downward trend since mid-April. This is due in part to the recovery in equities markets, which increased traders risk appetite. Important economic indicators to watch today are the Unemployment Claims, to be released at 12:30 GMT, and Fed Chairman Ben Bernanke’s speech tomorrow. Positive news will put further pressure on the Dollar.

EUR – EUR Benefits from Heightened Risk Appetite

Yesterday’s release of the U.S. Federal Open Market Committee’s (FOMC) meeting minutes sent the EUR to its highest level against the USD since early January. The EUR advanced 1% to 1.3768 from 1.3630 yesterday. Earlier the EUR touched the 1.3830 price level, the highest since Jan 5th. However, the EUR slid against the USD slightly after a German report showed producer prices fell at the fastest rate in almost 22 years. The EUR also decreased 0.2% to 130.51 yen from 130.81 Wednesday.

Currently there is a shift into a risk-taking environment spurred by a rally in the stock markets and a decrease in volatility. The USD is the anti-risk currency. It also appears that investors are still confident that the U.S. is set first for a recovery compared to others like Japan, the U.K or the Euro-Zone. According to the International Monetary Fund (IMF), the Euro-Zone regional economy will contract 4.2% this year, more than the projected 2.8% contraction in the U.S. and the 4.1% fall in the U.K.

The EUR may gain for a 4th day versus the USD as the Flash Manufacturing PMI and the Flash Services PMI (German, French and Euro-Zone) reports are due to be released today at 7:30 and 8:00 GMT, respectively, and may show that the region’s manufacturing and service sectors contracted at the slowest pace in 7 months.

JPY – Yen Rises after News of Japan’s Record Economic Contraction

The Yen rose versus all 16 of the most-traded currencies yesterday after Japan reported that its economy shrank at a record pace. The Japanese currency advanced to 130.04 per EUR, up from 130.77 yesterday. The Yen appreciated 1.3% to 94.75 per Dollar, up from 95.97 Wednesday.

The JPY gained modest ground after Japan’s Cabinet Office said the economy shrank an annualized 15.2% in the 3 months ending March 31st, following a revised 14.4% contraction in the previous quarter. Japanese Gross Domestic Product (GDP) fell 3.5%, the most since records began in 1955. Speculations that the recession in the U.S, the world’s largest economy, is far from over helped to further boost demand for the Japanese currency as a refuge from the international downturn. However, there are signals that the U.S. currency may have fallen too quickly against the Yen and could strengthen.

Crude Oil – Crude Oil Surges above $62 a Barrel

Crude Oil surged yesterday above $62 a barrel, increasing by $1.94 in a relatively short time-frame. This marks one of the largest price jumps seen in almost 6 months! However, early this morning, Crude Oil for July delivery dropped as much as 69 cents, or 1.1%, to $61.35, breaking three days of gains. This was due to a decline in U.S. stocks after the Federal Reserve predicted a deeper recession and a government report showed a drop in fuel demand.

Prices also climbed after refinery fires and unrest in Nigeria threatened supplies. A falling Dollar further assisted the price increase. However, U.S. oil demand hardly improved, and remained 7.6% weaker than a year ago when Americans were already consuming less. There is doubt that the fundamentals of the oil market can support prices above $60 a barrel since there isn’t any improvement in demand and no sign the Organization of Petroleum Exporting Countries (OPEC) is likely to reduce output any further in their meeting at the end of this month.

Monday’s Memorial Day holiday signals the unofficial start of the U.S. summer driving season. So far gasoline demand gained 3.6% this past week. A continued increase in demand will help push the Oil price further up, however, with the latest report from the Federal Reserve a quick economic recovery in the U.S seems less likely.

Technical News

EUR/USD

This pair has witnessed a sustained upward movement for many days now. This movement has pushed the price of this pair into the over-bought territory on the RSI of the 4-hour chart, signaling that there may be a medium-term downward correction. However, the longer-term trends still appear to be pointing up. Going long appears to continue being the solid choice today.

GBP/USD

This pair’s strong bullish behavior has resulted in most oscillators indicating that a correction is imminent. While this has been the case for the past two days, it remains to be so. The RSI on the hourly, 4-hour and daily charts all show this pair floating in the over-bought territory, and there are bearish crosses forming on the 4-hour and daily charts’ Slow Stochastic. Waiting for the downwards breach and then entering the correction may be wise today.

USD/JPY

There appears to be a fresh bullish cross on the Slow Stochastic of the 4-hour chart, signaling an upward correction may be experienced soon. The price appears to be floating in the over-sold territory on the RSI of the hourly and 4-hour charts as well, which supports the above notion. Going long with tight stops might be a decent strategy today.

USD/CHF

Even though a sustained downward movement like the one this pair has seen typically pushes the price into levels which indicate a correction, that does not seem to be the case here. Most oscillators for this pair are signaling neutrality. The price does, however, appear to be in the over-sold territory on the 4-hour chart’s RSI, which may indicate an impending upward correction. Going long with tight stops might be wise today.

The Wild Card – Gold

The strong bullish movement in the price of Gold recently has pushed the price of this pair into the over-bought territory on the RSI of the hourly, 4-hour, and daily charts, signaling strong downward pressure. There also appears to be a fresh bearish cross on the Slow Stochastic of the hourly and 4-hour charts, which supports this notion. Considering the potential downward correction, forex traders may have a fantastic opportunity to join this trend reversal at a very early stage and with a great entry price.

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 appreciated sharply vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3830 level and was supported around the US$ 1.3580 level.  The common currency ascended to its highest level since 5 January as it tracked crude oil higher.  NYMEX crude oil futures for July delivery reached $62.17, their front month’s highest price since 7 January.  U.S. equity markets lingered in positive territory through the session’s midway point.  Some dealers are citing an increase in investor sentiment as another reason why the pair is gaining ground.  Treasury Secretary Geithner spoke today and said U.S. financial institutions have raised about US$ 48 billion since the results of the banks’ stress tests were released last Monday.  Minutes from the Federal Reserve’s Federal Open Market Committee meeting of 28-29 April were released today and cited a worsening labour market and declining industrial production. In partial contrast, the Fed also said the pace of decline in final private demand is slowing and added the downturn in the housing market is decelerating.  Notably, the Fed reported “Some members noted that a further increase in the total amount of (Treasury) purchases might well be warranted at some point to spur a more rapid pace of recovery.”  Traders seized on this statement as an indication the Fed may be moving closer to adopting more mainstream quantitative easing steps.  In eurozone news, Germany’s Bundesbank said there will not be a “quick, cyclical improvement” in economic activity but suggested the global economic downturn is easing.  Data released in Germany today saw April producer price inflation decline 1.4% m/m and 2.7% y/y. Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.85 level and was capped around the ¥96.20 level.  The yen motored higher despite the release of weaker-than-expected January – March gross domestic product data that saw a 4.0% q/q decline in economic activity, rendering a 15.2% annualized pullback.  The contraction was at the fastest pace on record and was caused by a record drop in exports and weak domestic consumption.  Additionally, data for the October – December period were downwardly revised to -3.8% q/q and an annualized -12.1%.  The Nikkei 225 yesterday stock index climbed 0.59% to close at ¥9,344.64.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.70 level and was supported around the ¥129.70 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.80 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.00 figure. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8215 in the over-the-counter market, down from CNY 6.8250.

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.