InvestMacro FX

By Adam Hewison

Today we are going down under to analyze the Australian dollar.

Many traders look at the Australian dollar (AUD) and the Canadian dollar (CAD) as commodity plays. Both countries are rich in natural resources and that seems to be a key element to the recent moves in both of these currencies.

Today we are going to look at the technical aspect of the Australian dollar. This market not only charts very well, but it responds very well to technical signals. In this short video, I will explain in detail my reasoning for wanting to be in this market. I will give you some specific Aussie dollar objectives and also some places to protect capital.

See the new video here…

As always, the videos are free to watch and there’s no need to register. I would love to get your feedback about this video and your own predictions about this market on our blog.

All the best,

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

By Adam Hewison

Taking another look at the British pound.

On May 8, I produced a video which gave a detailed analysis of the British pound (GBP) versus the US dollar (USD). At that time I expected the British Pound to continue its gains against the US dollar. In today’s video I will revisit GBP/USD cross to see just what has happened to this market.

I strongly recommend you take a look at my earlier video. Here is the link before watching our new video.

See the new video here…

As always, the videos are free to watch and there’s no need to register. I would love to get your feedback about this video and your own predictions about this market on our blog.

All the best,

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

By Adam Hewison

According to the dollar index (DX), which is a basket of currencies that track the dollar, it would appear as though the dollar is indeed going to be coming under more pressure. The dollar index is much like an index for stocks except in this case it is for currencies.

The U.S. Dollar Index consists of six foreign currencies:

1. Euro (EUR)
2. Yen (JPY)
3. Cable (GBP)
4. Loonie (CAD)
5. Krona (SEK)
6. Franc (CHF)

In my new short video on the dollar index, I will show you some previous successes that MarketClub has had. I will also cover an important signal we have just received, that in my opinion, will lead to further downside weakness in this index.

See the new video here…

As always, the videos are free to watch and there’s no need to register. I would love to get your feedback about this video and your own predictions about this market on our blog.

All the best,

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

Source: ForexYard

These past several weeks have seen a series of positive economic data emerging from various economies. Even a record contraction in Japanese GDP was anticipated and the market impact was minimal. As market optimism takes hold, safe-haven assets such as the USD begin to weaken. Traders have witnessed recently as the greenback has lost strength to most other currencies, and commodity prices have begun to climb back to 2007-2008 price levels. Is the recession coming to an end?

Economic News

USD – Dollar May Slide Further On Global Optimism

The U.S Dollar declined Tuesday against its major counterparts after a report from the U.S. Commerce Department said new construction of houses fell to a record low in April. The USD traded at $1.3630 per EUR after falling 0.5% yesterday. Against the Yen the U.S currency was at 95.94 after decreasing 0.3%. Analysts said that the data showing U.S. housing starts and permits unexpectedly fell to record lows doused the view that the housing market was stabilizing, denting optimism in the market for the U.S currency.

The USD also slid as a result of improving business sentiment in Germany, which spurred renewed optimism about the global economy, reducing demand for safer assets and boosting currencies perceived as riskier. Traders were also closely watching U.S. stock markets for indications about investors’ appetite for riskier assets. Earlier, major indexes clawed into positive territory, pushing the dollar to the lows of the day.

The greenback may decline further versus the EUR as three U.S. financial firms’ efforts to return government bailout money fueled speculation that banks have sufficient cash, reducing demand for Dollar-safety.

EUR – Pound Reaches 6-Month High vs. USD

The EUR rose on Tuesday, trading at $1.3625, up half a percent from Monday, due to a surprisingly big improvement in German economic sentiment. The ZEW indicator jumped to 31.1 in May from 13.0 in April, above economist estimates of a 20.0 reading. This suggests that analysts and investors were not as grim about the economy as before.

The British Pound also rose to the highest level this year against the Dollar after ICAP, the world’s biggest broker of transactions between banks, posted increased profit, and Marks & Spencer Group Plc’s net income beat analyst estimates, stoking optimism that the worst of the recession is over.

Analysts said the EUR-positive reaction to the ZEW report suggested that market participants saw improving sentiment in the Euro- Zone as boosting demand for risk, even as other data show that the economy remains weak. Gains in the EUR and Sterling helped to push the Dollar down as some traders unwind positions in the U.S currency. The USD is perceived to be a safe-haven option during times of uncertainty; however, the ongoing bets that the global economy is improving has warmed demand among investors for riskier trades in past weeks.

JPY – Japan’s Economy Shrinks at Record Pace

The Yen fell for a 3rd day against the EUR as stocks gained after a government report showed Japan’s economy shrank less than expected last quarter. The Yen fell to 131.17 per EUR from 130.81 yesterday in New York trading. The Japanese currency also declined against the Dollar to 95.70.

Japan’s economy shrank an annualized 15.2% in the three months ending March 31st, following a 12.1% contraction the previous quarter. Japan’s Gross Domestic Product (GDP) has also contracted by 4.0% in the first quarter of this year, marking its biggest quarterly fall on record. Economists have said that despite this very bad data, it was in line with the expectations and therefore neutral in terms of market impact.

Analysts have said that even though some market players were still unsure of the outlook for the Japanese economy, their expectations remain that this is the bottom for the economic recession and they may start to see a recovery from here onwards.

Crude Oil – Crude Hits $60 a Barrel!

Crude Oil prices rose Tuesday, briefly topping $60 a barrel as analysts expected a drop in U.S. crude inventories, though gains were limited by disappointing U.S housing data. Oil’s gains yesterday were aided by the Dollar’s slump against the other major currencies, which bolstered demand for commodities as an alternative investment. Crude was up 62 cents, or 1.1%, at $59.65 a barrel yesterday. Previously it topped $60 overnight to reach $60.48, the highest level since the middle of November. However, Crude Oil reduced its gains after data showed U.S. April housing starts fell to a new low.

Oil prices have been on an upward trend since mid-April in equity led rallies. They have recovered from below $33 in December last year after a plunge from record highs above $147 in July. On Wednesday, market players will shift their focus to U.S. Crude Oil Inventories data. Analysts expect the data to show a decline in oil reserves by 1.3 million barrels. A reading above or below estimates can have a major influence on Crude Oil trading.

Technical News

EUR/USD

The pair has resumed its bullish activity for the past couple of days and is currently trading at the 1.3600 level. However, it failed to breach the 1.3715 level and has provided mixed results ever since. If the pair will indeed breach the 1.3715 level, a sharp bullish move might take place.

GBP/USD

There is a very distinct bullish channel formed on the daily chart, as the cable is now floating near its upper border. Now, as all oscillators on the daily chart are pointing up, it appears that another bullish session could take place today.

USD/JPY

After peaking at the 96.70 level, the pair has dropped consistently and is currently trading at the 95.50 level. The 4-hour chart shows that the MACD is about to demonstrate a bearish cross, suggesting that the bearish trend could extend. Going short might be the preferable choice today.

USD/CHF

The daily chart shows that the pair has seen a strong downtrend over the past 2 months, dropping from the 1.1975 level to its current rate of 1.1115. Currently, as a bearish cross is taking place on the daily chart’s Slow Stochastic, it seems that the downtrend could continue today.

The Wild Card – Gold

The daily chart shows that Gold has been traded within a restricted range lately, without making any significant breach. As Gold failed to reach over $934.10 an ounce, it seems that a modest bearish move could take place today. This might be a good opportunity for forex traders to enter the 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.

By GCI Fx Research

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3665 level and was supported around the US$ 1.3530 level.  The common currency moved to intraday highs late in the North American session and was supported right around the 23.6% retracement of the move from $1.2880 to $1.3720.  U.S. equity markets were bid higher for modest gains during most of the trading day despite the release of a U.S. April housing starts data that saw activity decline to a 458,000 annualized rate from a 530,000 annualized rate in March.  Similarly, building permits declined to an annualized 495,000 rate in April from an annualized 516,000 level in March.  Overall housing starts were off 54.2% y/y. Traders are closely monitoring a report that Goldman Sachs, Morgan Stanley, and JPMorgan Chase have made an application to the U.S. Treasury to return US$ 45 billion in TARP funds that were borrowed from the U.S. Treasury last year.  An announcement from the Federal Reserve is expected on 8 June.  In eurozone news, the German economics ministry warned German companies will face a tough time this summer with credit and liquidity.  Data released in Germany today saw the ZEW May economic expectation index improve for a seventh consecutive month, rising to 31.1 from 13.0 in April.  These data suggest the worst could be over in the German economy while other economsits believe more difficult times are ahead for the German economy.  European Central Bank member Tumpel-Gugerell reported the ECB is prepared to administer banking supervision duties in tandem with national central banks, the European Commission, and supervisory bodies.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated marginally vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.90 level and was capped around the ¥96.70 level.  Moody’s Investors Service downgraded Japan’s foreign currency debt rating and the finance ministry has ratcheted up the verbal intervention against the yen’s recent strength.  Data released in Japan overnight saw revised March industrial production climb 1.6% m/m while April revised tool orders were up 20.3% m/m and off 80.4% y/y.  The Nikkei 225 yesterday stock index climbed 2.78% to close at ¥9,290.29.  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 ¥131.85 level and was supported around the ¥130.15 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.05 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8250 in the over-the-counter market, down from CNY 6.8270.

₤

The British pound extended recent gains vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5525 level and was supported around the $1.5295 level.  Cable reached its highest level since 18 December and has been well-bid from the $1.44 handle on 22 April.  Data released in the U.K. today saw April consumer price inflation moderate sharply as retail prices decline at their fastest pace since at least 1958.  March CPI fell to +2.3% y/y from +2.9% y/y in March, the lowest rate since January 2008.  Core CPI fell to an annual rate of +1.5% in April from 1.7%.  One school of thought suggests cable has been well bid for the past several days on account of the political problems being faced by Brown’s Labour government which has quickly found itself embroiled in an expenses scandal.  There is growing speculation the Tory party could use the scandal to vault to power and the Tories are known to favour keeping the pound and not adopting the euro.  Cable bids are cited around the US$ 1.5255 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8765 level and was capped around the ₤0.8850 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 rallied nicely yesterday, tagging along with impressive gains in U.S. equities.  The movement was a refreshing recovery for the EUR/USD since the currency pair had previously dropped below our 2nd tier downtrend line while hitting our previous bottom-end of 1.3422.  The upswing is cooling off today as yesterday’s movement lacked convincing volume and the S&P futures are struggling with previous May highs.  The EUR/USD is battling with May highs of its own, meaning it wouldn’t be surprising to see some near-term consolidation with slight downward pressure.  Furthermore, the fact that the EUR/USD didn’t rally strongly after much better than expected economic sentiment data shows the currency pair could be overbought.  On the other hand, if the EUR/USD and put some upward momentum together and get above previous may highs, we could witness a sizeable near-term pop towards the highly psychological 1.40 level.

Regardless of near-term obstacles, the EUR/USD is showing resilience above our 2nd tier downtrend line and the psychological 1.35 level.  Therefore, the EUR/USD is sending a clear bullish message trend-wise with key medium-term downtrend pressures out of the way.  As usual, the ultimate direction of the EUR/USD relies heavily upon U.S. equities.  The S&P futures staged quite a rally yesterday and are back above the psychological 900 level, making a convincing argument for the continuation of its uptrend.  Therefore, equities are performing in favor of the EUR/USD’s uptrend.  As a result, we maintain our bullish outlook on the EUR/USD as long as the currency pair can stay above our downtrend lines and the 1.35 psychological level.  However, the EUR/GBP is showing considerable downward pressure, indicating the Euro could continue to experience relative weakness over the medium-term.  The EU will be quiet on the news front until Wednesday’s German PPI where investors are looking for an improvement in producer prices.

Fundamentally, we find resistances of 1.3626, 1.3646, 1.3674, 1.3702, and 1.3735.  To the downside, we see supports of 1.3589, 1.3555, 1.3528, 1.3490, and 1.3467.  The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.3616.

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 continues its impressive climb on rising volume despite slightly worse than expected RPI and CPI data points.  The pricing numbers were only one basis point below analyst expectations, so the decline wasn’t too much of a surprise.  This was the first negative data release we’ve seen from Britain over the past month, and the momentum remains clearly to the upside.  The Cable is trading well above our downtrend line.  In fact, it’s becoming a non-factor, as is the key psychological 1.50 level.  The psychological 1.55 area becomes more of a relevant discussion at this point.  Speaking of 1.55, the GBP/USD is also trading near November 26 highs, indicating we could witness some near-term consolidation.  Near-term technical obstacles are in play for the EUR/USD as well with the S&P futures battling 900.  Hence, all three investment vehicles are sending the same message of near-term struggle with slight downward pressure.

The Cable has climbed above January ’09 highs.  The next two obstacles for the GBP/USD are the aforementioned November 26 highs followed by December 17 highs.  From here we could witness a nice pop towards our last resort downtrend line, which is off screen but sitting around 1.60 right now.  If the Cable can get on top of this downtrend line we could witness exciting near to medium-term gains.  However, we still have a ways to go.

We maintain our bullish outlook on the GBP/USD due to the overwhelmingly positive economic data surfacing from Britain over the past month.  We’ve seen improvements across the board, from employment to manufacturing to housing prices.  We’re witnessing the massive depreciation of the Dollar analysts have warned us about after America’s incredible liquidity measures.  However, as with the EUR/USD, the Cable’s ultimate performance is highly reliant upon U.S. equities.  Therefore, any collapse in the S&P could be accompanied by a depreciation of the Pound.  Fortunately for bulls, the S&P futures still have their upward momentum trend-wise.     Investors will be paying particularly close attention to British retail sales on Thursday followed by Revised GDP on Friday to make certain the data supports the positive numbers we’ve seen as of late.

Fundamentally, we find resistances of 1.5551, 1.5600, 1.5663, 1.5717, and 1.5794.  To the downside, we see supports of 1.5449, 1.5372, 1.5279, 1.5207, and 1.5134.  1.50 serves as a key psychological cushion with 1.55 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.5492.

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 exercised its positive correlation with U.S. equities yesterday, popping nicely back above the psychological 95.00 level while avoiding our 1st tier uptrend line.  However, the currency pair is backing away from our 1st tier downtrend line as yesterday’s volume failed to impress.  Meanwhile, the USD/JPY remains lodged in its downtrend line while not participating in the recent surge of U.S. equities like the EUR/USD and GBP/USD.  Therefore, the USD/JPY is sending a message of continual relative weakness in the Japanese economy despite improvement in Core Machinery Orders, a forward looking economic indicator.  Investors will get a clearer picture later in Wednesday’s session with Japan announcing Prelim GDP.  Analysts are anticipating further deterioration in Japan’s GDP, and a surprise in either direction could certainly be a market mover as far as the USD/JPY is concerned.

We maintain our bearish outlook trend-wise on the USD/JPY due to the downward inclination of the currency pair technically and fundamentally.  The USD/JPY has failed to destroy the psychological 100 level on several attempts while dropping below all of our downtrend lines.  The USD/JPY is at the bottom of its right shoulder, meaning a critical juncture for the currency pair could be approaching with key economic data on the way.  March 18 lows and our 1st tier uptrend line are keys fundamentally.  If these don’t hold then we could witness accelerated losses.  On a positive note, our 1st tier uptrend line is intact with another possible uptrend line should this one be broken.  Therefore, if today’s Prelim GDP should come in better than expected and the S&P rally strongly above 900, we could see a fundamental turnaround in the USD/JPY.  However, the same difficult fundamental obstacles remain to the upside should any encouraging upswing occur, limiting near-term gains.

Fundamentally, we find resistances of 96.33, 97.32, 97.98, 98.67, and 99.20.  To the downside, we see supports of 95.58, 95.12, 94.50, 93.66, and 92.71.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 96.10.

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.

U.S. housing starts and building permits decreased in April by more than expected while housing completions increased according to data released by the Commerce Department on new residential construction. Housing Starts decreased by 12.8 percent in April to a seasonally adjusted annual rate of 494,000 starts following a revised annual rate of 525,000 housing starts in March.  April’s data was below economic forecasts that were predicting a 523,000 annual housing starts pace. On an annual basis, housing starts are 54.2 percent lower than the April 2008 level.

Building permits statistics, used as a predictor of future construction, showed a seasonally adjusted annual rate of 494,000 permits in April which is a decline of 3.3 percent compared to March. April’s permits were also below forecasts expecting permits to number approximately 530,000 annually. On an annual basis, building permits are 50.2 percent lower than the April 2008 permit level.

Housing Completions for April increased when compared to March as completions rose to an annual rate of 874,000 privately-owned housing completions. This is an increase of 4.9 percent from the March completion totals. On an annual basis, housing completions are 15.0 percent below April 2008’s level.

US Dollar falls today in forex trading for second day.

The U.S. dollar has been weaker in forex trading today against most of the major currencies for the second day in a row as risk appetite has ticked up so far this week.  The dollar has declined today versus the euro, British pound, Australian dollar, Canadian dollar, Japanese yen, New Zealand dollar and the Swiss franc.

The euro has advanced versus the dollar today as the EUR/USD has gone from today’s 1.3570 opening exchange rate at 00:00 GMT to trading at approximately 1.3602 in the US trading session at 11:27pm EST according to currency data by Oanda.

The British pound has climbed today versus the American currency from 1.5335 to trading at 1.5503 dollars per pound. The dollar has fallen against the Japanese yen today as the USD/JPY has declined from its 96.43 opening to trading at 96.19.

The dollar has also fallen against the Canadian dollar after opening at 1.1634 earlier today to trading at 1.1570. Meanwhile, the USD has fallen  against the Swiss franc from 1.1142 to trading at 1.1116.

The Australian dollar has advanced versus the USD as the AUD/USD trades at 0.7751 after opening today at 0.7665 while the New Zealand dollar has also increased versus the USD and trades at 0.6030 after opening at the 0.5971 exchange rate.

AUD/USD Chart – The Australian dollar advancing sharply yesterday and today against the US Dollar in Forex Trading and is trading at its highest point versus the USD since October 2008.

Source: ForexYard

An increase in optimism led by a bullish stock market as well as positive comments made by U.S. Treasury Secretary Timothy Geithner yesterday led to an increased demand for riskier currencies. Expect a busy news day today, with important news coming from the U.S, Euro-Zone and Japan.

Economic News

USD – Dollar Declines as Stock Market Rallies

The Dollar declined against most of its currency pairs as the U.S. stock market rallied in yesterday’s trading. The rally was sparked by positive comments by U.S. Treasury Secretary Timothy Geithner in which he changed his views as he voiced his opposition against pay caps. He went further and stated that in the coming weeks there will be more big reforms in the U.S. financial system. Another factor that led to volatile Dollar trading and the bullish stock market was the intent of JP Morgan, Goldman Sachs and Morgan Stanley to repay the $45 billion that was lent to them through TARP (Treasury’s Troubled Assets Relief Program). The optimism also led to massive increases in shares including those of Citigroup and Bank of America.

The Dollar declined by a hundred pips versus the EUR to close at 1.3540. This comes as investors dropped the safe-haven USD, and returned some confidence to the EUR. The British Pound recorded an impressive 160 pip gain against the Dollar to close at 1.5305. This comes as the Dollar lost ground over the last several weeks against the British currency. The reason for this may be as the global bullish stock market rallies continue so does a weak USD. However, against the Japanese Yen, the USD gained 170 pips to close at 96.49. This rebound may be the result of a correction in the pair, and traders dropping the safe-haven Yen, as investors turn to riskier assets.

Looking ahead to today, much news is expected from the U.S. The 2 main events are the Building Permits and Housing Starts data that will both be released simultaneously at 12:30 GMT. The 2 results are interrelated, and are a strong indicator of a recovery of the U.S. property market. If results are positive, then we can expect much of the same behavior in the forex market as on Monday. On the other, hand gloomy data may lead to a stronger Dollar as investors return to the safe-haven currency and drop more risky assets.

EUR – EUR Soars Against Dollar

The EUR soared against the Dollar in Monday’s trading. This was largely due to a global stock market rally that was led by the U.S. The pattern of late is when stock markets are bullish the EUR climbs against the U.S. Dollar. Analysts continue to misread the market as they expect the Dollar to recover against the EUR to 1.2500 levels. However, this is unlikely to happen anytime soon. If the equity markets continue to rally in the coming weeks, then the EUR may continue to strengthen versus the USD. The EUR/USD behavior was also a surprise, as German Prelim GDP figures on Friday morning showed that the German economy declined by a massive 3.8%. Though, the EUR remains in some respects to be resilient.

The EUR/USD pair closed higher yesterday by 100 pips at 1.3540. The EUR/GBP pair finished Monday’s trading lower by 25 pips at 0.8841. This may be due to the Bank of England (BoE) revealing that it made profits of a billion Pounds, as it took advantage of the financial crisis over the past year. Against the JPY, the EUR ascended by a massive 300 pips as demand for the safe-haven Japanese Yen plummeted, as traders put their money into riskier, more volatile assets. It seems that over the coming week this pair may continue its correction higher.

Today, there are several important economic news events that are set to be released from Britain and the Euro-Zone. Britain is set to release the PPI and RPI figures at 8:30 GMT. The Euro-Zone is expected to release German ZEW Economic Sentiment and ZEW Economic Sentiment figures at 9:00 GMT. Negative figures may lead to bearish trading for both the EUR and GBP. However, positive results, may lead to a bullish GBP and EUR in Tuesday trading. This is likely to be compounded if it seems that British Prime Minister Gordon Brown produces optimism in Britain as he attempts to rescue her economy.

JPY – JPY Tumbles Against Dollar

The JPY tumbled against the Dollar in Monday’s trading, as traders dropped the ultra safe-haven Yen, and returned to the lesser safe-haven Dollar. This also marks a correction in the USD/JPY, as the pair tumbled in the past 2 weeks. The behavior was sparked by a stock market rally from the U.S. that was initiated by economic optimism in the U.S. economy. This soon led to bullish equity markets in other industrialized countries. This in turn led to traders to take more risks in yesterday’s trading. Japan’s government hopes for more of this as the country struggles to climb out of the economic recession, as the bullish JPY has helped prevent this.

The Yen slid 170 pips or nearly 2% against the Dollar to close at 96.49. The JPY declined by 420 pips versus the British Pound as traders ditched the safe-haven Yen for the cable. This helped reverse much of the losses that the Pound made against the JPY in last week’s trading. The JPY also declined by a breathtaking 340 pips against the EUR, as investors ditched the safe-haven currency, in order to diversify their portfolios. There are 2 important sets of data that will be released from Japan later today. These are the Prelim GDP and the Prelim GDP Price Index at 11:50 GMT respectively.

Crude Oil – Crude Oil Climbs 5%

The price of Crude Oil rose by an impressive $2.42 to $59.45 a barrel, or 5%. This is remarkable in a commodity that has recorded so much volatility as of late. Much of the price increase was spurred by a weak Dollar, and strong commodity and equity markets. The main way for Crude to continue this bullishness, is for investors to feel that there are increasing signs of a global economic recovery.

In recent weeks, it seems that the price of Crude has been stabilizing. This is partly owed to the production cuts that OPEC has made. The question now is will OPEC continue enacting production cuts over the next several months? If they do, then Oil prices may reach $65-$70 by the end of June. It’s also important to note that Crude prices can be used as a measure of economic health in the economy.

Technical News

EUR/USD

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

GBP/USD

The hourly chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bearish cross forming on the 4-hour chart’s Slow Stochastic implies that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The typical range trading on the hourly chart continues. The daily chart Slow Stochastic is floating in neutral territory. However, the pair currently sits near the upper border of the 4-hour chart’s RSI, suggesting downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card – Crude Oil

After a few days of sustained upward movement, the price of this commodity now appears to be floating in the over-bought territory on the RSI of the daily chart. There also appears to be fresh bearish crosses on the 4-hour chart’s Slow Stochastic, which signifies that forex traders may be capable of entering the impending downward correction at a great entry price by going short on this commodity today.

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.