InvestMacro FX

Source: ForexYard

Last week’s release of negative employment data from the United States has many forex traders running from the USD. With a rally taking place among Euro-Zone currencies, as well as the price of Crude Oil, there appears to be plenty of investment opportunities more profitable than the U.S. Dollar lately. Forex traders would be wise to change gears and pick up other investments than the typical safe-haven of the USD.

Economic News

USD – U.S. Sees Worst Unemployment Figures Since 1983

Last week was mainly a bearish week for the Dollar. The USD dropped significantly against the EUR and the GBP. The EUR/USD crossed the 1.35 level, and the GBP/USD was traded at an almost two-month high, after reaching to 1.4890.

Last week was filled with important data regarding the U.S economy. First, the Manufacturing Purchasing Managers’ Index was seen at a 5-month high after reaching the 36.3 mark. In addition, the housing sector in the U.S continued to show recuperating signals as the monthly Pending Home Sales rose by 2.1% in February. However, all this had little effect on the U.S Dollar as the Non-Farm Employment Change report climbed to a 25-year high with over 663,000 people losing their jobs in March, making it the fourth consecutive month in which the U.S economy lost more than 650,000 jobs.

With all respect to the improving housing sector, such horrifying figures are an immense warning sign for all those who feel that the crisis is now behind us and not ahead of us. The weakening of the greenback on almost all fronts was fairly expected in light of the problematic job sector.

As for the week ahead, a lot of extremely influential data will be published, and most attention will be focused towards two of them. First, the U.S. Trade Balance which measures the difference in value between imported and exported goods and services. Analysts expect that the deficit has continued to narrow throughout February. Second, the U.S Unemployment Claims, which measures the number of individuals who filed for unemployment insurance for the first rime during the past week. This week the report will have an even stronger impact than it usually does, as investors are anxious to see whether the poor job sector in the U.S. is likely to continue. Traders are advised to pay attention to these publications and set their positions on the USD accordingly.

EUR – The EUR Continues to Strengthen against the Majors

Last week the EUR underwent bullish trends against most of its major currency counterparts. The EUR/USD rose to about 1.3580, and the EUR/JPY reached the 136.80 level. However, the EUR saw a falling trend against the GBP throughout most of the trading week.

The most significant notification which came from the Euro-Zone over the past week was definitely the European Central Bank’s (ECB) decision to cut interest rates to 1.25% from 1.50%. Normally, when a region announces its cutting interest rates, the automatic reaction to it is the weakness of the local currency. However, this time, on a fascinating turn of events, the exact opposite effect took place. A reason for this is as follows: for about a month now, analysts have anticipated that the ECB will have no choice but to cut interest rates, as the European interest rate was much higher than those in the U.S, Japan and Great Britain; however, for the past week or so, everyone was under the impression that the ECB will cut interest rates at least by half a percent. When it was announced that the ECB will cut interest rates by only 0.25%, most investors were caught by surprise, which caused them to reevaluate their positions, concluding in a very strong bullish trend for the EUR.

As for this week, traders are advised to focus on the German economic data. On Wednesday at 10:00 GMT, the monthly German Factory Orders will be published. This report, which measures the change in the total value of new purchase orders placed with manufacturers, is expected by analysts to drop for the sixth consecutive month. On Thursday at 10:00 GMT, the monthly German Industrial Production report, which measures the change in the total inflation-adjusted value of output produced by manufacturers, is expected by analysts to drop for the sixth consecutive month as well. If the real results will be similar to the forecasts, the current trend may reverse, and the EUR/USD could significantly drop. Traders should follow the announcements and try to make profits from the effects of these results.

JPY – The Yen is Losing Ground on All Fronts

The JPY saw an extremely bearish session last week, and it will be certain to say that if you went short on the JPY, you now have more funds in your equity than you had before. The USD/JPY for example, has crossed the 100.00 barrier for the first time in six months.

Two reasons have led to the JPY’s downfall over the past week. One, two very important Japanese economic indicators delivered unfortunate figures. The Preliminary Industrial Production, which measures the change in the total inflation adjusted value of the output produced by manufacturers, dropped by 9.4%, making it the fifth drop in a row. In addition, the Tankan Manufacturing Index, which measures general business conditions, dropped to a -58 mark, reflecting a 34-year low. The second reason for the weakness of the Yen is the Japanese economic policy that tries to do its best to encourage the local exporting and believes that the best way to do this is via a weak currency. These are the main reasons for the Japanese low interest rates, which are made to keep the Yen as weak as possible.

As for the week ahead, the most significant data expected from Japan will be the Overnight Call Rate, on which the Japanese interest rates for April will be revealed. As for now, the Bank of Japan (BoJ) is widely expected to leave it at 0.10%, as it can’t really drop it further. In conclusion, unless sudden changes will take place, the JPY will probably continue to face downtrends against the major currencies in the upcoming week.

Crude Oil – Could Crude Oil Reach $55 a Barrel?

Crude Oil’s prices continued to rise during last week’s trading session. A barrel of oil has breached through the $50 price for the first time in two weeks, and it is currently valued for over $53.00 a barrel.

It appears that Crude Oil is rising on speculations that the global economic stimulus decided on at the G20 meeting will indeed put an end to the recession, and with the beginning of 2010 we might even see the first signs of global growth. All of these speculations have led investors to think that the demand for oil will increase dramatically throughout 2009. In addition, the deteriorating USD has also contributed to the spike in oil prices as Crude Oil is valued in Dollars.

Looking ahead to this week, traders are advised to watch carefully after the leading stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone in order to predict the next movements in oil prices. Nevertheless, in case the USD continues to weaken as it has lately, $55 a barrel seems like a very realistic target for this week.

Technical News

EUR/USD

The latest uptrend in this pair has pushed the price into the over-bought territory on the RSI of the hourly and 4-hour charts, indicating that a downward correction may be imminent. With fresh bearish crosses occurring on the hourly and 4-hour charts’ Slow Stochastic, this notion may indeed be correct. Going short might be a wise choice today.

GBP/USD

The steadily rising value of this pair has recently generated a bearish cross on the Slow Stochastic of the hourly, 4-hour, and daily charts, signaling that a downward move is likely to occur in the nearest time-frame. With the price floating in the over-bought territory on the hourly and 4-hour charts’ RSI, this notion indeed carries weight. Going short might be a good strategy today.

USD/JPY

There appears to be a bearish cross on the Slow Stochastic of the 4-hour chart, signaling a downward correction may occur shortly. The price of this pair also seems to be floating in the over-bought territory on the hourly chart’s RSI. Going short and riding out the impending downward correction may be wise today.

USD/CHF

This pair’s recent drop has pushed the price into the over-sold territory on the RSI of both the hourly and 4-hour charts, signaling an upward correction could be in the making. With a bullish cross recently occurring on the 4-hour chart’s Slow Stochastic, this move may indeed be imminent. Going long might be a good choice.

The Wild Card – Gold

Gold’s recent plummet has most oscillators signaling an imminent upward correction. With the price floating in the over-sold territory on the RSI of the hourly, 4-hour, and daily charts, this upward movement may occur in the nearest future. The bullish crosses on the Slow Stochastic on each of these charts also support this notion. Forex traders have a great opportunity to capture the impending correction and make strong gains by placing early long positions after the upward turn has been made.

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.

U.S. Nonfarm Payrolls employment data released today showed that jobs continued to fall at a very high rate in the U.S. as employment declined by over 600,000 for the fourth month in a row. The Department of Labor nonfarm payrolls report showed that U.S. payrolls shed 663,000 jobs in March following a drop of 651,000 jobs in February.

This was the fifteenth straight month that companies have shed workers and the unemployment rate jumped from 8.1 percent to 8.5 percent bringing the rate to its highest standing since 1983.

January’s job decline was revised higher to show a loss of 741,000 jobs which registered the largest fall in employment since 1949. The amount of jobs lost since December 2007 has now totaled 5.1 million according to the Labor Department and 3.3 million of those jobs have been shed in the last five months.

The March Labor Department report just surpassed market forecasts that were expecting a loss of 660,000 jobs and matched forecasts expecting the unemployment rate to reach 8.5 percent.

The decline in jobs was spread throughout most economic sectors with the exception of the education & health services sector which saw 8,000 jobs created in March. The service-providing sector was the hardest hit by job losses for the month as this sector lost 358,000 total jobs with professional & business services shedding 133,000 workers, retail trade cutting 48,000 workers and leisure & hospitality losing 40,000 workers for the month.  Government employment also declined by 5,000. The goods-producing sector lost 305,000 jobs for the month as the manufacturing sector cut 161,000 jobs and the construction sector lost 126,000 jobs.

U.S. Dollar mostly lower today in Forex Trading.

The U.S. dollar has been losing ground in forex trading against most of the major currencies after today’s employment report. The dollar has fallen against the euro, Australian dollar, Swiss franc, New Zealand dollar and the British pound while gaining ground versus the Japanese yen.

The euro has advanced in trading versus the dollar from today’s 1.3441 opening at 00:00GMT to trading at approximately 1.3484 in the late afternoon of the US trading session at 4:06pm EST according to currency data by Oanda. The British pound has increased versus the dollar as the GBP/USD has gone from its 1.4722 opening rate to trading at 1.4832 in the U.S. session.

The Australian dollar has gained slightly versus the USD with the AUD/USD trading at 0.7155 after opening today at 0.7151. The New Zealand dollar has also made a small gain versus the US dollar as the NZD/USD trades at 0.5866 after opening the day at the 0.5856 exchange rate.

Against the Swiss franc, the USD has been falling today for the second straight day as the USD/CHF has declined from its 1.1352 opening to trading at 1.1316. The dollar has also declined against the Canadian dollar after the USD/CAD opened at 1.2407 earlier today to trading later at 1.2308.

The dollar has managed to make gains against the Japanese yen as the USD/JPY has climbed from its 99.67 opening to trading at 100.23 later today.

USD/JPY Chart – The US Dollar advancing against the Japanese Yen in Forex Trading today. The Dollar surpassed the 100 yen to the dollar mark and reached its highest trading level against the Yen since early November 2008.

By GCI Fx Research

€

The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3515 level and was supported around the US$ 1.3220 level.  U.S. March non-farm payrolls printed at -663,000 and the unemployment rate reached 8.5%, a new 25-year high,.  Average hourly earnings were up +0.2% and January’s non-farm payrolls tally was revised for the worse by 86,000 jobs.  The U.S. economy has now shed more than five million jobs since the U.S. recession started in December 2007.  Other U.S. data today saw the March ISM non-manufacturing index contract to 40.8 from 41.6 ub February.  These negative service sector data suggest the economy may be contracting more than expected and conflicts with recent U.S. economic data that suggested the economy may have bottomed out in late Q1.  Some traders view the final outcome of the Group of Twenty meeting as a success while others believe it was short on details including a lack of a commitment on the part of all nations to increase their fiscal stimuli.  In eurozone news, the EMU-16 composite PMI rallied to 38.3 from 36.2 in February, the largest monthly gain since October 2003.  Many dealers believe the European Central Bank will enact quantitative easing measures in May.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥100.25 level and was supported around the ¥99.35 level.  Today’s represents the first time the greenback has traded above the psychologically-important ¥100 figure since 4 November.  The yen lost some ground across the board as some investors expressed satisfaction with the outcome of the Group of Twenty meeting.  Bank of Japan is expected to broaden its quantitative easing framework this year.  The Nikkei 225 stock index climbed 0.34% to close at ¥8,749.84.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥133.15 level and was capped around the ¥135.00 figure.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥148.70 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.45 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8343 in the over-the-counter market, up from CNY 6.8340.

₤

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4845 level and was supported around the $1.4645 level.  The March PMI services index improved to 45.5 from 43.2 in February.  Data released on Wednesday saw manufacturing PMI strengthen and there is increasing speculation the U.K. economy may have bottomed out.  Other data saw Halifax March house prices off 1.9% m/m and off 17.5% y/y.  Cable bids are cited around the US$ 1.4515 level.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.9040 level and was capped around the ₤0.9160 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1390 level and was supported around the CHF 1.1315 level.  Data released in Switzerland today saw March consumer price index off 0.3% m/m and off 0.4% y/y.  Swiss National Bank is likely to maintain its quantitative easing framework.  U.S. dollar bids are cited around the CHF 1.1165 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5205 level while the British pound gained ground vis-à-vis the Swiss franc and tested offers around the CHF 1.6835 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 dramatic run up that we have seen in the S&P 500 may be coming to an end. The retracement back over the 840 level should provide sufficient resistance to reverse this market to the downside.

Now here is the caveat, our long-term indicator, the monthly “Trade Triangle” remains negative on this market. While the direction of our weekly timing “Trade Triangle” is on the sidelines and neutral. This has created a conflict, meaning that conservative traders should remain on the sidelines to protect capital.

I am looking for an area to once again get short this market and trade with the major trend in our favor.

My downside target zone is for an eventual move down to the 500 level. Only if we take out highs as I mention in the video, then this analysis will change.

I hope you enjoy this short video. I will cover two important elements in trading: the Elliott wave theory, and the other is the Fibonacci retracement levels that I like to watch and trade with.

See the Video

As always, the video is available with our compliments and there is no requirement to register to watch this video.

All the best,
Adam Hewison

President, INO.com
Co-creator, MarketClub

Source: ForexYard

A surprise 25 point basis point Interest Rate cut by the ECB is being digested by the currency markets. But traders won’t have much time to pause as the high impact Non-Farm Employment numbers are released later today.

Economic News

USD – USD Weakens from Negative U.S. Data and Positive EUR News

The USD experienced a rather rough day of trading yesterday, with a substantial loss to the EUR and GBP. After the European Central Bank (ECB) failed to reduce Interest Rates as deep as forecasted, there was a modest rebound in the value of the EUR against its primary currency pair, the U.S. Dollar. Ending Thursday at 1.3456 against the EUR, and 1.4731 against the GBP, the greenback has seen better days.

Two rather important currency valuating events have taken place over the previous few weeks. The first was the announcement of quantitative easing by the U.S. government, an event which dropped the value of the USD to the 1.3700 price level against the EUR. This loss was held in check, however, as most investors anticipated a similar move by the ECB. As this was not forthcoming this week, the second event was a renewed sell-off of USD in exchange for higher yielding assets on Wall Street as well as a buy-up of more unique currencies as a hedge against the perceived future weakness of the current safe-haven currencies.

As this week comes to an end, there is still room for a market shock during Friday’s trading hours. With a calendar chalk full of important events, traders are highly advised to participate in the heavy news-trading day ahead of them. The U.S. government will be releasing its monthly Non-Farm Employment Change report at 12:30 GMT alongside the announcement of the U.S. unemployment rate. A disappointing payrolls report could send the EUR/USD above the 1.3500 resistance level tested in the early hours of the Japanese trading session.

Later in the day, Federal Reserve Board Chairman Ben Bernanke will be delivering a speech titled “The Fed’s Balance Sheet” at the Richmond Federal Reserve Bank’s Third Annual Credit Market symposium. Traders often use Bernanke’s testimonies and speeches to speculate about future monetary policy decisions by the Fed, generating high market volatility during these events.

EUR – EUR Gains Strength as Risk Appetite Increases

The EUR gained momentum throughout today’s trading hours as the European Central Bank (ECB) left room for future monetary policy adjustments by only reducing Interest Rates by a 25 basis points, from 1.50% to 1.25%, yesterday. Forecasts were for a reduction of half a percentage point in expectation of the ECB taking quantitative easing measures similar to those in the United States. As this was not yet forthcoming, the EUR has rebounded slightly to the 1.34 price level against the USD.

When the United States announced its plans for quantitative easing, there was a heavy sell-off of the USD, but the losses the greenback experienced to the EUR were held in check by the assumption that the ECB would follow the States with an announcement of a similar initiative. Now that the ECB has rejected the notion of deep rate cuts followed by quantitative easing, at least for the time being, the sell-off of USD, the purchase of EUR, and the increase in risk appetite have wrought havoc in the forex market in the form of heavy volatility. Those who benefited by going long on the Dollar throughout these past few months may want to consider changing tactics for the time being.

The British Pound also made moderate gains, at least against the USD, as some housing data released yesterday generated a stronger movement towards less liquid assets and a short-term rebound in confidence. Following tomorrow’s release of inflationary data from Europe and Britain, traders will get a glimpse into what may be occurring at the start of next week. The Pound could continue its recent bullish run against the EUR below the 0.9100 mark.

JPY – Japanese Yen Continues to Deteriorate

The Japanese Yen has seen better days. Over the past week this island economy’s currency has consistently depreciated against the majors, losing considerably against the USD and EUR. The level of this depreciation does not appear to have any stops in the making. Japan has maintained a posture of weakening its currency to boost exports, but the added weight of an unwinding of JPY safe-haven trades may have pushed its value lower than anticipated.

The resultant free-fall in the value of the JPY has begun to shake the confidence which many investors had in the island economy and expectations are now sliding further into the red for the economy’s recovery. With little economic news being released by Japan, the end of this week’s trading will likely see a continuation of this falling trend in JPY crosses. Against the USD, the JPY could finally settle above the 100.00 Yen level today.

OIL – Crude Oil Prices Stabilizing as Dollar Relationship becomes More Solid

The price of Crude Oil has become much more predictable this past week. With a sharp appreciation following some negative U.S. data, the value of Crude then continued to sink back below $50 a barrel. However, as the USD weakens once more, the price of Crude has once again made a jump in the direction of the mid-$50 price range. Crude Oil’s value has begun to react much more realistically to the value of the Dollar; this in turn brings a level of stability to Oil trading in the commodities market, which traders can benefit from greatly.

With Crude Oil Inventories falling slightly this past month, there is a perception that demand has slightly increased in the short-term, while long-term demand remains negative. As the Dollar continues to weaken, traders will most likely see the value of Crude Oil climb back towards $55 a barrel through next week, unless the Dollar gains back its recent losses.

Technical News

EUR/USD

The pair failed to break the resistance level of 1.3500 earlier today and now trades near the 1.3410 mark. The 4-hour chart is showing a bearish cross on the Slow Stochastic Oscillator and the pair’s RSI is currently floating in the overbought region. This signals downward movement may take place later today. Traders today may look to short this pair.

GBP/USD

The 4-hour chart has the Cable floating in overbought territory on the Relative Strength Index and a bearish cross on the Slow Stochastic, signaling potential depreciation of the pair. The hourly chart currently shows the pair’s Bollinger Bands tightening, signaling a violent breach is possible. Placing short positions might be a good strategy for the day.

USD/JPY

This pair has experienced a bullish trend the past 12 days and may be due for a correction. The daily chart shows a bearish cross forming on the Slow Stochastic with the pair trading in overbought territory on the RSI. There may be potential for a downward price movement. The 4-hour chart also has the RSI trading in overbought territory, and the Bollinger Bands on the hourly chart appear to be tightening, an indicator that a breach of the lower border is possible. Going short may be the preferable strategy today.

USD/CHF

The range trading on the 4-hour chart continues as the pair has not make a significant move in either direction. The RSI is currently floating in neutral territory and the Slow Stochastic is in the middle zone. However, the hourly chart’s Bollinger bands are currently tightening, signaling a violent breach may be imminent. Traders may want to wait for the breach then swing.

The Wild Card – Crude Oil

Yesterday’s price spike may have left the commodity in overbought territory. The 4-hour chart currently shows the RSI floating in the overbought zone and a bearish cross is visible on the pair’s Slow Stochastic Oscillator. This may give forex traders a good opportunity to go short on Crude Oil today.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By GCI Fx Research

€

The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3515 level and was supported around the US$ 1.3220 level.  Group of Twenty officials meeting in London appeared poised to announce details of plans to combat tax havens and increase funding to the International Monetary Fund.  Officials noted “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4%, and accelerate the transition to a green economy.”  Also, G20 leaders pledged to “refrain from competitive devaluations of our currencies.”  The common currency rallied today after the European Central Bank reduced its main refinancing rate target by 25bps instead of the widely expected 50bps cut.  The ECB has reduced its key rate by 300bps since October 2008.  ECB member Stark said next month will be the proper time for the ECB to decide on non-conventional policy measures.  In U.S. news, February factory orders were up 1.8%, below expectations, from a downwardly revised 3.5% decline in January.  Also, weekly initial jobless claims grew 12,000 to 669,000 last week while continuing jobless claims extended their move higher.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.90 level and was supported around the ¥98.40 level.  The yen was given across the board as risk appetite returned to markets following gains in U.S. equity markets and a sense that Group of Twenty officials could be making progress at their London summit.  Bank of Japan is expected to broaden its quantitative easing framework in the near future, possibly by purchasing a greater range of asset-backed securities.  The Nikkei 225 stock index climbed 4.40% to close at ¥8,719.78.  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 ¥134.25 level and was supported around the ¥130.30 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.85 level.  In Chinese news, the U.S. dollar closed at CNY 6.8340 in the over-the-counter market.

₤

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4750 level and was supported around the $1.4445 level.  Data released in the U.K. today saw March construction PMI rise to 30.9 while March Nationwide house prices were up 0.9% m/m and off 15.7% y/y, the first monthly rise since October 2007.  It was also reported that ISD median pay increases fell to +3.4% y/y in the three months to February.  Cable bids are cited around the US$ 1.4515 level.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.9085 level and was capped around the ₤0.9170 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.

The European Central Bank cut its interest rate today by 25 basis points  to mark a new all-time low rate level for the eurozone. Today’s rate reduction was less than the 50 basis point cut economic forecasts were generally expecting and brought the rate from 1.50 percent to 1.25 percent. The ECB now has reduced its rate by 300 basis points since October 8th when it participated in coordinated rate reductions with central banks around the world.

Jean-Claude Trichet, the President of the ECB, commented in his press conference today that “today’s decision takes into account the expectation that price pressures will remain subdued, reflecting the substantial past fall in commodity prices and the marked weakening of economic activity in the euro area and globally. The latest economic data and survey information confirm that the world economy, including the euro area, is undergoing a severe downturn. Both global and euro area demand are likely to remain very weak over 2009, before gradually recovering in the course of 2010.”

Trichet also did not rule out further rate reductions and that any “nonstandard” bank measures implemented would be discussed at the next rate meeting in May.

US Weekly Jobless Claims rise to highest since early 1980’s.

Weekly U.S. initial jobless claims rose more than expected in the week that ended on March 28th according to the U.S. Labor Department today. Jobless claims totaled 669,000 unemployed workers, an increase of 12,000 from the week prior that had 657,000 initial jobless claims. The jobless increase marked the highest level since 1982 and surpassed forecasts expecting claims to number approximately 650,000. A 4-week moving average of unemployed workers showed an increase of 6,500 from the prior week to 656,750 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending March 21st grew by 161,000 workers to a total of 5,728,000 unemployed workers. The four week moving average of continuing claims grew by 163,500 workers from the previous week to 5,496,500 workers.

US Dollar falling in forex trading today.

The U.S. dollar has been falling in forex trading today against the major currencies as stock markets have rallied on positive sentiment of the G20 meetings and new flexibility in mark-to-market rules. The Dow Jones Industrial Average has gained by over 250 points at time of writing to pass the 8,000 threshold.  The Nasdaq has gained by 50 points while the S&P500 has advanced over 25 points.

The dollar, meanwhile, has fallen against the against all the major currencies today except the Japanese yen.

The euro has advanced versus the dollar for the second day in a row as the EUR/USD has gone from today’s 1.3272 opening exchange rate at 00:00 GMT to trading at approximately 1.3476 in the US trading session at 1:39pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency as the GBP/USD has gone from 1.4494 to trading at 1.4722 dollars per pound.
The USD has declined against the Swiss franc with the USD/CHF falling from the 1.1439 opening to trading at 1.1334. The dollar has also decreased against the Canadian dollar as the USD/CAD dropped from the opening at 1.2549 earlier today to trading at 1.2371 later.

The Australian dollar has traded higher versus the USD as the AUD/USD trades at 0.7168 after opening today at 0.7026 while the New Zealand dollar has gained versus the USD and trades at 0.5806 after opening at 0.5678.

The dollar has advanced against the Japanese yen today as the USD/JPY has gained from its 98.72 opening to trading at 99.33.

EUR/USD Chart – The Euro advancing today against the US Dollar in Forex Trading and trading above its 21-day moving average in blue(Daily Chart).

Source: ForexYard

Market participants are eagerly awaiting key data pieces due be released today. The European Central Bank is expected to cut Interest Rates by 50 basis points and weekly U.S. unemployment numbers are predicted to be high. These two events will be the main drivers of currencies in the forex market today.

Economic News

USD – U.S. Unemployment Claims on Tap

The U.S. Dollar weakened during yesterday’s trading session, correcting the sharp gains against the EUR and GBP seen last week as steep job losses in the private sector rekindled fears of a prolonged U.S. recession. After yesterday, the USD fell slightly against the EUR, pushing the oft-traded currency pair to 1.3270. The Dollar experienced similar behavior against the Pound and closed at 1.4490.

The ADP Non-Farm Employment Change released yesterday showed an additional 742K individuals lost their jobs in the U.S during the month of March. The number was far higher than economists had previously forecasted. This is indeed another sign that any economic recovery in the U.S. will be slow to commence.

Another leading indicator released yesterday was U.S. Pending Home Sales. This number handedly beat market expectations but 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.

As for today, the leading U.S. data will be the Unemployment Claims. The survey is expected to show 649K individuals have filed for unemployment insurance for the first time during the past week. Such a result will be a direct continuation of the recent troublesome figures delivered lately from the U.S. economy and is threatening to hurt the USD. Traders should follow it closely, as any crucial information might ignite a new trend in the market.

EUR – EUR Fluctuates as ECB Interest Rate Decision due Today

The EUR finished yesterday’s trading session with mixed results versus the major currencies. The 15-nation currency saw moderate gains versus the USD. Versus the JPY, the Euro-Zone currency range-traded throughout most of the day, as much of the market data from yesterday was focused on the greenback.

Retail Sales in Germany unexpectedly fell in February and the rate of unemployment rose, fueling fears about job security. As a result, European companies have stepped up efforts to reduce production and cut jobs as the worst global slump since World War II. German business confidence fell to the lowest level in more than 26 years in March and unemployment increased for a fifth straight month.

As a result, the ECB is expected to cut its Interest Rates today while other governments embark on state-sponsored investment programs. The market may view the ECB action of a rate cut as a step to restore investor confidence, and to mitigate the economic fallout from the financial crisis.

In the last year, the ECB has been less aggressive than the Federal Reserve in monetary policy and as the financial crisis has worsened in Europe, the EUR has steadily fallen against the USD. However, the ECB plans for cutting Interest Rates might have an effect on the Euro-Zone economy and could reassure the European banking sector that they could rely on the ECB to keep liquidity circulating and also bring more confidence to the markets.

JPY – Yen Experiences Mixed Results against Major Currencies

Japan’s business confidence hit a record low after slumping global demand has halved the nation’s exports, pushing the country into one of its worst recessions. Rising unemployment and falling spending data a day earlier already showed the worrisome trend that the drop in external demand was affecting Japan’s domestic economy. Analysts expect the Japanese economy to continue to contract in the first half of this year, lending a record five straight quarters of negative economic growth.

Today, the JPY will be absent from the economic calendar, however, traders should follow overseas events in order to determine the JPY’s direction for today. Special attention should be given to the ECB Press Conference and U.S. Unemployment Claims figure that will be published at 11:45 and 12:30 GMT respectively, and will be today’s leading publications that could affect the Yen’s crosses.

OIL – Crude Oil Sinks below $49 a Barrel

Oil prices fell slightly during yesterday’s trading session and closed below $49 a barrel as more signs of a sick economy fueled worries about energy consumption. The International Energy Agency (IEA) said that Crude Oil inventories rose to 359.4 million barrels, which is 15.5% above levels from one year ago, the highest level since 1993. Some analysts have said Crude Oil is waiting to break out from it’s price slump but the negative inventories data may have held that rally in check..

Oil prices rose sharply last month from $35 to above $54 taking their cue from a rally in equity markets. But a new sign of a prolonged recession which has crushed energy demand around the world is again pushing prices lower below the psychological price level of $50.

Technical News

EUR/USD

After testing and breaking the resistance line of 1.3300, the hourly chart is showing a bearish cross on the Slow Stochastic with the pair’s RSI floating in the oversold region. This may indicate an imminent downward correction for the pair. Going short could be the right play today.

GBP/USD

The bullish momentum seen this morning may have left the pair in an oversold position after failing to breach the 1.4600 price level. The 4-hour chart’s RSI is currently floating in the oversold region while a bearish cross has formed on the Slow Stochastic, indicating a downward move. This could be a good opportunity to go short.

USD/JPY

The daily chart is showing bearish trends as the pair trades near the 98.75 level. The daily chart displays the Relative Strength Indicator trading in the upper range and an imminent bearish cross is forming on the Slow Stochastic Oscillator. This may indicate the potential for the pair to head lower today. Going short may be the right move.

USD/CHF

There appears to be a leveling-off in the price of this pair as the Bollinger Bands on the 4-hour chart appears to be tightening, signaling an impending volatile price movement. Most oscillators show a lack of distinct direction. On the other hand, range-trading allows traders to cut profits from buying on dips and selling on highs.

The Wild Card – EUR/GBP

The pair’s downward thrust early this morning continues the bearish trend. However, the 4-hour chart is providing extensive bullish signals. A bullish cross has formed on the Slow Stochastic and the pair is floating in the oversold range on the RSI. The Bollinger Bands on the daily chart continues to tighten, indicating a volatile correction may soon occur. Forex traders can take advantage of this imminent volatile movement by setting long positions with tight stops.

Market Analysis provided by Forex Yard.

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By GCI Fx Research

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The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3165 level and was capped around the US$ 1.3285 level.  Traders were surprised that U.S. March ISM manufacturing index rallied to 36.3 from 35.8 in February.  Albeit this represented the fourteenth consecutive month of declining activity, some economists believe the sector may have bottomed out.  Other data saw February construction spending decline 0.9%, the fifth consecutive monthly downturn.  Additionally, March pending home sales rose 2.1% from -7.7%.  Additionally, ADP reported private sector jobs contracted a major 742,000 in March and February’s total was upwardly revised to -697,000 from -706,000. Many economists believe Friday’s non-farm payrolls total could be around -675,000.  Notably, it was reported last month that some 651,000 non-farm jobs were lost in February.  Traders will also pay close attention to downward revisions to January’s and February’s non-farm payroll tallies.  In eurozone news, many dealers believe the European Central Bank will reduce its main refinancing rate by 50bps tomorrow to 1.0%.  Others believe the ECB may also announce some form of quantitative easing measures, possibly including the purchase of commercial paper, corporate debt, or the issuance of medium-term loans.  All eyes are on London as the Group of Twenty meets to discuss the global financial crisis.  European leaders are said to be pressing for increased international regulation while U.S. officials are said to be pressing for more fiscal stimulus from the eurozone.  German Chancellor Merkel reminded her colleagues that Germany passed a €50 billion stimulus in February.  Data released in the eurozone today saw the February EMU-16 unemployment rate climb to 8.5% from 8.3% in January.  Also, the EMU-16 manufacturing PMI reading improved to 33.9 from 33.5 in February.  Moreover, German February retail ales were off 0.2% m/m and 5.3% y/y.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.20 level and was capped around the ¥99.45 level.   Bank of Japan’s quarterly tankan survey was released overnight and worsened to record lows with large manufacturers’ main diffusion index at -58 from -24 in December – the largest decline ever.  Similarly, the consumer sentiment diffusion index worsened to -88.9 in March, a new low.  Today’s data elevate the likelihood that Bank of Japan will enact more quantitative easing measures to reduce credit strains, possibly through the purchase of additional asset-backed securities.  The Nikkei 225 stock index climbed 2.99% to close at ¥8,351.91.  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 ¥129.85 level and was capped around the ¥131.90 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥142.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥140.55 level.  In Chinese news, it was announced that President Obama will visit China in H2 2009.  The White House reported President Hu “emphasized China’s commitment to strengthen and improve macroeconomic control and expand domestic demand, particularly consumer demand, to ensure sustainable growth, and ensure steady and relatively fast economic development.”

Daily Market Commentary provided by GCI Financial Ltd.

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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.

U.S. employment data was released today in the form of the ADP National Employment Report and showed that U.S. private employment declined the most on record. March nonfarm private employment fell by 742,000 according to the ADP report and marked the highest decrease in jobs on a monthly basis since the ADP  report started in 2001. Today’s employment report follows the February revised decline of 706,000 jobs and surpassed market forecasts that were expecting a decline of 663,000 jobs for the month.

The service-providing sector showed the largest decline for the month with a loss of 415,000 jobs while the goods-producing sector fell by 327,000 jobs. The manufacturing sector registered its 37th month in a row of employment decline with a loss of 206,000 jobs while construction jobs fell for the 26th straight month with a decline of 118,000 workers. All size of businesses slashed jobs in March as large businesses lost 128,000 jobs, medium sized businesses shed 330,000 jobs and small businesses dropped 284,000 jobs.

The market-moving US Nonfarm Payrolls report for March is to be released this Friday at 12:30 pm GMT with market forecasts predicting a decline of 659,000 jobs after February’s 651,000 decrease.

ISM Manufacturing data improves.

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity failed to grow in March for the fourteenth straight month but did edge up from February. March’s ISM Report On Business index readings for economic activity were at 36.3 percent following February’s 35.8 percent level. The March score did also slightly surpass economic forecasts which were expecting the ISM index reading to register 36.0 percent. A score above 50 percent is considered to be growth and less than 50 percent is considered to be a contraction.

Norbert J. Ore, chair of the ISM Business Survey Committee, commented on the report saying, “The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month. While the PMI is slightly higher in March, the New Orders Index offers greater encouragement, as it rose above the 40-percent mark for the first time in seven months. The Production Index showed no benefit as yet from the improvement in new orders, as it continued to decline at a rate similar to March. The rate of decline in the Employment Index slowed slightly, and the same held true for the Prices Index. A special question was asked with regard to the Economic Stimulus Package, and five of the 18 manufacturing industries expect to derive some benefit from the stimulus.”

Most of the manufacturing sectors tracked for March showed improvement over the February report with supplier deliveries and inventories being the exceptions. Supplier deliveries fell by 3.1 percent for the month while inventories decreased by 4.8 percent in March.

New orders, production, employment, customer inventories, prices and the backlog of orders all showed increased readings for March. The exports index registered a 1.5 percent increase for March while imports also increased by 1.0 percent.

Pending Homes Sales in US increase.

U.S. Pending Homes sales rose more than expected for the month of February according to the monthly report produced by the National Association of Realtors. The NAR report showed that pending home sales contracts signed by buyers increased 2.1 percent in February following a 7.7 percent decline in January.

Market forecastors had predicted the sales data would show no change or remain flat for the month. The pending home sales level is 1.4 percent below the February 2008 level.

NAR chief economist Lawrence Yun commented in the report about the increased sales figures this month, “Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains.”

On the state of the housing market, Yun contented that, “More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity.”

US Dollar mostly lower in forex trading.

The U.S. dollar has been under pressure in forex trading against the major currencies so far today. The dollar has fallen against the euro, Australian dollar, British pound, Japanese yen, New Zealand dollar and Canadian dollar while trading higher against the Swiss franc.

The euro has advanced versus the dollar as the EUR/USD has gone from today’s 1.3209 opening exchange rate at 00:00 GMT to trading at approximately 1.3233 in the late afternoon of the US trading session at 4:12pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency from 1.4299 to trading at 1.4445 dollars per pound. The dollar has decreased against the Canadian dollar after the USD/CAD’s opening at 1.2674 earlier today to trading at 1.2620 later in the day.

The Australian dollar has also traded higher versus the USD as the AUD/USD trades at 0.6979 after opening today at 0.6887 while the New Zealand dollar has gained versus the USD and trades at 0.5671 after opening at 0.5572.

The dollar has decreased slightly against the Japanese yen today as the USD/JPY has edged down from its 98.69 opening to trading at 98.61.

Meanwhile, the USD has advanced against the Swiss franc today as the USD/CHF has gained from the 1.1428 opening to trading at 1.1460.

AUD/USD Chart – The Australian Dollar advancing today against the US Dollar in Forex Trading and trading right above its 55-period simple moving average(purple).