InvestMacro FX

Home prices in the U.S. continue to decline as the Standard & Poors/Case-Shiller index released today showed that home prices fell new record amounts in the December when compared to a year ago. The S & P’s/Case-Shiller Home Price Index measures sale prices of existing single-family homes nationally and tracks 10-city and 20-city composite home price measurements. The December 2008 house prices report showed that the 20-city composite index fell an annual 18.5 percent to mark a new record low while the 10-city composite index also fell a new record low 19.2 percent in December compared to last year.

The metropolitan areas hardest hit continued to be Las Vegas and Phoenix with annual declines of 33.0 percent and 34.0 percent, respectively. On an annual basis, none of the 20 metropolitan areas measured have shown house price increases with Denver being the area with the lowest decline at 4.0 percent. On a monthly basis, Phoenix registered the largest house price decline with a fall of 5.1 percent while Boston registered the best reading for the month with a decline of only 1.3 percent.

David M. Blitzer, Chairman of the Index Committee at S & P, commented in the report, “Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those MSA’s now with negative rates exceeding 20%. If one looks in detail at the annual return data, it can be seen that 13 of the 20 MSA’s and the two composites have been reporting consecutive record declines since December 2007. The monthly data follows a similar trend, with all of the metro areas reporting at least four consecutive months of negative returns.”

Also released today out of the US was the Conference Board’s consumer confidence index which saw confidence fall to a new all-time low in February. In a survey of 5,000 households, the confidence index showed that consumer confidence fell over 12 points from 37.4 in January to 25.0 in February to mark its lowest point since the survey started in 1967. The Present Situation index also declined from 29.7 in January to 21.2 in February while the Expectations index fell from 42.5 in January to 27.5 in February. The decline in confidence surpassed market forecasts that were expecting the confidence index to register a 36.0 score for February.

US Dollar falls in Forex Trading.

The U.S. dollar has been falling in the forex market today against most of the major currencies today. The dollar has lost ground to the euro, Swiss franc, Canadian loonie, New Zealand dollar and Australian dollar while showing a gain versus the Japanese Yen and British Pound.

The euro has advanced in trading versus the dollar from today’s 1.2726 opening at 00:00GMT to trading at approximately 1.2839 in the afternoon of the US trading session at 4:37pm EST.

The dollar has declined against the Canadian dollar after opening at 1.2491 earlier today to trading later at 1.2415. The Australian dollar has increased versus the USD with the AUD/USD trading at 0.6499 after opening today at 0.6456.

The New Zealand dollar has also increased versus the US dollar as the NZD/USD trades at 0.5133 after opening the day at the 0.5115 exchange rate. Against the Swiss franc, the USD has been falling today after gaining yesterday as the USD/CHF has declined from its 1.1675 opening to trading at 1.1598.

The British pound has decreased today versus the dollar as the GBP/USD has gone from its 1.4559 opening to trading at 1.4478 in the U.S. session. The dollar has advanced against the Japanese yen as the USD/JPY has climbed from its 94.97 opening to trading at 96.70 later today.

EUR/USD Chart – The Euro has advances today versus the US Dollar in Forex Trading.

GCI FX Research

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The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2830 level and was supported around the $1.2660 level.  Traders paid close attention to testimony from Federal Reserve Chairman Bernanke who reported the economy is suffering a “severe contraction” and said the Fed and Obama administration must normalize the banking and credit markets.  Bernanke added “Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery… To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets.”  The Fed will soon operationalize its program to enhance the availability of consumer loans.  Bernanke also noted “significant stresses persist in many markets. Notably most securitization markets remain shut…and some financial institutions remain under pressure.”  The Fed Chairman also said the government’s possible plan to purchase a significant minority interest in some U.S. financial institutions does not amount to nationalization.  Data released in the U.S. today saw the February Richmond Fed’s manufacturing index worsen to -51 while the February consumer confidence index fell to 25 from 37.7 in January.  Other data saw Q4 2008 U.S. house prices decline a record 3.4%, the largest decline in at least eighteen years, while the December S&P/ Case-Shiller home price index was off 18.5%.  In eurozone news, French President Sarkozy warned the banking crisis in central and Eastern Europe will “probably worsen.”  EMU-15 December new industrial orders were off 5.2% m/m and 22.3% y/y.  Also, it was reported that the German Ifo business climate index fell to 82.6 from 83.0 in January.  Additionally, the EMU-15 December current account deficit printed at -€7.3 billion, up from -€13.9 billion in November.  Euro bids are cited around the US$ 1.2475 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥96.90 level and was supported around the ¥94.25 level.  Minutes from Bank of Japan Policy Board’s meeting on 21-22 January were released today in which some officials concluded “Members agreed that it would be appropriate to maintain the current guidelines and that the bank encourage the uncollateralized overnight call rate to be around 0.1%.”  Some officials, however, were skeptical about whether or not easing measures would have an appreciable impact on the economy.  BoJ officials are now focusing their attention on the significant chance that deflationary pressures have taken root in the Japanese economy.  Many BoJ-watchers believe the central bank will expand its asset purchasing programs and steer market rates lower.  Data released in Japan overnight saw the January corporate services price index decline 0.9% m/m and 2.2% y/y.  The Nikkei 225 stock index lost 1.46% to close at ¥7,268.56.  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 ¥123.85 level and was supported around the ¥119.35 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥139.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥83.15 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8368 in the over-the-counter market, up from CNY 6.8355.

₤

The British pound gained marginal ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4575 level and was supported around the $1.4375 level.  Surprisingly, the CBI’s retail sales balance improved again this month, rising to -25 from -47 in January – the strongest level since June 2008. Other data saw Q4 business investment off 3.9% q/q and 7.7% y/y while January net mortgage lending printed at ₤2.9 billion. Cable bids are cited around the US$ 1.4245 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8885 level and was supported around the ₤0.8725 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.

Source: ForexYard

With stocks dropping to record lows, currencies fluctuating in irregular patterns, and the price of Crude Oil continuing its free fall, it seems unlikely that consumer confidence will begin to rise in the near future. With the CB Consumer Confidence Report expected later today, traders should anticipate a negative release and price this in to the value of the USD.

Economic News

USD – Dollar Rises as Wall Street Tumbles

The Dollar rose against its main currency pairs in yesterday’s trading while Wall Street recorded some big losses. The Dow Jones dived by a massive 250 points, reaching a 12-year low. This came about after federal authorities released information about the possibility of taking stakes in top U.S. banks. It is important to note that bank shares, such as those of Citigroup and Bank of America, increased as Barack Obama reassured investors that banks will remain in private hands.

The USD made large gains against the EUR as it climbed about 185 points versus the European currency to close at 1.2724. Against the JPY, the USD gained about 200 points to finish trading at 94.96. The USD, however, lost 31 points against the GBP to close at 1.4547.

One reason for the Dollar’s gains was due to investors viewing the currency as a safe-haven. This is likely to continue in the coming months as the recession continues to destabilize the global economy. The JPY and EUR weakness against the Dollar yesterday can be explained by pointing to negative data coming from these 2 regional markets. Also, the JPY is starting to be considered as less of a safe-haven than the USD. Furthermore, European Central Bank (ECB) President Jean-Claude Trichet spoke about the intensification and severity of the recession as it hit all sectors of the Euro-Zone economy in recent weeks.

Looking ahead to today, the 2 main news events coming out of the U.S. are the release of U.S. CB Consumer Confidence figures. This will be important in determining the Dollar’s value later in today’s trading. It is important to take into account, as we have seen of late, even if the news from the U.S. is negative, it may even help lead to Dollar bullishness as investors continue to seek the safe-haven U.S. currency in the current recession.

EUR – European Currency Declines on Deepening Recession

The EUR declined as fears about an accelerating recession in the Euro-Zone took its toll in Monday’s trading. The EUR recorded losses against most of its currency pairs, which was also compounded by Wall Street’s record drop yesterday. The European currency’s trading in recent weeks has been increasingly volatile, as the economic situation continues to dampen the Euro-Zone economy.

The main factor leading to a bearish EUR yesterday was European Central Bank (ECB) President Jean-Claude Trichet detailing more how hard-hit the Euro-Zone has been since the start of the recession, indicating that the ECB is likely to cut Interest Rates further in March. The EUR fell by a staggering 140 points against the GBP to 0.8739. The EUR/USD pair finished yesterday’s trading down by nearly 185 points at 1.2724. However, against the JPY, the EUR closed up 90 points at 120.85.

Today, there will be a lot of news coming out of the Euro-Zone. The German Ifo Business Climate and Current Account figures are expected to be released at 9:00 GMT. Better-than-expected results may lead to a bullish EUR through the end of today’s trading sessions.

JPY – Yen Declines against Dollar and EUR

The Yen recorded losses against all of its major currency crosses in yesterdays trading. This came about for several reasons. Primarily among them is that Japan’s economy continues to decline at an alarming rate as the global recession continues to take its toll. The Yen declined by 200 points against the USD to finish Monday’s trading at 94.96. Against the EUR it also lost 90 points to close at 120.85.

A few economic data releases are expected to be released from Japan later today. At 23:50 GMT there is the release of Japanese Trade Balance figures. This is likely to have an impact on the JPY in late trading. However, before this release there is likely to be a lot of action in the currency market. This is likely to be led by political and economic developments coming out of the U.S., Britain, and the Euro-Zone. If things continue in the same pattern for the JPY, then the USD/JPY currency cross may exceed 96.00 in tomorrow’s trading. Additionally, if Japan shows more negative economic data in the coming week, then it is likely to sink to new lows against its major currency pairs.

Oil – Oil Tumbles on Falling Demand

The price of Crude Oil tumbled $2.31 to $38.01 a barrel in yesterday’s trading, as OPEC foresaw demand falling faster than the cartel’s production cuts. OPEC has cut its oil production by several million barrels a day since September, and is expected to cut further when they meet again in March. One of the main issues that is affecting Oil’s volatility is the U.S. economy. It seems that the only way for Oil to make a mini-recovery is if the U.S. shows that it is resilient when it comes to the recession. However, facts on the ground seem to contradict this.

With over 500,000 Americans losing their jobs each month, the collapsing car industry, and with the closure of factories in the U.S., it seems unlikely that Oil prices will recover at all, at least in the next few weeks. This is increasingly valid as Japan, China, and the Euro-Zone are also increasingly feeling the heat of the global recession. It seems that only daily U.S. stockpile increases or a string of positive economic figures coming out of the U.S. may push-up Oil prices in the short-term. In the long-term, traders should look for a continuance of this steady price depreciation.

Technical News

EUR/USD

A bullish cross appears to be imminent on the 4-hour chart’s Slow Stochastic, signaling a bullish correction may take place shortly. However, a bearish cross may be forming on the hourly chart’s Slow Stochastic, indicating the opposite. Weekly momentum appears to be leveling which means the pair may lack direction at the moment. Waiting for a clearer signal might be the right choice today.

GBP/USD

It appears a bearish cross is imminent on the hourly chart’s Slow Stochastic, indicating a downward correction may occur soon. As the price begins to approach the over-bought territory on the 4-hour chart’s RSI, the downward correction becomes more imminent. Going short with tight stops might be the right choice today.

USD/JPY

This pair has recently entered a sustained upward trend. With the Slow Stochastic on the 4-hour chart indicating a bearish cross has recently formed, and the hourly chart’s Slow Stochastic signaling that one may be imminent, a downward correction may indeed be occurring in the near future. Going short with tight stops might be the preferable strategy today.

USD/CHF

After last Friday’s significant drop, the pair now appears to be in a steady uptrend. With the recent bearish cross on the 4-hour chart’s Slow Stochastic, a downward correction may be imminent. However, most other oscillators show a lack of direction. Waiting for the correction to finish its course then buying on lows may be the right strategy today.

The Wild Card – Oil

The price of this commodity appears to be floating in the over-sold territory on the hourly chart’s RSI, signaling an upward correction may take place later today. There appears to be a bullish cross forming on the 4-hour chart’s Slow Stochastic as well, which supports this notion. Forex traders should wait for a leveling off in the price of this commodity then anticipate the upward correction to earn large profits during this imminent price movement.

Forex Market Analysis provided by ForexYard.

© 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.

GCI Forex Research

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The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2565 level and was capped around the $1.2690 level.  Traders are talking about the Obama administration’s possible purchase of up to 40% of Citigroup’s shares.  Speculation remains rampant the government may decide to nationalize some U.S. financial institutions with Citigroup and Bank of America cited as the two top candidates. The government and Federal Reserve released a joint statement today that reiterates they will work together to make sure banks are sufficiently capitalized and said they will conduct stress testing beginning this week to see how well capitalized banks are.  Fed Chairman Bernanke will testify before Congress this week and the markets are looking for him to sound more optimistic than he did last week when he notes recent economic numbers have been “dismal.”  Data released in the U.S. today saw the Chicago Fed’s national activity index decline to -3.41 in the three months ending in January, its lowest level in 34 years.  In eurozone news, European Central Bank member Gonzalez-Paramo reported “Our focus is on price stability.  We have undone 30 months of rate increases in just three months. We have succeeded in anchoring inflationary expectations.”  Eurogroup Chairman Juncker reported “I don’t see the risk of member countries of the euro-zone defaulting. In any case, the member states which might be at risk know that they (are) responsible for dealing with their budgetary and economic difficulties. But this question is not an issue.  Responsibility is national when it’s a matter of avoiding risk of defaulting on payments otherwise the E.U. and the euro zone in particular has always managed to deal with emergencies of the kind you raise. But I do not see any imminent danger.”  ECB member Draghi reported “Action must focus simultaneously on the three pillars of fiscal, monetary and financial stability policies.  Worrying about getting too close to the lower limit for nominal interest rates cannot be a reason for inaction. Rapid disinflation must not be allowed to turn into deflation.” Euro bids are cited around the US$ 1.2475 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.95 level and was supported around the ¥92.75 level.  The yen was given across the board as traders priced in additional economic weakness in Japan with most economists estimating a very weak end to the fiscal year at the end of next month.  Many Japanese economic data will be released on Friday including retail sales, consumer price inflation, and industrial production data.  The Nikkei 225 stock index lost 0.54% to close at ¥7,376.16.  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 ¥121.90 level and was supported around the ¥119.05 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥139.10 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥81.80 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8355 in the over-the-counter market, down from CNY 6.8367.

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.

Canadian Retail Sales decreased sharply and fell by the most in over fifteen years in December according to the monthly report released by Statistics Canada today. Retail sales decreased by 5.4 percent to C$33.0 billion in December following a decrease of 2.4 percent in November. The decline in retail sales marked the largest fall since 1991 and surpassed the economic forecasts that were predicting a 2.7 percent decline for the month. Core retail sales, excluding automobile sales, fell by 3.2 percent in December following a decline of 2.3 percent in November. The decline in core sales also surpassed forecasts expecting only a 2.0 percent decline in December.

Contributing to the slide in the retail sales numbers was a decrease in the automotive industry as sales fell by 12.7 percent in December. Sales at gasoline stations decreased in December by 11.7 percent while sales at new car dealerships fell by 15.1 percent and marked its largest monthly drop since January of 1998. Also contributing to the downward slide in sales were decreases in building and outdoor home supply stores(-5.6%), clothing and accessories stores(3.7%) and furniture, home furnishings & electronics stores(-2.6%).

Canadian dollar mixed in currency trading.

The Canadian dollar has been mixed today in the currency markets against most of the major currencies. Today, the US dollar has gained ground versus the Canadian loonie dollar from today’s opening exchange rate of 1.2444 to trading at 1.2502 this afternoon in the US trading session at 4:19pm ET.

The euro has fallen versus the loonie in trading today as the EUR/CAD currency pair has declined from 1.6057 to trading at 1.5877. The loonie has gained ground against the Japanese yen as the CAD/JPY has advanced from 74.70 yen per loonie to trading at approximately 75.63. The Australian dollar has lost ground to the loonie as the AUD/CAD has fallen from 0.8079 to trading at 0.8024 today. The New Zealand dollar has also declined against the Canadian dollar as the NZD/CAD fell from its 0.6382 opening to trading later in the day at the 0.6347 exchange rate.

CAD/JPY Chart -The Canadian loonie advancing versus the Japanese Yen today in currency trading despite a dismal retail sales report released today.

by Tracy Lenyk

Forex Indicators to Watch

Currencies do not become weaker or stronger randomly. A large portion of a currency’s value is based on consumer confidence based upon the economic strength of the country. Economic strength is determined by certain key factors. These factors are closely watched in FX trading market. When these economic indicators change and the value of a currency will fluctuate accordingly. A countries currency represents the economic health of that country and the price is reflective in its currency.

Fundamental economic factors have become increasingly important market movers.When focusing on the impact that economic numbers have on price in the FX market there are 5 top indicators to watch. These indicators that we are about to discuss have a strong effect to generate volume and to move prices in the market.

Economic News Impacts The Short-Term Trading and The Long-Term.

The data itself is not as important as whether or not it falls within market expectations. Besides knowing when all the data is released, it is vitally important to know what economists are forecasting for each indicator. For example, knowing the economic consequences of an unexpected monthly rise in the Consumer Price Index. The actual, is not nearly as vital to your short-term trading decisions as it is to know that this month the market was looking for CPI to fall.

Analyzing the longer-term ramifications of an unexpected monthly rise in prices can wait until after you’ve taken advantage of the short term trading opportunities. Market expectations for all economic factors are public knowledge. You should be tracking these economic data indicators on an economic or forex calendar.

1.Payroll Unemployment

Strong job creation is a good indication of economic growth, as companies must increase their workforce in order to meet demand The unemployment rate is also a good measure of the strength of the labor market. One of the ways analysts gauge the strength of an economy is by the number of jobs created, and the percentage of workers unable to find jobs.

2. The Discount Rate FOMC Interest Rate Decisions

The Federal Open Market sets the discount rate, which is the rate at which the Federal Reserve Bank charges member banks for overnight loans. The rate is set during the FOMC meetings by the regional banks and the Federal Reserve Board. Lets take a further look at these two factors.

The discount rate is an interest rate a central bank charges depository institutions that borrow reserves from it. For example, the German Bundesbank offered a discount rate up to 1999 until interest rate policy was transferred to the Europen Central Bank.

A depository institution is a financial institution in the United States, such as a savings bank, that is legally allowed to accept monetary deposits from consumers. Federal depository institutions are regulated by the Federal Deposit Insurance Corporation (FDIC).

An example of a non-depository institution might be a mortgage bank. While licensed to lend, they cannot accept deposits.

The Federal Open Market Committee (FOMC), a component of the Federal Reserve System, is charged under U.S. law with overseeing open market operations in the United States, and is the principal tool of US national monetary policy(Open market operations are the buying and selling of government securities.) The Committee sets monetary policy by specifying the short-term objective for those operations, which is currently a target level for the federal funds rate (the rate that commercial banks charge on overnight loans among themselves). The FOMC also directs operations undertaken by the Federal Reserve System in foreign exchange markets, although any intervention in foreign exchange markets is coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.

There are 8 meetings scheduled per year. The dates are known in advance so mark them on your economic calendar and incorporate them into your forex trading strategies.

3. Trade Balance

The balance of trade measures the difference between the value of goods and services that a nation exports and the value of goods and services that it imports. A trade surplus results if the value of exported goods exceeds that of imported goods, whereas a trade deficit exists if imported goods exceed exported goods.

Generally this information is released around the middle of the second month following the reporting period. Again this should be apart of your trading strategies.

4. CPI – Consumer Price Index

The CPI is a key gauge of inflation, as it measures the price of a fixed group of consumer goods. Higher prices are considered negative for an economy, but since central banks often respond to price inflation by raising interest rates, currencies sometimes respond positively to reports of higher inflation. Below is a further explanation of CPI.

A consumer price index (CPI) is a measure of the average price of consumer goods and services purchased by households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics.

This information is released monthly.

5. Retail Sales

Retail sales is a measure of the total goods sold by a sampling of retail stores. It is used as a gauge of consumer activity and confidence as higher sales figures would indicate increased economic activity.

This information is released monthly

Happy trading.

http://www.forex-money-exchange.com

About the Author

http://www.forex-money-exchange.com. This website has forex articles, forex audios and forex signals

Source: ForexYard

Trading this past week of the EUR/USD was characterized by larger than normal price changes with the pair falling to a key support level and then dramatically rising. Traders this week are looking to gain from the continued bullishness in the pair amid tense market conditions that could continue through the middle of the week.

Economic News

USD – Mixed Signals coming from the U.S Economy are affecting the USD

Last week was an extremely volatile trading session for the greenback. The Dollar first depreciated against most of the major currencies, however just before the week ended, the USD saw bullish trends at all fronts, driving it back to former levels vs. the majors.

One reason that could explain the vexed trading is the contradicting economic publications that took place this week. On one hand the housing sector and the employment condition aren’t giving even the slightest clue that the economy is stabilizing. The Building Permits indicator dropped to merely 0.52M new residential building permits issued during January, and the Housing Starts indicator showed that only 0.47M new residential buildings began construction during January. Just to help you understand the severity of these figures, during June 2008, 1.09M new permits were issued, and 1.07M new buildings began construction. In addition, the weekly Unemployment Claims reveled that once again, over 600K people have filed for unemployment insurance for the first time. However, on the other hand, it seems that the price of goods and services in the U.S. is stabilizing. The Producer Price Index gave a surprising positive result, reflected in 0.8% rise in prices during January, and the Consumer Price Index rose as well, by 0.3%. The fact that producers are willing charge more, and that consumers are willing to pay more is one of the best signals to detect that the economy is getting healthier. However, one good month does not prove anything, and next few months will tell if the Obama administration is succeeding in stopping the financial crisis.

Looking ahead to this week, the most crucial publication could be on Friday when the Preliminary Gross Domestic Product for December will be announced and is forecasted by analysts to deliver a rather disturbing figure; it is predicted to decline by 5.4%. Such a result could lead to an angry trading day, just before the week ends. Until then, the Housing Sector indicator and the weekly Unemployment Claims should play the leading role in this week’s fundamental publications. Make sure you’ll watch closely after each of them if you want to make the biggest profits possible from this week.

EUR – EUR/USD Aims to Breach a Significant Resistance Price Level

The European currency underwent a jumpy weekly session. With the beginning of the trading week, the EUR strengthened against all the major currencies, however a batch of unfortunate publications has eliminated most of it. During last night, the EUR appreciated sharply against the Dollar and the EUR/USD is currently testing the 1.30 level.

Last week took off with an extremely surprising indication as the German Economic Sentiment dropped by 5.8 points, beating expectations for a 26.5 slide. Although the figure was still negative, it significantly better than expected and managed to spark a strong bullish trend for the EUR. However, by the end of the week both the French and the German economies have delivered some disturbing data. The French Manufacturing Purchasing Managers’ Index (PMI) dropped to 35.4 marks, failing to reach expectations for a 38.0. The German Services PMI declined to 41.6, well beneath expectations for a 45.0 mark.

As for this week, the most significant data expected from the Euro-Zone is the German Business Climate, published by the Institute for Economic Research. This indicator tends to have a massive impact on the market, and is expected to give an 83.2 mark. This forecast is well under the levels seen only few months ago, which were always above 100. Such result will probably support the current bearish trend of the EUR.

Other data to look after this week are the German Preliminary Consumer Price Index (CPI), the German Unemployment Change, and the European Core CPI. All are expected to deliver relatively positive result, which could very much initiate an uptrend for the EUR before the week ends.

JPY – Yen May Continue to Depreciate in the Long-Term

Last week the Yen continued to weaken against the major currencies. Its sharpest drop was against the EUR; however it saw bearish trends against the Dollar and the Pound as well.

Last week was filled with significant data economic data from Japan. The Japanese Preliminary Gross Domestic Product dropped by 3.3%. The contraction was the third quarter in a row of negative economic growth. This is the broadest measure of economic activity and as long as it continues to deliver negative figures, the JPY will most likely depreciate further. As expected, the Bank of Japan ruled to keep the Interest Rate at 0.10% – the lowest rate in the western world. It seems that the Japanese leaders will do anything they can to prevent the JPY from strengthening further. Traders should consider using this opportunity to open long-term short position on the JPY.

In the meantime, on Tuesday night the Japanese Trade Balance is expected to slide to -0.49T. The Japanese economy is largely dependant on its exports and such result is devastating for it. If this figure is accurate the Yen could drop sharply as a result. Also interesting will be the Japanese Retail sales and the Tokyo Core Consumer Price Index that will be published on Thursday night, and traders are advised to follow them.

OIL – Stock Markets Trends Dictate Crude Oil Prices

Crude Oil is continuing to trade around $40 a barrel. It appears that investors have correlated their investment on Crude Oil with the leading global stock markets. As long as the leading economies will continue to deliver worrying news that will damage equity markets, Crude Oil will probably retain its low price level.

In addition, Oil consumption predictions for this year are decreasing over and over again in light of the deepening global recession, and rumors that OPEC will decide to make another production cut has been circling once again.

This week traders should follow very carefully after data from the leading stock markets as they have proved to dictate Crude Oil prices lately.

Technical News

EUR/USD

The pair is in the midst of a very strong bullish trend, as it has just breached through the 1.2900 level. After a few failing attempts to test the 1.2940 level, the pair seems ready now to cross another psychological boundary. Should the breach occur, the pair will most likely see further bullish behavior

GBP/USD

The pair gained almost 150 pips since the weekend, and is now traded around the 1.4600 level. The bullish momentum was originated at the lower border of the Bollinger Bands, meaning that there is still more room left for this trend. Going long seems to be a good choice today.

USD/JPY

The 4 hour chart is showing that the pair’s bullish momentum is reversing itself, and has turned to be bearish. The bearish cross on the daily Slow Stochastic strengthens the pair’s downtrend, which might see a valid target price at 92.49.

USD/CHF

Ever since the pair reached its peak of over 1.1850, it’s been showing bearish momentum exclusively. As all oscillators on the hourly chart are providing bearish signals, a breach through the 1.1400 level will probably validate another downwards move, with the new possible target price of 1.1300.

The Wild Card – GOLD

Gold is in the midst of a very strong bullish move, as indicators are pointing up on the daily and the 4 hour chart. The Slow Stochastic on the hourly chart also points towards a current bullish momentum. In addition, there is a very distinct bullish channel forming on the daily chart, which strongly supports this bullish notion. This might be a great opportunity for forex traders to join a very promising bullish trend.

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 Markus Heitkoetter

People who want to profit from the market often ask experienced traders how they come up with their trading strategies. Newcomers are often overwhelmed by the amount of available data and are a bit mystified about how to navigate through it. But, even more often, they want to know how to develop a strategy that works consistently, and they expect to find “secrets” that brings them a stable profit. As I tell them, however, there is no crystal ball, no magical insight to be had on the market. Instead, I like to share with them three proven rules and habits that allow me to test my strategies and determine which to continue using.

My three rules are actually quite simple:

1. Learn to identify the direction of the market and follow it; that means that you buy when the market is going up and sell when the market is going down. 2. Always know when to exit a trade; specifically, remember to always place a stop loss and a profit target after entering a trade. 3. If you are using a trend-following strategy, find a trending market.

For the first rule, there are, of course, many ways to identify the direction of the market. You can use chart pattern recognition like Trend Lines, Head-and-Shoulder Formations, Flags, Pennants and so on. Other chart pattern techniques include candlestick formations like Hammers, Dojis, Dark Cloud Covers (quite an interesting name), Morning and Evening Stars and others. You can also use indicators like Moving Averages, Parabolics, MACD, Bollinger Bands and many others.

All these tools are designed to help you to identify the direction of the market, but none of them is “best.” They all serve slightly different purposes, and individual traders need to research them to know which is right for their own style and goals. However, once you feel confident that you’ve found a tool which gives you the direction of the market, you should simply follow it. Jesse Livermore said something more than 100 years ago which still applies today: “Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend.”

The second rule is also straightforward: as soon as you are in a trade, place a stop loss order and a profit target. Make sure that your profit target is larger than your stop loss, because then you will make money even if you just achieve a 50% winning percentage. You should even be able to do better. Setting these markers and sticking to them is key to ensuring that you don’t let your emotions get in the way of your preparation. Know when to accept a reasonable profit and when to cut your losses. Otherwise, you’re simply gambling and depending on luck, not a system that you can evaluate and depend on.

Third and finally, watch multiple markets and look for one that is trending. Not every market will always be profitable. Besides, it is trends, not markets, that make money for traders. For example, if the e-minis are not moving, check the currencies, or the grains, or oil, or gold. These days we have more electronic markets and tools than ever, and you shouldn’t have a problem finding a trending market.

Following those three rules should allow you test, clarify, and revise almost any strategy you come across or develop on your own. The most important thing to remember about all three rules is that they help you determine whether a strategy is consistently profitable. As long as you are making more than you are losing, you have a successful strategy, and following these three rules will help you stay focused on that outcome.

There’s nothing magic about finding a successful strategy. Many people like to make it sound more complicated than it actually is, and some newcomers have trouble accepting that it can be so simple, but it is. The key to trading success is to keep it simple.

About the Author

Markus Heitkoetter is the author of the international bestseller “The Complete Guide To Day Trading” and a professional day trading coach. For more free information on day trading visit his website http://www.rockwelltrading.com.

Consumer prices in the U.S. increased in January after falling for three months in a row according to a report released today by the U.S. Department of Labor. The Consumer Price Index increased by a seasonally adjusted 0.3 percent in January after falling by a revised 0.8 percent in December. Consumer prices had fallen by a record 1.7 percent in November and declined by 0.8 percent in October as energy prices came crashing down after registering record high levels in July 2008.

On an annual basis, consumer prices showed no change from the January 2008 level. Today’s data matched economic forecasts predicting a 0.3 percent monthly increase while the annual change slightly surpassed forecasts expecting an annual decline of 0.1 percent.

Contributing to the increase in consumer prices was a rise in the price for energy as the energy index increased by 1.7 percent in January. The gasoline index also rose by 6.0 percent in January after fallng by 19.3 percent in December. The energy index had declined for five straight months before January and is 31.4 percent lower than level of July 2008.

Core consumer prices, excluding food and energy prices, increased by 0.2 percent in January following no change in December. The annual change in core prices showed a 1.7 percent increase over January 2008 following December’s 1.8 percent annual increase. Market forecasts were predicting core inflation to register a monthly increase of approximately 0.1 percent and an annual increase of 1.5 percent.

US Dollar falling in forex trading near midday Friday.

The U.S. dollar has been under pressure in forex trading today against the major currencies so far today. The dollar has fallen against the euro, Australian dollar, British pound, Swiss franc, New Zealand dollar and Canadian dollar while trading slightly higher against 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 1.2592 opening exchange rate at 00:00 GMT to trading at approximately 1.2633 in the US trading session at 11:39pm EST.

The British pound has increased today versus the American currency from 1.4215 to trading at 1.4295 dollars per pound. The USD has declined against the Swiss franc from the 1.1800 opening to trading at 1.1771. The dollar has decreased against the Canadian dollar after opening at 1.2592 earlier today to trading at 1.2581 before noon.

The Australian dollar has also traded higher versus the USD as the AUD/USD trades at 0.6411 after opening today at 0.6394 while the New Zealand dollar has gained versus the USD and trades at 0.5063 after opening at 0.5038.

The dollar has advanced slightly against the Japanese yen today as the USD/JPY has gained from its 94.12 opening to trading at 94.28.

GBP/USD Chart – The British Pound advancing today against the US Dollar in Forex Trading and trading right below its 21-day simple moving average.

Source: ForexYard

The EUR/USD saw extremely high price volatility yesterday. When the pair reached its intra day high which coincided with the opening the New York trading session, it depreciated to its opening price for the day. Driving the appreciation for the Dollar was heavy losses in U.S. equity markets.

Economic News

USD – Dollar Volatility continues as Dow Hits 6-Year Low

The Dollar recorded another day of volatile trading on Thursday, as the U.S. equity market took a beating. The Dow Jones Industrial Average reached a six year low yesterday. One of the main reasons for this was the U.S. banking shares hitting a 17 year low. The shares of banks, such as Bank of America and Citigroup slid by 14% respectively. Equity markets can be used to measure the amount of risk in currency markets. This was reflected in yesterday’s trading of the USD.

Throughout the Japanese and European trading sessions, the EUR/USD steadily appreciated, touching on a high of 1.2759. But as the New York markets opened, the pair began a sharp reversal, ending the day near close to its opening level of 1.2591.

The Dollar also closed up vs. the Pound from 1.4269 to 1.4214. Britain’s currency is still very sensitive to developments in the U.S. This was also helped by a recorded swell in Britain’s money supply earlier today, and an increase in the U.S. PPI. Both of these therefore helped support the greenback. Against the JPY, the Dollar rose over 65 pips to close at 94.10 as investors continue to back the greenback’s safe-haven status vs. the JPY.

Traders are advised to pay close attention to Core U.S. CPI figures that are set to be published at 13:30 later today. The results of this may help keep the Dollar’s strength going into next week’s trading. It is also advisable to follow how Obama’s meeting with President Harper of Canada is displayed in the media prior to the opening of U.S. markets. The reason why this is important is because Obama spoke about his opposition of protectionism, contradicting his campaign remarks. Therefore, the Dollar may go bullish as investors realize he is even more of a capitalist than his Republican predecessor.

EUR – EUR Recovers from 3-Month Low against Dollar, then Reverses

The European currency made bullish gains against its major currency pairs in yesterdays trading. The most notable event in EUR trading was the European currency’s recovery against the USD as it hit a 3-month low in Wednesday’s trading. The EUR’s strength in early Thursday’s trading was owed to a number of factors, including German Finance Minister Peter Steinbruck tough rhetoric that Germany would back emergency measures to prevent the Euro-Zone economic situation from deteriorating further.

The EUR rose significantly but then reversed by nearly 160 pips against the USD to close at 1.2591. This was also helped by the Dow and U.S. banking stocks hitting lows not seen in over 6 years. The Pound lost over 60 pips against the EUR in yesterday’s trading to close at the 0.8858 mark. Some of this may be owed to Britain’s sensitivity to America’s weak banking sector. Against the JPY, the EUR rose by nearly 100 pips to close at 118.52. This comes about as Japanese equities declined and Japanese exporters reported that they may be shipping jobs abroad.

Today, there are many news events coming out of the Euro-Zone and Britain. From the Euro-Zone, investors are advised to follow the release of the Flash Services PMI and the Flash Manufacturing PMI figures set to be released at 9.00 GMT. Britain is set to release Retail Sales figures at 9.30 GMT. The results of these data releases may set the pace for the EUR and Pound going into the beginning of next week’s trading.

JPY – JPY Safe-Haven Status Comes under Threat

The JPY’s safe-haven status came under threat again yesterday, as Japan’s economy has become increasingly volatile to the global recession. Japanese equities slid yesterday as exporters reported more bad news owing to the strong Yen. Japanese carmaker Nissan said that it may export 130,000 jobs to Mexico. Additionally, the Yen also reacted negatively to the U.S. Stock Market dive, leading the Nikkei to dive 1.2% too. In the last few days of trading the Dollar has made some big gains against the JPY. This is mainly due to the fact that investors and forex traders are of the view that the Dollar will be the number 1 safe-haven currency during the current global recession.

The JPY dived against the Dollar by 60 pips to close at 94.10. The Yen lost over 100 pips vs. the EUR, marking its second straight loss against the European currency. Against the GBP, the JPY lost over 60 pips to close at 133.97. There is a possibility that the Yen’s behavior against its major currency counterparts in recent days may be partly owed to a correction in the value of the Yen. Therefore, this may not be as bad as it first seems. If things continue like this, however, then the Yen may help Japan’s economy recover quicker out of recession. Today, forex traders are advised to follow events coming out of Japan, the Euro-Zone, and the U.S., as these may help set a price level for the Yen against its major currency crosses going into the middle of next week.

OIL – Crude Oil Spikes on Better Inventory Data

Oil prices went to as high as $40.23 in yesterdays trading. However, by the close of trading the black gold was trading near $39.466, holding gains of nearly $2 from Wednesday’s closes. One of the main factors contributing to Oil’s gains was the U.S. Crude Oil Inventories Data. Crude stocks declined by 0.2 million barrels last week. Analysts had forecasted a rise in inventories by 2.9 billion. The other 2 factors that may have played in to Crude’s strength on Thursday were the Dollar’s weakness in early trading and a possible price correction in the black gold.

Crude prices may extend their gains today as investors may perhaps pursue take profits. This volatility of Oil in today’s trading is strongly dependent on Euro-Zone and U.S. data releases. Also, Crude may go bullish if investors feel that President Obama can handle the complex U.S. recession. The highest that Oil prices could reach by the end of today’s trading may be $41.00. If prices do hit this mark, they are likely to drop very quickly below $39 a barrel, as there is not enough confidence and physical demand to uphold this price level.

Technical News

EUR/USD

The Daily chart’s showing that the pair is still in bearish configuration. However, a bullish cross on hourly chart’s Slow Stochastic implies that an upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

GBP/USD

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.4220 level. The hourly chart’s Slow Stochastic is showing a fresh bullish cross suggesting that upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY

The bullish trend is loosing its steam and the pair seems to consolidate around the 94.15 level. The daily chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Going short with tight stops appears to be preferable strategy.

USD/CHF

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

The Wild Card – Gold

Gold prices rose significantly in the last month and peaked at $975 for an ounce. However, daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

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.