Friday, 3 Sep 2010

The euro and high-yielding currencies held firm on Friday after an improvement in U.S. housing and jobless claims data bolstered investor appetite for risk ahead of key U.S. jobs data today at 12:30 GMT.

• Forex Market Trends

Economic News

USD – Dollar Slips against the Euro and the Yen

The U.S currency was on the defensive Thursday, retaining most of the losses sustained the previous day when upbeat data helped lure investors away from safe-haven currencies and assets.

Figures released yesterday showed U.S. pending home sales rose unexpectedly in July and new claims for unemployment insurance fell for a second straight week, which, together with upbeat manufacturing data on Wednesday, eased the gloom over the U.S economy. That lifted stocks, commodities and higher-yielding currencies. However, investors hesitated to take fresh positions ahead of Friday’s monthly U.S. jobs report, analyst said.

EUR – EUR Gains for a 2nd Week Before Retail Sales Report

The euro headed for a 2nd consecutive weekly gain versus the U.S dollar before a European report that economists said will show retail sales rose for a 3rd month, spurring demand for the region’s assets. Retail sales in the euro area increased 0.2% in July, matching the previous month’s gain, according to economists’ estimations before today’s report.

Against the British pound the 16-nation currency traded near a 3-week high on speculation European Central Bank President Jean-Claude Trichet will tomorrow reiterate his comments that the region’s recovery is on track.

Market players said that given the fact that the euro zone economy has surprised to the upside, led by a robust recovery in Germany as this higher growth path is priced into the markets, the euro will likely gain further. The next target for the euro is around $1.287, the 38.2% Fibonacci retracement of its fall from its August peak of $1.3334 to its August low of $1.2588. And the target after that would be $1.2923.

JPY – Yen Trades Near 15-year High

The Japanese yen rose yesterday, extending its gains vs. the dollar after U.S. reports showed an unexpected increase in pending home sales, a decline in initial jobless claims and improved retail sales. The pullback in the dollar came even after a Japanese political candidate reiterated his call for direct currency-market intervention to stem the recently strong yen. Japan’s currency stood at 84.35 yen per dollar, up slightly on the day but not far from the 15-year low of 83.58 yen hit late last month.

A sharp drop in dollar/yen, such as 1 to 2% or more in a single day towards the 80 yen level and below, is seen as the most likely scenario that would prompt Japan to intervene and start to buy dollars. Thus many traders expect the market to test the willingness of Japan to intervene, especially if U.S. payrolls data comes in weaker than expected.

OIL – Crude Oil Declines on Forecast for U.S. Jobless Increase

Oil prices declined, headed for a weekly drop, amid forecasts that a U.S. government report will probably show the jobless rate rose in August for the first time in 4 months, signaling a recovery in fuel demand may falter.

Crude gave up some of yesterday’s 1.5 % gain as analysts estimated the August payrolls report from the Labor Department may show the U.S. economy lost 101,000 jobs. Oil prices rose yesterday after an explosion on a platform owned by Mariner Energy Inc. prompted speculation that tighter regulations will cut production.

Technical News

EUR/USD

A symmetrical triangle pattern has formed on the daily chart with the two of the three vertices beginning on August 18th and August 23rd. The chart pattern is characterized by the slope of the price highs and lows that are converging to form the outline of a symmetrical triangle. Technical indicators help to verify the consolidation pattern. The 20-day exponential moving average has flattened out; combined with a tightening of the Bollinger Bands and a lower Average True Range (14) indicate a decrease in volatility. Traders should wait for a breach of the triangle and target the short term resistance at the August high of 1.2930. A stop should be placed inside the triangle to protect against a false breakout.

GBP/USD

The pair has found support in the recent downtrend at the 100-day exponential moving average. A breach below the line could take the pair to the support at 1.5125. Resistance is found at the downward sloping trend line at 1.5470.

USD/JPY

Despite the slowdown in the depreciation of the pair, the downward trend continues. Support is found at the swing low on the daily chart at 83.60, with a long term target the all-time low for the pair at 79.70. Resistance is located at Monday’s high of 85.90.

USD/CHF

Downward pressure continues for the pair as the bearish trend shows signs of strengthening. Long term moving averages such as the 50, 100, and 200 day are downward sloping, indicating the trend is to the downside. Traders should be short with the first support at Wednesday’s low of 1.0065, followed by 1.0030.

The Wild Card

Gold

Gold prices continue their uptick, targeting the commodity’s all-time high at $1,265. The price looks to move higher with the 20-day exponential moving average sloping higher. CFD CFD traders should be long on gold with a protective stop below the support level at $1,231.

Thursday, 2 Sep 2010

Currencies like the euro and UK pound muted gains made yesterday as investors appear to be waiting on a batch of economic data set to be released later today. Signs that the global economic recovery is speeding up may be reinforced today as the UK, euro zone and US are all forecasted to release significant news. Traders can expect major market volatility today, and excellent opportunities to increase profits.

• Forex Market Trends

Economic News

USD – After Dramatic Losses Yesterday, USD Awaits Fresh Unemployment Data

Following better than expected US manufacturing data yesterday, risk taking returned to the marketplace and caused the greenback to slide against the majority of its currency rivals. Both EUR/USD and GBP/USD shot up over 100 pips.

In overnight trading, the USD pared most of its losses, trading relatively steady ahead of a volatile news session today. Currently, the EUR/USD is trading around the 1.2795 level, down about 15 pips from last night. Similarly, GBP/USD is down around 18 pips and is trading around 1.5440.

Traders will want to pay particular attention to the latest US unemployment claims figure today, as well as the Pending Home Sales report, set to be released at 12:30 and 14:00 GMT respectively. While unemployment is not forecasted to change significantly from last week, the figure is notoriously difficult to predict.

Should a better than expected figure come in, investor confidence will likely be boosted, leading to further losses for the buck. Predictions for the Pending Home Sales number are for a marked improvement over last monthly period. If true, traders can expect the USD to continue to slide.

Traders should remember that any trend in the market today is likely to dramatically change tomorrow with the release of the latest US Non-Farm Payrolls (NFP) figure. The figure consistently leads to market volatility and should be carefully paid attention to.

EUR – Euro Set to Extend Gains Today

Following a dramatic return to risk taking in the market yesterday, the euro saw significant gains against its major counterparts throughout the day. In addition to the dollar, the euro saw bullish movement against both the yen and Swiss franc.

The EUR/JPY jumped some 130 pips yesterday before staging a mild downward correction in overnight trading. Currently the pair stands at 107.60. The EUR/CHF moved up over 100 pips, and is currently holding onto its gains. The pair has been trading around the 1.3015 price level throughout the night.

Investors are eagerly awaiting the news from the ECB press conference, scheduled to take place at 12:30 GMT. While an increase in euro zone interest rates are unlikely, the press conference will provide an opportunity for the ECB to give any predictions regarding the current state of the European economic recovery. Any positive sentiment will likely help the euro extend its recent gains in afternoon trading.

In addition, euro pairs will likely be affected by the latest US Unemployment Claims figure. Better than expected unemployment data should lead to an increase in risk taking and boost the euro against its main currency rivals.

JPY – Yen Tumbles as Risk Taking Returns to Marketplace

The yen took dramatic losses yesterday against many of its counterparts as investor confidence in the global economic recovery boosted riskier assets. The GBP/JPY moved up some 100 pips throughout the day, and is currently trading around 129.95. Against the euro, the Japanese currency was able to recoup some of its earlier losses in overnight trading. The EUR/JPY has fallen about 50 pips in the last few hours, and is currently trading around the 107.60 level.

Today, should positive market news continues to be released, the yen will likely see further losses. Traders will want to pay attention to the ECB press conference, as well as the US Unemployment Claims and Pending Home Sales figures. At the same time, these events could very well disappoint, in which case a return to risk aversion may occur in afternoon trading. In that case, the safe haven yen could see a fairly profitable day.

Crude Oil – Crude Oil Prices Rise despite US Inventories Report

An increase in US crude oil inventories did not stop prices from increasing dramatically yesterday. Typically speaking, larger inventories mean that there is decreased demand in the US which causes prices to drop. This was not the case yesterday, as the weakened dollar helped boost commodity prices, including oil. Crude prices jumped over $2, and currently stand at $73.82 a barrel.

Today, crude oil prices will largely be based on whether risk taking persists in the marketplace. Should positive news from the euro zone and US be released, the greenback is likely to remain low against its main currency rivals. In this case, international demand for oil will increase, driving up prices. At the same time, should risk aversion return to the marketplace, crude oil may drop in afternoon trading.

Technical News

EUR/USD

The Bollinger Bands on the hourly chart appear to be tightening in anticipation of another consolidation point, which will likely precede another sharp movement. As a result, many of the technical indicators on this pair appear to be floating in neutral territory, the exception begin the weekly RSI which has the pair just entering the over-bought region. It appears this pair is expecting volatility which explains the neutrality of most indicators. However, the weekly chart’s RSI does suggest long-term downward pressure which makes short positions appear more favorable.

GBP/USD

The weekly chart’s RSI has the price of this pair floating in the over-bought territory since 3 weeks ago, suggesting a growing level of downward pressure. The recent bearish cross on the weekly chart’s Stochastic (slow) and subsequent downward movement on the oscillator also support this notion. Going short may be preferable today.

USD/JPY

This pair has broken through its 15-year low mark of 85.00 and currently sits about 80 pips lower. We would expect to see indicators pointing towards an upward correction and this is indeed the case, but only on the weekly chart. The weekly RSI has the price in the over-sold territory, but there are few other indicators to support an upward correction. It appears as if the larger picture of this pair is for a continuation of the downtrend.

USD/CHF

The price of this pair appears to be floating in the over-sold region on the 4-hour, daily and weekly RSI, suggesting strong upward pressure. Recent bullish crosses on the 4-hour and weekly Stochastic (slow) support this notion. Going long with tight stops appears to be the best strategy for the day.

The Wild Card

Gold

The price of this commodity appears to have pushed it into the over-bought region of the daily RSI, but has recently dropped a bit lower than the over-bought region’s lower border. We are now seeing the price beginning to correct back downwards. A bearish cross is also forming imminently on the weekly Stochastic (slow), suggesting that now may be a great entry point for forex traders interested in capturing fast profits before the weekend.

Tuesday, 31 Aug 2010

The Japanese yen made another bullish move against the majors as the steps taken by the Bank of Japan to weaken the yen only served to increase traders’ resolve to increase bullish bets on the Japanese currency.

• Forex Market Trends

Economic News

USD – Dollar Stronger Following Lower Equities

The dollar traded higher versus the euro and the pound but weaker versus the yen in illiquid trading conditions. Much of today’s trading revolved around negative sentiment for an increase in economic activity in the global economy.

The EUR/USD was trading lower at 1.2655 after opening the day at 1.2737. The GBP/USD was also down at 1.5470, from an opening day price of 1.5526. The USD/JPY was lower at 84.55 after opening at 85.38.

The US Commerce Department released a report showing that personal spending was in line with economists’ expectation of an increase of 0.4% over the previous month. However, US Consumer Income rose only 0.2% on expectations of a 0.3% increase.

The Dow Jones Industrials Average finished lower by 1.39% on light trading. The New York Stock Exchange recorded its lowest trading volumes of the year. Only 3.2B shares traded hands yesterday. On average over 5B shares are traded on a daily basis. August is known to be a slow month as many traders are away from their trading desks on vacation. Also not helping the volumes was a banking holiday in London. Low volumes allow for price movements to be exaggerated in illiquid trading conditions.

Consumer data will once again be back in the spotlight as the CB Consumer Confidence index will be released today at 14:00 GMT. The report carries significant weight as consumer spending makes up a majority of US GDP.

The EUR/USD has broken out from a bearish flag pattern and will likely test the support level at 1.2610. A breach below this line could send the pair to its next support level at 1.2465.

EUR – Euro Weaker on Light Volume

The euro was down across the board but fell significantly versus the Japanese yen. A lack of liquidity was seen in today’s trading as London banks were closed in observance of the summer bank holiday.

The EUR/GBP was down at 0.8180, after opening the day at 0.8202. The EUR/JPY was sharply lower at 107.08, from an opening day price of 108.76.

Driving the yen higher versus the euro was the market’s lack of enthusiasm towards the Bank of Japan’s program to expand liquidity by increasing loans to banks. Traders were looking for more concrete action by the BOJ to actively intervene in the currency markets to halt the strengthening yen.

Traders will be following the release of the German unemployment change due to be released at 09:00 GMT. Economists have forecasted a drop of 19K jobs over the previous month for Europe’s largest economy.

JPY – Yen Continues to Strengthen Despite BOJ Easing

The Bank of Japan’s (BOJ) attempt to stem the yen’s strengthening looks to be in vain as traders continue to bid up the Japanese currency. Continued risk aversion has traders moving into the yen as a safe haven, pushing the yen to a 15-year high.

The USD/JPY was down sharply at 84.55 after opening the day at 85.38.

The BOJ announced that it will offer Japanese financial institutions 10 trillion yen of loans in new 6-month loans at the basement interest rate of 0.1%. This comes on top of the 20 trillion yen 6-month loans the BOJ had previously been offering.

Despite the new policy that is mean to weaken the yen, the market did not react positively and continued to buy the yen. Traders will now be looking for direct intervention in the currency markets by the BOJ to weaken the yen. Until now, Japan’s tough talk and new liquidity provisions have not impressed the markets. The yen should continue to strengthen below its 15-year low versus the dollar at 84.00.

OIL – Crude Oil Snaps 3-day Win Streak

Spot crude oil prices fell yesterday as traders reduced their exposure to risky assets. This snapped a 3-day streak of rising prices for the commodity. Pushing the price of crude oil down were weak equity markets and lackluster consumer data released from the US.

The price of spot crude oil fell to $74.05, following an opening day price of $75.16. At one point in the day the price of spot crude oil fell to $70.77, the lowest price the commodity has traded since early June.

Traders will want to eye tomorrow’s CB Consumer Confidence index, along with Wednesday’s weekly crude oil inventory data. These two data pieces will be the main influencers this week. Traders should also be mindful of movements in the major equities indexes, such as the Dow Jones Industrials Average. Lately spot crude oil prices have been taking price moves from fluctuations in the equity markets. The next resistance level for spot crude oil rests at $75.50.

Technical News

The Wild Card

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Current Time: 08/31 04:00 GMT

#	Time	$€£¥	Event	Per.	Prev.	Fore.	Act.	Imp.
08/31
	05:00	JPY	Housing Starts	y/y	0.6%	2.5%	-
	06:00	CHF	UBS Consumption Indicator		1.81	-	-
	07:55	EUR	German Unemployment Change		-20K	-19K	-
	08:00	EUR	Italian Retail Sales	m/m	-0.3%	0.2%	-
	08:30	GBP	Net Lending to Individuals	m/m	0.6B	0.7B	-
	08:30	GBP	Final Mortgage Approvals		48K	47K	-
	09:00	EUR	CPI Flash Estimate	y/y	1.7%	1.6%	-
	09:00	EUR	Unemployment Rate		10.0%	10.0%	-
	09:00	EUR	Italian Prelim CPI	m/m	0.4%	0.2%	-
	10:00	EUR	Italian Monthly Unemployment Rate		8.5%	8.6%	-
	12:30	CAD	GDP	m/m	0.1%	0.2%	-
	13:00	USD	S&P/CS Composite-20 HPI	y/y	4.6%	3.8%	-
	13:45	USD	Chicago PMI		62.3	57.3	-
	14:00	USD	CB Consumer Confidence		50.4	50.7	-
	18:00	USD	FOMC Meeting Minutes		*	*	*
	23:30	AUD	AIG Manufacturing Index		54.4	-	-
09/01
		GBP	Halifax HPI	m/m	0.6%	-	-
		USD	Total Vehicle Sales		40B	-	-
	01:30	AUD	GDP	q/q	0.5%	-	-
	03:00	NZD	ANZ Commodity Prices	m/m	-0.8%	-	-

Monday, 30 Aug 2010

This week may provide the decision point for the USD. With Non-Farm Payrolls due this Friday, the uncertainty surrounding the American recovery will undoubtedly be made clearer. Today’s report on US personal spending at 12:30 GMT may provide a glimpse into other growth prospects before this week’s more important data releases get published.

• Forex Market Trends

Economic News

USD – USD’s Rise Slowing Prior to NFP Week

The rising value of the US dollar over the past week has begun to meet resistance against a number of currency pairs. The EUR/USD fell as low as 1.2600 on Friday, before returning to trade near 1.2745 in today’s early morning hours. The GBP/USD also hit as low as 1.5390 before popping back up to 1.5545 today.

The sudden rise in risk aversion was one explanation being offered for this most recent USD boost. The American economic recovery is currently being viewed as standing on shaky ground. Estimates are putting growth at lower figures than previously thought, and other data is not supporting the once optimistic signals towards growth. This has led many investors to temporarily shift away from riskier assets and seek safety in the dollar.

This week may provide the decision point for the USD however. With Non-Farm Payrolls due this Friday, the uncertainty surrounding the American recovery will undoubtedly be made clearer. Today’s report on US personal spending at 12:30 GMT may provide a glimpse into other growth prospects before this week’s more important data releases get published.

EUR – EUR Set for Gains; Market Awaits Clearer Direction

The EUR remains in bearish trading patterns against most of its rivals, except for the Japanese yen. The flight away from riskier assets as of late has convinced many investors to seek out safer assets. The EUR/USD currently trades around 1.2745, up slightly since Friday; the EUR/GBP trades near 0.8200 down a bit from last week.

Fiscal concerns continue to plague Europe and, despite forecasts for a sluggish economic recovery in the US, the euro zone remains categorized as too risky for many investors at this time. As such, the EUR continues to trade lower, but recent signals have indicated that risk appetite may be on the rise, with news about monetary easing in Japan and the potential for more positive employment figures from the US NFP report on Friday.

The euro zone will be absent from today’s economic calendar, making the US dollar today’s primary currency for investors. It isn’t likely that any of the major pairs will see sharp movements today or tomorrow, given that this week will experience very significant data releases on Wednesday and Friday. It is more likely that we should expect sluggish, thin trading environments until those releases.

JPY – Bank of Japan to Alter Monetary Policy; Yen Weakening

The Japanese economy has been brought sharper into focus this past week with news surrounding the speculation that the Bank of Japan (BOJ) will alter its monetary policies to help weaken the yen. It appears the BOJ has called for an emergency meeting this morning to discuss easing its monetary policy.

With the USD/JPY rising towards highs unseen in over a decade, Japan appears anxious to push back against its currency’s rising value but is hesitant in doing so. While the JPY continues to advance, the BOJ has appeared to have come to the decision to alter its policies and attempt a weakening of its currency before its export industries suffer any further. This morning’s policy statements by the BOJ will likely set the trend for the yen for the next few weeks.

Crude Oil – Oil Prices Rising on Market Optimism, Growth Forecasts

The price of spot crude oil has dipped as low as $71 a barrel this past week. However, as of this morning, news of a speculative drop in safe havens such as the USD and JPY has helped bring commodity prices back up slightly. The price of crude oil has rebounded back above $75 a barrel as a result.

Last week’s rising dollar was explained as being part of risk aversion. This week it appears as if risk aversion has begun to come to an end and the USD is expected to drop a fair amount. Optimism about a speedy recovery is back in swing and this has many speculators forecasting a rise in oil demand. If this speculation proves true then we should see oil prices reaching back towards $78 a barrel, if not higher, over the next few weeks.

Technical News

EUR/USD

A number of technical indicators are showing this pair is in overbought territory, indicating a downward correction could occur today. The Relative Strength Index on the 4-hour chart is approaching the upper resistance line, while the Williams Percent Range on the 8-hour chart is right at the -20 mark. Traders are advised to go short with tight stops today.

GBP/USD

Most technical indicators are showing the pair trading in neutral territory at the moment, which typically means that no major price shifts will occur today. That being said, the Relative Strength Index on the 8-hour chart is showing the pair in overbought territory, meaning the potential exists for a downward correction. Traders may want to take a wait and see approach today, as a clearer picture may present itself later on.

USD/JPY

There are a number of technical indicators showing that this pair is currently in overbought territory, meaning a bearish move is likely at some point today. This includes the Stochastic Slow on the 4-hour chart, which shows a cross has formed above the upper resistance line. In addition, the Williams Percent Range and Relative Strength Index on the 8-hour chart both show the pair as overbought. Traders are advised to enter into short positions today.

USD/CHF

Technical indicators are showing that the pair is in oversold territory, meaning upward movement may occur later in the day. The MACD on the 8-hour chart is showing a cross has formed well below the signal, while the Relative Strength Index on the daily chart is hovering right along lower support line. Traders are advised to go long in their positions today.

The Wild Card

Russell 2000

According to a number of technical indicators, the Russell 2000 has reached overbought territory and is likely to fall over the course of the next day. The Relative Strength Index on the 4-hour chart is hovering right over above the upper resistance line, while the Williams Percent Range on the 8-hour chart is currently well about the -20 level. CFD traders may want to enter into short positions today, as a bearish correction is likely to occur.

Friday, 27 Aug 2010

The US Prelim GDP, to be released at 12:30 GMT, is the primary publication today that is set to determine the level of the US dollar. The other main release that are is to dominate forex trading, especially for currencies, is the publication of the British Revised GDP at 8:30 GMT. Traders are also advised to follow Fed Chairman Bernanke’s speech at 14:00 GMT. This speech is very likely carry a higher than usual impact on Dollar volatility.

• Forex Market Trends

Economic News

USD – Dollar Falls on Increased Risk Appetite

The US dollar fell against most of its major currencies on Thursday, as gains in stocks and commodities prompted investors to wade into riskier currency trades. By yesterday’s close, the USD fell against the CHF, pushing the oft-traded currency pair to 1.0240. The dollar experienced similar behavior against the EUR and closed at 1.2720.

In addition, a slide in new US home sales and weak durable goods orders highlighted weakness in the US economy, but analysts said that such data has failed to stoke safe-haven demand for the dollar, as it did earlier in the month.

Another leading indicator released yesterday was US unemployment claims. This number handedly beat last week’s results 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.

Looking ahead to today, the most important economic indicator scheduled to be released from the US is the Prelim GDP at 12:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Fed Chairman Bernanke’s speech at 14:00 GMT. This speech is very likely to impact dollar volatility. Traders are advised to watch closely, as this is likely to set the pace of the dollar going into next week’s trading.

EUR – EUR Rises on Gains in European Shares

The EUR rose on Thursday as early gains in European shares, following a climb on Wall Street, indicated improving demand for riskier assets. As a result, the EUR hit a session high against the dollar at around 1.2745 before pulling back to around $1.2720. The 16-nation single currency experienced similar behavior against the GBP and closed at 0.8190.

European shares rose 0.8%, clawing back from a five-week low on forecast-beating results, although gains were capped after US data on Thursday raised concerns the world’s biggest economy risks sliding back into recession. That shift, just getting underway, could take the shine off the soaring EUR in the coming months.

Sentiment in the euro zone’s regional economy has brightened in the past week following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-euro crosses. It will be crucial for traders to identify how the preceding economic indicators from the US, European and Japanese economies will affect their positions.

JPY – Safe-Haven Yen Climbs vs. Rivals

The Japanese yen has strengthened against most of its major counterparts, continuing to prove that for the time being this is the solid currency that traders can rely on to provide them with steady profits. The yen extended gains versus the dollar on Thursday, to trade above 84.40 amid a broad sell-off in the USD. The JPY also saw bullishness against the EUR and closed at 107.30.

Investors worry about the rise in the JPY as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency. With steady gains, primarily against the dollar, much of the yen’s bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. This has had a positive effect on major JPY currency pairings, as the rising turmoil in the market is leading to more investment in the Japanese currency.

Crude Oil – Crude Oil Rises above $73 a Barrel

Oil prices extended gains to rise above $73 a barrel Thursday, as regional stock markets advanced and recent sharp losses in crude drew more buyers. Crude has fallen about 11.5% from around $82 a barrel early this month as more evidence of a slowing US economy suggested that demand for oil and gas would remain sluggish.

In addition, a weaker US dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the oil producers receive.

Technical News

EUR/USD

This pair appears to be providing mixed signals today. The shorter time frames are floating in neutral territory, giving no clear indication. The daily chart shows the price just exiting the over-sold territory on the RSI and Stochastic, while the weekly chart has what appears to be a recent bearish cross on the Stochastic (slow) and is now descending lower. Waiting for a clearer sign of direction may be wise today.

GBP/USD

The price of this pair has recently entered the over-sold territory on the hourly RSI, and seems to be just exiting the over-sold territory on the daily RSI. These notions, combined with a recent bullish cross on the hourly Stochastic (slow), seem to suggest that going long would be a reasonable tactic today.

USD/JPY

This pair continues to float within a distinct, long-term bearish channel. The weekly chart has begun to provide hints that the pair may correct upwards in the near future, however. The weekly RSI has the price sitting just on the border of the over-sold territory. The weekly Stochastic (slow) shows the same thing. This pair may be preparing for an upward movement, but for now the down-trend remains dominant.

USD/CHF

The price on the USD/CHF has recently entered the over-sold region of the daily chart’s RSI and may experience upward pressure in the near future as a result. This pair’s weekly chart also has the pair in the over-sold territory, and shows fresh bullish crosses on the Stochastic (slow), both of which support the notion of an impending upward movement. Going long may not be a bad choice today.

The Wild Card

Gold

After a few weeks of sustained upward movement, the price of Gold now appears to be gearing up for a downward slide. The daily RSI has the price floating in the over-bought region for some time now, suggesting strong downward pressure. The weekly Stochastic (slow) has almost formed a bearish cross, and will likely do so by the beginning of next week. This provides forex traders a great chance to call the reversal point on a precious commodity like Gold and ride out the downward movement for a healthy profit.

Thursday, 26 Aug 2010

Volatility was high today as the Japanese yen fell to its lowest level in the past 15 years. This has taken place as traders test the resolve of the Japanese government not to intervene in the currency markets to prevent a consistent rise in the value of the yen.

• Forex Market Trends

Economic News

USD – Dollar Trades Sideways

The US dollar was mixed today versus the majors, rising against the yen but falling versus the British pound and the Swiss franc. Traders are anticipating market intervention from both the Japanese and the Swiss central banks following the sharp appreciation of the yen and the franc.

The EUR/USD traded near its opening price of 1.2655. The GBP/USD was higher at 1.5480, from an opening day price of 1.5429. The USD/CHF was lower at 1.0300, after opening the day at 1.0315.

Highlighting the volatility in yesterday’s trading was the movement of the Dow Jones Industrials Average. The Dow was down by more than 100 points after global bourses were lower. Disappointing US data also sank traders’ sentiment following the release of core durable goods orders, which fell 3.8% on expectations of a rise of 0.6%. Poor housing numbers were also released as new home sales recorded only 276K on expectations of 333K. However, the Dow came back and by the end of the day closed up 0.2%.

Today traders will be following US weekly unemployment claims that are expected to post 488K new applications for unemployment benefits. Also on the calendar is the Federal Reserve’s Jackson Hole Symposium. The yearly meeting of central bankers may provide a forum for further debate of US monetary policy, including when to raise US interest rates that remain close to 0%. Support and resistance for the EUR/USD are found at the levels of 1.2470 and 1.2730.

EUR – When Will the SNB Intervene on Behalf of the Franc?

Traders are waiting for intervention from the Swiss National Bank (SNB) to halt the appreciation of the franc versus the euro.

The Swiss franc (CHF) continues to strengthen as the currency is typically used as a safe haven in times of economic stress. Yesterday the franc rose following disappointing US new home sales numbers and weak US core durable goods orders. The franc is currently trading at a high versus the dollar since January and a new all time high versus the euro.

To counter the rapid appreciation of the franc, traders are watching for signs that the SNB will begin selling francs to halt the rise of the currency. As of now, the SNB has not intervened. This has allowed traders to push the Swiss franc to new highs versus the dollar and the euro. Until the SNB intervenes, the bullish trend for the franc should continue, and the USD/CHF will target the 2010 low of 1.0125.

JPY – When Will the Bank of Japan Intervene on Behalf of the Yen?

Yesterday the yen found some relief from the appreciation the Japanese currency has experienced versus the dollar and the euro. But this should only be a temporary pause in the appreciation of the yen as the Bank of Japan inches closer to intervention in the foreign exchange markets.

The USD/JPY rose to 84.64, from an opening day price of 84.38. The EUR/JPY was also higher at 107.20, after opening yesterday’s trading at 106.79.

The Bank of Japan (BOJ) continues to ramp up its rhetoric for intervention in the currency markets. Finance minister Yoshihiko Noda is beginning to lose his credibility in his attempts to talk the yen down. As the verbal intervention appears to be failing, the BOJ is inching closer to actual intervention in the market or other possible steps of a monetary policy easing which would be considered a step of last resort to weaken the yen.

Crude Oil – Crude Oil Rises Despite Negative Inventory Data

The price of spot crude oil rose today despite sluggish equity markets and rising crude oil inventories. Crude oil prices finished higher on the day at $72.75, from an opening day price of $71.88.

The US Energy Information Administration released its weekly crude oil inventory level report that showed crude oil inventories rose 4.1M barrels. Market expectations were for a rise of only 0.1M barrels.

The rise in the price of spot crude oil was the first significant gain the price has made in the last 17 trading days. This sudden appreciation caught the market off guard going against the downward trend. Also adding to the confusion was the large rise in inventories, another sign that demand has yet to pick up.

The next support and resistance levels for spot crude oil trading are $70.75 and $74.15.

Technical News

EUR/USD

Many indicators on this pair appear to be floating in neutral territory, but the direction of these indicators all point upwards. The price has just left the over-sold territory on the daily RSI, suggesting that we may see upward momentum gaining in the days ahead. Going long may be preferable today.

GBP/USD

This pair seems poised for a steady downward movement. The hourly and weekly RSI has the price in the over-bought territory, highlighting downward pressure. The Stochastic (slow) on the hourly, 4-hour, and weekly charts all show fresh or impending bearish crosses. Going short may be wise today.

USD/JPY

Technically speaking we should expect to see upward corrections to the sustained downward movement we see on the USD/JPY. However, the technical evidence for such a move is lacking. Almost all indications are neutral, and the few which are not neutral are indeed showing a potential for further downward movement. For example, the 4-hour Stochastic (slow) currently shows a fresh bearish cross. It appears as if staying with the downtrend is the best choice in today’s trading.

USD/CHF

The price of this pair appears to have pushed the RSI of the 4-hour and weekly charts into the over-sold territory, suggesting upward pressure. A recent bullish cross on the weekly Stochastic (slow) supports this notion. Going long with tight stops could be a wise tactic today.

The Wild Card

CAD/CHF

The sharp downturn in this pair has resulted, at last, in the technical indicators showing potential for a correction. The 4-hour, daily and weekly RSIs all float in the over-sold territory and just recently a bullish cross formed on the daily Stochastic (slow). All of this evidence points towards a beneficial opportunity for forex traders looking for a great opening price at the low point of a movement. Going long on this pair now seems to have the most potential for profits today.

Tuesday, 24 Aug 2010

A consensus seems to be forming that risk aversion is returning to the market. Despite the sporadic release of positive data in various parts of the world, the overall trend appears to indicate a slow-down in recovery and growth. This has led to an increase in fears about the potential for a speedy recovery, which in turn has fueled the mass flight away from riskier assets and into the safety of the US dollar and Japanese yen.

• Forex Market Trends

Economic News

USD – US Dollar Making Strong Gains on Flight from Risk

The US dollar has been on the upside for the past several trading days. Against its primary rivals, the greenback has made modest growth. The EUR/USD pair has slid from its recent high of 1.2900 to currently trade just over 1.2600, and there doesn’t seem much in the way of slowing this movement. Against the British pound, the dollar has made remarkable gains to push the pair back towards 1.5400 from recent highs around 1.5700.

A consensus seems to be forming that risk aversion is returning to the market. Despite the sporadic release of positive data in various parts of the world, the overall trend appears to indicate a slow-down in recovery and growth. This has led to an increase in fears about the potential for a speedy recovery, which in turn has fueled the mass flight away from riskier assets and into the safety of the US dollar and Japanese yen.

Today’s news events from the United States are focused primarily on existing home sales and minor manufacturing data from the Richmond Federal Reserve office in Virginia; covering the District of Columbia, Maryland, North and South Carolina and the Virginias. Both of these figures are forecast to show a decline, which will likely feed the sentiment of risk aversion currently dominating trading, pushing the USD higher against its rivals.

EUR – Euro Positive Even in Adverse Market; But Will it Last?

The euro has recently made an upward movement against many of its currency rivals, except for the US dollar and Japanese yen. The 16-nation single currency gained over 130 pips against the British pound, and is currently trading at 0.8181. Against the Aussie, the EUR is up from a recent low of 1.4140, presently trading at 1.4230.

While the euro appears to have made some solid gains this morning, many analysts do not expect the momentum to hold. Sentiment in the euro zone has taken a dive from recent estimates showing an expected stall in regional and global growth. These pessimistic reports have begun to weigh on the euro, and this morning’s gains should be understood in that context.

Today’s news cycle appears to have only two important economic events emanating from the euro zone. The first is an industrial orders figure, which is expected to highlight the stall in economic growth with a weak reading. The second is a business sentiment report from Belgium which is also predicted to present a negative reading. This news only highlights the recent weakness of the EUR and potential for a reversal of recently earned gains.

JPY – Does Recent JPY Boost Raise Probability of BOJ Intervention?

The Japanese yen has made strong gains against all of its currency rivals these past few trading days. This growth is likely due to the sudden spike in risk aversion, similar to the growth being witnessed in the US dollar currently. Market forecasts, which have been consistently predicting a global slow-down, have scared investors away from riskier assets and back into the safety of the dollar and yen.

The result of this risk flight has been to pull the JPY in the direction of record highs against its counterparts, which only increases the possibilities of a Bank of Japan (BOJ) intervention. Speculation is running high at the moment, but with little news being released from Japan speculation seems to be the only game in town. For the time being, risk aversion and the safe-haven status of the yen appear to be in control of the JPY’s value.

OIL – Oil Price Persists in Downward Movement on Strengthening USD

The strengthening US dollar has been putting steady pressure on the value of commodities this past week. Spot crude oil prices have been falling since August 6th, and little news events appear to be capable of slowing this movement. Most forecasts this week are predicting a continued decline in market sentiment, pushing more and more traders into safety assets like the greenback. As a result, the price of commodities, such as oil, is expected to remain in a bearish pattern.

With the price currently hovering just under $73 a barrel, down from as high as $83 a barrel, the market would require a sharp reversal in recent data to bring the price of oil back towards the $80 mark. As already mentioned, without such momentum-shifting news, oil is likely to persist in its downtrend.

Technical News

EUR/USD

The pair continues to move lower, crashing through support at the 23.6% Fibonacci retracement level from the December to June bearish trend which lies at 1.2640. Yesterday’s low was set just above the 50% Fibonacci retracement at 1.2610 for the June to August bullish correction. Downward movement looks set to continue as the daily Momentum (14 ) is pointing to the downside. Supports of 1.2520 and 1.2470 should be tested in the near term. Resistance comes in at 1.2730.

GBP/USD

The Cable fell sharply yesterday, finding support in the area of 1.544 just above the 50-day exponential moving average. The pair looks to continue its move lower with a short term target the support level of 1.5330, the 38.2% Fibonacci retracement from the May low to the high in August.

USD/JPY

The bearish trend continues for the pair as yesterday’s trading ended with the pair at the 85.00 level. Selling opportunities may appear close to the 20-day exponential moving average. Traders should be targeting the near term low of 84.70.

USD/CHF

The USD/CHF cross experienced bullish behavior yesterday. However, there is technical data that supports a bearish move for today. The RSI of the daily and 4-hour charts indicates that the pair floats in the overbought territory, leading to the conclusion that a downward correction is imminent. Going short with tight stops may turn out to pay off today.

The Wild Card

Oil

Crude oil prices have dropped significantly in the last 3 weeks with a low at $72.75 per barrel. However, on the daily chart the RSI is floating in oversold territory which suggests that a bullish correction is impending. This might be a great opportunity for forex traders to enter the trend at a very early stage.

Monday, 23 Aug 2010

After four days in which the euro and British pound had dominated the market, the trend markedly reversed by last Thursday. Several negative economic reports from the U.S. have added to concerns regarding the global economic recovery, boosting risk aversion. Both the U.S. dollar and yen saw gains as a result. Will the dollar and the yen continue to strengthen this week as well?

• Forex Market Trends

Economic News

USD – Dollar Finishes Volatile Week with Green Signals

The U.S. dollar finished a rather volatile trading week with modest gains against most of the major currencies. The dollar began last week’s trading down about 150 pips against the euro, but eventually closed the session with a 70 pip gain. A similar trend took place against the British pound.

The dollar weakened against most of the major currencies until last Thursday, as reports showed that the U.S. economy is recovering faster than expected. The global demand for long-term U.S. financial assets rose in June from a month earlier as investors abroad bought treasuries and agency debt and sold stocks. Net buying of long-term equities, notes and bonds totaled $44.4 billion for the month, beating expectations for $36.3 billion, and well above $35.3 billion in May. In addition, the U.S. Producer Price Index (PPI) rose for the first time in 4 months in July. This has eased concerns for deflation in the U.S. and was interpreted as another signal that the U.S. economic recovery is advancing, and that a global recovery might quicken it’s pace as well. As a result, investors looked for higher-yielding assets, such as the euro and the pound.

However, disappointing data from the U.S. economy released on Thursday had turned the trend around. The weekly Unemployment Claims showed that 500,000 individuals filed for unemployment insurance for the first time during the past week, failing to reach expectations for 478,000 requests. In addition, the Philly Manufacturing Index showed that manufacturing in the Philadelphia region unexpectedly shrank in August for the first time in a year. These reports have crated uncertainty regarding the recovery of the U.S. economy, and as a result turned investors to open long positions on the safe-haven dollar.

As for the week ahead, many interesting economic releases are expected from the U.S. Traders are advised to focus on the Existing Home Sales, Core Durable Goods Orders, New Home Sales, weekly Unemployment Claims and the Preliminary Gross Domestic Product publications, as there are likely to have the largest impact on the dollar.

EUR – Euro Tumbles Due To Disappointing Data

The euro dropped against most of its major counterparts during last week’s trading session. The euro began last week with a rising trend, yet finished it with a 70 pip loss against the U.S. dollar and a 120 pips loss against the Japanese yen.

The euro fell last week as negative data from the euro-zone’s leading economies have increased concerns regarding the pace of recovery for the region. The German ZEW Economic Sentiment, a survey of German institutional investors and analysts who are asked to rate the 6-month outlook for Germany, dropped more than expected, and reached a 16-month low. This has been the 4th consecutive decline for this survey, suggesting that German economic growth may be slowing down. In addition, the euro-zone’s Current Account, an indicator which measures the difference between imported and exported goods and services was released with a negative figure, the 3rd in a row. The negative report has decreased risk-appetite in the market, and turned investors to look for safe-haven currencies such as the yen.

Looking ahead to this week, traders are advised to follow the major economic releases from Germany, as it is the biggest economy in the euro-zone. Special attention should be given to the German Business Climate report, which will also try to detect the German economic outlook for the next 6 months. This week’s euro trading will be largely affected by the result of this publication.

JPY – Yen Rises to 7-Week High Vs. The Euro

The Japanese yen rallied against most of the major currencies during last week’s trading session. EUR/JPY tumbled about 100 pips, causing the pair to hit a 7-week low. The yen gained about 100 pips against the British pound as well.

The yen strengthened last week as economic reports from the U.S. and the euro-zone have signaled that the global economic recovery is slowing. Reports showed that the unemployment situation in the U.S. continues to deteriorate, as 500,000 people have filed for unemployment insurance for the first time during the past week. The euro-zone has provided negative data as well, as the German ZEW Economic Sentiment report, which attempts to predict the economic outlook of Germany for the next 6 months, has declined for the 4th consecutive time.

The disappointing economic data from both the U.S. and the euro-zone are the main reason that concerns regarding the global economic recovery are taking place. These concerns are driving investors to open long position on the yen, which is considered to be a relatively safe investment. As long as the leading economies will continue to provide negative signals, the yen is likely to strengthen further.

As for this week, a batch of data is expected from the Japanese economy. Traders are advised to follow the Japanese Trade Balance and the Tokyo Core Consumer Price Index, as these reports tend to have a large impact on the yen.

OIL – Crude Oil Drops To $73.45 a Barrel

Crude oil continued to tumble during last week’s trading session. A barrel of crude oil was trading at around $75.70 at the beginning of the week, and eventually dropped to around $73.85 a barrel by Friday.

The main reason for crude oil’s decline seems to be the negative data from the U.S, the biggest oil consuming nation. The weekly Unemployment Claims rose by 12,000 to 500,000 in the past week, the highest figure since November 2009. In addition, the Federal Reserve Bank of Philadelphia said that its general economic index slipped to -7.7 on August, also signaling a possible contraction of the U.S. economy. It seems that as long as the U.S. economy continues to provide negative data, demand for gasoline in the U.S. is likely to decrease, and as a result crude oil prices will continue to decline.

Looking ahead to this week, traders are advised to continue following the major economic updates from the U.S. and the euro-zone, as these seem to have the largest impact on oil prices. Most significantly, traders should follow the U.S. Crude Oil Inventories report, scheduled for Wednesday, as this publication tends to have an instant affect on crude oil prices.

Technical News

EUR/USD

The pair has been experiencing some very bearish behavior in the past week, as it currently stands between the 1.2700-1.2730 levels. The main oscillators of the daily chart indicate this trend may continue into the near future. However, the 4-hour Slow Stochastic reveals that a bullish cross is about to occur anytime soon, indicating that a bullish correction may be imminent. Now may be a ripe time to take advantage of the situation at an early stage.

GBP/USD

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

USD/JPY

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

USD/CHF

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 prices have been increasing rapidly lately, as they stand at over $1229per ounce. The 1-day and 1-week chart shows that this bullish trend is set to continue. This is also supported by the 1-hour and 4-hour MACD oscillator. It may be a wise move for forex traders to enter this very popular trend.

Friday, 20 Aug 2010

The Dollar advanced against most of its major counterparts Thursday as unexpectedly weak U.S. employment and manufacturing data weighed on stocks and other riskier assets, prompting investors to seek the relative safety of the greenback and Japanese Yen.

• Forex Market Trends

Economic News

USD – USD Gains on Poor Employment Data

The U.S. dollar gained versus most of its counterparts Thursday as negative economic data deepened concerns that the country’s recovery is stagnating, sending investors to the safe haven USD and Japanese yen.

Disappointing U.S. employment and manufacturing data weighed on equity markets as well as riskier currencies which are tied to global growth, such as the Australian, New Zealand and Canadian dollars.

U.S. initial unemployment claims disappointed this week, rising 12,000 claims above expectations to 500,000 in the week ended Aug. 14, the highest level since Nov. 14 last year. The disappointing data intensified fears that the country’s already weak labor market is deteriorating further. Later in the day, the Philadelphia Fed index fell to -7.7 in August compared to 5.1 in July, and on economists’ expectations of an advance to 7.0.

The rise in claims was particularly troubling as no seasonal factors, like the hiring and firing of temporary workers for the 2010 Census, affected the recent employment results. Economists expected employment data to pick up in recent weeks.

With no major news released from the U.S. or euro zone today, investors should follow any movements in equity markets as these tend to have a major effect on the USD.

EUR – EUR Declines on Economic Growth Concerns

Renewed concerns about global economic outlook, brought on by disappointing economic data from the U.S. and comments by euro zone officials, spurred risk aversion in the markets and weighed on the 16-nation common currency.

Late Thursday, the euro was at $1.2820 from $1.2860 late Wednesday and at Y109.40 from Y109.87. The U.K. pound was little changed at $1.5606 from $1.5605; however, in today’s early trading the GBP has declined below $1.5600 and is trading near the $1.5885 level.

Investors are concerned that austerity measures taken across the region earlier this year in response to the sovereign debt crisis will hamper the regional economy’s growth and subsequently its economic recovery. This may also put lasting downward pressure on the euro as markets tighten up during downturns.

JPY – JPY Rises as Investors Turn to Safety

The Japanese yen rose to a 7-week high against the euro on signs the global economic recovery is slowing, turning investors to the safety of the Japanese currency as a refuge. The yen appreciated versus 15 of its 16 major counterparts after the release of disappointing U.S. economic data Thursday which showed that filings for U.S. unemployment benefits were more than forecast last week and a gauge of manufacturing in the Philadelphia region unexpectedly fell.

Japan’s currency climbed to 109.09 per EUR in today’s early trading from 109.49 in New York yesterday, after reaching 109.02, the highest level since July 1. The JPY rose to 85.24 per USD from 85.39 yesterday.

Weighing on the JPY is recent talk about possible intervention by Japan to stop the appreciation of the yen that is hurting Japanese exporters. Japan’s economy is heavily reliant on exports and, therefore, its fragile economic recovery. A strong yen can curtail the Japanese recovery.

Crude Oil – Crude Decline on Negative U.S Economic Data

Crude Oil futures prices settled at a 6-week low Thursday, hurt by disappointing U.S. economic data which was released Thursday as well as the highest inventories in nearly 27 years. U.S. initial claims for unemployment benefits rose by 12,000 in the week ended Aug. 14. Economists had forecast a drop of 4,000.

Claims totaled 500,000 in the week, the highest number since 14 Nov. 2009. Further disappointing data came from the manufacturing industry with the Philadelphia Fed index falling to -7.7 in August compared to 5.1 in July.

Light Sweet Crude Oil for September delivery on the New York Mercantile Exchange settled down 99 cents, or 1.3%, at $74.43 a barrel, the lowest price since July 7. The contract, which expires at today’s settlement, has fallen from a 3-month high near $83 a barrel on Aug. 4.

Technical News

EUR/USD

This pair appears to be floating in a sideways range between 1.2775 and 1.2900, with a current price just above the lower border. As expected, the indicators are showing an expectation for an upward move in line with this range trading behavior. The RSI on the hourly and daily chart both show the price in the over-sold region. It seems going long might be a wise choice today.

GBP/USD

This pair seems to be floating in a range between 1.5525 and 1.5675 with the current price sitting in the middle of this range. Most of our indicators seem to suggest the next movement may be in an upward direction. The RSI on the hourly and daily chart show the price being over-sold, and we have a fresh bullish cross on the daily chart’s Stochastic (slow). Going long may not be a bad idea today.

USD/JPY

This pair has been trading within a bearish channel since early May and our indicators seem to suggest that this will not likely change anytime soon. We do, however, have a recent bullish cross on the weekly chart’s Stochastic (slow) which may be hinting at longer-term corrective pressure, but with all other indicators neutral it is hard to tell. Going with the prevailing trend may be preferable in this situation.

USD/CHF

There appears to be a fresh bullish cross on the weekly chart’s Stochastic (slow), suggesting some moderate upward pressure over the long-term. The price also floats in the over-sold territory on the RSI of both the weekly and 4-hour chart, supporting this notion. Waiting for the price to swing back upward and then going long may be a strong tactic in these circumstances.

The Wild Card

Crude Oil

After the significant drop in oil prices yesterday, we see some strong signs of corrective pressure. The daily chart’s RSI has the pair floating in the over-sold territory, and the Stochastic (slow) appears to show an already-elapsed bullish cross which has turned upward into neutral territory. The momentum appears to favor that forex traders go long and take hold of this swing while the upward momentum holds.