Forex Tips & Daily Analysis

U.S Prelim GDP Figure will Determine Today's Trend.

Today, traders are advised to follow constant daily development coming out of the U.S. economy, such as the release of Prelim GDP figure. This indicator might provide for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following this vital announcement at 12:30 GMT.

Economical News

USD

The U.S. Dollar traded weakly in yesterday's session as it witnessed depreciation against all of its currency rivals. Plunging toward the critical levels of 1.4000 against the EUR and 1.6000 against the GBP, the greenback's recent weakness doesn't appear to have an end in sight for today.

With an expectant worry that today's data releases will put investor focus on America's increase in debt issuance, thus resulting in a higher Treasury yield; the market may continue to go bearish on the USD. As expected, higher yielding assets and currencies like the EUR and GBP may then gain significantly from these speculations. Positive economic data in Europe throughout the week has also resulted in dramatic investment shifts towards a diversified portfolio for many traders who wish to increase their risk and pull away from safe-haven investments.

Looking forward to today, forex traders will no doubt be marking the multitude of European data releases as Britain's HPI housing report may show a sudden return to market weakness, and the Euro-Zone's M3 money supply report has the potential of showing a drop in the level of currency available throughout the European forex market. In the United States, the Preliminary GDP report is scheduled to be released at 12:30 GMT and may show the U.S. economy shrinking less than last quarter, a sign that the economy could be entering a solid recovery. With a focus on America's debt issuance, USD weakness is anticipated to continue throughout the end of the week.

EUR

The EUR has been the beneficiary of the market's recent increase in risk appetite considering it has appreciated against almost all of its currency rivals over the past week. The 16-nation currency climbed towards the psychological barrier of 1.4000 against the USD, temporarily breaching the resistance line before falling back under the mark. With the recent dash to sell off the JPY, the EUR apparently received the bulk of investor flight, climbing as high as 135.40 against the island currency.

With the surge of consumer confidence in some of Europe's largest economies, there exists a moderate level of hope in a speedy recovery for the Euro-Zone's regional economy. German market data has displayed a wide array of positive results which have helped convince many weary traders that the worst may indeed be over. In a rush to diversify trading portfolios for riskier assets, the EUR appears to have been one of the primary choices for this move. The question remains, however, as to whether this move towards Europe will continue. Some analysts say it marks the beginning of a recovery, but will not sustain itself at this pace in the short-term.

As for today, there are two important data releases which forex traders need to keep an eye on. The first is the Nationwide HPI report in Britain which may show the housing market declining once more. This report is scheduled to be released at 6:00 GMT. The second is the report on the M3 money supply in circulation throughout the Euro-Zone. With a direct correlation to interest rates, the money supply is an important gauge of currency valuation. With negative results, we could see a temporary reversal to the EUR's recent trends through the end of today's trading.

JPY

The Japanese Yen saw one of its most bearish sessions in months. Dropping back towards the 97.00 level against the USD, and the 155.00 level against the GBP, the island currency witnessed a rash sell-off in Thursday's mid-day trading sessions. There was a growing concern that Japanese equities were more resilient than previously forecast which led to an increase in risk appetite for many safe-haven investors. This generated an investment flight towards Europe in search of higher yielding assets. Some analysts believe the JPY-funded carry trade may be on the return, which will eventually push the value of the Yen towards the lows of 2007-2008.

As for today, there aren't many data releases expected from Japan. However, last night's consumer pricing reports indicated a decrease in price for Japanese goods and services, highlighting a weakened demand for these sectors of Japan's economy. This may also have generated a strengthened push to flee from JPY safe-haven investments. Unless news from the Euro-Zone or U.S. comes out highly negative throughout the day, the JPY will likely continue getting weaker.

Technical Analysis

EUR/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.3980 level. The pair currently sits near the upper border of the daily chart's RSI, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily 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.

USD/JPY

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

USD/CHF

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

Wild Card

Crude Oil

Crude Oil prices rose significantly in the last two weeks and peaked at $65.30 per barrel. However, the 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 Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4060	1.6055	97.05	1.0895	0.7980	0.8835
	1.4035	1.6030	96.85	1.0860	0.7960	0.8815
	1.4000	1.6000	96.60	1.0835	0.7930	0.8785
Support	1.3950	1.5925	96.00	1.0775	0.7870	0.8725
	1.3925	1.5900	95.75	1.0750	0.7840	0.8695
	1.3885	1.5870	95.45	1.0725	0.7820	0.8675

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2009-05-29	01:30	AUD	Private Sector Credit	m/m	0.1%	0.2%
		Private Sector Credit This is a measure of the overall credit provided to privately owned companies by financial institutions.
2009-05-29	05:00	JPY	Housing Starts	y/y	-20.7%	-21.8%
		Housing Starts This report is a measure of the number of new residential buildings which began construction during the previous month. It's a leading indicator of economic health because building construction produces a wide-reaching ripple effect. For example, jobs are created for the construction workers, subcontractors and inspectors are hired, and various construction services are purchased by the builder;
2009-05-29	06:00	EUR	German Retail Sales	m/m	-0.4%	0.3%
		German Retail Sales This report measures the value of domestic retail sales in the country. Traders pay close attention to this report because it is capable of surprising traders with early data on the state of the economy.
2009-05-29	06:00	GBP	Nationwide HPI	m/m	-0.4%	0.3%
		Nationwide HPI This indicator measures the change in the sales price of homes with mortgages backed by the Nationwide Building Society.
2009-05-29	08:00	EUR	M3 Money Supply	y/y	5.1%	4.5%
		M3 Money Supply Measures the annual change in currency outstanding. Higher levels of currency can have a devaluing effect on the currency.
2009-05-29	08:00	EUR	Private Loans	y/y	3.2%	2.9%
		Private Loans Measures the annual rate of growth of loans disbursed to the private sector.
2009-05-29	09:00	EUR	CPI Flash Estimate	y/y	0.6%	0.2%
		CPI Flash Estimate The Consumer Price Index's (CPI) Flash Estimate measures the inflation rate incurred by consumers when purchasing goods and services. It typically carries a significant impact as traders depend on this information for a glimpse into inflationary pressures and its impact on the nation's currency.
2009-05-29	09:00	EUR	Italian Prelim CPI	m/m	0.2%	0.2%
		Italian Prelim CPI This is a preliminary report which measures the change in price for goods and services purchased by consumers. It precedes Final CPI and is an accurate gauge of the country's inflation.
2009-05-29	09:15	EUR	ECB President Trichet Speaks		*	*
		ECB President Trichet Speaks Due to testify before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels;
2009-05-29	09:30	CHF	KOF Economic Barometer		-1.86	-1.80
		KOF Economic Barometer This is an index designed to predict the overall direction of the economy over the following 6 months. Also known as KOF Leading Indicators, or Konjunkturbarometer.
2009-05-29	12:30	CAD	Current Account		-7.8B	-10.4B
		Current Account The Current Account is a measure of the trade undertaken by the country. It factors into the Trade Balance and carries an impacton GDP. This is primarily a measure of the quarterly difference in value between imported and exported goods and services.
2009-05-29	12:30	USD	Prelim GDP	q/q	-6.1%	-5.5%
		Prelim GDP This report is a measure of the change in the value of all goods and services produced by an economy. It is a primary gauge of the economy's health.
2009-05-29	12:30	USD	Prelim GDP Price Index	q/q	2.9%	2.9%
		Prelim GDP Price Index Measures the change in the price of goods and services calculated in GDP. It acts as one of the primary tools used by the central bank to assess inflation.
2009-05-29	13:45	USD	Chicago PMI		40.1	42.1
		Chicago PMI The Chicago Purchasing Manager's Index (PMI) is a measure of the general health of the Chicago business sector. A number above 50.0 signifies that businesses are expanding; below 50.0 signals contraction.
2009-05-29	13:55	USD	Revised UoM Consumer Sentiment		67.9	68.0
		Revised UoM Consumer Sentiment The University of Michigan (UoM) releases this report which is a survey of consumer sentiment towards general business conditions and economic health.
2009-05-29	13:55	USD	Revised UoM Inflation Expectations		2.6%	-
		Revised UoM Inflation Expectations Measures the inflation of goods and services consumers are expecting over the next 12 months.