Forex Tips & Daily Analysis

Higher Yielding Currencies Maintain Bearish Trend.

Higher yielding currencies, namely the EUR and AUD, remained bearish during European trading yesterday, as fears that Greece will have to leave the euro-zone led to risk aversion in the marketplace. Investors are now worried about what the possible effects of a Greek exit from the euro-zone would be for other indebted countries, including Spain and Italy. Today, traders will want to note that there is a bank holiday in France, Germany and Switzerland. That being said, news out of the US may lead to market volatility. The Unemployment Claims figure and Philly Fed Manufacturing Index are both forecasted to show US economic growth. If true, the USD could see gains during the afternoon session.

Economical News

USD

The dollar was able to benefit yet again from risk aversion in the marketplace yesterday, as worries about the Greek political situation caused investors to abandon higher yielding assets. The EUR/USD dropped to a fresh four-month low during the morning session, reaching 1.2679 before staging an upward correction. The pair eventually peaked at 1.2758. The greenback also saw gains against the Australian dollar. The AUD/USD fell as low as 0.9868 before moving upward during mid-day trading.

Turning to today, dollar traders will want to pay attention to the US Unemployment Claims figure at 12:30 GMT, followed by the Philly Fed Manufacturing Index at 14:00. Despite a lack of overall growth in the US labor market in recent months, the number of people claiming unemployment insurance in the US has remained relatively steady. Should today's news come in below the forecasted 368K, the greenback could see gains vs. its main rivals. With regards to the manufacturing index, analysts are predicting the news to come in at 10.3, well above last month's figure. If true, the USD/JPY could turn bullish as a result.

EUR

The possible effects of a Greek exit from the euro-zone sent the common currency to fresh lows against several of its main rivals during trading yesterday. In addition to the EUR/USD, which hit a four-month low, the EUR/JPY dropped to its lowest level in three-months. The pair dropped to 101.89 at the beginning of the European session before staging a mild correction and stabilizing at 102.40. The euro had better luck against the British pound, following a warning from the Bank of England Governor that the euro-zone crisis could impact growth in the UK. The EUR/GBP advanced close to 60 pips, reaching as high as 0.8006 during the afternoon session.

Turning to today, euro traders will want to continue monitoring any announcements out of the euro-zone. Analysts are warning that the currency still has the potential to sink further as long as the prospect for a Greek exit from the euro-zone exists. Furthermore, the possible negative effects the current political crisis can have on other euro-zone countries, notably Spain and Italy, may result in additional risk aversion in the marketplace, which could cause the euro to fall further.

JPY

The USD/JPY advanced close to 30 pips during European trading yesterday, reaching as high as 80.54. The dollar was able to benefit from better than expected news out of the US, which placed the currency well above the psychologically significant 80.00 level. The yen also took losses against the Australian dollar. The AUD/JPY was up over 80 pips during mid-day trading, reaching as high as 80.15 before staging a slight downward correction.

Turning to today, JPY traders will want to pay attention to news out of the US, specifically the Philly Fed Manufacturing Index. The index is forecasted to show significant growth in the US manufacturing sector. If the indicator comes in at or above the forecasted 10.3, the yen may fall further against its US counterpart.

Technical Analysis

EUR/USD

Most long-term technical indicators place this pair in oversold territory, indicating that upward movement could occur in the near future. The Williams Percent Range on the weekly chart is currently at -90, while the daily chart's Slow Stochastic has formed a bullish cross. Traders may want to go long in their positions.

GBP/USD

While the daily chart's Slow Stochastic has formed a bullish cross, most other technical indicators place this pair in neutral territory. This includes the weekly chart's Relative Strength Index and MACD/OsMA. Taking a wait and see approach may be the wise choice for this pair.

USD/JPY

The Williams Percent Range on the daily chart has drifted into overbought territory, indicating that this pair could see downward movement in the near future. Additionally, a bearish cross on the weekly chart's MACD/OsMA has formed. Traders may want to go short in their positions.

USD/CHF

A bearish cross on the daily chart's Slow Stochastic indicates that this pair could see downward movement in the near future. Additionally, the Relative Strength Index on the same chart is currently in the overbought zone. Opening short positions may be the wise choice for this pair.

Wild Card

AUD/CAD

The Williams Percent Range on the daily chart is currently in oversold territory, indicating that upward movement could occur in the near future. Additionally, a bullish cross on the same chart's Slow Stochastic has formed. This may be a good time for forex traders to open long positions ahead of a possible upward correction.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.2853	1.6023	81.18	0.9469	1.0071	0.8114
	1.2811	1.5972	80.69	0.9430	1.0024	0.8069
	1.2784	1.5946	80.38	0.9401	0.9995	0.8034
Support	1.2715	1.5899	79.87	0.9355	0.9948	0.7986
	1.2680	1.5867	79.54	0.9321	0.9917	0.7948
	1.2647	1.5818	79.06	0.9299	0.9869	0.7915

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2012-05-17	01:00	AUD	MI Inflation Expectations		3.3%	-
		MI Inflation Expectations Measures the percentage change which consumers expect for the price of goods and services over the next year.
2012-05-17	04:30	JPY	Revised Industrial Production	m/m	1.0%	1.1%
		Revised Industrial Production This report measures the change in the value of manufacturing output from mines and utilities, after being adjusted for inflation. It acts as a leading indicator of economic health.
2012-05-17	11:00	GBP	MPC Member Weale Speaks		*	*
		MPC Member Weale Speaks External BOE MPC Member Martin Weale is due to testify on his appointment as MPC member before the Treasury Select Committee, in London.
2012-05-17	12:30	CAD	Foreign Securities Purchases		12.50B	9.34B
		Foreign Securities Purchases This report is a measure of the month-by-month value of debt, domestic securities,and assets purchased by foreigners. It is a leading indicator of foreign investment in domestic securities.
2012-05-17	12:30	CAD	Wholesale Sales	m/m	1.6%	0.4%
		Wholesale Sales It measures the total value of sales at the wholesale level. An increasing value can help to appreciate a currency as rising deman in wholesale sales may lead to increased consumer sales and overall economic growth.
2012-05-17	12:30	USD	Unemployment Claims		367K	368K
		Unemployment Claims An indicator which measures the number of individuals who filed for unemployment insurance with the government for the first time during the past week. This is one of the earlier releases of economic data.
2012-05-17	12:30	USD	Treasury Sec Geithner Speaks		*	*
		Treasury Sec Geithner Speaks Treasury Secretary Timothy Geithner is due to speak today. His speeches can carry an impact on the market for dollars so traders must prepared.
2012-05-17	14:00	USD	Philly Fed Manufacturing Index		8.5	10.3
		Philly Fed Manufacturing Index Level of a diffusion index based on surveyed manufacturers in Philadelphia.
2012-05-17	14:00	USD	CB Leading Index	m/m	0.3%	0.1%
		CB Leading Index This index measures consumer confidence based on a number of leading economic indicators. Its impact is usually very low as these indicators are released individually at another time.
2012-05-17	14:30	CAD	BoC Review		*	*
		BoC Review This report includes articles related to the economy and central banking, written by analysts from the Department of Monetary and Financial Analysis about general economic health and the conditions of the Canadian financial sector.
2012-05-17	14:30	USD	Natural Gas Storage		30B	25B
		Natural Gas Storage This figure measures the change in the number of cubic feet of natural gas held in storage by this country from week to week. It has a moderate impact on the price of fuels, but provides mixed results for investors.