The trading week start calm and may end in a rumble.
Economical News
USD
On Friday, we saw weakness in Retail Sales, which is a very good gauge of future labor demand. Jobs data showed that the US economy added only 88,000 jobs in April, while the jobless rate rose to 4.5% from 4.4% in March. This data kept the dollar near record lows against the EUR in late April.
This quarter has been quite weak for the US economy. Growth has been below 2% while it seems that the Fed is quite comfortable staying on the side-lines. Monthly inflation has fallen 16% since 2002, near the lowest in 10 years.
The decline in the dollar has helped to firm the US trade deficit, the shortfall in the current account from a record of 7% in 2005. Thus, we believe that although in the long term, a weak USD should help the US economy and this help the USD strengthen; in the short term weakness in the labor market and relatively weak retail sales figures should keep the USD at record lows for the coming weeks.
EUR
The strength of the EUR is raising concerns as the slowing growth rate in Europe is starting to have an effect on inflation. But European officials are maintaining their stance that the strong currency will not drag down exports. It could also influence the ECB's decision of whether the next EU rate hike will be beyond the 4% level, so more cautious comments are expected from ECB President Trichet at next week's press conference which may provide more insight into the future of the EUR.
This week's economic calendar is light on news from Europe and the market has reacted by providing a very calm opening to the trading week. Traders should expect this to change as the day moves one, however, we do not expect and dramatic changes in the market and most traders are likely to change their stance as the week progresses
JPY
The Japanese market is expecting Japanese traders after the long Golden Week, which means the possibility high volatility. Now that Golden Week is out of the way, the coming hours could determine direction for the rest of the week.
As we can see, the Japanese calendar is light on news this week however, the release of the Bank of Japan minutes from the meeting earlier this month as well as the scheduled speeches by Fukui and Muto could deliver some volatility to this market.
Most of the currencies which are being traded against the JPY, have been trading in a very tight range for the past two weeks, and it looks it is going to change the path.
We expect that the JPY will become stronger against all the pairs.
Technical Analysis
EUR/USD
The pair seems to be continuing the local downtrend it has been establishing and the volatility is decreasing. The daily charts are bullish with hourlies sliding between bearish and neutral.
GBP/USD
GBP USD is in a range between 1,9850 and 2,0050.At the moment GBP USD moves without a trend,Daily charts are bearish as the hourlies unwind to confirm. Selling on dips might be a preferable strategy.
USD/JPY
A very distinct uptrend is forming on the 4 hour chart in the shape of a classic tight channel. The pair seems to have no reason to stop as the RSI and slow stochastic soundly confirm. Next target price is 120.50.
USD/CHF
USD CHF is in a range between 1,2080 and 1,2190. Dailies are signaling that the direction is definitely up but is contradicted by the hourlies which give mixed signals, USD CHF moves without a trend. It looks as if the pair will probably make a correction before moving on with uptrend into the 1.2200 levels.
Wild Card
NZD/USD
It looks as if a very clear downward channel is forming on the 4 hour chart, as the pair now floats on the upper level of it. upside potential in the New Zealand dollar looks promising in the short term. forex traders have a great opportunity to get into the downtrend in the right direction and at a good entry price for a short position.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.3662 | 2.0050 | 120.65 | 1.2160 | 0.8302 | 0.6893 |
| 1.3615 | 2.0030 | 120.45 | 1.2140 | 0.8285 | 0.6862 | |
| 1.3573 | 2.0010 | 120.34 | 1.2130 | 0.8270 | 0.6834 | |
| Support | 1.3580 | 1.9940 | 119.60 | 1.2080 | 0.8180 | 0.6800 |
| 1.3540 | 1.9920 | 119.30 | 1.2050 | 0.8154 | 0.6775 | |
| 1.3510 | 1.9905 | 119.00 | 1.2010 | 0.8132 | 0.6752 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 05/07/07 | 6:45 | CHF | Unemployment Rate | Apr | 2.9% | 2.8% |  |
| 05/07/07 | 11:00 | EUR | German Factory Orders m/m | Mar | 3.9% | -0.4% | |
| 05/07/07 | 13:30 | CAD | Building Permits m/m | Apr | -22.4% | 2.9% |  |
| 05/07/07 | 20:00 | USA | Consumer Credit m/m Rate | Apr | 3.0B | 4.2B | |