Data on tap - German IFO figures.
Economical News
USD
It has been a very strong day for the greenback yesterday regarding news events as both of the releases came out stronger than expected. The first release was the leading Index which measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The wide expectation for the release was 0.2% and the actual figure was 0.3%. The second new event was the Philadelphia Fed Manufacturing Index which came in almost three times stronger than expected at a rate of 18.0 whereas it was expected to come in at 7.5. The USD reacted well on most fronts as the EUR/USD went down to 1.3370, and the USD/JPY continued its ongoing rally. The GBP remained indifferent to the positive US news and did not show massive market movement.
As for today, the US calendar is empty and the volatility is expected to be very light, as the USD movement might be derived from markets outside the US.
EUR
Yesterday the EUR lost some ground against the greenback as better than expected US economic data rallied the US currency. Although the Eurozone Manufacturing PMI, which measures the activity level of purchasing managers in the manufacturing sector, released stronger than expected at 55.4 beating the expected figure of 54.5 the bullish momentum of the EUR slowed as it either weakened or range traded against the majors. Today the German IFO figures will be released at 0800 GMT and this is the most significant data to come out of the Eurozone in a relatively light news week. Market volatility is expected by traders especially since historically the performance of the EUR in the long term moves in close correlation to the IFO figures. The Business Climate Index is expected to come in at 108.4, dropping slightly from May's Figure of 108.6. The Business Expectations Index is expected to come out unchanged at 104.8 and the Business Situations Index is expected to drop to 112.0 from a previous figure of 112.5. The direction of the EUR today depends mostly on the release of the IFO figures as no other important news is expected and if these figures come out positive we may well see the European currency launch another rally.
JPY
Yesterday the JPY fell to a 4-1/2-year low against the greenback as carry trades were once again the name of the game. The Yen also fell to 15 and 16 year lows against the Australian dollar and the sterling, respectively. The main reason for the slide of the Japanese currency was the steady buying of foreign currency by new Japanese investment trusts drawing in funds from households receiving summer bonuses. The Bank of Japan is expected to raise interest rates as early as August to a 12-year high of 0.75 %, but the yen continues to suffer as Japan's interest rates at 0.5% are much lower than those for other major currencies. Total foreign asset holdings of investment trusts have surged by 5.725 trillion yen in the first five months which is placing the Yen under heavy downward pressure. Also the selling of investment trust funds for Japanese individual investors is set to continue this week which could keep the Yen on its bearish path.
Technical Analysis
EUR/USD
After dipping on the 1.3370 level, the pair now consolidates around 1.3390 with mixed signals on the daily studies. The hourlies are slightly bearish which indicates that selling on tops might be preferable today.
GBP/USD
The pair is range trading for several days after a very steady uptrend which seems to be calmer. The daily charts are heading north as the hourlies are unwinding from overbought levels and support the bullish notion. The next target price is 2.0000.
USD/JPY
The pair has made a significant move overnight, and is now trading very close to 124.00 and heading further north. The daily studies are very bullish, as the hourlies are rotating and will unwind soon to support the bullish move, probably to the direction of 124.40
USD/CHF
After losing height for 4 consecutive days the pair completed a positive trading day and now trades at 1.2410. Both dailies and hourlies are heading down, and it looks like the week will close around 1.2360.
Wild Card
GBP/JPY
The pair is trading at record levels of 246.90, as the steam appears to be very strong. There is still a great chance for forex traders to take a ride on a very impressive trend that has not yet accumulated its potential. The move is also being supported by fundamental research which indicates that the JPY might weaken further and the GBP is currently on a bullish trend.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
 |
|
|
|
|
| Weekly Trend | |
|
|
 |
|
|
| Resistance | 1.3510 | 1.9945 | 124.14 | 1.2514 | 0.8534 | 0.6843 |
| 1.3476 | 1.9899 | 123.78 | 1.2495 | 0.8500 | 0.6810 | |
| 1.3400 | 1.9849 | 123.50 | 1.2423 | 0.8478 | 0.6767 | |
| Support | 1.3315 | 1.9779 | 122.99 | 1.2360 | 0.8400 | 0.6700 |
| 1.3265 | 1.9753 | 122.50 | 1.2312 | 0.8367 | 0.6682 | |
| 1.3240 | 1.9625 | 122.23 | 1.2289 | 0.8334 | 0.6653 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 06/22/07 | 08:00 | EUR | German Ifo Business Climate Index | 108.6 | 108.4 |  | |
| 06/22/07 | 08:00 | EUR | German Ifo Business Expectations Index | 104.8 | 104.8 | | |
| 06/22/07 | 08:00 | EUR | ECB President Trichet Speaks | - | - | |