Forex Tips & Daily Analysis

Economical News

USD

The Greenback was pushing forward a bit stronger yesterday after the FOMC decision to keep the Interest Rate unchanged at 5.25%. The positive effect was mostly felt against European currencies, in contrast to the JPY which had an opposite effect and took the USD a bit lower. The Rate decision was widely expected to remain unchanged, and demonstrated the Fed's opinion regarding the inflation stating: “readings on core inflation have improved modestly in recent months". The Fed also showed a bit of concern for future unfolding of inflationary policy by saying: “predominant policy concern remains the risk that inflation will fail to moderate as expected”.

The second focus point yesterday was the release of the GDP Annualized Revision that came in a bit weaker than expected at 0.7% with a 0.8% consensus. The GDP Deflator on the other hand came in stronger than expected at 4.2% with a consensus of 4.0%.

As for today, there is several important news events expected to be released, starting with the Core PCE Price Index, which is expected to be released at 13:30 GMT at a rate of 0.1%. The Core Personal Consumption Expenditures Price Index measures the rate of inflation experienced by consumers when purchasing goods and services, excluding Food and Energy. Like the CPI, it reflects the price change in consumer goods and services. The PCE differs slightly from the CPI in that it only measures goods and services targeted towards and consumed by individuals. Food and Energy account for roughly 25% of PCE, but they can be very volatile from month to month and can distort the overall picture. PCE with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend.

A bit later at 13:45 the Chicago PMI is expected to be released at 58.0 after coming in at 61.7 last month. The Consumer Sentiment will be released at 14:00 GMT and is expected to come in at 83.9 which is a slight increase from last month's 83.7.

It looks as if the Greenback will maintain a certain amount of stability until the market closes, preparing the grounds for next week's session, which is expected to provide more price action, especially towards the end of it, with the Monthly Job Report.

EUR

The main economic news that released yesterday from the European markets was the German Consumer Price Index. This indicator released at 0.1 % which was lower than the previous and forecasted figure of 0.2 %. Also in other news from the Eurozone the M3 money supply grew 10.7 % in May year on year, up from a 10.4 % year-on-year growth rate in April. The European Central Bank said yesterday that the three-month moving average M3 year-on-year growth rate was 10.7 % in the March-May period, compared with 10.4 % in February-April. This rise in money supply indicates that inflation still poses a concern for the European market. The EUR lost some ground against the greenback yesterday but it seems to be holding relatively steady against the majors with some brief dips. Today no market moving news is expected from Europe so EUR movement will be dollar centric.

JPY

Yesterday the JPY lost further ground falling from the 123.18 level to around the 123.36 mark against the USD and it and the Japanese currency also suffered losses across the board. The Yen decline was further sparked by dropping consumer prices which is adding to the belief that the BoJ will leave its very low interest rate unchanged. This sentiment further fuelled carry trades causing the JPY to weaken and it suffered its greatest loss against the Aussie dollar which has an interest rate that is 5.75% higher than the yen. The yen has been on a slippery slope since the beginning of the year and it is now targeting its biggest quarterly loss against the greenback since 2001. The Tokyo Core CPI released in negative territory at -0.1% and the headline figure also came in below expectations at -0.2%. Today the JPY should continue on its bearish path against the majors as the current market sentiment is backing carry trades and there is no indication of carry trade unwinding in the near future.

Technical Analysis

EUR/USD

The pair is floating at the 1.3430/1.3470 range for a while now; these are the 62.8% and 76.4% Fibonacci levels of the 1.3534/1.3260 move. The daily studies are slightly bearish, and if a break beyond the 1.3400 level occurs, we might see a larger bearish move towards the 1.3360 level.

GBP/USD

The cable is in the midst of a very bullish trend and appears to be eyeing the 2.0100 levels again. The right direction seems to be up with slight caution due to overbought hourlies. Buying on dips might be preferable.

USD/JPY

After a small correction down to the 122.20 levels, the pair is regaining the momentum up and it looks as if the next target price is 124.00 again. The daily charts are bullish, and the hourlies are now unwinding to support the bullish notion.

USD/CHF

After bottoming at the 38.2% Fibonacci level of 1.2270 which is taken from the 1.2150/1.2470 move, the pair is regaining the positive movement. The daily charts a very bullish, and so are the hourlies. Next target price appears to be at the 1.2380 levels.

Wild Card

GBP/JPY

There is a bullish channel forming on the 4 Hour chart, as the pair now floats at the center of it. This provides forex traders with the opportunity to enter a very stable uptrend that still has plenty of steam in it. The next target price is 247.50.

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
06/29/07	08:30	GBP	Current Account		-12.7B	-12.0B
06/29/07	08:30	GBP	GDP	q/q (r)	0.7%	0.7%
06/29/07	08:30	GBP	Mortgage Approvals		107K	106K
06/29/07	12:30	USD	Core PCE Price Index m/m		0.1%	0.1%
06/29/07	12:30	USD	Personal Spending m/m		0.5%	0.7%
06/29/07	12:30	CAD	GDP m/m		0.3%	0.2%
06/29/07	13:45	USD	Chicago PMI		61.7	58.0
06/29/07	14:00	USD	Consumer Sentiment	(r)	83.7	83.9