Data On Tap - US ISM Manufacturing.
Economical News
USD
On Friday, the greenback nose-dropped all across the board as several important figures were release with mixed results. The Core PCE Price Index was released as expected at 0.1%, together with Personal Spending that came in at 0.5% with a consensus of 0.7%, and Personal Income that also came in below expectations at 0.4%. After a blow of negative figures, the US market delivered some optimism with three positive figures. The first was the Chicago PMI, which was released a bit higher than the 58.0 expectation at 60.2. Following, were the revision of the Consumer Sentiment which came in at 85.3 after a wide expectation of 83.9. Sealing the Friday news session was the Construction Spending which surprised with a very high figure of 0.9% (exp.0.1%). All this positive flow of events could not prevent the massive USD shorting, and the Greenback ended the week at a rate of 1.3540 against the EUR, and almost 2.0100 against the GBP.
As for today, the most important news expected to come from the US is the ISM Manufacturing Index (14:00 GMT). The ISM Index is expected to remain unchanged from last month's figure of 55.0, and will probably not create massive price movement if it will be released inline with expectations.
The ISM Manufacturing Prices is also expected to be released today, and with a positive expectation of 71.0, and a previous figure of 69.0, it might push the greenback further down, to continue the trend initiated on Friday.
There aren't many news events expected this week except from Friday's release of the Nonfarm Payrolls and Unemployment rate, which is extremely important and influential for the Greenback's near future.
EUR
The EUR appreciated massively against the USD on Friday, proving that it does not need extremely positive news to gain strength, and that even mixed signals are enough to push the currency up all across the board. There were several releases from the Euro-Zone and Britain none of them showing a pure bias to any direction. The UK GDP was revised to an unchanged 0.7%. The UK Mortgage Approvals came in a bit higher than expected at 114K. The Euro-Zone Consumer Confidence was released at -0.2, and the UK Consumer Confidence was released at -0.3%.
As for today, the most important release will be the UK Manufacturing PMI, which is expected to be released at 54.7 after coming in at 54.9 last month. With the lack of truly important European news, the focus will be on the US Calendar and the ISM data.
JPY
After small profit taking, the JPY is moving on with the well known weakening trend, after most of the news releases that came from Japan were negative last week. The very important Tankan Index was released yesterday inline with expectations on the manufacturing level, and the non manufacturing level. The Tankan Index measures the general business conditions of large manufacturers. The index is derived from a quarterly survey that asks respondents to rate subjects such as general business conditions, supply and demand conditions for products and inventories, prices, sales, and employment conditions. The Tankan is released four times per year and is one of the nation's most respected gauges of economic health because manufacturers play a vital role in the large export industry.
With no major changes in the Index, we might expect the BOJ to continue with a calm monetary policy, and for carry trades to continue with full steam, as there is no risk of a close hike in interest rates.
Technical Analysis
EUR/USD
The pair is now trading at the 1.3540 levels, which was the staring point of the downtrend initiated in the beginning of June. The current levels represent a very important resistance level which if broken will take the pair back to the 1.3600 levels and up.
GBP/USD
The cable is showing strong bullish signals on the 4 Hour charts, showing that the uptrend might still have steam in it to push the pair above the record levels we have seen in mid April. Next target price appears to be 2.0130.
USD/JPY
The downtrend initiated last week continues, creating a bearish sentiment on the daily charts. The Hourly charts support the negative notion and are setting a target price of 122.50. The pair is still trading within the boundaries of the upward channel on the daily chart, and if the 122.50 will be breached, than the reverse move is affirmed.
USD/CHF
The daily charts are very bearish, and the pair is now in the midst of a correction move initiated at 1.2460. The approximate destination for the pair now stands at 1.2150, which is a very strong support, and is very unlikely to be breached this week.
Wild Card
NZD/USD
There was a very important breach through the upper level of a very distinct channel formation, indicating that a further move up is creating. This provides forex traders with opportunity to join the trend, and benefit from the excellent entry point that was created.
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 | 1.3510 | 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 |
|---|---|---|---|---|---|---|---|
| 07/02/07 | 14:00 | US | ISM Manufacturing | 55.0 | 55.00 |  | |
| 07/02/07 | 14:00 | US | ISM Manufacturing Prices | 71.0 | 69.0 | |