Forex Tips & Daily Analysis

Economical News

USD

The past week has been relatively light on news events from the US, and the USD pegged currencies mostly moved in a range with no ground breaking sharp movements. Yesterday the GDP revision was released inline with expectations at 4.0% for the annualized and 2.7% for the deflator. The House Price Index came in a bit lower than expected at 0.2% but caused no significant move.

Today will be a day packed with major news events, and traders should expect high volatility especially from the USD side of the board.

The first release at 12:30 GMT will be the Core Personal Consumption Expenditures -PCE Price Index which measures the rate of inflation experienced by consumers when purchasing goods and services, excluding Food and Energy. The forecast stands at 0.2% which is a bit higher than last month's 0.1%. Next up will be Personal Income and Personal Spending where income is expected to remain unchanged at 0.4%, and spending is expected to rise a bit from 0.1% to 0.4%.

A bit later at 13:45 GMT the Chicago PMI is expected to be released. The index measures the health of the Chicago business environment. It's derived from a monthly survey of purchasing managers where respondents indicate whether their organization's activity is higher than, the same as, or lower than the previous month for output, purchases, employment, inventories, orders, and prices. An index reading above 50 indicates sector expansion. This month the expectations are for a slight decrease from 53.4 to 53.0. To finish the already busy schedule, the Fed's Chairman Bernanke will start his speech on 15:00 GMT, where many people believe he will gently hint a possibility for a rate cut next month.

It is expected to be a very choppy trading day, especially around the releases time, and traders should pay close attention to violent price movements.

EUR

Yesterday was a relatively uneventful day for the EUR as it range traded against most of the majors. The only news released out of the Eurozone yesterday was the German Unemployment Rate, which came in slightly above expectations at 9.0 %, and Italian Retail Sales that released below expectations at 0.1 %. However this news was not considered significant enough to cause any major volatility in the EUR and the EUR movements were mainly pegged to other currencies. The EUR had a bullish surge against the greenback earlier in the week which now seems to be stabilizing. Traders should keep a watchful for any hints from the ECB as to when they will hike rates as the EUR may once again come under pressure if the ECB is dovish in its monetary policy. Today there is a string of economic news to be released from the Eurozone but these releases are not expected to cause any sharp movements in the EUR. Once again today any EUR volatility will be pegged to the majors and other global news events, and the EUR should particularly experience some sharp movements against the greenback as there is a string of important economic releases from the US today.

JPY

There has been a flow of news releases that came from Japan overnight with mixed figures. The first one was the Core CPI which was released inline with expectations at 0.1% which is also last month's release. The Tokyo CPI was also released inline with expectations at -0.2% and the Core figure was released at flat 0.0%. The Manufacturing PMI went down a bit from 50.0 to 49.6, and the Overall Household Spending entered negative territory of 0.1%. The Japanese Unemployment rate showed a positive decline from 3.7% to 3.6%, and was the most positive figure of the day.

As a whole it appears that carry trades have fully returned and all of the JPY crosses are steaming up, and will probably continue to in the near future.

Technical Analysis

EUR/USD

There is a distinct channel forming on the 4 Hour chart and the pair is floating in the bottom level of it. The slow stochastic and RSI are at the 50 level which indicates positive momentum. It looks like the next target price is 1.3730.

GBP/USD

The Cable is in the midst of an up trend and is now trading at 2.0150 which is a relatively strong resistance. If a break through that level will occur, we might see the next move up get validated and the pair will probably reach 2.0220 at the end of that move. The RSI supports the bullish notion and is now floating at 60.

USD/JPY

The pair is firmly heading to 116.20 which is the 38.2% Fibonacci level of the 124.00/111.65 move and a very strong resistance. A breach through that level will validate the additional move to the 50% level which now stands at 117.80.

USD/CHF

There are first bullish signals starting to form on the daily chart as the RSI crossed the 20 level from above. The 4 Hour chart is showing very tight Bollinger bands and slow stochastic firmly heading for a bullish cross which indicates that the bullish move is imminent. The first target price is 1.2080.

Wild Card

Gold

The Gold is forming a channel structure that is going upwards as it is now floating at the bottom of it, but is shy of a bearish break. This is usually a signal for an additional bullish to the upper level of the channel. This is a great opportunity for Forex traders to enter a long position at a great price.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3751	2.0244	117.00	1.2108	0.8290	0.6875
	1.3722	2.0215	116.72	1.2090	0.8258	0.6840
	1.3690	2.0182	116.45	1.2060	0.8235	0.6815
Support	1.3630	2.0115	115.83	1.2000	0.8182	0.6748
	1.3600	2.0080	115.50	1.1973	0.8140	0.6720
	1.3572	2.0053	115.23	1.1935	0.8105	0.6690

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
31/08/2007	12:30	USD	Core PCE Price Index	m/m	0.1%	0.2%
31/08/2007	12:30	USD	Personal Spending	m/m	0.1%	0.4%
31/08/2007	12:30	CAD	GDP	m/m	0.3%	0.1%
31/08/2007	13:45	USD	Chicago PMI		53.4	53.0
31/08/2007	14:00	USD	Factory Orders	m/m	0.6%	1.0%
31/08/2007	14:00	USD	Consumer Sentiment (r)		83.3	83.0
31/08/2007	14:00	USD	Fed Chairman Bernanke Speaks
31/08/2007	15:10	USD	Pres Bush Speaks on Housing