U.S Markets Stress Continues.
Economical News
USD
Yesterday, the US market continued to witness a further deterioration.
The USD fell again, setting a fresh record low mainly against the EUR and the CAD. Growing concerns about the US economy and the possibility of further interest rate cuts by the Federal Reserve are the main reasons behind the US dollar's continuous weakness. The USD is trading around the 1.4095 level against the EUR.
Yesterday, trader's attention was focused primarily on the Fed Chairman's Bernanke Speech in front of the U.S Congress. Bernanke told Congress that the credit crisis has created a "significant market stress", but reassured that regulators would take steps to curb fallout due to the mortgage crisis.
Fed Chairman's Speech came just two days after the Federal Reserve cut a key interest rate by 0.5% in order to prevent the weight of housing and credit problems from sinking the economy.
The Greenback weakness continues to dominate financial markets as last day's headline figures showed little signs of hope. One of the few positive US economic indicators seen through recent trade was yesterday's Philadelphia Fed manufacturing report that showed a slightly more optimistic picture of regional industrial production. The headline figure released at 10.9, far above consensus estimates of 3.0, for the month of September.
There is no significant economic news expected to come out of the U.S today, apart from the Fed Governor's Mishkin and Fed Governor's Kohn speeches on monetary policy in Frankfurt.
EUR
Yesterday, the EUR surged to a record high against the USD and is now trading around the 1.4070 level.
There was no significant economic news coming out of Europe yesterday apart from the Italian Unemployment Rate index which showed a stronger than expected figure of 6.0%. Along with this, speculators continued to ignore domestic economic data, as traders were more than willing to send the EUR higher and the USD lower.
Today's European economic calendar is also relatively empty and there are no market moving news expected. So today the EUR should continue to range trade at current record heights and may even appreciate slightly.
JPY
In this ongoing period of the global crisis that began in the US, we see that the JPY is holding relatively stable ground in relation to other currencies. The JPY is showing quite calm price behavior recently whereas the rest of the board is showing record levels for the USD Gold and Crude Oil. There is a massive transfer of liquidity from the Equity markets into the commodities market, and it is quite encouraging to see that there is one economy that is still keeping its head high in front of the global economical craziness.
As for today, the JPY remains quite stable post Fukui's speech yesterday, that explained further what stands behind the decision to leave the interest rate unchanged at 0.5%. There are no major new expected to come from Japan and it appears that the JPY will continue the strengthening process as it might take some more time for the carry trades to resume.
Technical Analysis
EUR/USD
The pair has breached through the1.4100 and is heading up with strong momentum and full intensions to break the next all time high. The hourlies are more bullish then ever with plenty of room to run. The dailies are showing a mild bearish cross which might mean a correction is imminent.
GBP/USD
The cable is showing a steady increase in the past few days with relatively low volatility. The hourlies are bullish, and the slow stochastic of the 4 Hour and the daily charts are floating on 50, which is an indication of continues bullish momentum. Next target price is around 2.0170.
USD/JPY
The pair has been in a bearish formation for the past two months and the daily studies are strengthening the notion that the pair's direction is down. The hourlies confirm the bearish notion as the 4 Hour RSI has failed to cut the 80 level from the bottom section.
It appears that the USD/JPY is heading 114.00.
USD/CHF
The pair is floating around 1.1700 but appears to be shy of a break. The 4 Hour chart is indicating a bullish cross, and the dailies support the notion that 1.1680 should be a very strong support. If a breach through that level occurs, the next bearish will be validated
Wild Card
Crude Oil
The Oil is still within the very distinct channel, with very strong bullish momentum. It is now testing the bottom level of the channel which provides Forex traders a great opportunity to enter the market in a relatively good price. 81.75 appears to be the next target price.
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 | 1.4180 | 2.0175 | 115.50 | 1.1775 | 0.8775 | 0.7095 |
| 1.4160 | 2.0150 | 115.30 | 1.1750 | 0.8755 | 0.7075 | |
| 1.4125 | 2.0125 | 115.00 | 1.1720 | 0.8730 | 0.7050 | |
| Support | 1.4060 | 2.0060 | 114.45 | 1.1685 | 0.8700 | 0.6985 |
| 1.4025 | 1.0030 | 114.15 | 1.1655 | 0.8670 | 0.6955 | |
| 1.4005 | 1.0010 | 113.95 | 1.1635 | 0.8650 | 0.6925 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 21/09/2007 | 9:00a | USD | Fed Governor Mishkin Speaks |  | |||
| 21/09/2007 | 12:00 | USD | Fed Governor Kohn Speaks | | |||
| 21/09/2007 | 12:30 | CAD | Retail Sales | m/m | -0.9% | 0.0% | |
| 21/09/2007 | 12:30 | CAD | Core Retail Sales | m/m | -0.3% | 0.4% |  |
| 21/09/2007 | 3:00p | EUR | ECB President Trichet Speaks | |