Forex Tips & Daily Analysis

Economical News

USD

The greenback's weakness has continued to be the focal point of market speculation. Trading today within a fraction of its all time low versus the EUR, there is much anticipation awaiting Fed Chairman Bernanke's speech today. Amidst slowing retail sales over the last month and strengthened rumors of US interest rate cuts, it will be intriguing to see if the dollar continues on its downward trend.

The US Retail sales which is due to be released at 12:30 GMT today is expected to slow down a bit to around 0.2%. Reports of a drop in sales amongst leading car manufacturers as well as major shopping brands will further strengthen the notion that the release will indeed be inline with negative expectations.

The US Trade Balance was released yesterday at -57.6B, showing that the US deficit has reduced a bit; this should have caused a slight positive reaction for the USD, but instead initiated quite a violent and volatile trading session for the EUR/USD.

The US PPI is due to be released today at 12:30 GMT and is expected to rise to 0.5% after a previous release of negative -1.4%. The Core PPI numbers are expected to remain unchanged at 0.2%.

Dollar movement during the Asian session showed that the greenback was slowly climbing back to a relatively stable position. Feds Chairman Bernanke is speaking today in Dallas, and his speech will most likely add volatility to the market. Known for dropping hints throughout his speeches, you can expect to see a lot of short term movement with the dollar.

Several events on the economic calendar today will have an impact on the struggling greenback. Due to the uncertainty of today's events, traders will probably continue to see the greenback weaken.

EUR

The EUR has performed with undeniable strength over the last several days. With a feverish push, it has dwarfed the dollar and kept it at around 1.42 for the week. ECB President Trichet's remarks this week have continued to heed tremendous response, as European economies continue to flourish.

Speculation over the hiking of interest rates by the ECB has been slowed a bit due to the weak period within the US economy. Recent events regarding the EUR strength suggest that a hike of at least 0.25% might be in place.

Aside from that, the European calendar stays relatively empty today. Traders will focus much of their attention on events occurring within the US, as they have been far more influential.

JPY

Bank of Japan's decision to keep interest rates steady at least until the end of 2007, should continue to make carry trading a very lucrative move. The USD/JPY might be pushed to as high as 120 before all is said and done. BOJ President Fukui, has continued to press the importance of watching global markets before tweaking Japanese economic trends. The current rejuvenation in the Japanese economy has allowed speculators to focus on what has been the real volatile story of the US economy. With growth of consumer confidence and steady wage increases, the JPY looks to expand with the economy hand in hand. Holding any existing long positions would be wise, as any fluctuation should be beneficial.

Technical Analysis

EUR/USD

The pair topped at 1.4240 yesterday only to lose some ground for the rest of the day, and is now trading around 1.4190. The hourly charts are very bullish and the daily studies support the bullish notion. Oscillators show that a touch at the 1.4240 again is quite imminent, and a breach beyond will validate another bullish move to the 1.4300 area.

GBP/USD

The cable has been trading in a range for a while now, and the 4 Hour chart is showing a horizontal channel which indicates that there isn't a clear signal as to the cable's direction. The daily chart is floating in neutral level, and a slight bullish signal is coming from the bottom barrier of the 4 Hour channel. A preferable strategy might be to wait for a stronger signal before entering the market.

USD/JPY

There is a clear and strong uptrend forming on the 4 Hour chart with a very strong momentum as supported by the RSI and slow stochastic. The daily chart is showing that there is still more room to run and that the break is very close as we saw 4 consecutive doji's on the daily chart. Next target price should be around 118.00.

USD/CHF

After shortly testing the 1.1880 area, the pair has corrected a bit back to the 1.1800 zone. The 4 Hour chart is showing bullish signals again and the daily chart's RSI and slow stochastic are floating on the 50 levels which indicates that we might see the pair hitting 1.1900 before the weekend. A break back below the 1.1780 will validate a deeper correction down.

Wild Card

Crude Oil

Oil has been pushing back up with a massive momentum, and is tapping on the all time high zone again. If oil will break the all time high violently, it would be a fantastic opportunity for Forex traders to make profit out of the move's momentum. A breach through 83.70 will validate a move to the 84.70, probably on the same day.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4235	2.0360	118.30	1.1905	0.9194	0.7094
	1.4212	2.0320	117.95	1.1870	0.9055	0.7065
	1.4178	2.0280	117.66	1.1843	0.9020	0.7033
Support	1.4143	2.0233	117.00	1.1703	0.8960	0.6981
	1.4108	2.0200	116.73	1.1679	0.8928	0.6957
	1.4082	2.0175	116.47	1.1650	0.8900	0.6933

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-10-12	05:00	JPY	Household Confidence		44.0	44.5
		Household Confidence Measures the mood of households in regard to economic conditions. The reading is derived from a monthly survey that asks households to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2007-10-12	06:40	EUR	French CPI	m/m	0.4%	0.2%
		French CPI The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.
2007-10-12	09:00	EUR	Industrial Production	m/m	0.6%	0.3%
		Industrial Production Measures the total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation's currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income. Traders pay special attention to Industrial Production because it's one of the few growth indicators that is produced directly by the Federal Reserve.
2007-10-12	12:30	USD	PPI	m/m	-1.4%	0.5%
		PPI The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.
2007-10-12	12:30	USD	Retail Sales	m/m	0.3%	0.3%
		Retail Sales Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.
2007-10-12	12:30	USD	Core PPI	m/m	0.2%	0.2%
		Core PPI Derivative of the Producer Price Index (PPI) that excludes the Food and Energy items. Although Food and Energy can be very volatile from month to month, they play an important role in pass-through inflation. Therefore Core PPI usually has less impact than the overall PPI.
2007-10-12	12:30	USD	Core Retail Sales	m/m	-0.4%	0.3%
		Core Retail Sales Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.
2007-10-12	13:10	USD	Fed Chairman Bernanke Speaks		-	-
		Fed Chairman Bernanke Speaks Federal Reserve Chairman Ben Bernanke will deliver a speech titled "John Taylor's Contributions to Economics" at a conference in Dallas. As head of the Federal Open Market Committee (FOMC), which is responsible for setting the nation's short term interest rate, Ben Bernanke is arguably the most influential figure in the currency markets. Bernanke is known to drop clues during his speeches, as it is the FOMC's tenet to keep the public aware of their monetary policy long before interest rates are changes. Heavy market volatility is often experienced during Bernanke's speeches as traders attempt to decipher his clues.
2007-10-12	14:00	USD	Consumer Sentiment (p)		83.4	84.0
		Consumer Sentiment (p) Measures consumer attitudes concerning both the present situation and future expectations. It's derived from a monthly 500-person survey conducted by the University of Michigan. Higher sentiment levels are a leading indicator of rising consumer spending, which accounts for two-thirds of the economy.
2007-10-12	14:00	USD	Business Inventories	m/m	0.5%	0.3%
		Business Inventories Measures the value of goods held by manufacturers, wholesalers, and retailers. A falling trend has a positive effect on the nation's currency because retailers order more goods when they have depleted inventories. This creates more business for the wholesales, who in turn increase their orders to manufacturers.