Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the greenback fell to a record low against the EUR on the back of the Growth Fed Outlook index. It dropped down to a new low against the EUR on Thursday after the EUR currency broke through the $1.43 mark on reports from Washington that growing economic weakness was increasing jobless claims, and at the same time The U.S. currency fell 0.9 percent against the JPY touching 115.29, the lowest since Oct. 2. This unexpected jump in the number of workers filing new claims for jobless aid is an additional signal of the continuation of the weakening US labor market. The Labour Department said that the new claims for unemployment aid climbed by 28,000 last week.

Also yesterday a separate report showed that the Bank of America's third-quarter net income fell to $3.7 billion, its Revenue fell 12 percent to $15.93 billion and its shares had fallen 6 percent this year. Bank of America said it placed aside $2.03 billion for credit losses, up more than 73 percent from a year earlier, and nonperforming assets doubled to $3.37 billion. It mentioned that the weakened housing conditions were mainly responsible for some of the increases.

Also the corporate and investment banking profit dropped by 93 percent to $100 million from $1.43 billion, hurt by $717 million of the trading and sales losses.

At the moment the global investors are divided as to whether the Fed will lower its key interest rate in its next meeting on Oct. 30-31. Concerns about the outlook for the U.S. economy have increased in the last few days with the weaker-than-expected US currency. On the basis of this major event many investors have increased their speculation whether the Federal Reserve will cut interest rates again in order to shore up the economy.

EUR

The EUR has reached fresh record highs against the USD in recent weeks, and especially yesterday. The single European currency rushed forward and past the 1.43 per dollar level for the first time. Many analysts believe that the string of weak economic release on Wednesday added to the greenback's woes.

As it has been forecasted by different central banks, the 13 nation currency's rise against the greenback and Asian currencies has begun to damage exporters and is likely to create a long term negative economical impact on the Eurozone's economic development. It is expected that the EUR's economic growth will slow as a result of the fallout caused financial market chaos which especially hit the housing markets. Europe has begun to realize step by step that the housing markets in some EU countries are more over-valued than in the United States, so it can be develop into a serious risk for the Eurozone economy.

In order to deal with this major issue, Europe is going to take a firm position on foreign exchange rates when it will meet today (19/10/2007) at its G7 partners meeting in Washington. The G7 consists of the United States, France, Japan, Italy, Canada, Britain and Germany. The European Central Bank will consider cutting interest rates, while there is also advice that it must stand ready to stiffen policy in case growth increases. In addition the ECB will address liquidity conditions and the role of credit-rating companies.

JPY

Yesterday the U.S. currency slipped by 0.9 percent against the JPY reaching the 115,15 level. It earlier reached 115.29, the lowest since Oct. 2, as it looks at the moment, the Japanese currency has still a strong momentum to carry on and to continue to rise against the 16 most activates currencies which it is being traded against. The weakening trend of the greenback against the JPY is likely to go a bit further as the market increases its expectations of a U.S. interest rate cut, and it is believed by the major banks that the JPY will rise to the 112 level against the greenback by the end of the year.

The JPY rose to 164.65 versus the EUR, rising from the 165.30 level late yesterday in New York. Against the greenback, the JPY stabilized at 115.15 from the 115.63 level. It is expected that today the JPY will rise to the 164 mark against the EUR.

In other news, Japanese stocks rose, led by a rebound in bank shares and gains for high-earning trading companies. The benchmark Nikkei 225 rose 0.89 per cent to 17,106.09 while the broader Topix index climbed 1.09 per cent to 1,617.75.

Technical Analysis

EUR/USD

This pair reached a new all time high yesterday and it breached the key 1.4300 resistance level. The 4 H is giving a strong bearish signal indicating that this pair should begin to make some downward movement. Today's target will be to breach the 142.60 level, however there may still be room for this pair to rise further.

GBP/USD

Both the daily and 4 H charts are bearish. This pair is deep in overbought territory as indicated by the RSI on the 4 H chart. Bollinger bands are tightened indicating decreased volatility. This pair is starting to head down and if the 2.0400 level is breached we could see a sustained bearish trend develop.

USD/JPY

This pair has been is been on a steady downtrend coming down from the 117.30 to its current levels. There is also a distinct bearish channel that has formed on the 4 H chart. All indications are that this pair has still room to move down.

USD/CHF

This pair has now breached the bottom section of the bearish channel on the 4 H chart. It broke through the key 1.1745 level which validates that the next move should still be bearish. This pair is now targeting the 1.1700 level.

Wild Card

Crude Oil

The hourlies and daily charts are bearish. On the 4 H chart the stochastic slow is crossing above 80, indicating that we are in overbought territory. Today will be a good opportunity for Forex traders to take advantage of a possible sustained bearish movement.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4342	2.0542	115.96	1.1800	0.9015	0.7071
	1.4315	2.0510	115.78	1.1770	0.8992	0.7047
	1.4290	2.0480	115.50	1.1735	0.8968	0.7020
Support	1.4256	2.0422	114.83	1.1690	0.8912	0.6966
	1.4233	2.0390	114.62	1.1668	0.8880	0.6941
	1.4210	2.0360	114.41	1.1644	0.8857	0.6914

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-10-19	08:30	GBP	GDP	q/q	0.8%	0.7%
		GDP Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.
2007-10-19	08:30	GBP	GDP	q/q	0.8%	0.7%
		GDP Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.
2007-10-19	08:30	EUR	Index of Services 3m/3m		1.0%	0.9%
		Index of Services 3m/3m Measures the gross value added (GVA) of all service sectors. GVA is the difference between the value of a service provided (output), and the value of the goods and services used up in providing that service (intermediate consumption).
2007-10-19	09:00	EUR	Italian Trade Balance		1.8B	0.0B
		Italian Trade Balance Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.
2007-10-19	11:00	CAD	CPI	m/m	-0.3%	0.2%
		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.
2007-10-19	11:00	CAD	Core CPI	m/m	0.1%	0.2%
		Core CPI Derivative of the Consumer Price Index (CPI) that excludes the volatile Food, Energy, Alcohol and Tobacco items. CPI with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend and the central bank uses it as their primary inflation gauge, aiming to keep it at an annualized rate of 2%.
2007-10-19	14:00	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.