Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the greenback continued to weaken after another round of disappointing data.

Durable Goods orders fell for a second consecutive month by -1.7% in September, much lower than the expectation of 1.5% which indicates that the credit crisis is refusing to vanish.

Last month's contraction in Durable Goods was also revised from -4.9% to -5.3%. Jobless claims dropped mildly but came in much worse than expected at 331k. New home sales recovered to 0.77M in September but it was still below expectation of 0.78m and is mainly due to a large downward revision in August. The greenback is sent to new 33 year low against Canadian dollar, and is pressing 23 year low against the Australian Dollar and flirting again with record low against EUR. Crude oil also surged to another record high, jumping by US$3.50 to US$91.09.

Looking ahead, the University of Michigan's Consumer Sentiment survey will cap this week's data from the U.S however, the market is showing very strong signals of negative USD pressure, and it appears that the greenback will probably end this week in another fresh all time high.

EUR

The EUR slightly appreciated overnight as poor U.S. economic data did little to ease speculation of a possible future rate cuts by the Fed.

In data from the Euro-zone, the German IFO index came relatively flat on consensus. Overall the EURUSD traded with a low of 1.4249 and a high of 1.4344 before closing the day.

The Euro-zone economic data is showing us that in spite of the greenback's weakness which made the US products more attractive and cheaper, the Euro-zone exporters didn't hurt significantly, however this is more likely to occur if the EUR strengthening will maintain its pace, and then it may threat the Euro-zone economy in a more radical way.

The European calendar is quite empty today except for the M3 Money supply Y/Y which is expected to be released at 11.5 which is very close to the previous release of 11.6, and will probably not generate any price movement.

It appears that the EUR is going to continue to climb up at least for today, as there appears to be no light in the end of the Greenback's tunnel, at least not for the short run.

JPY

The Japanese inflation levels were closely monitored when the Tokyo CPI was slightly higher from the prior -0.1% drop to a flat 0.0%. However National CPI, remained negative and unchanged at -0.1%, which implies that the world credit crunch is also effecting the Japanese economy.

The inflation data reinforces the consensus that the Bank of Japan will keep interest rates on hold while waiting for clarity on the U.S. economic outlook. Responding to the data, the CPI release today did little to ease the views that the Japanese Economy remains in a state of deflation after most of the figures for the month of September come in flat on consensus.

The JPY softened in the moments after the release of September's industrial production data which suggests that the Japanese economy was badly hit by recent market turbulence.

However, analysts say that the uptrend for industrial production remains intact, and output is expected to continue to be firm towards next year on the back of solid exports to Asia and Europe

The JPY is weaker across the board (excluding the USD) on a rise in risk appetite due to positive earnings from Microsoft and the rise in the Nikkei index as the last actually offer to strengthen the JPY against the majors.

Technical Analysis

EUR/USD

The pair has broken another all time high level, and is now trading around 1.4350. The 4 Hour chart is showing strong positive momentum, with a potential to test the 1.4400 level. The daily chart on the other hand is showing 3 bearish crosses on the slow stochastic that might indicate that on the longer run a correction is quite close.

GBP/USD

The wide range the cable has been trading in for a while has been breached. The pair is now trading around 2.0550, and is showing very strong bullish momentum on all fronts. It appears that next target price might be around 2.0620. A preferable strategy might be to look for a good entry point on the 15 minutes studies.

USD/JPY

The pair is floating on a tight range for several days now and is now trading at 114.50. The daily oscillators are showing no specific direction or bias and are floating at neutral levels. The hourly charts are signaling slight bullish momentum that might develop into a stronger signal on the larger scale.

USD/CHF

After bottoming at 1.1620 the pair appears to correct a bit and is now trading at 1.1650. The 1 hour chart is showing a strong bullish cross which indicates that we might see a correction to the 1.1700 level before the trading closes today. The daily chart is still bearish, and a preferable strategy would be to the get in the market for a short run period.

Wild Card

Crude Oil

Oil is trading at the unbelievable all time high of 91.60 and is showing stronger momentum than ever. Both daily and hourly charts are demonstrating extremely bullish oscillators. This is a great opportunity for forex for Forex traders to get in the market and enjoy the continuation of this strong trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4402	2.0620	115.16	1.1780	0.9120	0.7064
	1.4400	2.0600	114.88	1.1765	0.9093	0.7035
	1.4370	2.0582	114.60	1.1730	0.9062	0.7000
Support	1.4310	2.0520	114.00	1.1680	0.9000	0.6930
	1.4300	2.0500	113.73	1.1658	0.8965	0.6900
	1.4273	2.0483	113.46	1.1633	0.8938	0.6875

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-10-26	07:15	CHF	PPI	m/m	0.3%	0.3%
		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.
2007-10-26	08:00	EUR	M3 Money Supply	y/y	11.6%	11.5%
		M3 Money Supply Measures the annual change in currency outstanding. Higher levels of currency can have a devaluing effect on the currency.
2007-10-26	12:30	CAD	Business Conditions Orders		6.0	1.0
		Business Conditions Orders Measures the relative level of purchase orders received by the manufacturing industry. The index is derived from a monthly survey that asks respondents to rate the level of orders receives as 'rising', 'declining', or 'about the same'. A rising trend has a positive effect on the nation's currency because good manufacturing conditions are a sign of a strong economy.
2007-10-26	14:00	USD	Consumer Sentiment		82.0	82.0
2007-10-26	20:15	USD	Fed Governor Mishkin Speaks
		Fed Governor Mishkin Speaks Federal Reserve Governor and FOMC voting member Frederic Mishkin will deliver a speech titled "Financial Instability and the Federal Reserve as a Provider of Liquidity" at the Museum of American Finance’s Commemoration of the Panic of 1907, in New York. Audience questions expected. FOMC voting members are responsible for setting the nation's short term interest rate, so traders scrutinize their speeches closely for clues regarding future monetary policy.