Forex Tips & Daily Analysis

Economical News

USD

Yesterday we could notice that the U.S. dollar was down against most of the other major currencies. The continuing trend of the depreciation of the US doll still seems to be very strong and as is forecasted by many traders, this move should go much further.

The US market sufferd yesterday from additional turbulences in its economy, after the publication of very important indexes which easily influence the US economy and its currency, indexes such as: Personal Spending, Personal Income, Unemployment Claims, and Manufacturing Index.

The Institute for Supply Management's factory index chopped down to 50.9 in October, the lowest in seven months since March, from 52 in September and less than economists anticipated. This result of the manufacturing sector in October suggested that continuing troubles in the housing and credit markets have seeped into the industrial sector. The imports index fell below 50 for the first time in nearly six years, suggesting that manufacturers have begun to resource supplies domestically rather than in foreign countries.

The Labor Department announced yesterday that the number of people asking for unemployment benefits declined by a larger-than-expected 6,000 last week to total 327,000. Initial jobless claims fell by 6,000 to 327,000 in the week that ended Oct. 27, surpassing this year's standard of 318,000 for three consecutive weeks. This result implies a slowdown in hiring.

The spending report showed incomes increased 0.4 percent in September for a second month. With the market growing pessimistic about the economy, as it seems, The Fed's decision to cut interest rates probably won't do much for banks struggling with rising credit losses as we can notice step by step how it begins to influence the diverse segments of the economy.

Today, the Labor Department is going to publish the reports on October jobs creation (Nonfarm Employment change, and Unemployment rate); this time these reports will have more importance than they usually have on the US economy trend. The report should show slower job creation, strengthening the Fed's motivation for further interest-rate cuts.

EUR

The EUR and the GBP keep going forward, in a firm and a quite clear direction against the US dollar on Thursday, even after the U.S. Federal Reserve cut interest rates by a quarter of a point on Wednesday. The EUR and the GBP have been hiking steadily against the US dollar since August accompanied by uncertainties for the strength of the U.S. economy, on the basis of by the subprime credit crisis. The pound touched $2.0875 yesterday, the strongest since May 1981.

Yesterday the 13-nation euro bought $1.4439 in morning trading, down from its record high of $1.4503, and as it is expected the US dollar may fall to $1.46 against the Euro at the end of the year.

The U.S. economy is on the path for a slowdown and it is still facing up coming pressure. Overseas growth and a weaker dollar are boosting exports from the US to Europe, and in addition many investors began lately to transfer many of their funds to European countries where their deposits and mixed income investments bring higher returns

The Euro is being pushed forward by sentiment that the European Central Bank is working by gradual moves of rate increases, the pound benefits from expectations that the Bank of England will not touch rates, and will leave them untouched rather than follow the Fed in cutting the cost of borrowing.

JPY

Yesterday the JPY gained against the 16 most traded currencies. The Japanese yen rose for the first time in a week versus the EUR, also the Australian and New Zealand dollars fell the most against the JPY yesterday. Australia's dollar weakened 3 percent while New Zealand's currency lost 2.6 percent. The JPY strengthened after the report showed manufacturing in the U.S. slowed more than forecast last month.

The JPY advanced yesterday 0.9 percent to 165.77 per euro, to 114.88 per dollar from 115.43. Many traders believe that today the dollar may fall to 113 yen after the publication of the Nonfarm Employment change, and Unemployment rate reports in the US market.

The Bank of Japan kept again its benchmark rate at 0.5 percent on Wednesday, the lowest among major economies and still the JPY is being considered as a favored currency among many investors for carry trade positions over the long term.

Technical Analysis

EUR/USD

This pair seems to be consolidating around the 1.4470 level after experiencing a rather topsey turvey trading session. All charts indicate a very strong bearish signal, making the possibility of a sharp reversal imminent. However this pair has been ignoring all technical points and therefore strong positive momentum could push this pair once again well beyond the 1.4500 level and into unknown territory.

GBP/USD

The cable has been on a steady robust uptrend over the last week and the bullish rampage is refusing to let up. Bollinger bands are widened indicating increased volatility. Therefore traders can expect today's cable movement to be sharp. The 4 H and daily charts both give a strong bearish signal. However the tailwind of recent positive momentum may still push this pair higher before a sustained reversal can be expected.

USD/JPY

This pair fell sharply yesterday from the 115.91 to the 114.42 mark. On the 4 H, both momentum and RSI are sloping downwards indicating a bearish signal. The stochastic slow is crossing above the 60 mark. Therefore a short position seems to be the preferred strategy today.

USD/CHF

There is a steady downward channel appearing on the daily chart. This pair will once again target the 1.1500 level and if it is breached then we could see another sharp move downwards. Daily charts are neutral; however the 4 H chart is still giving a strong bearish signal.

Wild Card

Crude Oil

After breaking a new all time high of 96.20, this commodity has made a sharp move down. However it now seems to be consolidating at around the 93.30 level and preparing itself for another rally. Therefore Forex traders may find this a good opportunity for profit taking by coming in early on a long position in order to maximize profits on the next rally.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4540	2.0915	115.55	1.1627	0.9295	0.7035
	1.4510	2.0885	115.26	1.1600	0.9265	0.7008
	1.4470	2.0860	115.00	1.1573	0.9230	0.6980
Support	1.4432	2.0800	114.43	1.1500	0.9160	0.6915
	1.4408	2.0770	114.05	1.1470	0.9132	0.6880
	1.4388	2.0740	113.77	1.1433	0.9100	0.6853

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-11-02	06:45	CHF	CPI	m/m	0.1%	0.8%
		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.
2007-11-02	08:55	USD	German Manufacturing PMI		54.9	53.5
		German Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2007-11-02	09:00	EUR	Manufacturing PMI		51.5	51.5
		Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2007-11-02	09:30	GBP	Construction PMI		60.3	59.5
		Construction PMI The Chartered Institute of Purchasing and Supply (CIPS) Construction Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the construction sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2007-11-02	11:00	CAD	Employment Change		51.1K	12.0K
		Employment Change Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises
2007-11-02	11:00	CAD	Unemployment Rate		5.9%	5.9%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2007-11-02	12:30	USD	Nonfarm Employment Change		110K	82K
		Nonfarm Employment Change Measures the number of new jobs created in the previous month, excluding the farming industry. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.
2007-11-02	12:30	USD	Unemployment Rate		4.7%	4.7%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2007-11-02	12:30	USD	Average Hourly Earnings	m/m	0.4%	0.3%
		Average Hourly Earnings Measures the rate of inflation found in the wages paid to nonfarm jobholders. A rising trend has a positive effect on the nation's currency. When businesses pay more for labor, they are likely to pass the higher costs to the consumer, so traders view wage inflation as a leading indicator of consumer inflation.
2007-11-02	14:00	USD	Factory Orders	m/m	-3.3%	-0.5%
		Factory Orders Measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods. Factory Orders tend to have a low impact because it reports much of the same information contained in the Durable Goods Orders report released over a week earlier.