Forex Tips & Daily Analysis

Economical News

USD

Amidst once again surprising economic numbers, the greenback stayed relatively steady on Monday. The greenback did fall in the early hours of Tuesday, against 14 of the 16 major currencies, challenging investors to determine how and when the greenback will end its slide. The Institute of Supply Management (ISM) released its Non-Manufacturing index at 55.8, up one point from its previous 54.8 mark; forecasts initially predicted a one point drop. The index measures the activity of purchases made by purchasing managers in the service sector and allowed the greenback some breathing room after last week's disaster. Yesterday, saw Fed Governor Mishkin announce that he will "carefully assess economic data" before considering any changes in US economic policies. As oil prices continue to rise and the US financial landscape is in turmoil, the Fed has held its ground in defending its decisions to hold out on any further action.

Traders are at a standstill due to the differences in opinion between the majority of investors and the Fed's themselves. Many investors believe that the US will have no choice but to cut rates even more in order to withstand the damage that the winter will bring in regards to gasoline prices. The Fed, in statements released by Mishkin, Rogers and Gross reiterated their faith in economic data, and went so far as to say that the quarter point interest rate cut could even be reversed if all went well before year's end.

Today look to see even more discussions regarding such issues as Fed Chairman Ben Bernanke speaks in San Antonio. Bernanke will address the audience at the ACCION Texas Summit on Microfinance, about community development. It is safe to say that the market will fluctuate around the time of his speech, as Bernanke is known for leaving hints regarding future policies in his speeches.

EUR

The EUR entered this week in positive territory as it finished last week with all-time highs against the greenback. News has been dominated predominately by the US, but this week sees the tide change with major news events on the EU schedule.

Investors saw the EUR/USD move yesterday between a low of 1.4440 and highs at 1.4530 levels. Similar range trading should be expected today as there are no real major events on tap. PPI, Retail Sales and Service PMI are to be released this morning, with not much movement expected to come from them as investors will try and hold positions ahead of Thursday's ECB Interest Rate statement. Sentiment is that the ECB will hike rates to offset current economic trends regarding the EUR. Today should see much of the same in regard to the EUR as investors will most likely see the EUR stay strong.

JPY

Yesterday, BOJ Chairman Toshihiko Fukui Spoke and hinted that a future interest rate hike might take place sooner that we expected.

Since then we saw the JPY strengthen against all across the board.

Fukui added that a timely interest rate hike is needed and that keeping rates too low could pose risks in the future that the BOJ would like to avoid.

We are expecting the JPY to maintain its strength against the majors, and carry trades are more likely to reduce especially against the USD until the rate hike will take place.

Tomorrow, Core Machinery Orders is expected to be released. The figure measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. The forecasted figure is -2.0% which is better in comparison to the previous figure (-7.7%) implying a rising trend which is a positive effect on the JPY ,since if the manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansionary phase.

It appears that the JPY will continue to float on relatively quiet waters, and that the direction will be directly effected by the ongoing USD weakness.

Technical Analysis

EUR/USD

Daily and hourly indicators are in neutral territory which indicates range trading today, traders need to pay attention to the bullish flag structure which is establishing on the 4 H chart and may signal an upcoming bullish trend however not yet completed. In case of completion, this pair may head to 118.83 the Fibonacci resistance (61.8%) and then going long seems to be the preferable strategy.

GBP/USD

After losing more than 230 pips in the last three days, the bearish sentiment continues. The daily charts are showing that there is still more room to run and the hourlies are showing a light oversold status. A preferable strategy might be to look for a good short entry point.

USD/JPY

Recent unwinding move seems to have bottomed at 114.00 and the pair has gone up since Friday. The daily studies are bullish, and the hourlies support the bullish notion. A breach through 115.00 will validate the move, and create a great opportunity for a long run buying position.

USD/CHF

The bearish rally continues at full steam, and is confirmed with extremely bearish dailies. The hourlies are a bit oversold, which indicates that traders should look for a high entry point before resuming the down trend which appears to have plenty of room to run. A breach through 1.1495 will validate the move and take it to the 1.1480 zone

Wild Card

Crude Oil

The strong momentum continues. Crude Oil now consolidates around 94.90 with a clear intention to continue the uptrend. The dailies are showing the third consecutive bearish cross. That provides Forex traders with a great opportunity to establish an entry point and continue the bullish ride.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4600	2.0915	115.55	1.1627	0.9310	0.7035
	1.4565	2.0885	115.26	1.1600	0.9285	0.7008
	1.4530	2.0865	115.00	1.1573	0.9254	0.6980
Support	1.4500	2.0800	114.43	1.1470	0.9160	0.6915
	1.4476	2.0770	114.05	1.1440	0.9132	0.6880
	1.4450	2.0740	113.77	1.1400	0.9100	0.6853

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-11-06	00:01	GBP	BRC Retail Sales Monitor		3.0%	-
		BRC Retail Sales Monitor The British Retail Consortium (BRC) Retail Sales Monitor measures the change in value of like-for-like (i.e. same-store) sales at surveyed retailers, which effectively excludes stores that have been open for less than a year.
2007-11-06	00:01	GBP	NIESR GDP Estimate		0.7%	-
		NIESR GDP Estimate The National Institute of Economic and Social Research (NIESR) Gross Domestic Product (GDP) Estimate is a prediction for the past month's official GDP using statistical projection techniques. NIESR is one of the UK's oldest independent economic research institutes and their estimates are widely reported in the press.
2007-11-06	05:00	JPY	Leading Index	m/m	27.3%	0.0%
		Leading Index Measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The index is published monthly by The Conference Board, a leading private US research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.
2007-11-06	08:55	EUR	German Services PMI		53.1	55.0
		German Services PMI The Services 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.
2007-11-06	09:00	EUR	Services PMI (r)		55.6	55.6
		Services PMI (r) The Services 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.
2007-11-06	10:00	EUR	Retail Sales	m/m	0.1%	0.5%
		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.
2007-11-06	10:00	EUR	PPI	m/m	0.1%	0.2%
		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.
2007-11-06	11:00	EUR	German Factory Orders		1.2%	-0.1%
		German Factory Orders Measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods.
2007-11-06	13:30	CAD	Building Permits	m/m	1.4%	1.7%
		Building Permits Measures the number of new construction intentions. This data is a leading indicator for the construction industry since the issuance of a building permit is one of the first steps in the construction process.
2007-11-06	15:00	CAD	Ivey PMI		56.0	55.0
		Ivey PMI The Ivey Purchasing Manager's Index (PMI) measures the activity level of purchasing managers from all sectors of the economy, 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.
2007-11-06	18:40	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.
2007-11-06	22:30	AUD	Interest Rate Statement		6.50%	6.75%
		Interest Rate Statement The Central Bank Governing Council releases an Interest Rate Statement each month. The statement contains the latest decision regarding changes to the countries short term interest rate ("minimum bid rate"). A rising trend has a positive effect on the nation's currency. Short term interest rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. What makes interest rates so important is that high rates attract foreigners looking for the best "risk-free" return on their money, which significantly increases demand for 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 in an attempt to bring prices down. This is what makes inflation-predicting indicators so important. Traders know that rising prices will lead the central bank to raise interest rates, which ultimately leads to a more valuable currency.