Forex Tips & Daily Analysis

Economical News

USD

The U.S. stock market tumbled for the second day in a row after Federal Reserve Chairman Ben S. Bernanke said that the U.S economic growth would remain sluggish, as the housing market is expected to slump further. As a result, the USD has been dragged down to its record low vs. the EUR and the weakest in 26 years against the GBP.

The housing market contraction appeared likely to become even more severe and it seems as if the Feds is in a tight corner. The FOMC cut the benchmark lending rate by 0.75 percentage point to 4.5% in the last two meetings over the past 8 weeks. This is the most aggressive cut since the economy was emerging from its last recession in 2001. Federal funds futures contracts show the Fed is almost certain to lower the rate by another quarter point to 4.25% next month.

Apart from that, the USD received a shred of positive data yesterday, in the form of the Unemployment Claims which fell unexpectedly, declining for the third successive week, suggesting that the labor market remained relatively healthy.

Today, the U.S Trade Balance is expected to be released at -59.0B, down from last month's figure of -57.6B. The Import Price Index is expected to be released inline with expectations at 1.0%, while the Consumer Sentiment will probably weaken.

The beginning of next week is expected to be relatively quiet and empty from economic events. Monday will be a day off for the equity markets due to Veterans Day, while on Tuesday the Pending Home Sales data is the only to be released. It appears that the price action will probably be low, and that most of the activity will be concentrated on the second part of the trading week.

EUR

The EUR rose to a record high against the USD yesterday after the Federal Reserve Chairman Ben Bernanke said that the economic growth will slow "noticeably" through the end of the year and that the housing slump might even intensify before calming down again.

The EUR has also trimmed some gains against the USD yesterday after the ECB left interest rates steady and did not signal an imminent interest rate hike. The European markets are now waiting to see whether the ECB would relate to the sharp rally in the EUR/USD that has surged to an all-time high of $1.4737 yesterday.

Now the ECB is caught between inflation worries in the short term and fears about a sharper downturn in growth next year on the long run. The impending Euro zone slowdown and the strong EUR should eventually prevail in favor of lower rates early next year.

Furthermore, hawkish commentary made by ECB President Trichet yesterday, has helped underpin a tone for the EUR\USD, but price action for the pair still remains very much a “US story.”

There are no market moving news expected from European markets today, and price action will probably calmer than what we have seen in recent days.

JPY

The Japanese stock market has tumbled to its lowest point in more then 2 months yesterday, which caused the JPY to surge against the USD. With financial stocks also dragging the market lower, the USD\JPY is wiping out all the gains since the 50 basis point U.S. Federal Reserve interest rate cut on Sept. 18.

Things have become really serious as the fallout from the U.S subprime problems is spreading everywhere and seems quite unlimited by now.

The subprime mortgage crisis won't clear up anytime soon and the strong JPY continues to effect Japanese economy, causing losses to quite a few big national exporters.

Today, there is no price moving news expected to come from Japan, However on Monday, the quarterly GDP and the GDP Deflator are expected to be released. Traders should be aware of the fact that the price action will most probably be affected by USD weakness, rather than any other factor.

Technical Analysis

EUR/USD

The pair has been testing all time high levels consistently all throughout yesterday, and now floats 1.4715. The bullish momentum on the hourly charts is strong, and the daily chart shows a massive break through major key levels. Going long appears to be preferable today.

GBP/USD

The cable is showing unstoppable momentum, and extremely bullish daily charts. The hourlies are indicating a local overbought situation which will probably cause a small correction on the short run. Next target price might be 2.1200 quite soon.

USD/JPY

After the breach through the horizontal channel the pair has been forming since the beginning of august, the bearish momentum appears to be very strong. The testing of the 112.00 support level is imminent, and if breached a validation of a deeper bearish will occur. Going short appears to be preferable on all fronts.

USD/CHF

The pair is now consolidating around 1.1220 after a very sharp drop of over 200 pips in the recent week. The support appears to be very strong, and indicators show that unless a violent breach will occur, the consolidation will probably continue. The daily charts are showing bearish momentum, which strengthen the notion that going long on a wider scale might be a smart move.

Wild Card

Crude Oil

The Oil consolidates at the bottom of the upwards channel of the 4 hour chart. The location of the channel, and the double doji formation, indicate that a bullish break is quite imminent. This is a great opportunity for Forex Traders to join in the uptrend that would probably take oil into the 100$ levels.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4780	2.1200	113.65	1.1389	0.9345	0.7050
	1.4746	2.1167	113.34	1.1335	0.9312	0.7025
	1.4720	2.1120	113.00	1.1298	0.9289	0.7009
Support	1.4643	2.1060	112.00	1.1210	0.9234	0.6961
	1.4615	2.1012	111.67	1.1190	0.9170	0.6923
	1.4590	2.0940	111.23	1.1160	0.9140	0.6901

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-11-09	04:30	JPY	Industrial Production	m/m	-1.4%	-1.4%
		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.
2007-11-09	06:45	CHF	Consumer Climate		15	11
2007-11-09	07:45	EUR	French Industrial Production	m/m	0.3%	-0.4%
		French 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.
2007-11-09	07:45	EUR	French Trade Balance		-2.8B	-2.8B
		French 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.
2007-11-09	09:00	EUR	Italian Industrial Production	m/m	1.3%	-0.3%
		Italian 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.
2007-11-09	09:30	GBP	Trade Balance		-6.9B	-6.9B
		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.
2007-11-09	11:00	EUR	Composite Leading Indicators	m/m	107.3	-
		Composite Leading Indicators 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 Organization for Economic Co-operation and Development (OECD), a leading private research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.
2007-11-09	13:30	USD	Trade Balance		-57.6B	-59.0B
		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.
2007-11-09	13:30	USD	Import Price Index	m/m	1.0%	1.0%
		Import Price Index Measures the monthly rate of inflation for imported goods.
2007-11-09	13:30	CAD	Trade Balance		4.1B	3.9B
		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.
2007-11-09	15:00	USD	Consumer Sentiment (p)		80.9	80.0
		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.