Forex Tips & Daily Analysis

Economical News

USD

As the month of November comes to end, talks of the Federal Reserve cutting interest rates have done nothing but gain steam. The rumors have has so much weight that the Dow Jones and most other Wall Street outlets saw gains yesterday just from the notion that such cuts might eventually come. Yesterday the Fed's second in command, Vice Chairman Donald Kohn noted that ''flexible and pragmatic policy making'' was key in turning around the US economy and that the Fed would "act as needed" in cutting interest rates, if such measures were needed.

The release of the Beige Book yesterday further solidified the expectations of Government intervention in the economic "crisis" taking place now. The Beige Book identified that there was in fact growth in US districts, however tedious it might have been. The report touched on how US consumers have reacted to economic uncertainty with "relatively soft retail spending" in the beginning of holiday shopping. The Beige Book goes on to note how the ongoing credit crisis has created "barriers for some buyers" in the real estate market as available homes are on the rise. Manufacturing and products and services from food and energy inputs rose significantly according to the Fed report.

The events from yesterday have continued to contribute to the glairing uncertainty in the US, even so much as to produce completely different opinions from members of the same governing body. Kohn's remarks yesterday contradicted those of member from his own board. Such indecisiveness within the Fed could be disastrous as most of the positive movement that the greenback is seeing, is coming from expectations of Federal intervention.

As we look ahead to today, the US news schedule is once again full of significant information. Annual GDP and GDP deflators, along with unemployment claims will precede the 15:00 GMT release of the New Home Sales report. Rounding out the day we will here words from Fed Governor Mishkin, who many hope will reiterate Donald Kohn's call for swift and necessary intervention.

With a full calendar aside from US events, it will be intriguing to see what trends the greenback develops over the course of the day.

EUR

The EUR continues to impress, even on days where it sees sharp drops against its major counterparts. Yesterday, while falling to 1.4712 against the greenback, the 13 nation currency bounced back to once again flirt with 1.50 levels.

The Euro zone economy has encountered a bit more stress in these times, as prices for goods and services have skyrocketed compared to the dollar and now European businesses are beginning to feel the effects. With immensely clean track records and better value due to the currency crisis, US companies are simply becoming more affordable.

Today should prove to be a significant one, as amidst the very tight economic calendar, EU news will have a very large role in that it will be missing from the equation. Outside of the release of German unemployment rate and several related topics concerning the UK, the news will be dominated by US, UK and Japanese news.

It is safe to assume that even amongst losses in the EUR against it counterparts, the EUR will continue to make gains as was proven yesterday.

JPY

The JPY traded yesterday, at its lowest rates in a week, mostly due to the rise in the US stock market. Investors, brimming with positivity from early Dow Jones gains, began borrowing the Japanese currency to secure high-yielding assets.

Carry Trades were the name of the game, as the Aussie dollar and other "carry trade friendly" currencies flourished. In what has been described by some as "turbulent" markets, the JPY has been the focal point of much investor speculation. With its dependence toward foreign news being the main accelerator of movement within the currency, the JPY has found itself in the midst of major currency action.

Today's calendar began last night for Japan, as the release of Industrial production numbers came back higher than initially expected. With Manufacturing PMI, Core CPI numbers and Core Tokyo CPI numbers today could prove to be an important one for the land of the rising sun. It will be interesting to observe the status of the JPY before it gets to the 23:30 release of most of our news. It seems that the negative greenback sentiment may be on the brink of reversing, so this may finally halt the bullish JPY momentum.

Technical Analysis

EUR/USD

The pair is still floating in the range of 1.4800
.4900 while the current move is up. On the 4 hour chart, the Slow stochastic and RSI have a positive slope suggesting that the uptrend has much room left to go. The upcoming bullish trend is expected to test the 1.4900 level, and in case of a breach we expect this pair to test the 1.4950 resistance level. It appears that going long might be preferable today.

GBP/USD

The pair is floating in a relatively wide range for several days with a slight bullish tendency, as can be seen on the 4 Hour chart. No significant break through the 2.0400/2.0900 range has occurred, and the hourlies continue to deliver mixed signals. The daily chart is giving a moderately bullish sentiment with a bit more room to run. The 2.0800 is a key level, that if breach will validate the next bullish move.

USD/JPY

The downtrend the pair is going through seems to be very strong and the daily chart validates that there is still room to run. The daily chart is confirming that the momentum down is still quite strong and that 109.00 is a valid next target. On the hourlies studies we see that there is a local correction that might end at the 110.70 peak. Selling on highs might be preferable today.

USD/CHF

The volatility has decreased and the USD\CHF is in a bearish configuration on the daily studies. After a touch at the 1.0900 zone, the pair corrected to the 1.1135 level. The bullish momentum is fading away, and looks like a matter of short time before the bearish trend will resume.

Wild Card

Crude Oil

The strong bullish channel has been breached through the bottom barrier which started a strong bearish correction into the 92.00 zone. Oscillators show that the bearish momentum created by that breach is diminishing. This creates a great long entry point for Forex traders, as the journey to the $100 will probably be back on track soon.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4960	2.0900	111.80	1.1300	0.8985	0.7254
	1.4900	2.0845	111.00	1.1248	0.8940	0.7231
	1.4860	2.0800	110.50	1.1200	0.8880	0.7200
Support	1.4770	2.0700	109.60	1.1100	0.8800	0.7100
	1.4700	2.0640	109.00	1.1049	0.8770	0.7060
	1.4660	2.0600	108.40	1.0945	0.8700	0.7000

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2007-11-29	00:30	AUD	Private New Capital Expenditure	q/q	6.3%	2.2%
		Private New Capital Expenditure Measures the total amount of new capital expenditures by private businesses. A rising trend has a positive effect on the nation's currency because high levels of business investment are a sign of a strong economy.
2007-11-29	06:45	CHF	GDP	q/q	0.7%	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.
2007-11-29	07:00	GBP	Nationwide House Prices	m/m	1.1%	0.1%
		Nationwide House Prices Measures the monthly change in the average price for a house in the UK. It serves as a leading inflation indicator for the housing market.
2007-11-29	11:00	GBP	CBI Distributive Trades Realized		10	-
		CBI Distributive Trades Realized The Confederation of British Industry (CBI) Distributive Trades Realized Survey measures the health of the retail sector by asking executives if their firm experienced an increase or decrease in sales compared to a year ago. A positive number indicates that more retailers reported an increase. 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.
2007-11-29	13:30	USD	GDP Annualized	q/q	3.9%	4.9%
		GDP Annualized 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.
2007-11-29	13:30	USD	Unemployment Claims		330K	330K
		Unemployment Claims Measures the number of individuals who filed for unemployment insurance for the first time during the past week. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP. This weekly indicator produces very timely data, but traders generally view unemployment as a lagging indicator that gives little indication of the economy’s future performance.
2007-11-29	13:30	CAD	Current Account		8.4B	3.5B
2007-11-29	15:00	USD	New Home Sales		770K	740K
2007-11-29	21:30	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.
2007-11-29	23:15	JPY	Manufacturing PMI		49.5	-
		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.
2007-11-29	23:30	JPY	Core CPI	y/y	-0.1%	0.0%
		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%.