Forex Tips & Daily Analysis

Economical News

USD

The greenback began the week on a slight downward trend following some concerning news from the G7 over the weekend. After a meeting of the leading industrial nations in Tokyo, the G7, without specifically singling out a specific country voiced its growing concerns over the trembling global market. The US economy, while not being the sole catalyst has magnified the situation that much more, as the housing and credit crisis in America continues to press on. These issues coupled with the uncertainty of financial markets contributed to losses for the dollar against its major rivals as the new week began. The greenback was down nearly 25 pips in early Monday trading against the EUR at 1.4529 following a positive showing on Friday which saw the currency dip below the 1.45 EUR/USD support level ahead of the G7 meeting over the weekend. Similar results were seen against the Sterling, and while not nearly as significant, the move still concerns some dollar enthusiasts as most good performances by the dollar lately have not lasted very long. With another week of essential economic data on tap, many investors expect a bearish dollar trend to develop.

The US is expected to release a batch of important economic data that will likely map the near future for the dollar. Retails Sales, Trade Balance, TIC Net Long-Term Transactions and Consumer Sentiment are only some of the more standout figures expected to affect trading throughout the currency market. Thursday, traders should expect a speech from Fed Chairman Ben Bernanke, which according to the results from the aforementioned data, could dictate the reaction by the Fed as it tries to ease pressure off the greenback.

The dollar faces significant risk over the next week or so if it can't pose a big enough rally, as the EUR, Sterling and JPY will continue to eat away at gains made at the end of last week. Barring a standout result from economic data and consumer confidence from the US, the dollar could face another costly drop this week, especially with the ongoing rise of gold prices.

Today's US calendar has no economic data scheduled for release.

EUR

The EUR spent most of last week fighting off a string of negative data and rising concerns of a heavy slowdown in the Eurozone economy. As production numbers throughout the major European nations continued to be released the EUR managed to slip over 300 points against its staunch rival the greenback before ending Friday trading just above 1.45.

The weakening state of the Eurozone economy has convinced many that ECB President Jean-Claude Trichet will cut interests rates to ease growth related pressure. This would be a move in a different direction as the hawkish stance held by the ECB had led many to believe that if any action was taken, it would have been a rate hike.

The week ahead will produce a set of economic data that should help the EUR recover from last week's turbulent performance. French Nonfarm Employment, French and German GDP, Industrial Production, German ZEW Economic Sentiment are all on tap, as the week will begin with today's release of French Industrial Production. As data is expected to disappoint, two separate speeches by ECB President Trichet later this week should give us an idea how serious the Eurozone slowdown is.

JPY

Despite the fact that U.S. stocks continued to weaken and last Fridays' Eco

Watchers Survey printed at weaker than expected, carry trades have since stabilized. Overall, the JPY finished off trading last week 0.2% higher at 107.32, as investors looked across the water to Europe and the U.S. to find more attractive returns on their money. According to the latest Tankan survey most Japanese corporations forecast the value of USD/JPY in 2008 to be at around 113.00. With the pair now trading at 107.30 those hedges are deep in the red indicating that profit margins for exporters will suffer.

Today, the Japanese market will be closed due to the National Foundation Day.

Currency markets are expected to be relatively quiet with Japan on a holiday, and there probably will not be too much volatility in the wake of Friday's Interest Rate Announcement and the BoJ Monthly Report. In the week's Japanese economic calendar, we will also see the release of GDP numbers as well as several industrial figures.

Technical Analysis

EUR/USD

An ascending triangle structure is forming on the daily chart which implies a bullish comeback with a first target price of 1.4623.

The ascending triangle may offer even more significance as the top barrier is located at 1.4878 and the Slow Stochastic was crossed at 12, indicating that there is more room for the bullish trend.

GBP/USD

The daily chart is bullish as the Slow Stochastic crossed at 10 and the RSI shows a positive slope. The next resistance level is located at 1.9568, and the next support level is at flat 1.9400. If the cable drops sharply beyond that level, a strong bearish move might be in place.

USD/JPY

The trendless tight range the pair has been going through continues with no hint of a distinct direction. The 4 hour chart is indicating that locally the move within the channel is bearish. Traders must wait for a significant break on any side in order to swing back in.

USD/CHF

The 4 hour chart is showing a classic reversal formation in the form of an upwards channel. The channel is supported by a cross in the slow stochastic which indicates that the bullish move might be quite imminent. Going long appears to be the right move today.

Wild Card

GBP/JPY

There is a very distinct downwards channel forming on the 4 hour chart as the pair now floats around its upper level. The RSI and slow stochastic are floating in the mid section which indicates that the next move would be towards the bottom of the channel. This could be a great opportunity for forex traders to enter the market on a short position with a chance that a bearish break beyond the channel will unleash an even stronger move.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4700	1.9560	107.69	1.1100	0.9147	0.7600
	1.4659	1.9528	107.35	1.1020	0.9100	0.7589
	1.4600	1.9500	107.00	1.9089	0.9059	0.7525
Support	1.4528	1.9400	106.45	1.0900	0.9000	0.7500
	1.4500	1.9346	106.24	1.0870	0.8938	0.7460
	1.4436	1.9300	106.00	1.0834	0.8853	0.7410

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-02-11	07:45	EUR	French Industrial Production	m/m	-1.5%	-
		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.
2008-02-11	09:30	GBP	PPI Input	m/m	0.5%	-
		PPI Input The Producer Price Index (PPI) Input 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.
2008-02-11	09:30	GBP	Trade Balance		-7.4B	-
		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.
2008-02-11	12:30	AUD	Home Loans	m/m	4.0%	-
		Home Loans Measures the number of commitments for owner occupied home financing. A rising trend has a positive effect on the nation's currency because large purchases tend to be made by consumers that are optimistic and confident in their financial position. Additionally, consumer borrowing has a high degree of historical correlation with consumer spending, which is a major driver of the overall economy.