Forex Tips & Daily Analysis

Economical News

USD

The USD strengthened throughout yesterday's trading and as a result of mostly positive economic releases; it saw a day long bullish trend. Although the USD did lose momentum on Monday, yesterday it gained strength against most of its rivals. Against the EUR, the greenback rose and led to a decline of the pair to a level of 1.5480 in late New York market trading. The main factor that led to the USD's rise was the better than expected Core Retail Sales figure.

Yesterday's batch of American economic announcements started with Fed Chairman Bernanke's speech. Bernanke said that the financial markets improved, but cautioned that the central bankers and the markets are still a long way from the point when they can say the credit crisis is near its end. Traders looking for hints about future Interest Rate cuts in his speech were disappointed as he did not discuss the Fed's next Interest Rate move. Right after his speech, a batch of economic data was released, highlighted by Core Retail Sales of 0.5% and Import Price Index of 1.8%, both higher than forecasted.

Further adding to the USD's bullish momentum was the lower than expected Business Inventories figure which is a good sign for the American economy. Retailers order more goods when they have depleted inventories. This creates more business for the wholesales, who in turn increase their orders to manufacturers.

Looking ahead to today, we have the Consumer Price Index due to be announced. Forecasts have the index at the same rate as last month which should not affect the USD's value very much. Following the CPI announcement, Fed Governor Kroszner speaks at the Federal Reserve Bank of Boston. Lastly, traders will wait to hear the Crude Oil Inventories and watch how that release will affect the very high Crude Oil price, which high a record of nearly $127 yesterday. Traders should not expect much volatility from the USD today as the news releases are expected to be steady, but any surprise will either keep up the bullish momentum or lead to negative momentum.

EUR

Yesterday, the EUR experienced mixed momentum as it lost against the USD, and gained against a majority of its other counterparts. No economic data was released from the Euro- Zone and the trading of the EUR was fueled by past feelings of traders.

The only economic news directly regarding the EUR was the Eurogroup meeting which was held yesterday. During this meeting, Eurogroup president Jean-Claude Juncker said that financial markets finally understand the G7's message last month on foreign exchange. Juncker did mention the inflation concern adding that soaring food and Crude Oil prices are supporting that concern. The French and German stock markets did rise yesterday simultaneous to the mild rise of the EUR. However, against the USD, the EUR could not withstand as the greenback received a boost from strong U.S. economic releases.

After a silent day in terms of Euro- Zone data releases, today should be more interesting. Scheduled for today are the releases of French Consumer Price Index and Euro Industrial Production. Traders should also pay attention to the press conference following the Council of Economics and Finance Ministers meeting, where various financial matters will be discussed. Another important announcement will be the Bank of England Inflation Report, which is important to the EUR's future because of England's close ties and geographic location to the Euro- Zone. The forecasts of the French CPI and Euro Industrial Production are expected to be lower than in the previous month, therefore traders should expect bearish momentum from the EUR.

JPY

Yesterday the JPY saw bearish trends versus most of its major counterparts, and especially the USD, which was boosted by positive news from the U.S. economic markets.

The economic data released from Japan yesterday beat out forecasts and was quite positive for the struggling JPY. The Corporate Goods Price Index was announced at 3.7%, 0.1% higher than forecasted. Japan's Current Account was measured at 2.1T, which is a lot higher than the previous 1.45T and even higher than the already high forecast of 1.95T. Nevertheless, the JPY drop went on fairly independent from any Japanese news releases as it continued to accumulate a bearish momentum vs. the USD.

Looking ahead to today, Core Machinery Orders is expected to be announced and compared to the previous release, a positive figure is expected. This may be the time investors being timing their positions and take advantage of the recent decline in the Yen's value.

Technical Analysis

EUR/USD

The momentum created by the bullish breach through the channel has diminished and the pair now floats above the upper barrier of the channel. The daily RSI is showing fresh bullish momentum and it appears that testing the 1.5550 level is imminent.

GBP/USD

The bearish momentum continues with full steam, as the cable now floats around 1.9430, which is the bottom barrier of the channel. The Slow Stochastic of the daily chart is showing that a breach through the bottom level will unleash a very strong additional bearish move with a target price of 1.9350. Going short appears to be the right move today.

USD/JPY

There is a very clear bullish pattern on the daily chart after a local attempt to correct down has accumulated energy. The Slow Stochastic is showing a bullish cross which sharpens the notion that the trend is back. Going long appears to be the preferable choice today.

USD/CHF

Range trading with no distinct breaking direction continues. The daily oscillators are floating in neutral territory, as the hourlies show a very moderate bullish heading. No chart shows a strong enough signal, and staying out of this one today might be wise.

Wild Card

Gold

The daily chart is showing a very distinct pattern of a bearish flag which is on the verge of an additional bearish breakout. The Slow Stochastic confirms the bearish momentum and forex traders have a great opportunity to enter the market at a great entry price before the strong breach occurs.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5550	1.9540	105.66	1.0620	0.9500	0.8040
	1.5520	1.9510	105.36	1.0595	0.9470	0.8010
	1.5490	1.9480	105.06	1.0565	0.9440	0.7980
Support	1.5430	1.9410	104.46	1.0500	0.9370	0.7910
	1.5400	1.9380	104.16	1.0470	0.9340	0.7880
	1.5370	1.9350	103.86	1.0440	0.9310	0.7850

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-14	01:30	AUD	WPI	q/q	1.1%	1.1%
		WPI The Wholesale Price Index (WPI) measures the rate of inflation experienced at the wholesale level. The reading represents the monthly change in the average price of a fixed basket of goods and services purchased at the wholesale level.
2008-05-14	06:40	EUR	French CPI	m/m	0.8%	0.4%
		French 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.
2008-05-14	07:00	EUR	ECOFIN Meeting		*	*
		ECOFIN Meeting The Council of Economics and Finance Ministers (ECOFIN) will hold a meeting to discuss various financial matters, in Brussels. There may be a press conference or statement following the meeting. Traders will be on alert for comments regarding the euro's value.
2008-05-14	08:30	GBP	Average Earnings Index +Bonus q/y		3.7%	3.7%
		Average Earnings Index +Bonus q/y The Average Earnings Index (AEI) measures the average wage, including bonuses, paid to employees. The indicator reading represents the change in the current quarter when compared to the same quarter in the previous year.
2008-05-14	08:30	GBP	Claimant Count Change		-1.2K	0.1K
		Claimant Count Change Measures the change in the number of people claiming unemployment related benefits over the previous month. 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.
2008-05-14	08:30	GBP	Unemployment Rate		5.2%	5.2%
		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.
2008-05-14	09:00	EUR	Industrial Production	m/m	0.3%	-0.3%
		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.
2008-05-14	09:30	GBP	BOE Inflation Report		*	*
		BOE Inflation Report The Bank of England (BOE) Inflation Report provides detailed economic analysis and an assessment of inflation over the next two years. The report is published quarterly and holds critical insights into the bank's view of inflation and the economic conditions that will effect interest rates in the future. Traders scrutinize this report as it's been known to provide clues about the bank's future monetary policy.
2008-05-14	12:30	USD	Core CPI	m/m	0.2	0.2
		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%.
2008-05-14	12:30	USD	CPI	m/m	0.3	0.3
		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.
2008-05-14	13:15	USD	Fed Governor Kroszner Speaks		*	*
		Fed Governor Kroszner Speaks Federal Reserve Governor and FOMC voting member Randall Kroszner will deliver a speech titled "Addressing Challenges to Innovative Community Development Investment Activities" at the Community Reinvestment Fund Community Development Forum, in Minneapolis. 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.
2008-05-14	14:30	USD	Crude Oil Inventories		5.7M	*
		Crude Oil Inventories The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly increase in barrels of commercial crude oil held in inventory by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces.
2008-05-14	22:45	NZD	Retail Sales	m/m	-0.7%	-0.4%
		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.
2008-05-14	22:45	NZD	Core Retail Sales	m/m	0.2	-0.4%
		Core Retail Sales Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.
2008-05-14	23:50	JPY	Core Machinery Orders	m/m	-12.7	-5.2%
		Core Machinery Orders Measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. A rising trend has a positive effect on the nation's currency. When manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansion phase.