Forex Tips & Daily Analysis

Economical News

USD

Yesterday the greenback had a volatile trading session against its major currency rivals. It underwent contrasting trends vs. the EUR and the GBP and was bullish vs. the JPY. The main news from the US economy revolved around the Consumer Price Indices. The Consumer Price Index was released at 0.2%, a little bit lower than last month's 0.3% mark. The Core Consumer Price Index was also slightly lower than last month's 0.2% mark as it came in at 0.1% for April. The biggest repercussion from the reports is that the Fed can now cut rates once again if needed, rather than worry about rising inflationary trends. This very understanding might be what reversed the USD bullish trend into a bearish one.

Today, an extremely intensive news day can be expected for the US economy. First off on the day will be the Empire State Business Conditions Index. The index measures the general business conditions of manufacturers in New York State. Although the survey is limited to New York only, it's highly important as the New York Federal Reserve report serves as a precursor for national manufacturing numbers. Later on, the Treasury International Capital (TIC) Net Long-Term Transactions will be published. Analysts forecast it to release at 63.6B, well below last month's 72.5B mark. Such a descent should have negative effect on the USD. At 13:30 (GMT) Fed Chairman Bernanke will deliver a speech in Chicago on Risk Management in Banking Organizations. As always, Bernanke's speeches are very intriguing, as clues regarding interest rate changes might be scattered throughout. Considering that analysts predict an interest rate cut to be imminent, this particular speech could be vital. At 14:00 (GMT) The Philadelphia Fed Manufacturing Index will be published. Just like the New York Index, its importance derives from the fact that it's released weeks before other major reports on manufacturing.

Today will be a fascinating day for traders, yet it obligates them to stay fully alert. For today, trading the USD could create significant profits as high volatility is expected throughout most of the day.

EUR

Yesterday the EUR saw volatile trends within its major pairs. The EUR\USD began the day with a falling trend as it hit a daily low of 1.5413, yet it promptly rose up to 1.5473. The only significant gain for the EUR came against the JPY.

European news from yesterday included the French Consumer Price Index. This Index which measures the rate of inflation came out at 0.3%, lower than last month's 0.8% figure. Later on in the day, the European Industrial Production report was published, and released at -0.2%, better than the expected -0.3% mark, yet lower than last month's 0.3%. Also yesterday, the Council of Economics and Finances Ministers held a meeting, where all of the Euro-Zone financial chiefs expressed concerns over the growing levels of inflation, yet they admitted their appreciation to the European Central Bank (ECB) reactions to the rising commodities prices, and stated they have full confidence that it will continue to act this way.

As for today, a bundle of data is expected for the EUR. The German, French and European Gross Domestic Product (GDP) reports are scheduled. These reports measure the total value of all goods and services produced by an economy. Analysts forecast positive results in all three reports, and rising trends are likely in light of these forecasts, as GDP is the primary gauge of an economy's health. Later on, the ECB President Jean Claude Trichet will deliver a speech. Trichet has avoided manipulating the European interest rate for the last month, despite rising commodities prices. Investors will follow his speech very closely, in the event that he gives any clues regarding a rate change, as it should instantly affect the EUR.

Traders should remain very keen today, as high volatility is expected. Lots of data coming from the Euro zone and the U.S should create fluctuation in the market. Traders should use this opportunity to create short-term profits.

JPY

Yesterday was an extremely bearish day for the JPY as it saw falling trends against most of its major counterparts. It has continued it's freefall since the beginning of the week vs. the USD, the EUR and the GBP.

The only news regarding the JPY that came out yesterday was Core Machinery Orders, which reflected an 8.3% fall in March, making the value of orders in March the smallest since May 2005. It is the second straight monthly fall following a 12.3% decline in February, and for now it seems that the JPY is continuing to nurture its deterioration.

On tap for today, the Japanese Gross Domestic Product is scheduled. This survey measures the total value of all goods and services produced by the economy. Analysts forecast it to come in lower than last month, and such unfavorable results will probably continue to contribute to the JPY downfall.

Traders should bear in mind that the Gross Domestic Product results will be published only at 23:50 (GMT). Hence until then the JPY will be mostly influenced by global economic developments, especially from the U.S. This day is promising to be a very volatile day for the Forex market, and the JPY shouldn't be any different.

Technical Analysis

EUR/USD

The pair's bullish move is approaching the testing point of 1.5500 which is a key Fibonacci level of the entire bearish corrective move. The momentum is quite bullish and if a breach through the key level occurs, we might see the pair generate fresh momentum with a target price of 1.5580.

GBP/USD

There is a very distinct flag forming on the 4 hour chart, as the cable now approaches the upper level close to the tip of the flag. The local momentum within the flag is moderately bullish yet a very strong cross is imminent on the daily chart, which indicates that the bearish move might return shortly with strong steam.

USD/JPY

The pair is in the midst of the fifth consecutive day of appreciation and according to the daily chart there is still much more room to run. The hourlies are supporting the bullish notion, and it appears that going long might be the preferable strategy today.

USD/CHF

The pair has been ranging for a while now after the strong bullish move, and it appears that today the local momentum might be moderately bearish. Although the signal is not strong the pair might have a local target at 1.0450, which might make it feasible for forex traders to go short with very tight stops.

Wild Card

Gold

The flag formation on the daily chart still remains intact, as gold now floats in the middle of it with moderate bullish momentum. The upcoming cross on the daily Slow Stochastic is showing that the bearish trend will probably resume quite shortly. This could be a great opportunity for forex forex traders the take a position before the technical signal is fully unraveled.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5570	1.9560	105.90	1.0630	0.9430	0.7835
	1.5540	1.9530	105.60	1.0600	0.9400	0.7805
	1.5510	1.9500	105.30	1.0570	0.9370	0.7975
Support	1.5440	1.9430	104.70	1.0540	0.9300	0.7915
	1.5410	1.9400	104.40	1.0510	0.9270	0.7885
	1.5380	1.9370	104.10	1.0480	0.9240	0.7855

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-15	01:30	AUD	RBA Bulletin		*	*
		RBA Bulletin The Reserve Bank of Australia (RBA) Bulletin is a monthly publication that contains economic commentary, feature articles, speeches and a set of statistical tables.
2008-05-15	05:45	CHF	Consumer Climate		14	11
		Consumer Climate Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-05-15	06:00	EUR	German GDP	q/q	0.3%	0.7%
		German 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.
2008-05-15	06:00	EUR	German CPI	m/m	-0.2	-0.2%
		German 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.
2008-05-15	06:45	EUR	French GDP	q/q	0.4%	0.5%
		French 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.
2008-05-15	09:00	CHF	SNB Board Member Jordan Speaks		*	*
		SNB Board Member Jordan Speaks Swiss National Bank (SNB) Governing Board Member Thomas Jordan will deliver a speech titled "Monetary Policy in a Climate of Increased Uncertainty," in Geneva
2008-05-15	09:00	EUR	Core CPI	y/y	2.0	2.0%
		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%.
2008-05-15	09:00	EUR	GDP	q/q	0.4%	0.5%
		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.
2008-05-15	09:00	EUR	CPI	y/y	3.6%	3.3%
		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.
2008-05-15	10:30	AUD	RBA Governor Stevens Speaks		*	*
		RBA Governor Stevens Speaks Reserve Bank of Australia (RBA) Governor Glenn Stevens will deliver a speech titled "Asia, Australia and Financial Markets" at the Asia Society AustralAsia Centre CEO Asia Update luncheon, in Sydney. As head of the central bank's governing body, which is responsible for setting the nation's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
2008-05-15	11:40	EUR	ECB President Trichet Speaks		*	*
		ECB President Trichet Speaks European Central Bank (ECB) President Jean-Claude Trichet will speak at the 36th Economics Conference organized by Oesterreichische Nationalbank, in Austria. As head of the central bank's governing body, which is responsible for setting the euro zone's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
2008-05-15	12:30	CAD	Manufacturing Shipments m/m	m/m	1.6%	-0.4%
		Manufacturing Shipments m/m Measure the total value of shipments made by manufacturers.
2008-05-15	12:30	USD	Empire State Business Conditions		0.6	0.1
		Empire State Business Conditions Measures the general business conditions of manufacturers in New York State. The index is derived from a survey that asks respondents to rate the level of general business activity as 'decrease', 'increase', or 'no change'. A rising trend has a positive effect on the nation's currency because good manufacturing conditions are a sign of a strong economy. Although this survey is limited to manufacturers in New York only, traders pay close attention because the New York Federal Reserve releases it weeks before other major reports on manufacturing (e.g., Industrial Production, ISM Manufacturing Index).
2008-05-15	12:30	USD	Unemployment Claims		365K	370K
		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.
2008-05-15	13:00	USD	TIC Net Long-Term Transactions		72.5B	63.6B
		TIC Net Long-Term Transactions Treasury International Capital (TIC) Net Long-Term Transactions measures the monthly difference in cross-border foreign and domestic purchases of long-term securities (i.e., bonds with an original maturity longer than one year). For example, if foreigners purchased $100 billion in US securities, and the US purchased $30 billion in foreign securities, the net reading would be $70 billion. A rising trend has a positive effect on the nation's currency because foreigners must first convert their domestic currency before they can purchase the nation's assets. This can dramatically elevate currency demand. Traders watch this indicator closely as it provides several insights into international currency flows.
2008-05-15	13:15	USD	Capacity Utilization Rate		80.5%	80.1%
		Capacity Utilization Rate Measures the percentage of available resources being utilized by factories, mines and utilities. A rising trend has a positive effect on the nation's currency because companies tend to raise their prices when nearing maximum capacity. This price increase (i.e., inflation) will eventually trickle down to the consumer, so capacity levels can act as a leading indicator of CPI and other consumer inflation gauges. Traders pay special attention to the Capacity Utilization Rate because it's one of the only inflation indicators that is produced directly by the Federal Reserve.
2008-05-15	13:15	USD	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.
2008-05-15	13:30	USD	Fed Chairman Bernanke Speaks		*	*
		Fed Chairman Bernanke Speaks Federal Reserve Chairman Ben Bernanke will speaks at the Charlotte Chamber of Commerce annualy meeting where he will recieve an award and talk about the regional economy. 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.
2008-05-15	14:00	USD	Philadelphia Fed Man. Index		-24.9	-19.0
		Philadelphia Fed Man. Index Measures the general business conditions of manufacturers in the Philadelphia Federal Reserve district. The index is derived from a survey that asks respondents to rate the level of general business activity as 'decrease', 'increase', or 'no change'. A rising trend has a positive effect on the nation's currency because good manufacturing conditions are a sign of a strong economy. Although this survey is limited to manufacturers in Philadelphia only, traders pay close attention because the Philadelphia Federal Reserve releases it weeks before other major reports on manufacturing (e.g., Industrial Production, ISM Manufacturing Index).
2008-05-15	14:30	CAD	BOC Spring Review		*	*
		BOC Spring Review The Bank of Canada (BOC) Review is a quartarly publication featuring articles related to the economy and central banking, with summary statistical tables.
2008-05-15	17:00	USD	NAHB Housing Market Index		20	20
		NAHB Housing Market Index The National Association of Home Builders (NAHB) Housing Market Index (HMI) combines several factors including present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers in new homes. The NAHB produces the index through a survey in which respondents are asked to rate the general economy and housing market conditions.
2008-05-15	20:00	USD	US Treasury Semi-Annual FX Report		*	*
		US Treasury Semi-Annual FX Report This is the Treasury Department's Report to Congress on International Economic and Exchange Rate Policies outlining the currency practices of America's major trading partners.
2008-05-15	22:45	NZD	PPI Input	q/q	1.3%	*
		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.
2008-05-15	22:45	NZD	PPI Output	q/q	1.5%	1.4%
		PPI Output The Producer Price Index (PPI) Output measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when selling goods and services. Manufacturers are unlikely to pass Output inflation to the consumer, so it has much less market impact than its PPI Input counterpart.
2008-05-15	23:00	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.
2008-05-15	23:50	JPY	GDP Deflator	y/y	-1.3%	-1.5%
		GDP Deflator The Gross Domestic Product (GDP) Deflator measures the quarterly implied rate of inflation for all economic activity. The deflator is used to calculate the difference between nominal and real GDP.
2008-05-15	23:50	JPY	GDP	q/q	0.9%	0.6%
		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.