Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the greenback maintained its volatile trading momentum against its rivals, while mixed important economic figures were released from all over the world. The greenback rate hit a 10 day low against the EUR at the rate of 1.5542 before recovering most of its losses following positive economic releases from the U.S. markets.

Yesterday was an important news day on the US economic calendar. The release of some key economic indicators showed that some improvement or more importantly stability has returned to the US economy. The Unemployment Claims report showed a moderate increment, with the final figure of 371K. The Philadelphia Fed Manufacturing Index recovered to the level of -15.6, which is a great deal healthier than the April reading of -24.9. Overall, yesterday's mixed fundamental data imposed a very volatile and risky session.

Today should provide some expected volatility in the market, ahead of a day full of U.S. news events highlighted by the housing market and consumer confidence data.

Traders may expect another fall in Housing Starts and Building Permits in April. However, the University of Michigan Confidence index in May could rise to 65.0 from a record low of 62.6 in April.

For the time being EUR/USD seems trapped in a range between 153.50 and 155.75. As long as market participants are in doubt whether the U.S. economy will weather the storm without any further rate cuts, traders should not expect drastic moves on the currency cross rate.

EUR

Yesterday, the mixed economic figures releases from all the economical sectors made the EUR trade volatile and risky. The trading day started off with bullish trends for the EUR, and than reversed into coherent falling trends against its major counterparts.

The bullish inclination that was observed with the beginning of the trading day came as a result of a series of positive data coming out for the European markets. The German, French and European Gross Domestic Products (GDP) delivered better than expected figures. The German GDP came at 1.5% after last month's 0.3% mark. The French GDP came at 0.6% after last month's 0.3%, and the European GDP came at 0.7%, after last month's 0.4% figure. Such favorable results must have initiated the rising EUR trend. Later on, a bundle of data began flowing from the U.S, delivering unexpected positive figures. Relatively strong printing of the TIC Net Long-Term Transactions and the Philadelphia Fed Manufacturing indices promptly generated a rising trend for the greenback and respectively a drop of the EUR.

As for today, the European Central Bank President is expected to deliver a speech at the 9th Brussels Economic Forum as it may supply traders with important indicators for the short term trading. As always, high volatility is expected throughout his speech.

Traders should follow carefully European developments, yet they are ought to keep one eye open for U.S news, as they are suppose to be more vital.

JPY

Yesterday, the JPY moderately rose across the board as investors reduced demand for riskier assets such as stocks after a series of relatively weak U.S. economic data added to anxiety over the country's growth picture.

The JPY rising trend was further supported by the Preliminary GDP figure which showed that Japan's economic growth unexpectedly picked up pace in the first quarter thanks to firm exports and consumption. Such a result allayed fears that deepening global financial market problems may take a toll on the world's second-largest economy.

The JPY hiked to a session high of 104.40 and was last trading around the 104.50 level, up 0.4 % on the day.

The low-yielding Yen tends to attract flows during periods of uncertainty as the low Interest Rates reflect Japan's capital surplus. Considering that the Japanese Interest Rate is only 0.5%, an ascending inflation is a real risk for the economy and investors are well aware of that.

Today, traders should look forward for some more bullish attitude regarding the JPY, and keep watching carefully for news arriving from the U.S and the Euro-zone, as they will be the main factors in the JPY progress for today.

Technical Analysis

EUR/USD

The daily chart is showing that the pair still does not have a distinct direction, although it consolidates around the 1.5500 and appears to be accumulating momentum ahead of the next break. The 4 hour chart is showing moderate bullish momentum, however the hourlies and the daily charts do not show a distinct direction. Forex traders are advised to wait for clearer signs on the hourlies before entering the market.

GBP/USD

The moderate bearish price movement continues within the bearish channel which still has yet to be breached. The daily chart is showing a strong bearish cross, and the 4 hour chart is also slowly joining the bearish notion. The RSI is floating near the 50 level and the Slow Stochastic is pointing to the continuation of the bearish movement. Next testing point should be around 1.9650. Going short appears to be preferable today.

USD/JPY

After the bullish breach through the daily channel accumulated its momentum, the pair has returned to its bearish trend. Currently, there is an accurate narrowing bearish channel on the daily chart. The Slow Stochastic is indicating that the chances of a bullish breach are quite slim and that the bearish momentum still has steam in it. All indications are that there is room for further downward movement and the preferred strategy today will be to go short on dips.

USD/CHF

After touching a base at 1.0486, the pair now consolidates a bit higher at 1.0500. All oscillators show that the bearish momentum will probably continue. The Slow Stochastic of the 4 hour chart is showing no crosses in the horizon, and the bearish momentum appears to be intact. The RSI and Momentum are negatively sloped. This pair is still trending downwards and there are no imminent indications of a reversal. Therefore traders can maximize profits by entering a steady short position.

Wild Card

Crude Oil

The violent bullish trend continues as all technical indicators on all time frames are showing that the direction is up and the momentum is extremely high. A fresh all time high has breached on a daily basis, and the end doesn't appear to be close. Forex traders are advised to join the bullish trend with relatively loose stops, until the first signal of a slowdown is received.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5540	1.9565	105.56	1.0650	0.9490	0.8020
	1.5510	1.9535	105.26	1.0620	0.9460	0.7990
	1.5480	1.9505	104.96	1.0590	0.9430	0.7960
Support	1.5400	1.9440	104.36	1.0530	0.9360	0.7890
	1.5370	1.9410	104.06	1.0510	0.9330	0.7860
	1.5340	1.9380	103.76	1.0480	0.9330	0.7830

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-16	04:10	AUD	RBA Assistant Governor Debelle Speaks		*	*
		RBA Assistant Governor Debelle Speaks Reserve Bank of Australia (RBA) Assistant Governor Dr. Guy Debelle will deliver a speech titled "A Comparison of the US and Australian Mortgage Markets" at the International Expert Symposium, in South Australia.
2008-05-16	04:30	JPY	Industrial Production	m/m	-3.1%	-3.1%
		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.
2008-05-16	05:00	JPY	Household Confidence		36.7	36.0
		Household Confidence Measures the mood of households in regard to economic conditions. The reading is derived from a monthly survey that asks households 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.
2008-05-16	06:45	EUR	French Nonfarm Employment	q/q	0.3%	0.3%
		French Nonfarm Employment Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation's currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP.
2008-05-16	07:00	USD	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.
2008-05-16	07:15	CHF	Retail Sales	y/y	3.3%	3.0%
		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.
2008-05-16	08:00	EUR	Italian Trade Balance		-0.4B	-0.9B
		Italian 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.
2008-05-16	09:00	EUR	Trade Balance		2.1B	*
		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.
2008-05-16	12:30	CAD	New Motor Vehicle Sales m/m	m/m	-3.2%	0.0%
		New Motor Vehicle Sales m/m Measures the unit sales for new vehicles. A rising trend has a positive effect on the nation's currency because demand for vehicles, as with other expensive durable goods, has historically been a leading indicator of trends in overall consumer spending. Vehicle sales accounting for roughly 25% of total retail sales.
2008-05-16	12:30	USD	Building Permits		928K	915K
		Building Permits Measures the number of new construction intentions. This data is a leading indicator for the construction industry since the issuance of a building permit is one of the first steps in the construction process.
2008-05-16	12:30	USD	Housing Starts		947k	940K
		Housing Starts Measures the annualized number of new residential buildings that began construction during the previous month. A rising trend has a positive effect on the nation's currency because the housing market is a leading gauge for the overall economy. A high level of housing activity signals that the construction industry is healthy and that consumers have the capital to make large investments. More importantly, new housing activity creates an economic ripple effect as home owners buy goods such as appliances and furniture for their homes, and builders buy raw materials and hire more workers to meet demand.
2008-05-16	14:00	USD	Consumer Sentiment (p)		62.6	62.0
		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.
2008-05-16	16:00	USD	Treasury Secretary Paulson Speaks		*	*
		Treasury Secretary Paulson Speaks US Treasury Secretary Henry Paulson will hold a press conference with French Finance Minister Christine Lagarde, in Paris.