Forex Tips & Daily Analysis

Economical News

USD

Yesterday saw the resumption of rising trends for the greenback after bearish momentum had started off the trading week. The EUR\USD pair traded below 1.5510, and the GBP\USD traded below 1.9480.

The only data released yesterday from the US economy markets was the Leading Index which came back at 0.1%, better than the 0.0% mark that was forecasted. The main outcome of this survey suggests that the Federal Reserve (Fed) will have room to hike Interest Rates later this year in case Crude Oil prices will continue to put upward pressure on the local inflation. Yesterday, Crude Oil reached an all time record, breaching $127 per barrel.

On tap today, the Producer Price and the Core Producer Price Indices (PPI) will probably be the main catalysts of possible fluctuation in the market. These two surveys measure the rate of inflation experienced by manufacturers in the US. The inflation rate is the main concern for U.S economic chiefs at the moment, as a continuance of rising commodities prices (especially the Crude Oil) will compel them to generate Interest Rate manipulations. Later on in the day, Fed's Vice Chairman Kohn will deliver a speech regarding the economic outlook in New Orleans. His speech should include further clues regarding U.S methods of dealing with the rising inflation as well as changes in monetary policy.

Traders should focus mainly on the PPI results, as they might determine the greenback's direction for today. If results return with positive movement expect the USD to extend its bullish behavior.

EUR

Yesterday, investors were witness of volatile trends for EUR pairs, leaving the 15- Nation's currency with mixed results for the trading session. Volatile behavior was observed particularly within the EUR\JPY and the EUR\GBP. The EUR\USD underwent a staunch bearish trend, falling 0.4% from late Friday, down to 1.5508.

The strong volatility ripple that occurred in most EUR pairs came as a result of the shortage in EUR news since the beginning of the week. On the other hand, the falling trend vs. the USD took place mainly thanks to US economic data, which suggested that the U.S could be avoiding recession.

Coming up today, some crucial data is expected for the EUR. First will be the German Producer price index, which measures the rate of inflation, as analysts forecast this month's number to be lower than last months. Later on, the German and the European ZEW Economic Sentiment will be published. These surveys reflect the mood of investors regarding the economy. The German survey is forecasted to come back at -37.5, 3.2 points better than last month. The European survey is forecasted to come back at -44.2, 2.6 points better than last month, and the positive figures should create bullish inclination for the EUR.

Investors should take advantage of today's significant data which is scheduled for both the Euro zone and the U.S. The high volatility can benefit swift profits.

JPY

Yesterday the JPY underwent volatile sessions against its major currency counterparts. It saw up and down trends, as it eventually finished the trading day with figures similar to the previous trading day session.

The only data published for Japan yesterday was the Tertiary Industry Activity Index, which measures the change in spending for services. The index rose 0.3% in March, following a 1.7% decrease in February. The index contributed very little to the market movement of the JPY.

Looking ahead, a bundle of data is scheduled for the JPY throughout the day. The Overnight Call Rate will take place as it is expected to maintain Japan's interest rate as the lowest in the industrial world - 0.5%. Later on, the Bank of Japan (BoJ) Monthly Report will be published, providing a summary of the current economic climate from the Bank's viewpoint. A few hours later, the BoJ will hold a Press Conference, in which Governor Fukui will deliver a speech, revealing the factors that affected the interest rate decision and future monetary policy amendments.

Traders should expect major volatility within JPY pairs today, as all of today's data will be centered on the BoJ Press Conference that will likely determine today's trend.

Technical Analysis

EUR/USD

The daily chart is showing that the pair is trading in a range with no specific direction for the past 3 weeks. The Bollinger Bands are widened indicating increased volatility with the flat wide range is still in place. Indicators are mixed on both the daily and hourly level. Therefore the preferred strategy today will be to buy on dips and sell on highs.

GBP/USD

The Cable has made the first step of the bullish correction move and appears to be continuing with that notion. The Slow Stochastic of the 4 hour chart is showing positive slope, and the RSI is floating on the 50 level, which indicates that the pair still have much more room to run. The first target price might be 1.9600.

USD/JPY

The pair is showing bearish momentum on the hourly level after a drop to the 103.70 level. The 4 hour chart and the dailies are giving mixed signal with no distinct market direction. Forex traders are advised to wait for clearer signs on the dailies before entering the market.

USD/CHF

The pair has been quite choppy in the past two days yet no clear direction was seen. The 4 hour chart and the hourlies are in a bearish configuration while the dailies are showing that the pair still does not have a distinct direction. A preferable strategy might be to wait for the oversold hourly levels before taking a long position.

Wild Card

Gold

Gold broke the 908.00 resistance level. Gold is in an uptrend supported by 1 Hour exponential moving averages. Bollinger Bands are widened indicating increased volatility. We should expect to see a bullish configuration today. 1 Hour and 4 Hour Elliott patterns are also implying that Gold should gather momentum during the day. The target is expected to hit 910. This provides forex traders with a great opportunity to go long on a very healthy uptrend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5610	1.9580	105.20	1.0630	0.9600	0.8050
	1.5580	1.9550	104.90	1.0600	0.9570	0.8020
	1.5550	1.9520	104.60	1.0570	0.9540	0.7990
Support	1.5580	1.9460	104.00	1.0490	0.9460	0.7920
	1.5550	1.9430	103.70	1.0460	0.9430	0.7880
	1.5520	1.9400	103.40	1.0430	0.9400	0.7850

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-20	01:30	USD	RBA Meeting Minutes		*	*
		RBA Meeting Minutes The Reserve Bank of Australia (RBA) Meeting Minutes are a detailed record of the committee's interest rate meeting held about two weeks earlier. The minutes provide detailed insights regarding the RBA's stance on monetary policy, so traders carefully comb them for clues regarding future interest rate shifts.
2008-05-20	03:04	JPY	Overnight Call Rate		0.50%	0.50%
		Overnight Call Rate Measures Interest rate at which the BOJ rediscounts bills or extends loans to financial institutions; Usual Effect Actual > Forecast = Good for currency; Frequency Variable, about 14 times per year; FF Notes The rate shift is often priced in the market so it tends to be overshadowed by the BOJ Press Conference held a few hours later; Acronyms Bank of Japan (BOJ); Also Called Interest Rates; Why Traders Care Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future; Derived Via The 9 members of the BOJ Monetary Policy Committee come to a consensus on where to set the rate;
2008-05-20	06:00	JPY	BOJ Monthly Report		*	*
		BOJ Monthly Report The Bank of Japan (BOJ) Monthly Report provides a summary of the current economic climate from the Bank's viewpoint, including growth, inflation, exports, and interest rates. The report is based on data available at the time of the last Monetary Policy Meeting.
2008-05-20	06:00	EUR	German PPI		0.7%	0.5%
		German PPI The Producer Price Index (PPI) 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.
2008-05-20		JPY	BOJ Press Conference		*	*
		BOJ Press Conference Speaker BOJ Governor; Usual Effect More hawkish than expected = Good for currency; Frequency Variable, about 14 times per year; Acronyms Bank of Japan (BOJ); Also Called Interest Rate Statement; Why Traders Care It's one of the primary methods the BOJ uses to communicate with investors regarding monetary policy. It covers the factors that affected the most recent interest rate decision, the overall economic outlook, inflation, and clues regarding future monetary policy;
2008-05-20	07:15	CHF	PPI	m/m	0.6%	0.5%
		PPI The Producer Price Index (PPI) 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.
2008-05-20	09:00	EUR	German ZEW Economic Sentiment		-40.7	-37.5
		German ZEW Economic Sentiment Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment measures institutional investor sentiment. The monthly indicator reflects the difference between the share of investors that are optimistic and the share of investors that are pessimistic. For example, if 30% of participants expect the economic situation to improve within the next six months, 30% expect no change and 40% expect the economic situation to deteriorate, the ZEW Indicator of Economic Sentiment would take a value of -10. Thus, a positive number means that the share of optimists outweighs the share of pessimists.
2008-05-20	09:00	EUR	ZEW Economic Sentiment		-44.8	-44.2
		ZEW Economic Sentiment Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment measures institutional investor sentiment. The monthly indicator reflects the difference between the share of investors that are optimistic and the share of investors that are pessimistic. For example, if 30% of participants expect the economic situation to improve within the next six months, 30% expect no change and 40% expect the economic situation to deteriorate, the ZEW Indicator of Economic Sentiment would take a value of -10. Thus, a positive number means that the share of optimists outweighs the share of pessimists.
2008-05-20	12:30	CAD	Foreign Securities Purchases		3.8B	2.3B
		Foreign Securities Purchases Measures the monthly value of domestic securities, debt, and assets purchased by foreigners. 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.
2008-05-20	12:30	USD	Wholesale Sales	m/m	-1.8%	0.2%
		Wholesale Sales Measures the total value of sales at the wholesale level. A rising trend has a positive effect on the nation's currency because increased sales at the wholesale level are a good indication that there is high consumer demand at the retail level.
2008-05-20	12:30	USD	PPI	m/m	1.1%	0.4%
		PPI The Producer Price Index (PPI) 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.
2008-05-20	12:30	USD	Core PPI	m/m	0.2%	0.2%
		Core PPI Derivative of the Producer Price Index (PPI) that excludes the Food and Energy items. Although Food and Energy can be very volatile from month to month, they play an important role in pass-through inflation. Therefore Core PPI usually has less impact than the overall PPI.
2008-05-20	13:00	USD	Fed Vice Chairman Kohn Speaks		*	*
		Fed Vice Chairman Kohn Speaks Federal Reserve Vice Chairman and FOMC voting member Donald Kohn will speak about the economic outlook at the National Conference on Public Employee Retirement Systems Annual Conference, in New Orleans. 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.
2008-05-20	13:00	USD	IBD/TIPP Economic Optimism		39.2	38.0
		IBD/TIPP Economic Optimism The Investor's Business Daily (IBD) TechnoMetrica Institute of Policy and Politics (TIPP) Economic Optimism Index measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey where 900 nationwide adults evaluate their "six-month economic outlook," "personal financial outlook," and their "confidence in federal economic policies." Index readings above 50 indicate optimism; below 50 indicates pessimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-05-20	14:00	USD	Fed Publishes TAF Summary		*	*
		Fed Publishes TAF Summary On April 21, 2008, the Federal Reserve offered $50 billion in 28-day credit through its Term Auction Facility (TAF). A summary of the auction results are expected to be published.