Forex Tips & Daily Analysis

Economical News

USD

Yesterday the USD gained some strength against most of the major currencies. The Unemployment Claims were forecasted 8k higher than the actual figure. As such the decrease in unemployment claims helped the USD's strengthening. The most interesting trend was when the USD/JPY pair appreciated. This resulted in an appreciation of 80 pips from 12 GMT until 18 GMT, almost uninterrupted, the USD/JPY rose from 103.52 to 104.32.

Today the only indicator to come out from the land of Old Glory is the important Existing Home Sales indicator. This indicator is a monthly demand measurement for homes sales. Although the indicator does not hint directly about the growth of the economy, these home owners tend to purchase new appliances and furniture to furnish their homes which does affect the economy's growth. Thus, a rising trend will have a positive affect on the USD, when the forecast is at 48.6 million compared to the previous month's forecast of 49.6 million, the USD may decrease in value. This weekend will be longer than usual for the USD as Memorial Day is celebrated this Monday, which will cause low liquidity in the New-York session.

Today an investor may expect mixed trends for the USD. In the first part of the day a continuation of yesterday's ascending trend. And in the second part of the day, if the Existing Home Sales' figure will come out as expected a descending trend will be seen by the greenback.

EUR

The Euro was traded yesterday with mixed results versus the major currencies. This can be explained by the good news that came from the U.S. and the U.K. Traders should note that the EUR/JPY gained 93 points in trading. As such a minimum position of 10k, going long, opened with leverage of 1:20, could have earned 18.6%; this is amazing feat not only on a daily basis but also on an annual basis.

Yesterday was a slow news day in the Euro-Zone as the Corpus Christi Day was observed in Germany. The major indicator published in the Euro-economic zone was the Industrial New Orders m/m which came in lower than forecasted at -1.0%. Today greater volatility is expected as more news will be published throughout the day. As the majority of the indicators are expected to be lower then the previous publication, this should cause the EUR to have a declining trend.

Beware of French Finance Minister, Christine Lagarde's attempt to promote the strengthening of the USD. She is promoting the USD after it lost approximately 17% in the past 12 months. Despite the fact that she has not specified a plan, she did use strong language that she would arm twist whoever is holding the strings to pull the dollar up. This can mean that a plan is in the working that would shift the current economic situation.

The opportunities to succeed are out three. Hence investors should scrutinize in order to invest correctly in the EUR.

JPY

The GBP/JPY gained just under 1% in trading yesterday. In addition, the remainders of the major currencies have gained as well vs. the Yen. As there was no news published during New-York trading session from Japan, the weakening of the Yen was based on news from its counterparts. Investors may note that even though the Yen has lost strength yesterday, it actually has been gaining strength since mid-June 2007 at just about 16% altogether.

In last night's Publication of the Monetary Policy Meeting Minutes, the Bank of Japan set 0.5% as the goal for the uncollateralized overnight call, which is the inertest rate in Japan. Today the word is mum from Japan. Investors should pay close intention to news from other countries.

For interesting episodes yesterday involving the Yen please refer to the previous analysis.

Technical Analysis

EUR/USD

There is a very interesting bullish channel forming on the 4 hour chart, as the pair now bounces back from the bottom section of it. The Slow Stochastic is showing a very strong cross which indicate that the direction of the pair should be heading up. Going long appears to be preferable.

GBP/USD

After the pair hit the rock bottom of 1.9400, the momentum appears to be consistently bullish. Oscillators are showing that the trend might continue to the next key level of 1.9900, and if a breach will occur, there will probably be a stronger fresh bullish momentum. Going long might be the smart choice today.

USD/JPY

The pair has been going through a bullish trend for a while and is now floating in a flat channel on the daily chart. The Slow Stochastic is showing that it's a matter of time before the bullish trend resumes, and that going long will most probably be the best choice today.

USD/CHF

The pair is currently floating in a wide range on the daily chart, and appears to be heading down at the moment. The Slow Stochastic of the daily chart is moderately bearish, and the RSI confirm the bearish notion. It appears that going short with tight stops might be the right strategy today.

Wild Card

WILD - Crude Oil

It seems that the bullish momentum is still relevant, and that oil is heading up with plenty of room to run. There is a local corrective move on the hourlies that is losing momentum, which gives forex traders a great opportunity to rejoin the trend at an excellent entry price.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5800	1.9890	105.00	1.0400	0.9680	0.8030
	1.5775	1.9850	104.70	1.0360	0.9645	0.8000
	1.5750	1.9820	104.30	1.0335	0.9610	0.7975
Support	1.5700	1.9750	103.70	1.0275	0.9550	0.7950
	1.5670	1.9720	103.40	1.0240	0.9525	0.7920
	1.5630	1.9700	103.00	1.0200	0.9500	0.7880

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-23	06:45	EUR	French Consumer Spending		-1.0%	0.4%
		French Consumer Spending Measures the total amount spent by consumers on goods and services. A rising trend has a positive effect on the nation's currency because consumer spending is a major driver of the economy, accounting for about two-thirds of GDP.
2008-05-23	07:30	EUR	German Manufacturing PMI		53.6	53.3
		German Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2008-05-23	07:30	EUR	German Services PMI		54.9	54.0
		German Services PMI The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2008-05-23	08:00	EUR	Manufacturing PMI		50.7	50.5
		Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2008-05-23	08:00	EUR	Services PMI		52.0	51.7
		Services PMI The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2008-05-23	08:30	GBP	Second Estimate GDP	q/q	0.4%	0.4%
		Second Estimate GDP Measures Change in the value of all goods and services produced by the economy; Usual Effect Actual > Forecast = Good for currency; Frequency Released quarterly, about 55 days after the quarter ends; FF Notes There are three versions of GDP released one month apart – Preliminary, Second Estimate, and Final. The Preliminary release is the earliest and thus tends to have the most impact; Acronyms Gross Domestic Product (GDP); Also Called Revised GDP; Why Traders Care It's the broadest measure of economic activity and the primary gauge of the economy's health;
2008-05-23	08:30	GBP	Index of Services 3m/3m		0.4%	0.4%
		Index of Services 3m/3m Measures the gross value added (GVA) of all service sectors. GVA is the difference between the value of a service provided (output), and the value of the goods and services used up in providing that service (intermediate consumption).
2008-05-23	09:00	EUR	Italian GDP	q/q	0.0%	0.2%
		Italian 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.
2008-05-23	09:45	CHF	SNB Chairman Roth Speaks		*	*
		SNB Chairman Roth Speaks Measures the value of all currency and liquid cash assets held by the public. A rising trend has a positive effect on the nation's currency although the relationship is not entirely reliable. The commonly held theory is that elevated currency levels spur growth and have an inflationary effect, leading to higher interest rates. However, some believe that an increased supply of money will trigger an equal drop in demand, leading to a lower currency valuation.
2008-05-23	14:00	USD	Existing Home Sales		4.93M	4.86M
		Existing Home Sales Measures the annualized number of existing homes sold in the previous month. Existing Home Sales make up a larger portion of the housing market than New Home Sales, and therefore are an important indicator of trends in the housing market. This indicator is published monthly by the National Association of Realtors.