Forex Tips & Daily Analysis

Economical News

USD

Yesterday the USD saw bullish momentum against all of its currency pairs. The USD's value was boosted by Fed Chairman, Bernake's hawkish speech and the better than expected Factory Orders, which were released at 1.1% compared with the 0% forecast. Against the EUR, the USD's positive trend caused the pair to cross the 1.5500 range and trade at around 1.5450 after Bernake's speech.

In Bernake's speech held yesterday at the International Monetary Conference in Barcelona, he mentioned the greenback's negative trend in the Forex market. Bernake rarely speaks about the USD, and yesterday the USD was a big part of his speech. Traders also took notice on his words regarding the inflation being a primary concern and further interest rate cuts being unlikely. The USD's bullish momentum benefited again an hour later as Factory Orders beat out forecasts. The Crude Oil's decline yesterday gave the greenback even more positive momentum.

Today is a huge news day for the USD as the very important ADP Nonfarm Employment Change will be announced as part of a batch of announcements expected topped with another speech by Bernake. The ADP estimate foreshadows the actually Nonfarm Employment Change which will officially be released on Friday. Nonfarm Productivity and the ISM Non-Manufacturing Composite will also be released tomorrow and will impact the USD as well. Bernake's speech will end the USD's trading day with volatility, but the main impact should be caused by the ADP Nonfarm Employment Change and ISM Non-Manufacturing Composite that are forecasted to be lower than the previous results and should hurt the USD's recent momentum.

EUR

Yesterday the EUR saw mixed trends against its currency pairs and had bearish momentum against the USD following the greenback's strong trading day. The EUR/USD cross was traded at around 1.5431, reaching a weekly low. There were only a couple of news releases from the Euro-Zone and both were not very influential, however ECB president Trichet, held a hawkish speech.

The PPI was released at the exact value forecasted and only 0.1% higher than the previous release. The Revised GDP did beat the forecast by 0.1%, but still was very close to the previous release. Trichet said that policymakers are grappling with a number of significant economic shocks, but these shocks do not change the fact that central banks have to concentrate on controlling inflation. He emphasized the importance of the active role that the central banks have to take in the Euro-Zone.

Looking ahead today, the EUR's volatility will start with a morning speech by Trichet. Important economic news will be released today with the first being the Services PMI, which is forecasted to be unchanged, compared to its previous release. The second announcement will be the Retail Sales, which is expected to rise compared to its previous negative result. Overall the EUR should gain a little bullish momentum and much will depend on Trichet's speech.

JPY

The Japanese Yen saw mixed trends versus its currency pairs as each cross was greatly affected by its local news, as the JPY did not offer its own direction. Not to be outdone by his counterparts, BOJ Governor Shirakawa spoke and said that he expects upside risks to the CPI inflation rate. His speech also hinted that the Japanese economy will see limited growth as already expected. The JPY finished the trading day with a lone release of Capital Spending, which strongly beat the forecast and improved compared to the previous reading.

Today is expected to be a quiet news day from Japan as there are no releases expected. The Yen's trends will be affected by its currency pairs' rallies. As it seems like both the USD and EUR are expecting much volatility today, their crosses with the JPY will see that same volatility caused by them today. Traders should keep a close look on the news coming from the US and Euro-Zone as both will be the deciding factors in the Yen's movement.

Technical Analysis

EUR/USD

There has been a very sharp drop in EUR/USD price and the very strong support level of 1.5500 was violently breached. The 4 hour chart is showing fresh bearish momentum and all oscillators are showing that there is still much more room to run. Going short might be a good choice today.

GBP/USD

The daily chart is showing a very distinct bearish channel, as the cable now floats in the middle of it. The momentum is strong and the next target price is 1.9500. Going short on a position trade might be the smart choice today, as the channel quite wide and a test of the bottom area is imminent.

USD/JPY

The range trading continues, as the pair shows no distinct price direction. The daily oscillators are floating in neutral territory and are showing no clear signal on any direction. Forex traders are advised to stay out of this one today, at least until a clear signal is accepted

USD/CHF

There has been a sharp bullish break through the very important resistance level of 1.0400 and the pair now consolidates around that area. The daily oscillators are lining up in a fresh bullish notion and it appears that going long might be the right choice today.

Wild Card

Crude Oil

There is a very distinct flag forming on the 4 hour chart, as Oil now approaches the tip of it. The momentum is very bearish and it appears that a breach is quite imminent. Forex traders have a great opportunity to join the bearish trend before the key break occurs and enjoy very high potential on that entry.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5539	1.9738	105.97	1.0501	0.9652	0.7985
	1.5511	1.9703	105.68	1.0473	0.9625	0.7948
	1.5485	1.9666	105.42	1.0447	0.9597	0.7909
Support	1.5416	1.9588	104.86	1.0389	0.9537	0.7831
	1.5389	1.9552	104.59	1.0359	0.9511	0.7796
	1.5362	1.9514	104.21	1.0332	0.9483	0.7759

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-04	01:30	AUD	GDP	q/q	0.7%	0.3%
		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.
2008-06-04	03:00	NZD	ANZ Commodity Price Index		-0.3%	*
		ANZ Commodity Price Index Measures the rate of inflation (i.e., the rate of price changes) for the nation's seventeen main commodity exports. ANZ, one of New Zealand's leading banking and financial services firms, releases this indicator monthly.
2008-06-04	07:30	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.
2008-06-04	08:00	EUR	Services PMI (r)		50.6	50.6
		Services PMI (r) 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.
2008-06-04	08:30	GBP	Services PMI		50.4	50.4
		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.
2008-06-04	09:00	EUR	Retail Sales	m/m	-0.4%	0.2%
		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.
2008-06-04	09:00	USD	OECD Economic Outlook		*	*
		OECD Economic Outlook The Organization for Economic Cooperation and Development (OECD) Economic Outlook contains analysis and projections for the major world economies.
2008-06-04	09:30	GBP	BRC Shop Price Index	y/y	1.2%	*
		BRC Shop Price Index The British Retail Consortium (BRC) Shop Price Index measures the rate of inflation (i.e., the rate of price changes) at surveyed retailers.
2008-06-04	11:30	USD	Challenger Job Cuts	y/y	27.4%	*
		Challenger Job Cuts The Measures the change in number of job cuts. This indicator is released by Challenger, Gray & Christmas, a private placement firm
2008-06-04	12:15	USD	ADP Nonfarm Employment Change		10K	-30K
		ADP Nonfarm Employment Change Measures the number of new jobs created in the previous month, excluding the farming industry. ADP, a leading provider of employment solutions for businesses, releases this indicator two days before the highly anticipated official Nonfarm Employment Change. ADP claims that this indicator has predictive value in regard to official statistics, but it hasn't yet gained acclaim from traders due to it's short history.
2008-06-04	12:30	USD	Nonfarm Productivity	q/q	2.2%	2.5%
		Nonfarm Productivity Measures the annualized quarterly growth in labor efficiency for producing goods and services outside the farming sector. A rising trend indicates future inflationary pressures as manufacturers raise prices in response to an at-capacity factory environment.
2008-06-04	12:30	USD	Unit Labor Costs	q/q	2.2%	2.0%
		Unit Labor Costs Measures the relationship between compensation per hour and productivity, or output per hour minus inflation. Higher hourly compensation increases unit labor costs; labor productivity improvements offset compensation increases and lower unit labor costs. A rising trend has a positive effect on the nation's currency. When businesses pay more for labor, they are likely to pass the higher costs to the consumer, so traders view wage inflation as a leading indicator of consumer inflation.
2008-06-04	14:00	USD	ISM Non-Manufacturing Composite		52.0	51.0
		ISM Non-Manufacturing Composite The Institute of Supply Management (ISM) Non-Manufacturing Composite measures activity level, new orders, empoyement and supplier deliveries 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.
2008-06-04	14:30	USD	Crude Oil Inventories	y/y	-8.8M	1.1M
		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.
2008-06-04	18:45	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.
2008-06-04	21:00	NZD	Monetary Policy Statement		*	*
		Monetary Policy Statement It's the primary tool the RBNZ uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions
2008-06-04	21:00	NZD	Official Cash Rate		8.25%	8.25%
		Official Cash Rate Measures the interest Interest rate at which banks lend balances held at the RBNZ to other banks. 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.