Forex Tips & Daily Analysis

Economical News

USD

The greenback had a tough trading session last week, which was capped off by a huge bearish slip on Friday. Sparked by a batch of mediocre US data and positive EUR news, the USD saw losses throughout the week that saw a return to exchange rates it had during the height of the credit crisis, only several months ago. The oft traded EUR/USD pair was one of the more effected trading pairs of the week, as it saw fluctuation in the early parts of the week, dipping as low as 1.5360, before skyrocketing back to levels of 1.57 and above. The early part of the week saw decent fundamental news from the US, as ISM manufacturing, ADP NonFarm Employment Change and Unemployment Claims all showed improvement. Thursday's unemployment claims were released at the same time as a press conference for the European Central Bank (ECB), which was where any hope of more dollar bullishness ended. The routinely hawkish President of the ECB Jean-Claude Trichet made market-moving news as he announced the likelihood of an unprecedented rate hike in the Euro-Zone (EZ) by July. Investors were privy to a bullish run on the EUR/USD that moved nearly 200 pips before the end of trading on Thursday.

Friday was equally important for the market as the release of NonFarm Payrolls and the US unemployment rate sent the market into what was an expected frenzy. NonFarm numbers came back at -49K, a more positive release then expected, still though it was the 5th straight month that we have seen the all important figure see negative results. The Unemployment rate provided the surprise of the day as it ballooned to 5.5%, its highest mark since late in 2004. The 0.5% hike brought immediate losses to the greenback against a majority of its currency rivals. As the day progressed, more details of the unemployment situation were felt throughout the US. With the bearishness of the USD came the rise of Crude Oil prices as the important commodity shot back up to record high rates of over $138 per barrel. Equally as important was a nearly 400-point drop in US stock markets.

Looking ahead to this week, we will see a batch of US data headlined by Michigan Consumer Sentiment, Core CPI, Retail Sales and the US Fed President Trade Balance. The fundamental forecast has the aforementioned making slight gains, except for Trade Balance. Still though it is hard to see how the US will manage to climb out of the current state of affairs, as rising commodities prices and investor wariness surrounding the USD will likely stunt any positive calendar news. Also expected next week are two important speeches by Federal Reserve Chairman Ben Bernanke. The Fed boss is under some scrutiny from US officials regarding the decrepit state of the US economy, and will likely address the current situation, hopefully with a feasible solution. Still though expect high volatility in and around the time of his comments.

Today, the US has a light news day as we expected Pending Home Sales and comments from New York Fed President Geithner. With a batch of outside data and another speech by ECB President Trichet, expect the greenback to continue its bearish trend.

EUR

The Euro spent last week, posting steady gains against a majority of its currency rivals. A combination of mixed US and GBP news and the ECB Press Conference proved enough to bring solid results to the world second most liquid currency. The EUR saw most of its bullishness immediately following and ECB Press Conference where President Trichet labeled his growing concern over inflationary risks by hinting at a July rate hike in the EZ. The sudden change in policy by the staunch ECB sparked bullish EUR positions by investors throughout the market. Trichet warned that the move is still not ideal, but because of the strength of the EUR and the lack of similar growth in the EZ economy, the rate hike looks more and more likely.

On Friday, the EUR saw positive gains amidst poor local economic data. German Industrial Production dropped unexpectedly by just under 1%, as a result of rising material costs in April.

The current state of the US economy and the fears surrounding rising food and oil prices have also helped cement the growth of the 15-Nation currency. The correlation between EUR/USD and Crude Oil is dangerously close to 100%. The EUR/USD should prove to be interesting pair for Forex investors this week, as many believe it will test levels of 1.60 yet again.

There is a host of European data on tap this week, but little that should really make a lot of noise in the market. A speech by ECB President Trichet today and Industrial Production data from Italy and France could contribute to some EUR bullishness.

JPY

The JPY saw significant recovery on Friday after a week of bearishness versus most of its currency rivals. The JPY was absent from the news docket for most of last week. Average Cash Earnings, Monetary Base and a speech by new Bank of Japan (BoJ) Governor Shirikawa, did little to move the Asian currency. In fact, there is very little to come out of Japan regarding local economy that has moved the currency lately.

Friday provided strong bullish movement for the JPY as traders renewed reacted to a drop in the Dow Jones and the Standard and Poor's index to renew the buying of the low interest JPY. The renewal of carry trading came also as world commodities prices rose for yet another week.

On tap this week from Japan we can expect quite a lot of important economic data. Machinery and Industrial indices, Overnight Call Rate, the BoJ Monthly report and Press Conference and GDP could provide some volatility to the JPY. However it is still recommended to watch global news and Stock movement to really gauge the direction of the JPY

Technical Analysis

EUR/USD

The 4 hour chart is showing that there has been a breach through the very strong resistance level of 1.5790. This breach might indicate the continuation of the strong bullish trend to the next target price of 1.5850. Going long appears to be preferable.

GBP/USD

The range trading within the bearish channel of the daily chart continues. The cable is now showing local bullish movement in the channel and it appears that a test of the upper level is quite imminent. Going long with tight stops might be a good strategy today.

USD/JPY

The pair has tested the bottom barrier of the daily bullish channel unsuccessfully. The daily oscillators are showing that the bullish momentum is back and that the next target price might be 106.00. The 4 hour RSI is supporting the bullish notion and it appears that going long might be the best choice today.

USD/CHF

The daily chart is slowly showing that the bearish trend is moderately back after a long period of range trading without a distinct price direction. The 4 hour Slow Stochastic is showing a double top formation with negative slope which indicate that the bearish momentum might increase. Going short might be a preferable strategy today.

Wild Card

WILD - Crude Oil

With fresh all time high being breached on a daily basis, it appears that Oil is showing no signs of a stop. The momentum is very high and the price movement transcends all normal technical logics. Forex traders have great opportunity to join the bullish bonanza while the momentum is higher than ever.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5899	1.9782	106.00	1.0270	0.9736	0.8110
	1.5863	1.9750	105.79	1.0233	0.9695	0.8078
	1.5830	1.9732	105.45	1.0200	0.9660	0.8050
Support	1.5762	1.9660	104.80	1.0158	0.9600	0.7979
	1.5740	1.9638	104.39	1.0126	0.9572	0.7948
	1.5712	1.9610	104.08	1.0100	0.9544	0.7928

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-09	05:00	JPY	Leading Index	m/m	94.1%	93.0%
		Leading Index Measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The index is published monthly by The Conference Board, a leading private US research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.
2008-06-09	05:45	CHF	Unemployment Rate		2.6%	2.5%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2008-06-09	06:00	EUR	German Trade Balance		16.7B	15.5B
		German 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.
2008-06-09	07:00	JPY	Economy Watchers Current Index		35.5	34.5
		Economy Watchers Current Index Measures the current mood of businesses that directly service consumers, such as barbers, taxi drivers, and waiters. A reading above 50 signals an improvement in sentiment. These businesses, dubbed "Economy Watchers" because they directly observe the economy during their everyday business, are thought to hold important insights from the microeconomic level.
2008-06-09	08:30	EUR	Sentix Investor Confidence		3.5	3.0
		Sentix Investor Confidence Measures investor confidence towards the Euro-zone economy. A rising trend has a positive effect on the nation's currency because it suggest that funds are more likely to invest in European securities, which tends to strengthen the economy.
2008-06-09	08:30	GBP	PPI Input	m/m	2.4%	2.6%
		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.
2008-06-09	08:30	GBP	PPI Output	m/m	1.4%	0.8%
		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.
2008-06-09	12:15	CAD	Housing Starts		214K	220K
		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.
2008-06-09	14:00	USD	Pending Home Sales	m/m	-1.0%	-0.5%
		Pending Home Sales Measures the number of signed real estate contracts for existing single-family homes, condos and co-ops. An index of 100 is equal to the average level of contract activity during 2001.
2008-06-09	14:00	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.
2008-06-09	16:30	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.
2008-06-09	23:01	GBP	RICS House Price Balance		-95.1%	-97.2%
		RICS House Price Balance The Royal Institution of Chartered Surveyors (RICS) House Price Balance measures the price change of homes in the UK. This leading indicator represents the percentage of chartered surveyors reporting a price rise in their designated area. For instance, a reading of 50% means that 50% more surveyors reported a rise than reported a fall in prices.
2008-06-09	23:01	GBP	BRC Retail Sales Monitor	y/y	-1.5%	*
		BRC Retail Sales Monitor The British Retail Consortium (BRC) Retail Sales Monitor measures the change in value of like-for-like (i.e. same-store) sales at surveyed retailers, which effectively excludes stores that have been open for less than a year.
2008-06-09	23:50	JPY	Core Machinery Orders	m/m	-8.3%	-3.1%
		Core Machinery Orders Measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. A rising trend has a positive effect on the nation's currency. When manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansion phase.