Forex Tips & Daily Analysis

Economical News

USD

During yesterday's trading the greenback suffered a bearish trend versus its major currency rivals. The USD lost 80 pips against the EUR and closed at 1.5552 before reopening of the Japanese market. The dollar also lost against the GBP, seeing a 90 pip drop as it closed trading at 1.9632. The movement can largely be tied to fundamental news from yesterday. Crude Oil Inventories came in lower than expected at -4.6M, as reports had initially expected a 4M swing in the opposite direction. The Beige Book which provides a compilation of evidence supplied by the twelve Federal Reserve districts regarding the economy showed that the U.S. economy is still weak and FOMC Members Kohn and Kroszner speeches were less hawkish than expected. These factors combined with another day of rising oil prices ($138/barrel) contributed to the drop in the USD.

Later on the Japanese session opened with a significant push for the USD as the equity market in Japan saw a sharp drop of nearly 200 pips. The greenback saw recovery against its major counterparts as it erased all its losses from Wednesday. The momentum could be very important as we look toward today's trading session.

On tap today, we are expecting a batch of mix US data. Core Retail Sales are expected to gain 0.2% to 0.7% and Retail Sales is forecasted to rise to 0.5%. The Import Price Index is currently forecasted at 2.5%, a 0.7% raise from last month and Unemployment Claims is expected to reset back to 370K. The aforementioned events should provide steady liquidity to the market, before the 15:30 GMT speech by Federal Reserve Chairman Ben Bernanke. Bernanke, who will give a speech at the New Federal Reserve Bank of Kansas City, has been a strong defender of the stronger dollar in the last couple of weeks. His speeches will likely contribute once again to volatility in the market. As most indicators are expected to have a rising trend this should give the greenback a bullish push overall versus its rivals during today's trading session.

EUR

The EUR finished yesterday's trading session with mixed results versus the major currencies. The 15-Nation currency saw gains versus the greenback for most of the day before seeing the Asian equity markets push the dollar back up. Versus the JPY, CHF and GBP the Euro-Zone currency range traded throughout most of the day, as most of the market movement from yesterday were dollar centered. In addition yesterday was a slow news day in Europe as only the French CPI was published. The French CPI came in at 0.5% which is 0.1% higher than forecasted and 0.2% higher than previously published.

Today we can expect several indicators to be published in the Euro-zone. Early this morning the French Final Employment Change rose by 0.2% to 0.4% for the month of May. The ECB Bulletin is expected early this morning and will likely provide little to move the market. If the bulletin provides a hawkish stance it could result in a short term bullish trend in the EUR. Industrial Production is forecasted to rise by 0.2% from last month and in Ireland a vote on the Lisbon Treaty referendum will take place. Investors should pay close attention to the news and place their transaction accordingly with the developments throughout the day.

JPY

The Yen strengthened versus most of the major currencies yesterday as Asian equities markets turned negative during the European session on banking concerns. Over the past few days, there has been no cohesiveness amongst the Yen crosses as pairs like EUR/JPY accelerated while USD/JPY retreated. Overall the USD/JPY traded with a low of 106.58 and a high of 107.74 before closing the day around 106.90 in the New York session. Additionally, the Yen gained another 48 pips versus the GBP and closed at 209.75.

Looking forward this week, we have the Bank of Japan rate meeting on Friday. Inflation continues to dominate the mind of the central bank and expect it to continue to be a driving force in the forex market as well. Last Tuesday's 1st Quarter Japanese GDP came in stronger than expected, but in fact caused little reaction as the final figure indicated quite a sluggish growth. The Trades Surplus and the Corporate Goods price indices were also stronger than expected.

Technically, higher inflation could prompt higher Interest Rates but the latest Japanese fundamental data will probably not be radical enough to convince the Bank of Japan to raise Interest Rates in the nearest BoJ session.

Today we don't expect significant economic data to come out from the Japanese economy. Forex investors should keep an eye on the economic events from around the world, as Volatility and direction for the Japanese currency may be derived from them.

Technical Analysis

EUR/USD

The pair has been trading within a wide range with high volatility for a while now. It appears that the bearish price movement might be back. The Slow Stochastic of the 4 hour chart indicates an upcoming test of the 1.5400 level. If that level is breached, swinging in the trend would be the best strategy.

GBP/USD

The float within the widening bearish channel on the daily chart continues, as no significant breach has been made. The negative slope on the daily Slow Stochastic indicates the continuation of the bearish movement within the channel. Going short with tight stops appears to be the preferable strategy.

USD/JPY

The daily chart is showing that the bullish channel still remains intact, as the pair now floats in the middle of it. The daily Slow Stochastic and the RSI are pointing to very bullish grounds, and no correction appears to be in sight. Next target price should be around 108.10 and going long looks like a preferable choice today.

USD/CHF

The daily chart is giving mixed signals with its RSI floating in neutral territory.

However, the Slow Stochastic of the 4 hour chart is showing quite a strong bullish momentum, and the RSI confirms that the direction is indeed up. The hourlies support the bullish notion as well, and it appears that the pair still has more room to run. Going long with tight stops is a preferred strategy today.

Wild Card

Crude Oil

The recent corrective bearish move is over and it seems as if the Oil has been moving within an accurate bullish channel with quite a strong momentum for a while now. The bullish cross on the hourlies is strengthening the notion that forex traders might enjoy a nice entry price for the upcoming bullish move. However, sharp drops can be seen locally, therefore traders should look for a dip in an attempt to rejoin the strong bullish trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5570	1.9660	108.20	1.0460	0.9470	0.7990
	1.5550	1.9640	108.00	1.0440	0.9450	0.7970
	1.5520	1.9610	107.70	1.0410	0.9420	0.7940
Support	1.5440	1.9540	106.90	1.0340	0.9350	0.7870
	1.5410	1.9510	106.60	1.0310	0.9320	0.7840
	1.5390	1.9490	106.40	1.0390	0.9300	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-12		EUR	Lisbon Treaty Vote		*	*
		Lisbon Treaty Vote Ireland will vote on a referendum to accept or reject the European Union's Lisbon Treaty. The outcome of the vote will determine whether or not the treaty will go into effect for the entire European Union.
2008-06-12	01:30	AUD	Employment Change		37.5K	13.8K
		Employment Change Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises
2008-06-12	01:30	AUD	Unemployment Rate		4.3%	4.2%
		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.
2008-06-12	06:45	EUR	French Final Employment Change	q/q	-0.2%	0.3%
		French Final Employment Change Measures the change in the number of employed people, excluding the farming industry and public employees in non-market sectors.
2008-06-12	08:00	EUR	ECB Bulletin		*	*
		ECB Bulletin Reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision. The report also provides detailed analysis of inflation and current economic conditions.
2008-06-12	08:30	GBP	BOE Inflation Attitudes		3.3%	*
		BOE Inflation Attitudes Measures consumer expectations for future prospects of inflation. The indicator is derived from a survey that asks respondents their expectations for the rate of inflation over the coming year. The Bank of England (BOE) produces this survey quarterly in conjunction with GfK, a leading German market research company.
2008-06-12	09:00	EUR	Industrial Production	m/m	-0.2%	0.0%
		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.
2008-06-12	10:00	CHF	SNB Board Member Jordan Speaks		*	*
		SNB Board Member Jordan Speaks Swiss National Bank (SNB) Governing Board Member Thomas Jordan will deliver a speech titled "Monetary Policy in a Climate of Increased Uncertainty," in Geneva
2008-06-12	12:30	USD	Core Retail Sales	m/m	0.5%	0.7%
		Core Retail Sales Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.
2008-06-12	12:30	USD	Retail Sales	m/m	-0.2%	0.5%
		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.
2008-06-12	12:30	USD	Import Price Index	m/m	1.8%	2.5%
		Import Price Index Measures the monthly rate of inflation for imported goods.
2008-06-12	12:30	USD	Unemployment Claims		357K	370K
		Unemployment Claims Measures the number of individuals who filed for unemployment insurance for the first time during the past week. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP. This weekly indicator produces very timely data, but traders generally view unemployment as a lagging indicator that gives little indication of the economy’s future performance.
2008-06-12	14:00	USD	Business Inventories	m/m	0.1%	0.3%
		Business Inventories Measures the value of goods held by manufacturers, wholesalers, and retailers. A falling trend has a positive effect on the nation's currency because retailers order more goods when they have depleted inventories. This creates more business for the wholesales, who in turn increase their orders to manufacturers.
2008-06-12	14:35	USD	Natural Gas Storage		105B	94B
		Natural Gas Storage Measures Change in the number of cubic feet of natural gas held in underground storage during the past week; Usual Effect No clear effect, there are both inflationary and growth implications; Frequency Released weekly, 5 days after the week ends; FF Notes While this is a US indicator, it most affects the loonie due to Canada's massive oil sands; Acronyms Energy Information Administration (EIA); Also Called Nat Gas Stocks, Nat Gas Inventories; Why Traders Care It influences the price of petroleum products which affects inflation, but also impacts growth as many industries rely on oil to produce goods;
2008-06-12	15:30	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.
2008-06-12	22:45	NZD	Core Retail Sales	m/m	-0.5%	0.2%
		Core Retail Sales Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.
2008-06-12	22:45	NZD	Retail Sales	m/m	-1.2%	0.5%
		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.