Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the USD had a very strong trading day supported by a bullish trend. The greenback's positive momentum occurred because of the better than anticipated Retail Sales report. Although the other economic data released from the U.S. was less than forecasted, Retail Sales and Core Retail Sales were the most important events of the day and the main factor behind the USD's trading trend.

The USD's momentum started at 12:30 GMT yesterday after the Retails Sales were released at a rate of 1.0%, 0.5% better than expected. Core Retail Sales saw a bump to 1.2%, also better than the expected 0.7% rise. Simultaneously, the Unemployment figure was released at a higher count than initially forecasted at 389K (19K more than expectations) and the Import Price Index was slightly lower than expected. Still though, both seemed to go unnoticed by traders as the Retails Sales drove the greenback's bullish momentum. Later on, Fed Chairman Ben Bernanke held a speech at the Federal Reserve Bank of Kansas City; however nothing of any real surprise or significance regarding the USD or monetary policy was mentioned by him. Long terms traders should enjoy listening to the interesting words that have been heard from Republican presidential candidate John McCain who has been speaking out two days running on the need to strengthen the dollar and cut government spending.

Looking ahead to today, two economic released from the U.S. are expected to drive the Dollar's trading trend. The main release will be Core CPI, which is forecasted to see a small rise and help return trader confidence into the American economy. The Core CPI figure measures the change in the price of goods and services purchased by consumers, excluding food and energy. Another important release will be the Preliminary Michigan Sentiment, which has been declining over the past two months and is expected to slightly fall again this month. Traders should expect a little bullishness out of the USD as long as the Core CPI's result will be as forecasted and the Michigan Sentiment doesn't fall too drastically and hurt the CPI driven momentum

EUR

The EUR saw mixed results versus its currency pairs yesterday, as the EUR/USD cross saw the most volatility with a strong bearish trend led by positive USD news. Looking into EUR economic releases, the day was highlighted by a better than expected Industrial Production released at 0.9% after being forecasted to be neutral at a rate of 0. The hawkish comments coming out of the European Central Bank (ECB) Bulletin also impacted the EUR positively. The ECB said that it detects signs of a strong acceleration in labor cost growth, which would impact the inflation within the Euro-Zone (EZ). Following Trichet's speech this week, ECB Governing Council member Guy Quaden said that it is legitimate to consider a limited rate hike in the future, after staying untouched since June 2007.

No major economic releases are expected today from the EZ, but there will be three releases of limited relevance from the Euro-Zone. The German CPI will be released this morning and is expected to stay unchanged and not impact the EUR's trading trend. The quarterly Employment Change and yearly Labor Cost Index will also be released today and it seems like both are not too relevant and won't reveal any new hints that weren't shown by other indicators. Looking around the world, it seems like the BOJ Press Conference and American CPI will be the main releases today and should impact the EUR according to their results.

JPY

No economic data affecting the JPY directly was released yesterday and the Yen's trading was mostly directed by its currency pairs' trends. With no news coming out of Japan to help strengthen the JPY, the Yen saw bearish trends against its crosses as both the USD and EUR had positive economic releases and strengthened against the Yen. Most notably, the USD/JPY reached its 3 month high following another weak trading day for the JPY.

Making up for yesterday's boring economic day in Japan, there will be a batch of data releases affecting the JPY today. Most important of the batch will be the BOJ Press Conference and Monthly Report, which will give traders hints regarding the Japanese monetary policy. The Japanese Household Confidence is expected to slightly fall in today's release and might harm the JPY's trading trend. The Overnight Call Rate and Industrial Production are both supposed to stay unchanged and won't affect the Yen. It seems like the JPY will need hawkish comments from today's press conference in order to gain some long-lost bullish momentum and without a good press conference, the JPY's value will continue to fall.

Technical Analysis

EUR/USD

The Bollinger Bands indicate that volatility will be increasing during the day. According to the indicators there is no clear direction so far today. Therefore traders should wait for clearer signal throughout the day to enter the market.

GBP/USD

Yesterday's bearish momentum seems to have bottom out and the cable range traded as is shown on the daily and 4 hour charts. However on the hourly chart the RSI and Slow Stochastic oscillators show there is more room to for the pair to gain. Investors may go long with tight limits today.

USD/JPY

The pair has tested the top barrier of the 4 hour bullish chart unsuccessfully. The indicators on the daily indicate the pair is overbought. As the there is no clear signs on the 4 hour or the hourly charts trades may go short with tight stops.

USD/CHF

A new bullish trend is forming on the 4 hour chart, and the Slow Stochastic indicates a target price of 1.0450. The oscillators on the hourly chart show conflicting movement. A good strategy today for traders will be to go long with tight stops.

Wild Card

Crude Oil

The recent minor corrective bearish move is over. And with all time highs breached on a daily basis, it appears that Crude Oil is showing no signs of stopping. The very strong momentum and the price movement exceeds all normal technical logic. 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	1.5500	1.9530	108.80	1.0540	0.9470	0.8010
	1.5480	1.9510	108.60	1.0520	0.9450	0.7990
	1.5450	1.9480	108.30	1.0490	0.9420	0.7960
Support	1.5370	1.9400	107.60	1.0420	0.9350	0.7890
	1.5340	1.9370	107.30	1.0390	0.9320	0.7860
	1.5320	1.9350	107.10	1.0370	0.9300	0.7840

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-13		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;
2008-06-13		ALL	G8 Meeting		*	*
		G8 Meeting The Group of Eight (G8) Finance Ministers and Central Bankers will begin a 2-day meeting in Osaka Japan to discuss a range of global economic issues including oil, food inflation, and exchange rates. Although the meeting is closed to the press, officials are expected to talk with reporters throughout the day. A press conference is usually held at the conclusion of the meeting. The G8 consists of the world’s richest nations - United States, Japan, Germany, United Kingdom, France, Italy, Canada, and Russia - who together represent about 65% of the world economy. Though not an institution, the G8 represents an important global policy making process at the highest level, and at times their policies can have an impact on the currency markets.
2008-06-13		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.
2008-06-13	03:10	AUD	RBA Governor Stevens Speaks		*	*
		RBA Governor Stevens Speaks Reserve Bank of Australia (RBA) Governor Glenn Stevens will deliver a speech titled "Asia, Australia and Financial Markets" at the Asia Society AustralAsia Centre CEO Asia Update luncheon, in Sydney. As head of the central bank's governing body, which is responsible for setting the nation's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
2008-06-13	03:23	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;
2008-06-13	04:30	JPY	Industrial Production	m/m	-0.3%	-0.3%
		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.
2008-06-13	05:00	JPY	Household Confidence		35.2	34.5
		Household Confidence Measures the mood of households in regard to economic conditions. The reading is derived from a monthly survey that asks households to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-06-13	06:00	EUR	German CPI	m/m	0.6%	0.6%
		German CPI The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency.
2008-06-13	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.
2008-06-13	09:00	EUR	Labor Cost Index	y/y	2.7%	2.9%
		Labor Cost Index Measures annualized rate of inflation in the wages, salaries and benefits paid to civilian workers. 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.
2008-06-13	09:00	EUR	Employment Change	q/q	0.2%	*
		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
2008-06-13	12:30	CAD	Manufacturing Shipments m/m		-1.6%	0.2%
		Manufacturing Shipments m/m Measure the total value of shipments made by manufacturers.
2008-06-13	12:30	USD	Core CPI	m/m	0.1%	0.2%
		Core CPI Derivative of the Consumer Price Index (CPI) that excludes the volatile Food, Energy, Alcohol and Tobacco items. CPI with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend and the central bank uses it as their primary inflation gauge, aiming to keep it at an annualized rate of 2%.
2008-06-13	12:30	USD	CPI	m/m	0.2%	0.5%
		CPI The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.
2008-06-13	12:30	CAD	Labor Productivity	q/q	-0.8%	-0.4%
		Labor Productivity Source Statistics Canada (latest release) Next Release Sep 10, 2008 Measures Change in labor efficiency when producing goods and services; Usual Effect Actual < Forecast = Good for currency; Frequency Released quarterly, about 75 days after the quarter ends; Why Traders Care Productivity and wages are directly linked - a drop in a worker's productivity is equivalent to a rise in their wage. When businesses pay more for labor the higher costs are usually passed on to the consumer;
2008-06-13	13:55	USD	Prelim Michigan Sentiment		59.8	59.5
		Prelim Michigan Sentiment Measures Consumer views regarding current and future economic conditions; Usual Effect Actual > Forecast = Good for currency; Frequency Released monthly, around the middle of the current month; FF Notes There are two versions of this report released about 15 days apart – Preliminary and Revised. The Preliminary release is the earliest and thus tends to have the most impact; Also Called University of Michigan Consumer Sentiment, Reuters/Michigan Sentiment; Why Traders Care Released since 1976, it has a track record of predicting consumers' spending habits via their economic attitudes and outlook; Derived Via 500-person telephone survey conducted by the University of Michigan;