Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the USD lost grounds against most of its rival currencies but remained within its recent range. The recent USD weakness has been caused by some traders' renewed expectations for higher U.S. interest rates after contradictory U.S. economic data. The greenback continues with bearish momentum following Tuesday's losses, which resulted by the Housing Starts' plunge to its lowest level in the last 17 years added by the adverse economic information from mortgage and lending markets. The USD was 0.1% lower against the JPY, trading at 107.80, and also depreciated to 1.5528 compared with 1.5462 against the Euro.

Also yesterday, the Crude Oil prices climbed up, passing the $136 following an imminent strike trend in Nigeria. Crude Oil prices moved up in anticipation of the supply data from the U.S, which showed a decrease in stockpiles by 1242k barrels in the week ending on June 13.

On tap today, we are expecting a batch of mixed U.S. data. Unemployment Claims is expected to rebound back to 375K, the Philadelphia Fed will release its Manufacturing Index for June which is expected to hike to -10 compared with May's reading of -15.6. We also expect hawkish speeches from the Treasury Secretary Paulson and the Fed's Vice-Chairman Donald Kohn about risk management and its implications for systemic risk. As most indicators are expected to have a rising trend, this should give the greenback a recovery from the previous trading days during today's trading session.

EUR

EUR

The EUR finished yesterday's trading session with signs of strength against most of its counterparts, despite sparse new economic data and expectations that the ECB will initiate aggressive interest rate rises to curb inflation pressures in the month of July.

The Euro rose 18 pips to 1.5528 against the USD after slipping earlier to 1.5462. The cross remains confined to the 1.5300-1.5550 range because of the lack of significant new economic data. Against the JPY, the EUR rose up 20 pips to 167.61 reaching the 168.00 mark, and was also up against GBP, rising to 1.2605 despite the hawkish comments of the BoE that the interest rate will remain at 5%.

Trading conditions are expected to become more volatile, as the analysts from the Euro Zone and U.S. have been predicting a series of rate hikes by the Fed and the ECB before year-end; however it is probable that the Fed will maintain the interest rate target at 2% after a sharp reduction from 3.5%. However, it has become a common opinion that the ECB will raise the interest rate to 4.25% in July.

Today, we don't expect significant economic data to come out from the Euro economy, as the only economic reading will be Italian Unemployment Rate. Expected to be released at 8.00 GMT, experts expect the rate to be reduced by 0.1% from a previous reading of 6.1%. However, traders should expect to see an active EUR trading session in response to key U.S. data releases today.

JPY

Yesterday, the JPY saw mixed results against major currencies. It appreciated vs. the USD, passing the 107.60 point, but retreated against the Euro. The only economic data from yesterday was the Japanese All-industries Index, rising by 0.8% compared with the last reading of 0.3% in March.

It is also worth mentioning that the Bank of Japan (BoJ) monetary policy meeting released the minutes from the last meeting. A significant note in the minutes was that the BoJ raised the caution level regarding the growing risk of inflationary pressures in the global economy, raising the expectation of an increase in the interest rate before the end of the year.

Looking ahead to today, there will be almost no significant economic releases from the Asian markets except the speech by the BoJ Governor at the annual meeting of the National Association of Shinkin Banks, in Tokyo. High volatility is expected to take place after Shirakawa's speech. Traders should pay attention to his speech in order to get a sense of the direction of the currency for the near future.

Technical Analysis

EUR/USD

The daily chart and the 4 hour chart show that the momentum on is still bullish. However, the 4 hour chart's Relative Strength Index floats near the upper line indicating that the current trend might be closing to its end. On the Hourlies, the local bearish correction is already intact. A bearish cross of the Hourly chart's Slow Stochastic validates that correction as well.

GBP/USD

The daily chart is showing that the pair does not have a distinct direction, as the chart appears to be quite horizontal for the past 2 weeks. The Bollinger Bands are widened, and the 4 hour Slow Stochastic also provides no clear indication. On the Hourlies, the pair has been range trading with high volatility for a while now. Waiting for a clearer sign before entering the market might be the smart move today.

USD/JPY

There is a very distinct bearish channel forming on the daily chart, as the pair now floats at the middle of it. All oscillators are showing bearish momentum, and the 4 hour chart's Bollinger Bands are getting tighter which indicate an additional upcoming downwards move. The next target price of 107.10 appears to be valid.

USD/CHF

The typical range trading on the daily chart continues. Both the RSI and Slow Stochastic are floating in neutral territory. The hourlies are also providing mixed signals with no specific direction. Good strategy might be to wait for a clearer signal before entering the market n this pair.

Wild Card

Wild - Gold

Gold broke the 883.50 resistance level. Gold is in an uptrend supported by 1 Hour exponential moving averages. Bollinger Bands are widened indicating increased volatility. We should expect to see a bullish configuration today. 1 Hour and 4 Hour Elliott patterns are also implying that Gold should gather momentum during the day. The target is expected to hit 894. This provides forex traders with an opportunity to go long taking advantage of a bullish correction.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5670	1.9690	108.67	1.0453	0.9587	0.8039
	1.5625	1.9664	108.32	1.0421	0.9549	0.8017
	1.5590	1.9630	107.94	1.0370	0.9517	0.7977
Support	1.5530	1.9572	107.28	1.0305	0.9444	0.7914
	1.5490	1.9530	107.00	1.0288	0.9403	0.7881
	1.5468	1.9500	106.69	1.0257	0.9383	0.7862

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-19	06:15	CHF	Trade Balance		1.57B	-
		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.
2008-06-19	07:30	CHF	Libor Rate		2.75%	2.75%
		Libor Rate Measures the London interest rate for 3-month Swiss franc deposits.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.
2008-06-19	08:00	CHF	Monetary Policy Assessment		-	-
		Monetary Policy Assessment 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.
2008-06-19	08:00	EUR	Italian Unemployment Rate		6.1%	-
		Italian Unemployment Rate Measures the percentage of total work force that is unemployed and actively seeking employment during the previous quarter.
2008-06-19	08:30	GBP	Retail Sales	m/m	-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.
2008-06-19	08:30	GBP	M4 Money Supply	m/m	0.6%	-
		M4 Money Supply Measures the monthly change in currency outstanding. Higher levels of currency can have a devaluing effect on the currency. M4 Money Supply is calculated as M0 + UK residents' bank deposits + deposits made by the private sector.
2008-06-19	08:30	GBP	Public Sector Net Borrowing		-0.5B	-
		Public Sector Net Borrowing Measures the difference between spending and income for the government and public corporations. A rising trend has a positive effect on the nation's currency because high levels of borrowing are a signal of investment and economic expansion.
2008-06-19	11:00	CAD	Core CPI	m/m	0.3%	-
		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%.
2008-06-19	11:00	CAD	CPI	m/m	0.8%	-
		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.
2008-06-19	12:30	CAD	Wholesale Sales	m/m	0.6%	-
		Wholesale Sales Measures the total value of sales at the wholesale level. A rising trend has a positive effect on the nation's currency because increased sales at the wholesale level are a good indication that there is high consumer demand at the retail level.
2008-06-19	12:30	USD	Unemployment Claims		384K	-
		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.
2008-06-19	14:00	USD	Philadelphia Fed Man. Index		-15.6	-
		Philadelphia Fed Man. Index Measures the general business conditions of manufacturers in the Philadelphia Federal Reserve district. The index is derived from a survey that asks respondents to rate the level of general business activity as 'decrease', 'increase', or 'no change'. A rising trend has a positive effect on the nation's currency because good manufacturing conditions are a sign of a strong economy. Although this survey is limited to manufacturers in Philadelphia only, traders pay close attention because the Philadelphia Federal Reserve releases it weeks before other major reports on manufacturing (e.g., Industrial Production, ISM Manufacturing Index).
2008-06-19	14:00	USD	Leading Index	m/m	0.1%	-
		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.
2008-06-19	14:30	USD	Natural Gas Storage		-	-
		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;
2008-06-19	22:45	NZD	Visitor Arrivals	m/m	-11.8%	-
		Visitor Arrivals Measures the number short-term overseas visitors who arrive in the country. A rising trend has a positive effect on the nation's currency because tourism plays an important role in the economy. Almost 10% of the nation's population is employed by the tourism industry, and 10% of the nation's GDP is indirectly related to tourism.