Forex Tips & Daily Analysis

Economical News

USD

The USD lost value against all of its crosses yesterday. The bearish trend occurred after a batch of negative news coming from the U.S., highlighted by the very low Consumer Confidence. The Crude Oil price increase, reaching $138 also hurt the greenback. After breaking under the 1.55 zone on Monday, the EUR/USD was traded just under 1.56 yesterday.

The USD was hurt by the bad economic releases that were announced in the U.S. yesterday. The news started with the National HPI Composite that fell to -15.3%, however that was better than analysts forecasted. An hour later the USD's momentum was officially bearish, as the Consumer Confidence, House Price Index and Richmond Fed Index all were released at worse than expected values. The biggest disappointment was the Consumer Confidence, which was already expected to fall to 56.4, but it was released at a value 4 points lower than the forecasts, at 50.4. The rising Crude Oil prices, which reached $138 yesterday, also hurt the USD's trading value.

Looking ahead to today, there is a batch of U.S. economic data scheduled to be released. The day will start with the important Core Durable Goods Orders, which is expected to fall to a negative rate this month. New Home Sales are expected to be around 11K lower than the previous value. Traders should pay attention to the evening release of the FOMC Statement, which will include the Federal Funds Rate. Experts forecast no change of the rate and it seems like it will stay at 2.00% and will be increased later this year. All news coming from the U.S. is expected to be negative and the greenback's bearish trend is expected to continue and cause the USD to lose even more grounds against its currency crosses.

EUR

Yesterday, the EUR saw mixed results against most of its major currency rivals. The most notable change was a bullish trend against the USD as the cross nearly reached 1.56 during the middle of the trading day. Against the USD, the EUR took advantage of the bad economic data released coming from the U.S.

The EUR saw mixed economic data results yesterday with the French Consumer Spending beating the forecasts, while the German Consumer Confidence fell sharply lower than expectations. The French Consumer Spending was expected to rise, but analysts didn't expect to rise all the way up to 2.0% after having a negative value last month. Yesterday, European Central Bank Executive Board member Lorenzo Bini Smaghia said that a possible way to ease the pressure from ever increasing commodity prices is to increase productivity, especially in the European services sector. Also, European Central Bank Governing Council member Miguel Angel Fernandez Ordonez reiterated that the ECB is alert to heightened inflation risks and despite weaker economic data, it could raise rates next month. Analysts estimate that the ECB may indeed change the steady 4.00% Interest Rate by increasing it next month.

As for today, look for volatility in the EUR's trade movements after ECB President's Trichet Speech in the morning. The only economic data releases will be the Italian Retail Sales and Industrial New Orders. The Italian Retails Sales should rise after a negative value last month, while the Industrial New Orders are expected to be a negative rate. The EUR's trend today will be determined by Trichet's speech and its pairs' economic data releases.

JPY

The JPY saw fairly bullish trends against most of its currency crosses yesterday. Like the EUR, the JPY rose against the USD following the weak data coming from the U.S.

The JPY also enjoyed its own positive economic data as both the Trade Balance and CSPI were released at higher than forecasts figures. As the Crude Oil prices are increasing and hurting the world's biggest economies, the Japan's imports of Crude Oil and condensate in May rose 8.0% on year to 3.76 million barrels a day. As the prices are rising, the purchase of more Crude Oil is harming the Yen.

No economic data is expected to be released from Japan today. As the day is filled with important economic data releases expected from the U.S. and a speech from ECB president Trichet, the JPY's volatility will be determined by its major currency rivals' momentum.

Technical Analysis

EUR/USD

The pair is still trading within its wide range with no specific direction. However, the daily chart shows that after a short bearish correction, the pair appears to resume its bullish trend. The daily chart's Accelerator\Decelerator oscillator is also showing that a rising trend is impending. The next target price may touch the high of 1.5630.

GBP/USD

The 4 hours chart is showing that the pair is continuing to greatly fluctuate within its wide range. However, the Relative Strength Index shows that the recent rising trend that took place since the last low of 1.9585 hasn't yet to reach its limit. Going long with tight stops might be a good decision today.

USD/JPY

The range trading continues without a distinct direction as the pair floats between the ranges of 108.00 - 109.00. The daily chart's RSI is floating around its upper level for a while now, showing that the current bullish moderate correction has reached its limit. According to the hourly chart's Slow Stochastic, this pair is also overbought, yet there is no solid signal for the future trend. Traders are advised to stay out of that pair today.

USD/CHF

The daily chart is showing that the pair has been range trading for a while now. As the RSI suggests, the local bearish momentum on the hourlies might take the pair to the low of 1.0350 level. Traders are advised to wait for clearer bearish signs on the hourlies before entering the market.

Wild Card

Silver

After a long period that sliver was fluctuating on a very consistent basis, all indicators on the hourlies are showing that a bullish trend is forthcoming. Forex traders have a good shot to enter at what appears to be the beginning of a rising trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5640	1.9790	108.78	1.0513	0.9644	0.8021
	1.5614	1.9751	108.51	1.0486	0.9615	0.7985
	1.5585	1.9714	108.24	1.0457	0.9588	0.7947
Support	1.5524	1.9642	107.66	1.0401	0.9530	0.7866
	1.5496	1.9604	107.37	1.0372	0.9502	0.7829
	1.5468	1.9566	107.11	1.0344	0.9474	0.7793

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-25	08:00	EUR	Italian Retail Sales		-0.5%	0.3%
		Italian 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.
2008-06-25	08:30	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.
2008-06-25	09:00	EUR	Industrial New Orders	m/m	-1.0%	-0.5%
		Industrial New Orders Measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods.
2008-06-25	10:00	GBP	CBI Distributive Trades Realized		-14	-17
		CBI Distributive Trades Realized The Confederation of British Industry (CBI) Distributive Trades Realized Survey measures the health of the retail sector by asking executives if their firm experienced an increase or decrease in sales compared to a year ago. A positive number indicates that more retailers reported an increase. 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.
2008-06-25	12:30	USD	Core Durable Goods Orders	m/m	2.4%	-0.9%
		Core Durable Goods Orders Derivative of Durable Goods Orders that excludes the Transportation components. Orders for aircraft occur in periodic burst and can severely distort the underlying trend, so traders tend to focus more on this indicator than the overall Durable Goods Orders.
2008-06-25	12:30	USD	Durable Goods Orders m/m	m/m	-0.6%	0.0%
		Durable Goods Orders m/m Measures the total value of new purchase orders placed with domestic manufacturers for hard goods with a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes. A rising trend has a positive effect on the nation's currency because an increased level of purchase orders signals that manufacturers will be busy in the months to come as they work to fill the orders. Traders watch this indicator closely because of it's predictive abilities.
2008-06-25	14:00	USD	New Home Sales		526K	515K
		New Home Sales Measures the annualized number of new residential buildings that were sold 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.
2008-06-25	14:35	USD	Crude Oil Inventories		-1.2M	-0.1M
		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.
2008-06-25	18:15	USD	FOMC Statement		*	*
		FOMC Statement Usual Effect More hawkish than expected = Good for currency; Frequency Eight times per year; FF Notes The FOMC usually changes the statement very slightly at each release. It's these changes that traders focus on. Acronyms Federal Open Market Committee (FOMC); Also Called Monetary Policy Release; Why Traders Care It's the primary tool the FOMC uses to communicate with investors. It contains the outcome of their vote on the federal funds rate, a brief commentary of the economic conditions that effected their vote, and most importantly, clues about the outcome of future votes. Derived Via The 10 members of the FOMC decide on what to include in the statement;
2008-06-25	18:15	USD	Federal Funds Rate		2.00%	2.00%
		Federal Funds Rate Measures Interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight; Usual Effect Actual > Forecast = Good for currency; Frequency Eight times per year; FF Notes The rate change is usually priced in the market and thus overshadowed by the FOMC statement which is focused on future changes; Acronyms Federal Open Market Committee (FOMC); Also Called Rates, Fed Funds; 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 10 members of the FOMC vote on where to set the rate;
2008-06-25	22:45	NZD	Current Account		-3.4B	-1.7B
		Current Account Measures the quarterly difference in value between imported and exported goods, services, income flows, and unilateral transfers. A rising trend has a positive effect on the nation's currency. The Current Account is a comprehensive accounting of the nation's trade with other countries. It includes the previously reported Trade Balance (which covers trade of goods and services), so traders focus on the income flows and unilateral transfer portions of the report.