Forex Tips & Daily Analysis

Economical News

USD

The USD lost over 100 points in trading yesterday against the Euro. The pair ultimately closed at 1.5665. Except gaining vs. the JPY, the US dollar lost versus the rest of the major currencies yesterday. A possible explanation for this general deprecation of the greenback can be found in yesterday's news events. The FOMC Statement was less hawkish than expected after the Fed decided to leave interest rates unchanged at 2.00%. To demonstrate this, here is an example of assertions that were made during the FOMC Statement by the Fed: "uncertainty about the inflation outlook remains high" and "the upside risks to inflation and inflation expectations have increased". The balance of risks is shifting and the USD will continue to be under pressure for as long as the "inflation situation" remains unclear.

Yesterday's fundamental data came out with mixed results bringing no relief for the US dollar. The Core Durable Goods Orders and Durable Goods Orders came in as forecasted at -0.9% and 0.0% respectively. Though the Durable Goods Orders demonstrated a rising trend, the more essential Core Durable Goods Orders displayed a declining trend. On the other hand, the Crude Oil Inventories grew from -1.2m to 0.8m. The closing event of the day was the Federal Funds Rate which, as explained above, remained unchanged at 2.00%.

Today should be calmer than yesterday as fewer affecting events on the greenback will be published. The final GDP should rise by 0.1%. The Unemployment Claims should shrink by 6k. The vital Existing Home Sales indicator might rise by 0.7M. The Natural Gas Storage is expected to be released as well. On the whole, the USD should be on the rise as it is implied by the impending indicators of the day.

Today, investors might need to be ready to take the opposite position from yesterday. The reason for this is the new direction that can be derived from the indicators. Thus going long on the USD could be a good strategy today.

EUR

During yesterday's trading session, the EUR strengthened versus most of the major currencies. Overall this intensifying change can find support for yesterday's news events. The Italian Retail Sales came in lower than forecasted at 0.0%. The main bullish support came from ECB President Trichet's speech yesterday which focused mainly on the expected inflation increase, the real GDP growth and their decision to keep future Interest Rate unchanged. He said that while the ECB may raise interest rates at its July 3 council meeting, it was not said that he envisages a series of rate hikes. These forecasted changes by the ECB President were the main source of the strengthening effect on the EUR.

Today will be a slow news day for the Euro-economic-zone. Only two insignificant indicators are expected to be issued. The German Import Price Index should rise by 0.6% to 1.5%. And the M3 Money Supply is forecasted to come in at 10.4%. As a result, traders should pay intention to news from the EUR counterparts, especially the batch of major releases from the U.S. before placing transactions.

JPY

The JPY finished yesterday's trading session with conflicting results. The most notable change was the Yen's loss of 90 pips to the Euro; however the JPY increased in value against the USD and the GBP. Yesterday, there were no indicators published from Japan. Consequently, the direction of the Yen emerged from its counterparts.

Today will be a relatively eventful day for the JPY as many indicators will come to light. The central figures of the day are the Tokyo Core CPI, the Industrial Production and the Retail Sales. The Core CPI should rise to 1.1% and the Industrial Production should rise to 2.5%, therefore both are projected to help strengthen the Japanese currency. On the other hand, the Retail Sales gauge should decrease to -0.1%. The nonessential figures of the day on the Japanese calendar are the National Core CPI, the Overall Household Spending and the Unemployment Rate. The National Core CPI and the Overall Household Spending should rise to 1.3% and -2.0% respectively. However, as was previously mentioned, these figures' printings are not expected to have a serious impact on the Yen.

Investors, today, may consider a strategy that emphasizes a direction that is derived from the indicators being published from Japan.

Technical Analysis

EUR/USD

The pair has made a substantial bullish correction, and is now floating around a key Fibonacci level 1.5630. The Slow Stochastic indication on the 4 hour chart is showing no crosses and the RSI suggests the constitution of the correction. It appears that a test of the key Fibonacci level 1.5700 might be quite imminent.

GBP/USD

The daily chart is showing that the pair still does not have a distinct direction, as the chart appears to be quite horizontal for the past month. The Bollinger Bands are tight, and the 4 hour Slow Stochastic is showing a bearish cross. It appears that the possible next move might be a bearish one. In that case traders are advised to swing in after a breach.

USD/JPY

According to the daily chart the stable bullish movement this pair has been showing since mid March is still intact. However, the hourlies and the 4 hour chats show that the typical range trading continues with both the hourly RSI and Slow Stochastic are floating in neutral territory. Forex traders are advised to wait for a clearer signal before entering the market n this pair.

USD/CHF

After several failed attempts to breach through the 1.0300 support level on the hourlies, it appears that the pair might make an additional attempt of a break. If and when a breach of that level occurs, it will most probably unleash an intensive follow-up bearish trend that might be targeted at 1.0000 at its lowest point. Going short appears to be preferable today.

Wild Card

GBP/JPY

The pair has been moving within a very accurate bullish channel with very strong momentum for 3 and a half months now. The RSI is floating low, indicating that there is still a lot room for the bullish move. The hourlies also support that notion, however according to it; the uptrend is much more restrained as volatility is quite low. Forex traders have a good opportunity to take advantage of an ongoing uptrend with high profit potential.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5704	1.9801	108.79	1.0450	0.9651	0.8000
	1.5680	1.9773	108.56	1.0426	0.9625	0.7972
	1.5661	1.9740	108.30	1.0399	0.9598	0.7956
Support	1.5623	1.9705	108.01	1.0360	0.9556	0.7902
	1.5600	1.9680	107.74	1.0338	0.9530	0.7880
	1.5575	1.9656	107.42	1.0309	0.9501	0.7855

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-26	00:00	AUD	Leading Index		-0.4%	*
		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.
2008-06-26	06:00	EUR	German Import Price Index	m/m	0.9%	1.5%
		German Import Price Index Measures the monthly rate of inflation for imported goods.
2008-06-26	08:00	EUR	M3 Money Supply	y/y	10.6%	10.4%
		M3 Money Supply Measures the annual change in currency outstanding. Higher levels of currency can have a devaluing effect on the currency.
2008-06-26	08:30	GBP	Business Investment	q/q	-1.4%	-
		Business Investment Measures the total amount of capital expenditures by all businesses. A rising trend has a positive effect on the nation's currency because high levels of business investment are a sign of a strong economy.
2008-06-26	08:45	GBP	MPC Treasury Committee Hearings		-	-
		MPC Treasury Committee Hearings The Bank of England (BOE) Monetary Policy Committee (MPC) members, including Governor Mervyn King, will testify before Parliament's Treasury Committee. MPC members are responsible for setting the nation's short term interest rate, and traders scrutinize their speeches because they are known to drop clues regarding future monetary policy.
2008-06-26	12:30	USD	Unemployment Claims		381K	375K
		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.
2008-06-26	12:30	USD	Final GDP	q/q	0.9%	1.0%
		Final GDP Measures the change in the value of all goods and services produced by the economy. It's the broadest measure of economic activity and the primary gauge of the economy's health.
2008-06-26	12:30	USD	Final GDP Price Index	q/q	2.6%	2.6%
		Final GDP Price Index Measures the change in the price of all goods and services implied by GDP.
2008-06-26	14:00	USD	Existing Home Sales		4.89M	4.96M
		Existing Home Sales Measures the annualized number of existing homes sold in the previous month. Existing Home Sales make up a larger portion of the housing market than New Home Sales, and therefore are an important indicator of trends in the housing market. This indicator is published monthly by the National Association of Realtors.
2008-06-26	14:30	USD	Natural Gas Storage		57B	90B
		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;
2008-06-26	22:45	NZD	GDP	q/q	1.0%	-0.3%
		GDP Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.
2008-06-26	22:45	NZD	Trade Balance		-0.33B	0.15B
		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.
2008-06-26	23:30	JPY	Core CPI	y/y	0.9%	1.3%
		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%.
2008-06-26	23:30	JPY	Overall Household Spending		-2.7%	-2.0%
		Overall Household Spending Measures the total amount spent by households on goods and services. A rising trend has a positive effect on the nation's currency because consumer spending is a major driver of the economy, accounting for about half of GDP.
2008-06-26	23:30	JPY	Tokyo CPI	y/y	0.9%	1.1%
		Tokyo CPI The Tokyo Consumer Price Index (CPI) measures the rate of inflation experienced by consumers living in Tokyo, the nation's most populated city. Tokyo CPI tends to have a greater market impact than national CPI because it gives traders the most recent reading on consumer inflation. Tokyo is a relatively small population to survey, allowing CPI to be compiled faster and released about one month before national results.
2008-06-26	23:30	JPY	Unemployment Rate		4.0%	4.0%
		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.
2008-06-26	23:50	JPY	Industrial Production	m/m	-0.2%	2.5%
		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.
2008-06-26	23:50	JPY	Retail Sales	y/y	0.1%	-0.1%
		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.