Forex Tips & Daily Analysis

Economical News

USD

The US Dollar experienced a bearish trading session last week, largely due to the rising oil prices and the hesitancy of the Federal Reserve to hike Interest Rates in order to battle inflationary scares in the US. Investors came into last week with the assumption that the US would beat the Euro-Zone to the punch and hike Interest Rates. This and some poor fundamental data from the Euro zone initially sent the USD up vs. most of its major counterparts. However, as the week passed by, the greenback was not able to maintain this trend and began to fall consistently versus most of its major currency rivals. Poor US data did little to help the greenback cope with what ended up being a non-changing Fed Rate announcement. Additionally, the FOMC was about as vague as possible regarding how inflationary struggles in the US would be addressed. Dollar prices proceeded to make substantial drops versus the EUR and JPY. As the dollar slide continued towards the week's end, Crude Oil prices hit an all time high, and the US stock markets took a big hit.

This week should prove to be even more important to the Dollar as we look forward to critical news, in what is already a shortened holiday week in America. On tap this week we can expect the ISM Manufacturing Index, ADP Nonfarm Employment Change, Factory Orders, Crude Oil Inventories, Average Hourly Earnings, Unemployment Claims, and the Unemployment Rate. These figures will be highlighted by the Thursday release of Non-Farm Payrolls and the ISM Manufacturing Composite. These events will likely provide much needed volatility in the market which has missing for quite some time now. We can expect to hear from several members of the Fed this week, as we have begun to see a clear division of monetary policy within the US economy. With the next scheduled rate statement for the Dollar roughly one month away, the Dollar will have to move in response to outside news.

Today, the US will be uncharacteristically absent from most of the news day. Chicago PMI is the only scheduled event on tap and should have minimal effect on overall market movement. As such investors are advised to review the USD counterparts before placing their transactions.

EUR

The EUR recovered nicely last week, mainly against its US counterpart. Poor data early in the week left a bad taste for Euro enthusiasts as all seemed to be going in favor of the USD. Once the FOMC statement from the US came back with no change, traders jumped into action again and used their EUR to purchase more of the USD and the JPY. Furthermore, the EUR has now put the ball back in its court in terms of renewing its dominance aboard the currency lists, especially after Crude Oil prices took their toll the hardest on the USD last week

The week ahead should be huge for the EUR as we can expect market affecting news from Monday to Friday. The week from the EZ will be highlighted by German Retail Sales, Manufacturing PMI, PPI, German Factory Orders and the all important Interest Rate Statement. The markets are scheduled to return with favorable results, but the real key is the Minimum Bid Rate hike. ECB President Jean-Claude Trichet has been hesitant in regards to a possible Interest Rate hike since announcing a shift in policy several months ago when he called for July to be the month where the rate will change. July is now upon us. Investors are happy to access the market under such anticipated favorable conditions.

Today we can expect the 9:00 GMT release of the CPI Flash Estimate and Italian Preliminary CPI. Both events should have little effect on the market's movement. Euro traders should continue to see gains spill over from last week. However these gains may be within a smaller range with the lead up to Thursday's mega news day.

JPY

The JPY experienced two different trading periods within last week's session. Up until Thursday mid-day the JPY was within its usual habit of range trading versus its rivals and bearish trend against the USD. Last week's Japanese economy produced a great deal of fundamental data. Yet, these data proved to have little effect on the movement of the Japanese currency. The big move came on Thursday, when the US Federal Reserve left Interest Rates unchanged and left traders in a state of ambiguity regarding the future of the USD. This sent US stock prices down. The movement of the stock markets sparked risk aversion in the market initiating the JPY's bullish trends against most of its rivals. By the end of the previous week, the USD/JPY traded at a 3 week low, dropping almost 200 points to close just above 107.

Looking ahead this week three important indicators will be published. Today, the Tankan Large Manufacturers Index and the Tankan Large Non-Manufacturers Index will print their results. Both indices are forecasted to decrease. The 3rd vital indicator for the week will be the Average Cash Earnings, which should decline to 0.7%.

Traders are advised to pay close intention to Japan's trading partners and stay keen as this week is expected to turn extremely volatile for the Japanese currency.

Technical Analysis

EUR/USD

There is a very distinct bullish channel forming on the hourly chart, as the pair is now floating around the bottom level of it. The Slow Stochastic on the 4 hour chart suggests the trend can continue rising. The breach through the 1.5815 level will validate the next 1.5855 target price.

GBP/USD

All indicators on the hourlies are showing that we may see the pair correcting back to the 1.9850 level. A bearish cross on the 4 hour chart seen by the Slow Stochastic also supports that notion indicating that a local correction might be imminent. Going short with tight stops might be the right thing to do today.

USD/JPY

The downwards channel on the daily chart still remains intact, as the pair now floats on the bottom barrier. The momentum is bearish and very strong. The hourlies also support the bearish notion, and it appears that the pair still has some more room to run. Going short is a preferred strategy today.

USD/CHF

The bearish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily Slow Stochastic is showing the continuation of the trend, and the hourly studies confirm the bearish notion. Going short might be the right choice today.

Wild Card

Gold

It appears that the recent bullish trend has reached its current pick, and now, all indicators on the 4 hours chart are showing that a bearish correction is impending. forex Traders may have a great opportunity to join the corrective move at a very early stage.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5880	2.0030	107.20	1.0280	0.9720	0.8010
	1.5850	2.0000	106.80	1.0250	0.9690	0.7980
	1.5820	1.9970	106.50	1.0220	0.9660	0.7950
Support	1.5750	1.9900	105.80	1.0150	0.9580	0.7880
	1.5720	1.9870	105.50	1.0120	0.9550	0.7850
	1.5690	1.9840	105.30	1.0080	0.9520	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-06-30	00:30	AUD	TDMI Inflation Gauge	m/m	0.3%	*
		TDMI Inflation Gauge The TD Securities Melbourne Institute (TDMI) Inflation Gauge measures the rate of inflation experienced by consumers when purchasing goods and services. The Melbourne Institute, in conjunction with TD Securities, releases this indicator monthly. This is a much more timely indicator then the official quarterly CPI.
2008-06-30	01:30	AUD	Private Sector Credit	m/m	0.4%	0.6%
		Private Sector Credit Measures the total credit provided to the private sector by financial intermediaries.
2008-06-30	03:00	NZD	Business Confidence		-49.7	*
		Business Confidence Measures the mood of businesses in regard to economic expectations. It's derived from a monthly survey of 1,500 businesses conducted by the National Bank of New Zealand.
2008-06-30	05:00	JPY	Housing Starts	y/y	-8.7%	-3.7%
		Housing Starts Measures the annualized number of new residential buildings that began construction 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.
2008-06-30	08:30	GBP	Index of Services 3m/3m		0.3%	0.3%
		Index of Services 3m/3m Measures the gross value added (GVA) of all service sectors. GVA is the difference between the value of a service provided (output), and the value of the goods and services used up in providing that service (intermediate consumption).
2008-06-30	08:30	GBP	Mortgage Approvals		58K	52K
		Mortgage Approvals Measures the number of home loans issued during the previous month. A rising trend has a positive effect on the nation's currency because large purchases tend to be made by consumers that are optimistic and confident in their financial position. Additionally, consumer borrowing has a high degree of historical correlation with consumer spending, which is a major driver of the overall economy.
2008-06-30	08:30	GBP	Net Lending to Individuals m/m	m/m	7.3B	7.0B
		Net Lending to Individuals m/m Measures the total value of outstanding consumer installment debt, such as credit cards and auto loans. A rising trend has a positive effect on the nation's currency because historically consumer borrowing and spending have a high degree of correlation.
2008-06-30	09:00	EUR	CPI Flash Estimate	y/y	3.7%	3.9%
		CPI Flash Estimate The Consumer Price Index (CPI) Flash Estimate measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. The Flash Estimate is releases about two weeks ahead of the complete CPI report and is derived from current energy prices and early inflation data from EU member states. 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.
2008-06-30	09:00	EUR	Italian Prelim CPI	m/m	0.5%	0.3%
		Italian Prelim CPI Measures the change in the price of goods and services purchased by consumers.There are two versions of CPI released about 25 days apart - Preliminary and Final. The Preliminary release is the earliest and thus tends to have the most impact. The Final is not included for lack of significance.
2008-06-30	12:30	CAD	GDP	m/m	-0.2%	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.
2008-06-30	13:45	USD	Chicago PMI		49.1	48.2
		Chicago PMI The National Association of Purchasing Managers (NAPM) Chicago Purchasing Manager's Index (PMI) measures the health of the Chicago business environment. It's derived from a monthly survey of purchasing managers where respondents indicate whether their organization's activity is higher than, the same as, or lower than the previous month for output, purchases, employment, inventories, orders, and prices. An index reading above 50 indicates sector expansion.
2008-06-30	23:30	AUD	Manufacturing PMI		51.2	*
		Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2008-06-30	23:50	JPY	Tankan Large Manufacturers Index		11	3
		Tankan Large Manufacturers Index Measures the general business conditions of large manufacturers. The index is derived from a quarterly survey that asks respondents to rate subjects such as general business conditions, supply and demand conditions for products and inventories, prices, sales, and employment conditions. A rising trend has a positive effect on the nation's currency. The Tankan is released four times per year and is one of the nation's most respected gauges of economic health because manufacturers play a vital role in the large export industry. Traders pay special attention to the Tankan survey because it's one of the few growth indicators that is produced directly by the Bank of Japan.
2008-06-30	23:50	JPY	Tankan Large Non-Manufacturers Index		12	8
		Tankan Large Non-Manufacturers Index Measures the general business conditions of large service providers. The index is derived from a quarterly survey that asks respondents to rate subjects such as general business conditions, supply and demand conditions, prices, sales, and employment conditions. A rising trend has a positive effect on the nation's currency. Japan's manufacturing sector is driven mainly by exports, so the services sector gives a better indication of conditions in the domestic economy. Service providers also employ about half of the nation's workers, so traders follow this survey as a leading indicator of employment.