Forex Tips & Daily Analysis

Economical News

USD

Yesterday the USD saw bearish trends against most of its major currency counterparts. The USD fell 34 points vs. the Euro, setting the EUR\USD rate at 1.5794. The USD also depreciated against the GBP, and underwent a volatile session against the JPY.

A bundle of data was delivered from the U.S economy yesterday. The most influential indicator was the Institute of Supply Management (ISM) Manufacturing Index. This indicator measures the activity level of purchasing managers in the manufacturing sector, while a reading above 50 indicating expansion. The index rose from a 49.6 to 50.2 reading, well above the expectation of 48.6. The ISM Manufacturing Prices, which measures the monthly inflation experienced by manufacturers, also increased, rising from 87.0 to 91.5 in the month of June. Additional indicators that released yesterday were the Monthly Construction Spending that fell by 0.4%, and the Domestic Vehicle Sales that descended to 9.7M, following last month's printing of 10.3M. Yet these indicators had little effect on the USD.

Today is going to be another significant day for the US dollar. The very important Nonfarm Employment Change is expected to depreciate by 20K. Such a result, if it occurs, may definitely result in falling trends for the USD. U.S Factory Orders are forecasted to drop to the 0.4% level in May, following a 1.1% increase in the previous month. Crude Oil Inventories might also reach the -0.1M level, after last week's printing of 0.8M. the last event today will take place at 16:00 GMT as US Federal Reserve Governor Frederic Mishkin will deliver a speech titled "The Global Financial Disruption and the World Economy" at the Caesarea Forum of the Israel Democracy Institute in Eilat. Clues regarding U.S future monetary policy might be scattered.

Traders are advised to follow carefully today's financial news, and keep an eye open on Crude Oil prices, as it seems to have large influence on USD pairs.

EUR

Yesterday, the EUR underwent volatile session against most of its major currency rivals. The EUR rose against the USD; however it mainly fluctuated against the GBP and the JPY.

Yesterday, the main news for the Euro came from the German Economy, the strongest economy in the Euro zone. German Retail Sales rose 1.3% from April, up 0.7% year-on-year. The German Unemployment Change has fallen by 38K as opposed to the last month. Other indicators published yesterday were the European Manufacturing Purchasing Manager's Index (PMI) that slightly rose to 49.2 from 49.1 in May. The PMI remained at its lowest level since May 2005, indicating that the sector is still contracting. The European Unemployment Rate has remained at 7.2% in May, unchanged from the rate in April. Even though yesterday's data failed to deliver positive figures for the European economy, the EUR has appreciated against the USD, mainly because the European Central Bank (ECB) is widely expected to raise Interest rates by a quarter percentage point to 4.25% on Thursday, increasing demands for Euro dominated assets and Euros to buy them with.

Today, ECB President Jean-Claude Trichet will deliver a speech at the 15th edition of the Rencontres Finacueres Internationales, in Paris. Traders should follow his speech carefully as any clues regarding future Interest Rate manipulations might generate increased volatility in the market.

Today, the sole indicator that will be published from the Euro zone is the Producer Price Index, which measures the change in the price of finished goods and services sold by producers. The index is forecasted by analysts to rise by 0.9% in May, following the 0.8% growth rate observed in April, and is expected to have increased 6.7% from the previous year at the same month.

Traders should also follow the leading indicators published from the U.S economy, as they should play the main role in today's trading session.

JPY

Yesterday, the JPY saw mixed results versus its major currency counterparts. The JPY first broadly rose against the USD, benefiting from growing risk aversion in global stocks as heightened fears regarding further losses in the banking sector motivated investors to buy Yens. The JPY tends to gain support when heightened risk aversion occurs, as investors reverse trades financed by borrowing the JPY at low interest rates. However, the USD\JPY rose back, mainly as a result of the positive U.S ISM reports.

Also yesterday, the Japanese Average Cash Earnings rose by 0.2% from the previous year, lower than the expected 0.7%, yet it was the fifth straight monthly increase and followed a 0.8% rise in April. The average basic salary in Japan has increased by 0.3%, rising for the seventh straight month. Late in the night, the Japanese Monetary Base, which measures the value of all currency and liquid cash assets held by the public, rose by 0.4% in June from the previous year, marking the first increase in four months.

Today, the JPY will be absent from the economic calendar and traders are advised to follow global financial news, especially from the U.S economy.

Technical Analysis

EUR/USD

The pair has been range trading with high volatility for a while now, and it appears that the bearish price movement might be back. However on the 4 hour chart local bullish correction is taking place. Going long with tight stops could be a good strategy today.

GBP/USD

After quite a long period of a distinct bullish correction, the pair has made its bearish breach, and appears to have established a starting point for a relatively strong downtrend. The Slow Stochastic of the daily chart confirms the bearish momentum, and being on the sell side appears to be the right choice today.

USD/JPY

The daily chart is showing flat consolidation around the 106.00 level with no distinct price direction. The 4 hour chart is showing mixed signals, and the daily chart is dwelling in neutral territory. Traders are advised to wait for a clear signal on any direction or keep out of that one today.

USD/CHF

After bottoming out at the 1.0130 level, the pair is showing signs of a corrective move on the daily chart. 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 1.0350 might be quite imminent.

Wild Card

Crude Oil

The very important resistance level of 144.00 is looming and the bullish move might revalidate as can be seen on the daily chart. Forex traders have a great opportunity to join this strong key breach and enjoy the rest of the bullish momentum.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5900	2.0030	106.80	1.0270	0.9990	0.8020
	1.5870	2.0000	106.50	1.0240	0.9660	0.7980
	1.5840	1.9970	106.20	1.0210	0.9630	0.7950
Support	1.5780	1.9900	105.60	1.0140	0.9560	0.7880
	1.5750	1.9870	105.30	1.0110	0.9530	0.7850
	1.5720	1.9840	105.00	1.0080	0.9500	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-02	01:30	AUD	Building Approvals	m/m	5.4%	-3.3%
		Building Approvals Measures the number of new construction intentions. This data is a leading indicator for the construction industry since the issuance of a building permit is one of the first steps in the construction process.
2008-07-02	01:30	AUD	Retail Sales	m/m	-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.
2008-07-02	07:15	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.
2008-07-02	08:30	GBP	Construction PMI		43.9	43.1
		Construction PMI The Chartered Institute of Purchasing and Supply (CIPS) Construction Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the construction 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.
2008-07-02	08:30	GBP	Housing Equity Withdrawal	q/q	7.3B	5.4B
		Housing Equity Withdrawal Measures the value of new loans secured on housing that is not used for house purchases or home improvements. A rising trend has a positive effect on the nation's currency because historically consumer borrowing and spending have a high degree of correlation.
2008-07-02	09:00	EUR	PPI	m/m	0.8%	0.9%
		PPI The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.
2008-07-02	11:30	USD	Challenger Job Cuts	y/y	45.6%	*
		Challenger Job Cuts The Measures the change in number of job cuts. This indicator is released by Challenger, Gray & Christmas, a private placement firm
2008-07-02	12:15	USD	ADP Nonfarm Employment Change		40K	-20K
		ADP Nonfarm Employment Change Measures the number of new jobs created in the previous month, excluding the farming industry. ADP, a leading provider of employment solutions for businesses, releases this indicator two days before the highly anticipated official Nonfarm Employment Change. ADP claims that this indicator has predictive value in regard to official statistics, but it hasn't yet gained acclaim from traders due to it's short history.
2008-07-02	14:00	USD	Factory Orders	m/m	1.1%	0.4%
		Factory Orders Measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods. Factory Orders tend to have a low impact because it reports much of the same information contained in the Durable Goods Orders report released over a week earlier.
2008-07-02	14:35	USD	Crude Oil Inventories		0.8M	*
		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.
2008-07-02	15:00	USD	Treasury Secretary Paulson Speaks		*	*
		Treasury Secretary Paulson Speaks US Treasury Secretary Henry Paulson will hold a press conference with French Finance Minister Christine Lagarde, in Paris.
2008-07-02	16:00	USD	FOMC Member Mishkin Speaks		*	*
		FOMC Member Mishkin Speaks Federal Reserve FOMC members vote on where to set the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.
2008-07-02	23:30	AUD	Services PMI		49.7	*
		Services PMI The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services 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.