Forex Tips & Daily Analysis

Economical News

USD

The USD appreciated against all of the major currencies during yesterday's trading session. The US Dollar gained over 160 points versus the EUR and closed at a rate of 1.5702. This happened in spite of the mostly disappointing results for the economy. . The Unemployment Rate was higher than forecasted at 5.5%. The Average Hourly Earnings did not change since last published at 0.3%. The Unemployment Claims indicator rose to 404K. The ISM Non-Manufacturing Composite plummeted to 48.2 meaning the service sector is shrinking. And the Natural Gas Storage Gauge came in 4B lower than predicted at 85B. Thus to find a better explanation for this, phenomenon traders might like to look at the crucial Nonfarm Employment Change which did came in lower than expected at -62K, however most expected a larger drop as the ADP came in a with a big disappointment and the actual Nonfarm Employment Change was fairly close to the forecast and not too far from the previous result. The USD also took advantage of its inferior counterparts yesterday.

General Motors, which is known for the 3.5-ton Hummer, might start selling a mini-car, Chevrolet Beat, in US markets. The Chevrolet Beat is more than a foot shorter than anything else General Motors sells in the U.S. They are doing this to win drivers whom are deterred by the record fuel prices. If this plan works out for GM it might help bring down oil price that in return might help strengthen the Dollar.

Today, floor trading will not take place in the US as Independence Day is celebrated. Thus volatility may be low trading versus the greenback. Investors are advised to keep in eye on news from the USD's counterparts before placing their transactions.

EUR

The EUR depreciated against most of the major currencies yesterday. This depreciation includes a 160 points loss vs. the USD. The EUR eventually closed against the USD at 1.5702. Yesterday, the indicators came in with mixed results, however the ECB Press Conference was extremely dovish. The Services PMI decreased to 49.1. The Retail Sales indicator came in higher than expected at 1.2%. The Minimum Bid Rate came in as expected at 4.25%. During the ECB Press Conference President Jean-Claude Trichet hinted that he probably won't increase interest rates anymore. He continued to state that the state of European economic-zone economy is problematic. This dovish statement seems to be the culprit of the EUR depreciation yesterday.

An issue that almost certainly will interest investors is the European energy policy. Companies in Europe are not happy with the current situation. They, the companies, would like the development of a unified energy policy for all of the European economic-zone. They believe this plan will give Europe the tolls to fight the energy cartels. If this advocated plan by the European companies is accepted, lower energy prices might come as a result.

Today, only two economic releases will be published in the European economic-zone. The French Government Budget Balance that previously was at -45.0B. And the German Factory Orders which is expected to rise to 0.8%. Given that these indicators are not expected to have a great impact on the European currency, investors ought to look for other news sources before placing there transactions.

JPY

During yesterday's trading session the JPY finished with mixed results. The Yen against the USD lost 70 points and closed at 106.72. And the JPY versus the EUR closed ad 167.59 which is a depreciation of 69 points. Yesterday, indicators describing the state of Japan's economy were not made public. Thus an explanation for yesterday's price movement needs to be found elsewhere.

Most of Japan stocks, especially the auto stocks, and bonds rose during yesterday's trading session. This rise was caused by an assumption by investors that exports from Japan will not slow down. Investors came to this assumption yesterday because of opinions expressed by the European Central Bank president that European interest rates will not increase anymore. Thus foreigners buying Japanese goods will need to buy Yen, which in the long term can help strengthen the Yen.

Today will only be a slow news day as only one indicator will come to light from Japan. The Leading Economic Index is a combination of economic indicators including employment, production, new orders, consumer confidence, housing, stock prices, and interest rate spreads. The index is forecasted to rise to 93.0% which should be good for the Yen's value. However as only one indicator is projected investors are advised to find more news resources prior to taking up new positions.

Technical Analysis

EUR/USD

The pair went through a substantial bearish correction yesterday, and is now floating around 1.5715. The Slow Stochastic on the daily chart is showing the current bearish move may further continue, and the RSI also supports that notion, indicating the market is overbought. Going short appears to be preferable today.

GBP/USD

The 4 hour chart is showing that the pair has reached its bullish peak after crossing the 2.00 level, as the cable is experiencing bearish momentum ever since. A bearish cross on the hourlies Slow Stochastic indicates the pair may continue its downtrend. Waiting for the validated breach beyond 1.980 and swing should be a good strategy today.

USD/JPY

After a short bearish correction, the pair seems ready to resume its bullish trend. All oscillators on the daily chart are showing bullish momentum and the Bollinger Bands are getting tighter which also indicates an additional upcoming bullish move. Going long appears to be a good decision today.

USD/CHF

The pair has gone through a sharp bullish correction yesterday as it gained over 150 pips in one day. A bullish cross on the hourlies Slow Stochastic suggests the pair has room for further bullish move. Going long with very tight stops might do the job today, incase a bearish reversal will occur.

Wild Card

Gold

The bearish correction which took place yesterday seems to have larger potential as all oscillators on the daily chart are showing fresh bearish momentum. Forex traders have a great opportunity to join the bearish move at a very early stage and with a great entry price.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5800	1.9930	107.60	1.0360	0.700	0.8020
	1.5780	1.9900	107.30	1.0330	0.9670	0.7990
	1.5750	1.9870	107.00	1.0300	0.9640	0.7960
Support	1.5680	1.9800	106.30	1.0230	0.9570	0.7880
	1.5650	1.9770	106.30	1.0200	0.9540	0.7850
	1.5620	1.9740	106.00	1.0170	0.9510	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-04		USD	Holiday: Independence Day		*	*
		Holiday: Independence Day US banks will be closed in observance of Independence Day. Low liquidity is expected for the New York Forex session.
2008-07-04	05:00	JPY	Leading Economic Index		92.8%	93.0%
		Leading Economic Index Measures the Level of a composite index based on 12 economic indicators; Released monthly, about 38 days after the month ends; Source changed from a diffusion index to a composite index as of Jun 2008. There's a revised version of this index released about 10 days later, but it's not included for lack of significance. Tends to have a muted impact because the individual indicators are released earlier;
2008-07-04	06:45	EUR	French Government Budget Balance		-45.0B	*
		French Government Budget Balance Measures the difference between the central government's monthly income and spending. A positive number indicates more revenue was received than spent during the month.
2008-07-04	10:00	EUR	German Factory Orders		-1.8%	0.8%
		German Factory Orders Measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods.
2008-07-04	14:00	CAD	Ivey PMI		62.5	62.2
		Ivey PMI The Ivey Purchasing Manager's Index (PMI) measures the activity level of purchasing managers from all sectors of the economy, 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.