Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the greenback rallied against most of its currency pair rivals. The USD gained close to 100 pips against the EUR, and saw bullish trends against the JPY and the GBP as well.

One of the main contributors to the USD's rising trends was a speech given by Federal Reserve Chairman Ben Bernanke yesterday, in which he stated that the Fed may extend its emergency-loan program for securities firms into next year. By saying so, Bernanke calmed the markets, almost reassuring market players that the Fed will be there in case any problem occurs. Another boost in support for the bullish USD was the unexpected drop in Oil prices. Crude Oil was traded in yesterday's session for less than $136 a barrel, $6 lower than the previous day and with the drop the USD climbed back up to rates below 1.57 versus the EUR and below 1.97 against the GBP.

Despite this, the US economy released a host of fundamental indicators yesterday that stifled the push in the USD. The leading indicator of the day, Pending Home Sales, which measures the change in number of signed real estate contracts for existing single-family homes, fell by 4.7% in May to 84.7 from an upwardly revised 88.9 in April. The Wholesale Inventories survey rose by 0.8%, slightly above expectations, mainly as a result of higher food and energy prices. The May U.S Consumer Credit rose by $7.78 billion to bring total consumer credit up to $2.57 trillion.

Today, the sole indicator for the USD will be the Crude Oil Inventories, which measures the change in the number of barrels of crude oil held in inventory by commercial firms during the past week. Analysts forecast it to descend by 1.5M. Traders are advised to pay close attention to this indicator, along with Crude Oil prices, as they have proved to have a significant effect on USD pairs.

EUR

Yesterday, the EUR saw mixed results versus most of its currency pair counterparts. The EUR underwent a bearish trend against the USD, declining close to a 100 pips. Against the GBP and the JPY it mainly fluctuated within a small range.

The main reason for the EUR's drop vs. the USD was a press conference held by the European Central Bank (ECB) president Jean-Claude Trichet after the interest rate hike. Trichet said that price stability remains ECB's main concern, and that rising inflation is still a valid and calculated risk for the Euro-Zone. And yesterday, ECB member Tumpel-Gugerell contributed even further to speculation that no one in the monetary policy committee is committed to another rate hike, especially not with oil prices falling as much as they did yesterday. Along with the surging Dollar, the EUR's downfall was inevitable.

Today, in early morning EUR news, French and German Trade Balance was released close to expectations and contributed very little to market activity. A speech by ECB President Trichet could also set he tone for what could be a day of recovery for the EUR. A relatively slow afternoon of news today will keep investors pressed to 14:35 GMT release of US Crude Oil Inventories as the catalyst for any expected market volatility.

JPY

The JPY underwent volatile sessions within most of its currency pairs. Until midday the JPY saw mainly downtrends against the USD, the EUR and the GBP. However, at that point a reversal took place, and the JPY had fully recovered.

Yesterday's trading began with some disturbing news for the JPY as the Japanese economy Watchers Current Index, which measures the current mood of businesses that directly service consumers, fell to a 4 years low, mainly as a result of high food and oil prices. Yet later on, the Core Machinery Orders rose by 10.4%, well above expectations for a 1.1% increase.

Today, the Corporate Goods Price Index is expected to rise by 5.2%, and the Japanese Current Account that measures the quarterly difference in value between imported and exported goods and services is forecasted by analysts to greatly rise from 1.51T to 1.90T.

Traders should follow carefully today's data, along with global developments, especially from the U.S.

Technical Analysis

EUR/USD

The pair has been going through choppy sessions with no distinct direction for the past 6 trading days. Several attempts to breach through the 1.5600 support level failed, and the pair is consolidating around 1.5700. the 4 hour and the daily chart provide mixed signals. However, the hourlies are showing signs of local bullish momentum. The hourly Slow Stochastic has a positive slope that implies a bullish correction might continue in the near time.

GBP/USD

The bearish flag formation on the daily chart is still valid, as no major breaches occurred. The momentum is still very bearish as pointed by the daily RSI. Forex traders should wait for an additional break through the 1.9600 level to validate the next sharp bearish move.

USD/JPY

After bottoming at 105.00 on the 4 hour chart, the pair now shows a relatively volatile price movement with strong bullish momentum. The pair is in the middle of a bullish trend as the attempts to breach through the 109.00 resistance level continue. The daily chart's Slow Stochastic also indicates that the bullish momentum might continue. Going long appears to be preferable.

USD/CHF

The pair continues to float without a distinct trend. No significant breach has been seen on the daily chart, and the 4 hour chart is giving mixed signals. Traders are advised to wait for a clear break before swinging into the trend

Wild Card

Crude Oil

This commodity is in the midst of a very strong bearish corrective move and appears to be heading towards $130 per barrel again. The bearish channel together with the sharp negative slope of the 4 hour Slow Stochastic, makes it quite lucrative for forex traders to join the downtrend and swing in with stops.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5752	1.9768	108.02	1.0445	0.9598	0.8039
	1.5725	1.9742	107.87	1.0410	0.9570	0.8019
	1.5699	1.9718	107.70	1.0370	0.9535	0.7990
Support	1.5660	1.9673	107.30	1.0310	0.9482	0.7945
	1.5632	1.9650	107.02	1.0287	0.9450	0.7907
	1.5608	1.9621	106.80	1.0250	0.9432	0.7880

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-09	00:30	AUD	WMI Consumer Sentiment	m/m	-5.6%	-
		WMI Consumer Sentiment The Westpac Melbourne Institute (WMI) Consumer Sentiment measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future.
2008-07-09	01:30	AUD	Home Loans	m/m	-4.2%	-2.0%
		Home Loans Measures the number of commitments for owner occupied home financing. 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.
2008-07-09	06:00	EUR	German Trade Balance		18.7B	17.4B
		German 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.
2008-07-09	06:45	EUR	French Trade Balance		-3.7B	-3.9B
		French 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.
2008-07-09	08:30	GBP	Trade Balance		-7.6B	-7.4B
		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.
2008-07-09	09:30	GBP	BRC Shop Price Index	y/y	1.8%	-
		BRC Shop Price Index The British Retail Consortium (BRC) Shop Price Index measures the rate of inflation (i.e., the rate of price changes) at surveyed retailers.
2008-07-09	12:15	CAD	Housing Starts		221K	-
		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.
2008-07-09	14:35	USD	Crude Oil Inventories		-	-
		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.
2008-07-09	23:50	JPY	CGPI	y/y	4.7%	-
		CGPI The Corporate Goods Price Index (CGPI) measures the rate of inflation (i.e., the rate of price changes) experienced by corporations when purchasing goods. A rising trend has a positive effect on the nation's currency because when businesses pay more for goods, they are likely to pass the higher costs to the consumer.
2008-07-09	23:50	JPY	Current Account		1.51T	-
		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.