Forex Tips & Daily Analysis

Economical News

USD

Yesterday, The Greenback experienced mixed results versus a basket of its currency rivals. Despite a notable fall in initial jobless claims, which descended to 346k in the week ending in July 5, from 404k the previous week. Thursday, the U.S. dollar fell to a one-week low versus the euro and slipped against the yen as well during morning trading in New York.

In the beginning of the trading session, the favorable data of the U.S jobless claims helped the USD sustain gains. The Dollar vs. EUR descended to 1.5699 from 1.5710 and against the Yen, it climbed to 107.41 from a previously 107.25. However, most of the gains were erased when resurgence credit worries appeared again after the two largest U.S. mortgage funders' shares, Fannie Mae and Freddie Mac tumbled on capital concerns. Also, Fed's Bernanke in a speech at Congress asked to consider more regulatory authority over the markets. In his statement, Bernanke requested passing legislation that will extend the regulators' authority to oversee investment bank holding companies to follow and supervise the financial markets. Moreover, this is the second time he has mentions this type of action should be taken on this issue this week, his insistent view could be interpreted as an urgent demand for change.

On tap today, all eyes will be on the Trade Balance which will be announced at 12:30 GMT. Economists predict a deficit of 62.5B with a decrease of 1.6B from June's deficit of 60.9B. Also today, we have the Import Price Index that measures the change in inflation for imported goods; it is expected to come in 2.0%. Another important release is the Preliminary Michigan Sentiment, which has been declining over the last two months and is expected to slightly fall again this month to 55.5. Traders should take advantage of today's announcements as it seems like the USD will derive its trends based upon the actual value of the Trade Balance.

EUR

Yesterday, the EUR experienced a rising trend against most of its currency rivals. The EUR rose 0.2% to 1.5778, reaching a one week high at 1.5800 versus the USD. The 15 nation currency soared against the Yen to 169.16 from 168.29 in early trading. As part of the economic readings from yesterday, the Italian industrial production fell 1.4% in May. The French Industrial Production came out with a disapointing -2.6% as well, after a positive value of 1.5% in April.

Also yesterday, the European Central Bank said that the current interest rates at 4.25% will help achieve the reduction of the inflation level that existed when the interest rates were 4%. They said that they expect a drastic diminution to 2% before moderating in 2009, and with this they Central Bank will be able to ensure medium term price stability. Closing the bulletin, ECB president Trichet, held a hawkish toned speech and pointed out that there won't be room for complacency and that the ECB will act firmly to bring back the inflation over the planned terms.

Looking ahead today, the only economic event coming from the Euro-Zone is the German Wholesale Price Index, which measures the rate of inflation experienced at the wholesale level and is expected to trim down to 1.0%, from the previous value of 1.4% in May. This should happen despite price increases of Crude Oil and refined gasoline. Traders should keep their eyes open for developments from the U.S. These developments should be the main indicator in determining the EUR's direction today.

JPY

Yesterday, the Yen experience bearish trends during trading hours versus its major currency pairs. Against the USD, the Yen experienced a volatile section, trespassing the 107.00 barrier to later consolidate in a range between 106.25 and 107.75. The JPY saw a sharp decline, falling to a two week low against the EUR, reaching 169.16. A shadow of pessimism is maintained by the Japanese government who expects to maintain its vision that the economy will remain stuck in doldrums for a fifth straight month in July. Over the last month, the official reports announced that economic recovery appears to be pausing and weak moments have been seen recently.

As for today, we have only two events from the Japanese markets. We have the Industrial Production, which is expected to be maintained at the same value of 2.9%. In addition, the Japanese Household Confidence will be released and is expected to slightly fall to 31.5. These results might further harm the JPY's trading trend.

Technical Analysis

EUR/USD

The EUR/USD pair has made an aggressive bullish move within the flat channel of the daily forex chart and is now approaching strong support. The hourly EUR/USD chart is showing a local consolidation around the 1.5770 level. The positive slope on the 4 hour chart's Slow Stochastic is also indicating that moderate bullish momentum. Buying on dips could be a good strategy today.

GBP/USD

The 4 hour and the daily GBP/USD charts indicating that the bullish trend has not yet said its last word as this currency pair is in the midst of a strong upward trend. However the hourly forex chart's indicators are pointing down. A preferable strategy might be waiting for a clearer signal on the hourlies.

USD/JPY

The pair has been range trading for the past few days. All oscillators on the hourlies and the 4 hour USD/JPY charts are quite neutral, while no distinct direction is seen on the horizon. However, there is a bearish cross on the daily chart's Slow Stochastic, implying that a bearish correction is imminent.

USD/CHF

The Slow Stochastic on the daily forex chart is heading downwards. The 4 hour chart's Slow Stochastic also supports that notion. Yet, the forex technical indicators on the hourlies imply a local bullish correction. Thus going short with tight stops appears to be preferable.

Wild Card

Crude Oil

It seems that the bullish momentum is back again as the Crude Oil is heading up with plenty of room to run. All of the technical oscillators on the hourly and the daily Crude Oil charts are giving a bullish signals and this commodity may target the $144 price level today. This gives forex traders a great opportunity to rejoin the market at an excellent entry price.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5860	1.9860	108.20	1.0390	0.9700	0.8070
	1.5830	1.9830	107.90	1.0360	0.9670	0.8040
	1.5800	1.9800	107.60	1.0330	0.9640	0.8010
Support	1.5740	1.9730	106.80	1.0260	0.9570	0.7955
	1.5710	1.9700	106.50	1.0230	0.9540	0.7915
	1.5680	1.9670	106.20	1.0200	0.9510	0.7825

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-11	04:30	JPY	Industrial Production	m/m	2.9%	2.9%
		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.
2008-07-11		JPY	Household Confidence		34.1	31.5
		Household Confidence Measures the mood of households in regard to economic conditions. The reading is derived from a monthly survey that asks households to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-07-11	06:00	EUR	German WPI		1.4%	1.0%
		German WPI The Wholesale Price Index (WPI) measures the rate of inflation experienced at the wholesale level. The reading represents the monthly change in the average price of a fixed basket of goods and services purchased at the wholesale level.
2008-07-11	11:00	CAD	Employment Change		8.4K	10.0K
		Employment Change Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises
2008-07-11	11:00	CAD	Unemployment Rate		6.1%	6.1%
		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.
2008-07-11	12:30	CAD	Trade Balance		5.1B	5.2B
		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.
2008-07-11	12:30	CAD	New Housing Price Index	m/m	0.0%	0.1%
		New Housing Price Index The New Housing Price Index (NHPI) measures monthly changes in the selling prices of new residential houses. The NHPI is used as the inflation measure of new home construction.
2008-07-11	12:30	USD	Trade Balance		-60.9B	-62.5B
		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.
2008-07-11	12:30	USD	Import Price Index	m/m	2.3%	2.0%
		Import Price Index Measures the monthly rate of inflation for imported goods.
2008-07-11	13:55	USD	Prelim Michigan Sentiment		56.4	55.5
		Prelim Michigan Sentiment Measures Consumer views regarding current and future economic conditions; Usual Effect Actual > Forecast = Good for currency; Frequency Released monthly, around the middle of the current month; FF Notes There are two versions of this report released about 15 days apart – Preliminary and Revised. The Preliminary release is the earliest and thus tends to have the most impact; Also Called University of Michigan Consumer Sentiment, Reuters/Michigan Sentiment; Why Traders Care Released since 1976, it has a track record of predicting consumers' spending habits via their economic attitudes and outlook; Derived Via 500-person telephone survey conducted by the University of Michigan;