Forex Tips & Daily Analysis

Economical News

USD

The USD had a strong trading day against its currency crosses yesterday. The USD's rally was supported by a batch of better than forecasted economic releases and a hawkish speech by Fed Chairman, Bernake. The USD also took advantage of the falling Crude Oil prices which traded at around $134 a barrel yesterday. After trading at around 1.60 on Tuesday, the EUR/USD fell to the low of 1.58 as the USD gained momentum. The USD/JPY rose from around 104.00 to trade above 105.00 in yesterday's market following the releases from the U.S.

The USD took advantage of a batch of positive economic data that was released yesterday. Both the Core CPI and general CPI beat forecasts and kept an increasing trend compared to last month's results. The Capacity Utilization Rate, which measures the percentage of available resources being utilized by manufacturers, mines, and utilities, and the Industrial Production, both beat expectations with their results announced simultaneously. The icing on the cake in terms of economic data was the Crude Oil Inventories, which were measured at 3.0 million, compared to negative value last week, which further dropped the Crude Oil price as well. Around this time, Fed Chariman Bernake gave the semiannual monetary policy testimony before the House Committee on Financial Services, in Washington DC. In his words, Bernake said a "top priority" for the central bank is to bring inflation to an acceptable level. He helped the greenback's rally by easing traders' worries as he said that he believes mortgage giants Fannie Mae and Freddie Mac are in "no danger of failing".

There are more significant economic data releases for the USD today, however it seems like this time the momentum might shift to a bearish trend. The impactful Building Permits and Housing Starts are expected to slightly drop as traders are still waiting for a sign of a breakout from Housing Crisis. The Unemployment Claims are expected to significantly increase by 34K this week. It will be up to FOMC Member Kroszner, who is due to speak at the Interagency Minority Depository Institutions National Conference, in Chicago, to save the greenback from a weak trading day ahead. Kroszner's speech and the Philadelphia Fed Manufacturing Index, which is the only release which is expected to rise, will be the only indicators that might save the USD from a bearish trading day.

EUR

The EUR lost ground versus its major rivals yesterday, most notably losing more than 100 points against the USD. While the USD, GBP and CHF were supported by mostly better than forecasted economic data, the EUR's economic releases were all very steady and were valued at their forecast figures. The CPI's from France, Germany and the whole Euro-Zone were all measured very close to their previous figures and no there was no surprise to push the EUR ahead of its currency crosses. The French CPI was even lower than its previous measuring and the worry of very slow economic growth in the Euro-Zone is becoming more realistic. It also seems like in general the Crude Oil and EUR have matching trends, so as the Crude Oil prices fell sharply yesterday, so did the EUR.

There is only one significant economic data release expected today from the Euro-Zone. The morning will start off with the Italian Trade Balance which is expected to slightly rise, but stay in the negative zone. Against the USD, traders might no foresee a direction as both currencies might have bearish trends, but against all the other crosses, the EUR could lose even more grounds as no impactful surprises are expected in today's trading.

JPY

As expected, the JPY's trading trends were caused by its counterparts' momentum shifts yesterday. There was no economic data released from Japan yesterday and the trading was based on the USD's bullish momentum and the EUR's bearish momentum. The USD/JPY cross dropped in the morning to the low 104.00's before the USD's news were announced, but after the releases, the cross was traded above that 105.00 range. The low Crude Oil prices did not help the weak JPY and it seems like investors are very worried about a significant economic slowdown in Japan caused by the high material costs.

The only economic release in Japan today will be the Monetary Policy Meeting Minutes. Although the meeting was held about a month ago, this will be the traders' first opportunity to sense the Japanese financial issues and plans. One should doubt very optimistic minutes and they will probably focus on the plans by the BoJ to fix the current issues and revive the Japanese economy. The release of the minutes will be followed by a speech by BOJ Governor Shirakawa, that will seal off the trading day.

Technical Analysis

EUR/USD

The bearish channel on the 4 hour chart remains in tact, as the pair is now floating on the bottom barrier. A bearish cross on the daily chart's Slow Stochastic confirms that the direction is indeed down. Going short appears to be preferable.

GBP/USD

After the recent local bullish correction has been halted, the cable is now floating in neutral territory. A fresh bullish cross on the 4 hour chart's Slow Stochastic indicates the continuation of the bullish move; however, all other oscillators are showing mixed results. Waiting for a clearer signal on the hourlies before entering the market might be the smart move today.

USD/JPY

There is a very distinct bearish channel forming on the daily chart, as the pair is now floating on the bottom barrier of it. A break beyond the 104.50 level will validate the ongoing of the bearish move. Traders should wait for the breach before swinging in.

USD/CHF

The range trading continues, as the pair shows no distinct price direction. However, a fresh bullish cross on the daily chart's Slow Stochastic, accompanied by positive signals on the 4 hour chart's Accelerator\Decelerator suggests the beginning of a bullish move. Going long with tight stops seems to be a good strategy today.

Wild Card

Gold

The bearish move that embarked yesterday appears to have more steam in it, as the RSI on the daily chart has crossed the 70 line, indicating that the market is overbought. This is a great opportunity for forex traders to enter a very promising trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5945	2.0110	105.80	1.0250	0.9860	0.8020
	1.5915	2.0080	105.50	1.0220	0.9830	0.7990
	1.5885	2.0050	105.30	1.0190	0.9800	0.7960
Support	1.5820	1.9970	104.60	1.0110	0.9730	0.7880
	1.5790	1.9940	104.30	1.0080	0.9700	0.7850
	1.5760	1.9910	104.00	1.0050	0.9670	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-17	01:30	AUD	RBA Bulletin		*	*
		RBA Bulletin The Reserve Bank of Australia (RBA) Bulletin is a monthly publication that contains economic commentary, feature articles, speeches and a set of statistical tables.
2008-07-17	08:00	EUR	Italian Trade Balance		-1.00B	-0.90B
		Italian 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.
2008-07-17	09:00	CHF	ZEW Expectations		-63.8	-66.8
		ZEW Expectations Zentrum für Europäische Wirtschaftsforschung (ZEW) Expectations measures institutional investor sentiment regarding the economic outlook. The monthly indicator reflects the difference between the share of investors that expect further improvement of economic conditions and those that expect growth to decrease.
2008-07-17	12:30	CAD	Foreign Securities Purchases		9.8B	3.5B
		Foreign Securities Purchases Measures the monthly value of domestic securities, debt, and assets purchased by foreigners. A rising trend has a positive effect on the nation's currency because foreigners must first convert their domestic currency before they can purchase the nation's assets. This can dramatically elevate currency demand. Traders watch this indicator closely as it provides several insights into international currency flows.
2008-07-17	12:30	USD	Housing Starts		0.98M	0.96M
		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.
2008-07-17	12:30	USD	Residential Building Permits		0.98M	0.96M
		Residential Building Permits Measurees the annualized number of new residential building permits issued during the previous month.It's a leading indicator of economic health because building construction creates a wide-reaching ripple effect. For example, jobs are created for the construction workers, construction tools and materials are purchased, a mortgage is sold by the financing bank, and new furniture is purchased to fill the building.
2008-07-17	12:30	USD	Unemployment Claims		346K	380K
		Unemployment Claims Measures the number of individuals who filed for unemployment insurance for the first time during the past week. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP. This weekly indicator produces very timely data, but traders generally view unemployment as a lagging indicator that gives little indication of the economy’s future performance.
2008-07-17	13:10	USD	FOMC Member Kroszner Speaks		*	*
		FOMC Member Kroszner Speaks FOMC members vote on where to set the nation's key interest rates, and their speeches are often used to drop subtle clues regarding future monetary policy and interest rate shifts.
2008-07-17	14:00	USD	Philadelphia Fed Man. Index		-17.1	-15.0
		Philadelphia Fed Man. Index Measures the general business conditions of manufacturers in the Philadelphia Federal Reserve district. The index is derived from a survey that asks respondents to rate the level of general business activity as 'decrease', 'increase', or 'no change'. A rising trend has a positive effect on the nation's currency because good manufacturing conditions are a sign of a strong economy. Although this survey is limited to manufacturers in Philadelphia only, traders pay close attention because the Philadelphia Federal Reserve releases it weeks before other major reports on manufacturing (e.g., Industrial Production, ISM Manufacturing Index).
2008-07-17	14:30	CAD	BOC Monetary Policy Report		*	*
		BOC Monetary Policy Report The Bank of Canada (BOC) Monetary Policy Report provides a detailed review of the bank's policies and strategies, plus a look at the current economic climate and its implications for inflation. The report is published semi-annually in April and October, with updates in July and January, and holds critical insights into the bank's view of inflation and the economic conditions that will effect interest rates in the future. Traders scrutinize this report as it's been known to provide clues about the bank's future monetary policy.
2008-07-17	14:35	USD	Natural Gas Storage		90B	88B
		Natural Gas Storage Measures Change in the number of cubic feet of natural gas held in underground storage during the past week; Usual Effect No clear effect, there are both inflationary and growth implications; Frequency Released weekly, 5 days after the week ends; FF Notes While this is a US indicator, it most affects the loonie due to Canada's massive oil sands; Acronyms Energy Information Administration (EIA); Also Called Nat Gas Stocks, Nat Gas Inventories; Why Traders Care It influences the price of petroleum products which affects inflation, but also impacts growth as many industries rely on oil to produce goods;
2008-07-17	15:15	CAD	BOC Governor Carney Speaks		*	*
		BOC Governor Carney Speaks Bank of Canada (BOC) Governor Mark Carney, along with Senior Deputy Governor Paul Jenkins, will testify before the Standing Senate Committee on Banking, Trade and Commerce, in Ottawa. As head of the central bank's governing body, which is responsible for setting the nation's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
2008-07-17	23:50	JPY	Monetary Policy Meeting Minutes		*	*
		Monetary Policy Meeting Minutes The Bank of Japan (BOJ) Monetary Policy Meeting Minutes are a detailed record of the bank's interest rate meeting held about one month earlier.