Forex Tips & Daily Analysis

The dollar appreciated against all of the major currencies yesterday. The reason for this appreciation is a direct reaction to speeches by the US Treasury Secretary Henry Paulson and the Federal Reserve Bank of Philadelphia President Charles Plosser. In their speeches, they have stressed policies that could strengthen the dollar.

Economical News

USD

The dollar appreciated against all of the major currencies yesterday. Traders should note that the USD hit a 10 day high versus the Euro at 1.5757. The dollar ultimately gained almost 150 points and closed at 1.5780. The greenback against the CHF appreciated over 130 points and closed at 1.0307. The USD vs. the JPY rose by about 90 points were obtained and closed at 107.31. The reason for this appreciation is a direct reaction to speeches by the US Treasury Secretary Henry Paulson and the Federal Reserve Bank of Philadelphia President Charles Plosser. In their speeches, they have stressed policies that could strengthen the dollar. Secretary Paulson gave encouraging words regarding the mortgage crisis, while President Plosser hinted that interest rates will rise in the near future. In addition, two more indicators came to light, the Richmond Manufacturing Index and the House Price Index. Both of these indicators declined -16 and -0.3% respectively, however the House Price Index fell by less than forecasted.

Today only two indicators are expected for the red white and blue. However, the Crude Oil Inventories could add to yesterday's appreciation of the dollar, just like last time, if the indicator will surprise the analysts and ascend. As well, the Beige Book will come out, yet it is must likely be ignored by investors, because the book is considered a secondary source.

US banks are trying to sell off their lucrative money-management departments in an attempt to raise much needed cash. The banks are doing this in spite of the recent rally in their stocks. On condition the banks sell these departments to buyers abroad, the buyers will need to convert their money into dollars to complete these deals. Thus a greater demand for the USD will ensue and the most recent trend will carry on.

Investors should keep their eyes open on the Crude Oil Inventories indicator before deciding on today's trend.

EUR

The Euro weakened against most of the major currencies except the CHF. The EUR lost a most notable 150 points against the USD and closed at a 10 day low of 1.5780. The reason for this movement was not dependent on news from the Euro-Zone as there weren't any news releases yesterday from the EZ.

In contrast, three economic indicators will be published from the Euro-Zone today. The French Consumer spending which is expected to have a declining trend should come in at -0.6%. The next two indicators should not have a great effect on the Euro. The Italian Retail Sales should come in at -0.1%. And the Industrial New Orders, that measures new purchasing orders of local manufacturers for durable and non-durable goods, is forecasted at -1.3%.

Thus a preferable strategy for today will be to go short; however investors are advised to pay close intention to news events from other effecting countries.

JPY

The Yen completed yesterday's trading session with mixed results. The Yen lost almost 90 points vs. the USD and eventually closed at 107.31, however the Yen gained 55 points versus the CHF and closed at 104.09. Yesterday's indicators were not published in Japan thus this trend was generated by news events from around the world.

Today only one indicator will come out from Japan. The Trade Balance is projected to come in at 0.28T. This indicator measures the difference between imported and exported goods during a reported month. Investors should note that on Thursday the Tokyo Core CPI that measures price changes from year to year will come out as well as other indicators. Today, traders should keep an eye on the Yen's counterparts before placing their orders.

Technical Analysis

EUR/USD

After a sharp drop yesterday, the range trading continues, as the pair floats aimlessly on the hourly and the 4 hour chart. The oscillators are still floating in neutral territory with no distinct direction signal. There seems to be moderate bullish momentum on the hourlies, yet forex traders are advised to wait for a clearer signal before entering the market on this one

GBP/USD

Despite yesterday's sharp drop, the bullish channel on the daily chart is still intact. According to a 4 hour chart, the pair is oversold; therefore a fresh bullish momentum may be quite imminent on the 4 hour chart as well. Going long with tight limits might be a preferable strategy today.

USD/JPY

The pair is still in a bullish configuration and is now floating around 107.30. The momentum on the 4 hour chart is very strong and it appears that there might be a testing of the Fibonacci level of 108.00. The Bollinger Bands are tightened on the 4 hour chart implying that volatility will increase during the day; meaning that traders may have a good opportunity to make profits during today's trading session.

USD/CHF

There are very strong bullish signals on both the hourlies and the daily charts. The RSI and Momentum are positively sloped. This pair is trending upwards and there are no imminent indications of a reversal. Therefore traders can maximize profits by entering steady long positions

Wild Card

Silver

There is a very accurate bearish channel forming on the daily chart, as the break through the bottom level of it was just validated. Silver now has enough bearish momentum to be carried into the 17.00 zone. This is a great opportunity for forex traders to use this technical break and swing into a high potential downwards move.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5870	2.0010	108.05	1.0380	0.9770	0.8000
	1.5850	1.9990	107.85	1.0360	0.9750	0.7980
	1.5820	1.9960	107.55	1.0330	0.9720	0.7950
Support	1.5760	1.9900	106.95	1.0270	0.9660	0.7890
	1.5730	1.9870	106.65	1.0240	0.9630	0.7860
	1.5710	1.9850	106.45	1.0220	0.9610	0.7840

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-23	01:30	AUD	CPI	q/q	1.3%	1.2%
		CPI The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.
2008-07-23	01:30	AUD	Trimmed Mean CPI	q/q	1.2%	1.1%
		Trimmed Mean CPI Derivative of the Consumer Price Index (CPI) that factors in the seasonality of certain price components and excludes price changes that fall in the outside 30% of the price change distribution for all CPI components.
2008-07-23	06:45	EUR	French Consumer Spending	m/m	2.0%	-0.5%
		French Consumer Spending Measures the total amount spent by consumers on goods and services. A rising trend has a positive effect on the nation's currency because consumer spending is a major driver of the economy, accounting for about two-thirds of GDP.
2008-07-23	08:00	EUR	Italian Retail Sales	m/m	0.0%	-
		Italian 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.
2008-07-23	08:30	GBP	MPC Meeting Minutes		8-1 hld	-
		MPC Meeting Minutes The Bank of England (BOE) Monetary Policy Committee (MPC) Meeting Minutes are a detailed record of the committee's interest rate meeting held about two weeks earlier. The minutes expose the votes cast at the meeting and can give traders further insight into the central bank's stance on monetary policy. Traders carefully comb the minutes for clues regarding future interest rate shifts.
2008-07-23	08:30	GBP	BBA Mortgage Approvals		28.0K	-
		BBA Mortgage Approvals The British Bankers' Association (BBA) Mortgage Approvals measures the number of mortgage approvals issued by the BBA for home purchases in the previous month. A higher number of approvals points to a healthy housing market. The housing market is a key influence on consumer spending because two thirds of households own their own home.
2008-07-23	09:00	EUR	Industrial New Orders	m/m	2.5%	-
		Industrial New Orders Measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods.
2008-07-23	10:00	GBP	CBI Industrial Trends Orders		1	-
		CBI Industrial Trends Orders The Confederation of British Industry (CBI) Industrial Trends Orders measures the value of new purchase orders placed with domestic manufacturers. A rising trend has a positive effect on the nation's currency. A busy manufacturing industry is a positive sign that the economy is expanding, and this survey points to how busy manufacturers will be in the months to come as they work to fill new orders.
2008-07-23	11:00	CAD	Core CPI	m/m	0.3%	-
		Core CPI Derivative of the Consumer Price Index (CPI) that excludes the volatile Food, Energy, Alcohol and Tobacco items. CPI with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend and the central bank uses it as their primary inflation gauge, aiming to keep it at an annualized rate of 2%.
2008-07-23	11:00	USD	CPI	m/m	1.0%	-
		CPI The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.
2008-07-23	14:35	USD	Crude Oil Inventories		3.0M	-
		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.
2008-07-23	18:00	USD	Beige Book		*	*
		Beige Book Provides a look at how regional Federal Reserve branches view the economy in their area. It is produced two weeks before the monetary policy meetings of the Federal Open Market Committee (FOMC), who uses the book's anecdotal evidence to help determine the path for interest rates.
2008-07-23	21:00	NZD	Monetary Policy Statement		*	*
		Monetary Policy Statement It's the primary tool the RBNZ uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions
2008-07-23	21:00	NZD	Official Cash Rate		8.25%	-
		Official Cash Rate Measures the interest Interest rate at which banks lend balances held at the RBNZ to other banks. Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.
2008-07-23	23:50	JPY	Trade Balance		0.64T	-
		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.