Forex Tips & Daily Analysis

Yesterday, the greenback saw bullish trends against most of its major counterparts with the help of hawkish rhetoric from U.S. officials and another day of sinking prices for crude oil.

The boost of the USD was supported by comments from U.S. Treasury Secretary Hank Paulson when he said on Tuesday that a strong dollar is "really very important", and as the general rhetoric behind the Fed elite is becoming unison, rising inflation could lead the Fed to start raising interest rates even before labor and financial markets recover giving a big push to the USD.

Economical News

USD

Yesterday, the greenback saw bullish trends against most of its major counterparts with the help of hawkish rhetoric from U.S. officials and another day of sinking prices for crude oil. Also helping contribute to another day of gains was the approval by US lawmakers of the bill that will help the Federal Reserve bail out Fannie Mae and Freddie Mac. The USD climbed to a one-month record high against the JPY when it reached the 107.83 levels in yesterday's trading session. The EURUSD was traded at a two-week low of $1.5670, before leveling out at just under 1.57.

The boost of the USD was supported by comments from U.S. Treasury Secretary Hank Paulson when he said on Tuesday that a strong dollar is "really very important", and as the general rhetoric behind the Fed elite is becoming unison, rising inflation could lead the Fed to start raising interest rates even before labor and financial markets recover giving a big push to the USD. The Senate Banking Committee approved yesterday with a majority of 19-2, a massive housing rescue bill which is intended to rescue the housing sector from its worst downturn since the Great Depression. The legislation would authorize the Federal Housing Administration to help troubled loan owners to trade mortgages with rising monthly payments for loans backed by the Goverment with easier and more afforadble setups. The bill is also set to put forth a new, and more strict regulatory body with power to control the finances of mortgage bigs like Fannie Mae and Freddie Mac .The decision of helping mortgage finance companies Fannie Mae and Freddie Mac will likely have a positive effect the USD improving the its status with investors as the US tries to pull the economy out of ‘recession'.

Looking ahead to today, there is a batch of U.S. economic data scheduled to be released. The day will start with the important Unemployment Claims which analysts predict to rise incrementally from last month's 366k up to 379k. Also on tap is the 14:00 GMT release of Existing Home Sales, forecasted to see a slight decrease to 4.93M from 4.99M in the previous month. Later on, Federal Reserve Bank of New York President Timothy Geithner will deliver a speech. Geithner is one of the main individuals responsible for setting the U.S key interest rate, and clues regarding any possible rate cut might be scattered. If analysts' expectations of negative results for U.S data will occur, this could cut the latest USD bullish trend and contribute to another try beyond 1.60 for the EUR/USD.

EUR

The EUR saw bearish trends against its most rivaled counterparts yesterday. Against the USD the 15 nation currency fell to its lowest value in the last two weeks as a combination of poor local Euro-Zone data, hawkish US policy and plummeting oil prices was to much to hold off. The EUR fell against the GBP to as low as 0.7840 thanks to a renewed growth in speculation that rates in the UK could be raised despite the Bank of England's decision to leave interest rates unchanged at 5.0% in its last scheduled statement.

Also yesterday the French household consumption of manufactured goods fell 0.4% in June, compared with a 1.7% rise in May. The figure showed a rise of 1.0% compared with the same month last year but was also down 1.5% from where it was expected to be by now. The Italian adjusted retail sales was up 0.2% in May compared with April, and the Euro zone industrial orders came down 3.5% vs. last month, falling more sharply than expected.

As for today a bundle of crucial data is expected. The day will start with the announcement at 7:00 GMT of the French Manufacturing PMI, expected to drop to 49.0 from 49.2 in the last result, followed by French Services PMI. At 7:30 GMT we await the German Manufacturing PMI, and German Services PMI, both indicators are predicted to be lower than their last measurement affecting the currency in a small but negative way. The most significant news will be published at 8:00 GMT when German Ifo Business Climate Index, and German Ifo Business Expectations Index will be released. The two important EZ events are also expected to decline, which could result in immediate bearishness from the EUR. Analysts predict that Ifo and PMI weakness could further punish the single currency to go as low as $1.5600, as for today. Look for high volatility in the EUR's trade movements in and around the economic events release.

JPY

The JPY saw mixed results against most of its currency crosses yesterday. The JPY fell against the USD to its lowest value in a month following the strong news events coming from the US, against the EUR the JPY experimented in a volatile trading session to remain near the opening price.

The only data that came from the JPY yesterday was the Trade Balance showing that Japan trade surplus fell 89% in June. Exports fell 1.7%, while imports surged 16.2% driven by record oil prices over the last month or two. All signs are beginning to point toward the Asian powerhouse entering a much-anticipated recession.

On tap for today, forex traders should maintain their focus mainly on the Tokyo Core CPI. The National Core CPI, and the Corporate Services Price Index, all expected to be released. The Core CPI should rise to 1.6% helping to strengthen the Japanese currency. The National Core CPI is expected to be increased to 1.9%, while the CSPI is expected to remain unchanged at 0.6%. However, as was previously mentioned, these figures are not expected to have a serious impact on the Yen.

Technical Analysis

EUR/USD

There is a very accurate bearish channel forming on the 4 hour chart, as the pair is now floating in the middle of it. The Slow Stochastic on the daily chart is showing a bearish cross, indicating that the bearish move shall continue. Going short might be the right choice today.

GBP/USD

The 4 hour chart shows that the pair has been range-trading for a while now, as the cable has consolidated around the 2.00 level. However, a bearish cross on the 4 hour chart's Slow Stochastic, suggests that a bearish move is imminent. Going short with tight stops appears to be preferable.

USD/JPY

There is a very distinct bullish channel forming on the daily chart, as the pair is now floating on its top barrier. However, all indicators on the 4 hour chart are giving bearish signals, suggesting a reversal might be impending. Going short might be wise today.

USD/CHF

The bullish move that took place over the past couple of days seems to be vanished. The hourlies show that the pair has consolidated around the 1.0380 level, and the 4 hour chart is giving mixed signals. Waiting for a clearer signal on the hourlies might be a good strategy today.

Wild Card

Crude Oil

The bearish move which was initiated last week seems to be galloping in full speed. And now, all oscillators are indicating the continuation of the bearish momentum. This might be a great opportunity for forex traders to join a very promising trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5775	2.0060	108.65	1.0460	0.9660	0.7935
	1.5755	2.0040	108.45	1.0440	0.9640	0.7915
	1.5725	2.0010	108.15	1.0410	0.9610	0.7885
Support	1.5665	1.9950	107.55	1.0350	0.9550	0.7825
	1.5635	1.9920	107.25	1.0320	0.9520	0.7795
	1.5615	1.9900	107.05	1.0300	0.9500	0.7775

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-24	07:00	EUR	French Manufacturing PMI (p)		49.2	49.0
		French Manufacturing PMI (p) The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, 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.
2008-07-24	07:00	EUR	French Services PMI (p)		50.1	49.7
		French Services PMI (p) The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, 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.
2008-07-24	07:30	EUR	German Manufacturing PMI		52.6	52.0
		German Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, 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.
2008-07-24	07:30	EUR	German Services PMI		52.1	51.5
		German Services PMI The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, 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.
2008-07-24	08:00	EUR	German Ifo Business Climate		101.3	100.2
		German Ifo Business Climate The Information and Forschung (Ifo) Business Climate Index measures the mood of firms in manufacturing, construction, wholesale and retail. The index is derived from a monthly survey of over 7,000 firms where respondents are asked to give their assessments of the current business situation and their expectations for the next six months.
2008-07-24	08:00	EUR	German Ifo Business Ex. Index		94.7	93.4
		German Ifo Business Ex. Index The Information and Forschung (Ifo) Business Expectations Index measures the mood of firms in regard to future expectations for the economy.
2008-07-24	08:00	EUR	Manufacturing PMI		49.2	48.7
		Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, 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.
2008-07-24	08:00	USD	Current Account		-0.3B	-0.5B
		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.
2008-07-24	08:00	EUR	Services PMI		49.1	48.8
		Services PMI The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, 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.
2008-07-24	08:30	GBP	Retail Sales	m/m	3.5%	-2.5%
		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.
2008-07-24	12:30	USD	Unemployment Claims		366K	379K
		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.
2008-07-24	14:00	USD	Existing Home Sales		4.99M	4.93M
		Existing Home Sales Measures the annualized number of existing homes sold in the previous month. Existing Home Sales make up a larger portion of the housing market than New Home Sales, and therefore are an important indicator of trends in the housing market. This indicator is published monthly by the National Association of Realtors.
2008-07-24	14:00	USD	FOMC Member Geithner Speaks		*	*
		FOMC Member Geithner Speaks Federal Reserve Bank of New York President Timothy Geithner. Federal Reserve FOMC members vote on where to set the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy
2008-07-24	14:35	USD	Natural Gas Storage		104B	83B
		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;
2008-07-24	17:35	GBP	MPC Member Bean Speaks		*	*
		MPC Member Bean Speaks Bank of England Deputy Governor Richard Bean. BOE Monetray Policy Committee members vote on where to set the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy
2008-07-24	23:30	JPY	Tokyo Core CPI	y/y	1.3%	1.6%
		Tokyo Core CPI Measures the change in the price of goods and services purchased by consumers in Tokyo, excluding fresh food. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate
2008-07-24	23:30	JPY	National Core CPI	y/y	1.5%	1.9%
		National Core CPI Measures Change in the price of goods and services purchased by consumers, excluding fresh food; Usual Effect Actual > Forecast = Good for currency; Frequency Released monthly, about 27 days after the month ends; FF Notes This data garners much of the media spotlight, but tends to be overshadowed by the Tokyo CPI data which is released a month earlier; Also Called Core CPI, National CPI Ex Fresh Food; Acronyms Consumer Price Index (CPI);
2008-07-24	23:50	JPY	CSPI	y/y	0.6%	0.6%
		CSPI The Corporate Services Price Index (CSPI) measures the rate of inflation experienced by corporations when purchasing services. A rising trend has a positive effect on the nation's currency because when businesses pay more for services, they are likely to pass the higher costs to the consumer.