Forex Tips & Daily Analysis

Yesterday, the greenback saw mainly volatile sessions against its currency counterparts. After the significant appreciation the USD went through on Tuesday, it managed to preserve its relatively high rates.

Economical News

USD

Yesterday, the greenback saw mainly volatile sessions against its currency counterparts. After the significant appreciation the USD went through on Tuesday, it managed to preserve its relatively high rates.

The USD kicked off yesterday's trading session with an unexpected boost, as Automatic Data Processing announced that July's Nonfarm Employment Change report showed a gain of 9,000 jobs in the private sector, well above expectations for a loss of 58,000 jobs. The USD then rose to a 4 week high against the EUR, as the EUR/USD dropped to 1.5523. However, soon after, a dramatic rebound in Crude Oil prices took place. Oil rose by $4 a barrel, crossing the $127 level, and drove the USD back to its original rate before the Employment Change publication.

Today has the makings for a huge news day in the US and for the Greenback. At 12:30 GMT we will likely see strong volatility, as 4 different leading indicators are due. The most important of the events will be the Advanced Gross Domestic Product, which is forecasted to reflect a 2.2% raise as opposed to the same time last year. Another significant indicator will be the U.S Unemployment Claims that are expected to decrease from 406K in the previous week, to 395K.

As most of today's U.S data is expected to give positive figures, traders must keep in mind that tomorrow the Nonfarm Unemployment Change, one of the most influencing USD indicators, is forecasted by analysts to show an increase of 75,000 jobless individuals. Such results should outcome in a massive volatile session in the next couple of days as markets should experience large fluctuation which could deliver some fantastic opportunities to gain profits. Traders are well advised to take advantage of it and end this week with nice profits.

EUR

Yesterday was a day of volatile sessions for the EUR. The EUR started the trading day the same way it ended the previous one, continuing to depreciate. However, later on it managed to bounce back to finish the day with similar figures to the ones at the beginning of the day.

The sole event that was published from the Euro-zone yesterday was European Consumer Confidence. The survey showed that the consumer confidence has declined to a 5 year-low, further questioning the European Central Bank's ability to execute an interest rate hike, as fears of inflationary pressure are consistently aggravating.

Looking ahead to today, the German Unemployment Change is expected to reflect a continuation in the improvement of the Euro-zone's strongest economy employment condition, as analysts forecast it to decrease by 20K jobs, following May's 38K reduction. Later on, the Consumer Price Index Flash Estimate is expected to show a stable growth of 4.1%, and the European Unemployment Rate is forecasted to remain at 7.2%.

Today the EUR might finally see some signs of strengthening for the first time since the beginning of the week. Yet it seems that even though the EUR should be supported by positive financial indicators, another day of cheering data from the U.S will probably prevent it.

JPY

Yesterday, the JPY underwent volatile sessions against most of its major currency rivals. The JPY was predominantly influenced by the other major currencies' behavior, such as the USD and the EUR, which experienced similar sessions as well.

It seems that the unfortunate news just keep coming for the Japanese economy. In addition to the 0.6% decline in the Japanese Average Cash Earnings in June from the previous year, making it the first fall since December, the International Monetary Fund (IMF) had cut the expected growth in the Japanese economy to 1.5% in 2008 and 2009 as well. The IMF has also suggested that the Bank of Japan's chiefs will avoid making any interest rates cuts for the time being, as the Japanese interest rate is the lowest in the industrial world at 0.5%, and will wait to follow future developments.

Today, the JPY will be absent from the economic calendar, and traders are advised to follow global developments, as the USD and EUR are likely to determine JPY's movements for today.

Technical Analysis

EUR/USD

The Slow Stochastic on the 4 hour chart is pointing up. On the hourly chart the Bollinger Bands have narrowed indicating the upcoming volatility. Hourly chart's Slow Stochastic also supports that bullish notion. Going long appears to be preferable today.

GBP/USD

The negative slope on the daily chart's RSI and Slow Stochastic continues. In addition this conception is supported by the 4 hour chart; where the Slow Stochastic seems to reverse to a negative course as well. Going short with tight stops appears to be the preferable strategy.

USD/JPY

After showing a consistent bullish momentum for a while, the daily Slow Stochastic is now showing signals of a falling correction. All indicators on the 4 hour chart also support this bearish notion. Going short with tight stops seems like the right choice today.

USD/CHF

Although the pair is showing a violent and choppy session on many occasions, the daily chart is still floating on very neutral territory with no distinct price direction. The 4 hour chart is slightly hinting on a bullish direction yet it is advised to wait for a strong signal and swing in.

Wild Card

Crude Oil

The fresh bullish rally occurred yesterday, and it appears that the Oil shows no signs to halt. The hourly, 4 hour and daily charts oscillators are pointing up and the momentum might be even stronger. This is an excellent opportunity for forex forex traders to join a strong trend that still has a steam in it.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5655	1.9875	108.50	1.0540	0.9501	0.7950
	1.5628	1.9850	108.33	1.0516	0.9475	0.7925
	1.5600	1.9822	108.19	1.0490	0.9450	0.7899
Support	1.5560	1.9783	107.75	1.0448	0.9408	0.7865
	1.5532	1.9750	107.51	1.0423	0.9382	0.7841
	1.5506	1.9724	107.27	1.0400	0.9350	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-31	01:30	AUD	Retail Sales	m/m	0.9%	0.1%
		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.
2008-07-31	01:30	AUD	Trade Balance		-0.3B	0.0B
		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.
2008-07-31	01:30	AUD	Private Sector Credit	m/m	0.5%	0.5%
		Private Sector Credit Measures the total credit provided to the private sector by financial intermediaries.
2008-07-31	01:30	JPY	Average Cash Earnings	y/y	0.8%	0.6%
		Average Cash Earnings Measures the monthly change in the wages paid to jobholders.
2008-07-31	03:00	NZD	Business Confidence		-38.7	*
		Business Confidence Measures the mood of businesses in regard to economic expectations. It's derived from a monthly survey of 1,500 businesses conducted by the National Bank of New Zealand.
2008-07-31	05:00	JPY	Housing Starts	y/y	-6.5%	-18.1%
		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.
2008-07-31	05:45	CHF	CPI	m/m	0.2%	-0.5%
		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.
2008-07-31	06:00	GBP	Nationwide House Prices	m/m	-0.9%	-1.2
		Nationwide House Prices Measures the monthly change in the average price for a house in the UK. It serves as a leading inflation indicator for the housing market.
2008-07-31	07:55	EUR	German Unemployment Change		-38K	-20K
		German Unemployment Change Measures the change in the number of unemployed people actively seeking employment during the previous month. Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor conditions.
2008-07-31	09:00	EUR	CPI Flash Estimate	y/y	4.0%	4.1%
		CPI Flash Estimate The Consumer Price Index (CPI) Flash Estimate measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. The Flash Estimate is releases about two weeks ahead of the complete CPI report and is derived from current energy prices and early inflation data from EU member states. 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.
2008-07-31	09:00	EUR	Italian Prelim CPI	m/m	0.4%	0.4%
		Italian Prelim CPI Measures the change in the price of goods and services purchased by consumers.There are two versions of CPI released about 25 days apart - Preliminary and Final. The Preliminary release is the earliest and thus tends to have the most impact. The Final is not included for lack of significance.
2008-07-31	09:00	EUR	Unemployment Rate		7.2%	7.2%
		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.
2008-07-31	12:30	CAD	GDP	m/m	0.4%	0.2%
		GDP Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.
2008-07-31	12:30	USD	Advance GDP	q/q	1.0%	2.2%
		Advance GDP Measures Total value of all goods and services produced by the economy; Why Care GDP is the broadest measure of activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency. Frequency Released quarterly, about 30 days after quarter ends; Timliness Gross Domestic Product (GDP); FF Notes While this is a q/q data, it's reported in an annualized format which shows the pace for GDP if the following 3 quarters remain the same. There are three versions of GDP released one month apart – Advance, Preliminary, and Final. Due to the timeliness of the Advance release, it tends to have the most impact.
2008-07-31	12:30	USD	Advance GDP Price Index	q/q	2.7%	2.4%
		Advance GDP Price Index Measures Inflation for all economic activity implied by GDP; Why Care While it's not the timeliest measure of inflation, it is the broadest. It encompasses all aspects of GDP and is used to calculate the difference between nominal and real GDP. The Fed is rumored to use this as the main inflation indicator. Also Called GDP Deflator; Frequency Released quarterly, about 30 days after quarter ends; FF Notes While this is a q/q data, it's reported in an annualized format which shows the pace for inflation if the following 3 quarters remain the same.
2008-07-31	12:30	USD	Unemployment Claims		406K	395K
		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.
2008-07-31	12:30	USD	Employment Cost Index	q/q	0.7%	0.7%
		Employment Cost Index Measures the change in the price businesses and the government pay for civilian labor. It's a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer.
2008-07-31	13:45	USD	Chicago Business Barometer		49.6	49.0
		Chicago Business Barometer Level of a diffusion index based on surveyed businesses in the Chicago area
2008-07-31	14:35	USD	Natural Gas Storage		84B	69B
		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;
2008-07-31	17:00	USD	Treasury Sec Paulson Speaks		*	*
		Treasury Sec Paulson Speaks Due to speak about the economy and financial markets at the New York Public Library, in New York;
2008-07-31	23:30	AUD	Manufacturing PMI		47.0	*
		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.