Forex Tips & Daily Analysis

World Bank Forecast Returns Traders to Safe-Havens.

The US Dollar has made some solid gains this week following news from the World Bank (WB) that economic forecasts for growth in 2009 are showing a 2.9% contraction, as opposed to the previous forecasts of 1.7%. As political turmoil in Iran and the show-down with North Korea continue, investors have felt a slight drop in confidence in markets lately and pulled their investments back into safe-havens such as the USD and JPY, which explains their sudden rise in value yesterday. This move back to less risky investments appears to be continuing today.

Economical News

USD

The U.S. Dollar gained against its riskier counterparts Monday after the World Bank issued a poor forecast for 2009. Renewed concerns over the state of the global economic recovery combined with unfolding instability in Iran and North Korea brought back an air of pessimism pushing investors to safer currencies. The Dollar was at $1.3856 per EUR following a 0.5% gain since Friday and at 95.99 Yen down from 96.23.

The World Bank predicted Monday that the global economy will shrink 2.9% in 2009, much deeper than the previous estimate of 1.7%. Doubts were also raised that developing countries will be able to spur global economic recovery as their GDP is expected to grow only 1.2% in 2009. The prospect for world economic recovery is expected to be slow and shallow. The report led to a decline in equity markets and commodities which further helped strengthen the Dollar.

The biggest risk to the Dollar this week is the highly anticipated Federal Open Market Committee (FOMC) meeting that is set to begin today and concludes Wednesday with a policy statement. Existing Home Sales are set to be released at 2:00 GMT; however, most of the focus will still be on the outcome of the FOMC meeting as investors await announcements regarding the Fed's Treasury buying program and direction of interest rates.

EUR

The EUR lost against its major currency pairs Monday as investors returned to risk aversion after a disappointing report from the World Bank. The EUR traded at $1.3856 Monday down from $1.3948 and at 133.05 Yen down from 134.22 Friday.

Additional pressure to the EUR came after European Central Bank (ECB) President Jean-Claude Trichet stated that he has no intention of offering stimuli to the Euro-Zone economy. A slightly stronger than expected rise in the German Ifo Business Climate had a very short and mild effect on the EUR considering Germany's budget deficit shortfalls made this boost in optimism appear muted.

Despite some interesting economic data set to be released today, including the German Flash Manufacturing PMI and the German Flash Services PMI, both to be released at 7:30 GMT, the markets are awaiting the FOMC meeting statement and ECB's one-year refinancing operation, both due on Wednesday.

JPY

The Japanese Yen gained against most major currencies Monday as risk aversion returned amid political unrest in Iran and a gloomy report from the World Bank regarding expected global recovery. The report stated that the recession will be deeper than previously forecasted, pushing investors to safer currencies, such as the Dollar and Yen.

The Yen traded at 132.87 per EUR following a 0.9% increase yesterday and was at 95.86 per Dollar, after rising 0.4%. Economic data released earlier showed an improvement in the business sentiment index as well as an improvement in the services sector, providing a brighter outlook for Japan's economic state. As the world turmoil continues, it is likely the Yen will extend its gains during today's session as well.

Technical Analysis

EUR/USD

This pair appears to be consolidating towards the price of 1.3875 with what appears to be an impending volatile movement. The MACD on the hourly and 4-hour charts indicate bullish crosses, which support the price moving towards the convergence point and the Bollinger Bands on the hourly chart appear to be tightening, which indicates imminent volatility. Waiting for the breach and then riding the wave may be a wise choice today.

GBP/USD

This pair may be poised for an upward movement today. The MACD on the hourly chart is showing an imminent bullish cross. The Slow Stochastic on the 4-hour chart also shows a fresh bullish cross that has just formed. These two together support the notion of an impending upward movement. Going long may be a wise choice today.

USD/JPY

This pair's recent downward movement has pushed many of the indicators on all charts into the over-sold territory, as well as generating a number of bullish crosses. The pair is currently testing the solid support level of 95.30. If a breach occurs, the downward movement may continue despite technical indicators. However, if the price fails to breach, there may likely be an upward correction throughout the day.

USD/CHF

This appear has been consolidating over the past few days towards the price level of 1.0850. As the MACD on the hourly chart shows a clear bearish cross, and the Bollinger Bands are tightening on the hourly chart, this pair could experience a sharp volatile movement after the impending downward move. Waiting for the breach and then riding the wave may be a solid strategy.

Wild Card

EUR/NOK

The sustained upward movement for this pair has pushed many indicators into the over-bought territory and created bearish crosses across the board. However, the Parabolic SAR on all charts is still signaling for forex traders to buy. Without a clear downward correction today, this pair will likely continue upwards as the NOK loses value to the EUR. Today will either be the day this pair reverses, or continues to climb to record highs. Choosing the right one will earn big bucks today.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3955	1.6400	96.00	1.0950	0.7920	0.8575
	1.3930	1.6375	95.75	1.0925	0.7895	0.8550
	1.3900	1.6350	95.50	1.0900	0.7860	0.8525
Support	1.3830	1.6285	95.00	1.0840	0.7800	0.8465
	1.3800	1.6250	94.75	1.0815	0.7775	0.8430
	1.3775	1.6225	94.50	1.0785	0.7745	0.8400

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2009-06-23	06:00	EUR	GfK German Consumer Climate		2.5	-
		GfK German Consumer Climate The German group GfK uses this report to show the results of their survey on business consumer confidence in order to gauge the health of the German economy. It is a leading indicator of economic strength.
2009-06-23	06:15	CHF	Trade Balance		2.55B	-
		Trade Balance This report measures the difference between imported and exported goods and services. A positive number indicates the country is exporting more goods than it is importing. A country with a growing positive trade balance may see their currency strengthen as a result.
2009-06-23	06:45	EUR	French Consumer Spending	m/m	0.7%	-
		French Consumer Spending The indicator presents the total amount spent by consumers on goods and services in France. An increaseing value can boost a nation's currency because consumer spending is a major driver of the economy, accounting for a sizeable portion of GDP.
2009-06-23	07:00	EUR	French Flash Manufacturing PMI		43.3	-
		French Flash Manufacturing PMI Measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. Above 50.0 indicates industry expansion, below indicates contraction. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy
2009-06-23	07:00	EUR	French Flash Services PMI		48.3	-
		French Flash Services PMI Measures the evel of a diffusion index based on surveyed purchasing managers in the services industry. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
2009-06-23	07:30	EUR	German Flash Manufacturing PMI		39.6	-
		German Flash Manufacturing PMI Measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. Above 50.0 indicates industry expansion, below indicates contraction. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
2009-06-23	07:30	EUR	German Flash Services PMI		45.2	-
		German Flash Services PMI Measures the level of a diffusion index based on surveyed purchasing managers in the services industry. Above 50.0 indicates industry expansion, below indicates contraction. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
2009-06-23	08:00	EUR	Flash Manufacturing PMI		43.3	-
		Flash Manufacturing PMI Measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. Above 50.0 indicates industry expansion, below indicates contraction. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
2009-06-23	08:00	EUR	Flash Services PMI		44.8	-
		Flash Services PMI Measures Level of a diffusion index based on surveyed purchasing managers in the services industry. Above 50.0 indicates industry expansion, below indicates contraction. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
2009-06-23	08:30	GBP	BBA Mortgage Approvals		27.7K	-
		BBA Mortgage Approvals The number shows mortgage approvals for home purchases in the past month from British Banker's Association (BBA) approved banks. 60% of British home lending originates from BBA banks. Positive housing data lends strength to the nation's economy as it signifies economic growth and expansion.
2009-06-23	12:30	CAD	BOC Gov Carney Speaks		*	*
		BOC Gov Carney Speaks Bank of Canada (BoC) Governor Carney is due to speak. These speeches often carry clues about future monetary policy decisions and can affect the market during their delivery.
2009-06-23	13:00	EUR	Belgium NBB Business Climate		-27.6	-
		Belgium NBB Business Climate An indicator compiled by surveying manufacturers, builders, and trading firms. A reading above 0.0 indicates improving economic expansion, below indicates worsening conditions.
2009-06-23	14:00	USD	Existing Home Sales		4.68M	4.83M
		Existing Home Sales This indicator report measures the number of already existing residential buildings that were sold during the previous month. It is published in an annualized format even though it is released monthly.
2009-06-23	14:00	USD	HPI	m/m	-1.1%	-
		HPI A housing index that evaluates the change in the purchase price of homes with mortgages backed by Fannie Mae and Freddie Mac.
2009-06-23	14:00	USD	Richmond Manufacturing Index		4	-
		Richmond Manufacturing Index An index compiled from surveying manufacturers in the Richmond Virginia area. A reading above 0 shows improving economic conditions. This item is sometimes overlooked as the data has already been released in prior reports.
2009-06-23	23:50	JPY	CSPI	y/y	-2.4%	-
		CSPI The Corporate Services Price Index (CSPI) reports the rate of inflation as seen by corporations when buying services. An increasing value can boost a nation's currency because when businesses are forced to pay more for services, they most likely will pass the higher costs to the consumer.
2009-06-23	23:50	JPY	Trade Balance		-0.52T	-
		Trade Balance This report measures the difference between imported and exported goods and services. A positive number indicates the country is exporting more goods than it is importing. A country with a growing positive trade balance may see their currency strengthen as a result.