Forex Tips & Daily Analysis

ADP Employment Data to Drive the Majors Today.

The surprise drop in consumer confidence in the United States yesterday has resulted in a sudden buy-up in USD as investors flock to safe-havens. With a market that appears to be lacking a clear direction recently, major reports such as the CB Consumer Confidence report yesterday, and today's ADP Non-Farm Employment Change report become that much more important to watch as more investors await their release before trading.

Economical News

USD

The greenback gained Tuesday as a report on U.S. home prices showed that the pace of price declines may be slowing and manufacturing data from June came in slightly better than expected. The Dollar may extend its gains versus the EUR after a report showed an unexpected drop in U.S. consumer confidence for June, increasing demand for the safety of the world's main reserve currency.

The USD traded at 1.4035 versus the EUR, following a 0.4% gain yesterday. The dollar also fetched 96.35 yen following a 0.3% advance. Tuesday's data gave investors more reasons to buy the U.S Dollar. For months, improvements in the outlook for the economy, financial markets or other companies has led to stock gains and weighed on the USD, taken as a signal of reduced demand among investors to hold the safe-haven currency.

However, analysts have said that the Dollar may be near a turning point, after trading in a pattern closely correlated with equity moves. Investors have sold U.S. Dollars recently as stock markets and oil prices rose on an upbeat view for prospects of a global economic recovery, hurting demand for the greenback as a safe haven.

Investors now await the U.S. government's high-profile monthly employment report. The jobs data is due on Thursday as U.S. financial markets will be shut on Friday for Independence Day.

EUR

The EUR gained versus the U.S Dollar on speculation European Central Bank (ECB) policy-makers will today signal that the central bank will keep Interest Rates on hold into next year to aid an economic recovery. ECB member Axel Weber said last week that the central bank has used up its scope to cut Rates. Policy-makers will leave the benchmark rate unchanged at this week's meeting, according to analyst predictions.

There is also an improving sentiment in the Euro-Zone's economic conditions. European economic confidence rose more than economists forecast in June, the European Commission in Brussels reported yesterday, signaling the region's slump is abating. Analysts predict that the ECB will keep Rates at 1% for the foreseeable future. And that might turn the EUR further on the upside.

The European currency has advanced the most in 4 months against the Yen, last traded at 135.56 yen from 135.21 yesterday. When it reached 135.96 for a brief stint yesterday, this was the highest level reached since June 15. The EUR has risen 7.1% versus the Japanese yen this year and doesn't seem to be losing any momentum.

JPY

The Japanese Yen weakened against the EUR and the Dollar yesterday after a report showed China's manufacturing expanded for a 4th consecutive month, dampening demand for the relative safety of Japan's currency. The JPY fell to 135.80 per EUR and weakened to 96.95 per U.S. Dollar from 96.36. The Yen also fell against 15 of the 16 most-traded currencies after an Australian report showed retail sales climbed for a 3rd month, giving investors more confidence to purchase higher-yielding assets.

Although, the Bank of Japan's (BOJ) June Tankan corporate survey showed on Tuesday that big manufacturers' sentiment pulled back from a record low hit 3 months ago, the improvement was smaller than forecast. The Yen edged down against the Dollar after the news but the market's reaction was subdued overall as investors decided that it offered no surprise.

Analysts said that the market has considered all the positive factors that have come out and is starting to react more to negative factors. The market is lacking clear direction and is likely to stay in an adjustment period for now.

Technical Analysis

EUR/USD

This pair currently lacks clear direction. With most indicators either floating in neutral territory, or giving off mixed signals, this pair continues to trade in a distinct range. Buying on lows and selling on highs within this range is the most preferable strategy in this environment.

GBP/USD

There is a distinct bullish cross on the 4-hour chart's Slow Stochastic and an imminent bullish cross on the hourly chart's MACD. These two signals together indicate an impending bullish correction to yesterday's sharp downward movement. Going long might be wise today.

USD/JPY

Yesterday's volatile bullish movement in this pair has pushed the RSI on the hourly and 4-hour charts into the over-bought territory, representing the presence of downward pressure. The fresh bearish cross on the 4-hour chart's Slow Stochastic supports the notion of a downward correction. Going short with tight stops appears to be preferable.

USD/CHF

Almost all indicators on this pair show neutrality as the price floats near the 1.0850 price level. With a bearish cross on the hourly MACD and a bullish cross on the 4-hour MACD, the direction of this pair is uncertain. Waiting for a clearer signal might be a good choice today.

Wild Card

EUR/GBP

The price of this pair has been trading flat these past several days. However, the Bollinger Bands on the hourly and daily charts are tightening, signaling an impending volatile jump. With a bearish cross on the hourly MACD and the 4-hour chart's Slow Stochastic, this volatile jump may very well be bearish. Forex traders have a great opportunity to enter early sell positions before this jump takes place and ride out the downward slope for profits!

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4160	1.6530	97.85	1.0950	0.8155	0.8660
	1.4115	1.6485	97.45	1.0925	0.8120	0.8600
	1.4075	1.6450	97.15	1.0900	0.8095	0.8575
Support	1.4000	1.6390	96.50	1.0840	0.8025	0.8505
	1.3970	1.6350	96.15	1.0815	0.7995	0.8460
	1.3915	1.6310	95.85	1.0790	0.7950	0.8420

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2009-07-01		CAD	Canadian Bank Holiday		*	*
		Canadian Bank Holiday Canadian banks will be closed due to a bank holiday.
2009-07-01		USD	Total Vehicle Sales		9.9M	9.8M
		Total Vehicle Sales The total number of imported and domestically produced automobiles sold over the previous month. The figure is presented on an annualized basis.
2009-07-01	01:00	USD	FOMC Member Yellen Speaks		*	*
		FOMC Member Yellen Speaks Due to speak at the US Monetary Policy Forum in New York.
2009-07-01	01:30	AUD	Building Approvals	m/m	4.1%	3.2%
		Building Approvals This report is a measure of impending construction activity. It is a significant indicator since the first step in beginning a new construction project is the acquisition of permits granting the approval to do so.
2009-07-01	01:30	AUD	Retail Sales	m/m	0.3%	0.5%
		Retail Sales This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth.
2009-07-01	06:00	EUR	German Retail Sales	m/m	0.5%	0.0%
		German Retail Sales This report measures the value of domestic retail sales in the country. Traders pay close attention to this report because it is capable of surprising traders with early data on the state of the economy.
2009-07-01	06:30	AUD	Commodity Prices	y/y	-23.3%	*
		Commodity Prices Commodities account for a very large portion of Australia's GDP. As such, commodity prices are a leading indicator of economic health.
2009-07-01	07:30	CHF	SVME PMI		39.8	41.3
		SVME PMI The Schweizerischer Verband für Materialwirtschaft und Einkauf (SVME) Purchasing Manager's Index (PMI) shows the actions of purchasing managers, with a reading above 50 showing growth. Forex traders follow this type of survey closely because purchasing managers' opinions can be viewed as a leading indicator of overall economic performance.
2009-07-01	08:00	EUR	Final Manufacturing PMI		42.4	42.4
		Final Manufacturing PMI This indicator is the results from a survey of purchasing managers in the manufacturing industry used in order to gauge economic health from their perspective.
2009-07-01	08:30	GBP	Manufacturing PMI		45.4	46.4
		Manufacturing PMI The Manufacturing sector's Purchasing Manager's Index (PMI) is an indicator which measures how much activity the purchasing managers of the manufacturing sector in the economy are experiencing.
2009-07-01	08:30	GBP	Index of Services 3m/3m		-1.2%	0.2%
		Index of Services 3m/3m Measures the gross value added (GVA) of all service sectors. GVA is the difference between the value of a service provided (output), and the value of the goods and services used up in providing that service (intermediate consumption).
2009-07-01	11:30	USD	Challenger Job Cuts	y/y	7.4%	*
		Challenger Job Cuts Challenger Gray & Christmas, a placement firm, releases this indicator as a measure of jobs recently cut.
2009-07-01	12:15	USD	ADP Employment Change		-532K	-410K
		ADP Employment Change A monthly estimate of the change in employment conducted by Automated Data Processing (ADP) for all industries excluding the farming industry.
2009-07-01	14:00	USD	ISM Manufacturing PMI		42.8	44.1
		ISM Manufacturing PMI This is an index based on surveyed purchasing managers in the manufacturing industry. A number above 50 indicates an expansion in the manufacturing sector; below 50 signals a contraction. This index is a strong indicator of an economy's general health.
2009-07-01	14:00	USD	Pending Home Sales	m/m	6.7%	1.1%
		Pending Home Sales This indicator offers a measure for the number of real estate contracts signed for already existing homes. Housing data is a leading indicator of economic health.
2009-07-01	14:00	USD	Construction Spending	m/m	0.8%	-0.5%
		Construction Spending This report provides a measure of the month-by-month change in the value of new construction projects.
2009-07-01	14:00	USD	ISM Manufacturing Prices		43.5	46.8
		ISM Manufacturing Prices The Institute of Supply Management's (ISM) Manufacturing Prices report measures the month-by-month inflation incurred by manufacturers when purchasing materials.
2009-07-01	14:30	USD	Crude Oil Inventories		-3.8M	-1.6M
		Crude Oil Inventories This report measures the change in the number of barrels of Crude Oil held in inventory on a week-by-week basis. It is also called Crude Oil Stocks.
2009-07-01	15:15	USD	FOMC Member Evans Speaks		*	*
		FOMC Member Evans Speaks Due to speak about economic outlook at the Bankers Association Luncheon, in Madison
2009-07-01	23:50	JPY	Monetary Base	y/y	7.9%	8.1%
		Monetary Base This report measures yearly change in the amount of Japanese currency in circulation, including banknotes, coins, and current account balances. It has a direct correlation with Japanese inflation rates.