USD Declines vs. The Yen On Economy Concern.
The U.S dollar slid 0.8% against the Yen for a second day on speculation the G-8 leaders may question the greenback's status as the world's reserve currency. Leaders from the G-8 most-industrialized nations are meeting in Italy today to tackle shrinking economies and rising unemployment even after the U.S. pledged $12.8 trillion to end the recession.
Economical News
USD
The U.S. dollar climbed broadly on Wednesday as risk aversion rose on uncertainty about the global economy and U.S. corporate earnings. The greenback was up 0.6% against the EUR at $1.3840, and advanced vs. the British pound to $1.6046 from $1.6072 yesterday when it fell to $1.5985, the lowest level since June 8.
The U.S dollar rallied after the Federal Reserve Chairman Ben Bernanke's speech yesterday, in which he stated that the central bank may extend its emergency-loan program for securities firms into next year, thus spurring confidence among investors. Another support for the USD was the unexpected drop in Oil prices. Crude Oil was traded in yesterday's session for less than $136 a barrel, $6 lower than the previous day. The Dollar also found some support on Thursday as Japanese importers and investors, including retail investors, hunted bargains in foreign currencies.
However, the U.S. dollar fell more than 3% against the Japanese Yen yesterday to its lowest level since February, as investors continued to shun risk and unwind carry trades. The USD was last down 3.1% against the Yen at 91.99 yen after going as low as 91.82 yen. In Asian trading Thursday however, the U.S dollar has managed to reclaim some of the ground it lost against the Yen in the previous session.
EUR
On Wednesday, the EUR saw mixed results versus most of its currency pair counterparts. The EUR underwent a bearish trend against the USD, declining close to a 100 pips. Against the Japanese yen on the EUR fell more than 3% yesterday to 127.95, its lowest since mid-May, as investors shunned risk and unwound carry trades.
The Sterling hit a 1 month low against the Dollar, extending its losses after weak industrial output data the previous day reinforced doubts about a UK recovery.
The British pound declined for a 5th day versus the U.S dollar, trading as low as $1.6048, on speculation the Bank of England will increase its asset-purchase program at a monetary-policy committee meeting tomorrow, boosting the supply of the U.K. currency.
The Bank of England will stick tomorrow with its current plan to spend as much as 125 billion pounds in newly printed money to boost the economy, according to economists' predictions. The GBP may fall to a 2 month low against the Yen in coming weeks after it dropped below a support level at 154.08 yen, according to analysts.
JPY
The Japanese yen hit its highest levels in more than 4 weeks against the Dollar on Wednesday as an uncertain outlook for the global economy curbed investors' risk appetite. The JPY advanced versus the EUR as concern U.S. corporate earnings will drop led traders to cancel bets Japan's currency would weaken as the global economy recovered.
The Yen typically rises during times of financial turmoil because Japan's trade surplus means the nation doesn't have to rely on overseas lenders. Japan's currency has climbed as much as 5.5% to 70.96 versus the Australian dollar, the biggest intraday advance since Feb. 10, and appreciated as much as 5.3% to 11.16 versus the rand on speculation the weak U.S. earnings outlook and a drop in stocks will reduce demand for higher-yielding assets.
Technical Analysis
EUR/USD
The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the hourly chart's RSI is already floating in the over-bought territory, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
GBP/USD
The bullish trend is loosing its steam and the Cable seems to consolidate around the 1.61 level. The pair currently sits near the upper border of the hourly chart's RSI, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
USD/JPY
The bearish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily chart's Slow Stochastic is showing the continuation of the trend, and the hourly studies also confirm the bearish notion. Going short might be the right choice today.
USD/CHF
The pair is currently in the midst of a relatively sharp downtrend as the pair is traded at the 1.087 level. However, it seems that the 1.085 level has turned into a very strong support level. If the pair will manage to breach through it, another sharp bearish move might take place.
Wild Card
Crude Oil
A distinct bearish channel has formed on the daily chart, as Crude Oil is currently traded in its lower section. However, as all oscillators are currently pointing up, it appears that a technical correction could arise. This might be a great opportunity for forex traders to enter the trend at its starting-point.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.4015 | 1.6195 | 93.85 | 1.1020 | 0.7935 | 0.8715 |
| 1.3985 | 1.6170 | 93.60 | 1.0955 | 0.7890 | 0.8700 | |
| 1.3960 | 1.6140 | 93.40 | 1.0885 | 0.7860 | 0.8680 | |
| Support | 1.3920 | 1.6100 | 92.90 | 1.0850 | 0.7845 | 0.8670 |
| 1.3900 | 1.5975 | 92.70 | 1.0800 | 0.7755 | 0.8610 | |
| 1.3885 | 1.5950 | 92.55 | 1.0750 | 0.7725 | 0.8580 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 2009-07-09 | USD | G8 Meetings | * | * |  | ||
| G8 Meetings The G8 Meetings is attended by the finance ministers from the 8 most industrialized countries. Due to discuss a wide range of economic issues that impact impact the forex market. June's event is set to take place in Lecce, Italy. | |||||||
| 2009-07-09 | GBP | MPC Rate Statement | * | * |  | ||
| MPC Rate Statement This statement is issued by the Monetary Policy Committee (MPC) to communicate with investors about the reasons for their recent interest rate decisions, as well as to discuss the strength of the nation's economy. | |||||||
| 2009-07-09 | 01:00 | AUD | MI Inflation Expectations | 2.8% | * | | |
| MI Inflation Expectations Measures the percentage change which consumers expect for the price of goods and services over the next year. | |||||||
| 2009-07-09 | 01:30 | AUD | Employment Change | -1.7K | -20.0K |  | |
| Employment Change This report measures the number of jobs created during the previous month. It is one of the most important indicators of the economy's health since individual consumption makes up a significant portion of a country's GDP and has a direct correlation with employment. | |||||||
| 2009-07-09 | 01:30 | AUD | Unemployment Rate | 5.7% | 5.9% | | |
| Unemployment Rate This figure represents the percentage of potential workers that are currently unemployed and actively seeking a job. This report is typically overlooked as its information is derived from previously released indicators. | |||||||
| 2009-07-09 | 06:00 | EUR | German Final CPI | m/m | 0.4% | 0.4% |  |
| German Final CPI The German Final Consumer Price Indicator measures the change in price of goods and services purchased by consumers. Frequency Released monthly, about 15 days after the month ends; FF Notes The 'Previous' listed is the 'Actual' from the Preliminary release and therefore the 'History' data will appear unconnected. There are two versions of CPI released about 15 days apart - Preliminary and Final. The Preliminary release is the earliest and thus tends to have the most impact; Acronyms Consumer Price Index (CPI); | |||||||
| 2009-07-09 | 06:00 | EUR | German Trade Balance | 9.0B | 8.9B | | |
| German Trade Balance This indicator measures the difference between imported and exported goods and services from Germany. A Rising trend tends to have a positive impact on the EUR. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers; | |||||||
| 2009-07-09 | 06:00 | JPY | Prelim Machine Tool Orders | y/y | -79.2% | - | |
| Prelim Machine Tool Orders This is a report which Measures the change in the total value of new orders placed with machine tool manufacturers. There are 2 versions of this report, the Preliminary and Final. The Preliminary release is the earliest and therefore tends to have the most impact. | |||||||
| 2009-07-09 | 08:00 | EUR | ECB Monthly Bulletin | * | * | | |
| ECB Monthly Bulletin This report reveals the data which was used by the ECB Governing Board when making the latest interest rate decision. It is released 1 week after the Minimum Bid Rate is announced. | |||||||
| 2009-07-09 | 08:30 | GBP | Trade Balance | -7.1B | -6.8B | | |
| 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. | |||||||
| 2009-07-09 | 09:00 | GBP | CB Leading Index | m/m | 0.7% | - | |
| CB Leading Index This index measures consumer confidence based on a number of leading economic indicators. Its impact is usually very low as these indicators are released individually at another time. | |||||||
| 2009-07-09 | 11:00 | GBP | Official Bank Rate | 0.50% | 0.50% | | |
| Official Bank Rate This indicator represents the recent interest rate decision made by the Bank of England's (BoE) 9 member Monetary Policy Committee (MPC). Interest rates are a primary determinant of the value of a nation's currency. | |||||||
| 2009-07-09 | 12:15 | CAD | Housing Starts | 130K | 131K | | |
| Housing Starts This report is a measure of the number of new residential buildings which began construction during the previous month. It's a leading indicator of economic health because building construction produces a wide-reaching ripple effect. For example, jobs are created for the construction workers, subcontractors and inspectors are hired, and various construction services are purchased by the builder; | |||||||
| 2009-07-09 | 12:30 | USD | Unemployment Claims | 614K | 608K | | |
| Unemployment Claims An indicator which measures the number of individuals who filed for unemployment insurance with the government for the first time during the past week. This is one of the earlier releases of economic data. | |||||||
| 2009-07-09 | 13:00 | USD | FOMC Member Duke Speaks | * | * | | |
| FOMC Member Duke Speaks Federal Open Market Committee member Elizabeth Duke is due to speak today. As a leader of the central bank she can instantly influence the currency markets with her speeches and off hand remarks on the future of U.S. monetary policy. | |||||||
| 2009-07-09 | 14:00 | USD | Wholesale Inventories | m/m | -1.4% | -1.0% | |
| Wholesale Inventories Alteration in the value of goods, which are stored by wholesalers in the U.S. The data release is published monthly. | |||||||
| 2009-07-09 | 14:30 | USD | Natural Gas Storage | 70B | 85B | | |
| Natural Gas Storage This figure measures the change in the number of cubic feet of natural gas held in storage by this country from week to week. It has a moderate impact on the price of fuels, but provides mixed results for investors. | |||||||
| 2009-07-09 | 23:50 | JPY | CGPI | y/y | -5.4% | -6.4% | |
| CGPI The Corporate Goods Price Index (CGPI) is a measure of the rate of inflation experienced by corporations when purchasing goods. | |||||||
