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Tuesday, 5th Feb 2013ForexHint
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Economical News | Technical Analysis | Wild Card | Market Trend | Indicators

Euro Takes Losses Ahead of ECB Meeting Later This Week.

The euro reversed some of its recent gains throughout yesterday's trading session, as investors eagerly await the outcome of a European Central Bank (ECB) meeting later this week. Additionally, a report indicating an increase in Spanish unemployment weighed down on riskier assets. Today, the main piece of economic news is likely to be the US ISM Non-Manufacturing PMI, scheduled to be released at 15:00 GMT. If the indicator comes in above the forecasted 55.2, the US dollar could see bullish movement during afternoon trading

Economical News

USD

The US dollar took moderate losses against several of its main currency rivals during a slow news day yesterday, as investors continued to digest Friday's worse than expected Non-Farm Payrolls report. The GBP/USD advanced close to 50 pips during the European session, eventually reaching the 1.5750 level. Meanwhile, after advancing close to 40 pips during the first part of the day, the USD/CHF saw a bearish correction during the mid-day session, virtually erasing its earlier gains. By the end of the European session, the pair was stable at the 0.9090.

Today, dollar traders will want to pay attention to the US ISM Non-Manufacturing PMI, scheduled to be released at 15:00 GMT. Analysts expect the indicator to come in at 55.2, slightly below last month's 56.1. A worse than expected result today is likely to reinforce the idea that the Fed will keep US interest rates at their current record lows for the foreseeable future, which would weigh down on the greenback during afternoon trading.

EUR

A report showing an increase in Spanish unemployment from last month resulted in the euro turning bearish during European trading yesterday. Against the US dollar, the common-currency lost close to 80 pips during the morning session, eventually reaching as low as 1.3547, before bouncing back to the 1.3570 level. Meanwhile, the EUR/GBP fell more than 60 pips over the course of mid-day trading, to trade as low as 0.8610.

For euro traders today, the main pieces of economic news are likely to be the Spanish and Italian Services PMI's, followed by the EU Retail Sales figure at 10:00 GMT. Better than expected results for any of the indicators could help the euro recoup some of yesterday's losses. Later in the week, traders will not want to forget to pay attention to the ECB Press Conference, scheduled for Thursday at 13:30 GMT. Any optimistic statements during the press conference regarding the EU economic recovery could boost the euro.

Gold

The price of gold fell more than $10 an ounce during the first part of the day yesterday, following a report showing an increase in Spanish unemployment which turned the EUR/USD bearish. A bearish euro means gold becomes more expensive for international buyers, which often leads to a drop in prices. After a reaching as low as $1661.40 during mid-day trading, a slight upward correction brought the precious metal back to $1668 by the end of the European session.

Today, gold traders will want to pay attention to the US ISM Non-Manufacturing PMI, and its impact on the EUR/USD. A better than expected figure may result in additional gains for the greenback against the euro, which if true, may lead to an additional drop in gold prices.

Technical Analysis

EUR/USD

The weekly chart's Slow Stochastic is close to forming a bearish cross, indicating that a downward correction could occur in the near future. Additionally, the same chart's Relative Strength Index has crossed into overbought territory. Opening long positions may be the smart choice for this pair.

GBP/USD

The Williams Percent Range on the weekly chart has fallen into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the MACD/OsMA on the daily chart appears close to forming a bullish cross. Traders may want to open long positions.

USD/JPY

The Relative Strength Index on the weekly chart has cross into overbought territory, indicating that a downward correction could occur in the coming days. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the smart choice for this pair.

USD/CHF

While the weekly chart's Williams Percent Range has crossed over into oversold territory, most other long-term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

Wild Card

CAD/JPY

A bearish cross on the daily chart's Slow Stochastic signals that this pair could see a downward correction in the near future. This theory is supported by the Relative Strength Index on the same chart, which is currently in overbought territory. Opening short positions may be the smart choice for

Indicators

DateTime GMT$€£¥EventPeriodPrev.ForecastImp
2013-02-05NZD
Bank Holidayhelp
**1
Bank Holiday

US banks will be closed due to a bank holiday.

2013-02-0500:01GBP
BRC Retail Sales Monitorhelp
0.3%-3
BRC Retail Sales Monitor

The British Retail Consortium's (BRC) Retail Sales Monitor measures the change in value a sample of similar retail stores, essentially excluding those stores which have been open for a year or less.

2013-02-0500:30AUD
Trade Balancehelp
-2.64B-0.81B5
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.

2013-02-0500:30AUD
HPIhelp
0.3%0.3%3
HPI

A housing index that evaluates the change in the purchase price of homes with mortgages backed by Fannie Mae and Freddie Mac.

2013-02-0503:30AUD
Cash Ratehelp
3.00%3.00%5
Cash Rate

Measured value of interest rates for overnight money market operations. Interest Rates are a key component in currency valuation.

2013-02-0503:30AUD
RBA Rate Statementhelp
**5
RBA Rate Statement

The Reserve Bank of Australia releases an Interest Rate Statement each month. The statement contains the latest decision regarding changes to the countries short term interest rates, monetary policy, and the direction of the economy. Short term interest rates are the paramount factor in currency valuation. A hawkish statement could boost the currency where a dovish statement could lower the currency's valuation.

2013-02-0507:00CHF
Trade Balancehelp
2.90B2.74B3
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.

2013-02-0508:15EUR
Spanish Services PMIhelp
44.344.73
Spanish Services PMI

Survey of about 300 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;

2013-02-0508:45EUR
Italian Services PMIhelp
45.645.93
Italian Services PMI

Survey of about 450 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;

2013-02-0509:00EUR
Final Services PMIhelp
48.348.31
Final Services PMI

The Euro-Zone Final Services PMI indicator is a survey that measures the activity of purchasing managers.

2013-02-0509:30GBP
Services PMIhelp
48.949.85
Services PMI

The Services Purchasing Manager's Index (PMI) surveys the dealings of purchasing managers in the services sector, with a reading above 50 indicating growth. An increasing indicator can boost a nation's currency. To compile the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Forex traders follow this survey closely because purchasing managers may have insight to periods of economic expansion or contraction.

2013-02-0510:00EUR
Retail Saleshelp
0.1%-0.5%3
Retail Sales

This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth.

2013-02-0510:00EUR
Italian Prelim CPIhelp
0.3%0.2%1
Italian Prelim CPI

This is a preliminary report which measures the change in price for goods and services purchased by consumers. It precedes Final CPI and is an accurate gauge of the country's inflation.

2013-02-0512:30CHF
Gov Board Member Zurbrugg Speakshelp
**3
Gov Board Member Zurbrugg Speaks

SNB Governing Board members are responsible for setting the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy;

2013-02-0513:30USD
FOMC Member Duke Speakshelp
**1
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.

2013-02-0515:00USD
ISM Non-Manufacturing PMIhelp
56.155.25
ISM Non-Manufacturing PMI

Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers' Index (PMI) or Non-Manufacturing ISM Report On Business is an index based on the survey of around 400 purchasing managers. This excludes the manufacturing industry. They are often asked to rate business conditions including employment, production, prices, and new orders.

2013-02-0515:00USD
IBD/TIPP Economic Optimismhelp
46.546.11
IBD/TIPP Economic Optimism

The Investor's Business Daily (IBD) TechnoMetrica Institute of Policy and Politics (TIPP) Economic Optimism Index measures the mood of consumers in regard to economic conditions. 900 nationwide adults evaluate their "six-month economic outlook," "personal financial outlook," and their "confidence in federal economic policies." Index readings above 50 indicate optimism, and below 50 indicates pessimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy, and therefore - good for the USD.

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