What now for Dollar vs Yen relationship? (New Video)

By Adam Hewison – Today we are looking at a market we have not looked at for quite some time. I am of course referring to the Japanese Yen US dollar relationship.

The video I have just completed is less than four minutes long and it will give you a good idea as to what the next major direction will be for the dollar against the Yen.

You can watch this video with my compliments and there is no registration requirements. I would love to get your feedback about this video on our blog.

See the New Video here…

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Dollar Under Downward Pressure as G8 Summit Takes Its Toll

Source: ForexYard

U.S. Dollar came under much downward pressure on Thursday as the main developing countries led by China increased talk on replacing the USD as the global reserve currency. This helped the greenback plummet against its main currency pairs throughout Thursday’s trading. The Dollar also went bearish as traders returned to risk appetite, as U.S. Unemployment Claims rose less than expected; Britain kept here Interest Rates unchanged, and global equity markets rallied.

Economic News

USD – USD Falls on Sudden Return to Risk Appetite

Thursday’s trading session saw a reversal of the recent risk aversion sentiment that followed last week’s weak U.S employment data. The Dollar Index fell for the first time in six days, losing 1.1% to 79.85, as risk appetite revived and investors moved back into equities, riskier currencies and commodities. Yesterday, the Dollar fell sharply against the Pound, Yen, and EUR.

The market was little changed after the release of the U.S. jobless claims data, which showed claims for state unemployment benefits unexpectedly tumbled last week to their lowest level since January. With a relatively light week in terms of economic data releases investors turned primarily to the stock markets for direction.

Traders should follow the release of the U.S. Trade Balance at 12:30 GMT, as well as the Prelim UoM Consumer Sentiment and Treasury Secretary Timothy Geithner’s speech at 14:00 GMT. These news events are set to give insight to the health of the U.S economy. Worse than expected results may reverse yesterday’s trend and push investors back to risk aversion. It is also advisable for traders to follow the last day of the G8 Summit, as any more negative talk of the Dollar, could lead to another bearish day for the U.S. currency.

EUR – EUR Gains as European Equity Markets Rally

The EUR was at $1.3974 Thursday, up from $1.3894 in yesterday’s opening. The EUR also gained against the Yen to close at 129.90 Yen, up from 129.41 Yen. The Pound climbed as much as 1.9% to $1.6380 against the Dollar, the biggest intraday gain since June 9th.

With a revival in risk appetite Thursday, the Dollar retreated sharply against the EUR and the Pound. China’s intent to pursue its discussion about developing alternative reserve currencies to the Dollar put further pressure on the Dollar against the EUR. The Pound’s extensive rise came after the Bank of England voted to keep its Interest Rate unchanged at 0.5%, and made no change to the scope of its asset purchase program, despite market expectations of expansion.

However, the EUR has been facing difficulties maintaining its gains versus the Dollar in the past few weeks. Despite a light news day from Britain and the Euro-Zone today, traders should follow the French Industrial Production release at 6:45 GMT and the British PPI Input at 8:30 GMT. Better than expected results may intensify the recent return to risk appetite.

JPY – Yen Tumbles as Global Financial Crisis Eases

The Yen declined against most of its major currency counterparts Thursday, as concerns over the pace of the global economic recovery eased. The JPY traded at 92.93 per USD Thursday. The Yen finished trading at 129.90 from 129.41 per EUR, after declining 1.1% yesterday. However, it reached 127.02 on July 8, the strongest level since May 18.

The Yen weakened as traders returned to risk appetite, pushing the EUR and GBP higher. The Yen typically rises during times of financial trouble since Japan’s trade surplus reduces the nation’s reliance on overseas assets, which lends the currency its safe haven status. In light of the recent bounce in risk appetite, it appears that the Yen’s recent rise may have been exaggerated as there is no real data to support it. Therefore, the Yen’s losses are likely to continue throughout today as well.

Crude Oil – Crude Oil Holds Above $60 a Barrel

Crude Oil prices managed to climb hold above $60 a barrel after dropping to a 7 week low of $59.25. Oil prices were fairly stable yesterday, as the Dollar weakened against most major currency counterparts. This in turn spurred demand for commodities. Oil prices also received a boost after the release of the initial U.S. jobless claims report showing a drop in new jobless claims to the lowest level since January, and another report showed car sales in China surged.

It is expected global Oil consumption will fall in 2009. Thus hopes for recovery in demand are starting to shift to China, particularly its auto market, which according to reports rose 36% from last year. This puts the country on track to overtake the U.S. as the world’s biggest auto market this year. Nonetheless, with U.S. stockpiles of gasoline and distillate fuels continuing to climb, according to the Energy Information Administration and an expectation for China’s Oil demand to also fall this year, it is possible the drop in Oil prices has not yet reached its end.

Technical News

EUR/USD

The EUR/USD pair has experienced much bearishness in the past week. However, it seems that this trend may be coming to an end, as the pair experienced a bullish correction yesterday. The daily chart’s Slow Stochastic and weekly chart’s RSI support this upward trend to continue. Going long with tight stops may turn out to be a good strategy today.

GBP/USD

The cross has declined significantly in the past 2 weeks. Thursday’s trading did see a reversal to this trend. The pair now stands at the 1.6304 level, but the chart’s oscillators are showing mixed signals. The daily chart’s Slow Stochastic indicates that yesterday’s upward trend will continue. This is also supported by the chart’s weekly MACD. Entering this popular trend now may turn out to be a wise choice today.

USD/JPY

The pair has been bearish for the past week. Yesterday saw this trend continue, but at a slightly slower pace. The chart’s oscillators are showing mixed signals. On one hand, the hourly chart’s RSI supports this bearishness to continue. On the other hand, the daily chart’s RSI and Stochastic Slow support a bullish reversal to possibly take place in today’s trading. Entering the pair when the signals are clearer may be a wise choice today.

USD/CHF

The USD/CHF cross has been range trading between the 1.0750 and the 1.0950 levels in the past several days. However, the pair went through much bearish behavior yesterday. The daily chart’s Slow Stochastic signals this trend may continue today. However, the daily chart’s MACD signals that a bullish correction could occur anytime soon. When the upward breach occurs, going long with tight stops may turn out to pay off today.

The Wild Card – Silver

The price of Silver and other commodities has continued to slide in the past 2 weeks. However, a weaker Dollar has led to the price of this commodity stabilize in the past day. The chart’s 4-hour MACD and the daily chart’s Stochastic Slow indicate that the bearish trend may be coming to an end. Entering the commodity at an early stage may turn out to give forex traders great returns in the coming days.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Crude Futures Log Further Large Declines

By Fast Brokers – Crude futures are continuing their brisk decline on rising volume today, entering the heavy-handed $60-$61/bbl zone we mentioned in our previous analysis.  Crude’s declines are feeding off of quite a few fuels, the foremost being a report from OPEC saying they don’t expect crude consumption to reach 2008 levels until 2013.  OPEC’s prediction manages to provide a starker image than the IEA’s estimation last week of 2011-2012.  Altogether, both OPEC and the IEA are indicating that the demand side of crude will likely take years to repair and restore to previous levels.  Not only are we witnessing a drop-off in global production and manufacturing due to higher unemployment and lower consumption, but the U.S. and China are enacting aggressive policies to decrease their reliance on fossil fuels.  Therefore, there are several factors impacting the demand side of crude.  Weekly crude inventories came in just shallow of analyst expectations, but failed to have a positive impact on price yet again.  Hence, fear of deterioration on the demand side of the equation is overpowering the consistent decline in U.S. stockpiles.

Meanwhile, crude is finding intra-day support in the $60-$61/bbl range as we anticipated, yet failed to stay above our 2nd tier uptrend line, a negative sign technically-speaking.  Despite the intra-day stabilization, there continues to be a considerable downward pressure on price.  Therefore, we could be in for a messy earnings season.  If this is so, the $58-$61/bbl range may only last a week or so.   Corporate earnings and 3rd quarter outlook should be a driving force for the near-term performance of crude and equities.  If corporations project lower earnings, this implies a decline in production, manufacturing, and consequently overall consumption of crude.  On the flipside, should corporations provide a rosy outlook for the upcoming quarter, crude futures could bottom and begin to rebound substantially.  We can tell you crude futures are in a very vulnerable position, and the near-term potential remains for a more protracted selloff.  The question becomes whether this is the worst if it, or just the beginning of a path towards a retest of the lows?  We will closely monitor the developing situation.

Present Price: $60.10/bbl

Resistances: $60.25/bbl, $60.73/bbl, $61.26/bbl, $61.66/bbl, $62.16/bbl

Supports: $59.69/bbl, $59.17/bbl, $58.90/bbl, $58.55/bbl, $57.87/bbl

Psychological: $60/bbl

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Gold Bounces after Heavy Losses

By Fast Brokers – Gold has bounced from our 1st tier uptrend line and is battling with our 2nd tier downtrend line as we type.  Gold managed to avoid a test of the psychological $900/oz level, and is strengthening on better than expected earnings from Alcoa coupled with an encouraging decline in weekly unemployment claims.  However, gold’s pullback yesterday came on a large spike in volume compared to the relative calm of previous trading sessions.  Additionally, we have yet to see any substantial volume to the upside today.  Therefore, there remains considerable downward pressure on price with bears outnumbering bulls.  We believe yesterday’s pullback in gold could have been a trend-setting statement with the precious metal tumbling beneath June lows.  Ultimately, the fate of gold rests upon its positive correlation with U.S. equities.  Should the S&P futures give into their downtrend, we would likely see a corresponding contraction in Gold.  On the other hand, gold has the highly psychological $900/oz level to rely upon for near-term support.  Additionally, we believe the $890-$990/oz zone would prove to be a worthy defense to the downside should the area be breached.  In the meantime, investors should keep a close eye on volume and gold’s interaction with our 2nd tier downtrend and 1st tier uptrend lines.

Present Price: $915.40/oz

Resistances: $916.27/oz, $919.59/oz, $922.80/oz, $925.27/oz, $927.01/oz

Supports: $913.93/oz, $911.42/oz, $909.57/oz, $906.34/oz, $904.77/oz

Psychological: $900/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

EUR/USD Rises Past our 2nd Tier Downtrend Line

By Fast Brokers – The EUR/USD is backing away from our 2nd tier downtrend line and the psychological 1.40 mark as volume to the upside has been insufficient thus far in prompting meaningful gains technically.  Even if an immediate-term rally is to ensue in the EUR/USD with the currency pair climbing past the psychological 1.40 level and July 7th highs, it still has to confront our 3rd tier downtrend line hanging in the distance.  Therefore, the currency pair is a far cry from reinitiating its medium-term uptrend.  Investors should keep in mind that volume on the sell-side has been larger than the buy-side, reflecting the negative attitude out there.  Regardless, the present hop out of our 2nd tier downtrend line is encouraging, indicating the bulls are aiming to achieve further stabilization in the currency pair.

The EUR/USD  made a noteworthy bounce from our important 2nd tier uptrend line after German Industrial Production came in much higher than expected, countering June’s setback to the downside.  In fact, yesterday’s release is the highest reading in years, and should help ease investor uncertainty for the time being.  In addition to yesterday’s positive Industrial Production number, Germany reported a large, unexpected increase in Factory Orders on Monday.  The recent optimistic signs from the Germany economy are helping stabilize the Euro despite growing pessimism in global markets.  Today’s positive performance in the EUR/USD comes from a better than expected earnings report from Alcoa.  Cost-cutting measures were able to counter Alcoa’s decline in revenue more effectively than anticipated, giving investors hope that the 2nd quarter earnings season may not be so bad after all.  However, Alcoa’s earnings are strongly correlated to the cost of aluminum, so it’s unwise to make an assumption about the 2nd quarter earnings season based off of the report of one commodity price-reliant company.

Since news will be relatively quiet on the EU front this week, we expect the EUR/USD to take its cue from U.S. equities and crude futures.  The S&P futures are trading near critical supports, and any protracted downward movement in the S&P should be accompanied by a broad-based appreciation of the Dollar.  We don’t expect the positive correlation between the EUR/USD and equities to change any time soon, so U.S. corporate earnings should play a big role in the currency pair’s immediate-term movements.   Since the S&P futures are trading around important supports, we believe the multiple inflection points in the EUR/USD may signify an approaching trend-making move.  However, the 2nd quarter earnings season doesn’t really start cooking until next week, so the EUR/USD may choose to stay range-bound for the remainder of the week…Stay tuned.

Present Price: 1.3991

Resistances: 1.3991, 1.4020, 1.4050, 1.4065, 1.4091

Supports: 1.3970, 1.3944, 1.3915, 1.3889, 1.3865

Psychological: 1.40

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

GBP/USD Rallies Strongly after BoE Keeps QE Level Unchanged

By Fast Brokers – The Cable is posting a solid rally Thursday after the BoE kept its 125 billion Pound quantitative easing plan unchanged.  Though many analysts were expecting a 25 billion bump up this time around, we warned that these rumors may have been unsubstantiated.  Investors are taking the BoE’s inaction as a sign of confidence in the British economy.  However, we believe the central bank just wants to see how the remainder of the 125 billion Pounds fares as its injected into the economy over the next month or so.  Therefore, we believe the optimism resulting from today’s BoE meeting may be short-lived.

Regardless, the Cable has received a much-needed boost above the psychological 1.60- level for the immediate-term, and is currently testing our 2nd tier downtrend line.  We haven’t seen any abnormally large volume to the upside thus far today, so it will be interesting to watch how the GBP/USD interacts with our 2nd tier downtrend line.  Other than the BoE meeting, investors are buying up the Pound after Britain announced a narrower than anticipated Trade Balance deficit.  Even if the Cable should break through our 2nd tier downtrend line large barriers remain, including our 3rd tier uptrend and downtrend lines and the psychological 1.65 level.  However, it would be encouraging for bulls to see the Cable settle back in the middle of the June trading range.  Despite the positive developments made in the Cable over the past 24 hours, we believe the downtrend remains the prevalent force in this picture as with the EUR/USD.  We would need to see a large, technical reversal for us to alter our present negative outlook.

Meanwhile, all eyes are on U.S. equities and the 2nd quarter earnings season.  Alcoa kicked off the 2nd quarter with lower than expected losses as a result of effective cost-cutting by management.  Investors are encouraged by the better than anticipated number from Alcoa, and are stabilizing the S&P futures in reaction.  However, earnings season doesn’t really heat up until next week, so it’s too early to judge how U.S. corporate earnings will fare as an entity.  Although Britain will release its Input PPI tomorrow, the GBP/USD should remain positively correlated with U.S. equities trend-wise since the S&P futures are trading near important supports.  Furthermore, investors should keep in mind that British economic data has come in mixed this week.  Today’s lower than expected trade balance deficit is countered by negative numbers concerning manufacturing and housing.  Therefore, the pressure to the downside remains.

Present Price: 1.6242

Resistances: 1.6264, 1.6287, 1.6321, 1.6367, 1.6428

Supports: 1.6210, 1.6152, 1.6129, 1.6079, 1.6026

Psychological: 1.60

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

USD/JPY Logs Significant Losses

By Fast Brokers – The USD/JPY continued its heavy losses yesterday after the currency pair reactive negatively to the inflection point of our 1st tier uptrend and downtrend lines.  Volume increased to the downside with the currency pair breaking below important March 19 lows.  The USD/JPY seems to finally be making a decision trend-wise after months of heavy consolidation.  We viewed our 1st tier uptrend line as a critical support, and it wouldn’t be surprising to see losses accelerate over the coming week.  The USD/JPY’s negative inflection comes with the S&P futures trading at important supports and 2nd quarter earnings season on the way.  It will be interesting to see if the USD/JPY’s present breakdown indicates an upcoming selloff in U.S. equities.  If so, we could witness the USD/JPY retest the highly psychological 90 level.

Japan reported discouraging Core Machinery Orders and Current Account data Tuesday.  These data points signal the Japanese economy continues to feel pressure from declining demand for its manufactured goods both at home and abroad.  Lower Japanese corporate earnings and higher unemployment are pinching domestic demand.  The discouraging Current Account number makes investors worry that international consumption is not picking up as quickly as the improvement in global consumer sentiment data may suggest.  An appreciating Yen should only make matters worse, so a declaration of the downtrend by the USD/JPY could be very bad news for Japan.

Present Price: 92.84.

Resistances: 93.32, 93.76, 94.45, 94.99, 95.73

Supports:  92.57, 91.96, 91.50, 91.03, 90.28

Psychological: 90, 95

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

How low can crude oil go?

By Adam Hewison After trading as high as $73 a barrel, crude oil began to buckle under pressure as the CFTC began to look into position limits that can be held by traders.

What’s happening now is giving speculation a bad name. Speculators form a very important task in assuming risk that is being transferred from either a producer or an end-user. Without this transfer of risk, which couldn’t take place without the speculator taking the other side of the trade, prices would be artificial at best. This approach has worked for hundreds of years and over a century here in the US.

Now back to crude oil…

In my new video you will see what has happened to crude oil in the last eight days. You’ll will also see what I believe will be the area that crude oil will find support.

You can watch this video with my compliments and there is no registration requirements. I would love to get your feedback about this video on our blog.

See the New Video Here…

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

USD Declines vs. The Yen On Economy Concern

Source: ForexYard

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.

Economic News

USD – Greenback Retakes Ground Against the Japanese Yen

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 $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. During Thursday’s Asian session however, the U.S dollar has managed to reclaim some of the ground it lost against the Yen in the previous session.

EUR – The EUR Hits its Lowest in 6 Weeks Against the Yen.

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 – Yen Rallies the Most in 7 Months on Safety Demand

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.

OIL – Crude Down for 6 Day as U.S Data Raises Demand Concerns

Crude Oil prices declined more than 4% Wednesday to a 7 week low, falling for the 6th straight session, as U.S. oil inventories dropped 2.9 million barrels to 347.3 million last week, the lowest since January, an Energy Department report showed yesterday. The losing streak is the longest since the 6 sessions ended on Dec. 5. Crude has now slumped 14% this month, as investors question whether supply-and-demand fundamentals are sufficient to justify Oil’s recent rally above $70 a barrel.

The Organization of the Petroleum Exporting Countries’s (OPEC) 2009 World Oil Outlook added to the gloom as it said world demand for Oil may take years to recover from the slump in 2009 because of economic weakness and demand destruction.
The cartel said consumption of its crude would not return to 31 million barrels per day (bpd), the level it averaged in 2008, until 2013.

Technical News

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.

The 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.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Fundamental Outlook at 1400 GMT (EDT + 0400)

By GCI Fx Research

The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3830 level and was capped around the $1.3935 level.  Today’s intraday losses followed yesterday’s selling pressure and a couple of different factors led to market activity.  First, risk aversion remains elevated ahead of the U.S. earnings season with many investors unwilling to chase assets with higher yields.  Second, traders believe the Group of Eight’s communiqué that will follow their meeting in Italy will be long on climate treaty language and short on currency language.  There was speculation that China, Russia, or India could press officials to adopt a new international reserve currency and decrease dependence on the U.S. dollar.  While this may still remain an agenda for some countries, it does not appear it will be publicly topical at the G8 meeting.  To this end, the European Central Bank released a report today that indicates the global economic crisis has left major international currencies “broadly unaffected” and reiterated the U.S. dollar “has maintained…its status as the most important international currency globally.”  Third, the International Monetary Fund released a report today that indicates the global economic recovery is quite slow.  Fourth, ECB member Paramo indicated the ECB will “maintain a liquidity policy that ensures all solvent institutions with the right collateral…have unlimited access to this liquidity.”  Indications that the ECB will maintain an easy monetary policy have a negative impact on the euro as they suggest policymakers are in no hurry to unwind their monetary stimuli.  Fourth, Q1 GDP was off 2.5% q/q and 4.9% y/y, an indication that EMY-16 economic growth revisions did little to dispel the view of recessionary activity in Q1.   Notably, year-over-year growth in eurozone bank loans to the private sector slowed to 1.8% in May from 2.3% in April, the lowest reading since at least 1992.  Data released in Germany today saw May industrial output surge a monthly 3.7%, up sharply from April’s -2.6% contraction.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥92.15 level and was capped around the ¥94.85 level.  The pair continues to weaken on expectations that second quarter corporate earnings reports will be weaker-than-expected and lead some Japanese accounts to reduce their exposure to U.S. equities.  Today’s low represents the pair’s lowest print since 18 February.  The yen shook offer weaker-than-expected May core private-sector machinery orders that fell 3.0% m/m to a record low value.  Also, bank lending slowed last month to +1.8% from a record pace and June corporate bankruptcies were up more than 18% m/m and 7.4% y/y.  Collectively, today’s data does not bode well for capital and consumer spending in Japan’s domestic economy, and may be at odds with the government’s and Bank of Japan’s recent upgrades to their economic assessment.  The big talk involving BoJ is that officials could extend their emergency financial programs to support the economy when its Policy Board convenes on 14-15 July.  Some dealers believe an indication that BoJ will extend its policies past the September deadline will take focus away from policies’ exit strategies and lead to a weaker yen.  One wildcard that remains is Japan’s elections in mid-September, especially as Prime Minister Aso has little political support and no clear mandate.  BoJ’s consumer sentiment diffusion index printed at -81.4 for the April – June period, its first improvement in nearly two years.  Another component of the survey revealed consumers’ inflation expectations have remained firm.    Other data released overnight saw the core consumer price index decline 1.1% y/y in May, off sharply from April’s -0.1% print.  Additionally, the May current account surplus was off 34.4% y/y to ¥1.302 trillion.  The Nikkei 225 stock index lost 2.35% to close at ¥9,420.75.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥127.00 figure and was capped around the ¥132.10 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.75 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.95 level. In Chinese news, the U.S. dollar was unchanged vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8318 in the over-the-counter market.

The British pound extended its recent depreciation vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5980 level and was capped around the $1.6135 level.  Sterling continued its move lower on growing speculation the Bank of England’s Monetary Policy Committee will extend its quantitative easing scheme by lifting its asset purchasing plan beyond ₤150 billion.  An announcement could come tomorrow following the MPC’s meeting.  Data released in the U.K. today saw the Halifax June house price index off 0.5% m/m and 15.0% y/y.  Chancellor of the Exchequer Darling reported the government will establish a new financial stability council that will integrate the Bank of England, the Financial Services Authority, and the U.K. Treasury.  Other data released today saw BRC June shop prices up 0.7%.  Cable bids are cited around the US$ 1.3435 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8670 level and was supported around the ₤0.8615 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.