USD/JPY Falls Through Critical 1st Tier Uptrend

By Fast Brokers – The USD/JPY has finally decided to venture below our critical 1st tier uptrend line, which we view as an important development for the currency pair.  Though the USD/JPY hasn’t registered the corresponding large volume on the pullback that bears would like to see, this could be the mark of a turning point.  The USD/JPY is trading just above 3/19 lows at present.  Should the pullback pick move beneath these lows on rising volume, we could see a sharp immediate-term selloff towards the 92 level.  The USD/JPY has been in a drawn out battle between the bulls in the bears, so today’s movement could mark a significant turning point.  Such a movement could signal the beginning of a new downtrend, which would place further strain on a beleaguered Japanese economy.

Japan reported discouraging Core Machinery Orders and Current Account data yesterday.  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.

Meanwhile, the U.S. earnings season is kicking off with Alcoa, and the S&P futures are beginning the week on a downbeat.  A commitment by the S&P to its downtrend would likely spell more trouble for a pressured USD/JPY since they are positive correlated.  Hence, investors will be keeping a close eye on how earnings fare over the coming two weeks.

Present Price: 93.46.

Resistances: 95.73, 96.33, 96.90, 97.45, 98.05

Supports: 93.32, 92.57, 91.96, 91.50, 91.03

Psychological: 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.

GBP/USD May Retest 1.60 after Negative HPI number

By Fast Brokers – The Cable is trying to recover to our 2nd tier uptrend line after yesterday’s pullback resulting from a substantial selloff in U.S. equities.  The Cable is finding little salvation in last night’s better than expected Consumer Confidence number since both British Manufacturing Production and today’s Halifax HPI come in negative.  While we expected the pullback in Manufacturing Production since the PMI was negative last week, the disappointing HPI data deflates the confidence surrounding a potential recovery in the British housing market.  These two negative data points, combined with last week’s discouraging GDP and Current Account numbers, are weakening the Pound further.  Meanwhile, the S&P futures are experiencing substantial downward pressure, and crude continues to log large losses.  Hence, investor confidence still seems to be turning sour in regards to the longevity of a global economic recovery.

We’ve seen volume increase to the downside in both the GBP/USD and the EUR/USD, though total volume remains at a relatively subdued level.  Therefore, investors should take notice if volume increases to the downside from Tuesday’s session, for this could indicate a sharper selloff approaching.  Though the Cable remains above 1.60, it is struggling to stay above our 1st tier downtrend line while hoping to reach our 2nd tier uptrend line.  Should the Cable’s immediate-term pullback should pick up pace, the currency pair could find noteworthy support in the psychological 1.60 level.  If not, then the GBP/USD still has our 1st tier uptrend line and June lows as a safety net.

Investor and analyst focus will be on tomorrow’s BoE meeting and 2nd quarter earnings releases.  Rumors have been floating around that the BoE may increases its present quantitative easing plan by 25 billion.  Even though these rumors are unsubstantiated, they make for an interesting BoE press conference.  Investors will be paying particularly close attention to the BoE’s plans regarding quantitative easing.  However, should the BoE increase its level of QE, we wouldn’t be surprised to see a small, near-term pop in the Cable since this is what occurred following the initiation of the plan.  We noticed a similar positive reaction from the EUR/USD after it announced its alternative liquidity measures as well.  As far as earnings go, investors are very curious as to how 3rd and 4th quarter projections will fare.  Naturally, corporate earnings should have a large impact on U.S. equities.  If the S&P futures should falter, the Cable would likely tumble with them due to their strong positive correlation.

Present Price: 1.6073

Resistances: 1.6082, 1.6133, 1.6152, 1.6183, 1.6223

Supports: 1.6052, 1.6018, 1.5978, 1.5924, 1.5887

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.

EUR/USD Experiences Relative Strength after Upbeat German Data

By Fast Brokers – The EUR/USD is recovering 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, today’s release is the highest reading in years, and should help ease investor uncertainty for the time being.  In addition to today’s positive Industrial Production number, yesterday Germany reported a large, unexpected increase in Factory Orders.  The recent optimistic signs from the Germany economy are helping stabilize the Euro despite growing pessimism in global markets.   That being said, we saw volume begin to rise to the downside yesterday as the greenback appreciated with U.S. equities posting sizable losses.  Therefore, investors should keep a watch on the 15M, 30M, and 1H charts to see if volume continues to rise on the sell-side.  If sell-side volume increases and the EUR/USD closes below our 2nd tier uptrend line, we could witness a more rapid pullback towards June lows and our 1st tier uptrend line.  On the other hand, we very well may see the EUR/USD jog between our 2nd tier uptrend and downtrend lines today due to the positive data from Germany.

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.  While the EUR/USD is bouncing off our 2nd tier uptrend line, the currency pair is trading back below the highly psychological 1.40 level.  Furthermore, our 2nd tier and 3rd tier uptrend lines are reaching their respective inflection points with our 1st tier and 2nd tier downtrend lines over the next 24-48 hours.  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: 1.3924

Resistances: 1.3944, 1.3970, 1.3991, 1.4018, 1.4050

Supports: 1.3915, 1.3889, 1.3865, 1.3848, 1.3826

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.

Risk Aversion Continues to Dominate Trading

Source: ForexYard

Risk appetite among investors continues to fade ahead of the second quarter earning season. With growing fears over disappointing earnings numbers due too weak consumer consumption, investors continue to turn to the safe haven USD and JPY and away from riskier currencies. The strong Dollar and falling equities continue to hurt Oil, with Prices reaching $62 a barrel.

Economic News

USD – Dollar’s Recovery Continues

The U.S Dollar rose broadly yesterday against the EUR and GBP, as uncertainty about the global economic outlook and forthcoming U.S. corporate earnings increased the safe-haven appeal of the USD. By yesterday’s close, the USD rose against the EUR, pushing the often traded currency pair to 1.3890. The Dollar experienced similar behavior against the GBP and closed at 1.6085.

Yesterday was a quiet news day from the U.S. as there were no major economic data releases on the calendar. However, Traders are bracing for second-quarter U.S. corporate earnings, which will be released in the coming weeks. Analysts said poor results, especially from financial institutions, would likely crank up Dollar demand. Analysts are also keeping an eye on this week’s G8 summit that starts in Italy today. Moreover, China, Russia and Brazil have said they will push their view that the world needs to start seeking a new global reserve currency as an alternative to the Dollar, though they admitted such a shift would take time.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Crude Oil Inventories at 14:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost the USD in the short-term. Traders are also advised to follow the FOMC Member Evan Speech at around 16:55 GMT. This speech is very likely to Impact the Dollar volatility. Traders are advised to watch closely, as this is likely to set the pace of the Dollar going into the rest of the day’s trading.

EUR – The EUR Loses Momentum

The EUR finished yesterday’s trading session with mixed results versus the major currencies. The 16-nation currency extended gains versus the Sterling Pound on Tuesday, to trade above 0.8633 amid a broad sell-off in the GBP. The EUR did see bearishness as well, as it lost over 150 pips against the JPY and closed at 131.85.

A leading indicator released yesterday from Europe was the German Factory Orders report. Germany holds the largest and strongest economy in the Euro-Zone, and thus the relevant publications from this economy usually have a hefty impact over the EUR. Data showed orders in Germany rose at the strongest monthly pace in nearly two years in May, but economists said the yearly comparison would remain weak for some time yet. Moreover, a European Commission study warned that Europe’s economy might shrink further due to the economic crisis if the right policies were not implemented and if Europe failed to resolve problems in the financial industry.

Looking ahead to today, the most important economic indicator scheduled to be released from the Euro-Zone is the German Industrial Production at 10:00 GMT. Analysts are forecasting this figure to increase from its previous reading. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the EUR in the short-term. Traders are also advised to follow the Halifax HPI figures coming out of Britain at 8:00 GMT, as these results may set the EUR’s main currency crosses going into next week.

JPY – Yen Climbs against Majors

The Yen advanced to near the strongest level versus the Dollar in more than a month on speculation U.S. corporate earnings will drop, prompting Japanese investors to sell overseas assets and take money home. The Yen has also gained sharply against the EUR and GBP during yesterday trading session, hitting its highest level in five weeks against the Sterling at 152.30 and two week high against the EUR at 131.50.

The Yen crosses have fallen since early June, after rallying from January to multi-month highs, as the sentiment about global recovery prospects that had driven them up deteriorated.

Traders today have very little fundamental news emanating from Japan as the only indicator being released is the Economy Watchers Sentiment report. Analysts forecast the figure to increase from its previous reading. This indicator typically generates small amounts of volatility. However, the EUR and the USD appear to be clutching the reins of today’s market. Traders would be wise to note their future direction as it usually carries a heavy impact on the other currencies.

Crude Oil – Another Day of Falling Crude Oil Prices

Oil prices fell for the seventh straight day yesterday, with a barrel costing $10 less than it did just one week ago when crude hit a new high for the year. Oil prices had already begun to slide after peaking last Tuesday, and dismal jobs numbers last week from both the U.S. and Europe have hastened the decline.

Optimism about a quick economic recovery and a rebound in energy demand, were dampened after the Labor Department reported last Thursday that U.S. economy lost a larger than expected 467,000 jobs in June. On the same day, a report from Europe indicated that unemployment in the 16 countries that use the EUR spiked to a 10-year high in May. However, the release of Crude Oil inventory today is likely to help determine the market’s next direction for Black Gold. Therefore, traders are advised now to make some profits as the price of Crude Oil is set to remain volatile in the short-medium term.

Technical News


The Bollinger Bands on the daily chart appear to be tightening, signaling that a volatile movement may be imminent. However, all oscillators show the price floating in neutral territory, and the 4 hour chart indicates a clear range-trading pattern in a bearish channel. Buying on lows and selling on highs within this channel might be a wise choice today.


This pair’s recent drop in value continues to hold the price in the over-sold territory on the RSI of the 4-hour and daily charts, signaling upward pressure. While the momentum appears to remain downward, we may likely see a number of upward corrections throughout the day. Buying on the lows and selling on the highs of these fluctuations will be a good strategy today


The bearish momentum the pair has shown since the breach of the channel on the daily chart continues. The 4-hour 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.


After peaking at the 1.0960 level, the pair has halted its bullish momentum and is now trading around 1.0933. The RSI on the hourly chart is located around the 60 level, suggesting that the bullish move has more room to go. Going long might be the right strategy today.

The Wild Card – Gold

There appears to have been a violent breach of the upper border of the Bollinger Bands on both the hourly and 4-hour charts, signaling moderate downward pressure on the price of this commodity. However, the price currently floats in the over-sold territory on the 4-hour chart’s RSI which supports the notion of a possible upward correction in the near future. forex traders can benefit from this potential trend reversal by setting early buy positions and riding out the upward movement.

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.

Euro vs. USD – learn their relationship

By Adam Hewison – Today, we are dissecting and examining one of my favorite markets … the Forex market. The Forex market is the biggest market in the world and is traded on a 24/7 basis.

What makes these markets so exciting is the fact that they have a very strong tendency to trend, that is, once they get started in one direction they tend to continue in that direction for some time.

I learned how to trade Forex in the trading pits of Chicago where I was a member of the IMM, a division of the Chicago Mercantile exchange. The CME has grown dramatically over the years, and I have many fond memories of trading in the old exchange in Chicago. Today, you can trade the stock of the CME (NASDAQ_CME).

I digress to today’s video.

Today we are exploring the relationship between the Euro and the Dollar (EURUSD). In this short video, which we are making available without cost or registration, you’ll catch a glimpse of a conservative way to trade the Forex markets. This approach will detach you from your computer screen and show you how to enjoy your free time without having to worry about the markets.

I would not recommend this movie if you are risk adverse. Trading in Forex, the futures markets, and in any market for that matter always has an element of risk.

I hope you enjoy this educational Forex trading video and that you’re able to see the value in this approach.

Every success in the markets.


Adam Hewison
Co-creator, MarketClub

5 Factors that make Forex Trading Attractive.


Forex Trading has been surging in popularity the last several years due to many factors from technological advances that have opened up the market to traders and investors looking to diversify their portfolios or migrating from the stock market.

Here is a list of 5 factors that I feel make the Fx Market an attractive one:

1. Free Forex Demo Accounts – Feel that you’re the next George Soros or you’ve got a can’t-miss trading system? Well, you’re going to want to test out your system or your speculation skills before risking your hard earned money.  Demo account trading is where to start, demo losses may hurt your ego but they won’t empty your wallet.  Demo trading is also a great time to get acquainted with the characteristics of the forex platform you’re going to be trading on, learn your market orders, stop losses and charting applications. Don’t rush to trade real money right away, the forex market will be there next week, next month and next year, build your skills through practice and you will give yourself a better chance for success.

2. Democracy – The forex market is as close to a true democracy as a market will probably get.  Starting with the fact that no region or country has a built-in advantage over any other region or country of the world. Unlike the major stock markets, the forex market trades continuously 24 hours a day, 5 days a week from the afternoon on Sunday to the end of the work day on Friday at 5 pm EST and allows all regions of the world to trade equally. The market is generally considered to trade in three sessions, the Asian session followed by the European session and then finally the North American session.  The barriers to entry are also low as an individual retail trader can enter the market with a trading account deposit of just $1.

3. Liquidity – The forex market is the most liquid market in the world by far.  The daily turnover exceeds 3 trillion dollars on any given day and dwarfs all of the world’s major stock markets.  Liquidity is attractive because with so many market participants, a trader can usually get a fair price to enter the market.  Also, the enormous liquidity does not allow for any one entity to bully the forex market. A rare exception to this rule is when a central bank intervenes in the market as we saw a few times in 2009 by the Swiss National Bank.

4. Leverage – Leverage allows you take a bigger trading position compared to the amount of money you have deposited in your trading account. Depending on your forex broker, leverage levels up to a 400:1 ratio can be found.  This means that your broker will allow you to trade a position that is 400 times the amount in your account. Leverage gives you more bang for the buck but as it can magnify your gains, it also will magnify your losses.  It is best to start with a small leverage ratio and increase if you feel comfortable.  For more in-depth reading on leverage, check out this article (Forex Leverage: A Double-Edged Sword) .

5. Always a bull market somewhere – This is commonly said about the forex market and it is true.  One of the most interesting characteristics of trading in the forex market is the currency pair nature. In the over-the-counter spot market, currencies are directly traded against each other.  For example, when the USD/CAD currency pair is rising, there is a bull market in the USD and a bear market in the CAD as more traders are buying the USD and selling the CAD simultaneously.  This dynamic is always present throughout the forex market and proves the statement true that there is always a bull market going on.

Risk Aversion Subsides as Data Boosts Confidence

Source: ForexYard

The USD and JPY went strongly bullish in yesterday’s early morning hours, no doubt a remnant of the dire reports from the global economy faced last week. The sudden boost in risk aversion at the opening of London’s market yesterday morning sounded a bell for the return of the safe-havens. However, upon the opening of US markets, economic data spurred investors back to life with positive results which made the safe-haven charge appear pre-mature. The question now is whether the gains recovered by the EUR and GBP can continue today.

Economic News

USD – Dollar Moves on ISM Non-Manufacturing PMI Publication

The Dollar went bullish in early trading yesterday, as U.S. equities dropped.
However, the U.S. ISM Non-Manufacturing PMI publication pushed the USD closer to its opening levels. This release is significant as it measures a large portion of economic activity in the U.S. Optimism returned to the U.S. equity markets later in the day after the index’s better-than-forecast results. Thus, risk aversion dissipated as the day dragged on, despite financial turmoil threatening the EUR and GBP, as the economies of the Euro-Zone and Britain face a possible long-term financial crisis.

The Dollar hit a 1-month high vs. the GBP before losing these gains to finish almost level for the day at 1.6261. The greenback hit a 5-week high against the EUR, before also finishing virtually unchanged at 1.3964. Monday’s volatility in the forex market may have been due to slightly lower than usual trading volume, coming on the back of the U.S. Independence bank holiday. The factor that also played into investor’s minds was the dire unemployment figures that came out of the U.S. last week. This led to sharp movements in the forex market on Monday.

As for today, there is a lack of primary economic news, which will be coming out of the U.S. The US Building Permits figures will be published at 12:30 GMT and the Ivey PMI will be released at 14:00 GMT. A wide set of economic results will be published from Britain and Japan though, meaning the GBP and Yen may be the most vulnerable currencies as today’s trading gets under way.

EUR – EUR Hits 5-Week Low vs. USD

The EUR hit a 5-week low against the USD, before recovering in late-day trading. This behavior was due to a variety of factors, such as fears about the prolonged economic crisis, as unemployment continues to grow. Furthermore, Joaqin Almunia, the EU Economic Commissioner stated that the Euro-Zone is likely to be constrained by low economic growth for the foreseeable future. The reasons for these remarks were due to the nations of Europe spending very heavily on the financial crisis. In turn, this has resulted in mounting debt that may cripple their recovery in the long-run.

The EUR/USD pair hit the 1.3875 level before recovering back towards 1.3964. Analysts are now left wondering on the state of Britain too as the island economy faces losing its AAA debt rating. If it does indeed end up losing this, then Britain’s economy would be in permanent retreat, meaning the GBP will be put on life-support. However, the recent worsening of the banking situation in Germany and the threat of collapse in other Euro-Zone currencies may mean even more dire consequences for the EUR in the long-run.

Looking ahead to today, there is plenty of news that is set to determine the EUR and GBP crosses for today’s trading. At 10:00 GMT German Factory Orders are set to be published. From Britain, we can expect the Manufacturing Production figures and Industrial Production figures at 8:30 GMT and Consumer Confidence at 23:01 GMT. Positive results from Britain and the Euro-Zone may lead the way for the rest of the week. This could lead to lessening risk aversion, as traders ditch the USD and JPY, in favor of the EUR and GBP.

JPY – Yen Continues its Bullishness vs. Major Currencies

The Yen continued its bullishness against the major currencies on Monday on increased risk aversion. Yesterday saw traders ditch currencies such as the USD, EUR, and GBP in favor of the JPY. Additionally, the JPY benefited from reports from the Japanese government that the worst of the economic crisis in Japan may be over. The reason for yesterday’s risk aversion was due to reports that the recession is set to be prolonged. This was compounded by the dire forecasts of the economic future of both Britain and the Euro-Zone.

Today, there are many economic releases that are set to be released out of Japan in late trading. These include the Core Machinery Orders, Bank Lending, and Current Account figures that will be released simultaneously at 23:50 GMT. Leading up to these releases, forex traders are advised to follow plans from the Obama administration regarding the rising unemployment in the U.S. If his administration fails to provide answers, then the JPY is likely to continue its winning streak.

Crude Oil – Oil Tumbles on Dismal Global Economic Outlook

The price of Crude slid to a 5-week low due to a dismal global economic outlook in yesterday’s trading. The price of Crude hit $63.35 a barrel before recovering slightly to $64.20 by day’s end. Monday’s bearish behavior was exasperated by concerns of falling fuel consumption, pushing down Crude Oil even further. These fears are likely to continue as global unemployment continues to rise, which in turns is taking its toll on falling demand for Oil.

The 6th straight trading session fall in Crude Oil prices has also led to concern amongst OPEC ministers, who would prefer to see Crude at a healthier $75 a barrel. It’s important to take into account that Crude prices also fell due to the bullish Dollar throughout much of Monday’s trading. The thing which is likely to continue dominating the price of Crude is news surrounding the upcoming G8 Meeting in L’Aquila, Italy on July 8th.

Technical News


As the price of this pair floats near the over-bought territory on the hourly chart’s RSI, there is an indication of downward pressure. The impending bearish cross on the 4-hour chart’s Slow Stochastic supports this notion. Going short might not be a bad idea today.


With a fresh bullish cross on the daily chart’s Slow Stochastic, as well as on the 4-hour chart’s MACD, there appears to be much in the way of an impending bullish movement in this pair. Going long with tight stops might be a wise choice today.


The short upward correction seen yesterday has pushed the price of this pair into the over-bought territory on the hourly chart’s RSI, signaling downward pressure. With an impending bearish cross on the 4-hour chart’s Slow Stochastic, this downward movement appears more imminent. Going short appears to be preferable.


An imminent bullish cross on the hourly MACD and the 4-hour Slow Stochastic suggest that an upward movement is on the way. As the price recently exited the over-sold territory on the hourly RSI, there may be only a small amount of momentum for this impending bullish movement. Going long with tight stops may be the safest bet for today.

The Wild Card – USD/ZAR

The price of this pair currently floats in the over-bought territory of the 4-hour chart’s RSI, indicating downward pressure. The impending bearish crosses on the hourly MACD and daily Slow Stochastic both support the notion of a downward move. Those participating in the forex market today would be wise to pay attention to this pair as the downward pressure appears to be getting stronger and a bearish move may be impending.

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$ 1.3875 level and was capped around the $1.4000 figure.  Group of Eight officials are convening in Italy from Wednesday to discuss the global economy and representatives from major emerging market economies including Russia, China, India, and others will be present.  There has been a significant amount of recent talk about the U.S. dollar being replaced as the main international reserve currency.  Russian President Medvedev said the current U.S. dollar-based system is “flawed” but added “there is no alternative to the U.S. dollar or the European currency.”  Indian Economic Advisory Council chairman Tendulkar said he is urging his country to diversify its foreign exchange reserves and reduce its holdings of U.S. dollars.  European Central Bank President Trichet added “it’s extremely important that the U.S. authorities…say that a strong dollar is in the interest of the U.S.”  Trichet also warned consumer confidence is lagging and said weakness in the labour sector may not be fully priced in.  Data released in the eurozone today saw the July Sentix investor confidence index decline to -31.3 from -27.  Trichet spoke about the eurozone banking system today, saying commercial banks should “restructure as much as possible their situation when needed” and said banks need to pass liquidity on to borrowers and not horde cash.  ECB member Noyer verbally intervened in the FX market saying “we must ensure a bigger stability between currencies in the coming months” and said “we must avoid…the piling up of currency reserves.” ECB member Paramo reported current interest rate levels are appropriate and foresees EMU-16 economic growth by H1 2010.  In U.S. news, the June ISM non-manufacturing composite index printed at a better-than-expected 47.0, up from 44.0 in May.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.65 level and was capped around the ¥96.10 level.  Bank of Japan raised its economic assessment for all regions of the country for the first time since January 2006, primarily on account of an improvement in exports and production.  BoJ noted “the pace of economic deterioration was slower in all regions compared with the previous assessments” but added “most regions, however, emphasized that their economies continued to be in a severe situation.” On a negative note, the central bank reported capital spending is “sharply falling” and reported consumer spending “remains weak.”  BoJ Governor Shirakawa noted “Japan’s economic conditions, after deteriorating significantly, have begun to stop worsening.”  Data released in Japan today saw the May diffusion-based leading index improve to 60.0 in May from 50.0 in April while the composite-based leading index printed at 77.0 in May from 76.2 in April.  The Nikkei 225 stock index lost 1.38% to close at ¥9,680.87.  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 ¥131.70 level and was capped around the ¥134.20 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥153.00 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.75 level. In Chinese news, the U.S. dollar moved higher vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8334 in the over-the-counter market, up from CNY 6.8315.  Chinese commerce minister Chen said China will likely continue to be negatively impacted by a slowdown in global trade, but said global trade volumes will “recover a little bit” before the end of the year.  China launched a trial yuan settlement scheme today.

The British extended recent losses vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6095 level and was capped around the $1.6325 level.  Sterling came off today on market speculation that Bank of England will announce an extension of its quantitative easing program on Thursday when the Monetary Policy Committee’s interest rate decision is announced.  Some traders believe the MPC may decided to purchase an additional ₤25 billion in government and other bonds as part of its credit easing program, adding to the ₤125 billion of the existing facility.  Others believe the MPC could expand the program but will wait until August.  The U.K. government is currently managing the public’s expectations regarding public-sector pay awards.  Prime Minister Brown reiterated policymakers “cannot be complacent about the global economy.”  Cable bids are cited around the US$ 1.5845 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8645 level and was supported around the ₤0.8550 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.

How To Tell a Good Forecast from a Bad One

Here’s a forecast for you. Clear and direct. As quoted by a Reuters reporter in his January 15, 2009, article, entitled, “Global Lending Thaw May Yet Return to Deep Freeze.”

“‘This is a temporary respite and when it’s over, the stock market will make new lows…,’ says Robert Prechter, chief executive officer at research company Elliott Wave International in Gainesville, Georgia.” [Reuters, 1/15/09]

But there are lots of forecasts out there – for the economy, for the Dow, for the price of oil, for the chances of the Boston Celtics repeating as NBA champions – so the question arises, how can you tell a good forecast from a bad one?

Bob Prechter addressed that very question with another reporter in a Q&A originally published in the book, Prechter’s Perspective.

Editor’s Note: For more market insights from Bob Prechter, visit Elliott Wave International to download Prechter’s FREE 60-page Deflation Survival eBook, part of Prechter’s NEW Deflation Survival Guide.

The following text was originally published in Robert Prechter’s 2004 bestselling book, Prechter’s Perspective.

By Robert Prechter, CMT

Q: In general, is there any way for a person to tell a good forecast from a bad one?

Bob Prechter: There is a subtle way to tell a potentially useful forecast from a useless one. Most published forecasts are at best descriptions of what already has happened. I never give any forecast a second thought unless it addresses the question of the point at which a change in trend may occur.

As an example outside the financial markets: a sportswriter for the Atlanta Journal-Constitution published his ratings (scale 1-5) for each of the players on the Atlanta Braves baseball team as a forecast of how they would perform in 1984. At the start of the season, he rated 1983’s Most Valuable Player a “5,” Atlanta’s slugger a “4,” and the right fielder a lowly “2” due to bad performance in 1983 following two excellent years. Later in 1984, the MVP was batting only .215, and the slugger was batting a dismal .179, while the lowest-rated player, the right fielder, had hit 8 home runs and led the team in batting average and RBIs.

The point is not that the sportswriter was wrong in his predictions. The point is that he didn’t make any predictions, even though he thought he did and said he did. He was merely rating the 1983 Braves in retrospect. He ignored possible bases upon which to forecast the 1984 season, things like motivation, new developments or events in a player’s life, cyclic changes in playing success, etc. As with most forecasts, these things weren’t even considered.

Read forecasts carefully. If they are mild-mannered extrapolations of a recent trend, it’s probably the best policy to toss them aside and go search for something potentially useful.

Q: Obviously, the same holds true in finance.

Bob Prechter: All the time. When economists say, as they so often do, that they see “no reason to expect anything different” from the recent past, they mean it from the bottom of their knowledge. The linear projections they typically employ result in logic such as that expressed by an economist in a national newspaper, who said, “This rising consumer confidence is good news for the economy. Rising confidence spurs the economy, and the pickup in the economy then serves to heighten confidence.” By this line of reasoning, no change of direction could ever occur. That’s why, absent other knowledge, the only forecasts even worth your time considering are those that predict a change. Not because the forecaster is certain to be right, but because it shows that he is thinking and perhaps employing a tool that can anticipate trends.

Q: So the word “prediction” doesn’t necessarily apply to the future!

Bob Prechter: Right. And it’s those predictions about the future that are the tough ones. That’s why economists stick to predicting the past, which is a crafty solution. It leads to misery among the people who follow them, but it doesn’t seem to affect economists’ jobs, so it certainly keeps them happy!

Q: Do you think that predicting the economy is possible?

Bob Prechter: It is not only possible, it is downright easy compared with predicting the stock market. One economist has gotten a lot of chuckles by saying that the stock market has predicted something like 19 of the last 13 recessions. However, that is only a reasonable statement if you believe that a certain rigid definition of a recession is the only one that is viable. In fact, if you look at the ebb and flow of economic activity and generally realize that it lags stock market activity of between 0 and 12 months, you will find that there is no better single indicator of what the economy is going to do than the stock market. Not only that, but even 19 out of 13 is infinitely better than any economist has ever done.


For more on deflation, download Prechter’s FREE 60-page Deflation Survival eBook or browse various deflation topics like those below at

Robert Prechter, Chartered Market Technician, is the world’s foremost expert on and proponent of the deflationary scenario. Prechter is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

USD/JPY Drags as Investors Head for Safety

By Fast Brokers – The USD/JPY is edging lower again with investors exiting crude while sending the Cable and EUR/USD lower.  Although the S&P hasn’t logged as large of losses as the aforementioned correlations, they are trading right at June lows, an important level technically.  The slight pullback in the USD/JPY reinforces a theme of negative market sentiment.  However, the USD/JPY remains above 6/29 lows, and we’ve yet to witness significant volume to the downside.  Therefore, the consolidation of the USD/JPY carriers on with our 1st tier uptrend line slowly creeping into the picture.  We expect the consolidation to continue until investors make a more concrete directional decision in the S&P.  The trend decision could come sooner than later with the 2nd quarter earnings season beginning Wednesday while most of the USD/JPY’s correlations trade at or near important technical levels.  The amount of investor uncertainty is increasing in regards to the sustainability of the present economic recovery.  This uncertainty is reflected by the negative tendency of the USD/JPY.  Any retracement below our 1st tier uptrend line and March lows could signal the beginning of a new leg down.

Japan will release a set of economic data points tomorrow, including core machinery orders, bank lending, current account and the M2 money stock.  Investors will pay close attention to see if core machinery orders can continue their positive performance, or whether the data point experiences a setback along with the recent Tankan number.  It seems Japan’s manufacturing and export sectors are stuck in a rut due to declining global consumption coupled with an abnormally appreciated Yen.

Present Price: 95.26

Resistances: 95.73, 96.33, 96.90, 97.45, 98.05

Supports: 94.99, 94.45, 93.76, 93.32, 92.57

Psychological: 95

Market Commentary provided by Fast Brokers.

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