Month: July 2010

Source: ForexYard

The U.S. Dollar advanced on Wednesday, gaining 1% against the Japanese Yen and pushing the EUR back under $1.30, after a report showed U.S. consumer confidence fell more than expected, pressuring equities lower and reducing investors’ appetite for risky assets.

Economic News

USD – Dollar Rises on Demand for Greenback’s Safety

The U.S Dollar advanced against most of its major counterparts as a decline in U.S. consumer sentiment to a 5 month low revived demand for the relative safety of the world’s main reserve currency.
The U.S. consumer confidence for July fell to its lowest level since February with all eyes on consumer durable goods numbers for June later in the session for more evidence about the world’s largest economy.
The greenback advanced as much as 1.3% to 87.97 Yen in the biggest intraday gain since June 2. Treasury two-year note yields increased as much as 0.06 percentage point to 0.64% in the biggest intraday climb since June 10. The USD/JPY recent weakness has been related to the very low level of U.S. yields, analysts said. And the fact that the yields are rebounding at this stage is likely to lend some support to the pair.

EUR – EUR Erases Gains; Slips Below $1.30 level

The European currency hovered below a key level on Wednesday, running into profit taking after it hit a 11-week high against the U.S. Dollar, with attention turning toward the Australian Dollar ahead of crucial inflation data. The EUR slipped below the psychological, and technically crucial, level of $1.30, having hit a high of $1.3045 on Tuesday.

The 16-nation currency held some impressive gains against the Japanese yen, trading above 114 yen after having jumped over 1% on Tuesday to a 2-month high.
Traders said the EUR/JPY looked increasingly bullish on charts, especially after it rose above 113.50 yen where it had met lots of offers from Japanese exporters.

Moreover, despite the EUR/USD easing from highs, sentiment toward the single currency remains bullish in the short term with a number of commentators surprised by the resilience of the Euro-Zone economy. On the other hand, doubts remain over the ability of the U.S. economy to avoid a slowdown. Market players say that a sustained break above the $1.30 level could place the single currency against the greenback in a new $1.30-$1.35 trading range in the coming weeks.

JPY – Yen Rises on Safety Demand

Japan’s currency gained versus all 16 major counterparts ahead of U.S. reports in two days which are forecasted to show economic and business activity grew at a slower pace. The Yen rose from near a two-month low against the EUR on speculation signs of a slowing U.S. recovery will spur demand for safer assets.

The Yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders. The Yen traded at 87.77 per Dollar from 87.90. The currency gained to 113.95 per EUR from 114.24 yesterday, when it reached 114.42, the weakest level since May 18.

Crude Oil – Oil Falls a 2nd Day after Consumer Confidence Drops

Crude Oil declined for another day after an industry report showed U.S. crude inventories rose and the Conference Board said confidence among the nation’s consumers fell, signaling growth and energy demand may falter. Rising oil production capacity in the Gulf of Mexico after Tropical Storm Bonnie fizzled over the weekend without damaging infrastructure also weighed on Oil prices, analysts said.
Oil prices dropped the most in more than 3 weeks Tuesday as the U.S confidence index declined to the lowest level in 5 months. Traders mentioned that there was a sell-off in the crude market because of a fall in U.S. consumer confidence and the sentiment is still weak.

Technical News

EUR/USD

Yesterday the pair pushed to its highest level in the past 3 months before falling backwards to finish almost unchanged, forming a spinning top candlestick formation. This may signal indecision on the part of traders and a lack of buyers in the current uptrend.

GBP/USD

The pound was a big gainer in yesterday’s trading as the cable breached and closed above the resistance level of 1.5520. The pair has been a strong performer as of recent, recording gains over the past 5 trading sessions. However, technical resistance is forming on the daily chart. The RSI (14) is dropping below the overbought zone while the Slow Stochastic oscillator is forming a bearish cross, indicating the next move may be to the downside. Traders may want to tighten their stops on any long positions.

USD/JPY

The yen suffered during yesterday’s trading, rising as high as 87.96 while closing above the 20-day simple moving average and the downward sloping trend line that began on June 14th. However, traders may be able to fade the trend as a bearish cross has formed on the 4-hour Slow Stochastic oscillator, indicating that the pair’s next move may be lower. Traders can target the resistance level of 87.40 with an extended target at the year to date low of 86.25.

USD/CHF

The pair may see a continuation of its recent downtrend in today’s trading as the RSI for the pair floats in the overbought territory on the 2 hour and 8 hour charts with most other indicators floating in neutral territory. Traders may be advised to go short for the day.

The Wild Card

GBP/NZD

The pair may see some downward correction today as the RSI for the pair is floating in the overbought territory on the hourly and 2 hour charts while a bearish cross is evident on the 2 hour and 4 hour charts Slow Stochastic, indicating an imminent downward movement. Furthermore, a breach of the upper Bollinger Band is evident on the 2 hour chart. Forex traders may be advised to go short for the day.

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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.

By eToro – The Euro again pressed the 1.30 level, as investor looked to increase currency risk.  The Euro is likely to continue to test the upside and reach the 1.3094 resistance level.

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USDCHF’s bounce from 1.0394 extended to as high as 1.0639 level. Further rally is still possible later today and target is to test 1.0675 key resistance, a break of this level will indicate that the downtrend started from 1.1730 (Jun 1 high) had completed at 1.0394 already, then longer term target would be at 1.0900 area. However, as long as 1.0675 resistance holds, the price action in the trading range between 1.0394 and 1.0675 is treated as consolidation of downtrend, and another fall to 1.0300 is still possible.

Daily Forex Analysis

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2950 level and was capped around the $1.3045 level.  The common currency continues to orbit the psychologically-important US$ 1.3000 figure as traders weigh an improving eurozone sovereign outlook against a deceleration in U.S. economic activity.  Dealers reacted to last Friday’s eurozone bank stress tests results by pushing the euro back above the US$ 1.3000 figure on the perception the European banking system should be able to withstand additional dislocations in the sovereign credit market.  European Central Bank officials talked up the stress tests late last week and yesterday, suggesting the eurozone received more than a passing grade.  Data released in the eurozone today saw the June M3 money supply increase 0.2% y/y and the ECB’s bank lending survey will be released tomorrow.  German data saw the August GfK consumer confidence survey climb significantly to 3.9 from the prior reading of 3.6 and the June import price index was up 0.9% m/m and 9.1% y/y.  Provisional July CPI data will be released tomorrow.  French data saw total June jobseekers off 8,600, an indication of an improving labour market there.  In U.S. news, dealers reacted negatively to a lower-than-expected July consumer confidence print of 50.4, compared with the previous revised total of 54.3.  These data suggest consumer spending may be relatively weak as final private demand is limited by current sentiment.  Other data saw the July Richmond Fed manufacturing index decline to +16 from the prior print of +23 while the May S&P/CaseShiller home price index was up 0.47% m/m and 4.61% y/y.  MBA mortgage applications, June durable goods orders, and the Fed’s Beige Book will be released tomorrow.  Philadelphia Fed President Plosser yesterday suggested the current economic situation does not warrant additional Fed stimulus but added the FOMC is prepared to move if and when needed.  Euro offers are cited around the US$ 1.3265 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥87.90 level and was supported around the ¥86.80 level.  Dealers pushed the yen lower today on expectations Bank of Japan could ease monetary policy further.  Demand for Japanese government bonds remains strong and this is a signal that many investors expect Japanese yields could fall further.  There is still talk the government may look to protect the psychologically-important ¥85 handle by selling yen for U.S. dollars or other currencies in what would be the country’s first official yen-selling intervention in several years.  Many BoJ-watchers believe the central bank will maintain its ultra-accommodative monetary policy for at least two more years.  Japanese banks have been investing in longer-dated debt and the swaps market to record profits as yields on five-year JGBs move lower.  Data released in Japan overnight saw the June corporate service price index decline 1.0% y/y, lower than the previous -0.8% May result and the latest evidence that deflation remains a major problem for the Japanese economy.  The Nikkei 225 stock index lost 0.07% to close at ¥9,496.85.  U.S. dollar bids are cited around the ¥86.29 level.   The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥114.10 level and was supported around the ¥112.75 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥136.65 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.30 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.7784 in the over-the-counter market, down from CNY 6.7790.  Data released in China overnight saw the June leading index decline to 102.84 from the revised prior tally of 103.25.  People’s Bank of China reported China’s economic fundamentals remain “good” and said the recent deceleration in economic growth will likely stabilize.

£

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5575 level and was supported around the US$ 1.5440 level.  Cable reached its strongest level since February 2010 as traders reacted positively to a surprise +33 print in July CBI reported sales, up from the prior reading of -5.  Additionally, none of the £355 million in corporate bond securities Bank of England said it would purchase in its twice-weekly program was tendered today, the first time investors did not seek a BoE bid since March.  This is indicative of improving sentiment in the credit markets.  A perceived relaxation of terms in the Basel 3 capital accord terms is also supporting sterling.   The key functions of the Financial Services Authority will be relegated to the BoE. Cable bids are cited around the US$ 1.5270 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the £0.8345 level and was capped around the £0.8415 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0635 level and was supported around the CHF 1.0480 level.  Data released in Switzerland today saw the June UBS consumption indicator improve to 1.810, up from the revised May result of 1.712 and its highest level since July 2008. Swiss unemployment remains at about half the level as the eurozone’s rate and this is resulting in positive economic activity.  There is some speculation Swiss National Bank may have intervened by selling francs today given the significant move lower for the currency but SNB would not confirm this speculation.  U.S. dollar offers are cited around the CHF 1.0980 level.  The euro appreciated vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.3795 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6525 level.

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By CountingPips.com

The U.S. dollar has been mixed in the forex markets today while U.S. stocks have been slightly lower in the U.S. session following a decline in the Conference Board’s consumer confidence survey to its lowest point since February. The dollar has been trading higher today versus the Japanese yen, Canadian dollar and the Swiss franc while falling against the British pound. The American currency is trading virtually unchanged against the euro, New Zealand dollar and the Australian dollar, according to currency data by Oanda at 12:10 pm EST.

The U.S. stock markets have been stuck in neutral so far in today’s trading session with the Dow Jones higher by a couple of points, the Nasdaq decreasing over 5 points and the S&P 500 showing close to a 2 point shortfall. Oil has declined by $1.59 to the $77.39 per barrel level while gold has dropped by $20.20 and trades around the $1,162.80 per ounce level.

U.S. consumer confidence has eroded in the past few months, according to the Conference Board survey, after showing increasing levels for the three previous months. In a survey of 5,000 households, the index showed that consumer confidence decreased by 3.9 points from 54.3 in June to standing at 50.4 in July. This marked the second straight decline and follows last month’s drop of almost 10 points from a 62.7 score in May.

Market forecasters were expecting consumer confidence to dip to the 51.0 level for the month.

The Expectations index fell in July to 66.6 from 72.7 in June while the Present Situation index also edged lower from 26.8 in June to 26.1 in July.

The Director of the Conference Board Consumer Research Center Lynn Franco commented on the newest survey in today’s report saying, “Consumer confidence faded further in July as consumers continue to grow increasingly more pessimistic about the short-term outlook. Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves. Given consumers’ heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season.”

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The FedEx Corporation or the FDX in the New York stock Exchange is one of the major logistics company in the world. Like the UPS which I presented a few days back (kindly check my previous blog here) also gapped up following an upbeat earnings forecast. The shares of FedEx jumped by 4.5% to $82.58. The company now sees its earnings to expand to somewhere between $1.05 and $1.25 per share for its first fiscal quarter ending Aug. 31 which is up by at least 58 cents per share compared to a year earlier. The revaluation estimate is now also higher than the previous forecast of 85 cents to $1.05 per share. Given FDX’s robust forecast and UPS’ stellar earnings, its apparent that the global logistic business is gaining speed which also suggest that the global trade is now recovering very well.

As a result of FDX’s upbeat outlook, its shares gapped up and in the process also broke out from an inverted head and shoulders pattern. It likewise moved past several key resistances like the 50-day moving average, 200-day moving average, and the 82.50 mark. Given yesterday’s price action, FDX is now suddenly on track to previous support at $90.00. The level also corresponds to its upside target by projecting the height of the inverted head and shoulders from the point of breakout. In case it weakens, the 82.50 support and the 200-day MA are still there to keep it from falling any further. A break of these supports, though, could send it back down to 80.00 or even down at the bottom of the gap.

More on LaidTrades.com …

By Anton Eljwizat

• Below is the 8-hour chart of the USD/DKK currency pair.

• The technical indicators used are the Slow Stochastic, and Relative Strength Index (RSI) and Williams Percent Range.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates an impending bullish cross, which may signal an upward movement is going to occur in the near future.

• Point 3: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• Point 4: The Williams Percent Range has peaked near at the -100 marker, which means that there may actually be a strong level of upward pressure.

USD/DKK 8-Hour Chart

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.

By Russell Glaser – The Cable continues to move higher and is flirting with a resistance level that was last touched in May.

Yesterday the GBP/USD rose as high as the resistance line of 1.5520 (R1) before falling back to close up at 1.5494. Today in early morning hours of the European trading session the price briefly breached the resistance line but failed to hold onto the gains.

Momentum appears to be behind the price move higher as the 14-day Momentum indicator is sloping higher, indicating further appreciation may be in store for the GBP/USD. The next significant resistance level comes in at 1.5820 (R2), the high from the middle of February. Support for the pair rests at the previous resistance levels of 1.5380 (S1), 1.5050 (S2), and a long term support at 1.4775 (S3).

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.

Here’s an update of the US dollar index or the USDX which I last posted on July 15 (kindly see my last blog here). As you can see from the chart, the index has continued to weaken after it broke its long term uptrend line and the 61.8% Fibonacci retracement level that I drew. At present, the index is trading just above 82.000. A move below this could send it lower to 81.000 or even 80.000. But in case the dollar buying makes a comeback and the index breaks above the short term uptrend line, it could rise further until it hits a resistance at the former uptrend line. A pass through the former uptrend line, though, could send it back to its previous peak at around 88.000.

The highlight of this week for the greenback is the advance second quarter GDP release of the US on Friday, July 30. Several economists from financial firms like Bloomberg, JPMorgan Chase & Co., and UBS Securities have already downgraded their forecast on the country growth from  the months of April to June of this year. The US economy is now only seen to have expanded by 2.5% after posting a growth of 2.7% during the first leg of the year. And I guess I agree with the mentioned growth downgrade. For one, the country’s retail sales figures have contracted both in May and June. The core retail sales June have continued to lose by 0.1% after already weakening by 1.2% during the previous month. Similarly, the headline retail sales have also lost 0.5% in the same period on top 1.1% contraction during the last. Note that more than 70% of the US’s GDP is composed of domestic consumption. A huge fraction of this is then represented in the country’s retail sales figures. Hence, a drop in the latter could likewise reflect negatively on the US’s overall output.

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