ForexYard's Commentaries

[FOREXYARD]

24/06/'07 - US Existing Home Sales.

Economic News

USD

Last week with little in the way of news releases, the greenback weakened a bit against most currencies apart from the JPY. It looks as if the carry trades are stronger than the general market trend. Towards the end of last week, we saw a glimpse of positive news for the USD as the Leading Index came stronger than expected and the Philadelphia Fed Manufacturing Survey tripled expectations. The good news didn't do much, and the negative trend continued.

Today's most important release will be coming from the very important housing market - Existing Home Sales. The Existing Home Sales measures the annualized number of existing residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation's currency because large purchases tend to be made by consumers that are optimistic and confident in their financial position. The sale of a home also triggers commissions for real estate agents, and often home owners will purchase goods such as appliances and furniture shortly after purchasing a home. This report is closely scrutinized as it's the month's first demand-side housing indicator to be released. This month, the forecast for the release is 5.96M with a previous figure of 5.99M last month. The spring is a strong season for Home Sales and May is usually one of the most active months. Because the data on new building permits and housing starts has been weak, it's likely to see weakness in existing home sales as well. There is a Surplus of inventory that is likely to be sold at lower prices. This week will be quite rich with US news events such as the Consumer Confidence, Durable Goods, GDP, the Chicago PMI, and the Fed's Interest Rate Statement.

EUR

Although most of the news that came from Europe last week was weaker than expected, that didn't stop the EUR to rally up all throughout the week, strongly pointing to the 1.3500 again. The most impressive move was made by the EUR/JPY which continues to be traded at record levels, and shows intense bullish momentum. With practically no news expected to come from Europe this week, it is quite clear that most of the price action will be coming from the US market, and its very rich upcoming economic calendar. With regards to the EUR/USD, the most important event would be the FOMC Rate decision which is widely expected to remain unchanged at 5.25%, and might help push the pair further up with the lack of positive USD releases to block the expected appreciation.

JPY

Despite the few small positive signals that the JPY might be experiencing, it is still quite clear that its performance is still very poor, and it is overcoming all the negative US news releases and still weakening against the USD. Although it appears that economic new events that come from Japan seem to have no influence on the ongoing bearish trend of the currency, it would probably not be true this week. There are several releases expected to come from Japan this week such as the Trade Balance, Large Manufacturing Conditions, and the BOJ meeting minutes, and together with the packed US week, might caused some price shifting out of the range we have grown accustomed to.


Technical News

EUR/USD

The pair has made a significant move from 1.3260 to the 1.3450 levels and according to the daily charts is heading strongly to 1.3500. If a break will occur beyond that level, we might see a violent move following. If a break will not happen, the pair will probably range trade between 1.3350/1.3450.

GBP/USD

The cable is trading at critical levels near 1.9990, and is slowly pointing to the very important resistance of 2.0000. This very important level, if broken; will probably take the pair back to the 2.0100 levels back again and even further.

USD/JPY

After a short consolidation period, the pair seems to be reestablishing the bullish move, as clearly derived from the daily charts. The current move is heading to the 124.40 levels, and a preferable strategy would be to wait for the hourlies to unwind before entering the market at a better point.

USD/CHF

The pair has been consolidating at 1.2300 after a sharp bearish move from the 1.2450. There is a bullish cross forming on the hourly charts, indicating that there might be a correction move before the daily bearish trend resumes.


The Wild Card

USD/CAD

The pair seems to be establishing a bullish trend after a very long and sharp downtrend that took it to record lows. This turning point provides forex traders with an opportunity to enter the market at a very good point for a long position as it is traded at a very low price, and the direction seems to be up.

[FOREXYARD]

26/06/'07 - US New Home Sales.

Economic News

USD

Yesterday as the USD was suffering from an uneventful day, the major figure on tap the U.S. Existing Home Sales which came close to forecast at a 5.99mn pace in May, dropping by -0.3% over the month. However, more ominous was the rise in the inventory of homes for sale which spiked up to 8.9 months from 8.4 months in April. This would appear to have been driven by sellers waiting for the better months to attempt to sell but at nearly 9 months' inventory, the downward pressure on prices will be gathering momentum and should test the industry further over the coming months.

There was another minor report from the Chicago Fed, which published its National Activity Index which was mildly improved to -0.22 in May from -0.30 the prior month ,however it is the 5th consecutive negative number. The key range is between -0.7 and +0.7 and thus the numbers are fairly steady but to the downside of the range and indicates a steady Fed policy which having a positive effect on the Greenback and may cause the USD to slightly strengthen against the majors, however if today's figures will be weaker than expected a significant reduction of the USD all over the board is expected.

And that just about summed up the overnight session which saw the Dollar constrained into a tight range, but ending towards the low of the range. This is in line with the medium term forecast of a weakening Dollar and the numbers beginning to emerge have been less than favorable which indicates that we must wait a little longer for the Fed's forecast of an upturn in H2 to emerge. Given the weakness in the housing market becoming more apparent this drag could last for a little while yet. Most likely we shall see the Dollar decline to my medium term targets by the end of July, possibly the beginning of August at which time the market should move into neutral mode over the summer doldrums.

We at the ForexYard dealing room expect an upcoming drop of the greenback within the next couple of days.

EUR

There was only one tidbit of news from the Euro-zone and it was confined to the German GFK consumer confidence survey. Although standing as the only pertinent survey for the European economy, the report had positive undertones and helped to establish at least a thin direction in the market heading into afternoon trading. It seems that consumers have remained increasingly confident compared to the previously noted pessimism by regional businesses. The consumer confidence report for the month of July fared far better, rising above expectations and printing an 8.4 for the German economy. Notably improvements were most seen in the index subcomponent measuring consumer demand, as the sector jumped to positive territory marking 9.1points. Next up for Euro bulls, French housing starts and Italian business confidence. However, given the blatant dollar overtones for the week, the bits of economic data will mean little in tomorrow's session.

German consumer confidence rises to 8.4 in July, The recent figure is an improvement over the 7.4 seen in the month of June and spells further upside in the Euro currency as speculation is already pricing in a string of rate hikes by the ECB. The Euro Zone economy is interesting, when despite a run of softer economic data over the past weeks, the German consumer confidence continues to improve. Note that the July number is surveyed in early June but is labeled July since it purports to give a feel for consumer intentions in the following month. The EUR seems to be ranged trading and to gather some new forces however it is unlikely that a strengthening will ordered the EUR currency in the upcoming week.

Pound bulls were out in full force following expectations, and subsequently powerful speculation, that BOE Governor Mervyn King will maintain his hawkish stance when policy makers meet again in July. Even beyond that, speculation is now emerging that interest rates may have to extend out to another rate hike, helping the benchmark rate to climb above 6% as inflationary pressures continue to rise in the UK economy. Ultimately, the bullish notion is likely to remain in the market, helping to keep the pound sterling below the 2.0000 level.

JPY

The Japanese yen was supported throughout the overnight session following the news that interest rates may well be increased again in the Chinese economy. These two economies are very separated in economic and governmental policies, and when they are intertwined on the basis that when risk aversion hits, Chinese markets trend lower and yen carry trades are unwound.

We need to keep notice that a better visual can be read in the February 27th global rout as equity markets around the world were emptied out, helping the yen. As a result, with the Bank of Japan likely out of the picture for the moment, yen momentum will be established by market risk and not by the Japanese monetary policy. However, this week's theme may be slightly different as economic data is in full force for the world's second largest economy. Should figures be optimistic for a rate hike in September, yen favoritism may very well build on fundamental justification. Well, it seems that JPY strengthening won't be surprising anyone.


Technical News

EUR/USD

On the 4 H chart we notice that the bullish trend might running ahead. The volatility increased, especially after the US dollar continued to weaken against the EUR with the EURUSD trading up to 1.3473 highs. The price should continue to move upwards in a range of 1.3400 to 1.3515. As it stands, the bullish pressure will continue to gather momentum on the EUR USD today as well.

GBP/USD

On the 4 H chart, a rising wedge (bullish) is forming which may imply a continuation of the bullish momentum. It's recommended to time the entrance into market with short term charts, 1.9980 seems like a strong entry point. At the moment, GPB/USD is trading in the 1.9930 to 2.0025 range. The volatility is high and we should expect to see bullish pressure on the GBP today. The uptrend should continue to the 2.0035 resistance level.

USD/JPY

Yesterday The US dollar weakened against the Yen, the USD traded down to 123.43 lows. USD JPY is in a downtrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands are tightened. We should expect to see today a continuation of the bearish configuration. 1H, 4H Elliott pattern imply that the USD/JPY will continue to gather momentum. The target is expected at 123.05

USD/CHF

The USD CHF is in a bearish configuration. The volatility is decreasing. USD CHF moves without trend and swings around exponential moving averages (EMA 50 and 100). Bollinger bands are tightened. 1H, 4H Elliott pattern imply a continuation of the bearish pressure. The target is expected at 1.2240


The Wild Card

EUR/GBP

On the 4 H chart, a decreasing wedge (bearish) is forming which may imply a continuation of the bearish momentum, the volatility is high. 0.6720 seems like a strong entry point. At the moment, EUR GBP is being traded around 0.6700 to 0.6780 range, and we should expect to see today bullish pressure on the EUR GBP. The forex downtrend should continue to the 0.6700 and the price should find a resistance below this level.

[FOREXYARD]

27/06/'07 - US Durable Goods

Economic News

USD

Yesterday the USD continued on its bearish path but the decline seemed to be stabilizing ahead of the much anticipated 2-day Federal Reserve meeting which starts later on today. Traders have been profit taking ahead of the FOMC but were reluctant to drop the greenback much lower yesterday. The market seems to be holding steady ahead of the FOMC as disappointing US New Home Sales and Consumer Confidence data released yesterday only caused the dollar to dip briefly. New Home Sales released at 915 K, down from last month's figure of 930 K and well below the forecasted figure of 922 K. Consumer Confidence came in at 103.9 which was below the expected figure of 105.5. The decline in consumer confidence and housing market may spark lower spending especially if the labor market weakens. Despite the negative data the markets reaction was limited as investors are now focusing their attention at the extent of the Feds concerns over inflationary pressures.

Today the most significant news coming out of the US will be the Durable Goods figures. The figure is expected to release in negative territory at -1.2% after being on the rise for three consecutive months. The core figure is expected to release at 0.2% which is a significant drop from last month's figure 1.9%. The greenback should continue to range trade today particularly against the EUR and the markets reaction to the durable goods figures should be limited as attention begins to shift to the FOMC and Thursday's interest rate announcement.

EUR

The EUR was range bound against the greenback despite recent poor economic data releases from the U.S In yesterdays news the Euro Zone Current Account came out significantly worse than expected, however it did not create any significant impact to move the markets any further. Today, the European market is void of any significant information and therefore any EUR volatility is likely to be pegged to the USD. Tomorrow more action is expected with the release of the German Unemployment Rate which is forecast to slightly improve compared to last month's 47.3 figure. This figure measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the EUR currency because working people tend to spend more and consumer spending is a major driver of the economy. In case of a disappointing figure we might witness a minor weakening of the EUR against the majors. Also tomorrow, The Retail Purchasing Manager's Index (PMI) will be released at 09:00 am GMT, this figure measures the activity level of purchasing managers in the retail sector with a figure above 50 indicating expansion. A rising trend will have a positive effect on the EUR however no change in this figure is expected. The bottom line today is that since the European market will be void of significant news the EUR will be affected by movement in the rest of the majors and it is expected to continue to range trade against the USD, however tomorrow we should see the EUR react to the significant European data releases.

JPY

Yesterday the JPY strengthened all across the board particularly against the USD after reports that the Japanese Ministry of Finance officials are beginning to voice concerns over the currency's weakness. Japanese Finance Minister Koji Omi reportedly warned the markets against making 'one-way' bets, in an apparent reference to the recent massive popularity for carry trades which have caused the yen to keep on a sustained bearish path. Koji also said that he has been watching foreign exchange moves very closely and this remark was a further indication to the market that Japan is concerned about a further decline in the yen. Yesterday investors used the Ministers remarks coupled with the fact that the MoF has changed its currency stance as an excuse for profit taking. We believe that the JPY strengthening will be short lived as Japan is unlikely to raise its interest rates from 0.5% and the prevailing high interest rate differential between Japan and the rest of the leading economies will continue to encourage carry trades in the long term. Earlier today Japanese retail sales released at 0.1% beating expectations of -0.6%. This positive surprise coupled with Minister Koji's remarks will continue to boost the yen and today we should see it maintain its bullish rampage.


Technical News

EUR/USD

The daily chart is failing to breach the upper barrier of the bearish channel and maintain the range trade which is limited to 1.3379 - 1.3466 Fibonacci levels. The 4 H chart is trying to break the 1.3435 Fibonacci level in its bearish trend and in case it fails to do so we expect range trading to be between the 1.3435 - 1.3471.

GBP/USD

The daily chart is clearly bearish when in the last couple of days the GBP lost 50 pips of its value and it seems that in the long term this pair is going down. The first barrier is located at 1.9922 however this pair is expected to test the 1.9845 Fibonacci level. In the short term, range trading is expected between 1.9922 - 2.0015 .

USD/JPY

On the daily chart we notice a bullish channel which was established on May the 8th and when the current bearish trend is trying to test the lower boundary 122.14, then we seek a reversal signal and if we find one, going long would be the preferable strategy.

USD/CHF

The daily chart implies a bullish trend beginning as the Slow Stochastic is crossing at 11 which is clearly in over sold territory . In the long term it seems that testing the 1.2364 level is more likely to happen in the upcoming weeks however in the short term this pair is range trading in a tight channel 1.2259 - 1.2309 so buying on dips and selling on tops seems preferable.


The Wild Card

CHF/JPY

On the daily chart ,a head & shoulder pattern is establishing however not yet completed and in case of completion we expect a bearish trend which will take this currency trading pair to the 98.62 Fibonacci level .

In the short term we are in the end of a bearish trend which still has some steam left and threatens to take this pair to 99.56 and brake this significant support level. We expect this pair to consolidate between 99.52 - 99.80 in the upcoming hours.

[FOREXYARD]

Economic News

USD

Yesterday provided us with a mix day of data which was published in the US and led to the strength of the USD while a reduction was expected. Data such as: Durable Goods Orders, Core Durable Goods Orders and Crude Oil Inventories. The USD has strengthened mainly due to the FOMC meeting and despite the larger than expected drop in durable goods orders in the month of May from 1.1% to -2.8%, but as it seems, the American federal reserve is not going to decrease rates in the short term the level of the inflation which exists in the US market. The Federal Reserve does not have much choice other than to keep the tone of the statement unchanged in order to tame the stock market.

The federal reserve has to deal carefully with the issues of the housing market and inflation. A bigger focus on housing market problems will definitely lead to more pronounced dollar weakness against the Euro than the Japanese Yen because the market anticipates another interest rate hike in the short run from the European Central Bank this year while shorting USD/JPY would require paying hefty interest.

Also yesterday, the Crude Oil Inventories data was published. The oil inventories fell as low as 1.6M from 6.9M, but not surprisingly, Oil prices jumped over 1%. Crude prices are standing now $1 shy of its 9 month high.

Today at 19.15GMT the interest rate statement will we published. As it is predicted in the market, U.S. central bankers will leave interest rates at 5.25%.

EUR

The EUR may be bolstered by speculation a German report today will show unemployment held at a six-year low in June, backing the European Central Bank's case for raising interest rates as economic growth threatens to fuel inflation. Europe's single currency may snap a three-day losing streak against the dollar as Germany's jobless rate (8:55 a.m. GMT), adjusted for seasonal swings, stayed at 9.2% for a fourth month in June. Traders expect another rate hike, coming from the ECB since the inflation pressures were expended and there is a threat on the inflation's destinations in the Euro Zone. We are expecting a significant strengthening of the EUR among the majors in the upcoming week.

JPY

During the last three days we could clearly notice the strength of the Japanese Yen against most of the currencies, but especially against the greenback and we could see that Japanese want to reap the benefits of JPY weakness. This move can be attributed mainly to Japan's minister of finance, Koji Omi, after his speech in which he announced, two days ago, that investors should not go blind after the weakness of the Japanese currency especially for the long term, and in addition because of the fact that many traders added many Japanese investment trusts in foreign assets, which are scheduled to go on sale at the end of the month. Today, at 00.50 GMT the Industrial Production data was published in Japan. The Industrial Production dropped from -0.2 to -0.4 for a third straight month in May, the longest losing streak in almost two years and according to this fact the market reacted dramatically against the Japanese currency. The JPY declined against 14 of the 16 most-active currencies. This situation may cause a delay in the intentions of the bank of Japan regarding raising the interest rate in the next month, which at the moment stands on 0.5%. The Bank of Japan search first for economic stability and growth in order to make a certain step of raising the interest rate. Japan's economic growth will probably slow to an annualized 1% in the second quarter from 3.3% in the first three months of 2007. Japanese makers of chip-making equipment reported smaller orders than sales for a second month in May, suggesting the pace of investment in the gear is slowing. The book-to-bill ratio, a measure of industry health, held at a 13-month low of 0.94, signaling equipment makers received only $94 in orders for every $100 in sales and many investors are restoring carry trades. The yen fell as low as 123.37 per dollar and then recovered to 123.19 at 9:39 a.m. in Tokyo from 123.20 before the release. The Nikkei rose 81.40, or 0.5%, to 17,930.68 as of 10:20 a.m. in Tokyo. The broader Topix index added 8.36, or 0.5%, to 1749.44. A weaker yen increases the value of Japanese exporters' dollar-denominated sales when converted back into local currency. The dollar may benefit from speculation the Federal Reserve will say the U.S. economy is improving after a policy meeting ends today, easing concern a housing slump will weigh on growth.


Technical News

EUR/USD

On the 4 H chart we can see that the bullish trend which started yesterday is out of steam and a reversal is occurring at the moment. It is important to notice the neutral channel which is establishing over the last four days. Slow stochastic is due to cross at 90 and momentum at 99.9231 implying an upcoming bearish trend which will take this pair to test the 1.3429 Fibonacci (0%) level.

GBP/USD

Daily chart implies an upcoming reversal with RSI at 86 and Slow Stochastic crossing at 93. On the 4 H chart, Slow Stochastic crossed at 91 which strengthened the assumption of the upcoming bearish trend, it seems that this pair will test the 2.0038 before a reversal will take place so going short would be the preferable strategy.

USD/JPY

A bullish flag is forming on the 4 H chart which might take this pair to 123.73 Fibonacci (76.4%). Slow Stochastic shows a positive divergence which strengthens the possibility of an upcoming bullish trend.

USD/CHF

It seems that the bullish trend is delaying however eventually will take place. On the 4 H chart a tight neutral channel is forming and this pair will try to breach the support barrier which is located at 1.2271, in case of a breakout, this pair will consolidate at 1.2232 Fibonacci(23.6%) and then going long would be the preferable strategy.


The Wild Card

GOLD

Foreign currency traders should pay attention to gold today: on the daily chart a bearish rising wedge is forming however has not completed ,in case of completion we might witness a reduction in gold value to 641.33 per ounce within the next 3 days .

[FOREXYARD]

03/07/2007 - REVERSALS? We think not!

Economic News

USD

Yesterday was a particularly quiet day on the release front with the stats published being the June ISM Factory data which came out positive; above the forecast of 55.0 at 56.0. The orders index rose 0.7 to 60.3 and prices paid dipped nicely to 68.0 and just below forecasts of 69.0. The 3-month average is now rising and there are early signs of the recovery that had been forecast for Q3-Q4 but production is still around 13% lower than a year ago and the housing market is obviously a lot lower. The USD continued to sell off overnight against most of the currencies on lingering concerns that problems in the sub prime mortgage market would spill over into the rest of the economy and will significantly affect traders' mindset. Concerns were also raised that rating agencies were masking losses in the market by not cutting credit ratings; the highest default ratings on home loans in a decade have reduced the prices of some bonds by 50%. The fall in the USD was particularly notable against the GBP which rallied to a 26-year high, while the EUR also rose to within half a cent of its record high against the USD. However, the USD ignored the June ISM data which showed the manufacturing index rose to 56.0 from 55.0 the previous month, slightly higher than forecast. With tomorrow being a U.S. bank holiday we shouldn't get the same degree of weakness, when tomorrow's trading , should provide consolidation and most probably at Thursday we will wait for the BOE and ECB rate decisions. Who knows this could even last into next week given that the pullbacks since the Dollar highs have been so rare which tends to point that might bring us a large correction now before the next USD drop .

EUR

After breaking out to the upside on Friday, the Euro ended the US trading session approximately 50 pips away from its all-time high. So even though the European manufacturing PMI numbers were net disappointing with only Germany putting in a positive number to save face, the level of growth still remains stronger. This allowed the EUR to resume the uptrend directly and approach the 1.3681 level against the USD. The GBP pushed above the 2.0131 high and this keeps the medium term targets at 1.40-1.41 EUR/USD and 2.0505 GBP/USD well in-line to be met later this month before the August summer doldrums take us into a correction. Euro zone June PMI manufacturing was revised up to 55.6 from 55.4, which had already beaten expectations. However, both France and Italy reported declines, with Germany responsible for the overall increase. UK June house prices (Nationwide) rose a higher than expected 11.1% yr, up from 10.3% in May. This is the highest rate since January 2005, however house price growth is expected to slow later this year. UK June PMI manufacturing fell to 54.3 from 54.7. Export orders improved but overall new orders fell. Generally it seems that we are in the middle of a significant positive move of the EUR and GBP against the USD however we are already near records which might be breached. In contrast to the US dollar, traders were committed to buying the British pound today and nothing could stand in their way. Despite news that a burning car hit an airport terminal in Glasgow London this weekend and manufacturing conditions deteriorated in the UK, yesterday the GBP managed to hit a 26 year high. Part of that strength is certainly a result of dollar weakness since the GBP is down against the CHF, JPY and EUR, however the GBP would not be able to hit the highs that it did yesterday without a positive outlook for the near the future. Of all of the central banks meeting this week, the Bank of England is the only one that is expected to raise interest rates. With oil hovering near $70 a barrel, the world's concern for inflationary pressures will not be going away anytime soon. The interest rate curve is already pricing in 6 percent interest rates by the end of the year.

JPY

Japanese earnings data decelerated in May. Ordinary earnings fell 0.6%yr in May, against a revised pace of -0.2%yr in April. Overtime earnings grew 1.1%yr, down from 1.5% in the prior month. Japanese Q2 Tankan was moderately better than expected. Large manufacturers' business conditions were unchanged at +23. The large non manufacturing headline was also stable at +22. Small firms saw conditions deteriorate slightly, while medium sized non-manufacturers saw conditions improve. Labor shortages remain broadly evident. The Tankan based output gap remains positive, but resource pressures were reduced slightly in the quarter. Capex spending plans for FY07 were revised up across the board. The sales and profit projections may portray an impending accommodation of wage increases. We must notice that even though the Yen strengthened against the USD and GBP, carry trades are still playing a major part in the market and the aggressive reduction caused also since of the profit taking which is compared to an aftershock reaction in those pairs especially the USD/JPY. We might see a continuation of those the JPY tendency to strengthen however the reversal is waiting few steps a way.


Technical News

EUR/USD

The daily chart implies another test of the 1.3678 which may determine a new record . On the 4 H chart a stamping is reflected which might eventually become a reversal. Slow Stochastic crossed at 91 and Momentum at 101.324 with a negative divergence implying a clear bearish trend which is due to be establish. Going Long seems risky at this point.

GBP/USD

A 25 year record was broken yesterday and the 4H chart reflects more room to go . There are no signs for a reversal yet, however those will be shown when this aggressive bullish trend will be out of steam. Our opinion is that this reversal will take place in the next 8-12 hours and then we expect this pair to test 2.0063.

USD/JPY

The 4 H chart implies the end of the bearish trend and the reversal signal has already appeared so we expect this pair to test the 122.70..

USD/CHF

A reversal has taken place over the last 12 hours in the pair after the 4H charts provided signals as such. We expect the down-move to continue but only after a correction takes place. Look for 1.2150 to be tested in the next 24 hours.


The Wild Card

GOLD

After a 4 day uptrend, GOLD prices have been moving sideways. Forex traders may find themselves looking for a direction but without momentum, this will be difficult. Look for a clear reversal signal to support a downward move towards 650.

[FOREXYARD]

04/07/'07 - GBP & EUR Services PMI and US Independence Day.

Economic News

USD

Yesterday, the greenback continued on its downhill slide as further weak US data releases only exacerbated the recent vigorous dollar sell-off. The US Factory Orders figure released in negative territory at -0.5 %. Although this number beat the expected figure of -0.9 % it was still significantly lower than last month's figure of 0.5 %. Also the Pending Home Sales figure came in lower than expected at -3.5%. On the back of this negative news the US currency dipped to 1.3633 against the EUR before settling back to the 1.3603 level and remains within sight of a record low as investors are awaiting any hint from the ECB of when a future rate hike will occur. The greenback also continued to range trade at 26-year-lows against the sterling dipping to the 2.0195 level and then stabilizing at 2.0166. The dollar weakening versus the GBP can also be attributed to expectations that the Bank of England will raise its key interest rate on Thursday to 5.75 %. The potential increasing interest rate and growth differentials between the US and Europe is putting significant pressure on the dollar. Also, a major driver of the dollar weakness are concerns about the subprime mortgage market as a slowdown in the housing market could leave the Fed with little option but to cut the interest rate. Today, the US financial markets will be closed because of the Independence Day Holiday so there will be low liquidity during the New York session and the USD should continue to range trade at its low levels as all key market players will exercise caution ahead of Thursday's interest rate statements. After the announcement of these statements we may see the dollar begin to find some reprieve as attention will turn back to establishing when the Fed is likely to start adopting a softer stance for its monetary policy.

EUR

Yesterday, the European currency extended its gains against the dollar while remaining relatively stable against the rest of the majors. The bullish run of the EUR against the greenback can be mainly attributed to weak US data releases and the expectation of a European rate hike in September. The only significant data that came out of the Eurozone yesterday was the PPI that came out inline with expectations at 0.3% and the unemployment rate released at a slightly better than expected figure of 7.0 % which further helped boost the EUR.

Today, the only news expected out of the Eurozone is the Services PMI and Retail Sales figures but no major market movement is expected as attention shifts to Thursday's interest rate statement and Trichet's speech. The Eurozone interest rate is expected to remain unchanged at 4.0 % but traders will closely watch Trichet's speech for an indication of when a future rate hike will occur to tame the EU's inflation. They will lookout in particular for the use of the words ‘strong vigilance' which will be a clear signal to the market that there will be a rate hike in September to 4.25 % and this will give the EUR another upward shove with the possibility of breaking its record high against the USD. So the European currency will continue to range trade today all across the board with the next stage of volatility expected to occur on Thursday.

JPY

The JPY was little changed yesterday against the greenback as it drifted from the 122.43 level to 122.32. The yen also gained ground all across the board on the back of comments by the BoJ member Nishimura that hinted towards a future rate hike. It is also believed by many investors that the Bank of Japan will raise its benchmark rate to 0.75 % by the end of September. Volatility will pick up again on expectations of a rate hike in September especially in the USD/JPY currency pair as a rate increase can lift the demand for JPY. Also an increased level of volatility may render carry trades to be too risky thus having a positive effect on the JPY and currently there seems to be greater demand to sell the greenback and to buy the JPY. There was no significant data released from Japan yesterday so we cannot attribute the JPY's strength only to the hints of a future rate hike as investors were aware of other Japanese data releases that have indicated that the Japanese economy is not quiet ready for a rate hike in the near future. So it seems that a drop in carry trades was the main driver of the JPY strength and without any significant data to be released from Japan for the rest of the week the JPY will be influenced mainly by the demand for carry trades.


Technical News

EUR/USD

On the 4 H chart we can see a classic pattern of an opposite head & shoulders forming with a negative divergence. This pattern may signal that the market is gathering some new energy and another boost up after a consolidation period which is due to end. A Doji was established and after that a reversal took place. We are holding the thought that this pair will test the all time record high which is located at 1.3667 and may even determine a new one . Today going long will be the preferable strategy.

GBP/USD

In the long term, we are assuming that the bullish trend is out of steam and a reversal is expected to take place in the next 3 days. However ,today this pair is expected to maintain its strengthening and will determine a new all time record . Going long in the short term is preferable however taking this kind of action requires caution to support for the upcoming reversal.

USD/JPY

On the daily chart, a widening channel is observed and is currently testing the lower boundary ,if a breakout will occur the next barrier is located at 122.01 (61/8% Fibonacci retracement level),however if a breakout doesn't take place, the next price target is 122.73 (78.4 % Fibonacci retracement level).

USD/CHF

In the upcoming days we are expecting this pair to maintain its bearish behavior, however we are seeking a reversal, which still has not been observed despite the USD strengthening during the overnight session. This pair may test the 1.2187 level and then continue his bearish trend.
Going short looks preferable.


The Wild Card

Crude Oil

A bullish channel is establishing on the daily chart and it seems that Oil still has room to strengthen before a reversal will take place. Forex traders should be aware that going long now may be a good move, but need to watch the market closely since the reversal is waiting to gather enough energy before taking place.

[FOREXYARD]

05/07/'07 - GBP & EUR Interest Rate Statements.

Economic News

USD

Yesterday the USD experienced mixed results against its major counterparts as it gained some lost ground against the sterling and the JPY but fell back versus the EUR. There were no data releases from the US yesterday as the country celebrated Independence Day so traders were already looking ahead to today's release of the ISM Non-Manufacturing data and Friday's release of the US Unemployment Rate for the month June. The other news expected today is the Unemployment Claims which is usually not a market moving report and it will receive even less attention today as traders will focus their attention towards Friday's monthly employment report. The ISM Non -Manufacturing Index, which measures the health of a county's services sector, is expected to release lower than last month but if it surprises on the upside it may well provide some reprieve for the fledgling dollar.

However the direction which the dollar will take in the near future may very well depend on economic events occurring outside the US such as the release of key interest rate decisions from the European Central Bank and the Bank of England. Traders will also be shifting most of their attention to the speech by the ECB President Trichet for an indication of when the European economy can expect a future rate hike. The greenback should stay on its bearish path in the near future but with Independence Day in the US and the keenly watched US Non-Farm Payrolls Report due out on Friday investors were hesitant to drop the dollar lower for now. However the greenback will remain under pressure all across the board as the financial markets uncertainty is increasing and signs are developing of spill-over effects from the troubled subprime markets.

EUR

Yesterday the EUR extended its gains against the majors, it traded steady at 1.3621 against the greenback which was slightly below Monday's two month peak of 1.3638 but still within sight of April's record high of 1.3682. The European currency also rose to 167.00 verses the JPY heading back towards Tuesday's record of 167.19. In Eurozone news the Services PMI figure, which measures the activity level of purchasing managers in the services sector, released inline with expectations at 58.3 while the German Services PMI figure surprised on the upside releasing at 58.9, beating the expected figure of 58.1. However from an economic perspective not all was rosy for the EUR as the Retail Sales figure for May logged an unexpected decline releasing in negative territory at -0.5%. This negative data was not enough to pullback the bullish EUR run as traders shifted their attention towards today's interest rate statement by the ECB. The current market sentiment is that the ECB President Trichet will reinforce expectations of a future rate hike while keeping the present rate on hold at 4.0 %. If Trichet's speech is interpreted as hawkish it will bolster the EUR and we could see it once again target the record high against the greenback. So today we should see some volatility and the EUR will continue on its bullish surge as the ECB is widely expected to be hawkish and many investors believe that we may well see another rate hike in September to 4.25 %.

Elsewhere in Europe today the British Interest Rate Statement will be released and it is widely expected to increase to 5.75 % from the current rate of 5.5%. The GBP is maintaining its leader status amongst the majors with regards to outperformance particularly against the generally weaker dollar and the British currency should continue to move higher today particularly ahead of the BoE meeting.

JPY

Yesterday the JPY lost some ground against the greenback but it had a brief rally reaching the 122.27 mark before slipping back and stabilizing at the 122.60 level. There were no significant data released from Japan yesterday but earlier today in the Asian trading session the Japanese Leading Index, which measures a country's overall economic health, released below expectations at 30.0%. This weak data caused the JPY to further extend its losses. The JPY has been under sustained pressure in recent times as a result of the Bank of Japans 0.5 % policy rate, which is the lowest among the majors, and the central bank's repeated pledge to raise rates only gradually. Traders said strength in global stock markets was supporting investors to hold on to their risky positions like carry trades, in which low-yielding currencies such as the yen are borrowed to fund investments in higher-yielding currencies and this is the main driver of the JPY's bearish slide. Without any significant news to be released from Japan for the rest of the week and with carry trades still the name of the game with no indication of unwinding in the near future the JPY will continue to trade on a slippery slope.


Technical News

EUR/USD

On the 4 H chart we notice that the bullish trend is running ahead for this forex trading pair. The volatility is increasing. The price should continue to move upwards in a range of 1.3550 to 1.3650. As it stands, the bullish pressure will continue to gather momentum on the EUR USD pair today as well.

GBP/USD

On the 4 H chart, a rising wedge (bullish) is forming which may imply a continuation of the bullish momentum, it is recommended to time the entrance into market with short term charts, 2.0120 seems like a strong entry point. At the moment GPB USD is being traded around 2.0100 to 2.0180 range. The volatility is high and we should expect to see today bullish pressure on the GBP. The uptrend should continue to the 2.0200 resistance level.

USD/JPY

The USD JPY broke the 122.70 support level. USD JPY is in an uptrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands are tightened. We should expect to see today a continuation of the bullish configuration correction for this pair. 1H, 4H Elliott patterns imply that the USD JPY will continue to gather momentum. The target is expected at 123.19 for today, but it is recommended to take in consideration for the long run the weakness of the Japanese currency against the American Dollar for the future positions.

USD/CHF

The USD CHF is in a bearish configuration. The volatility is decreasing. USD CHF is moving without a trend and swings around exponential moving averages (EMA 50 and 100). Bollinger bands are tightened. 1H, 4H Elliott pattern imply a continuation of the bearish pressure. The target is expected at 1.2100


The Wild Card

EUR/GBP

On the 4 H chart, a rising wedge (bullish) is forming which may imply a continuation of the bullish momentum, 0.6745 seems like a strong entry point. At the moment EUR GBP is being traded around 0.6730 to 0.6780 range. The volatility is high and forex traders should also expect to see today bullish pressure on the EUR GBP. The uptrend should continue to the 0.6769 resistance level.

[FOREXYARD]

09/07/'07 - UK PPI Input & Output.

Economic News

USD

The Strong ADP release on Thursday which exceeded expectations and was released at 150K new jobs, set the bar high for the change in Nonfarm Payrolls on Friday. Although the NFP indeed released higher than expected at 132K, it did not push the Greenback to far ahead, and the market's reaction was very soft, and against several currencies it took the USD moved down. Most of the other data that came from the US last week was strong, and surprisingly enough, had minimum effect, especially against the EUR. This week the US calendar will be very light, with events expected on Thursday and Friday like the US Trade Balance, Retail Sales, and Consumer Sentiment. As for today the US Consumer Credit is expected to be released (17:00 GMT) at 6.4B, with a previous release of 2.6B, and although the expectations are very high, it will probably not generate too much market movement, as most of the important news today is expected to come from Europe. The Greenback will probably be subjected to range trading this week, and will not make the significant break with the lack of major news to push it up again.

EUR

The European market demonstrated its strength on Friday as all of the news releases came out stronger than expected. The UK Industrial Production came out at 0.6% with expectations for 0.3%. The Manufacturing Production was released slightly higher than expected at 0.4%. The German Factory Orders soared to a much higher than expected 3.2% and rose from negative territory of -1.6%. All these positive figures managed to keep the European currencies very strong against the USD even after a stronger than expected release of the US Nonfarm Payrolls.

The most important release expected from Europe today will be the UK PPI Input and Output, at 8:30 GMT, the more important of the two is the Input figure which measures the rate of inflation experienced by manufacturers when purchasing goods and services. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.

JPY

There were two news releases during last night's Asian session, the first was Core Machinery Orders which came in at a much higher than expected 5.9%, and the second was M2+CD Money Supply which moderately exceeded expectations and was released at 1.8%. The positive news did not stop the JPY's weakening effect and with most of the JPY crosses regaining the uptrend, and with EUR/JPY still trading at record highs, it looks as if the carry trades are back in play, with steaming momentum. The fact the interest rates in Europe and the US are expected to remain unchanged in the near future, carry trades will not be affected, and will probably continue.


Technical News

EUR/USD

The pair is consolidating around 1.3625 which proves to be a strong resistance, and it looks like it is going to hold for now. The daily charts are bearish, and the hourlies are neutral. The 4 Hour chart is showing a bearish cross on the slow stochastic, indicating that a reversal might be imminent.

GBP/USD

After a choppy session at the end of last week, and levels that are floating at 30 year highs, it looks as if the momentum is still up. The daily charts are bullish, and the hourlies are extremely overbought. A preferable strategy might be to wait for the hourlies to unwind, before taking a course of action.

USD/JPY

With the uptrend regaining momentum, and very bullish daily studies, the bias is up, with plenty of room to run. The hourlies are supportive of the bullish notion, and it looks as if the next target price is 124.30.

USD/CHF

After bottoming at 1.2100 last week, and then rebounding to the 1.2180 levels, the pair seems to have small price movement. All studies are showing mixed signals as the daily charts are showing bearish momentum, and the 4 Hour chart is showing the forming of an upward channel. A preferable strategy would be to wait for a clearer signal, and keep out for now


The Wild Card

EUR/JPY

The pair is trading at an all time high and showing no signals of a pause. All indicators are supporting the bullish notion, and the daily RSI indicates that the trend is steaming up more than ever. This provides those trading forex online with the opportunity to join in on a very strong up trend with high profit potential.

[FOREXYARD]

10/07/'07 - Bernanke in pursuit of deliberate Monetary Policy strategy?

Economic News

USD

US consumer credit leapt $12.9bn in May, going against market expectations of $5bn - $8bn. Even though part of the increase was seasonal, the strong data (focused in revolving credit) shows that consumers are on aggregate so far unfazed by the housing threat.

Yesterday, USD currency trading was relatively mild against most of majors, largely attributed to the absence of data out of the U.S. economy. However, the USD continued to remain pressured with expectations that the Federal Reserve will hold rates for the remainder of the year, whilst other respective central banks are foreseen to be tightening. In other news, Friday's robust jobs report was not enough to reverse the recent trend of narrowing interest rate advantage for the dollar over major European currencies, which has eroded demand for the greenback according to analysts. Crude oil touched 11 month highs during the intra day of trading with a high of US$76.32. Overall, oil rose by US$0.16 a barrel to US$75.78. Looking ahead, plenty of attention will surround Federal Reserve Chairman Bernanke today, who is expected to talk about inflation at 17:00 GMT.

EUR

Ger May industrial production rebounded 1.9% (s.a.) in May (4.6% yr) after falling 2.1% in April. Manufacturing was up 2.3% (6.1%yr) while construction rose only 0.3% (-3% yr). Ger May current account surplus was €9.6bn versus €4.9bn in the same month last year. The number is not all due to a stronger trade balance, but rather also reflects that German companies are investing abroad rather than domestically.

Ger May trade balance was €17.5bn, a little stronger than expected. Although exports fell 0.8%, imports declined by 3.6%. A positive net exports contribution to Q2 GDP looks likely.Yesterday, the EUR was steady against the USD. The German Trade Balance came in better than expected at 17.6 bln (Forecast: 16 bln), both imports and exports were lower, but the larger drop in imports drove the overall trade surplus higher. yet did little to move the EUR out of its tight range trading against the USD.

Industrial production for the same month was right in line with expectations, but the April figures were revised higher. With only French and Italian industrial production due for release today, the EUR should move almost exclusively on the market's reaction to US Fed Chairman Bernanke's comments on inflation pressures. Additionally, yesterday the GBP continued to trade steadily above the 2.0000 levels despite PPI Core Output slightly down on expectations only maintain the GBP strengthen against the majors.

UK Jun PPI output prices rose 2.4%yr, unchanged from May. Input prices rose 2.1%yr. The BoE is concerned about firms raising their output prices in order to widen margins, but may take some comfort from the slowest m/m increase in output prices in 6 months (0.2%). Today traders Looking ahead for key data out May's Trade Balance of the UK will be released,and with forecasts the figure will be released at -6.6 bln (Prior: -6.32 bln) we may be witnessed for a reduction of the GBP against the majors.

JPY

Since the publication of the US non-farm payrolls last Friday, the Japanese Yen has continued to fall to new record lows against the EUR and decade or multi-decade lows against other currencies.

Yesterday, at 0:50 GMT the Core Machinery Orders data was published in Japan. 5.9% Vs. 2.2% compared to April. The Core Machinery Orders rose for a second straight month in May, helped by strong growth in orders for electrical machinery. The index doubled itself, more than expected, and according to that fact; Japanese stocks rose to new 7-Year highs. But at the same time trade volume remained moderately slow, with 1.7 billion shares changing hands on the Tokyo exchange's first section, below last year's daily average of 1.9 billion shares. Advancing shares beat decliners by a ratio of more than two to one.

The Core Machinery Orders data has a high importance to the Japanese economy, due to the fact that Machinery orders are widely regarded as a leading indicator of corporate capital investment, which accounts for about 15% of Japan's gross domestic product (GDP).

Many central banks expect the Bank of Japan to raise its interest rate target to a 12-year high of 0.75% in August from 0.50%, after elections for parliament's upper house. Meanwhile, the top monetary policy official of Japan's ruling party said on Monday that current economic conditions do not warrant an interest rate hike in August, countering market expectations of a central bank move next month, as it seems at the moment the JPY will continue to suffer and will stay low against most of the other currencies even if the Bank of Japan lifts its key rate. The Japanese central bank is widely expected to leave interest rates on hold at this week's meeting.


Technical News

EUR/USD

On the 4 H chart we notice that the bullish trend is running a head. The volatility decreased and the EUR/USD is in consolidating after it broke the 1.3610 resistance level. The price should continue to move upwards in a range of 1.3550 to 1.3630. As it seems, the bullish pressure will continue to gather momentum also today.

GBP/USD

On the 4 H chart, a rising wedge (bullish) is forming which may imply a continuation and as such, its recommended to time the entrance to the market with short term charts, 2.0120 seems like a strong entry point. At the moment the pair is being traded around 2.0100 to 2.0200 range. The volatility is low, we should expect to see bullish pressure on the GBP. The uptrend should continue on 2.0200 resistance.

USD/JPY

The USD/JPY broke the 123.20 support but immediately rebounded. USD/JPY is in a downtrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands have tightened. We should expect to see a bearish configuration. 1H, 4H Elliott pattern implies that the USDJPY will continue to gather momentum. The target is expected at 122.90

USD/CHF

The USD CHF is in a bearish configuration. The volatility has decreased. USD/CHF moves without trend and swings around exponential moving averages (EMA 50 and 100). Bollinger bands have tightened. 1H, 4H Elliott pattern implies a continuation of the bearish pressure. The target is at 1.2135


The Wild Card

EUR/JPY

The EUR/JPY broke 167.82 support. USD JPY is in a uptrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands have tightened. We should expect to see also today a bullish configuration. Forex 1H, 4H Elliott pattern implies that the USD JPY will continue to gather momentum. The target is expected at 168.25

[FOREXYARD]

11/07/'07 - ECB President Trichet to speak today.

Economic News

USD

Yesterday, the greenback went on a downward freefall as it reached a new record low against the EUR and the sterling. The USD slipped to 1.3785 against the EUR, which is its lowest level against the European currency since it's debut in 1999, before stabilizing at the 1.3735 mark. The USD also fell to the 2.0290 level versus the sterling, the drop was exacerbated by the stronger than expected British Retail Sales figure. The dollar weakness can be attributed mainly to investor's worries about the troubled US housing sector and that any positive outlook is set to go down the tubes. Investors' worries hit a crescendo yesterday as a result of the news that the S&P were planning on downgrading $12 B of US subprime mortgage bonds and to make matters worse there was $5 B of bond downgrades from the worlds' leading company for credit ratings called Moody's. Subprime mortgage loans are those made to people with questionable debt repayment records and this news of downgrading such large amounts of subprime mortgage bonds left investors questioning whether there is any light left at the end of the tunnel for the US housing sector. The other factor that was a major contributor to the greenback's tumble was the discouraging growth forecasts from key U.S. retailers and homebuilders. In addition Fed Chairman Bernanke did not mention in his speech yesterday anything specific about the future course of interest rates and he did not reiterate the central bank's mission of fighting inflation.

Today is relatively light on news without any significant data releases from Europe and the US so we should see the greenback consolidate slightly before once again being pulled into the bear's claws as the dollar's dwindling interest rate advantage over the EUR coupled with the problems in the US housing sector is putting a stranglehold on the greenback.

EUR

In Eurozone news yesterday, French industrial production for the month of May rose by less than expected to 0.4% m/m, and declined by more than expected to -0.3% y/y. Manufacturing production also rose by less than expected to 0.1% m/m and declined by more than expected to -0.8% y/y. The decline in industrial production was the result of a contraction in the auto industry, which declined to -2.1% in May from 1.2% in April. However, yesterday's weak data was not significant enough to have any sort of impact on the EUR, but nevertheless there was plenty of volatility and some sharp movements in the market as the EUR strengthened against most of the majors particularly against the USD on the back of investors concerns over the US economy.

The European Central Bank is going to hike rates at least two more times this year and U.S. bond yields are falling, giving no incentive for large global investors to hold dollars so there is nothing to hold back the EUR bullish rampage. Today is relatively light on currency trading news so the EUR will range trade for extended periods at its current record levels and it should continue on a steady rise from now on instead of the sharp increases that we saw yesterday.

JPY

In yesterday's news, Japan's current account surplus rose for the 5th straight month releasing at 2.23T, beating the expected figure of 1.99T. The main reason for the strong rise in the current account surplus over recent months was the fact that returns on overseas investments have climbed very sharply. The consensus seems to be that yesterday's current account data solidified expectations that the Bank of Japan could raise interest rates as early as August. In other news yesterday the Corporate Goods Price Index, which measures the rate of inflation experienced by corporations when purchasing goods, released slightly higher than expected at 2.3% beating the expected figure of 2.2%. The JPY went on a long overdue rally yesterday particularly versus the greenback as it rose from a low of 123.41 to 120.95. The current JPY strength can be mainly attributed to the drop in bond yields and US stocks which are causing carry trades to unwind. Today the JPY will continue it's resurrection as investors will be hesitant to employ the carry trade strategy due to the current US economic concerns and as a result of the carry trade unwind we should see the JPY surge further forward.

Tomorrow we may see some more JPY volatility as the BoJ will announce its benchmark interest rate which is expected to remain unchanged at 0.5%. However investors will focus their attention on BoJ Governor Fukui's speech for some indication of a future rate hike.


Technical News

EUR/USD

The daily chart implies on gathering new energies for another all time record high, however on the 4 H chart an upcoming reversal is expected when Slow Stochastic have a negative divergence, we are expecting this pair to test the 1.3708 level Fibonacci level (76.4%) before the next record will be determined.

GBP/USD

The extreme bullish trend seems to still have steam in it as the daily chart reflects another GBP strengthening . Slow Stochastic crossed at 44 implying on the strength of the GBP and maintain our speculations of another strengthening in the long term. On the 4 H chart we will might see a mild correction which will test the 2.0231 Fibonacci level (76.4%) thereafter, then going long may be preferable .

USD/JPY

The daily chart is clearly bearish with still much room left ahead Slow Stochastic has negative divergence which will carry this pair to test the 120.91 Fibonacci (50%) in the upcoming days. On the 4 H chart it can be observed that today this pair will test the 121.60 before continuing his bearish movement. Today ,going long might be preferable.

USD/CHF

On the 4 H chart an upcoming reversal is expected when Slow stochastic crossed at 13 which is clearly in oversold territory. However we think that the USD will still maintain its weakness against the CHF and might test the 1.1980 in the upcoming weeks when the weekly chart is clearly bearish. Going short for long term may be the preferable strategy.


The Wild Card

USD/CAD

On the 4 H chart 3 bullish waves have been observed and the third wave has not completed yet and there is still much room left for it. We expect this forex pair to test the 1.0604 Fibonacci (76.4%) level . In case of a breakout this pair will consolidate at 1.0651 . Today ,going long seems to be the preferable strategy.