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Thursday, 26 Jun 2008
USD Expected To Rebound After Bernake's Speech Yesterday
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  | |  | | |  |
| Weekly Trend | | | | | | |
| Resistance | 1.5704 | 1.9801 | 108.79 | 1.0450 | 0.9651 | 0.8000 |
| 1.5680 | 1.9773 | 108.56 | 1.0426 | 0.9625 | 0.7972 | |
| 1.5661 | 1.9740 | 108.30 | 1.0399 | 0.9598 | 0.7956 | |
| Support | 1.5623 | 1.9705 | 108.01 | 1.0360 | 0.9556 | 0.7902 |
| 1.5600 | 1.9680 | 107.74 | 1.0338 | 0.9530 | 0.7880 | |
| 1.5575 | 1.9656 | 107.42 | 1.0309 | 0.9501 | 0.7855 |
Economic News
USD -
The USD lost over 100 points in trading yesterday against the Euro. The pair ultimately closed at 1.5665. Except gaining vs. the JPY, the US dollar lost versus the rest of the major currencies yesterday. A possible explanation for this general deprecation of the greenback can be found in yesterday's news events. The FOMC Statement was less hawkish than expected after the Fed decided to leave interest rates unchanged at 2.00%. To demonstrate this, here is an example of assertions that were made during the FOMC Statement by the Fed: "uncertainty about the inflation outlook remains high" and "the upside risks to inflation and inflation expectations have increased". The balance of risks is shifting and the USD will continue to be under pressure for as long as the "inflation situation" remains unclear.
Yesterday's fundamental data came out with mixed results bringing no relief for the US dollar. The Core Durable Goods Orders and Durable Goods Orders came in as forecasted at -0.9% and 0.0% respectively. Though the Durable Goods Orders demonstrated a rising trend, the more essential Core Durable Goods Orders displayed a declining trend. On the other hand, the Crude Oil Inventories grew from -1.2m to 0.8m. The closing event of the day was the Federal Funds Rate which, as explained above, remained unchanged at 2.00%.
Today should be calmer than yesterday as fewer affecting events on the greenback will be published. The final GDP should rise by 0.1%. The Unemployment Claims should shrink by 6k. The vital Existing Home Sales indicator might rise by 0.7M. The Natural Gas Storage is expected to be released as well. On the whole, the USD should be on the rise as it is implied by the impending indicators of the day.
Today, investors might need to be ready to take the opposite position from yesterday. The reason for this is the new direction that can be derived from the indicators. Thus going long on the USD could be a good strategy today.
EUR -
During yesterday's trading session, the EUR strengthened versus most of the major currencies. Overall this intensifying change can find support for yesterday's news events. The Italian Retail Sales came in lower than forecasted at 0.0%. The main bullish support came from ECB President Trichet's speech yesterday which focused mainly on the expected inflation increase, the real GDP growth and their decision to keep future Interest Rate unchanged. He said that while the ECB may raise interest rates at its July 3 council meeting, it was not said that he envisages a series of rate hikes. These forecasted changes by the ECB President were the main source of the strengthening effect on the EUR.
Today will be a slow news day for the Euro-economic-zone. Only two insignificant indicators are expected to be issued. The German Import Price Index should rise by 0.6% to 1.5%. And the M3 Money Supply is forecasted to come in at 10.4%. As a result, traders should pay intention to news from the EUR counterparts, especially the batch of major releases from the U.S. before placing transactions.
JPY -
The JPY finished yesterday's trading session with conflicting results. The most notable change was the Yen's loss of 90 pips to the Euro; however the JPY increased in value against the USD and the GBP. Yesterday, there were no indicators published from Japan. Consequently, the direction of the Yen emerged from its counterparts.
Today will be a relatively eventful day for the JPY as many indicators will come to light. The central figures of the day are the Tokyo Core CPI, the Industrial Production and the Retail Sales. The Core CPI should rise to 1.1% and the Industrial Production should rise to 2.5%, therefore both are projected to help strengthen the Japanese currency. On the other hand, the Retail Sales gauge should decrease to -0.1%. The nonessential figures of the day on the Japanese calendar are the National Core CPI, the Overall Household Spending and the Unemployment Rate. The National Core CPI and the Overall Household Spending should rise to 1.3% and -2.0% respectively. However, as was previously mentioned, these figures' printings are not expected to have a serious impact on the Yen.
Investors, today, may consider a strategy that emphasizes a direction that is derived from the indicators being published from Japan.
-
Technical News
EUR/USD
The pair has made a substantial bullish correction, and is now floating around a key Fibonacci level 1.5630. The Slow Stochastic indication on the 4 hour chart is showing no crosses and the RSI suggests the constitution of the correction. It appears that a test of the key Fibonacci level 1.5700 might be quite imminent.
GBP/USD
The daily chart is showing that the pair still does not have a distinct direction, as the chart appears to be quite horizontal for the past month. The Bollinger Bands are tight, and the 4 hour Slow Stochastic is showing a bearish cross. It appears that the possible next move might be a bearish one. In that case traders are advised to swing in after a breach.
USD/JPY
According to the daily chart the stable bullish movement this pair has been showing since mid March is still intact. However, the hourlies and the 4 hour chats show that the typical range trading continues with both the hourly RSI and Slow Stochastic are floating in neutral territory. Forex traders are advised to wait for a clearer signal before entering the market n this pair.
USD/CHF
After several failed attempts to breach through the 1.0300 support level on the hourlies, it appears that the pair might make an additional attempt of a break. If and when a breach of that level occurs, it will most probably unleash an intensive follow-up bearish trend that might be targeted at 1.0000 at its lowest point. Going short appears to be preferable today.
The Wild Card
GBP/JPY
The pair has been moving within a very accurate bullish channel with very strong momentum for 3 and a half months now. The RSI is floating low, indicating that there is still a lot room for the bullish move. The hourlies also support that notion, however according to it; the uptrend is much more restrained as volatility is quite low. Forex traders have a good opportunity to take advantage of an ongoing uptrend with high profit potential.
| Date | Time | $€£¥ | Event | Per. | Prev. | Fore. | Act. | Imp. |
|---|---|---|---|---|---|---|---|---|
| 10/16 | 07:15 | CHF |  Retail Sales | y/y | 6.2% | 0.9% | - |  |
| 08:00 | EUR | Italian Trade Balance | 2.07B | -1.20B | - |  | ||
| 09:00 | CHF | ZEW Economic Sentiment | -44.4 | * | - | | ||
| 12:30 | CAD | Manufacturing Sales | m/m | 2.7% | -0.7% | - | | |
| 12:30 | USD | Core CPI | m/m | 0.2% | 0.2% | - |  | |
| 12:30 | USD | CPI | m/m | -0.1% | 0.1% | - |  | |
| 12:30 | USD | Unemployment Claims | 478K | 469K | - | | ||
| 13:00 | USD | TIC Long-Term Purchases | 6.1B | 28.0B | - | | ||
| 13:15 | USD | Capacity Utilization Rate | 78.7% | 78.0% | - | | ||
| 13:15 | USD | Industrial Production | m/m | -1.1% | -0.7% | - | | |
| 14:00 | USD | Philly Fed Manufacturing Index | 3.8 | -9.0 | - | | ||
| 14:35 | USD | Crude Oil Inventories | 8.1M | 1.9M | - | | ||
| 14:35 | USD | Natural Gas Storage | 88B | - | - | | ||
| 17:00 | USD | NAHB Housing Market Index | 18 | 17 | - | | ||
| 23:50 | JPY | Tertiary Industry Activity Index | m/m | 1.2% | -0.8% | - | | |
| 10/17 | 00:30 | AUD | Import Prices | q/q | 1.4% | 0.5% | - |  |
| 06:35 | JPY | BOJ Governor Shirakawa Speaks | * | * | * | |
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