| Forex News Center | | | Forex News Archive |
Friday, 22 Aug 2008
Will The USD Continuse Its Bearish Voyage Today?
Yesterday, the greenback saw bearish trends against its rival currencies as renewed worries about home funding giants Fannie Mae and Freddie Mac ignited a rally in the debt prices of the two companies on Thursday, pushing the USD further down against its rivals.
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  | |  | | | |
| Weekly Trend | | | | | | |
| Resistance | 1.4955 | 1.8830 | 109.70 | 1.0970 | 0.8865 | 0.8010 |
| 1.4935 | 1.8810 | 109.50 | 1.0950 | 0.8845 | 0.7990 | |
| 1.4905 | 1.8780 | 109.20 | 1.0920 | 0.8815 | 0.7960 | |
| Support | 1.4845 | 1.8720 | 108.60 | 1.0860 | 0.8755 | 0.7900 |
| 1.4815 | 1.8690 | 108.30 | 1.0830 | 0.8725 | 0.7870 | |
| 1.4795 | 1.8670 | 108.10 | 1.0810 | 0.8705 | 0.7850 |
Economic News
USD - Weakest day for the USD in five days
Yesterday, the greenback saw bearish trends against its rival currencies, retreating from this week's eight-month highs versus a basket of currencies. The greenback was greatly affected by an unexpectedly rise of Crude Oil prices and constant worries of the U.S. financial sector which tumbled the USD and set it on track for its worst one day fall in five months. The USD fell as low as 104.14 vs. the JPY and was traded against the EUR at 1.4906 from 1.4742 on late Wednesday.
In the beginning of the trading session, the USD rose against the EUR and the JPY as data that was released showed that Initial jobless claims fell last week to 432k, and the Philadelphia Federal Reserve August Business Index improved to -12.7 from -16.3 in July. However, renewed worries about home funding giants Fannie Mae and Freddie Mac ignited a rally in the debt prices of the two companies on Thursday, pushing the USD further down against its rivals. Investors are following closely the performance of these companies as growing expectation continues over how government intervention will support the two largest U.S. home funding companies and whether it will succeed in this rescue plan.
Today, we don't expect significant economic data to come out from the U.S. economy. The only exceptional news event will be a speech by Federal Reserve Chairman Ben Bernanke. Bernanke will give a speech about financial stability at the Federal Reserve Bank of Kansas City Economic Symposium. High volatility is expected during his speech as a hawkish stance will likely remain in the subject of rising concerns about the inflation.
EUR - Traders' dilemma, is the EUR headed for a slowdown in growth or a full recession?
The EUR finished yesterday's trading session with mixed results versus the major currencies. The 15-Nation currency saw gains versus the greenback and was last up 1.0% at 1.4888. Against the JPY, the EUR was 0.2% down at 161.55. Economists are predicting that the EUR will fight to regain the 1.50 area versus the USD after ECB announcements that recent economic data shows that a slower growth in the Euro area is expected rather than a recession as many feared.
Regarding the economic data released from the Euro economy yesterday, traders saw that French and German Flash Manufacturing PMI fell to 45.1 and 49.9 respectively, clearly indicating a contraction on the industry and contradicting ECB statements. The French and German Flash Services PMI were also released, showing on the French side a slight increase to 48.5 and a reading of 50.6 on the German economy. Finally, the Flash Manufacturing PMI came out at 47.5 and the Euro Services PMI edged down to 48.2 in August from 48.3, the lowest since June 2003. The results show that the figures are not as good as expected keeping alive fears of recession for the EUR economy this year.
Today we can expect only a couple of indicators coming from the Euro-Zone. At 8 GMT we have the Current Account which measures the difference in value between imported and exported goods, services, income flows, and unilateral transfers. One hour later we have the Industrial New Orders which measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods. Look for high volatility in the EUR's trade movements in and around the economic data releases.
JPY - Traders retreat to the JPY for risk aversion following the USD's bearishness
Yesterday, the JPY saw bullish trends against most of its major counterparts with the help of renewed concerns of the U.S. financial system, which caused an avalanche on carry trades. The JPY strengthened from mounting risk aversion as heightened fears in the American financial sector prompted investors to sell dollars. In early trading in New York, the USD was down 1.3% vs. the JPY at 108.35, and the EUR was down 0.5% vs. the JPY at 161.08.
Yesterday, during the Monetary Policy Meeting Minutes, the Bank of Japan warned about further rise in global inflation caused by a rise in international commodity prices. Also, another factor of the crisis which the board members pointed to is a slowdown of the U.S. economy and disruptions in the global financial markets. They also warned about further deceleration of exports, which have supported the recovery of the Japanese economy in recent years.
Today, there is no economic news expected to be released from Japan, however, we should see active JPY trading in response to key U.S and Euro-Zone data releases. The near term outlook for the JPY remains quite bullish as a U.S. economic redemption is unlikely to occur anytime soon. Therefore, traders are advised to follow U.S. data and Euro-Zone news with extra precaution today as they will mark future's JPY behavior.
Oil - The Russian-NATO tensions spark a jump in Crude Oil prices
The Crude Oil prices was a very bullish trading session yesterday as the price of a barrel rose above $121. Prices jumped more than $5 as traders were worried about the tensions between NATO and Russia, which could disrupt supplies to the West. Tensions with Russia reached a high as the U.S. and Poland signed a deal Wednesday to place a U.S. missile defense base just 115 miles (180 kilometers) from Russia's border, while Russian forces are still located deep in Georgia.
Effects of the war between Georgia and Russia were felt as BP PLC shut down its Baku-Supsa oil pipeline, which runs through the center of Georgia from Baku in Azerbaijan to Supsa on Georgia's Black Sea coast because of security concerns. With a capacity to pump up to 150,000 barrels a day, this oil line had recently been pumping around 90,000 barrels a day because of the tensions between the two countries. Trades should keep Bernake's speech on tap as USD volatility could affect the Crude Oil prices and of course pay attention to international news events as they have been the main cause of bullishness for the Crude Oil recently.
Technical News
EUR/USD
The Slow Stochastic and the RSI on the daily chart are showing a continuation of the current bullish correction. There is a very accurate bullish channel forming on the 4 hour chart. In addition all indicators on the hourly chart are pointing up. Going long might be the right choice today.
GBP/USD
After the recent bearish trend the cable consolidates arround the 1.870 level. However, a bullish momentum on the daily chart's Slow Stochastic suggests that the resumption of the general bullish movement is imminent. A bullish cross on the hourly chart's Slow Stochastic is indicating that the upwords move is impending. Going long might be the right choice today.
USD/JPY
The sharp bearish move that took place during the past couple of days seems to have more steam in it. The RSI on the daily chart is crossed above the 50 line, suggesting that the pair may fall further. The bearish move on the daily's Slow Stochastic also supports this notion. Next target could be 108.50
USD/CHF
The daily chart shows that the pair has been range-trading this week. However, a bullish cross on the 4 hour chart's Slow Stochastic, suggests that a bullish move is imminent. Going long with tight stops appears to be preferable.
The Wild Card
Crude Oil
The bullish move which was initiated this week seems to be galloping in full speed. And now, all oscillators are indicating the continuation of the bullish momentum. This might be a great opportunity for forex traders to join a very promising corrective trend.
| Date | Time | $€£¥ | Event | Per. | Prev. | Fore. | Act. | Imp. |
|---|---|---|---|---|---|---|---|---|
| 12/05 | 11:00 | EUR |  German Factory Orders | m/m | -8.0% | - | - |  |
| 12:00 | CAD | Employment Change | 9.5K | - | - | | ||
| 12:00 | CAD | Unemployment Rate | 6.2% | - | - | | ||
| 13:30 | USD | Non-Farm Employment Change | -240K | -268K | - |  | ||
| 13:30 | USD | Unemployment Rate | 0.2% | 0.2% | - | | ||
| 20:00 | USD | Consumer Credit | 6.9B | 2.3B | - |  |
Dansk
Deutsch
Español
Suomi
Français
Italiano
Português
Русский
Svenska
عربي
中国
中文
Forex Ticareti