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Thursday, 31 Jul 2008

Full Day of Fundamental Data Looks to Provide Volatility

Yesterday, the greenback saw mainly volatile sessions against its currency counterparts. After the significant appreciation the USD went through on Tuesday, it managed to preserve its relatively high rates.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndowndownnodownup
Weekly Trenddowndownnoupdowndown
Resistance1.56551.9875108.501.05400.95010.7950
1.56281.9850108.331.05160.94750.7925
1.56001.9822108.191.04900.94500.7899
Support1.55601.9783107.751.04480.94080.7865
1.55321.9750107.511.04230.93820.7841
1.55061.9724107.271.04000.93500.7820

Economic News

USD - Will US Economy Continue to Produce Positive Data?

Yesterday, the greenback saw mainly volatile sessions against its currency counterparts. After the significant appreciation the USD went through on Tuesday, it managed to preserve its relatively high rates.

The USD kicked off yesterday's trading session with an unexpected boost, as Automatic Data Processing announced that July's Nonfarm Employment Change report showed a gain of 9,000 jobs in the private sector, well above expectations for a loss of 58,000 jobs. The USD then rose to a 4 week high against the EUR, as the EUR/USD dropped to 1.5523. However, soon after, a dramatic rebound in Crude Oil prices took place. Oil rose by $4 a barrel, crossing the $127 level, and drove the USD back to its original rate before the Employment Change publication.

Today has the makings for a huge news day in the US and for the Greenback. At 12:30 GMT we will likely see strong volatility, as 4 different leading indicators are due. The most important of the events will be the Advanced Gross Domestic Product, which is forecasted to reflect a 2.2% raise as opposed to the same time last year. Another significant indicator will be the U.S Unemployment Claims that are expected to decrease from 406K in the previous week, to 395K.

As most of today's U.S data is expected to give positive figures, traders must keep in mind that tomorrow the Nonfarm Unemployment Change, one of the most influencing USD indicators, is forecasted by analysts to show an increase of 75,000 jobless individuals. Such results should outcome in a massive volatile session in the next couple of days as markets should experience large fluctuation which could deliver some fantastic opportunities to gain profits. Traders are well advised to take advantage of it and end this week with nice profits.

EUR - EUR Looks to Rebound From Declining Consumer Confidence Numbers

Yesterday was a day of volatile sessions for the EUR. The EUR started the trading day the same way it ended the previous one, continuing to depreciate. However, later on it managed to bounce back to finish the day with similar figures to the ones at the beginning of the day.

The sole event that was published from the Euro-zone yesterday was European Consumer Confidence. The survey showed that the consumer confidence has declined to a 5 year-low, further questioning the European Central Bank's ability to execute an interest rate hike, as fears of inflationary pressure are consistently aggravating.

Looking ahead to today, the German Unemployment Change is expected to reflect a continuation in the improvement of the Euro-zone's strongest economy employment condition, as analysts forecast it to decrease by 20K jobs, following May's 38K reduction. Later on, the Consumer Price Index Flash Estimate is expected to show a stable growth of 4.1%, and the European Unemployment Rate is forecasted to remain at 7.2%.

Today the EUR might finally see some signs of strengthening for the first time since the beginning of the week. Yet it seems that even though the EUR should be supported by positive financial indicators, another day of cheering data from the U.S will probably prevent it.

JPY - Foreign Influence Over the Yen will Likely Continue Today

Yesterday, the JPY underwent volatile sessions against most of its major currency rivals. The JPY was predominantly influenced by the other major currencies' behavior, such as the USD and the EUR, which experienced similar sessions as well.

It seems that the unfortunate news just keep coming for the Japanese economy. In addition to the 0.6% decline in the Japanese Average Cash Earnings in June from the previous year, making it the first fall since December, the International Monetary Fund (IMF) had cut the expected growth in the Japanese economy to 1.5% in 2008 and 2009 as well. The IMF has also suggested that the Bank of Japan's chiefs will avoid making any interest rates cuts for the time being, as the Japanese interest rate is the lowest in the industrial world at 0.5%, and will wait to follow future developments.

Today, the JPY will be absent from the economic calendar, and traders are advised to follow global developments, as the USD and EUR are likely to determine JPY's movements for today.

Oil - Oil Rebounds on Unexpected US Gasoline Stockpile

World oil prices steadied during the Asian trade on today after a rebound of more than 4$ driven by an unexpected decline in US petrol stockpiles. Oil futures rebounded as an unexpectedly large draw in petrol inventories underscored the resilience of US demand.

Oil prices surged as high as $127.39 a barrel, their highest intraday level in 6 days, as technical traders rushed to cover short positions. The charge was triggered when futures prices crossed a key technical level of $123.75. The turnaround was sparked by US crude oil inventories data. Traders saw the decline in petrol inventories as an indicator of resilience in US demand, suggesting crude demand would also firm.

Oil prices have doubled over the past 2 years but have fallen from record highs of $147 a barrel earlier this month. If the USD continues to strengthen and the geopolitical situation improves, then the long-term prices will probably reach $90.

Technical News

EUR/USD

The Slow Stochastic on the 4 hour chart is pointing up. On the hourly chart the Bollinger Bands have narrowed indicating the upcoming volatility. Hourly chart's Slow Stochastic also supports that bullish notion. Going long appears to be preferable today.

GBP/USD

The negative slope on the daily chart's RSI and Slow Stochastic continues. In addition this conception is supported by the 4 hour chart; where the Slow Stochastic seems to reverse to a negative course as well. Going short with tight stops appears to be the preferable strategy.

USD/JPY

After showing a consistent bullish momentum for a while, the daily Slow Stochastic is now showing signals of a falling correction. All indicators on the 4 hour chart also support this bearish notion. Going short with tight stops seems like the right choice today.

USD/CHF

Although the pair is showing a violent and choppy session on many occasions, the daily chart is still floating on very neutral territory with no distinct price direction. The 4 hour chart is slightly hinting on a bullish direction yet it is advised to wait for a strong signal and swing in.

The Wild Card

Crude Oil

The fresh bullish rally occurred yesterday, and it appears that the Oil shows no signs to halt. The hourly, 4 hour and daily charts oscillators are pointing up and the momentum might be even stronger. This is an excellent opportunity for forex forex traders to join a strong trend that still has a steam in it.

Current Time: 04/20 03:49 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
04/21
15:00USD+ CB Leading Index m/m0.5%0.8%-1
04/22
01:00AUD+ CB Leading Index m/m0.2%*-3
13:30CAD+ Wholesale Sales m/m0.8%0.7%-3
14:00USD+ HPI m/m0.5%0.6%-1
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