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Wednesday, 28 May 2008
High Volatility Dominates Ahead of the U.S Durable Goods Orders.
Yesterday, the greenback saw bullish trends against most of its major counterparts. The EUR\USD went as low as 1.5670, gaining additional 90 pips vs. the EUR. Accordingly, the USD gained against the rest of the major currencies.
A large portion of data was delivered yesterday from the US markets. The National Home Price Index decreased by 14.4% to the 172.12 level concluding a 15 straight months of yearly declines. However, the New Home Sales report reflected a 3.3% increase, from 509K on March to 526K on April. The report also showed that the median price of new homes in April was $246,100, up 9.1% from March. Later on, the Consumer Confidence plunged to a 16-year low, after dropping to 57.2 reading point.
Today two major indicators are scheduled on the U.S. calendar. The most crucial is the Core Durable Goods Orders, which is expected to come in at -0.4%. The second indicator is the Durable Goods Orders that should mark -1.3%. Both indicators are forecasted to be lower than their previous printings. Later, Minneapolis Fed President Stern is expected to deliver a speech. Traders are advised to look closely for clues regarding future monetary policy.
Given the fact that today's U.S. fundamental data is expected to see a declining trend, the greenback may decline as well.
From where we stand, there might be a great day to check out the calendar for the rest of the week. Additional important indicators are scheduled to be published. The Prelim GDP , Fed Chairman Bernanke Speech, Chicago PMI, Personal Spending, Core PCE Price Index and many more. Analyzing them properly may contribute to investors' possible profits.
Though the forthcoming indices are expected to establish a falling USD trend, the decreasing Oil prices might as well have a stronger affect on the greenback. Therefore, traders should follow today's events with extra caution.
The Euro finished yesterday's trading session with mixed results. A loss of close to 100 points to the greenback combined with a 40 points loss to the GBP. On the other hand, the EUR gained versus the JPY and the CHF. A likely explanation for this phenomenon is the conflicting publicized news from the different countries.
Yesterday, France President Nicolas Sarkozy advocated slashing taxes across Europe. If accepted by the Euro-zone nations, this tax reduction will possibly ease Oil prices worldwide, and should conclude in weakening the EUR. This might be the initiative to devalue the Euro as was stated by the French Finance Minister during the previous week.
Today there is almost no news to come out of the European markets. The most significant data will be the German Consumer Price, which measures the rate of inflation. Analysts expect German inflation to rise this month, and therefore forecast the index to increase by 0.5%, from -0.2% on the previous month up to 0.3%. The rest of the week will be exciting for the long term traders with the publishing of the Unemployment Rate, M3 Money Supply, Consumer Confidence and many more indicators.
Even with the long term news coming from the Euro-zone is expected to have a appositive effect on the EUR, investors should also keep a keen eye on news from the rest of the world.
The Japan's currency has for the most part lost strength yesterday versus the major currencies. The JPY underwent falling trends against the USD and the GBP, and saw a volatile session vs. the EUR.
The only news coming yesterday from Japan was the speech given by the Bank of Japan governor Shriakawa. In his speech Sharikawa stated that low Interest Rate may create price stability for the short-term, yet in his mind it will fail to achieve its goal for the long-term.
The most significant data for the Japanese economy today will be the Retail Sales. It is expected to rise by 0.5%, 0.5% lower than in the previous year. In addition, the Large Retailers' Sales is forecasted by analysts to descend by 1.3% from the preceding publication.
As news is still somewhat limited from Japan it would be wise to follow other countries publications, especially from the U.S.
The pair has been going through choppy sessions with mixed trends for the past seven trading days. Several attempts to breach through the 1.5850 level failed, and the pair is now consolidating around 1.5720. The 4 hour chart is showing a moderate bullish reversal signal. Hourlies are also showing signals of local bullish momentum, while the RSI confirms that the direction is indeed up. Going long with tight stops could be a good strategy today.
The Hourlies and the daily chart are showing that the pair does not have a distinct direction. 4 hour chart indicates that the moderate bearish price movement continues within the bearish channel which still has yet to be breached. The 4 hour chart RSI is floating near the 50 level and the Slow Stochastic is pointing to the continuation of the bearish movement. Forex traders are advised to wait for a clearer signs on the hourlies before entering the market.
The daily chart is showing that the pair has been range trading with no distinct direction for a while now. The 4 hour chart is showing no clear signals as the RSI and the slow stochastic are floating on neutral territory. Traders are advised to wait for a clear signal before choosing the preferable strategy.
The pair has been range trading for a while now, as no clear trend direction is in sight. The daily chart is showing mixed signals and the 4 hour chart is showing moderate bearish correction movement. Local bearish momentum on the hourlies might be taking the pair to the 1.0200 USD per CHF. Going short appears to be a smart move for today.
The Wild Card
There has been a sharp bullish channel forming on the daily chart as all time high were breached on a daily basis. There has been a successful attempt to breach the channel on the bottom section of it and the 4 hour chart is supporting the validation of the breach. Forex traders have a great opportunity of joining the corrective move at a very early stage. The bearish trend might have a very high profit potential and a target price of 124.50.
|01:00||EUR||German Prelim CPI||m/m||0.9%||-||-|
|01:00||EUR||Italian 10-y Bond Auction||1.36|1.5||-||-|
|01:50||JPY||Prelim Industrial Production||m/m||3.7%||-||-|
|09:00||CHF||KOF Economic Barometer||90.1||-||-|
|09:00||EUR||Spanish Flash CPI||y/y||-1.1%||-||-|
|10:30||GBP||Net Lending to Individuals m/m||m/m||2.4B||-||-|
|10:30||GBP||M4 Money Supply||-0.8%||-||-|
|14:30||USD||Core PCE Price Index||m/m||0.1%||-||-|
|16:00||USD||Pending Home Sales||m/m||1.7%||-||-|