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Friday, 25 Apr 2008
The USD Bullish Momentum Continues
Yesterday the greenback underwent an extremely bullish momentum, ascending against its major currency rivals. The USD undertook a dominant bullish trend against the EUR, beginning the trading day with the rate of 1.5876, and rising up to 1.5639. The USD also made dominant gains vs. the GBP, the JPY and the CHF.
Some favorable data arrived yesterday for the Dollar. The first great news came from the Core Durable Goods Orders. The survey was expected to be much better than last month's result which was a negative 2.1%. Analysts expected a turn for the better that should have been reflected in a 0.5% gain, yet the survey results came even better than expected displaying a 1.5% increase. Meanwhile more cheering data came for the USD with the publishing of the U.S Unemployment Claims. After last month's 375K result, analysts forecasted a similar figure for this month as well, but to enhance the USD's momentum the survey winded up with a 33K fall, landing on a much more convenient number of 342K jobless claims. Even an unfavorable New Home Sales figure could not spoil the momentum for the USD. The survey that measures the annual number of new residential buildings that were sold during the previous month gave the result of 526K, much lower than expected - 580K, yet that was just not enough to prevent the USD's outburst.
Today we are looking for one meaningful data result regarding the greenback. At 14:00 GMT the Consumer Sentiment survey should be released, which should generate positive results. Traders should look forward for the survey's outcome and at simultaneously pay close attention to Euro-zone developments as they should determine how this trading week will end.
Yesterday was a day of descending trends for the Euro. It developed bearish momentum against all of its major counterparts, sinking vs. the GBP, the JPY and especially the USD.
Some unfortunate data for the Euro-zone was announced yesterday, and it all centered down to the German Information and Forschung (Ifo) indices. Both the (Ifo) Business Climate and the (Ifo) Business Expectations indices were published, challenging on another for the lower result. The Business Climate which measures the mood of firms in manufacturing, construction, wholesale and retail resulted in a 102.4 figure, much less than the 104.3 figure expected. The Business Expectations which measures the mood in firms in regard to future expectations for the next 6 months brought in even harsher results as it failed to deliver the predicted figure of 98.0, and descended down to 96.8.
The main drawback of the figures isn't the momentary pullback for the Euro-zone, as it is a supporter to the assumption that the Euro-zone economy won't be able to elude the U.S slowdown, and now rumors regarding a rate cut are once again circulated.
As for today, some very important data are due to be announced. The German Import Price Index and the M3 Money supply Index are forecasted by analysts to deliver unfavorable results. If indeed the trail of negative news regarding the EUR will continue, than some more bearish behavior is expected.
Traders should be patient and wait to see how the day is developing for the EUR, especially from 08:00 GMT when the M3 money supply index will be published, as it may turn the current trend.
The JPY experienced bearish behavior yesterday. It lost strength against the USD and the GBP, and only thanks to the EUR freefall it made a rising trend against that currency.
The Yen's bearish trends are a continuance to repetitive unfortunate news surrounding the Japanese economy. Japan's All Industries Activity Index fell by 1.4%. The Corporate Services Price Index rose only by 0.4%, and not 0.7% as expected. For conclusion, Japan's inflation has made a 10-year high record in March, after 6 straight months' increase, followed by a 2.2% rise only in the last two months.
Gasoline prices have jumped 19%, while fuel and water rose by 4.2% and food prices rose by 1.6%. Considering that the Japanese interest rate is only 0.5%, an ascending inflation is a real risk for the economy and investors are aware of that.
Traders should look forward for some more bearish attitude regarding the JPY, and keep watching carefully for news arriving from the U.S and the Euro-zone, as they will be the main factors in the JPY progress for today.
The pair dropped more than 300 pips in the recent two days and is now floating around 1.5650. That level is a key Fibonacci level, and a validated breach trough that level will validate an additional bearish move. The failure of this attempt will most probably resolve in a moderate bullish correction.
The cable has been showing a strong bearish price movement in the past 3 days and is now traded around the 1.9700 zone. The daily chart still shows a very bearish Slow Stochastic with no visible crosses expected. The 4 hours RSI confirms the bearish momentum, and it appears that the next target price might be 1.9610.
The daily chart is showing the formation of a very accurate and distinct bullish channel, as the pair now floats in the middle of it. The daily Slow Stochastic and the RSI are pointing to very bullish grounds, and no correction appears to be in sight. Next target price should be around 105.10 and going long looks like a preferable choice today.
After a very long period of range trading with no distinct direction, the pair has made its bullish breach, and appears to have established a starting point for a relatively strong bullish trend. The Slow Stochastic of the daily chart confirms the bullish momentum, and being on the buy side appears to be the right choice today.
The Wild Card
Oil has been moving within a very accurate bullish channel with very strong momentum for a while now. Today was the first bearish breach beyond the bottom barrier of it. This is marking a potential bearish corrective move, and forex raders might have a great opportunity to go short with tight stop, and catch that move at a relatively early stage.
|00:30||AUD||AIG Manufacturing Index||45.4||-||-|
|01:00||NZD||GDT Price Index||-8.8%||-||-|
|01:00||USD||Total Vehicle Sales||16.2M||16.5M||-|
|01:50||JPY||Tankan Manufacturing Index||12||14||-|
|01:50||JPY||Tankan Non-Manufacturing Index||16||17||-|
|03:35||JPY||Final Manufacturing PMI||50.4||50.4||-|
|09:15||EUR||Spanish Manufacturing PMI||54.2||54.0||-|
|09:45||EUR||Italian Manufacturing PMI||51.9||52.3||-|
|10:00||EUR||Final Manufacturing PMI||51.9||51.9||-|
|14:15||GBP||ADP Non-Farm Employment Change||212K||231K||-|
|15:00||USD||FOMC Member Williams Speaks||-||-||-|
|15:45||USD||Final Manufacturing PMI||55.3||55.3||-|
|16:00||USD||ISM Manufacturing PMI||52.9||52.5||-|
|16:00||USD||ISM Manufacturing Prices||35.0||38.1||-|
|16:30||USD||Crude Oil Inventories||8.2M||-||-|