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Wednesday, 13 Aug 2008

USD Looks towards Retail Sales for Bullish Move

The greenback completed yesterday's trading session with mixed results versus the major currencies. The USD fell against the euro yesterday for the first time in five days, pushing the oft traded currency pair to 1.4911. The dollar experienced similar behavior against the JPY as the pair dropped from 110.27 to 109.12 by days end. The USD did see bullishness as well as it over 100 points against The GPB and closed at 1.8955.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupnononoupno
Weekly Trenddowndowndownupdownup
Resistance1.50391.9076109.521.09270.87850.7963
1.50151.9051109.241.09040.87610.7935
1.49831.9029108.991.08810.87340.7908
Support1.49121.8948108.281.08090.86630.7831
1.48871.8922108.031.07820.86390.7804
1.48641.8896107.761.07580.86120.7779

Economic News

USD - Retail Sales on Tap

The greenback completed yesterday's trading session with mixed results versus the major currencies. The USD fell against the euro yesterday for the first time in five days, pushing the oft traded currency pair to 1.4911. The dollar experienced similar behavior against the JPY as the pair dropped from 110.27 to 109.12 by days end. The USD did see bullishness as well as it over 100 points against The GPB and closed at 1.8955.

Yesterday, government reports showed that the U.S. trade balance for June had narrowed its deficit to 56.8B, 3 billion dollars less than last month. The unexpected recovery could be linked to US goods and services exports increased faster than imports lately. Following the report the USD briefly rose versus the euro, after trading as low as 1.4900. However by the end of the day the U.S. dollar slipped against the euro, breaking a five-session rally as investors locked in profits ahead of key economic data later in the week. The dollar has rallied more than 4% against the euro this month with help from a sell-off in oil prices and growing fears that economies around the world may slowdown at a quicker pace than in the United States.
Looking ahead to today, the most important financial indicator scheduled from the U.S economy is Retail Sales. Analysts forecast that U.S retail sales will stay unchanged after last month's 0.1% rise. Core Retail sales is expected to see another month of appreciation as forecasts map a 0.5% rise for June. Traders are strongly advised to pay attention to today's Retail Sales announcement, as a stronger than expected result may launch a bullish correction in the dollar.

EUR - EUR Expects Tough Challenges to Continue Yesterday's Bullish Move

The EUR finished yesterday's trading session with mixed results versus the major currencies. The 15-Nation currency saw gains versus the greenback for most of the day before seeing the Asian equity markets push the dollar back up. Versus the JPY, CHF and GBP the Euro-Zone currency range traded throughout most of the day, as most of the market movement from yesterday was focused on the greenback. In addition yesterday was a slow news day in Europe as only the French CPI was published. The French CPI data released at -0.2%, which is 0.1% lower than forecasted.
In late trading in New York, the single European currency edged up 0.1% to trade at $1.4922 after touching a six-month low of $1.4814 against the USD in early morning trading,. The sell off of the EUR/USD has convinced some analysts that the greenback may be ending its long-term downtrend against the EUR.
There will only be one data release from EZ today as the Industrial Production will be announced during early trading. Industrial Production tends to have a relatively mild impact on the market because Germany and France, which account for about half of the Euro-Zone's economy, release their industrial numbers before. A rising trend will have a positive effect on the nation's currency. Traders should pay close attention to the response of equity markets to the rising JPY, to determine how to continue with EUR positions. Investors should pay close attention to the news and place their transaction accordingly with the developments throughout the day.

JPY - Yen Experiences another Day of Appreciation

The JPY underwent a bullish trading session yesterday, as it appreciated against all of its major currency rivals. The JPY rose 0.7% and closed under 109.33 versus the USD, a day after hitting a seven-month peak of 110.40. In addition, the EUR fell 0.5% against the JPY and the pair closed at 163.16.

The export based Japanese economy took advantage of the drop in Crude Oil prices, which should help lower the transportation prices of Japanese exported goods across the world.

Yesterday, the most important financial indicator that was published from the Japanese economy was the Preliminary Gross Domestic Product which fell by 0.6% as opposed to the previous quarter. The gloomier outlook on the Japanese economy may force the Bank of Japan to seriously consider shaking up its longstanding benchmark interest rate.


There will only be one data release from Japan today as the Tertiary Industry Activity Index will be announced during late trading. A rising trend will have a positive effect on the nation's currency because about half of the nation's workers are employed in the service industry. Strong spending in the services sector not only signals higher employment rates, but can also be a sign of strong consumer spending in the future. Crude Oil will be a major influence in JPY movement as Japanese will look toward depreciation in Black Gold to continue in order for the JPY to keep strengthening.

Crude Oil - Oil Prices Slid As Investors Reacted To Developments in Georgia

Crude Oil prices slid to a 4 month low yesterday after Russia announced the end of military operations in Georgia and the International Energy Agency forecasted a steep drop in demand.
New York's main contract, Light Crude for September delivery, sank $1.44 to $113.01 dollars a barrel, the lowest level since April 15.
Geopolitical concerns always provide good support for Oil prices and this news should offer some relief to investors worried about exports of Azeri crude from ports in Georgia. The decline in Oil prices also was supported as the USD hit a near 6 month peak vs. the EUR, pressuring demand for the dollar-priced commodity. Signs of slowing global demand were further confirmed by a report from the US Energy Information Administration. The Energy Information Administration said in its monthly report that oil demand was slowing in advanced economies as people ease up on driving, supplies are rising and the market is set to cool well into next year.

Technical News

EUR/USD

After three weeks of coherent bearish movement, it seems that momentum is coming to a halt. The RSI on the daily chart has peaked at the oversold zone, suggesting that a reversal is imminent. Going long with tight stops might be the right choice today.

GBP/USD

After a long-lasting bearish trend the cable has consolidated around the 1.9870 level. All oscillators on the 4 hour chart are pointing up, indicating that a bullish correction might take place. Going long could be a good strategy today.

USD/JPY

The pair went through a very sharp bearish move yesterday, as it dropped over 150 pips. A bearish cross on the daily chart's Slow Stochastic suggests that the bearish momentum has more steam in it. Going short appears to be preferable.

USD/CHF

After a few weeks of bullish movement, the pair seems to be consolidating around the 1.0840 level. A bearish cross on the daily chart's Slow Stochastic implies that a reversal might be forthcoming. Traders are advised to hold for a break and then swing in.

The Wild Card

Silver

It seems that the strong bearish move that Silver experienced lately has vanished. As all oscillators on the daily chart are giving bullish signals, a bullish correction might be impending. This may give forex traders an excellent opportunity to catch the trend at a very early stage.

Current Time: 07/30 10:42 GMT
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