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Friday, 25 Jul 2008
Will The USD Reverse Its Course?
The USD saw mixed trading trends against its currency crosses during yesterday's trading session.
There were three main economic data releases from the U.S. yesterday. These indicators had a fairly bearish effect on the greenback. Although the USD suffered from the negative news most of its crosses saw bearish news releases as well, this counterbalanced the USD's bearishness.
USD - Weak U.S New Home Sales May Tumble The Dollar.
The USD saw mixed trading trends against its currency crosses during yesterday's trading session. The USD against the EUR traded within the previous day's range, and fell against the Yen. There were three main economic data releases from the U.S. yesterday. These indicators had a fairly bearish effect on the greenback. Although the USD suffered from the negative news most of its crosses saw bearish news releases as well, this counterbalanced the USD's bearishness.
The Unemployment Claims was released yesterday and it was measured at 406K, higher than forecasted and above the 400K barrier. Bad news continued from the U.S. with the fragile Existing Home Sales dropping from its previous mark and lower than projected. Regarding home sales, FOMC Member Geithner spoke in the House of Representative, The House voted to pass a broad package of housing-related items, including a $300 billion program to refinance troubled mortgages with federal insurance, a new regulator for government-sponsored enterprises Fannie Mae (FNM) and Freddie Mac (FRE), and an overhaul of the Federal Housing Administration. The Natural Gas Storage index was measured close to forecasts, which did not affect the USD significantly.
Looking ahead today, there is a batch of U.S. economic data scheduled to be released thus volatility is expected. The day will be kicked off with the Durable Goods Orders which is expected to continue showing a negative value and a slowdown in economic growth for the USD. The Revised UoM Consumer Sentiment, which measures consumers' economic conditions, is expected to be slightly lower than the previous survey. More importantly for the greenback will be the New Home Sales, which will be released at 2:00 p.m. GMT and is expected to be lower than last month. All the economic data releases are forecasted to be bearish for the USD and traders might consider going short on the greenback today.
EUR - EUR Bearishness Continue Following Poor Data.
The EUR saw bearish trends against most of its currency counterparts yesterday. The Euro range traded against the USD throughout the day since both currencies' had bearish news reassess. The EUR did fall against the JPY and CHF, based on its poor economic releases yesterday. The credit rating agency Standard and Poor's said that the European Union governments finances are set for a tough two years, as the slowing global economy causes income to decrease and pushes expenditure up. The report also singled out France and Spain as being set for increasingly tough times. Throughout 2007 in France, the government was the cause of missing its budget target. In Spain the culprit was countrywide elections that caused a spending overrun. The EUR was hurt by economic indicators released yesterday. The most hurtful was the German Ifo Business Climate and Expectations Indices both came in significantly lower than forecasted. The Manufacturing and Services PMI indices released from France and EU, all came in lower than forecasted and there seems there is no light at the end of the tunnel.
There are only two data releases expected today. Both of these indicators are expected to decline compared to their previous measuring. The German Import Price Index is expected to be estimated at 1%, this is significantly lower than previously released. The M3 Money Supply will also rise by a lower rate than its previous measuring. Though the Euro currency crosses' economic data have not been strong lately, the EUR could see bearishness today.
JPY - Bullish JPY Expected.
The JPY saw bullish trading trends against all of its currency crosses yesterday. From trading close to 108, the USDJPY dropped to the low 107's yesterday. And against the EUR, the JPY even broke under the 168 range. Besides taking advantage of its currency counterparts' weak data releases, the JPY had three major economic releases of its own, all being on par and even beating experts' expectations. The Tokyo and National Core CPI were both positive and were identical to forecasts; while the CSPI, which measures change in the price of services purchased by corporations, beat out its forecast. This indicator showed that Japan's core inflation rose at its fastest pace in over 10 years in June due to rising gasoline and food prices.
There are no economic data releases expected from Japanese economy today; however there will be a nice amount of data from the U.S. and Euro-Zone, which will affect the Yen's major counterparts. Most releases from both regions are expected to be bearish for those respective currencies, and traders might look for further bullishness from the JPY in those crosses.
Oil - Will Oil Resume Its Rising Trend?
Oil prices were stable during yesterday's trading session, as Oil closed at over $125 a barrel, a little change after falling to its lowest level in seven weeks in previous session. Oil has dropped close to $22 from the record 147.27 reached in July 11.
Traders started to acquire futures after oil dropped more than $3.50 a barrel on July 23. U.S. crude supplies declined in eight of the past 10 weeks as refiners delayed buying because of high prices and falling fuel demand. Traders should follow developments from around the world regarding supply concerns, and watch carefully after USD movements as they have a decisive effect on Oil prices.
The pair is floating at the key level of 1.5700, which is a very strong resistance level on the daily chart. If the pair will manage to breach through the 1.5650 level, a much stronger bearish move is likely to break forth, with a target potential of 1.5500. Going short with tight stops might be the right strategy today.
After the recent bearish correction, the cable appears to be consolidating at the 1.9850 level. However, a bullish cross on the 4 hour chart's Slow Stochastic suggests the resumption of the general bullish trend. Going long appears to be preferable today.
The sharp bearish move that took place during the past couple of days seems to have more steam in it. The RSI on the 4 hour chart has crossed the 50 line, suggesting that the pair should further fall. A bearish cross on the daily's Slow Stochastic also supports that notion. Next target could be 106.00
After breaching through the 1.0400 level, the pair failed to continue its bullish move, and a moderate bearish correction took place instead. The RSI on the 4 hour chart has picked over the 70 line, indicating that the market is overbought, and been falling ever since. A bearish cross on the daily's Slow Stochastic also suggests that a bearish move is imminent. Going short seems to be the right move today.
The Wild Card
After bottoming at the 17.05 level, Silver has made a bullish comeback, and now, all oscillators on the 4 hour chart are pointing up, indicating the continuation of the bullish move. This might be a great opportunity for forex traders to join the rising trend at a good entry price.
|14:30||USD||Core Durable Goods Orders||m/m||0.3%||0.5%||0.5%|
|14:30||USD||Durable Goods Orders m/m||m/m||4.7%||-0.4%||-0.5%|
|15:00||USD||S&P/CS Composite-20 HPI||y/y||5.0%||4.6%||5.0%|
|15:45||USD||Flash Services PMI||57.4||57.0||-|
|16:00||USD||CB Consumer Confidence||95.2||95.3||-|
|16:00||USD||New Home Sales||481K||501K||-|
|16:00||USD||Richmond Manufacturing Index||-3||0||-|
|01:50||JPY||Monetary Policy Meeting Minutes||-||-||-|
|02:10||USD||FOMC Member Lacker Speaks||-||-||-|
|02:30||AUD||MI Leading Index||m/m||-0.3%||-||-|
|03:30||AUD||Construction Work Done||q/q||-0.2%||-1.1%||-|
|08:00||CHF||UBS Consumption Indicator||1.35||-||-|
|08:00||EUR||GfK German Consumer Climate||10.1||10.0||-|
|12:05||EUR||German 30-y Bond Auction||1.07|1.3||-||-|