GBP/USD Runs Wild after Global PMI Numbers

By Fast Brokers – The Cable is continuing its remarkable run, jetting towards 1.70 in a hurry as we anticipated.  The Cable has busted through all of our trend lines, setting fresh 2009 highs in the process and making its case for a climb back to pre-crisis levels.  The EUR/USD is setting new 2009 highs today as well, indicating the significance of today’s movement.  However, 1.70 should play a psychological role for the near-term with the S&P dangling just below 1000.  While all correlations are confirming the uptrend in the GBP/USD, 1000 should prove to be a tough battle for the S&P even if the level is breached temporarily.  The Cable has been on such a run as of late, we would not be surprised to see the currency pair cool soon as investors anticipate the wave of data and central bank meetings over the next few days.

The Cable is getting its positive boost from better than expected manufacturing PMI data at home and abroad.  Britain’s manufacturing PMI ended its contraction, registering growth (50.8) for the first time since May 2008.  America’s manufacturing PMI data also headed towards growth, falling just short of the neutral 50 mark.  Additionally, the markets are reacting to positive manufacturing and export data flows from China.  The signs of a global recovery in manufacturing coupled with a better than expected Q2 earnings season are driving the Cable to confirm its uptrend.

The wave of economic data will only grow in size tomorrow, with Britain releasing its Halifax HPI and construction PMI data points while the U.S. announcing housing and pricing data of its own.  Better than expected economic data points would likely fuel the Cable’s rally since investors would price in the BOE confirming its decision to cap QE funding at its meeting on Thursday.  If the BOE and ECB both keep their alternative liquidity plans in check, investors would take this as a sign that the central bank governors are comfortable with the recovery taking root.

Meanwhile, investors should keep an eye on the S&P’s interaction with 1000.  If 1000 turns into a dense area of resistance the GBP/USD may opt to consolidate around 1.70.  However, if the S&P futures leave 1000, the GBP/USD could have added upward mobility due to its positive momentum.

Present Price: 1.6923

Resistances: 1.6939, 1.6969, 1.7025, 1.7064, 1.7104

Supports: 1.6864, 1.6832, 1.6815, 1.6768, 1.6731

Psychological: 1.70

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

USD/JPY Balances at 95 after Huge Gains in the GBP/USD, EUR/USD, Gold

By Fast Brokers – The USD/JPY has waded back above the psychological 95 level, looking to react positively to the inflection point of our 1st tier uptrend and 2nd tier downtrend lines.  The EUR/USD, GBP/USD, and gold are registering huge technical gains today after better than expected manufacturing data.  The USD/JPY is unwillingly participating to the upside since the currency pair is ultimately positively correlated to a global economic recovery.  While the USD/JPY hasn’t registered nearly as significant of a movement as its correlations, the USD/JPY could show a delayed reaction should the markets continue to qualify a legitimate recovery.  Therefore, the USD/JPY will likely sit tight until we see how the S&P futures handle their highly psychological 1000 level.  Should the S&P confirm a 1000+ future, the USD/JPY would likely join the party to the upside at this point.

Meanwhile, the USD/JPY will likely remain tethered to its highly psychological 95 level for the immediate-term.  The USD/JPY’s near-term resistances are 95, July 31 highs, and our 3rd tier downtrend line.  The currency pair will fight to stay above our 1st tier trend line in the meantime and solidify a solid base it can build from.  Investors will be digesting a large amount of data and central bank meetings over the next few sessions, meaning we don’t expect FX volatility to abate anytime soon.

Present Price: 95.27

Resistances: 95.41, 95.73, 96.33, 96.77, 96.96

Supports:  94.99, 94.49, 93.82, 93.28, 92.90

Psychological: 95

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

ISM Manufacturing data rises in July. USD declines in Forex Trading.


U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity contracted in July for the eightteenth straight month but did see better than expected improvement. July’s ISM Report On Business index readings for economic activity registered a 48.9 percent score following June’s 44.8 percent level and just slightly below a growing level. A score above 50 percent is considered to be economic growth and less than 50 percent is considered to be a contraction. The July score was better than economic forecasts which were expecting the ISM index reading to register 46.5 percent for the month.

Norbert J. Ore, chair of the ISM Business Survey Committee, commented on the report saying, “The decline in manufacturing was slower in July when compared to June, as the more leading components of the PMI — the New Orders and Production Indexes — rose significantly above 50 percent, thus setting an expectation for future growth in the sector. The Employment and Inventories Indexes are still contracting, but the rate is slowing and they are moving in the right direction. It is also worth noting that the New Export Orders Index shows growth following nine consecutive months of decline, suggesting that the global economy is recovering. Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue.”

Almost all of the manufacturing sectors tracked for July showed improvement over the June report with customer inventories being the exception. Customer inventories decreased by 1.0 percent in July.

New orders, production, employment, supplier deliveries, inventories, prices, exports, imports and the backlog of orders all showed increased readings for July. The exports index registered a 1.0 percent increase for July while imports  increased by 4.0 percent.

US Dollar falls lower in forex trading.

The U.S. dollar has been under pressure in forex trading against the major currencies so far in Monday trading. The dollar has fallen against the euro, Australian dollar, British pound, Swiss franc, New Zealand dollar and Canadian dollar while trading higher against the Japanese yen.

The euro has advanced versus the dollar as the EUR/USD has gone from today’s 1.4234 opening exchange rate at 00:00 GMT to trading at approximately 1.4418 in the afternoon of the US trading session at 12:22pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency from 1.6723 to trading at 1.6957 dollars per pound. The dollar has decreased against the Canadian dollar after the USD/CAD’s opening at 1.0781 earlier today to trading at 1.0664 later.

The Australian dollar has also traded higher versus the USD as the AUD/USD trades at 0.8416 after opening today at 0.8372 while the New Zealand dollar has gained versus the USD and the NZD/USD trades at 0.6676 after opening at 0.6624.

The dollar has gained against the Japanese yen today as the USD/JPY has advanced from its 94.75 opening to trading at 95.26.

Meanwhile, the USD has fallen against the Swiss franc today as the USD/CHF has declined from the 1.0719 opening to trading at 1.0587.

GBP/USD Chart – The British Pound Sterling advancing today against the US Dollar in Forex Trading and trading at its highest exchange rate since October 2008.

GBP/USD Forex Chart
GBP/USD Forex Chart

EUR/GBP – Short Term and Long Term Views

EUR/GBP has turned from a investment pair into a trading pair. Ever since the financial world became unglued (late 2007? Summer 2008?) the pair has been much more volatile. There are many more short term opportunities to trade the pair on an intraday basis. Additionally, on a long-term view, we are at a level of significance from many months ago.

On an intraday basis, EUR/GBP has set up for our favorite “false breakout” pattern. In the below 2 hour candlestick chart, the pair closed one timeframe outside the lower Bollinger Band, and then returned to close inside the Bollinger Bands in the next candlestick. We are confident in a move higher through out the day and into tomorrow.

For a short term trade, we buy at market (currently bid at .8507) with a Target level of .8563 (top of the Bollinger Bands) and a Stop Loss order at .8475 (right at today’s earlier lows).

For the longer timeframe, the .8420 – .8520 level attracted a lot of interest back in November of 2008. The chart of daily price actions showed the entire month of November to be a battle of bulls and bears. The move from those levels took us up to the .9800 levels; a move of approx 14 big figures. So we expect that there will be a lot of buying and selling interest at these levels again and we will wait to see the outcome. As we expect a 10 plus big figure move once the direction is settled, we are in no rush to jump in early; there will be plenty of room to position oneself.

UPDATE – Our July 27 Short EUR/CHF position finally hit our Target Profit level (anything in the 1.51xx range) on Thursday July 30th.

Update – We remain long EUR/USD from our blog post at the end of last week. We continue to target the 1.4700 area

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC

Thanks to FX Solutions for the below image.

Full Week of Fundamental Data Looks to Provide Volatility

Source: ForexYard

The economic calendar is filled with high impact data this week that threatens to sow large volatility into the market. From the wide range of news reports, ForexYard advises its traders to pay special attention to the U.S Manufacturing PMI, Pending Home Sales, Non-Farm Employment Change and EUR Minimum Bid Rate reports.

Economic News

USD – Non-Farm Payrolls Week Kicks Off

Last week the Dollar saw mixed results against the major currencies. The USD underwent extremely volatile sessions against the EUR and the Yen, yet the pairs rapidly returned to former rates by Friday’s close after the US and Canada released their GDP figures.

It appears that the mixed results which were received from the U.S leading economic indicators were the main reason for the Dollar’s harsh volatility, experienced last week. On Monday, the New Home Sales report, which measures the annualized number of new single-family homes that were sold during the previous month, delivered the highest figure in 7 months. In addition, the Core Durable Goods Orders index, a leading indicator of production, delivered the third consecutive positive figure.

However, aside from these positive reports, the Conference Board’s Consumer Report, which was released on Tuesday, showed that the U.S consumers are still cautious regarding their expenses. Usually, the more secure the consumers feel, the better the economy is doing. The weekly Unemployment Claims also delivered negative figures, as 584,000 individuals lost their jobs during the past week.

As for this week, an extremely busy trading week is impending. The leading economic publications for the week will be the Manufacturing Purchasing Managers’ Index, the Pending Home Sales, the ADP Non-Farm Employment Change, the weekly Unemployment Claims, and of course, the Non-Farm Payrolls on Friday. This week promises to create large volatility for USD pairs, which will provide traders many opportunities to create high profits.

EUR – Euro-Zone Interest Rate Announcement Scheduled This Week

The EUR experienced a rather volatile session during last week’s trading. The EUR saw mixed results vs. the Dollar, starting the week with a sharp drop, and correcting it by the weekend. The EUR also saw mixed results against the Yen and slid partially against the Pound.

The indecisive figures from the Euro-Zone’s strongest economy, Germany, was the main reason for the EUR’s volatility. On one hand, the German Unemployment Change showed that merely 6,000 people lost their jobs during June. This continued the relatively positive employment condition in Germany from the past few months. However, on the other hand, the German Preliminary Consumer Price Index delivered a negative result, showing that the inflation level in Germany is currently the most fragile aspect of its economy, and that concerns for deflation shouldn’t be revoked at the moment.

As for the week ahead, traders should once again focus their concentration on the German economy publication. A bundle of data is expected from the German economy, and its results will have a large impact on the EUR. The leading publications are the German Retails Sales, the Factory Orders, and the Industrial Production. Yet on top of that, the European Central Bank (ECB) is scheduled to announce its Interest Rate and monetary policy decisions on Thursday. In case the ECB surprises and manipulates interest rates, the EUR will be strongly impacted, and is likely to influence the major currencies as well.

JPY – Yen’s Volatility Continues

The Yen continued with its volatile activity from the past week. The JPY saw frequent ups and downs against the Dollar, closing the week around the 94.50 level. The Yan also underwent a volatile session against the EUR, and dropped against the GBP.

The significant news publications from the Japanese economy delivered mixed results as well. The Japanese Retails Sales dropped for the 10th consecutive month. This demonstrates the poor consuming condition in Japan, which shows that the Japanese still lack the confidence that the recession is a part of the past and not the future. The Preliminary Industrial Production reports, however, showed that the total inflation-adjusted value of output produced by manufacturers in June rose by 2.4%. This shows that although the Japanese are cutting on expenses, the Japanese economy still manages to create large export, and thus the industrial production figures continue to rise despite the recession.

Looking ahead to this week, two indicators seem to be more relevant then the others. Tomorrow night, the Japanese Monetary Base is scheduled. This indicator’s result seems to have influence on the Japanese interest rates, and thus investors tend to react to this publication. Also this week, the Leading Indicators index will be published on Thursday. This index is designed to predict the direction of the economy and has the potential to impact the Yen’s value.

Crude Oil – Crude Oil Reaches $70 a Barrel!

Crude Oil’s prices continue to rise, and a barrel of Crude Oil is currently trading near $70 a barrel, a 1-month high.

Crude Oil began last week’s trading with a sharp drop in value, mostly as a result of the strengthening Dollar. Later on, the Dollar dropped and the positive global data created a sentiment that the leading economies are pulling out of recession. It is widely thought that a financial improvement will raise energy demand, and thus the prices of oil rose. The positive figures from the global equity markets also contributed to Crude Oil’s bullish trend. It still looks that oil’s value is strongly correlated with the equity markets, especially in the U.S, and traders are advised to consider this in their Crude Oil positions.

As for the week head, Crude Oil looks to continue with its bullish trend. However, traders should follow the Dollar’s value, global equity markets and energy reports this week, as Crude Oil has proven to be a very volatile investment.

Technical News


The bullish trend is losing its steam and the pair seems to be consolidating around the 1.4250 level. There is a bearish cross forming on the 4-hour Slow Stochastic, indicating a bearish correction might take place in the nearest future. When the downward breach occurs, going short with tight stops appears to be the preferable strategy.


The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the 4-hour chart’s RSI is already floating in the over-bought territory suggesting that the recent upward trend is losing steam and a bearish correction is impending. Going short with tight stops might be the right strategy today.


The typical range-trading on the hourly chart continues. Both the daily RSI and Slow Stochastic are floating in neutral territory. However, there is a bullish cross forming on the 4-hour chart, suggesting an upward correction may be imminent. Going long might be a wise choice.


There is a fresh bullish cross forming on the 4-hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the RSI also supports this notion. When the upward breach occurs, going long with tight stops appears to be a preferable strategy.

The Wild Card – Gold

Gold prices rose significantly last Friday and peaked at $955 an ounce. However, the 4-hour chart’s RSI is floating in an overbought territory suggesting that the recent upward trend is losing momentum and a bearish correction may be impending. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.