Month: August 2009

Source: ForexYard

The U.S. Dollar is expected to go volatile today on U.S. Homes Sales data and the speech by Federal Reserve Chairman Ben Bernanke at 14:00 GMT. Bernanke is expected to discuss the economic crisis and recovery. With regards to the home sales data, the figure is expected to rise to 5.03 million, up from the previous figure of 4.89 million. Forex traders should follow both of these events closely as they are set to determine the USD’s main crosses for Friday’s trading.

Economic News

USD – Positive Economic Data Weighs in on Dollar

The Dollar declined versus most major counterparts throughout much of yesterday’s trading on Thursday as U.S. equity markets rallied amid better-than-forecast data. Weighing further on the USD, the Philadelphia Fed reported that manufacturing in the region unexpectedly expanded this month for the first time in almost a year, a sign the U.S. economy is recovering. Furthermore, the Conference Board said the index of leading economic indicators rose 0.6% in July, its fourth consecutive monthly gain. The Dollar index traded at 78.331, down slightly from 78.485.

The Dollar may continue its decline today as the release of today’s economic data may show sales of U.S. existing homes gained 2.1% last month, the highest since September 2008. An improvement in the U.S. housing market will further support risk appetite since the housing market crash was at the root of the current crisis.

Along with the Existing Home Sales report that will be released today at 14:00 GMT, traders should also follow Ben Bernanke’s testimony, set to begin at 14:00 GMT as well, as it tends to cause great market volatility and may intensify the current bearish sentiment on the Dollar.

EUR – EUR Extends Gains as Equities Continue to Rebound

The EUR extended its gains against the British Pound ahead of a report today that is forecasted to show Europe’s manufacturing and service industries contracted at a slower pace this month, adding to signs that the global recession is coming to an end.

The EUR traded at $1.4250 early this morning, from $1.4254 yesterday, and at 133.99 Yen from 134.26 Yen. Encouraging risk appetite further were recoveries in global equity markets, boosting demand for higher yielding currencies and commodities at the expense of the USD and JPY.

The French, German and Euro-Zone Manufacturing and Service data is expected to be released at 7:00 GMT, 7:30 GMT and 8:00 GMT respectively. With the recent recoveries in German and French GDPs, this data should provide an insight as to the sustainability of this recovery, and therefore have a major affect on the direction of the European currency.

JPY – Yen Boosted By a Drop in Asian Stocks

The JPY appreciated against the Dollar and Euro in today’s early trading as Asian stocks dropped, boosting demand for Japan’s currency as a refuge. The Yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive.

Japan’s currency rose against all 16 major counterparts as Japan’s Nikkei 225 Stock Average fell 0.7% and the MSCI Asia Pacific Index of regional shares lost 0.2%. The Yen traded to 93.59 per Dollar from 94.36 in New York yesterday. Japan’s currency traded at 133.16 per EUR, up from 134.22. With no major news expected from Japan, movements in global equities will continue to dominate Yen sentiment for today.

Crude Oil – Crude Prices Fall Despite Global Optimism

Crude Oil finished trading at $72.14 a barrel yesterday, down $1.64, as investors felt that the commodity was overvalued. Therefore, they dropped the commodity, and put their money into even riskier assets. Traders dropped Crude for equities, as better than expected manufacturing data added to evidence the recession may be ending. Crude Oil prices also dropped yesterday, as investors realized it was overvalued, as prices soared over the previous 2 days.

In light of the continuous low demand, Oil prices have used equities to estimate the economy’s progress and recovery. While Wednesday’s equities rally was driven by the surprisingly low inventories, it does not appear to be the beginning of a trend, as only a sustained increase in demand can permanently bring down the inventory level, and there is still no sign for that. Therefore, if equities rise again today and the dollar weakens significantly, we may see Crude Oil prices rebound.

Technical News

EUR/USD

The hourly chart displays a price move that has originated at the lower border of the Bollinger Bands and has the potential to appreciate all the way to its upper border. Going long with tight stops may be the popular choice today.

GBP/USD

After dropping below the 1.6450 level this morning, the pair has continued its decline, creating an opportunity for traders to take advantage. The hourly chart shows the formation of a bullish cross on the Slow Stochastic Oscillator, indicating the potential for a violent breach. The pair is also trading in the oversold territory on the RSI, indicating the pair may be due for an upward correction.

USD/JPY

The pair is continuing its 10-day bearish trend with the daily chart’s Slow Stochastic providing us with mixed signals. The oscillators on the 4-hour chart do not provide a clear direction either. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

The pair fell for the second day on Thursday, and the USD/CHF cross now stands at the 1.0654 level. The technical data seems to be showing misleading signs. On the one hand, the MACD, RSI and Stochastic Slow of the weekly chart support a bearish trend for today. On the other hand, the MACD of the 4-hour chart and Stochastic slow of the daily chart support a bullish reversal for today. Entering the pair when the signals are clearer seems to be the preferred strategy for today.

The Wild Card – Silver

Silver has experienced much bearishness in the past 2 weeks as it currently trades at the $13.74. The current bearish trend is expected to come to n end anytime soon, and a bullish correction may be in the making. This is supported by the RSI of the hourly and daily chart, and the Stochastic Slow of the hourly and daily chart. Entering the commodity when the upward breach occurs may turn out to pay off for forex traders today.

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.

As we look at the end of week review for the trading week ending Friday August 21, it is apparent that the British Pound has experienced a very volatile trading week. The British currency has moved on a number of factors, and I want you forex traders to take advantage of the GBP now.

Despite falling yesterday, the GBP/USD pair is already up 20 pips today at 1.6465. The GBP/JPY cross is also trading higher by 60 pips at the 154.50 level in early Friday trading. This behavior may be due to overselling of the British Pound in recent days. Many analysts predict that the GBP may make a mini recovery today.

I recommend you traders follow U.S. Home Sales and Federal Reserve Chairman Ben Bernanke’s speech at 14:00 GMT, as optimistic results may lead to higher risk appetite in the forex market. This would mean that traders could buy riskier currencies, such as the GBP, as they intend to make big end-of-week profits.

You may be wondering how the GBP can recover today after such a turbulent week. The truth is the British currency still is very fragile. However, if we look at the bigger picture, since the start of the financial crisis the GBP has fallen dramatically. Therefore, talking of a bullish GBP today doesn’t seem unreasonable at all.

You can read my other postings on the GBP CAMPAIGN on the ForexYard blog to get even more insight into the British Pound. In addition, you can also start trading over 30 currency crosses and top commodities now by opening an account with us. As of now, open your GBP positions en masse to profit from today’s trading.

By GCI Fx Research

€

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4275 level and was supported around the $1.4200 figure.  European Central Bank member Bini Smaghi reiterated the central bank expects inflation to remain low over the coming year and will “do everything it takes to prevent it from rising.”  He also indicatyed the ECB does not expect EMU-16 growth before the middle of 2010.  Notably, EMU-16 GDP growth was -0.1% q/q, up from the record decline of -2.5% in the prior quarter. The euro moved higher partially on a reound in Chinese equity markets as the Shanghai Composite was up 4.5% today following recent flirtations with bear market territory.  Other major news today focused on a warning from Germany’s finance ministry that the economic stabilization may not hold.  It was reported last week that German GDP improved unexpectedly in the second quarter.  In U.S. news, data released in the U.S. today saw the Philadelphia Fed’s manufacturing survey improve to 4.2 from -7.5 in July while July leading economic indicators were up 0.6%.  Also, weekly initial jobless claims rose to 576,000 from a revised 561,000 and continuing jobless claims printed at 6.241 million, up from a revised 6.239 million.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.55 level and was supported around the ¥93.85 level.  Bank of Japan Policy Board member Mizuno warned the domestic economic recovery could decelerate in the autumn, adding a sustained economic recovery would require “support from governments and central banks.”  He said the BoJ should prepare Japan for an extended bout with deflation, warning that “price declines will ease only at a moderate pace” in the year starting April 2011.  He also warned the central banks lacks the tools needed to “prop up prices and stimulate economic growth in the short term.”  The yen’s direction is uncertain given the real possibility that economic growth may slow further.  On the political front, a Democratic Party of Japan victory at the general election on 30 August could result in upward pressure on the yen and possibly more supply of Japanese government bonds.  The Nikkei 225 stock index climbed 1.76% to close at ¥10,383.41.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥134.60 level and was supported around the ¥133.40 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥156.70 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.65 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8273 in the over-the-counter market, down from CNY 6.8320.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

Retail Sales data was released today out of the United Kingdom and showed that retail sales increased in July for the second month in a row according to a report by National Statistics. July’s retail sales increased by 0.4 percent following a revised increase of 1.3 percent in June. July’s annual rate of increase was 3.3 percent higher than the July 2008 level following June’s annual increase of a revised 3.1 percent.

Market forecasts had expected an approximate monthly increase of 0.4 percent in July and a 2.7 percent annual increase.

Contributing to the sales gain was a increase in household goods stores by 4.5 percent and other stores sales increased by 1.1 percent.  Overall, predominantly non-food stores increased by 1.1 percent in July while predominantly food stores declined by 1.0 percent.

By Fast Brokers – The USD/JPY’s deterioration has continued well past its psychological 95 level and our important 1st tier uptrend line.  Investors have been favoring the Yen over the Dollar amid warnings from investor heavyweights Buffet and El-Erian that the Dollar could be under severe selling pressure over the long-term if the government doesn’t tighten liquidity appropriately.  Such news coupled with disappointing U.S. employment data and large pullbacks in the Shanghai Composite Index (SCI) have led investors to buy up the Yen.  The USD/JPY’s recent downturn seems to be more exaggerated than what we’ve witnessed in both the Cable and the EUR/USD.

The collapse of the USD/JPY’s 1st tier uptrend line is a bit disconcerting, and we have little reason to be positive trend-wise right now.   However, the currency pair has fought to stay above March lows and our 2nd tier downtrend line.  Furthermore, if the USD/JPY’s immediate-term technical do turn sour, July lows are hanging around as a last resort.  The USD/JPY’s near-term challenge will be to recover to its psychological 95 level so the currency pair can take another short at our 1st tier uptrend line.  Our 1st tier uptrend line is gradually approaching its inflection point with our 3rd tier downtrend line, meaning volatility could pick up in the beginning of next week.

Present Price: 94.70

Resistances: 94.95, 95.15, 95.44, 95.65, 96.08

Supports:  94.52, 94.36, 94.08, 93.88, 93.52

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.

By Fast Brokers – The Cable is retreating from yesterday’s pop after Public Net Sector Borrowing came in much higher than analyst expectations.  Today’s unsettling debt-related data comes after BOE Minutes revealed King voted to increase QE by 75 billion rather than the 50 billion passed by the central bank.  We were a bit shocked by King’s proposal considering most British data has been outperforming expectations.  In fact, we were surprised the BOE decided to inject more liquidity in the first place.  The development is unsettling Pound traders as uncertainty rises regarding the BOE’s future monetary policy.  We believe King may fear the Pound is overheating from previous investor optimism.  The faster the Pound appreciates, the less attractive British services become to foreign countries.  Hence, King may be trying to give Britain’s economy a little more breathing room as it attempts to recover from a historic downturn.

Speaking of recent improvements in Britain’s data, Retail Sales came in a basis point ahead of analyst expectations today.  Furthermore, Britain’s CPI and RPI outperformed earlier this week.  As a result, the fundamentals are telling a more positive story than what investors are interpreting from King’s vote at the BOE meeting.  With Britain’s data finished for the week, the GBP/USD’s immediate-term movement should be highly dependent on the performance of U.S. equities coupled with the EU’s slew of PMI data on Friday.  Though we’ve seen the Cable’s correlation with U.S. equities flip-flop this month, we expect the positive correlation should play out until further notice.

Technically speaking, both the Cable and the EUR/USD failed to tackle their respective August 13th highs yesterday as the currency pair’s didn’t receive enough buy-side interest to power through.  Hence, our 3rd tier downtrend line and August 13th highs continue to play an important role to the upside.  Meanwhile, the GBP/USD’s gravitation towards the 1.65 area continues.  This psychological zone is turning out to be as strong as we anticipated, and the currency pair will likely need an upward movement with conviction to leave 1.65 in the rearview.  As for the downside, the Cable has Wednesday lows, our 1st tier uptrend line, and August 17th lows to fall back on.  Investors should also note our 1st tier uptrend line is reaching an inflection point with our 2nd tier downtrend line, signaling the possibility of heightened near-term volatility.

Present Price: 1.6471

Resistances: 1.6482, 1.6512, 1.6544, 1.6569, 1.6608

Supports: 1.6455, 1.6428, 1.6398, 1.6376, 1.6346

Psychological: 1.65

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.

By Fast Brokers – The EUR/USD jumped over our 3rd tier uptrend and 2nd tier downtrend lines despite very disappointing German PPI and EU Current Account numbers yesterday.  Germany’s collapse in PPI adds onto last week’s decline in EU CPI.  Hence, EU prices are freefalling while producer prices decline at a faster rate than consumer prices.  Therefore, the ECB may be inclined to inject more liquidity since they have held a relatively neutral monetary policy stance while the BOE takes measures to re-inflate the Pound.  In regards to the surprise decline in the EU’s Current Account, this implies an outflow and consequently increase in supply of Euros since the EU’s imports outnumber its exports.  Regardless of yesterday’s negative data points, investors snapped up the Euro amid a flight from the Dollar.

We notice a sizeable pullback in the USD/JPY taking place while the GBP/USD and gold drag with the EUR/USD.  Keep in mind these movements are occurring with the S&P futures hovering around par in the wake of an increase in weekly U.S. Unemployment Claims.  Hence, the EUR/USD is basking in Dollar negativity stemming from words of caution from it seems investors are making a slight return to safety in the Dollar with global economic uncertainty creeping in.  However, heavyweights Warren Buffett and El-Erian continue their warnings that the U.S. Dollar could be stuck between a rock and a hard place if the Federal Reserve doesn’t tighten liquidity at the appropriate time.  As a result, it’s possible the EUR/USD could receive some psychological support as investors contemplate an unknown future.

Technically speaking, activity favored the buy-side yesterday on the 1-hour.  However, the EUR/USD failed to eclipse August 13-14 highs, putting near-term momentum in favor of the downside considering the size of the 8/13-8/17 pullback.  The EUR/USD certainly isn’t clear of its downtrend considering the currency pair’s back in the thick of its 7/20-7/28 trading zone.  The lid of this trading range should prove to be worthy near-term resistance along with our 3rd tier downtrend line.  Investors will likely refrain from breaking these technical obstacles with a wave of EU PMI data coming on Friday.  As for the downside, the EUR/USD has several strong trading range supports and all three of our uptrend lines waiting well below present price.  It will be interesting to see how investors treat the Dollar should another pullback in U.S. equities ensue.

Present Price: 1.4214

Resistances: 1.4236, 1.4248, 1.4259, 1.4268, 1.4278

Supports: 1.4200, 1.4188, 1.4180, 1.4163, 1.4154

Psychological: 1.40

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.

Source: ForexYard

Yesterday’s bearish behavior by the GBP was felt by many traders as the Bank of England’s (BOE) Monetary Policy Committee (MPC) released the minutes from a recent meeting regarding interest rates and quantitative easing. There was a hint of dissension among the policymakers with some calling for a greater extension of the quantitative easing program which ended up pumping an additional 50 billion Pounds into the UK market recently. Fears over weak inflationary growth and market downturns have some MPC members lobbying for more aggressive measures, which puts pressure on the Pound.

Economic News

USD – The Dollar Turns Down as US Stocks Rebound

The greenback fell against 11 of its 16 major currency counterparts Wednesday before a report, expected to show an index of U.S. economic indicators, rose for a 4th consecutive month. The U.S Dollar traded near a 1-week low against the EUR on speculation economic data will add to signs the global recession is easing, prompting investors to seek higher-yielding assets. The Dollar changed hands at $1.4230 vs. the EUR down from $1.4127 yesterday.

The U.S. Dollar was supported in earlier trading by declining U.S. stocks, following Chinese markets, prompting investors to move toward assets perceived as less risky.
However, the Dollar weakened against the Japanese yen, although it came off the day’s worst levels, as a sharp slide by China’s stock market overnight raised concerns about the global economic outlook and boosted the Japanese currency’s allure.

In recent months, the USD has tended to fall as stock prices and risk appetite rises, giving investors less impetus to buy dollars as a safe haven. In the absence of fresh economic data, currencies were mostly following stock prices for direction. Traders may see more volatility and choppy trades given that not much is happening in terms of events. So any correction to stock markets could be a key driver for the USD currency.

EUR – The EUR Hits Session High above $1.42

Europe’s single currency gained versus 11 of its 16 major rivals on Wednesday as economists said the Markit Economics’ composite index of both industries may be the highest in a year. The index is based on a survey of purchasing managers and due for release on Aug. 21st. The EUR added to gains against the U.S. Dollar, rising 0.6%, as stocks pared losses and oil prices rose sharply. The EUR also pared losses against the Yen and was last down 0.1% at 133.60 yen, off a one-month low of 132.16.

The European currency rose from near a 1-week low against the GBP on speculation a European report this week will show manufacturing and service industries contracted at a slower pace, adding to signs the recession in the 16-nation region is abating. The British Pound weakened 0.9% to 86.07 pence per EUR and dropped 0.2% vs. the Dollar to $1.6534.

The GBP extended losses after Bank of England (BOE) meeting minutes showed that some policymakers had wanted to extend quantitative easing by more than the amount decided. The central bank is spending 175 billion pounds to buy assets in a move aimed at pushing down borrowing costs to revive the U.K.’s shrinking economy. Asset purchases require the BOE to print money, which some investors fear may lead to an oversupply of the Sterling and eventual inflation.

JPY – JPY Rises as Chinese shares fall more than 2%

The Japanese yen rose versus other major currencies on Wednesday as a fall in Chinese shares made investors cautious about returning to risky investments. The Yen climbed to its strongest level in 3 weeks against the U.S. Dollar after China’s benchmark stock index fell into a so-called bear market, reigniting concern that the global economic recovery is stalling.

China’s main stock index, which tracks the bigger of China’s stock exchanges, slumped 4.3%, leading other Asian bourses lower and boosting demand for the Yen as a refuge. The Yen typically rises during times of financial turmoil because Japan’s trade surplus reduces the nation reliance on foreign capital. The JPY also gained against all 16 major counterparts after the Daily Telegraph cited Hartmut Schauerte, the economic state secretary, saying Germany is preparing measures with the Bundesbank in anticipation of a new credit crunch wave early next year.

Crude Oil – Oil Rallies on Sharp U.S. Inventory Data

Crude prices soared above $73 a barrel on Wednesday, as rising U.S. equities and an unexpected drop in inventories propelled oil prices to finish at their highest level since early June. Oil surged as much as 5.2% yesterday after crude stockpiles dropped 8.4 million barrels last week, the most since the week ended May 23, 2008, an Energy Department report showed. Crude Oil also gained as the U.S Dollar declined against other currencies, increasing the appeal of commodities to investors looking for an inflation hedge.

Oil prices fell earlier on Wednesday, hitting a low of $68.05 after a near 5% slump in Chinese shares sent doubts rippling through global markets about the strength of the world economic recovery. Traders also watched for storms in the Atlantic Basin but no immediate threat was seen to U.S. oil installations in the Gulf of Mexico. Expectations for a potential rebound in the economy could increase fuel consumption and have already helped lift prices.

Technical News

EUR/USD

Fresh bearish crosses on the hourly MACD and 4-hour Slow Stochastic suggest that a downturn is impending. With weekly momentum shifting into a downward posture, forex traders may see this pair go bearish in the coming hours. Going short may be a wise choice.

GBP/USD

This pair is currently giving off mixed signals as bullish and bearish crosses have recently formed on various indicators, which are contradicting one another. Long-term momentum still appears bearish and the doji candlestick formation on the daily chart suggests a downward correction may be imminent. Going short appears to be the preferable strategy.

USD/JPY

Recent upward movement has pushed the price of this pair into the over-bought territory on the hourly chart’s RSI, suggesting downward pressure. The bearish crosses on the hourly Slow Stochastic support this notion. Going short with tight stops appears to be a good decision for today’s trading.

USD/CHF

There appears to be a bullish cross on the 4-hour Slow Stochastic, with an impending bullish cross on the 4-hour MACD as well, indicating an impending upward movement. The bullish cross on the hourly MACD supports this notion and gives it some added urgency. Going long as soon as possible might be a wise decision.

The Wild Card – CHF/JPY

The latest upward movement on this pair has given forex traders two distinct signals for a downward correction later today. The first is a bearish cross on the 4-hour Slow Stochastic, suggesting a downward movement is imminent. The second is a fresh doji candlestick formation on the 4-hour chart, which typically signals a reversal is in the making. Entering short positions as soon as possible may help traders capture decent profits.

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.

By GCI Fx Research

€

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4180 level and was supported around the $1.4085 level.  Weakness in global equity markets capped the common currency’s upside potential today but North American dealers chipped away at the $1.42 handle.  Data released in the U.S. today saw MBA mortgage applications improve +5.6% in their latest week, consistent with the recent uptick in the U.S. housing market.  Data to be released in the U.S. tomorrow include weekly initial jobless claims and continuing jobless claims.  In eurozone news, European Central Bank member Weber reported the central bank will exit its quantitative easing measures “once the economic recovery becomes sustainable and the situation on financial markets gets sufficiently stable.”  Weber also expressed concern regarding the strength of banks and there is a growing concern of credit bottlenecks in the banking sector over the next few months.  Furthermore, he noted the improvement in German Q2 GDP was on account of fiscal stimulus and a looser monetary policy.  Data released in the eurozone today saw June construction output off 1.1% m/m and 8.8% y/y while German July annual producer price inflation registered its steepest decline since 1949, evidence that factory gate prices may not be contributing to consumer price inflation in Europe’s largest economy.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥93.75 level and was capped around the ¥94.95 level.  The pair moved lower in concert with widespread yen strength after Chinese equity markets tumbled again, precipitating another global sell-off in Asian and European markets.  The yen also strengthened ahead of the Japanese general election on 30 August. The  Democratic Party of Japan looks poised to defeat the Aso government and long-incumbent Liberal Democratic Party.  Market chatter suggests a DPJ government may be more tolerant of a stronger yen, and yesterday’s news suggested a DPJ government may call on Bank of Japan to purchase more Japanese government bonds.  BoJ Governor Shirakawa will attend the Kansas City Fed’s Jackson Hole Symposium from 20-24 August.    The Nikkei 225 stock index lost 0.79% to close at ¥10,204.00.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥132.15 level and was supported around the ¥134.50 level.  The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥153.60 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.15 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8320 in the over-the-counter market, up from CNY 6.8309.

₤

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6375 level and was capped around the US$ 1.6590 level.  Sterling was sharply lower earlier in the European session after minutes from Bank of England Monetary Policy Committee’s August deliberations were released.  The minutes revealed that Governor King and two other members of the MPC voted in the minority for a ₤75 billion increase in the BoE’s quantitative easing program, an amount that would have expanded the entire facility to ₤225 billion.  The MPC voted 6-to-3 to enact a ₤50 billion expansion, itself larger than many traders expected.   Today’s minutes suggest the BoE may be further away from unwinding its monetary stimuli than previously believed.  Data released in the U.K. today saw the August CBI industrial trends survey improve to -54 from -59, rendering industrial output at its best level since June 2008.  Cable bids are cited around the US$ 1.6215 level.  The euro gained ground vis-à-vis the British pound as the single currency tested offers around the ₤0.8625 level and was supported around the ₤0.8530 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

A report from Statistics Canada today showed that the Leading Indicators index increased in July. The Leading Indicator Index, which measures future economic activity, rose by 0.4 percent in July following revised flat returns in May and June.  July’s data was better than expected as market forecasts were calling for a 0.2 percent increase.

Contributing heavily to the overall index increase was a gain in the stock market index by 5.7 percent and a gain in the housing index by 4.5 percent.  Also showing  positive results were the money supply which increased by 0.7 percent, US Conference Board by 0.4 percent, average workweek hours by 0.3 percent and other durable goods by 2.1 percent. Contributing negatively to the index were shipments with a 0.02 percent fall, new orders for durables with a 5.9 percent decrease, furniture and appliance sales with a 0.4 percent fall and business and personal services employment with a 0.2 percent decline.

Canadian consumer prices fall by 0.3 percent.

Canada’s consumer prices decreased in July according another report released today by Statistics Canada. The consumer price index fell by 0.3 percent from June to July following a gain of 0.3 percent in June.  Consumer prices registered an annual decrease of 0.9 percent from the July 2008 level. June’s annual rate had registered a decline by 0.3 percent.  Market forecasts were expecting the consumer price index to decline by approximately 0.2 percent for the month to an annual rate fall of 0.8 percent.

Core consumer prices, excluding energy prices, showed no change in July and registered an annual increase of 1.8 percent. Market forecasts expected core consumer prices to rise by 0.1 percent in July and register an annual increase of 1.9 percent.

CAD rises vs. USD in Forex Trading.

The Canadian dollar has gained ground against the US dollar today in forex trading after initially falling verses the American currency earlier in the day. The USD/CAD currency pair opened trading today at 1.1030 cad per usd and has increased to an exchange rate of 1.0972 at 2:35pm in the US trading session. The USD/CAD had risen to an intraday high of 1.1113 in the European trading session earlier today before retreating lower.