Author: FX_Trdr

By CountingPips.com

The U.S. economy expanded by more than expected in the 3rd quarter of 2009 and brought an end to the deep recession according to a release by the U.S. Commerce Department. The advance estimate report released today showed that the U.S. Gross Domestic Product grew at an annual rate of 3.5 percent in the July to September quarter following a real 0.7 percent contraction in the 2nd quarter. The GDP numbers surpassed economic forecasts expecting growth of 3.2 percent. The economy declined by 6.4 percent in the 1st quarter and had contracted for four straight quarters before today’s news. This was the best quarter for U.S. GDP since the 3rd quarter of 2007 (3.6%) and is the clearest sign yet that the economy is turning the corner from the worst recession since the 1930’s.

Contributing largely to the gain in GDP for the 3rd quarter was an increase in consumer spending which makes up approximately two-thirds of U.S. economic activity. Consumer spending jumped by 3.4 percent in the quarter after decreasing by 0.9 percent in the 2nd quarter and marked its largest gaining quarter since the 1st quarter of 2007.  Durable goods purchases surged by 22.3 percent for the quarter after a decline of 5.6 percent. Consumer spending and durable goods purchases were boosted by the government’s “Cash for Clunkers” program and the housing tax credit.

Exports also contributed positively to the GDP numbers as exports of goods and services increased by 14.7 percent in the quarter after falling by 4.1 percent in the 2nd quarter, the last of a string of four declining quarters. Imports advanced in the 3rd quarter by 16.4 percent following a decline of 14.7 percent in the 2nd quarter.  Gross private domestic investment  showed a gain by 11.5 percent in the 3rd quarter after falling for seven consecutive quarters.

The advance estimate GDP data is subject to revision as the 2nd estimate version is released at a later date and is scheduled for November 24th 2008.

US Dollar falls on risk taking after GDP news.

The US Dollar has been on the defensive today in forex trading against the other major currencies as investor’s increased risk appetite has pushed the American currency lower and the stock markets higher. The dollar has been losing ground to the euro, British pound, Australian dollar, New Zealand dollar, Swiss franc and the Canadian dollar while edging up versus the Japanese yen at 2:13 pm EDT in the afternoon of the US trading session according currency data by Oanda.

The US stock markets, meanwhile, have surged higher today on the GDP news with the Dow Jones gaining by over 150 points, the Nasdaq increasing over 30 points and the S&P 500 advancing by over 17 points at the time of writing.  Oil has traded higher to around $80.29 while gold has also advanced by $13.00 to trading around the $1043.00 per ounce level.

EUR/USD Chart – The Euro gaining today versus the US Dollar as the positive GDP news has spurred risk taking and dollar weakness. The Euro had fallen for the past three days in a row.

By Adam Hewison – That is the big question on many traders’ minds as gold fell from a high around $1,070 to the lows seen earlier today.

In my new video that was shot at noon on Tuesday 10/27, I go into detail on what I think is going to happen to this market. I think you will see a refreshing view of the gold market and also the strategies that we’re employing to take advantage of the next big move in gold.

As always our videos are free to watch and there is no registration requirement.

Watch the New Video Here….
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

By Adam Hewison – There is compelling evidence that we may have seen a top in the S&P index. In my new short video, I show you the evidence that I have found which may point to the fact that we are going to see a correction in this index.

While the S&P index needs to put in more work to create a major top, there are early signs that this may be happening. I think when you watch this video you will come to the same conclusion as I did in regards to this market.

As always our videos are free to view and require no registration.

Watch the Video Here….

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Source: ForexYard

The surprise drop in New Home Sales in the United States yesterday has resulted in a sudden buy-up in USD as investors flock to safe-havens. With a market that appears to be lacking a clear direction recently, major reports such as the New Home Sales report yesterday and today’s Advanced GDP data become that much more important to watch as more investors await their release before trading.

Economic News

USD – Dollar Rises despite Negative Data

The US Dollar extended gains against the EUR after a report showed an unexpected fall in U.S. new home sales for September. The data offset solid durables goods numbers and stoked fear the rally in risky assets in recent months has run ahead of fundamentals. As a result, the USD finished yesterday’s trading session 100 pips higher against the EUR at the1.4716 level. The greenback also saw bullishness against the CHF and closed at 1.0260.

Yesterday, government reports showed that U.S. new home sales unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery even as businesses appeared to be stepping up investment. New single-family home sales fell 3.6% to a 402,000 unit annual pace from a downwardly revised 417,000 units in August. That has helped the U.S Dollar revive its safe haven appeal.

The other factor which led to the bullish Dollar yesterday was that U.S stocks fell, which boosted demand for the USD as a safe-haven currency. Moreover, renewed demand for the Dollar comes after a sharp drop earlier in the month, when the greenback hit 14- month lows versus the EUR, as investors favored foreign currencies and other riskier assets such as equities.

Looking ahead today, the two main news events that may have a very large impact on the Dollar and its main currency pairs in today’s trading are the Advance GDP and Unemployment Claims around 12:30 GMT. These reports are very important as they are likely to impact the USD’s volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow these releases.

EUR – EUR Sliding against Rising Safe-Havens

The EUR slid to a more than two-week low against the dollar yesterday, as concern over the strength of the U.S. economic recovery added momentum to a broad correction sweeping across all asset classes. After yesterday, the 16-nation currency fell sharply against the USD, pushing the oft-traded currency pair to 1.4710.The EUR experienced similar behavior against the JPY and closed at 130.95.

The EUR surrendered gains against the U.S. Dollar on Wednesday, falling to session lows, as riskier assets such as U.S. stocks pared gains while commodities fell. Analysts also said investors felt uncomfortable pushing the EUR higher given the huge amount of bearish trades on the dollar, which suggests a near-term recovery in the U.S. currency is on the horizon.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is the German Unemployment Change at 8:55 GMT. Traders will be paying close attention to today’s German Unemployment Change announcement, as a stronger than expected result may bolster the EUR.

JPY – Yen Benefits from Stock Market Losses

The yen rose across the board on Wednesday as investors trimmed riskier positions in higher-yielding currencies. This came as a result of stocks falling after weaker than expected U.S. data pushed many back into safe-havens. By yesterday’s close, the JPY rose against the EUR, pushing the oft-traded currency pair to 132.95. The yen also saw bullishness against the USD and closed at 90.30.

A slide in European shares, led by declines in the banking and energy sectors, accelerated the high-yielding Australian dollar’s sharp fall triggered by lower-than-expected domestic inflation data, while boosting the low-yielding yen.
Further strengthening could be seen in the Yen if other nations begin to raise interest rates in order to ward off inflation. This could potentially wreak havoc on the Japanese economy by making Japanese exports relatively more expensive when compared to their foreign counterparts.

Crude Oil – Crude Oil Slips Below $78 a Barrel

Crude Oil fell more than $2 to below $77.20 a barrel on Wednesday, after data showed a surprise build in U.S. gasoline inventories, stirring fuel demand concerns in the giant consumer.

Oil prices also came under pressure after data showed sales of new U.S. homes tumbled unexpectedly in September, the first drop in six months, and feeding doubt about an economic recovery, thus helping the safe-haven USD rise; pushing oil prices lower.

Looking ahead, traders are advised to watch carefully the global stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone in order to predict the next movements in oil prices.

Technical News

EUR/USD

This pair seems to be giving off mixed signals today. There is an impending bearish cross on the hourly Slow Stochastic, while the 4-hour Slow Stochastic indicates a fresh bullish cross. It seems as if short-term movement is down, while the longer-term pressure remains upward. Waiting for the upward swing and then going long appears to be preferable today.

GBP/USD

This pair continues to trade in a tight range between 1.6300 and 1.6400. Most technical indicators show that this trend will likely continue. Forex traders can benefit by buying on highs and selling on lows within this trend.

USD/JPY

The sustained down-trend of this pair has pushed many indicators into showing an impending correction. There are fresh bullish crosses on the hourly and 4-hour Slow Stochastic and MACD, and the price is currently floating in the over-sold territory on the 4-hour RSI. Going long appears to be a wise choice today.

USD/CHF

This pair shows a level of short-term upward pressure with a bullish cross on the hourly Slow Stochastic. However, the longer-term pressure seems to be in a downward direction. Going short after the swing may be a good tactic today.

The Wild Card – Crude Oil

Yesterday’s bearish movement in Crude Oil has pushed a number of technical indicators into the over-sold territory. There appear to be fresh bullish crosses on the hourly MACD and 4-hour Slow Stochastic, indicating an impending bullish move. And the price has just left the over-sold territory on the hourly RSI and is now cascading upward. Forex traders involved with commodities like this can take advantage of this knowledge by going long on Crude Oil now, and at 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.

It all comes down to Higher-Lows to maintain this current trend

The last couple of trading days have been catastrophic for bullish traders, as the major indices and currency pairs have retraced severely after touching major resistance levels. U.S stocks experienced further selling pressure yesterday as a combination of profit taking and economic data forced the indices down to lower levels.

This time round it was housing data that battered trader’s confidence as the results showed that sales of new homes slid by 3.6%. The news was completely opposite to what analysts were expecting and dropped to 402k in September. Furthermore MBA Mortgage Applications showed a decrease of -12.3%. Even though durable goods showed a positive result during pre-market hours, coming out as expected, the data was quickly brushed aside throughout the start of the session.

From a technical point of view, one can see on the chart that investor’s sentiment has flip-sided over the last couple of trading days. Even though support levels are failing to hold, the major indices are still trading above their prior lows. The form of a higher low on the indices would confirm that the current trend is still intact.

Volatility Explodes Higher, Investors flee to the Dollar for Safe Haven

The recent change in sentiment has caused volatility to spike as investors have been quick to rush out of riskier assets and cash-in on recent gains. The VIX, an index known to measure market volatility has increased by approximately 25% over the last couple of trading days. During yesterday’s session the VIX jumped by a whopping 12.4%, due to broad selling and investor’s preference to head back into the U.S Dollar.

From under 75 points the Dollar index has bounced higher over the last couple of trading days and has even broken out of its major trend line resistance. Even though the chart patterns are showing possible signs of a start of a new trend, one must note that overall fundamentals are still pointing towards further Dollar weakness as the U.S economy is slowly crawling out of its dire straits. Will the current bounce turn out to be a fake out?

Dollar index

Surprisingly enough, the currency pair which has been presenting relative strength over the last couple of trading days, has been the GBP/USD. Other pairs such as the EUR/USD and the AUD/USD have dropped due to recent opinions that those pairs have climbed to far too fast. The GBP/USD managed to hold on to its current levels after dropping on Monday and has even presented mild gains. One must note that even though this pair is showing resilience, continued selling pressure across the board could also have an effect on this pair, eventually sending it to lower levels.

By taking a glance at the following comparison chart one can see that while the Euro has severely declined over the last couple of trading days the Pound has managed to hold its ground.

Market Data to Watch Out For

Today’s trading session should be a rocky one, as a wave of economic data is scheduled to be released. Starting in Europe, Germany will release its unemployment rate, which is expected to show a jump to 8.3%. Even though other low priority data will be released throughout the day, eyes will jump to the U.S data, as the GDP result is scheduled to come out. Even though, according to analysts the number is expected to show an increase, recent declines in consumer spending and confidence, could show a different figure and dissapoint.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Yan Petters – The Fibonacci Retracement Lines are a fantastic tool that our platform provides you in order to detect future movements. In case you don’t how to use it, do yourself a favor and read the rest of this article.

How to set it?

First of all, open a chart, it doesn’t matter which one and make sure that the crosshair is switched on. Now, choose a certain time frame, for example the last 20 candles. The next thing you need to do is to spot the highest level and the lowest level of the frame you chose. On the chart you have the option to draw a trend line. Please click on the down arrow next to it. Various options will be opened – choose Fibonacci Retracement. Now what you need to do is to stretch the Fibonacci retracement lines from the left to the right of the frame you chose before, making sure that the highest line (the 100% line) touches the highest level of the chart, and the lowest line (the 0% line) touches the lowest level of the chart. It should look like this:

* Do you see that within the box I chose, the 100% line and the 0% line touched the highest and lowest levels within the box? It didn’t match the highest and lowest levels of the chart, but it doesn’t matter – you get to choose what will be the time frame, and this time we have limited the time-frame to the box.

Now how do we use it?

Very simple, just follow the lines. The idea is that if the pair has breached a certain level, it is likely to reach the next level, and so on. On the other hand, if the pair fails to breach a certain level, it is likely to reverse and reach its previous level once again.
Do note that the same as anything else, the wider the time-frame you pick, the more accurate the Fibonacci prediction will be. I do not recommend using this method with the 5-miutes chart or the 1-hour chart. The 4-hour chart seems to be the minimum time-frame required. Do bear in mind that using the 4-hour chart is useful only if you’re planning to keep the position open for a day or so. Otherwise, don’t waste you’re time on this strategy.

Forex Market Article 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.

Source: ForexYard

The USD continued to advance Tuesday against major currencies as a measure of U.S. consumer confidence registered an unexpected decline for October. Gold futures extended losses from the previous session as the USD rose. December Gold fell $7.40, to settle at $1,035.40 an ounce on the Comex division of the New York Mercantile Exchange and is currently trading around $1041.

Economic News

USD – USD Gains on Weak Consumer Confidence

The USD gained against the EUR for the second session in a row on Tuesday, after the release of unexpectedly weak U.S. confidence data intensified risk aversion with investors. Further concerns arose about the possibility the Federal Reserve will signal an eventual end to its stimulus policy stance at its FOMC meeting next week. The dollar index rose to 76.233, up from 76.100 late Monday, recovering from losses seen during Tuesday’s earlier session.

The Conference Board’s index of consumer confidence declined to 47.7 from a revised reading of 53.4 last month. This weakness mirrors the continuous rise in unemployment levels and undermines stabilization in other areas of the economy such as stabilization in financial markets and home prices.

Looking ahead for today, the release of the Core Durable Goods Orders at 12:30 GMT and New Home Sales at 14:00 GMT will likely cause volatility for the USD pairs. Further disappointing data may push the EUR/USD pair even lower.

EUR – EUR Down ahead of the Release of Key German Data

The EUR hit a session low at $1.4769 Tuesday afternoon, its lowest level since Oct. 13. Late Tuesday, the EUR was at $1.4802, down from $1.4865 late Monday and off a 14-month high of $1.5064 seen at the start of Monday’s session. The EUR was at ¥135.88, down from ¥137.08. The U.K. pound was at $1.6389, up from $1.6324.

Along with the disappointing U.S consumer confidence report, the EUR was down on an expectation the German jobless rate probably rose to 8.3% in October from 8.2% in the previous month before tomorrow’s report. Furthermore, according to analysts, the six month rally in stocks and commodities is probably at its peak as U.S. growth continues to lag, further hurting the appeal of riskier assets such as the EUR.

Looking ahead to today, investors should follow the release of the German CPI report which is forecasted to show consumer prices worsened, putting further pressure on the EUR

JPY – Yen Gains on Return to Risk Aversion

The JPY gained against major counterparts on speculation the global economic recovery will slow, reducing demand for high yielding assets. The Yen rose to 135.55 per EUR in today’s early trading, from 135.89 yesterday, after earlier reaching 135.43, the highest level since Oct. 21. The JPY traded at 91.50 per USD, up from 91.80 Tuesday.

The Yen traded near a one week high against the EUR ahead of reports due today and tomorrow that are forecasted to show German consumer prices and unemployment worsened, reiterating the notion that the European Central Bank (ECB) will keep interest rates low.

Japan’s retail sales fell for a 13th month in September. Sales slid 1.4% from a year earlier. The continuous poor data reinforces the idea that recovery will be slow.

Oil – Crude Prices Up ahead of Inventory Data

Crude Oil futures rose Tuesday, breaking a three day losing streak. Light, sweet crude for December delivery settled 87 cents, or 1.1%, higher at $79.55 a barrel on the New York Mercantile Exchange. A buying surge late in Tuesday’s session overturned Crude’s earlier losses caused by a stronger Dollar.

A report due today at 14:30 GMT is expected to show U.S Oil Inventories increased slightly. However, despite high Oil inventories, as long as equity markets stay stable the price of Oil should go up. Strong equities support Oil Prices as was evident Tuesday; despite weak consumer confidence, there was still appetite for riskier assets such as stocks and Oil.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-sold territory on the RSI of the 4-hour chart, signaling an impending upward move. The fresh bullish crosses on the hourly chart’s Slow Stochastic and MACD support this notion. Going long appears to be a good strategy today

GBP/USD

The price of this pair has been sending mixed signals over the past few days as it continues to trade in a wide range. There appears to be a bearish cross on the hourly chart’s Slow Stochastic; however, a fresh bullish cross has just occurred on the hourly chart’s MACD. With bullish and bearish crosses on the MACDs of the 4-hour and daily charts, respectively, traders may find it difficult to choose a direction. Waiting for a clearer signal might be a wise choice today.

USD/JPY

The sustained downward movement these past few trading days has apparently generated a bullish cross on the hourly chart’s Slow Stochastic, indicating a short-term upward correction may occur shortly. As the weekly Momentum oscillator begins to turn a corner, we may very well be seeing a reversal in the making. Going long to enter this new trend may be a wise move today.

USD/CHF

Last days’ sharp upward movement appears to have pushed the price of this pair into the over-bought territory on the RSI of the 4-hour and daily charts, indicating a downward correction may be due. The volatile breach of the upper border on the 4-hour chart’s Bollinger Bands also signals strong downward pressure. Going short might be a wise choice today.

The Wild Card – AUD/USD

There appears to be a fresh bullish cross on the 1 hour chart’s Slow Stochastic for this pair, signaling an upward movement may be in the making. With its sustained downward movement over the past days, this pair is overdue for a rebound. With fresh bullish crosses on the MACD for the hourly, 4-hour charts, this rebound may indeed be developing. Forex traders can definitely take advantage of this swing by buying this pair now, and at 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.

Market Movers of the Day

Asia-Pacific

*Japanese Retail Trade in September better than expected at -1.4% on an annualized basis

Europe

*UK CBI Distributive Trades Survey better than estimated at 8 in October

Americas

*US Consumer Confidence worse than expected at 47.7 for October

*US S&P/Case-Shiller Home Price Index for August better than forecasted at -11.3%

The Overall Sentiment

Forex

A surprising drop in US Consumer Confidence spurred risk aversion sending investors to play it safe pushing the Dollar higher against riskier currencies as the Aussie and New Zealand dollars. The Dollar continued to advance against the Euro driving the EUR/USD below 1.48. The Yen also beneficiated from the negative sentiment for higher-yielding currencies and with better-than-expected Japanese Retail Trade data climbed against most of its peers. The Pound strengthened against most majors and rose against the Euro for a second day after UK CBI Distributive Trades Survey positive figures. EUR/GBP broke below 0.9050 aiming for the 0.90 level.

Equities

Sentiment continued to be bearish for US stock markets after US Consumer Confidence surprised for the worst with an unexpected drop in October showing consumer worries about job losses and future earnings could have an impact on spending in the upcoming holiday season. The S&P lost 0.3%. UK equities managed to climb in spite of the negative sentiment coming from the US led by Europe’s second largest oil company, BP Plc, whose Q3 earnings reports surprised for the better beating market forecasts. The FTSE gained 0.2%. Japan’s equities dropped driven by losses coming from technology companies after disappointing earnings reports. Honda Motor was the best performer after tripling its profit forecast. Overall, Japanese Nikkei 225 fell 0.7%.

Commodities

The strengthening Dollar pushed Gold below $1035 in a four-day straight decline. Silver followed to trade below $17. Oil recovered from yesterday’s drop but remained under the $80 mark.

See more info on Gold

The Day Ahead

The day will start with Australian Consumer Price Index shedding light on the country’s inflation. German CPI will follow in a day with a thin stream of data coming from Europe. Moving to the US session, Durable Goods Orders report is expected to show that orders rose 1.0% in September and a gain of 2.6% is expected for New Home Sales. It will be a big day for New Zealand with the release of its Trade Balance for September and the RBNZ Interest Rate decision where no change is expected for the record-low 2.5% official rate.

Technical Analysis

USD/CAD DAILY

After sharply falling more than 700 pips to bottom at 1.02 USD/CAD recuperated regaining lost ground to reach the 1.07 mark. The pair currently trades at a very interesting spot where a daily closing above 1.07 will confirm its bullish momentum with more territory to advance but it also could be a good opportunity now to enter a Short position to take advantage of a correction after such a steep gain.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Source: ForexYard

Dollar trading today is set to be dominated by key releases from the U.S., such as the CB Consumer Confidence figures at 14:00 GMT. The speech by Treasury Secretary Timothy Geithner at 20:00 GMT is also set to be a market mover when it takes place at 20:00 GMT. It is also recommended that you follow the results from top U.S. companies, as this may help the U.S. Dollar continue to gain on its recent bullish trend.

Economic News

USD – Dollar Soars on Safe-Haven Status

The USD made impressive gains throughout Monday’s trading. This process was sustained, as concerns of investors rose on fears that U.S. lawmakers will make big cutbacks on tax credits for new homebuyers. If this does actually occur, then Bank of America will need to pay back its government debt by selling a large amount of its shares. As the day went by, the USD eventually recovered from the recent 14-month low vs. the EUR, as the leading U.S. equity indices, such as the S&P declined. This led to further demand for the USD on Monday, especially as Gold tumbled significantly yesterday.

The EUR/USD cross declined by a massive 190 pips to the 1.48.50 level. It is important to take into account that this behavior is set to shock the market for the rest of the current month of October. The GBP/USD pair was virtually unchanged, as it closed at the 1.6290 level. This was due in part to the GBP’s great strength throughout yesterday’s trading. The USD also made some very impressive gains vs. the JPY, CHF and Canadian Dollar. All of this remarkable behavior may tilt the top U.S. and global banks into labeling the U.S. Dollar as a safe-haven currency once again.

Looking ahead to today’s trading, there is set to be some very important economic news that is scheduled to be released from the U.S. The most important of these are the S&P/CS Composite-20 HPI at 13:00 GMT, the CB Consumer Confidence figures at 14:00 GMT and the very important speech by U.S. Treasury Secretary Timothy Geithner at 20:00 GMT. The latter of these 2 events is set to be the main driving force behind the USD’s strength today. You should also follow other releases form the leading industrialized economies, as the trading day unfolds.

EUR – GBP Rises on All Fronts

The British Pound rose on all fronts yesterday, as British business confidence rose to an 18 month high. Moreover, consumer prices are forecast to rise faster than any industrialized economy. This is as the inflation rate is expected to be 2.1% this year, far higher than that of the Euro-Zone and the U.S. The GBP continued to rise yesterday, as traders lost faith in the EUR, and realized that the Pound was undervalued. Additionally, investors, continue to realize that the GBP is over 20% undervalued, and some type of bullish correction is looming. This is especially so, as the Bank of England (BoE) may raise Interest Rates sooner than many expect.

The British currency made some massive gains vs. the EUR by nearly 130 pips to reach the 0.9119 level. The GBP/USD cross was unchanged at the 1.6290 level, as both the GBP and USD were the leading bullish currencies in Monday’s trading. The British currency also made significant gains vs. the JPY, as the pair ascended to the 150.55 level. With regards to the EUR, it declined against its major currency pairs. This was exasperated yesterday, as U.S. and European equities slid on Monday. The main benefactors of this seemed to be the GBP and USD.

Today, both the Euro-Zone and Britain are set to be publishing some very important economic indicators. These releases will be key in setting the undertone for both the GBP and EUR throughout today’s trading. From Britain, there will be the ever so important CBI Realized Sales release at 11:00 GMT. From the Euro-Zone, there will be the M3 Money Supply and Private Loans results at 09:00 GMT. Forex traders are recommended to open their positions in the majors, now, as today’s trading is set to offer some very big profits.

JPY – Yen Makes Gains vs. the Pacific Currencies

On one hand, the Japanese currency made losses vs. the USD and GBP. However, these gains weren’t worrisome, as these 2 counter currencies were the big bulls yesterday. With regards to the Pacific currencies, the JPY did make some significant gains vs. the AUD and NZD. This was due to a number of reasons. The most important of these being Japan’s Prime Minister Yukio Hatoyama’s comments on how he’ll revolutionize the Japanese economy in the coming months.

The JPY lost ground against both the Dollar and the Pound. However, it made some gains vs. the EUR. The JPY rose 65 pips vs. the New Zealand Dollar to reach the 66.80 level. At one point yesterday, the JPY was trading higher by nearly 70 pips vs. the AUD, to eventually close at the 84.50 level. The most important release to follow from the Japanese economy today is the Retail Sales figures at 23:50 GMT. In the meantime, open your positions in the JPY’s main crosses now.

OIL – Crude Oil Slides on Rising Dollar

Oil fell significantly on Monday, as the U.S. Dollar made significant gains. Crude dropped nearly a Dollar to close at $78.81. This was originally sparked by fears in the U.S. over the government cutting tax credits for homebuyers. This sent fears through the equities market. Thus the obvious loser of all of this was Crude Oil, as the USD gained as global investors seeked a safe-haven currency in Monday’s trading.

Crude’s losses are notable, as the black gold had been trading as high as $81.58 on Monday. The other factor that also played on the mind of traders yesterday was that demand of U.S. consumers may slide in the coming weeks as the pace of the U.S. economic recovery slows, and U.S. unemployment continues to rise. If the USD continues to rise today, then we may see Crude Oil continue to decline.

Technical News

EUR/USD

A bullish cross may be forming on the hourly chart, indicating a potential price movement towards the upper resistance level of 1.4985. The daily chart’s Bollinger Bands are tightening, indicating that a violent breach may take place in the next few hours, supporting the potential bullish movement

GBP/USD

On the 30 min chart the pair continues to range trade in the upper half of its Bollinger Bands. Both the 1 hour and the 4 hour charts are providing mixed signals with no significant breach. Such a range trading floating nature may provide a good opportunity for traders to safely buy on the lows and sell on the highs while profiting from the relatively predictable range trading.

USD/JPY

The bullish trend is loosing its steam and the pair seems to be consolidating around the 92 level. The 4-hour chart shows a fresh bearish cross that has just formed, indicating a future downward price movement. Supporting this is the RSI on the daily chart which is floating in the overbought territory. Traders may look for the pair to reach a lower support line of 91.55.

USD/CHF

There is a very accurate bearish channel forming on the hourly chart, as the pair has consecutively dropped for the past 2 days. Currently, as the RSI on the daily chart is floating below the 50 line and the Slow Stochastic is pointing down, the pair might extend its bearish trend. Going short might be the right choice today

The Wild Card – Oil

Oil prices are once again dropping, and a barrel of Oil is currently traded at around the 78.80 price level. And now the RSI on the 30 min chart broke above a bearish trend line indicating that oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

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.

Market Movers of the Day

Asia-Pacific

Australian PPI at 0.1% versus 0.3% expected

Europe

German Gfk consumer confidence disappointed with a reading of 4 against 4.5 expected

The Overall Sentiment

Forex

Although the stream of economic data was rather thin the Dollar regained strength rather aggressively against most of its peers, as a reaction to circling rumors the tax relief program for home buyers in the US might be terminated soon. The rumors coming in the midst of the earnings season caused worries over the heath of the economy to refloat once more. The rising bets on lower growth pushed the Dollar higher against the high yielders in a typical risk aversion play. The Dollar moved to a one week high against the Euro trading around 1.4850 $, edged around 1.2 against the Swiss Franc and bottoming around 0.9125 versus the Aussie. The Kiwi also gathered much attention amid comments from the Prime Minister of New Zealand that the strong Kiwi is helping to offset inflationary pressures. The statement coming ahead of the expected rate decision in New Zealand dented bullish momentum for the Currency  pushing it to as low as 0.744$.

Equities

Sentiment was strongly bearish in reaction to worries over the termination of the tax relief program to US home buyers. The circling rumors alongside downgrades for some of the US largest banks pulled shares of the Banking sector and homebuilders south into red territory, causing benchmark indexes to sink lower. Among the out standers were Bank of America and American Express with BofA falling more than 5% as investors speculated the bank will be forced to raise more capital. On the contrary American Express outstood on the positive side as the credit card company posted better than expected earnings with shares edging slightly higher. Benchmark indexes ended in the red across the board with S&P closing -1.17% lower, the FTSE lower by approximately -1% and the DAX by -1.71%.

Commodities

Sentiment was rather bearish in tandem to stronger Greenback and lower yield on Treasuries. Oil fell more than 3.5$ before settling bellow the 80$ mark at 78$, Gold moved bellow the 1050$ support and settled around 1040$ an ounce and silver fell below 17$ before rebounding slightly to 17.2$ an ounce.

The Day Ahead

The Day will be loaded with consumer data across the Globe. Starting with UBS Consumption indicator in Switzerland and then moving to the CBI Distributive Trades survey which will indicate on the consumption trend in the UK .In the US highly regarded Consumer data is due with the Consumer confidence at 14:00 GMT followed by the ABC/Washington post consumer confidence later in the day. The concluding consumer data for the Day will be the Retail Trade data in Japan due at the end of the trade with investors eager to see more positive news on the Japanese consumer. All in all investors will look for signs of a consumer recovery  with any positive surprise pushing the low yielders mainly the USD and the Yen lower as risk appetite could rise. The speech by Treasury secretary Timothy Geithner will be at the background and could weigh on the potential anti-Dollar sentiment, in case an exit strategy will be mentioned.

Technical Analysis

NZD/USD

After falling sharply to the 0.744 area the pair has stabilized and could potentially regain strength. The 0.744 is in line with the bullish trend line making it a good benchmark to start another bullish cycle. The 0.7550 area should be closely watched as it poses a strong resistance and only a break of that level would confirm the resumption of the bullish trend. A substantial break of the 0.744 level downwards could invalidate this scenario and push the pair to a deeper retreat.

Market Analysis provided by eToro

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