InvestMacro FX

By Greg Holden – It didn’t take long for forex traders to notice the sharp rise in JPY crosses this morning. But many have expressed a type of unfamiliarity with the politics of Japan to truly grasp what was happening. Let’s try to understand what’s going on there.

First off, Japan likes having a weak yen. In fact, it loves having a weak yen. If the Bank of Japan (BOJ) could keep the yen exceedingly weaker than it currently is, it would. But there is the opposing pull of free markets, and the tenets of an international, free-floating, foreign currency exchange system which demands as much laissez faire as possible, and chastises those who act differently (e.g. China).

But Japan is an export-dependent country that needs its currency weak to help its goods gain better access to markets. So the rise of the yen since 2007 (as much as 50% gain on the USD since then) has the BOJ fuming. But what can they do if they want to remain fair partners in the global economic community?

Despite the political sensitivity surrounding a bank’s attempts at currency intervention, Japan’s central bank decided that it was time to step in and weaken the yen for its own economic survival. It’s not the first time, either. The BOJ stepped in back in 1999 and 2004, but much earlier in comparison. It shouldn’t have come as a surprise, though. Japan has been edging itself towards intervention for some time now. And speculators have been anticipating this move for weeks.

So now that it has happened, try to grasp what this means. Basically, the BOJ is selling its own currency, en masse. It’s flooding the market with its own currency by releasing its reserves of that currency. The result is what we’ve seen this morning: mass depreciation of the JPY. We shouldn’t expect major changes anytime soon, either. Anticipate a continuation of the JPY’s fall going into the next few weeks.

Forex Market Analysis provided by ForexYard.

© 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.

Well, well, well. The EURUSD pair or the fiber as what traders call it in the streets appears to have broken out from a rectangle or consolidation. You see, the had been trending up from a low of 1.1876 last June 7 to a high of 1.3334 in August before correcting. All along I thought that the pair would already reverse but it did not. What it did was it only corrected to its 50% Fibonacci retracement level. It then continued to range or trade sideways until yesterday where it broke out to the upside when it finally breached the 1.2900 hurdle. However, the pair seems to be meeting some temporary resistance at 1.3000. If and when it moves past this number, chances are it would once again revisit its previous high just above 1.3300. Given the upside breakout, I can say that there is now a higher probability that the euro will move higher against the US dollar in the near term.

Germany’s September Zew economic sentiment index came in sour, unexpectedly falling to -4.7 (vs. 10.7) from from 14.0. The same sentiment index for the entire euro zone also slipped to 4.4 from 15.8. The slide in confidence can be attributed to the wide budget cuts done by the governments that make up the economic zone. Remember that the zone was being plagued with a credit crisis. One way to plug the countries’ deficit holes would be to drastically slash their spending. A cut in spending would obviously limit the business activity in the region but given Europe’s present fiscal situation, such move is really warranted.

Despite this, the euro still managed to outmaneuver the greenback thanks to the better than expected US core retail sales. Core retail sales in August grew by 0.6% which is twice of the market’s 0.3% consensus.

No high impact economic reports are due from the euro zone for the rest of this week. The euro, however, could take its cue from the releases from the United States. Today, the Us will publish its Empire State manufacturing index and its August industrial production. The former is seen to have reached 8.7 from 7.1 while the latter is expected to have increased again by 0.3%. The expected improvement in the Philadelphia Fed manufacturing index (from -7.7 to 0.9) which will be due tomorrow and the projected jump in the Prelim UoM Consumer Sentiment (from 68.9 to 70.3) could also induce some risk taking. Watch out for these reports.

More on LaidTrades.com …

By Russell Glaser – A breakout yesterday during the New York trading session took the EUR/USD above a key consolidation pattern and a resistance level that has held for over a month. In order to avoid a false breakout, the pair will need to close above the long term downward trend line that begins in December of 2009.

Yesterday, the pair originally sold off following worse than expected German economic expectations. However, later in the day the EUR/USD rallied after US Retail Sales data helped to boost risk sensitive currencies. This continued the bullish move for the pair and helped push the price above the resistance level at 1.2930 that has held for the last month.

The rise in price was as high as 1.3030 and completes the ascending triangle pattern. However, the breakout to the upside was capped by the falling trend line that begins in early December of 2009. This will serve as the first resistance level for EUR/USD at 1.3030 (R1), followed by the low from August 10th at 1.3070 (R2).

A breach above the rising trend line would set up an opportunity to go long on the EUR/USD to with a target of R2. But should the rally stall at the long term downward trend line, the recent gains could unravel and the pair may fall back into the consolidation pattern, targeting the rising lower boundary line at 1.2730.

Forex Market Analysis provided by ForexYard.

© 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 Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar weakened versus the G10 despite stronger than expected US retail sales data. Recent US data has been more positive but that has not stopped investors from worrying about future Fed actions although it appears policymakers are in a holding pattern as they wait for more data. Dropping Treasury yields also stoked worries of future Fed asset purchases as there was decent buying from foreign institutions behind the move. Equities were flat and oil and gold $76.79 and $1268.55 at the time of writing. EURUSD traded 1.2830-1.3033, USDJPY 82.92-83.76. Our team does not think the Fed will announce anything immediate as the data has not been weak enough to argue for further easing and officials are starting to put the onus on more fiscal-oriented shifts. Among the data releases, headline and ex-auto retail sales were better than expected, though there was a slight downward revision for July figures. That said, there were still some signs of a hesitant consumer as larger ticket items were softer. Even so, real consumer spending (including services) appears to be accelerating and our economists estimate that it is rising at a 2.2% annual rate so far in Q3, up from the 1.9% pace in H1. Upcoming US data releases include industrial production and capacity utilization.

EUR

The German ZEW survey surprised sharply to the downside with the sentiment survey registering a surprise negative print of -4.3. The current situation survey however was much stronger than expected at 59.9. Our team notes that the ZEW is not a very reliable leading indicator, but the figures are consistent with the view that Q3 will remain strong, but activity will falter afterwards. Eurozone industrial production was a little softer at 7.1% y/y. Up next is Eurozone CPI, with no change expected in the y/y reading.
GBP

Sterling weakened on the accelerating decline in UK house prices according to the RICS house balance for August before rebounding in the broader dollar sell-off. The RICS data was -32% versus consensus -12%.In other data, headline CPI was unchanged at 3.1%y.y, but monthly sequential inflation was again higher than expected at 0.5%. Martin Weale, in his testimony, brushed off any suggestion that there was scope for changing in the inflation target, but implicitly acknowledged that inflationary pressures were somewhat stronger than expected, calling the OBR’s 4% output gap estimate “plausible”.
Labour data is due and BoE Governor King addresses the Trades Union Congress. This marks the second occasion where a BoE governor speaks at the annual Trades Union Congress and following BoE policymaker Weale’s comments, King’s speech and ensuing Q&A should draw the focus of investors.

TECHNICAL OUTLOOK

EURUSD NEUTRAL Model has turned neutral; 1.3334 and 1.2588 mark the key near-term directional triggers.
USDJPY BEARISH Trend is bearish; there is little support till 79.75 key level. Short-term resistance is defined at 84.43 ahead of 85.23.
GBPUSD BEARISH Support is at 1.5297 with resistance above 1.5565 at 1.5731.
USDCHF BEARISH Slashed through 1.0061 thus exposing 0.9918 with scope for 0.9786. Near-term resistance comes in at 1.0278 ahead of 1.0466.
AUDUSD BULLISH Rise above 0.9389 and 0.9406 targets 0.9563. Near-term support is at 0.9309.
USDCAD NEUTRAL 1.0673 and 1.0108 define the next bull and bear triggers respectively.
EURCHF BEARISH Sell-off from 1.3924 found support at 1.2766; break of the level would expose 1.2403. Resistance at 1.3163.
EURGBP NEUTRAL Pulls back before 0.8390; move below 0.8252 and 0.8142 next would reinstate the bearish tone.
EURJPY BEARISH Focus is maintained on 105.44, next support at 100 psychological level. Resistance is at 111.19.

Forex 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 Anton Eljwizat – The Japanese Yen experienced one of its most bullish trading days in recent weeks on Tuesday against the USD. The USD/JPY fell as low as 82.97, its lowest level since mid-1995, after Japan’s prime minister won a ruling party leadership vote, reducing the chances Japanese authorities would attempt to stem yen gains. But overnight the Bank of Japan intervened in the FX market to weaken the yen.

Another developing trend is the recovery of Gold. Since the Dollar began dropping against the majors, gold has risen further and further. Currently traded around $1268 an ounce, if the Dollar will continue to drop, gold could reach $1280 an ounce by the end of the day.

Today’s Leading Indicators

14:30 GMT: US Crude Oil Inventories
• Crude oil’s plunging price has been a headline feature of the market in recent weeks. This release may take precedence over the market as the price of oil has gained relevance to today’s trading.
• A growing level of inventories may signal a lack of demand and push prices lower, while a negative release may highlight a lack in supplies, increased industrial usage, and an overall demand for more oil, which may help oil prices climb back towards $80 a barrel in the short-term.

21:00 GMT: NZD Official Cash Rate
• Forecast shows that the number is expected to stay at 3.00%.
• Therefore, the Impact of the interest rate decision may in fact strengthen the NZD in the longer run.
• Traders should focus their attention on this release, as it is expected to be the highlight of the week for New Zealand markets.

Forex Market Analysis provided by ForexYard.

© 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 Yen rose to a 15- year high against the dollar on Tuesday after Japan’s prime ‎minister won a ruling party leadership vote, reducing the chances Japanese authorities ‎would attempt to stem yen gains. The USD/JPY fell as low as 82.91, its lowest level ‎since mid-1995.‎

Economic News

USD – Dollar Drops against the Majors

The U.S. dollar fell against most of its major currencies on Tuesday, touching a 15-‎year low below 83 yen as a break of technical support levels in several currency pairs ‎sparked a stampede out of the greenback. Also the AUD/USD pair rose as high as ‎‎0.9456, its highest level since July 2008 before correcting itself. Currently the pair is ‎trading around the 0.9370 level.‎

The significant break came in late morning New York trade on market talk that ‎Goldman Sachs said in a research note that while it suspects the Federal Reserve will ‎ratchet down growth forecasts, the revision is unlikely to be enough to spark ‎additional easing.‎

Another leading indicator released yesterday was U.S. Core Retail Sales. This number ‎handedly beat last month’s results but failed to provide strength to the Dollar as ‎investors may be waiting for key data due to be released today to implement their ‎trading strategies.‎

Looking ahead today, the two main news events that may have a very large impact on ‎the Dollar and its main currency pairs are the Industrial Production and Crude Oil ‎Inventories at 13:15 GMT and 14:30 GMT respectively. These reports are very ‎important and are likely to impact dollar volatility. Traders should pay close attention ‎to the market as there is an opportunity to capitalize on the fluctuations which are ‎likely to follow this release.‎

EUR – EUR Traded Near One-Month High against Dollar

The EUR strengthened against most of its major counterparts yesterday, continuing to ‎prove that for the time being the euro is the solid currency that traders can rely on to ‎provide them with steady profits. The 16-nation currency extended gains versus the ‎USD on Tuesday, to close at around 1.2980 amid a broad sell-off in the U.S. dollar. ‎

The euro experienced similar behavior against the JPY and closed at 109.90.‎
The euro’s advance began after U.S. retail sales rose more than ‎expected in August, ‎notching the largest gain in 5-months. Once the euro broke above ‎‎$1.2920-30 area, the ‎level that was the top of the range since August, it kept going to a ‎one-month high of ‎‎$1.3033. The move may be accelerated, as ‎being at parity was a key technical point ‎which may encourage more selling of dollars, ‎analysts said. ‎

In addition, the single currency, which slid below $1.19 in June on euro-zone debt ‎trouble, has since risen by more than 8% after smooth government debt auctions in ‎Greece, Portugal, Spain and Ireland eased concerns.‎

JPY – Yen at 15-Years High vs. Dollar

The yen rose to a 15- year high against the dollar on Tuesday after Japan’s prime ‎minister won a ruling party leadership vote, reducing the chances Japanese authorities ‎would attempt to stem yen gains. The USD/JPY fell as low as 82.91, its lowest level ‎since mid-1995 before correcting itself. Currently the pair is trading around the 84.60 ‎level.‎

The yen has gained more than 10% against the dollar this year as recent weak U.S. ‎data and record low bond yields drove money away from U.S. assets.‎

Investors worry over a recent rise in the JPY as it makes Japanese products less ‎competitive abroad and hurts the value of overseas sales when translated back into the ‎Japanese currency. With steady gains primarily against the dollar, much of the yen’s ‎bullish movement could be contributed to the repatriation of overseas earnings by ‎Japanese companies into the local economy. This has had a positive effect on major ‎JPY currency pairings, as the rising turmoil in the market is leading to greater ‎investment in the Japanese currency.‎

Oil – Traders Await Crude Oil Inventory Report

Oil settled below $77 a barrel Tuesday as the stock market swung between losses and ‎gains on mixed economic news. After a run-up from $72 a barrel at the end of August, ‎crude oil has again slowed its advance, mainly on concerns about the strength of the ‎global economy. While positive news on China’s economy has tended to push prices ‎up, data from the U.S. and Europe has been a mixed bag, keeping a lid on price ‎increases.‎

Today, the release of the crude oil inventory report is likely to help determine the ‎market’s next direction for black gold. Moreover, a release of a string of positive ‎economic figures from U.S. could help its bullishness. Therefore, traders are advised ‎now to make some profits as the price of crude oil is set to remain volatile in the short ‎term.‎

Technical News

EUR/USD

There appears to be a bullish cross on the hourly chart’s Slow Stochastic for this pair, ‎indicating an upward correction may be imminent. The recent bullish cross on the ‎daily chart’s Slow Stochastic supports this notion. Going long might not be a bad idea ‎today.‎

GBP/USD

The price of this pair appears to be floating in the over-sold territory on the RSI of ‎both the hourly and daily charts, indicating that we could see an upward correction in ‎the nearest future. The bullish cross on the hourly chart’s Slow Stochastic supports this ‎notion. Going long might be a good strategy today

USD/JPY

After yesterday’s volatile price movements, this pair appears to have temporarily ‎calmed down. The price appears to be floating in neutral territory on most oscillators ‎and momentum appears to be showing a flat price movement. Waiting for a clearer ‎signal might be the right choice today

USD/CHF

The Bollinger Bands on the hourly and daily charts appear to be tightening in ‎anticipation of a volatile movement. With the recent bullish cross on the 4-hour chart’s ‎Slow Stochastic oscillator, the impending movement may be a downward correction. ‎Going long with tight stops might be the right choice today

The Wild Card

Platinum

The continuous upward trend in this commodity appears to be running out of steam ‎lately. The highs of the upswings have begun to diminish in size and the longer-term ‎oscillators are beginning indicate an imminent correction. There appears to be a bearish ‎cross on the daily chart’s Slow Stochastic, and the weekly Momentum oscillator has ‎turned downwards. ‎ Forex traders have a great opportunity to enter this possible trend ‎reversal at a fantastic price and capture the impending price swing.

Forex Market Analysis provided by ForexYard.

© 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.

EUR/USD

Break above key 1.2920/31 resistance area completes a four week base, targeting 1.3045, 61.8% retracement of 1.3332/1.2586 downleg, with 1.3032 seen so far. Break above 1.3045 will open 1.3074/1.3128. Downside, 1.2920 offers initial support, while loss of 1.2828 sidelines near-term bulls.

Res: 1.3032, 1.3045, 1.3074, 1.3128

Sup: 1.2955, 1.2920, 1.2875, 1.2828

GBP/USD

Extends recovery from 1.5346, yesterday’s higher low, to test 1.5565, 38.2% retracement of the 1.5997/1.5295 fall. Further gains will target 1.5596/1.5617, possibly 1.5645, 50% retracement. Only sustained break below 1.5470/45 weakens the structure.

Res: 1.5554, 1.5596, 1.5617, 1.5645

Sup: 1.5448, 1.5385, 1.5343, 1.5295

http://mediaserver.fxstreet.com/Reports/325f5b3f-7a7d-4768-8193-afec3573778f/gbpusd_20100915074835.gif

USD/JPY

Hit a fresh yearly low at 82.86 today, before surging higher in correction. Market is currently attempting at 85.21, key near-term resistance, break of which would delay bears in favor of stronger correction, initially towards 85.92/86.39. Failure to break above 85.21, however, would risk a lower top and continuation of the underlying negative trend.

Res: 83.83, 84.17, 84.47, 84.62

Sup: 84.72, 84.47, 84.00, 83.75

USD/CHF

Rejection at 1.0276, near 38.2% of 1.0630/1.0060 decline, confirmed the underlying bear structure. Loss of critical support at 1.0065/60, multi year bear continuation pivot, would project a significant weakness longer-term, with 0.9932 seen so far, just above target at 0.9916, 2009 low. Upside, 1.0050/61 caps for now.

Res: 1.0054, 1.0061, 1.0088, 1.0097

Sup: 0.9932, 0.9916, 0.9900, 0.9870

AUDUSD broke above 0.9404 (2009 high) and reached as high as 0.9457 level. Minor consolidation of uptrend would more likely be seen in a couple of days. Support is at the uptrend line on 4-hour chart (now at 0.9313), as long as the trend line support holds, we’d expected uptrend to resume and another rise to 0.9600 is still possible. However, a clear break below this trend line support will indicate that lengthier consolidation of uptrend is underway, then the pair will find support at 0.9200-0.9250 area.

Daily Forex Signals

There was a new and interesting report out of the Financial Times recently that analyzed the top ten hedge fund managers of all time according to their historical trading returns. According to the report, George Soros was the most successful manager with a total return of $32 billion for his fund spanning the last 30+ years. John Paulson of Paulson & Co came in second with a total return of $26.4 billion while Ray Dalio, Bruce Kovner, Seth Klarman, Alan Howard, David Tepper, Louis Bacon, Steven Cohen and Eddie Lampert rounded out the top ten.

Soros founded the Quantum Fund in 1973 and came into fame with his 1992 Black Wednesday “Broke the Bank of England” trade with deputy Stanley Druckenmiller that netted the fund over $1 billion.

According to new research, the 80-year-old Mr Soros has produced $32bn for his customers since setting up in 1973, an average of over $900m a year. Put another way, Mr Soros and his team of 300 have made their investors more than the total earnings of Apple, which employs 34,300, or Alcoa, one of America’s 30 largest manufacturers.When it comes to the hedge fund mantra of “absolute returns”, Mr Soros is leader of the pack.

See the FT article here (registration may be required)

By CountingPips.com

US retail sales increased by slightly more than expected in August and advanced by the largest amount in five months. The advance estimate of the US monthly retail sales, released by the US Commerce Department, showed that sales increased by 0.4 percent to $363.7 billion in August from July. The data came in just above market expectations that were predicting a 0.3 percent rise for the month and August marks the second consecutive monthly gain following a 0.3 percent rise in July.

On an annual basis, the retail sales data increased by 3.6 percent above the August 2009 sales level. Core retail sales, excluding automobiles, jumped by 0.6 percent in August following a 0.1 percent increase in July and surpassed economic forecasts that were expecting core sales to rise by 0.3 percent.

Contributing to the higher sales level for August was a rise in gasoline station sales with a 1.9 percent increase while food and beverage stores, clothing and accessories stores and sporting goods, hobby, book and music stores also had higher levels for the month.

US Dollar lower in Forex Markets, Stocks slightly higher, Gold at new record high

The US dollar has been on the defensive today in the forex markets against the other major currencies after the US retail sales release. The American currency has lost ground today versus the euro, British pound sterling, Swiss franc, Australian dollar, New Zealand dollar, Japanese yen and the Canadian dollar.

The American currency today fell to a fresh 15-year low against the Japanese yen as the Prime Minister of Japan Naoto Kan prevailed in a leadership challenge election which sparked yen strength. The 15-year USD/JPY low was recorded at the 82.92 exchange rate earlier today before pulling back some and trading right around the 83.05 level, according to currency data from Oanda. There is speculation that the reelection of the Prime Minister will make possible government intervention to weaken the yen less likely.

The U.S. stock markets, meanwhile, have been mixed today with the Dow Jones decreasing by over 15 points, the Nasdaq up by approximately 4 points and the S&P 500 is lower by less than a point at the end of the U.S. trading session. Oil has edged lower by $0.39 to the $76.80 level.

Gold has been surging today and has jumped by almost $30 per ounce to set a new record high. Gold is currently up by $24.60 to stand at the $1,269.70 per ounce level after touching $1276.50 per ounce earlier in the day which was $10 higher than the previous record that was recorded in June.