InvestMacro FX

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2950 level and was capped around the $1.3045 level.  The common currency continues to orbit the psychologically-important US$ 1.3000 figure as traders weigh an improving eurozone sovereign outlook against a deceleration in U.S. economic activity.  Dealers reacted to last Friday’s eurozone bank stress tests results by pushing the euro back above the US$ 1.3000 figure on the perception the European banking system should be able to withstand additional dislocations in the sovereign credit market.  European Central Bank officials talked up the stress tests late last week and yesterday, suggesting the eurozone received more than a passing grade.  Data released in the eurozone today saw the June M3 money supply increase 0.2% y/y and the ECB’s bank lending survey will be released tomorrow.  German data saw the August GfK consumer confidence survey climb significantly to 3.9 from the prior reading of 3.6 and the June import price index was up 0.9% m/m and 9.1% y/y.  Provisional July CPI data will be released tomorrow.  French data saw total June jobseekers off 8,600, an indication of an improving labour market there.  In U.S. news, dealers reacted negatively to a lower-than-expected July consumer confidence print of 50.4, compared with the previous revised total of 54.3.  These data suggest consumer spending may be relatively weak as final private demand is limited by current sentiment.  Other data saw the July Richmond Fed manufacturing index decline to +16 from the prior print of +23 while the May S&P/CaseShiller home price index was up 0.47% m/m and 4.61% y/y.  MBA mortgage applications, June durable goods orders, and the Fed’s Beige Book will be released tomorrow.  Philadelphia Fed President Plosser yesterday suggested the current economic situation does not warrant additional Fed stimulus but added the FOMC is prepared to move if and when needed.  Euro offers are cited around the US$ 1.3265 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥87.90 level and was supported around the ¥86.80 level.  Dealers pushed the yen lower today on expectations Bank of Japan could ease monetary policy further.  Demand for Japanese government bonds remains strong and this is a signal that many investors expect Japanese yields could fall further.  There is still talk the government may look to protect the psychologically-important ¥85 handle by selling yen for U.S. dollars or other currencies in what would be the country’s first official yen-selling intervention in several years.  Many BoJ-watchers believe the central bank will maintain its ultra-accommodative monetary policy for at least two more years.  Japanese banks have been investing in longer-dated debt and the swaps market to record profits as yields on five-year JGBs move lower.  Data released in Japan overnight saw the June corporate service price index decline 1.0% y/y, lower than the previous -0.8% May result and the latest evidence that deflation remains a major problem for the Japanese economy.  The Nikkei 225 stock index lost 0.07% to close at ¥9,496.85.  U.S. dollar bids are cited around the ¥86.29 level.   The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥114.10 level and was supported around the ¥112.75 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥136.65 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.30 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.7784 in the over-the-counter market, down from CNY 6.7790.  Data released in China overnight saw the June leading index decline to 102.84 from the revised prior tally of 103.25.  People’s Bank of China reported China’s economic fundamentals remain “good” and said the recent deceleration in economic growth will likely stabilize.

£

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5575 level and was supported around the US$ 1.5440 level.  Cable reached its strongest level since February 2010 as traders reacted positively to a surprise +33 print in July CBI reported sales, up from the prior reading of -5.  Additionally, none of the £355 million in corporate bond securities Bank of England said it would purchase in its twice-weekly program was tendered today, the first time investors did not seek a BoE bid since March.  This is indicative of improving sentiment in the credit markets.  A perceived relaxation of terms in the Basel 3 capital accord terms is also supporting sterling.   The key functions of the Financial Services Authority will be relegated to the BoE. Cable bids are cited around the US$ 1.5270 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the £0.8345 level and was capped around the £0.8415 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0635 level and was supported around the CHF 1.0480 level.  Data released in Switzerland today saw the June UBS consumption indicator improve to 1.810, up from the revised May result of 1.712 and its highest level since July 2008. Swiss unemployment remains at about half the level as the eurozone’s rate and this is resulting in positive economic activity.  There is some speculation Swiss National Bank may have intervened by selling francs today given the significant move lower for the currency but SNB would not confirm this speculation.  U.S. dollar offers are cited around the CHF 1.0980 level.  The euro appreciated vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.3795 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6525 level.

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By CountingPips.com

The U.S. dollar has been mixed in the forex markets today while U.S. stocks have been slightly lower in the U.S. session following a decline in the Conference Board’s consumer confidence survey to its lowest point since February. The dollar has been trading higher today versus the Japanese yen, Canadian dollar and the Swiss franc while falling against the British pound. The American currency is trading virtually unchanged against the euro, New Zealand dollar and the Australian dollar, according to currency data by Oanda at 12:10 pm EST.

The U.S. stock markets have been stuck in neutral so far in today’s trading session with the Dow Jones higher by a couple of points, the Nasdaq decreasing over 5 points and the S&P 500 showing close to a 2 point shortfall. Oil has declined by $1.59 to the $77.39 per barrel level while gold has dropped by $20.20 and trades around the $1,162.80 per ounce level.

U.S. consumer confidence has eroded in the past few months, according to the Conference Board survey, after showing increasing levels for the three previous months. In a survey of 5,000 households, the index showed that consumer confidence decreased by 3.9 points from 54.3 in June to standing at 50.4 in July. This marked the second straight decline and follows last month’s drop of almost 10 points from a 62.7 score in May.

Market forecasters were expecting consumer confidence to dip to the 51.0 level for the month.

The Expectations index fell in July to 66.6 from 72.7 in June while the Present Situation index also edged lower from 26.8 in June to 26.1 in July.

The Director of the Conference Board Consumer Research Center Lynn Franco commented on the newest survey in today’s report saying, “Consumer confidence faded further in July as consumers continue to grow increasingly more pessimistic about the short-term outlook. Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves. Given consumers’ heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season.”

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The FedEx Corporation or the FDX in the New York stock Exchange is one of the major logistics company in the world. Like the UPS which I presented a few days back (kindly check my previous blog here) also gapped up following an upbeat earnings forecast. The shares of FedEx jumped by 4.5% to $82.58. The company now sees its earnings to expand to somewhere between $1.05 and $1.25 per share for its first fiscal quarter ending Aug. 31 which is up by at least 58 cents per share compared to a year earlier. The revaluation estimate is now also higher than the previous forecast of 85 cents to $1.05 per share. Given FDX’s robust forecast and UPS’ stellar earnings, its apparent that the global logistic business is gaining speed which also suggest that the global trade is now recovering very well.

As a result of FDX’s upbeat outlook, its shares gapped up and in the process also broke out from an inverted head and shoulders pattern. It likewise moved past several key resistances like the 50-day moving average, 200-day moving average, and the 82.50 mark. Given yesterday’s price action, FDX is now suddenly on track to previous support at $90.00. The level also corresponds to its upside target by projecting the height of the inverted head and shoulders from the point of breakout. In case it weakens, the 82.50 support and the 200-day MA are still there to keep it from falling any further. A break of these supports, though, could send it back down to 80.00 or even down at the bottom of the gap.

More on LaidTrades.com …

By Anton Eljwizat

• Below is the 8-hour chart of the USD/DKK currency pair.

• The technical indicators used are the Slow Stochastic, and Relative Strength Index (RSI) and Williams Percent Range.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates an impending bullish cross, which may signal an upward movement is going to occur in the near future.

• Point 3: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• Point 4: The Williams Percent Range has peaked near at the -100 marker, which means that there may actually be a strong level of upward pressure.

USD/DKK 8-Hour Chart

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 Russell Glaser – The Cable continues to move higher and is flirting with a resistance level that was last touched in May.

Yesterday the GBP/USD rose as high as the resistance line of 1.5520 (R1) before falling back to close up at 1.5494. Today in early morning hours of the European trading session the price briefly breached the resistance line but failed to hold onto the gains.

Momentum appears to be behind the price move higher as the 14-day Momentum indicator is sloping higher, indicating further appreciation may be in store for the GBP/USD. The next significant resistance level comes in at 1.5820 (R2), the high from the middle of February. Support for the pair rests at the previous resistance levels of 1.5380 (S1), 1.5050 (S2), and a long term support at 1.4775 (S3).

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.

Here’s an update of the US dollar index or the USDX which I last posted on July 15 (kindly see my last blog here). As you can see from the chart, the index has continued to weaken after it broke its long term uptrend line and the 61.8% Fibonacci retracement level that I drew. At present, the index is trading just above 82.000. A move below this could send it lower to 81.000 or even 80.000. But in case the dollar buying makes a comeback and the index breaks above the short term uptrend line, it could rise further until it hits a resistance at the former uptrend line. A pass through the former uptrend line, though, could send it back to its previous peak at around 88.000.

The highlight of this week for the greenback is the advance second quarter GDP release of the US on Friday, July 30. Several economists from financial firms like Bloomberg, JPMorgan Chase & Co., and UBS Securities have already downgraded their forecast on the country growth from  the months of April to June of this year. The US economy is now only seen to have expanded by 2.5% after posting a growth of 2.7% during the first leg of the year. And I guess I agree with the mentioned growth downgrade. For one, the country’s retail sales figures have contracted both in May and June. The core retail sales June have continued to lose by 0.1% after already weakening by 1.2% during the previous month. Similarly, the headline retail sales have also lost 0.5% in the same period on top 1.1% contraction during the last. Note that more than 70% of the US’s GDP is composed of domestic consumption. A huge fraction of this is then represented in the country’s retail sales figures. Hence, a drop in the latter could likewise reflect negatively on the US’s overall output.

More on LaidTrades.com …

Forex Market Review by Finexo.com

Global risk appetite has returned to the markets, with both the Euro and the Sterling benefiting against the Dollar and the Yen. While some analysts are still criticizing the Euro Zone bank stress test for being significantly “unstressful”, markets have continued to react positively to test results.  Moreover, risk appetite surged yesterday after a report showed a bigger-than-expected increase in U.S new home sales in June and FedEx Corp.’s boosted its earnings prospects, proving that the US economy is far from a double-dip recession scenario.

Today’s focus is on the U.S Consumer Confidence report, a major survey of 5,000 people that typically rocks the markets. Last month this key indicator plunged from 63.3 to 52.9 – reflecting the generally fear of a double dip recession. While analysts predicted another fall to 51.3 this time, the recent boost in investor confidence may has increased speculations of potential positive upside movement in the index.

EUR/USD

The Euro extended its rally against a weakened Dollar in this morning’s Asian session.  The single European currency successfully passed yesterday’s high, to touch on a new 5-day high of $1.3017.  The currency had since pulled back to around the $1.30 level. However, the EUR/USD is likely to remain in its current trading zone, or even go higher as some markets participants see a push towards the 1.3125 mark.  Fundamentally, the recent better-than-expected string of data coming from the Euro Zone, together with the overall positive reaction to the stress tests, could help the EUR/USD push for further gains.

GBP/USD

The Pound has also benefited from the recent increase in risk appetite, as yesterday’s rally pushed the British currency to appreciate more than 70 pips against its American counterpart.  The pair has since entered into a consolidation phase, and has remained range bound between 1.5477 and 1.5505 in this morning’s Asian session. Typically, a tight consolidation pattern potentially leads to a break out in either direction. While on the downside, the pair could find support near its 20-day moving average around 1.5260, on the up side a potential push towards 1.5650 seems unlikely.

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors.

Source: ForexYard

The EUR once again reached above $1.30 on Monday after better than expected economic data from the US, and an advance in global equities, boosted demand for riskier assets. Gold continues to decline as market concerns ease and people turn away from safe-haven assets.

Economic News

USD – Dollar Declines on Renewed Risk Appetite

The US dollar declined against all of its major counterparts Monday following the release of better than expected US New Home Sales data. Combined with a boost in FedEx Corp.’s earnings, these two reports together have helped to raise demand for riskier assets. New US home purchases increased 24% from May to an annual pace of 330,000.

The Dollar depreciated 0.7% to $1.008 per EUR during today’s early Asian trading, from $1.2909 at the end of last week. The dollar fell to 86.86 Yen, from 87.46.

Looking ahead to today, traders are advised to follow the release of the CB Consumer Confidence at 14:00 GMT. Better than expected results on this report may intensify the greenback’s recent downtrend, especially since risk appetite will rise with a positive reading.

EUR – EUR and GBP Advance after Banks Pass Stress Tests

The EUR remained within its trading range as results from the stress tests continued to reassure investors. The common currency traded within a cent of the 10-week high of $1.3029 reached July 20; however, it has since returned to trade around $1.3015.

The EUR rose to ¥112.97, up from ¥112.11, after reaching ¥113.48, the highest level since June 3rd. The British pound also rose to $1.5490 from $1.5425 after briefly reaching above $1.55, the highest levels since late April.

The Pound advanced after a July 23rd announcement that HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc passed the European bank stress tests.

JPY – Yen Drops as Demand for Safe-Haven Currencies Diminishes

The Japanese yen fell versus all 16 major counterparts after the release of better than expected US New Home Sales data. The yen’s safe-haven appeal also diminished as global equities gained and boosted demand for riskier currencies.

The JPY is currently trading at 113.07 per EUR as of today’s early Asian trading, from 112.89 in New York yesterday, when it touched 113.48, the lowest since June 3. The yen is at 86.95 per USD, up slightly from 86.88.

Traders should follow the release of today’s economic data from the US and Europe as positive news will likely dampen demand for the yen further.

Crude Oil – Crude Remains around $79 a Barrel

Better than expected economic data from the US and advancing global equities helped support oil prices around $79 a barrel. Crude oil for September delivery traded at $78.85 a barrel, down 13 cents in electronic trading on the New York Mercantile Exchange

Oil seems to remain between $70 and $80 as future demand remains unknown and above average stockpiles are keeping Crude from breaching higher. For the time being, oil futures continue to trade on economic data as well as movements in equities.
Traders should follow the release of today’s US CB Consumer Confidence report at 14:00 GMT as better than expected results might help push oil prices closer to the $80 resistance level.

Technical News

EUR/USD

The price has broken out from the rising channel pattern on the daily chart for the second time; making a solid close above the upper line of the channel. A pullback into the channel pattern would signal a false breakout, as was the case last in last week’s trading. A rise to the 38.2% Fibonacci retracement level at 1.3110 would signal a confirmation of the breakout pattern.

GBP/USD

The pair rose as high as the resistance line of 1.5520, found the May high before falling back to close up at 1.5494. Momentum appears to be behind the price move as the 14-day Momentum indicator is sloping higher at 103, indicating further appreciation may be in store for the pair. The next significant resistance level comes in at 1.5820.

USD/JPY

The bullish correction the pair experienced in the later half of last week came to an end yesterday. The price rose as high as the 20-day simple moving average before heading sharply lower. The inability for the pair to breach this resistance level indicates a sharp downtrend in the pair. Traders should be short with a first target at the support level of 86.25.

USD/CHF

Shorter-time frame charts on this pair don’t seem to be hinting too strongly at an impending direction. The hourly and 4-hour Stochastic (slow) and RSIs show upward mobility, but have not yet entered signal territory. We can see, however, that the weekly chart’s Stochastic (slow) is giving off what appears to be a recent bullish cross. It seems upward pressure is mounting on this pair and we may see traders taking long positions as a result.

The Wild Card

USD/SEK

After a few days of trading sideways, this pair now seems to be giving off some clear buy signals. The 4-hour Stochastic (slow) appears to be approaching the beginning of a bullish cross, indicating future upward movement. The daily and weekly Stochastic (slow) also seem to indicate an impending bullish cross. The daily RSI also appears to be floating in the over-sold territory, indicating further upward pressure. Forex traders may want to take advantage of this information and enter a short-term long position on this pair for quick daily 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 eToro – Strong Asian economic numbers, and a renewed appetite for risk, pushed the Euro close to the 1.30 resistance level.  A break of 1.30 on a closing basis should lead to 1.3250.

Click here to read the full daily Review

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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.