InvestMacro FX

By Adam Hewison – The sharp upward rally in the S&P 500 surprised many people,
myself included. However, the rally did not change the “Death
Cross” which we pointed out as being a negative and significant
market event that does not occur very often.

This market’s rally also did not change our weekly and monthly
“Trade Triangles” which are still red and indicating that the
trend is headed lower.

In this short two minute video, I show you some other aspects of
the S&P 500 that I think you should be watching.

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

I would love to hear your comments about this or any of
our other market videos.

Watch the New Video Now…

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

By CountingPips.com

The US dollar has been trading lower versus the other major currencies today in forex trading while US stocks have tumbled after a number of US economic news releases. The dollar has been on the downside today against the euro, British pound sterling, Japanese yen, Australian dollar, New Zealand dollar and the Swiss franc while gaining ground versus the Canadian dollar.

The European common currency reached its highest trading level in two months against the dollar today as the euro/dollar pair ascended above the 1.2900 level the first time since May 10th when the pair was on its way down to a four-year low in early June. The EUR/USD has been a remarkable bull run since the June 7th lowpoint and has gained by approximately 1000 pips from that point.

Meanwhile, the US stock markets have been weaker today with the Dow Jones industrial average falling by over 50 points at time of writing. The NASDAQ is also lower by almost 15 points and the S&P 500 has decreased by almost 8 points. Gold has risen today by approximately $2.80 to level at $1209.60 while oil has edged lower by $0.82 to trade at the $76.22 threshold.

Manufacturing activity falls, Jobless Claims decrease

Economic news releases out today showed that manufacturing activity fell by more than expected in the Empire State manufacturing survey and the Philly Fed survey. The Empire State Manufacturing Survey showed that the general business index in New York dropped to a 5.08 score in July from a 19.57 score in June and much lower than the 18.00 forecasted score. The lower score still showed manufacturing growth for the month but at a slower pace.

The business outlook from the Philadelphia Federal Reserve released today also showed that manufacturing activity slowed in July. The Philly Fed index of current activity fell from a score of 8 in June to a score of 5.1 in July to mark a second consecutive monthly decline. This was worse than the economic expectations of a increase to a 10.0 score.

Weekly jobless claims fell in the week that ended on July 10th, according to data from the Department of Labor. Initial jobless claims declined by 29,000 workers to a total of 429,000 while the four-week moving average dipped by 11,750 workers from the previous week. Workers seeking continuing unemployment insurance increased for the week ending on July 3rd by 247,000 workers from the previous week while the four-week moving average of continuing claims bumped up by 22,000 workers.

Also released in a separate report today by the Department of labor was the producer price inflation report that showed producer prices fell for the third straight month in June. The producer price index declined by 0.5 percent in June following a decline of 0.3 percent in May and a 0.1 percent decrease in April. The largest contributor to the decline was a 2.2 percent shortfall in prices for consumer foods while prices for finished energy goods decreased by 0.5 percent for the month. Economic forecasts were expecting a 0.1 percent decrease.

Core producer prices, excluding food and energy, edged up by 0.1 percent in June following a 0.2 percent increase in May. The core increase matched economic forecasts.

By CountingPips.com

A Chinese government release today showed that China’s gross domestic product grew at a slower pace than expected in the second quarter of 2010. The Chinese economy grew by 10.3% on an annual basis in the April to June quarter following an 11.9% annual advance in the first quarter. This was slightly lower than the economic forecasts that were expecting an approximate 10.5% year-over-year rise in China’s GDP.

The second quarter GDP rise brought the size of China’s economy to US$2.553 trillion or 17.284 trillion Chinese yuan.

Also reported today by the National Bureau of Statistics of China showed that Chinese consumer inflation slowed down a bit in June. The consumer price index increased by 2.9% in June following a 3.1% increase in May and came in below market forecasts that were expecting inflation to increase to 3.3% per month.

Meanwhile, Chinese producer price inflation increased by 6.4% on an annual basis through June following a gain of 7.1% in May. This release was below market forecasts expecting a 6.8% increase.

By Adam Hewison – Here’s an ETF that you may want to take a look at…

I just finished a new short video on an ETF that’s looking very interesting.
The video runs a little over two minutes and gets right to the meat and potatoes
of this market.

This particular ETF is leveraged and trades almost 2,000,000 shares a day, so
it is nice and liquid. What makes this ETF so interesting, is that it plays such a big
part on the financial world stage.

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

Watch the ETF Video Now…

All the best,
Adam Hewison
President of INO.com

Good day forex peeps! Here’s my ‘weekly’ update on the USDCHF pair. As you can see from the chart, the pair has returned back in the area of the inverted head and shoulders after it broke out and reached a high of 1.1731 last June 1. It then suffered 5 straight weeks of heavy declines after reaching the mentioned high (click here to see my previous post). At present, the pair is hanging on the 1.0500 support. Should this support gives way, the pair could race towards its previous low just below 1.0200. The swissy could even be on parity again with the greenback if the pair breaks below 1.0200. A couple of indicators, though, indicate that it could head higher. During the past two weeks, the pair has drawn a bullish hammer and a doji, both of which suggest a possible reversal to the upside. The presence of a bullish divergence, where the price goes higher and the stochastics go lower, also suggest a likely move north. But if the pair indeed rebounds, it could still meet some resistance at the neckline of the former inverted head and shoulder. A break above this could send it back to its 1.1731 high.

On the fundamental front, despite the recent favor for the greenback due to the markets’ present bullish outlook and the US’s firms’ expected stellar earnings reports, the Swissy could still lose some support if the Swiss National Bank (SNB) decides to interfere in the forex market to weaken the CHF. The SNB, for those who does not know, is very notorious in doing so. In fact, interfering in the markets is one of its major tools in keeping the Swiss economy in check. The SNB favors a weak currency because Switzerland is highly dependent on exports. A strong currency, therefore, could dampen the country’s exports market. In the bank’s last statement, it mentioned that the strength of the CHF has not affected the economy in a negative sense. but that was then. After the USDCHF pair marked a 1.1731 high, the Swissy has rebounded strongly by about 1,200 pips. Therefore, there’s always an outside chance that the bank could sooner or later purposely weaken its currency. If it does not, then the CHF could continue its upside ride as the global market rebounds.

More on LaidTrades.com …

By ForexYard – The Australian dollar (AUD) erased the 0.5% point loss against the US dollar that it had made after an official Chinese paper reported the economy may slow more sharply than expected in the second half of this year.

The Japanese yen, on the other hand, rose slightly against the US dollar and euro in Asia today as weaker-than-expected Chinese economic data added to uncertainty over the global economic outlook, prompting some investors to buy the JPY. Sliding regional stock markets also supported the yen by fanning concerns over global growth. Some traders said the Japanese currency could gain more ground if stock prices fall worldwide.

China’s economic growth slowed to 10.3 percent in the second quarter from 11.9 percent in the first quarter in response to the fading of government fiscal and monetary stimulus as well as a high base of comparison a year earlier. With Chinese data now out of the way, the market’s focus is likely to shift back to the strength of US economy, traders are now saying.

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 Analysis by Finexo.com

The Dollar continues to remain under extensive selling pressure as it is becoming increasingly apparent that the U.S economic recovery may be slowing down.  Yesterday’s FOMC Minutes revealed that Fed officials had lowered their outlook for the economy for the first time since last April, projecting that GDP would expand by 3-3.5%, while stating that the risks to recovery have increased. Moreover, fuelling concerns that the U.S economic recovery may be stalling and adding to negative Dollar sentiments, retail sales showed a drop of 0.5% in June.  According to the Commerce department, weak receipts at automotive dealers and gasoline stations pulled sales down for the second straight month following seven consecutive increases.

EUR/USD

The Euro continues to hover around to a 2-month high of $1.2788, and has produced a solid support just under $1.2700, which if holds could lead to further gains.  Up ahead, traders will want to watch today’s U.S Jobless Claims figure, which if better than expected could relieve some Dollar concerns and push the EUR/USD down. However, if results are better than expected and the EUR/USD successfully holds on to its recent gains it could signal a strong buying support for the pair.
Support/Resistance 1.2685/1.2776

GBP/USD

The British Pound touched on a 10-week high versus the Dollar yesterday as stronger than expected UK employment data fueled speculation that the Bank of England may soon need to raise interest rates.  Yesterday’s Claimant Count Change showed that the number of jobless benefits dropped to 20.8K, its lowest level in a year (versus an expected 20.1K and a prior reading of 31.1K). The Unemployment rate for the past three months slipped to 9.7% from 9.8% last month. Following the unemployment data the Sterling appreciated by 0.2% against the Dollar and traded at $1.5254.

Following this stronger than expected unemployment figures, it seemed as if the GBPUSD would pull off one of its trademark 100+ pip breakouts. However, while the Sterling appreciated by 0.2% to rise to $1.5254, it was unable to break the 1.5300 barrier. The pair has since become range bound between 1.5200 and 1.5300. Nevertheless, with current Dollar sentiments remaining negative, a move above 1.5300 seems more likely than a drop below 1.5200.
Support/Resistance 1.5200/1.5290

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. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.

By Russell Glaser – The pair has been consolidating over the past 6 weeks while forming a chart pattern that looks to break to the downside in a continuation with the long term trend.

Following the sharp deprecation in the price of the pair during the month of May, the GBP/JPY has consolidated its losses and has formed an ascending triangle pattern.

A halt to the trend can be verified by the flat 20-day exponential moving average. Also a significant drop off in volatility is shown by the decrease in the Average True Range (14). A tightening of the daily chart’s Bollinger Bands confirms the reduced volatility in the pair.

Because the long term trend is to the downside, it is assumed that a breakout will be in this direction. However, traders are not limited to one direction in this trade setup. By placing a stop on the inside of the triangle to guard against a false breakout, losses can be minimized should the breakout fail to materialize. Therefore, a trade setup can be in either direction.

A breakout to the upside would target the resistance level at 138.25, followed by the significant resistance line of 139.25 and a long term target at 140.50, the 38.2% Fibonacci retracement level from the downward trend that began in August of 2009.

If the long term trend continues and the pair breaks out of the triangle to the downside, the first target would be the support at 131.30, followed by the bottom of the downward trend at 126.75.

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.

Extra! Extra! The US dollar has buckled its long term uptrend? Will it head south now? On today’s chart is my recent take on the US dollar index. For quite some time now, the US dollar had been gaining a lot of favors from investors due to the general bearish tone in the markets. The last time I reported on the USDX, the index’s uptrend was still very much intact despite its retracement from its yearly high (kindly see my previous post here). Just this week, though, the index’s long term uptrend line got broken. The only support now that is holding it at its present value is the 61.% Fibonacci retracement level that I drew. A break of this level could send it down to 82.00 or at 81.00. But given the doji candles and its oversold condition, the index could move sideways for awhile or even rebound. If it rallies, the immediate resistance would be the former uptrend line.

Anyway, given the recent string of strong rallies in the global equities and in the non-dollar currencies like the euro, the greenback appears to have lost its appeal. Remember that bulk of the USDX counter-weight is composed of the euro. Therefore an increase in the euro, would negatively affect the valuation of the index and the dollar. During the last couple of weeks, the euro has gained some support. Technically, it even has a higher chance now of moving north after it broke above its long term downtrend line against the USD (see the chart here).

On the fundamental front, the USD further weakened yesterday as a result of the stellar earnings figures from Intel. The USD’s slide and consequently the global markets’ advance could be extended today since another US giant is set to post its 2Q earnings. Later today, Google is expected to post an EPS of 6.53 for the second leg of the year. Tomorrow, a couple of big US banks, Bank of America and Citigroup, are due to post their earnings report as well.

More on LaidTrades.com …

Source: ForexYard

Despite enthusiasm over the start of earnings season markets paired gains yesterday. Retails Sales in the U.S. came in lower than expected for the second consecutive month. Investors responded by sending equities lower. In the currency markets the Euro continued to head higher against the USD, explained by reasonably better macro data released by Europe.

Markets recovered during the mid NY trading session, just to pair gains again after the FOMC meeting minutes were published, eventually ending the NY session flat. Fed minutes released later revealed more concern over the economic recovery. The Fed stated that, for the time being, there is no need for new steps to boost the economy. However, in case the economy continues to slow, it might take the necessary measures to accelerate growth.

Economic News

USD – Retail Sales and Fed Minutes Sent USD Lower

U.S. Retail Sales and Fed Minutes released yesterday sent the greenback lower against its major counterparts. The EUR/USD pair continued the recent rally for another day. The rally gathered momentum as European macro data was better than the disappointing figures released in the U.S. The U.S. economy is signaling that the economic recovery may be slower than previously thought. The fed sees rising risks and growth at a slowing pace.

The U.S. Dollar is currently trading at 1.2750 against the EUR during early trading today.

Looking ahead to today, more macro releases will influence the greenback. Data is expected to be lower than previous months but in case economic growth is indeed slowing, data might turn even worse than expected. In this case the U.S. Dollar might continue to decline against its major counterparts.

EUR – Weak U.S. Figures Send Euro Higher

The Euro continued its rally against the U.S. Dollar for the second day, although the pair traded higher most of the day it ended almost flat. The EUR reached $1.2776, thereafter it paired some of it gains, while concerns over the European economy remains.

The EUR remained almost unchanged versus the British pound. The EUR/GBP is currently trading at 0.8342, however the EUR traded lower against the Japanese yen currently at 112.58, as investors return to buy safer assets.

Looking ahead to today, there are no major news events to be released in Europe. Therefore U.S. macro data may influence investors’ appetite for riskier assets. In case figures turn worse than expected, investors would continue to prefer the EUR and GBP over the greenback. The Japanese yen, unlike the USD, could turn stronger against the Euro and British pound, as it still considered a safer asset.

JPY – Remains a Safe Heaven Currency

The JPY strengthened against the U.S. dollar as investors expressed their concerns about the U.S. economy by selling the U.S. dollar and buying the Japanese yen. The yen traded higher against most its counterparts, aided by lower likelihood of currency intervention from Japan’s policymakers. It strengthened against the British pound, the euro the Canadian dollar and the Australian dollar.

Looking ahead to today traders should pay attention to the support line at 88.00. A below this level might take the USD/JPY pair even lower. Some analysts estimate that that the yen could even reach as low as 85 in the following months.

OIL – Worries about Double Dip Hit Crude Oil price

Crude Oil price ended flat yesterday after Fed Meeting Minutes signaled slower growth than previously expected. Crude Oil traded higher above $78 before NY trading session only later to pare its gains after disappointing U.S. Retail Sales, declining further after the Fed published its monthly minutes.

Crude Oil prices have risen sharply since last Tuesday from $71.46, currently trading at $77.25. Having little effect on price, Crude Oil stockpiles decreased by 5.1 Million barrels according to the weekly EIA report published yesterday. Distillate stocks rose by 2.9 million barrels, analysts expected, on average a rise of 800K barrels.

Crude Oil prices may decline further in the short term if economic figures continue to deteriorate. Investors are worried about a possible double dip, or a renewed recession. The Fed at this stage will not take steps to accelerate the economy.

Technical News

EUR/USD

Yesterday the EUR/USD rose as high as 1.2776 but found resistance at the upper line of the pair’s rising price channel. The close was also above the resistance line at 1.2750 and the long term downward trend line that began in December of 2009. Traders may want to target the next resistance line at 1.3100. This level also coincides with a 76.4% Fibonacci retracement level from the pair’s bullish trend in 2009.

GBP/USD

The pair ran into technical resistance yesterday, rising to a high just shy of 1.5300. This price level is reinforced by the long term downward sloping trend line that began in July of 2008. The price level also coincides with a 23.6% Fibonacci retracement level of the same long term bearish trend. A breach of this price could send the pair to the resistance levels of 1.5380 and 1.5520 in the short term, with a long term target at 1.6425.

USD/JPY

The brief bullish correction has ceased in the pair as yesterday the price fell to the support level of 88, the significant resistance level reached on the same day of the “flash crash”. Falling momentum may push the pair lower as the 10-day Momentum Indicator is falling below the 100 level. The price has also failed to make a significant breach of the 20-day simple moving average. The next target for the pair could be the support of line at 87.

USD/CHF

Yesterday the pair pulled back to the 61.8% Fibonacci level at 1.0610 before heading lower to the daily low set on Tuesday. A breach of the 1.0480 support level could send the pair lower towards the 76.4% Fibonacci retracement level from the previous bullish trend at a price of 1.3050.

The Wild Card

Oil

Rising prices have been accompanied by increasing momentum as the 14-day Momentum indicator is sloping sharply higher. Yesterday the price of the commodity rose to a high of 78.12 before falling back for a slight gain. CFD traders may want to continue to be long on spot crude oil with a near term price target of $80.

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.