InvestMacro FX

By CountingPips.com

The U.S. dollar has been mixed in forex trading against the other major currencies while U.S. stocks have been on the defensive so far today. The dollar has made gains today versus the Australian dollar, New Zealand dollar and the Canadian dollar while falling against the euro, Swiss franc and the Japanese yen. The American currency is trading almost unchanged versus the British pound at time of writing.

The U.S. stock markets have been negative so far today with the Dow Jones decreasing by over 100 points, the Nasdaq down by about 25 point and the S&P 500 lower by over 10 points in the afternoon in the U.S. trading session. Oil is almost unchanged at the $76.19 level while gold has risen by $13.90 to the $1,248.00 per ounce level.

Economic news out of the U.S. today showed that durable goods orders declined less than forecast and reversed five straight months of gains in May. Durable goods orders in the United States fell 1.1 percent in May to a total of $192.0 billion, according to the report released by the U.S. Commerce Department. May’s total was $2.2 billion less than April’s total which registered a revised increase of 3.0 percent from March. Durable goods are products manufactured in the U.S. and generally considered to last more than three years.

The market forecasts had been expecting that durable goods orders would decrease by approximately 1.2 percent for the month.

New orders for durable goods excluding transportation rose by 0.9 percent in May following a revised decrease of 0.8 percent in April. Market forecasts were predicting an increase of 1.1 percent.

May’s results for shipments of durable goods decreased by 0.4 percent after two  straight monthly increases. Unfilled orders rose by 0.2 percent in the month while durable good inventories increased 0.8 percent and gained for a fifth month. May non-defense orders for new goods fell by 2.8 percent while defense orders for capital goods also fell by 3.0 percent.

Weekly Jobless Claims fall.

A separate government release by the U.S. Labor Department showed that weekly U.S. jobless claims decreased in the week that ended on June 19th. New jobless claims fell to a total of 457,000 unemployed workers, a decrease over the prior week by 19,000 workers. A 4-week moving average of unemployed workers fell by 24,250 from the previous week to a total of 462,750.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending June 12th also declined. Continuing claims dropped by 45,000 workers to a total of 4,548,000 unemployed workers. A four week moving average of continuing claims fell by 21,750 to 4,586,500.

By Fast Brokers – The Aussie is following the risk trade lower as the EUR/USD and USD/JPY head south.  Additionally, the Aussie is being hit by the surprise resignation of Prime Minister Rudd.  Rudd is handing over the keys to Australia’s first female PM, Julia Gillard.  Rudd appears to be taking a sack for the team as opinion polls turn and threaten his Labor Party.  Gillard has entered office by hinting at negotiations with Australia’s mining industry after Rudd imposed a hefty tax on the industry.  Should Gillard lighten up on the tax this could actually prove to be a positive for the Aussie despite today’s negative reaction.  However, we will have to wait and see how the situation materializes since politics is never a straight-forward business.  Meanwhile, Australia has been quiet on the data wire, leaving the Aussie up to its positive correlation with the risk trade along with psychological forces.  That being said, it will be interesting to see how the risk trade reacts to upcoming U.S. data, including weekly unemployment claims and durable goods orders.  The data wire will be relatively quiet across the board tomorrow, meaning present trends should prevails throughout the remainder of the trading week unless there is another psychological development in the EU or China.

Technically speaking, the Aussie faces technical barriers in the form 6/21 and 6/23 highs.  Additionally, the highly psychological .90 level should serve as a solid barrier should it be tested.  As for the downside, the Aussie is accumulating uptrend lines along with intraday and 6/17 lows.  Furthermore, the psychological .85 level should serve as a solid technical cushion should it be reached.

Price: .8671
Resistances:  .8671, .8710, .8738, .8764, 8801, .8826, .8859
Supports:  .8633, .8613, .8587 .8565, .8543, .8523, .8500
Psychological:  .90, .85

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable has tested its highly psychological 1.50 level, extending its impressive run from May lows after the MPC minutes revealed a dissenting member who thought the minimum rate should be listed by 25bp.  Eve n though the dissenter was a lone wolf, it shows incessant inflation in Britain is beginning to weigh on the BoE’s monetary policy decisions.  Regardless, it’s only one vote and it shouldn’t drive the Cable for too long since the EU fiscal crisis will likely hold the central bank at bay.  Speaking of the EU crisis, underperformance in the union could actually bring down inflation in Britain over the medium-term, supporting the BoE’s past disregard for inflationary pressures as a lasting trend.  In addition to the surprising MPC vote, Osborne’s budget cuts have been well-received by investors, helping the Pound outperform its peers.  Lastly, the Fed expressed concern that economic malaise in the EU could weigh on U.S. economic growth, supporting the Fed’s loose monetary policy for the foreseeable future, a Dollar negative.  Overall, the Cable has had more than enough backing to test 1.50, though it remains to be seen whether the currency pair can drive past this psychological level over the near-term considering the run it has been on this month.  That being said, a round of profit taking wouldn’t be surprising at some point in time.  Investors will remain focused on the U.S. today with durable goods orders and weekly unemployment claims releases on tap.  The UK will be quiet on the data wire again tomorrow, leaving the Cable up to prevailing trends, a positive considering the currency pair’s recent performance.

Technically speaking, the Cable faces technical barriers in the form of 5/10 highs and the psychological 1.50 level.  As for the downside, the Cable has intraday and 6/23 lows serving as technical cushions.

Present Price: 1.4982
Resistances: 1.4984, 1.5007, 1.5028, 1.5051, 1.5073, 1.5105
Supports: 1.4975, 1.4931, 1.4894, 1.4852, 1.4815, 1.4793
Psychological: 1.50, 1.45, June highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – Gold has undergone wild fluctuations over the past 24 hours as bulls bite on weakness.  However, the bears are winning out at this point in time as more investors lock in profits after the precious metal set new all-time highs.  Regardless, gold does have an impressive support system in place considering its steady rise over the past couple months.  Hence, it could be unwise to read too far into gold’s recent downturn as more than a healthy technical development.  Meanwhile, the EUR/USD and AUD/USD appear to have hit a roadblock and the Yen is running against the Greenback.  Outside of the Cable’s pop the FX markets are sending risk-averse signals, normally a positive for gold.  That being said, gold seems to be following its correlation with the risk trade at the moment.  However, should global psychologicals take a turn for the worse, this could lead investors back to gold as a safe haven asset.  We will have to see how markets react to today’s U.S. data set, including weekly unemployment claims and durable goods orders.

Technically speaking, gold still has multiple uptrend lines at work along with 6/23 and 6/10 lows.  Furthermore, the highly psychological $1200/oz level could serve as a solid cushion should it be tested.  As for the topside, gold faces technical barriers in the form of 6/23 and 6/28 highs.  Additionally, the psychological $1250/oz level continues to serve as a strong technical obstacle.

Present Price: $1228.88/ oz
Supports:  $1227.63/oz, $1225.20/oz, $1222.09/oz, $1219.16/oz, $1215.93/oz, $1212.96/oz
Supports:  $1230.09/oz, $1233.98/oz, $1237.62/oz, $1240.36/oz, $1242.64/oz, $1244.40/oz
Psychological: $1250/oz, $1200/oz,  June highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY has tumbled below 90 as July’s upper house elections come into focus.  The most heated debate is surrounding a proposed increase in Japan’s consumption tax.  The consumption tax conversation represents a Japanese government which is becoming more hawkish by the day.  Ratings agencies are putting Japan’s feet over the fire while threatening to cut their debt ratings should the government not enact a sufficient plan for reducing the nation’s debt-load.  Naoto Kan has been leading the charge, stating that Japan’s books will be balanced by 2020.  Overall, Japan is becoming more conservative fiscally, resulting in a stronger Yen.  Meanwhile, the Fed gave a darker outlook for the U.S. economy yesterday, reinforcing the central bank’s loose monetary policy for an extended period of time.  With Japan becoming more hawkish and the Fed staying dovish, the Yen has more than enough incentive to appreciate against the Dollar this week.  However, we’ve seen how influential 90 can be on the USD/JPY, so it wouldn’t be surprising to see the currency pair enter another one of its consolidation phases again shortly.  Attention will shift to the U.S. with weekly unemployment claims and core durable goods data on the way.  It will be interesting to see whether the USD/JPY can manage to hold above 5/20 lows or whether this downward movement swings towards 5/6 lows.

Technically speaking, the USD/JPY faces multiple downtrend lines along with intraday and 6/23 highs.  The psychological 90 level now becomes a psychological barrier.  As for the downside, the USD/JPY has technical supports in the form of 5/20 and 5/6 lows.

Present Price: 89.31
Resistances: 89.35, 89.55, 89.67, 89.94, 90.12, 90.22
Supports:   89.10, 88.80, 88.53, 88.12, 87.84
Psychological:  .90, June highs and May lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Greg Holden – Few market analysts are willing to take the time to consider how a change in US command in Afghanistan could affect world markets, and not without reason. A political change, such as that taking place right now in Washington and Kabul, has only a distant and convoluted impact on equity markets; but one worth exploring nonetheless.

Consider for a minute that the war in Afghanistan is a wide channel of American defense spending through which billions of dollars flow. This defense spending has obvious opportunity costs: that money could have easily been used to stave off large chunks of recent economic crises, for instance. One can’t help but wonder where our economies would be without these costly wars; but I digress.

The intricate web of companies involved in the rebuilding and protecting of Afghanistan and Iraq are affected by changes in policy which either grant or remove further access. Any disruption in leadership or strategy can also cause a decline in transparency and could result in contractors delaying their ventures and investments.

More importantly, however, is that the markets are currently shaking in their boots from the dovish statements by the FOMC yesterday and by recent declines in investor sentiment. The needed repairs from the BP oil spill – along with its political and economic fallout – has damaged many sectors and dampened investors’ appetite for risk.

Wide swings abound in the value of the US dollar which bounced from 1.2135 to 1.2665 in May against the EUR; and 1.2340 to 1.1870 and back up again so far in June. Don’t even get me started on the GBP/USD, which has experienced sharp 150-pip price swings daily for the past 2 months. It appears as if investors are hesitant to invest.

Combine this with a leading US general who gets his jollies by taking pot-shots at his civilian overseers, and what many see happening in the US right now is a narrowing of coherence and stability. The number of account managers at investment brokers, such as ForexYard, which have been telling me on a daily basis that their clients are simply too scared to invest helps to clarify the picture somewhat.

Doubling the impact of this very natural fear is a thin trading environment due to a myriad of influences – often as simple as the explanation that many traders are watching the World Cup instead of trading.

But here’s the silver lining. Despite the quivering we see among investors, the results of this uncertainty are actually making things more clear in the market right now. These wide price swings have very clear pivot points and long, smooth-ish trends.

Here are a few examples:

The Russell 2000, as shown below, has a neat up and down movement that has a rhythm in line with taking deep breaths for the doctor during a check-up. Breathe in, breathe out… good. Jumping in on these swings is one of the easier things I’ve seen traders do for profits these past few months.

Russell 2000 – Daily Chart

Gold doesn’t seem much different except that there are no neat breathing patterns, just a steady upward movement. Gold has its own difficulties, however, and the price movements of such a valuable commodity can easily wipe out the inexperienced trader. Trade Gold with caution, but remember, the trend is your friend, and this one is pretty clear.

Gold – Daily Chart

For those who doubted the impact of the World Cup on a country’s economy, just look at the USD/ZAR. The South African rand was in a steady downtrend against the dollar, but since the beginning of the World Cup we’ve seen the strength of the South African economy grow modestly and the rand has followed suit. The fever may last a few more days, but many technical analysts are now stating that the current movement is a consolidation trend that will end in a return to the previous downward movement of the ZAR towards the competition’s conclusion.

USD/ZAR – Daily Chart

Hi there my avid readers! On this blog is an update of the USDX chart which I presented last June 15. Back then, the US dollar index has weakened after reaching a new high of 88.708. At present, the index is trading just below 86.00. From its chart, it looks like that is is being supported by the 38.2% Fibonacci retracement level of the most recent impulse wave. If this level gives way, the 50% and the 61.8% Fibs, including the uptrend line are still present to possibly halt it from sliding further. A presence of a bullish divergence, where the price goes higher and the stochastics go lower, suggest a likely up-move soon. Conditions are also overbought which means that traders could soon buy up the dollar.

On the fundamental front, the US, May durable goods orders and weekly unemployment claims are due later at 12:30 pm GMT. The core durable goods are projected to have increased by 1.1%. The headline account, however, is seen to have fallen by 1.2%. On a separate update, the country’s weekly unemployment claims for June 19 is expected to reach 461k which is slightly better that the last week’s 472k count. Downbeat figures in any of these accounts could spark some risk taking, benefiting the safer currencies like the USD. Stay tune for these reports today!

More on LaidTrades.com …

By Anton Eljwizat – In the last 3 weeks of trading, the USD/CHF experienced much bearishness, as it now stands at 1.1040. However; it seems that this trend may be coming to an end. I will illustrate below that the USD/CHF may very well be heading for a reversal. Forex traders have the opportunity to wait for the upward breach on the hourlies and go long in order to ride out the impending wave.

• Below is the daily chart of the USD/CHF currency pair.

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

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

• Point 2: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

• Point 3: The Slow Stochastic indicates an impending bullish cross, signaling that the next move may be in an upward direction.

USD/CHF Daily 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.

Source: ForexYard

The Dollar weakened on all fronts yesterday as the Fed kept rates lower than 0.25%. Today, another volatile trading session is expected as the U.S. Core Durable Goods Orders and the weekly Unemployment Claims are scheduled for 12:30 GMT. The end results are expected to be positive; will the Dollar erase its losses?

Economic News

USD – Poor Housing Data Weakens the Dollar; Fed Leaves Rates At 0.25%

The Dollar slid yesterday against most of the major currencies. The Dollar dropped about 100 pips against the Euro and the EUR/USD and is now trading near the 1.2330 level. The Dollar continues its depreciation against the Pound and the Yen as well.

The Dollar’s downfall was due to very disappointing housing data. The New Home Sales report showed that purchases of new homes in the U.S. unexpectedly dropped in May to a record low. The report showed that the number of new single-family homes that were sold during May fell to 300K, failing to reach expectations for 424K. The expiration of a tax credit was the catalyst of the poor result and showed that the market remains dependant on government support.

Also yesterday, the Fed announced that the Federal Funds Rate will remain at a record low below 0.25%. Recently the U.S. economy has provided spurring recovery data, and many have assumed that the Fed will hike rates as a result. The Fed’s decision to leave rates at their current record low also contributed to the downward pressure on the Dollar.

As for today, many interesting publications are expected from the U.S. economy. The release that might have the largest impact on the market seems to be the Core Durable Goods Orders report. A positive end result might have potential to correct yesterday’s losses. Traders should also follow the weekly Unemployment Claims, as it tends to have a large impact on the market as well.

EUR – Euro Sees Mixed Results versus the Majors

The Euro saw a very volatile trading session during yesterday’s trading. The Euro gained about 100 pips against the Dollar, yet dropped about 70 pips vs. the Pound. The Euro saw mixed results against the Yen.

A batch of data was released from the Euro-Zone yesterday, and the unstable results seem to be the main reason for the Euro’s volatility. On one hand, the German Flash Manufacturing Purchasing Managers’ Index (PMI) dropped for the third month in a row, indicating that the German economy may not recover as quickly as expected. Yet on the other hand, the French Flash Services PMI saw a better-than-expected figure as the end result marked 61.6.

The mixed results from the Euro-Zone’s economies led to a volatile trading session for the Euro. In addition, the ongoing concerns regarding the Euro-Zone’s future are keeping constant pressure on the Euro. It seems that until the Euro-Zone will provide definite recovery signals, the Euro may remain at its low level.

Looking ahead to today, the most significant publication from the Euro-Zone seems to be the Industrial New Orders. This report measures the change in the total value of new purchase orders placed with manufacturers. Analysts have forecasted that the Industrial New Orders have climbed by 1.6% during April. If the end result will beat expectations, the Euro may strengthen against its major counterparts.

JPY – Yen Reaches 4-Weeks High versus the Dollar on Risk Aversion

The Yen rose to a 4-week high against the Dollar during yesterday’s trading session. The Yen gained about 80 pips vs. the Dollar yesterday, and the USD/JPY pair is currently trading near the 89.90 level.

The Yen extended its profits against the Dollar after the Federal Reserve announced its intention to keep Interest Rates steady at a record low. The Fed also pledged to keep rates low for an extended period. In addition, the poor housing data which was published from the U.S. economy have also supported the Yen. The disappointing U.S New Home Sales for May has boosted risk-aversion in the market, and turned investors to look for safer assets, such as the Yen. The concerns regarding the U.S. economy’s recovery have supported the Yen, as the Yen is considered to be the safest currency at the moment. For as long as the U.S. and the Euro-Zone will continue to provide dissipating data, the Yen may rise further.

As for today, traders are advised to follow the Tokyo Core Consumer Price Index (CPI). This report is considered to be one of the most reliable inflation indicators in Japan and the results tend to have in impact on the market. Analysts have forecasted that Japanese CPI has dropped by 1.5% during June. If the actual result will be similar, the Yen might drop against the major currencies.

OIL – Crude Oil Drops Below $76 a Barrel

Crude oil dropped below $76 a barrel for the first time in 8 days during yesterday’s trading session. Crude oil fell about 200 pips in yesterday’s trading and is currently trading near $76.00 a barrel.

Crude oil fell yesterday following an unexpected gain in U.S. stockpiles. The U.S. Crude Oil Inventories report showed that the number of barrels of crude oil that were held in inventory by commercial firms during the past week rose by 2.0M, beating expectations for a 1.2M decrease. In addition, the dissipating U.S. housing data that was released yesterday has created concerns that the U.S. economic recovery may take longer than expected, and as a result will damage demand for energy.

Looking ahead to today, traders are advised to follow the leading publications from the U.S. and the Euro-Zone, as these tend to have a large impact on crude oil trading. Traders should take under consideration that positive data has potential to erase crude oil’s losses.

Technical News

EUR/USD

Yesterday’s appreciation of the pair had the price rising to a minor trend line that begins on April 15th. If the price fails to rise above the trend line, this will be the 3rd point of contact, making this a significant trend line. Traders may find a good opportunity to go short at the trend line to enter into the long term downward trend of the pair. The RSI 10-day has breached below the 70 level, indicating a sell signal to short. A protective stop should be placed above the trend line.

GBP/USD

The Cable was one of the strongest movers in the FX markets yesterday. As such, the pair made a close above some significant technical resistance. The pair closed above the 100-day moving average, the 23.6% Fibonacci line for the bearish trend, and the 1.4930 resistance level. Momentum appears to be to the upside as the 14-day RSI is trending sharply higher. The next major resistance levels rest at 1.5125 and 1.5190.

USD/JPY

The pair has broken out of its trading range for the month, breaching below the support level of 90.80. The 14-day Relative Strength Index is moving shapely lower and has breached below the 30 level. This indicates that the momentum is to the downside. Traders may want to target the next support level at 89.90.

USD/CHF

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the RSI. Going long with tight stops may pay off today.

The Wild Card

AUD/USD

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short to ride out the impending wave.

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 Yan Petters – Yesterday’s most significant publication was the Federal Funds Rate. This is in fact the U.S. Interest Rates announcement for July. The Fed’s decided to leave rates at a record low, and even pledged to keep the low rates in the near future. This has weakened the Dollar, especially vs. the Euro and the Pound. As a result, crude oil tumbled as well, and a barrel of crude oil is currently trading around $76 a barrel. However, positive U.S. data today might have potential to correct yesterday’s losses.

Here are today’s leading news events:

• 09:00 GMT, European Industrial New Orders – It’s a leading indicator of production. A positive figure usually signals that manufacturers will increase activity as they work to fill the orders. If the end result will beat expectations for 1.6% rise, the Euro is likely to be supported.

• 12:30 GMT, U.S. Core Durable Goods Orders – This indicator measures the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. Analysts have forecasted that the Durable Goods Orders rose by 1.1% during May. Such a result has potential to boost the Dollar.

• 12:30 GMT, U.S. Unemployment Claims – This report measures the number of individuals who filed for unemployment insurance for the first time during the past week. If the end result will be lower than the expected 461,000 – the Dollar might rise against the majors.

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.