GBPUSD remains in uptrend from 1.5344 (Dec 28, 2010 low). As long as the trend line support holds, the fall from 1.6277 is treated as consolidation of uptrend, and one more rise to re-test 1.6298 (Nov 4, 2010 high) is still possible after consolidation. On the downside, a clear break below the trend line support will indicate that the rise from 1.5344 had completed at 1.6277 already, then the following downward move could bring price back to 1.5600 area.
By Zac, CountingPips
Recently, the forex broker Oanda announced it is adding the MetaTrader4 platform to its lineup of forex trading software. They have released a forex demo account MT4 version that is now available to practice with. No news yet when the platform will be able to accommodate real live trading accounts.
See more details on MT4 from Oanda: http://fxtrade.oanda.com/trade-forex/metatrader/
Since the beginning of the month, the price of crude oil has dropped more than $5.00 based on positive US economic data that has made the dollar stronger and oil less attractive to international buyers.
Tomorrow, the commodity is likely to drop further following the US Crude Oil Inventories figure, set to be released at 15:30 GMT. Typically, a surplus in US stockpiles means that the price of oil will go down, as it means that demand is down in the world’s largest crude oil consuming country.
Analysts are predicting tomorrow’s figure to come in around 2.2M, which if true, would signal a slight drop from last week’s figure of 2.6M. While this might lead some traders to believe that demand is going up in the US, and they should therefore go bullish on oil, 2.2M is still a very positive figure.
Given oil’s bearish trend over the last week, and the USD’s overall renewal in strength, it may be wise for traders to continue to short the commodity. At the same time, should a significantly smaller than expected inventories figure come in tomorrow, and especially if the number turns out to be negative, the price of crude may stage an upward correction for the rest of the week.
By GCI Forex Research
Fundamental Outlook at 0800 GMT (EDT + 0400)
USD
The dollar weakened during the Asia session, clocking up losses against the euro, the AUD, and the NZD. USDJPY remained tightly range-bound all night and traded 82.21-82.45. EURUSD traded 1.3544-1.3636. The S&P 500 continued its advance and finished 0.6% higher, despite thin news flow. The attention now shifts to Federal Reserve speakers, with Regional Fed Presidents Lacker (Richmond), Lockhart (Atlanta) and Fisher (Dallas) scheduled to speak. Fisher and Lacker are more hawkish and Lockhart and Lacker are non-voters this year, but their interpretation of the latest Bureau of Labor Statistics data could be an important near-term driver of the dollar. Non-voting members still participate in FOMC discussions and Lacker and Lockhart will rotate into voting positions in 2012. Fisher has already said he would be unlikely to support more easing beyond QE2 and given the current biases of these three, we could see the greatest USD reaction, if any, from Lockhart should he move away from his more neutral, cautious stance. Our economists believe payrolls should bounce back to their firm underlying trend, with some additional “payback” potentially ahead.
EUR
ECB Governing Council member Mersch said inflationary pressures have undoubtedly risen and the ECB would have to intervene if there were secondary effects from higher commodity prices. Mersch also said the ECB could hike interest rates without first exiting liquidity support measures. Mersch added that the EFSF should be able to buy bonds directly.
Irish Finance Minister Lenihan said he is negotiating with his European counterparts on the question of whether haircuts can be imposed on Irish senior bank debt which is not government guaranteed. He said the “debate is underway”.
GBP
Sterling received a brief boost on the news that the RICS house price balance strengthened to -31% in January from -39% in December. It remains in negative territory however, indicating that UK house prices are still tending to fall.
AUD
Business conditions in January showed a steep drop across employment intentions, forward orders, and capacity utilization. Our economists note that this is not entirely surprising given the impact of the Queensland floods. The AUD soon recovered from the news.
TECHNICAL OUTLOOK
USDJPY 80.93 support.
EURUSD BULLISH Focus is on 1.3741, break of this is required to refocus towards 1.3862 recent high while support lies at 1.3482.
USDJPY BEARISH Violation of 80.93 would expose 80.54 next. Resistance at 82.93.
GBPUSD BULLISH Initial resistance at 1.6186 ahead of 1.6279/99 zone. Near-term support is defined at 1.6037.
USDCHF NEUTRAL 0.9623 and 0.9329 mark the near term directional triggers.
AUDUSD BULLISH Focus is on 1.0200/56 resistance zone. Support lies at 1.0083.
USDCAD BEARISH The pair targets 0.9832/20 support zone. Near term resistance at 0.9932.
EURCHF BULLISH Pressure on 1.3069; move above this would open up the way towards 1.3118. Support at 1.2867.
EURGBP BEARISH Move below 0.8377 is required to confirm the negative trend. Resistance is at 0.8477.
EURJPY BULLISH Focus is on 112.92, break of this would confirm the uptrend and expose 114.01 next. Support zone is at 110.78/32.
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 Greg Holden
The British pound has been reaching significant resistance lines against a number of its primary currency rivals. A chance exists that the pound could see some downward retracement over the next several days as investors test the strength of these levels.
As an example, the GBP/CHF, shown on the chart below, has some revealing indicators regarding this development.
As you can see, the pair touched the long-term trend line at 1.5500 and quickly bounced off.
Now we are beginning to see the technical pressure building against any additional bullishness for this pair, symbolized by the technical oscillators on the lower portion of the chart.
The Stochastic (slow) shows a very fresh bearish cross, suggesting heavy sell pressure and what appears to be an impending downward movement that could be sustained for the next few days, even weeks.
The MACD/OsMA also shows a bearish cross, but the upward movement of the oscillator seems to be giving off mixed signals. The wide divergence on this oscillator, however, does support the downward notion.
If correct, the GBP/CHF could see some bearishness over the next few days, with targets at 1.5200 and 1.4900.
GBP/CHF – Daily Chart
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
Yesterday’s trading began with a sharp decline for the euro, following a disappointing German Factory Orders report. However, the euro managed to correct most of its losses afterwards on speculation the ECB might hike interest rates in March, in response to accelerating inflation.
The U.S. dollar slightly gained against most of the major currencies during Monday’s trading session. The dollar began yesterday’s trading session with a 60 pip gain vs. the euro, and a 30 pip gain vs. the Japanese yen. However, by the end of the day the dollar corrected most of its gains.
The dollar’s appreciation came after Germany reported weak manufacturing data. Germany’s factory orders declined in December by 3.4 percent, more than economists estimated. The lower-than-expected figures have weakened the euro, and as a result strengthened its greatest rival, the greenback.
The dollar was also supported by the better-than-expected U.S. Unemployment Rate figures, released last Friday. The U.S. Labor Department said on Friday that the U.S. unemployment rate fell to 9 percent in January, the lowest level since April 2009. This has boosted the dollar by 120 pips against the euro on Friday, and continued to impact the greenback on Monday.
Looking ahead to today, the most significant release from the U.S. economy looks to be the Economic Optimism report. This is a survey of about 900 consumers, who are asked to rate their next six-month financial outlook. A positive publication has the potential to further strengthen the dollar.
The euro failed to recover from last week’s bearish session, and remained at low levels against most of its major currency counterparts in Monday’s trading. The EUR/USD pair continues to trade below the 1.3600 level, and the EUR/ JPY pair remains below the 112.00 level.
The euro fell against the U.S. dollar and the Japanese yen in early trading yesterday after Germany, Europe’s largest economy, reported weak manufacturing data. German Factory Orders fell by 3.4 percent in December, well below expectations for a 1.4 percent drop. The market promptly reacted to the disappointing release, and the euro fell about 100 pips against both the dollar and the yen.
However the euro managed to erase most of its losses on speculation the European Central Bank (ECB) will hike rates. Governing Council member Yves Mersch said yesterday that the ECB will raise rates if the increase in inflation is not temporary. He added that as there would have to be a rigorous intervention by the monetary authorities if across the second-round effects there’s the risk that this increase transforms into a plateau.
As for today, the most interesting release on the economic calendar looks to be the German Industrial Production data. Economists predict that the German industrial production grew by 0.2% on December. If the end result will provide yet another disappointing data release, then the euro might proceed with its recent bearish trend.
The Japanese yen saw a rather volatile trading session on Monday. The yen saw several ups and downs against the U.S. dollar, which eventually ended near to market’s opening price. The yen also saw a sharp gain of 100 pips against the euro in early trading, just to undergo a 70 pips correction afterwards.
The Japanese currency began yesterday’s trading with a rising trend following a weak German manufacturing data. German Factory Orders declined in December by 3.4 percent from November, and as a result boosted demand for safer assets, such as the yen.
Looking ahead to today, traders are advised to follow the Japanese equity markets, as no significant release is expected from the Japanese economy. Traders should also follow the leading economic releases from the U.S. and euro zone, as these usually have a large impact on yen trading as well.
Crude Oil continued to fall from its recent high of $92.80 a barrel, and is currently trading near the $87.40 level. Crude began this week’s trading session the same way it ended last week’s session, with falling prices. The price for a barrel of oil also slid yesterday as tensions in Egypt appeared to ease. It seemed as if the expectations that Egypt’s political turmoil would affect oil flows in the region have diminished.
In addition, U.S. crude oil inventories will likely show that stockpiles rose for a fourth consecutive week, contributing to the weakening oil prices. Analysts estimate that domestic stockpiles rose by 2.4 million barrels last week. This inventories figure will be released on Wednesday.
As for today, traders are advised to follow the economic releases from the U.S. and euro zone as these tend to have a large impact on crude prices. Traders should also take under consideration that as long as the tensions in the Middle East continue to ease, crude prices might face further declines.
The EUR/USD pair saw a falling trend for the past couple of days, and reached as low as the 1.3507 level. Nevertheless, it can be seen on the 4-hour chart that a double-top pattern is beginning to form, with potential to take the pair to the 1.3780 level in the short-term.
The bullish trend that formed on the 4-hour chart has been breached and, ever since, the Cable has been trading near the 1.6130 level. However, as a bearish cross appears to have taken place on the daily chart’s Slow Stochastic, it seems that a bearish session might be impending. Going short might be the right choice today.
The pair has been trading within a restricted range for the past three months now, trading between the 80.30 and the 84.40 levels. Currently, as both the Slow Stochastic and the MACD on the 4-hour chart are providing bearish signals, it appears that the pair might correct the past week’s gains, with potential to reach the 81.30 level.
There is a very distinct bullish channel formed on the 1-hour chart, as the pair is now floating in its middle. However, the RSI on the 4-hour chart has recently dropped below the 70-line, indicating that a bearish correction might be imminent. Going short with tight stops might be the right strategy today.
Ever since Crude Oil peaked at $92.80 a barrel, it has seen a sharp bearish correction. Crude fell about 550 pips, and a barrel of crude is currently trading near the $87.30 level. In addition, as all the oscillators on the 4-hour chart are pointing down, it looks that the bearish correction might have more steam remaining. This might be a great opportunity for forex traders to join what appears to be a very popular trend.
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 Zac, CountingPips.com
Today, I am pleased to share a forex interview and commentary on this week’s major events and forex trends with currency analyst at DailyFx.com, Michael Wright. Michael specializes in fundamental and technical analysis and is an active trader in currencies, stocks and options. Michael authors articles ranging from Fundamentals Versus Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast for DailyFx and FXCM in New York.
This week we do not have a lot of major economic releases out of the United States. What do you feel could be the possible drivers of the major currencies this week, especially the direction of the US dollar?
Indeed, the economic docket in the world’s largest economy will be fairly muted this week; however the latter half of the week will likely dictate dollar price action as the 
currency stands at the crossroads against most of its major counterparts. Key events that could serve as a possible driver for the greenback will be the monthly budget statement for January, trade figures for December, as well as the University of Michigan confidence report for February. As most drivers of sentiment have weakened, currency traders should not rule out a dismal Michigan index, which is dollar negative. It is worth noting that the index has fallen an average of 4 points since February 2000, thus a reading in the area of 72 amid expectations of 75.0 should not be ruled out, and would likely put a dent in the buck to end the week. Elsewhere, the Bank of England interest rate decision and Australia’s employment change could impact the major currencies this week. Gauging sentiment will be as important as the releases themselves.
Do you think the market saw Friday’s nonfarm payrolls result as positive for the US economic picture with just 36,000 jobs added but a decline in the unemployment rate by 0.4 percent?
U.S. nonfarm payrolls rose a mere 36K in January versus economists’ expectations of 146K, while the unemployment rate fell to 9.0 percent from 9.4 percent in December. Though the headline figure fell short of predictions, market participants saw the overall report as a positive release for the economic outlook in the U.S. as the unemployment rate fell to its lowest level since April 2009. At the same time, the market attributed the drop in the headline number to severe weather conditions as the diffusion index remained unchanged at 59.4 in January, suggesting that hiring continued during the month.
The AUD/USD pair is back testing the 1.0255 all time high, do you think it is likely we will see the pair break above this level? Should this week’s job report out of Australia be seen as the major driver’s for this currency this week?
From my point of view, the AUDUSD is unlikely to overtake its all time high of 1.0255 as the worst flood in 50 years paired with Australia’s largest tropical storm since the European’s first settled in Australia dampen the region’s growth outlook. Moreover, recent bushfires that have destroyed/damaged homes does not bode well for the economy going forward. Recently, the RBA raised their growth forecast for 2011 from 3.75 percent to 4.25 percent. In turn, this upbeat tone lead the aussie to continue its northern journey. However, as the recent disasters weigh on the region’s outlook, a dismal Australian employment report due out on Wednesday could lead to a selloff in the AUDUSD as fundamental developments start to paint a bearish picture. From a technical standpoint, the pair is trading in a range of 1.0155 – 1.011. Therefore, a break below the latter will confirm my bearish bias.
The Bank of England’s interest rate decision is out this week with the BOE likely holding the interest rate steady at 0.50%. Is there anything to watch for or to take note of regarding this event since the bank generally does not provide commentary with their rate announcement? Is the event likely to have an effect on the British pound sterling?
The Bank of England is widely expected to keep borrowing costs and its asset purchase target unchanged at 0.50 percent and 200 billion pounds in February. As of late, market participants are pricing in a 17 percent chance that the central bank will raise its key overnight lending rate twenty five basis points at its meeting on February 10th, according to the Credit Suisse Overnight Index swaps. Indeed, comments trailing the rate decision are unlikely, thus, traders should not rule out a muted response in the British pound subsequent to the release. Conversely, the meeting of the minutes on February 23rd may provide the markets with a tradable event as the split amongst policy makers widen amid uncertainty in the region’s growth prospects. If by chance the BoE raises interest rates, the British pound should easily overtake 1.62.
The EUR/USD’s uptrend turned around last week after the ECB interest rate announcement and ECB President Trichet’s news conference that was seen as dovish for future interest rate moves. This event put a dent into Euro bulls momentum after a recent high at 1.3861. Is this enough of a catalyst to bring the EUR/USD lower over the medium term? Maybe to test the last swing low around 1.2875?
Following ECB rate decision last week, the EURUSD pushed lower as the central bank head Jean-Claude Trichet reiterated his comments from January’s meeting. His speech may not be enough to resume selling in the EURUSD for the first half of this week considering the fairly light economic docket. Looking ahead, I do not rule out a slight bounce in the euro against the dollar as policy makers resume their hawkish tone. Moreover, as concerns surrounding the ability of the European Financial Stability Fund to purchase government bonds await the next EU summit in March, the rally in the greenback will need to come on the back of positive fundamental developments. Therefore, traders should not rule out a retest of the 10-day simple moving average before the selloff resumes. Thereafter, a break and a close below 1.34 exposes the 1.28 area.
The Swiss franc has been generally weak against the major currencies since the beginning of the year. Is this more of a technical correction or does this have a more fundamental underlying cause?
As of late, the Swiss franc has weakened against most of its major counterparts this year due to the rise in risk appetite as speculation that the global recovery will gather momentum continues. It is important to note and attribute the Swissie’s rally last year to its safe haven appeal. The CHF is considered a safe haven because the Swiss National Bank keeps a large part of its reserves in gold. Therefore, as the recovery in major economies gathers steam, currency traders not rule out additional losses in the Swiss franc.
Thank you Michael for taking the time for participating in this week’s forex interview. To read Michael’s latest currency analysis and trading strategies be sure to visit DailyFx.com.
GBPUSD stays above a rising trend line on 4-hour chart and remains in uptrend from 1.5344 (Dec 28, 2010 low), the fall from 1.6277 treated as consolidation of uptrend. Sideways movement in a range between 1.6000 and 1.6277 would likely be seen in a couple of days, and uptrend could be expected to resume after touching the trend line. However, a clear break below the trend line support will indicate that the uptrend from 1.5344 had completed at 1.6277 already, then the following downward move could bring price to 1.5600 area.
An Andrew Tan-led company, Empire East Land Holdings, Inc. or ELI in the Philippine Stock exchange caught the market’s attention in today’s (February 7) trading when it rose by more than 14.52% from an opening of PHP 0.64 to a to close at its daily high of PHP 0.71. So looking at its price canvas above, you will see that ELI had already broken out from a complex cup and handle pattern about three weeks ago before making a return trip back towards the formation’s neckline. for awhile there I thought that ELI previous bullish move would fail but it’s a good thing that the cup and handle’s neckline was able to catch AGI’s descent and even push it high it back up.
ELI even looks more promising now as we zoom closer to its 6-month time frame. Notice how the stock made a bullish breakaway gap right few days after the red moving average kept it afloat. As some of you might know, the stock usually move in the direction of the breakaway gap as this signals the market’s increased optimism toward the issue. Oftentimes, a breakaway gap is even followed by another gap in the days to come. Moreover, today’s price action was accompanied by an increase in volume, suggesting that its move north would likely be supported. Moreover, the MACD’s histogram is about to turn positive. Such occurrence could further add to the stock’s buy signals. Furthermore, the stock still has more room to move higher, in my view, since its RSI is still far from the overbought area. In any case, ELI could once again aim for its recent high at PHP 0.84 if it continues to move up.
On the fundamental side, news that ELI submitted an offer to the Department of Finance (DOF) to purchase the government-owned Food Terminal, Inc. (FTI) in Taguig City for about PHP 14 billion caused investors to buy up ELI’s shares. FTI is one of the largest industrial complexes, in terms of area, in Metro Manila. Developing this complex into a business and residential hub more like what Megaworld Corporation (MEG), an affiliate of ELI, did to McKinley Hills, Eastwood City, and Newport City to name a few, could pay huge dividends to the company as such would attract businesses that would lease spaces and individual investors that would buy properties.
More on LaidTrades.com …
The Euro dropped almost 300 pips from 1.3859 to 1.3543 against the US dollar last week when European Central Bank President Jean-Claude Trichet said inflation risks are “broadly balanced,” dimming the prospect of an increase in interest rates. The comments on the inflation outlook disappointed investors who were betting on euro zone interest rates would rise ahead of those in the US. Friday’s employment report in the US also snapped euro’s spine. While having a disappointing non-farm employment change of only 36,000 for the month of January which is usually bearish for the USD (bullish for the EUR), US’s jobless rate came in with a surprise as it unexpectedly improved to 9.0%, a level not seen for quite some time, as compared to the 9.5% forecast. the upward revision in December’s employment change from 103,00 to 121,000 also sparked some US dollar buying.
In the process, the EUR/USD, in the 4-hour chart, broke down from its uptrend and went all the way down until it found some support at the 1.3540 area which propelled the pair for a mini bounce. However, the EUR/USD could further drop as the rally drew the right shoulder of a possible head and shoulders pattern. If the pair breaks below the neckline of the said pattern, we can aim for the 1.3250 target price. I got this by gauging the size of the head and shoulders and added it to the possible breakdown point. However, before it reaches that level, there could be some buying pressure at the 1.3400 price mark. In case the EUR/USD heads up once again, its immediate hurdle could be 3-day downtrend line. Then after that could be the 1.3677 resistance.
More on LaidTrades.com …
