UK Mortgage Approvals are expected to fall for the second consecutive month in June while Net Consumer Credit growth slows from the previous month over the same period.
UK Mortgage Approvals are expected to fall for the second consecutive month in June while Net Consumer Credit growth slows from the previous month over the same period. The figures will reinforce dovish comments from BOE policymakers delivered in testimony to the Parliament’s Treasury Committee, where governor Mervyn King downplayed the stronger-than-expected second quarter GDP result to stress lingering uncertainty about the recovery in general and inflation in particular, signaling monetary policy is firmly stuck in accommodative territory for the time being.
Trading Tactics
A clear uptrend could be an opportunity to Buy GBP/USD.
The buying point is at 1.5627; Pivot point highest level is the take profit at 1.5695; Pivot point is the stop loss at 1.5590
The selling point is at 1.5570; Fibonacci 38.2% is the take profit at 1.5450; Pivot point is the stop loss at 1.5650
Technical: Sterling forms a new high and may continue the minor uptrend. A move back higher could set up a test of 1.5695
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD crosses the signal line upwards; Momentum and RSI (Relative Strength Index) are in an uptrend; stochastic oscillator gives a neutral signal.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The Euro hit a one-week high against the US Dollar as risk appetite held up overnight.
The Euro hit a one-week high against the US Dollar as risk appetite held up overnight. A tame European calendar puts the onus on US consumer confidence data and another round of second-quarter earnings reports. The Euro inched higher in overnight trade, adding nearly 0.2 percent and reaching a high of 1.3017 to the US Dollar, the strongest in a week. The British Pound was little changed, tracking sideways in a narrow range below the 1.55 figure.
Trading Tactics
A clear uptrend could be an opportunity to buy EUR/USD.
A buying point is at 1.2988; Pivot point is the take profit at 1.3075; Fibonacci 23.6% is the stop loss at 1.2900
A selling point is at 1.2880; Fibonacci 50% is the take profit at 1.2775; Pivot point is the stop loss at 1.2960
Technical: Euro breaks standard error channel middle line upwards and may continue the major uptrend. A move back higher could set up a test of 1.3075
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD is in a bullish direction; RSI (Relative Strength Index) and Momentum are pointing upwards; stochastic oscillator crosses %D line downwards.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The Pound remains trading higher, supported by improved market confidence, and moving at 3-month highs above 1.5470, with room for further appreciation, according to technical analyst at Commerzbank.
The Pound remains trading higher, supported by improved market confidence, and moving at 3-month highs above 1.5470, with room for further appreciation, according to technical analyst at Commerzbank. The Sterling is biased to the upside, trading on an uptrend channel from May lows, targeting 1.5525/60 area, says Jones: "Short to medium term, the market has recently severed its 1.5310 down channel.
Trading Tactics
A clear uptrend could be an opportunity to Buy GBP/USD.
The buying point is at 1.5467; Pivot point is the take profit at 1.5565; Fibonacci 23.6% is the stop loss at 1.5400
The selling point is at 1.5380; Fibonacci 61.8% is the take profit at 1.5270; Pivot point is the stop loss at 1.5495
Technical: Sterling breaks the previous resistance level and forms a new support on moving averages line. A move back higher could set up a test of 1.5410
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD crosses the signal line with a higher histogram; Momentum and RSI (Relative Strength Index) are in an uptrend; stochastic oscillator crosses %D line in oversold area.
*Analysis is for information purposes only and does not constitute advice in any form. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The combination of growing confidence in Europe’s economy and mounting evidence of a slowdown in the U.S. is driving euro bears into hiding.
Fundamental The combination of growing confidence in Europe’s economy and mounting evidence of a slowdown in the U.S. is driving euro bears into hiding. After tracking the euro’s slide from about $1.45 at the beginning of 2010, the median forecast of currency strategists has stayed within two cents of $1.20 since the start of June, according to data compiled by Bloomberg. Goldman Sachs Group Inc. and Wells Fargo & Co. raised their estimates in the past two weeks, joining HSBC Holdings Plc and Deutsche Bank AG in predicting a stronger euro. Technical Technical analysis shows the euro may continue the bullish movement as MACD crosses the signal line upwards and RSI bounces on 30% line. Bollinger gives us a bullish signal by closing the candle above the middle band.
EUR/USD (Daily Chart) The primary tendency breaks downtrend line upwards.
EUR/USD (4 Hour Chart) The pair is in a clear uptrend.
EUR/USD (Hourly Chart) The Minor trend trying to break Fibonacci fan.
The Euro and the British Pound consolidated NY-session losses in overnight trade, with the single currency tracking sideways in a narrow range above 1.2750 while the UK unit oscillated within 30 pips above 1.5160.
The Euro and the British Pound consolidated NY-session losses in overnight trade, with the single currency tracking sideways in a narrow range above 1.2750 while the UK unit oscillated within 30 pips above 1.5160. Preliminary German Purchasing Manager Index figures are set to show that growth in the manufacturing and service sectors deteriorated to the slowest in four months. A composite Euro Zone Purchasing Manager Index reading is expected to decline for the third consecutive month to print at the lowest since February.
Trading Tactics
A clear downtrend could be an opportunity to sell EUR/USD.
A buying point is at 1.2860; Pivot point is the take profit at 1.2970; Fibonacci 50% is the stop loss at 1.2770
A selling point is at 1.2778; Pivot point is the take profit at 1.2635; Fibonacci 38.2% is the stop loss at 1.2830
Technical: Euro breaks previous support level and continues the minor downtrend. A move back lower could set up a test of 1.2635
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice histogram MACD is in a bearish direction; RSI (Relative Strength Index) and Momentum are in an uptrend; stochastic oscillator gives a bullish correction signal.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
(Reuters) - Japan's Nikkei average inched down 0.2 percent on Wednesday, weighed down by worries about a stronger yen and doubts over the U.S. economic recovery as the market awaited events later this week, including the results of European bank "stress tests."
While charts suggest recent falls in the Nikkei may be coming to an end, a number of lackluster U.S. indicators including Tuesday's housing starts are keeping investors wary, with few willing to actively buy before Japanese earnings pick up steam next week.
New U.S. home construction hit its lowest level in eight months in June, further evidence that the U.S. economy lost momentum in the second quarter, but a rise in building permits offered hope of a pickup in homebuilding.
"We still can't rule out the possibility that some speculative moves ahead of events -- the bank 'stress tests' this week and U.S. jobs data -- will shrink risk-money, leading to a stronger yen," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
"Given doubts over the U.S. economic recovery, if something like that were to happen the Nikkei could fall to just above 9,000."
The results of the stress tests, both the aggregate outcome and those of individual banks, will be released on Friday.
The market is also waiting for Fed Chairman Ben Bernanke's twice-yearly testimony before Congress on Wednesday and Thursday, with investors looking for any comments that could boost speculation about more monetary accommodation -- speculation that helped boost Wall Street on Tuesday.
The benchmark Nikkei fell 21.63 points to 9,278.83, after eking out small gains in early trade. The broader Topix slipped 0.4 percent to 829.35.
The dollar fell 0.5 percent to 87.10 yen, staying near a 7-month trough of 86.27 yen struck on EBS last week, as fears about a slowing U.S. recovery prompted investors to cut long positions in the greenback.
Market players say support for the Nikkei likely stands firm at 9,200, just under its July 1 close, which was a seven-month closing low. After that, support lies around 9,091, a low hit this month, and 9,076, a low posted in November 2009.
Orders placed through foreign brokers prior to the open showed that foreign investors were net sellers for the second day in a row, with some saying selling by foreign investors of financial shares weighed on the market.
Shares of Nomura Holdings Inc, Japan's top brokerage, were down nearly 4 percent after the Nikkei business daily reported on Monday that smaller rival Daiwa Securities Group likely suffered a loss in April-June, as financial market turmoil stemming from the Greek debt crisis took its toll.
Daiwa shares were down 3.5 percent on Wednesday.
On the technical front, in a sign that recent drops, which saw the Nikkei lose 1.8 percent last week, may be coming to an end, the Nikkei's MACD has narrowly avoided a bearish cross and appears to be leveling out.
Its slow stochastic -- a measure of how oversold the market is and whether it is in a short-term up or down trend -- continues to fall, but now is deep within oversold territory.
Resistance is strengthening at the level of the Nikkei's 25-day moving average around 9,600. The 25-day moving average is a proxy for a one-month moving average and closely watched in Japan.
Trade picked up on the Tokyo exchange's first section, with 2 billion shares changing hands, its highest volume in a week.
Declining shares outnumbered advancing ones by nearly 3 to 1.
EARNINGS IN FOCUS
Expectations toward earnings were a main driver in the market.
Shares of Nomura lost 3.8 percent to 455 yen and Daiwa fell to 363 yen.
The brokerages will report their results next week.
Shares in Pasona Group lost 5.8 percent to 53,900 yen after the staffing service firm forecast a drop in annual profit on Tuesday, citing tough employment conditions and an expected decline in orders in its outplacement services segment.
Earlier the stock fell to 53,000 yen, its lowest in nearly 14 months.
But Sapporo Holdings climbed 2.3 percent to 393 yen after the Nikkei business daily said the brewer is likely to report an operating profit of more than 1 billion yen ($11.4 million) for the January-June half, beating previous expectations of a loss of 500 million yen.
That compares with a 1.3 billion yen profit posted in the same period the year before.
Shares of electronics firm Omron sped up its decline to end the day 3 percent lower after news that workers at its southern Chinese factory have gone on strike, demanding a 40 percent pay increase.
The euro’s gains are close to petering out amid “fragile market confidence,” Royal Bank of Scotland Group Plc said.
The euro’s gains are close to petering out amid “fragile market confidence,” Royal Bank of Scotland Group Plc said. “Confidence will take a hit if European economic growth begins to fade,” Greg Gibbs, a currency strategist in Sydney, wrote today in a report. “It is hard to see confidence in European debt markets improving further from here. Perhaps the stress tests will deliver one more spurt of confidence. But it is close to a peak and so is the euro.”
Trading Tactics
A clear uptrend could be an opportunity to buy EUR/USD.
A buying point is at 1.2987; Pivot point is the take profit at 1.3060; Fibonacci 23.6% is the stop loss at 1.2910
A selling point is at 1.2880; Fibonacci 50% is the take profit at 1.2775; Pivot point is the stop loss at 1.2935
Technical: Euro breaks the previous resistance level upwards and may form a new support level. A move back higher could set up a test of 1.3060
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice histogram MACD is in a bullish direction; RSI (Relative Strength Index) and Momentum are in an uptrend; stochastic oscillator crosses %D line downwards for a small correction.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The British Pound pared the rally from earlier this week and slipped to a low of 1.5357 during the European trade as investors scaled back their appetite for risk, and the shift in market sentiment may drag the exchange lower
The British Pound pared the rally from earlier this week and slipped to a low of 1.5357 during the European trade as investors scaled back their appetite for risk, and the shift in market sentiment may drag the exchange lower going into the end of the week as investors maintain a cautious outlook for global growth. Former Bank of England board member David Blanchflower said policy makers should be cautious when withdrawing support from the economy as the recovery “is being driven by stimulus,” and went onto say that central bank around the global should wait for clear evidence of private sector growth before normalizing policy during an interview.
Trading Tactics
A clear uptrend could be an opportunity to Buy GBP/USD.
The buying point is at 1.5321; Pivot point is the take profit at 1.5410; Fibonacci 38.2% is the stop loss at 1.5270
The selling point is at 1.5240; Fibonacci 61.8% is the take profit at 1.5150; Pivot point is the stop loss at 1.5340
Technical: Sterling forms a new support level on the previous resistance and may continue the uptrend. A move back higher could set up a test of 1.5410
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD crosses the signal line upwards; Momentum and RSI (Relative Strength Index) are in an uptrend; stochastic oscillator crosses %D line upwards.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The euro weakened after Moody’s Investors Service lowered Ireland’s sovereign debt rating by one notch, fueling demand for perceived safer currencies such as the dollar and Japanese yen.
Fundamental The euro weakened after Moody’s Investors Service lowered Ireland’s sovereign debt rating by one notch, fueling demand for perceived safer currencies such as the dollar and Japanese yen. The single currency fell against 11 of its 16 most actively traded counterparts as Moody’s today cut Ireland’s rating to Aa2 from Aa1, citing the government’s “gradual but significant loss of financial strength.” The agency has a “stable” outlook on the country’s debt, it said today in an e-mailed statement. Moody’s also cut its rating on Ireland’s so-called bad bank, the National Asset Management Agency, to Aa2 with a stable outlook. Technical Technical analysis shows us the Euro may continue its uptrend as MACD bounces on equilibrium level; RSI pointing upwards and Bollinger gives a bullish signal by closing the candle above the middle band. EUR/USD (Daily Chart) The primary tendency breaks the trend line upwards.
EUR/USD (4 Hour Chart) The pair is in a clear uptrend.
EUR/USD (Hourly Chart) The Minor trend bounces on Bollinger lower band.
The parity broke the resistance at 1.27. This level is now acting a support. The price is still into its bullish channel and all indicators are bullish. However, pay attention to the bearish divergences on the RSI and the MACD. We maintain to trade only long positions as far as 1.2650 is support. The break out of the last highest at 1.2777 will comfort us in our bullish feeling. The breakout of 1.28 will give a new buy signal.
(Reuters) - The U.S. stock market landed at a technical crossroads following its best week in a year, yet the potential for positive earnings surprises beginning this week could give an edge to the bulls.
Analysts turned increasingly bearish before the start of earnings season. Sentiment stands at its lowest since May 2009, according to a Bespoke Investment Group note that said analysts have lowered estimates for 572 companies in the S&P 1500 in the last four weeks, while they raised expectations for 396.
At the same time, bullish investor sentiment as measured by the American Association of Individual Investors fell to just 21 percent, the lowest since early March 2009 -- right at the market's bottom.
Equity funds worldwide saw more than $11 billion in net outflows in the first week of July, while money market funds attracted the biggest inflows in 18 months, fund tracker EPFR Global said.
"Expectations are low going into the results, so we could have some positive surprises there and the big test will be if we can get back above 1,100 (on the S&P 500)," said Paul Hickey, a co-founder of Bespoke, based in Harrison, New York.
The Standard & Poor's 500 Index .SPX ended slightly higher on Friday at 1,077.95. For the holiday-shortened week last week, the three indexes rose more than 5 percent.
Even with signs of dwindling sentiment, analysts still expect 27 percent growth in earnings on the S&P 500 for the second quarter according to Thomson Reuters data. That is up from previous readings in the past three quarters, which hovered around 22 percent.
To be sure, beating top and bottom line expectations could still prove a Pyrrhic victory. Chief executives must also provide outlooks that convince investors the U.S. economy does not face a double-dip recession or the European credit crisis will not damage future earnings.
"Everybody's concerned about the economy and the market has reflected these concerns," said Cleveland Rueckert, equity strategist at Birinyi Associates in Stamford, Connecticut.
"Right now the market has priced in a slowdown in earnings, so we're going to see a lot of focus not only on the reports but also the guidance," he said.
TECHNICALS: HALF FULL, OR HALF EMPTY?
After regaining the key 1,040 level last week, the S&P 500 also generated a 'buy' signal in its moving average convergence-divergence, or MACD chart. But its 50-day simple moving average is still below the 200-day moving average. This so-called death cross is seen as a signal of further downward pressure.
The index also stands at its 20-day moving average, which leaves it right in the middle line of its Bollinger bands, meaning it technically has space to move in any direction, and leaves it susceptible to volatility.
"We're seeing a tug of war between technical indicators," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
"You're going to see people migrating toward one end of the camp or the other depending on how the earnings season plays out."
Amid the lack of technical guidance, options traders seem to be hedging themselves for some volatility. On Friday, the most active trades on the SPDR S&P 500 fund (SPY.P) were the July $107 calls and the July $107 puts.
"The volume is nearly the same for calls and puts, so these just look like bets on volatility next week instead of a direction," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.
BUSY EARNINGS WEEK
Big names like Google Inc (GOOG.O), Intel Corp (INTC.O), JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) will post their quarterly scorecards in a busy week that will see Alcoa Inc (AA.N) start the season after the market's close on Monday.
JPMorgan will be in focus as many investors expect financials to lead or take part in a stocks comeback. But the bank is expected to post earnings of 67.9 cents per share according to StarMine's SmartEstimate, which weights estimates according to analysts' accuracy, versus the mean of 72 cents a share.
If JPMorgan does miss median expectations, it could threaten this nascent stocks rally.
More than a few Dow components posting earnings could overshadow the economic data, but the minutes of the latest Federal Open Market Committee meeting, expected Wednesday, will be closely watched as they will provide a window into the Fed's take on the extent of the effect of the European credit crisis in U.S. growth.
Other data high points include business inventories Wednesday, the Producer Price Index and initial applications for unemployment benefits on Thursday and the Reuters/University of Michigan survey of consumers on Friday.
Overseas data includes Chinese gross domestic product due on Thursday and expected to show a slowdown to 10.5 percent year-on-year growth from 11.9 percent.
"If people see a higher number they might think China is going to really rein in their economic growth, which could then put downward pressure on commodity (and U.S. equity) prices," Wells Fargo's Jacobsen said.
(Reporting by Rodrigo Campos; Additional reporting by Angela Moon; Editing by Kenneth Barry)
EUR/USD Current price 1.2630. Near past Friday’s New York closing levels, pair long term bias in the pair shows 1.2860 as a strong resistance area, ahead of 1.2920, quite close. If above this last, there is a chance of seeing the pair extending the rally towards the 1.30 area. Still sovereign debt woes, and banking crisis is not over in euro zone, and despite market is much less short in the common currency, the road to the upside will be a hard one.
Technical
Technical analysis shows the Euro may continue its uptrend. We notice the demand in the market by using indicators like MACD, which shows strength in the market. RSI is in an uptrend. Bollinger gives a bullish signal by closing the candle above the middle band.
EUR/USD (Daily Chart)
The primary tendency is in a downtrend.
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EUR/USD (4 Hour Chart)
The pair forms a new support level on MA20 periods line
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EUR/USD (Hourly Chart)
The Minor trend breaks the previous resistance.
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The dollar slid as much as 1 percent to $1.2662 per euro
The dollar slid as much as 1 percent to $1.2662 per euro, the weakest level since May 21, before changing hands at $1.2642 at 1:05 p.m. in New York. A lackluster U.S. service sector report added to selling pressure on the dollar on fears of further slowdown in the U.S. economy. The euro also extended gains after the ISM report but currency analysts warned that investors should be cautious on the European currency.
Trading Tactics
A head and shoulders bottom could be an opportunity to buy EUR/USD.
A buying point is at 1.2620; Fibonacci 61.8% is the take profit at 1.3050; Fibonacci 23.6% is the stop loss at 1.2320
A selling point is at 1.2490; previous support is the take profit at 1.2075; Fibonacci 38.2% is the stop loss at 1.1875
Technical: Euro breaks the previous resistance level upwards and may continues the minor uptrend. A move back higher could set up a test of 1.2860 To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice histogram MACD is in a bullish direction; RSI (Relative Strength Index) and Momentum are in an uptrend; stochastic oscillator is in a bullish direction.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
By Finotec’s professional analyst.
(This image has been resized, click here to view the full-sized image.)
(This image has been resized, click here to view the full-sized image.)
Euro Zone Unemployment figures headline the economic calendar in European hours, with expectations calling for the jobless rate to hold steady
Euro Zone Unemployment figures headline the economic calendar in European hours, with expectations calling for the jobless rate to hold steady at a record-high 10.1 percent in May. A pause in unemployment’s two-year advance would hardly signal brighter prospects for the region however as the coming months bring slower economic growth and an erosion of business confidence in the aftermath of the EU debt crisis.
Trading Tactics
A head and shoulders bottom could be an opportunity to buy EUR/USD.
A buying point is at 1.2520; Fibonacci 61.8% is the take profit at 1.3050; Fibonacci 23.6% is the stop loss at 1.2320
A selling point is at 1.2290; previous support is the take profit at 1.1875; Fibonacci 38.2% is the stop loss at 1.1875 Technical: Euro breaks the previous resistance level upwards and may continues the minor uptrend. A move back higher could set up a test of 1.2360
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice histogram MACD is in a bullish direction; RSI (Relative Strength Index) and Momentum are in an uptrend; stochastic oscillator is in a bullish direction.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
EUR/USD Current price 1.2370. Near past Friday’s New York closing levels, pair long term bias in the pair shows 1.2460 as a strong resistance area, ahead of 1.2520, quite close.
Fundamental EUR/USD Current price 1.2370. Near past Friday’s New York closing levels, pair long term bias in the pair shows 1.2460 as a strong resistance area, ahead of 1.2520, quite close. If above this last, there is a chance of seeing the pair extending the rally towards the 1.30 area. Still sovereign debt woes, and banking crisis is not over in euro zone, and despite market is much less short in the common currency, the road to the upside will be a hard one.
Technical Technical analysis shows the Euro may continue its uptrend. We notice the demand in the market by using indicators like MACD, which shows strength in the market. RSI is in an uptrend. Bollinger gives a bullish signal by closing the candle above the middle band.
EUR/USD (Daily Chart) The primary tendency is in a downtrend.
EUR/USD (4 Hour Chart) The pair forms a new support level on MA20 periods line.
EUR/USD (Hourly Chart) The Minor trend breaks the previous resistance.
After a relatively calm trading week, an extremely volatile session is expected starting today. Last week, the Dollar fell against most of the majors as poor housing data weakened the greenback; however this could all change following the U.S. employment data which is expected on Friday. Traders are also advised to follow the ADP forecast which is expected on Wednesday, as it is considered to be a reliable forecast for the real result that will be published on Friday. Will the Dollar Erase last week's losses? Economic News
USD - Dollar Weakens As Data Shows Slowdown in Economic Recovery The Dollar slid against most of the major currencies during last week's trading session. The Dollar dropped about 400 pips against the Pound and about 200 pips against the Yen.
The Dollar dropped as data showed that the U.S. economy's recovery might be progressing slower than expected. The Existing Home Sales dipped by 2.2% in May to 5.66M from 5.79M in April, failing to reach expectations for 6.17M. The housing sector suffered from another misfortune as the New Home Sales failed to reach expectations as well. The report showed that sales of new homes plunged to a record low. Merely 300,000 new homes were sold during in May, well below the 446,000 which were sold in April, and well below the expected 424,000.
The unsatisfying data continued as the Durable Goods Orders report was published. The report showed that durable goods orders fell in May for the first time in 6 months. The report indicated a 1.1% drop. Following about 2 months in which the Dollar strengthened against most of the major currencies, such disappointing publications were enough to correct some of the Dollar's gains.
As for the week ahead, many interesting publications are expected from the U.S. economy. The economic release which is likely to have the greatest impact will be the Non-Farm Payrolls report, scheduled for Friday. The Non-Farm payrolls report is the most reliable data regarding the U.S. employment status. Analysts have forecasted that unemployment condition in the U.S. has worsened during June. If the actual result will be similar, the Dollar's drop may deepen.
EUR - Euro Drops On Disappointing Data from the Euro-Zone The Euro plunged against most of its major counterparts last week. The Euro saw mixed results against the Dollar, yet weakened against both the Pound and the Yen. The Euro dropped about 400 pips against the Yen, and the EUR/JPY pair fell to the 109.52 level. The Euro's slide came as a result of several disappointing economic publications from the Euro-Zone. The European Current Account, which measures the difference in value between imported and exported goods and services, showed a €5.1 billion deficit in April, swinging from a €1.5 billion surplus in March. In addition, the Belgium Business Climate survey, which asks about 6,000 businesses to rate their business conditions and expectations for the next 6 months, dropped for the 27th consecutive time. Another disappointing economic publication was the Industrial New Orders report. The report showed that European industrial new orders rose by 0.9%, yet failed to reach expectations of 1.6%.
Following the ongoing gloomy forecasts regarding the Euro-Zone's future, it seems that until solid data will prove that the European economies are truly recovering, the Euro may continue to tumble against the major currencies.
As for this week, traders are advised to follow the major publications from the German economy, such as the German Preliminary Consumer Price Index and the German Unemployment Claims. If the end results will show further recovery of the German economy, which is the largest and strongest economy in the Euro-Zone, the Euro might correct some of its losses. Traders are also recommended to follow The European Central Bank (ECB) President Trichet's speech on Wednesday. Trichet is likely to discuss the ECB's future plans and policy, and large volatility is likely to take place during his speech.
JPY - Yen Soars as Risk Aversion Increases The Yen strengthened against most of the major currencies during last week's trading session. The Yen marked a 200 pips gain vs. the Dollar, and the USD/JPY pair is now trading near the 89.30 level. The Yen strengthened against the Euro as well.
The main reason for the Yen's rise last week was the disappointing data from the Euro-Zone and especially the U.S. economy. In the U.S. the housing sector, which was the catalyst for the recent global crisis, provided rather disturbing figures. This created concerns that the U.S. recovery might take longer than expected, and as a result will damage global recovery as well. The Euro-Zone has provided various disappointing economic publications as well. All this has reduces risk-appetite in the market, and turned investors to look for safer assets. The Yen is considered to be a relatively safe investment, and thus when risk aversion increases, investors tend to put their faith in the Yen. As a result the Yen soared against most of its counterparts.
Looking ahead to this week, a batch of data is expected from the Japanese economy. The most significant publication looks to be the Tankan Manufacturing Index, which is expected on Wednesday. This is a survey of about 1,200 large manufacturers, which are asked to rate the relative level of general business conditions. Analysts have forecasted that the end result will be negative. If the actual result will indeed be negative, the Yen may erase some of its gains from last week.
Crude Oil - Crude Oil Reaches Above $79 a Barrel Crude Oil saw an extremely volatile session during last week's trading. Crude Oil began last week with a sharp drop of about 400 pips, and a barrel of Crude Oil was traded below $76. However by Friday oil saw a sharp rise and Crude Oil is now trading above $79 a barrel.
Oil prices rose Friday as rough whether in the Caribbean Sea threatened to progress into a hurricane in the Gulf of Mexico. This created speculations that Oil supply could be damaged, and energy prices jumped in response. However, currently it seems that the rough whether will not develop into a severe storm, and as a result Oil's bullish trend has eased, and Crude Oil's prices remain steady at around $79 a barrel.
As for this week, traders are advised to follow every development regarding the weather around the Gulf of Mexico, as every publication regarding the potential hurricane could boost Oil prices once again. Traders are also advised to follow the U.S. Crude Oil Inventories report which is expected on Wednesday, as this report tends to have an immediate impact on the market.
Technical News
EUR/USD After its recent bullish run the pair may be seeing some downward correction today. The RSI for the pair is floating in the overbought territory on the hourly chart while a bearish cross is evident on the 4 hour chart's Slow Stochastic. An impending bearish cross can also be seen on the hourly MACD. Going short for the day may be advised.
GBP/USD The pair may be seeing a bearish correction today as the RSI for the pair is floating in the overbought territory on the hourly, 8 hour and daily charts. A bearish cross is evident on the 4 hour, 8 hour and daily charts' Slow Stochastic. A bearish cross is also evident on the hourly MACD. Going short for the day may be advised.
USD/JPY The pair may see some recovery today following its recent drop. A bullish cross is evident on the 4 hour MACD as well as the 8 hour and daily charts' Slow Stochastic. The RSI for the pair is floating in the oversold territory on the daily and 8 hour charts. Traders may be advised to go long for the day.
USD/CHF The pair may be seeing some upward correction today as a bullish cross is evident on the hourly MACD as well as the 4 hour, 8 hour and daily charts' Slow Stochastic. The pair's RSI is floating in the oversold territory on the 2 hour, 4 hour, 8 hour and daily RSI while a breach of the Lower Bollinger Band is evident on the daily chart, indicating an imminent upward movement. Going long for the day may be advised.
The Wild Card AUD/NZD A breach of the upper Bollinger Band is evident on the 2 hour chart while the RSI for the pair is floating in the overbought territory on the hourly chart, indicating an imminent downward correction. Furthermore a bearish cross is also seen on the hourly and 2 hour charts' Slow Stochastic. Forex traders may be advised to go short for today.
U.K. banks remain “vulnerable” to further writedowns on their assets because of a potential decline in investor appetite for risk, the Bank of England said.
U.K. banks remain “vulnerable” to further writedowns on their assets because of a potential decline in investor appetite for risk, the Bank of England said. Derivatives and other financial instruments accounted for 40 percent of U.K. banks’ total assets at the end of 2009, the central bank said in its semiannual financial stability report published in London. Globally, mark-to-market losses on assets rose to $7.8 trillion in June from $4.5 trillion in March, it said. “If sovereign risk concerns rise or risk appetite continues to diminish, asset prices could fall further,” the BOE said. “This would have a significant impact on the solvency positions of holders of these assets, including both U.K. and global banks.”
Trading Tactics
A failure swing pattern could be an opportunity to Sell GBP/USD.
The buying point is at 1.5030; previous resistance is the take profit at 1.5150; Fibonacci 23.6% is the stop loss at 1.4890
The selling point is at 1.4927; Pivot point is the take profit at 1.4860; Previous resistance is the stop loss at 1.5015
Technical: Sterling forms a double top reversal pattern and starts a minor downtrend. A move back lower could set up a test of 1.4860
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD crosses the signal line downwards; Momentum and RSI (Relative Strength Index) are in a downtrend; stochastic oscillator crosses %D line upwards.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The Federal Reserve is widely expected to the keep its benchmark overnight interest rate at 0.25% on Wednesday.
The Federal Reserve is widely expected to the keep its benchmark overnight interest rate at 0.25% on Wednesday. This week’s policy decision, like other recent decisions, is not expected to be market moving, but the statement following the meeting always bears watching. The FOMC has pledged repeatedly to keep the federal funds rate at “exceptionally low levels” and “for an extended period of time.” Given the still volatile situation in Europe, it is extremely unlikely that the Fed would back off that pledge in this particular meeting. The Fed has also indicated that inflation “is likely to be subdued for some time,” a view supported by government inflation figures; core consumer prices have only risen two months this year and are up 0.9% year-over-year, well below the 2% average increase over the past decade.
Trading Tactics
A failure swing pattern could be an opportunity to Sell GBP/USD.
The buying point is at 1.4830; previous resistance is the take profit at 1.4940; Fibonacci 38.2% is the stop loss at 1.4715
The selling point is at 1.4719; Fibonacci 61.8% is the take profit at 1.4570; Pivot point is the stop loss at 1.4810
Technical: Sterling forms a failure swing reversal pattern and may continue the bearish movement. A move back lower could set up a test of 1.4570
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD crosses the signal line downwards; Momentum and RSI (Relative Strength Index) are in a bearish direction; stochastic is in oversold area.
*Analysis is for information purposes only and does not constitute advice in any form. Past performance is not an indicator of future performance. Trading in financial products carries a high degree of risk to your capital and it is possible to lose more than your initial investment.
The EUR/USD pair almost touched $1.2500 during yesterday's trading session, but declined sharply thereafter, following a rating downgrade. Fitch Ratings' downgraded French banking giant BNP Paribas from AA to AA-. The move increased analysts' concerns about the economy after the day passed with almost no major news events. Economic News
USD - Dollar Rallies on Renewed Euro-Zone Concerns The USD traded higher against most counterparts yesterday, except the Yen, as excitement about China's decision to relax the Yuan's pegged exchange rate subsided and as concerns regarding the stability of the Euro-Zone banking system resurfaced.
The EUR/USD pair declined by more than 150 pips after it reached $1.2466 at the start of the New York trading session. Traders moved away from riskier currencies after China cautioned they will only gradually raise the Yuan against the USD.
Looking ahead to today, traders are advised to follow the release of the Existing Home Sales report at 14:00 GMT. A better than expected result might back some optimism to the markets, supporting the EUR/USD pair slightly.
EUR - BNP Paribas Rating Downgrade Weakened EUR The EUR weakened against all its major counterparts yesterday following a rating downgrade. Fitch Ratings downgraded French banking giant BNP Paribas from AA to AA-. The move increased analysts' concerns about the economy after the day passed with almost no major news events.
The EUR declined versus the U.S. Dollar yesterday as investors lost confidence in the European currency. Although the Bank's quarterly results improved, it is still exposed to vulnerable assets. Fitch's BNP rating downgrade reminded investors' of Europe's fragile economy.
The general mood towards the EUR remains negative, despite the rally of the past two weeks. It would not be surprising to see the EUR/USD pair trading back at lower levels, near $1.2000.
As for today, traders should follow the release of the German Ifo Business climate release at 8:00 GMT as well as continue to monitor statements from financial leaders and rating agencies as recently they tend to greatly influence the currency market.
JPY - Concerns about European Banks Turn the Yen Popular Again The Yen appreciated yesterday versus riskier assets such as the EUR and GBP as investors turned to the safe heaven appeal of the currency following the downgrade of French Banking Giant BNP Paribas.
The Yen gained versus 13 of its 16 major counterparts after officials from the European Central Bank stated some banks in the 16-nation region are facing funding problems and as deep spending cuts are expected to be announced from Britain.
Japan's currency advanced to 111.90 per EUR from 112.18 in New York yesterday. The Yen is at 90.89 per USD from 91.11 yesterday. Crude Oil - Crude Declined as the Dollar Appreciated Crude Oil declined as excitement about China's plan to allow the Yuan to appreciate against the USD and as equities fell on renewed concerns that Europe's sovereign-debt crisis will affect economic recovery.
China is the world's largest Oil consumer outside the U.S; while the decision to loosen the exchange rate is expected to increase the country's Oil demand, the transition will likely be gradual and therefore the increase in demand will be more modest than initially expected.
Crude for July delivery dropped as much as 63 cents, or 0.8%, to $77.19 a barrel in electronic trading on the New York Mercantile Exchange yesterday. Currently Oil prices are back to trading near the $78.00 a barrel level. Technical News
EUR/USD We can see from the daily chart that the two week period of strength from the EUR may just be a short term correction in the long term bearish trend. The appreciation in the price has stalled at a trend line that began on April 15th. The second point of contact is on May 10th, and the 3rd point of contact is yesterday. The three contact points show the trend line is a significant trend line. Therefore we may expect the pair to continue it's long term bearish trend with the next target the support line at 1.2150.
GBP/USD The pair seems to be exhibiting some mixed signals. While the hourly RSI is floating in the oversold territory and the MACD is near the lower limit, indicating an impending upward movement, a bearish cross can be seen on the daily chart's Slow Stochastic as well as the 8 hour MACD. Waiting on a clearer direction for the pair may be advised.
USD/JPY Some upward correction may be expected for the pair today as the RSI for the pair is floating near the over sold territory on the hourly chart while a bullish cross is evident on the 4 hour and 8 hour MACD. Going long for the day may be advised.
USD/CHF The pair may be seeing a much need upward correction today as the RSI for the pair is floating in the oversold territory on the 4 hour, 8 hour and daily chart with a bullish cross evident on the daily charts' Slow Stochastic. An impending bullish cross can be also seen on the 4 hour and 8 hour MACD. Furthermore, a breach of the lower Bollinger Band is evident on the daily chart indicating an imminent upward movement. Going long for the day may be advised.
The Wild Card Gold Gold prices dropped following a rise to a new record price at $1262.20. But the price then quickly fell and is now trading near the price of $1238. The buying binge may have exhausted itself for the time being as the daily chart's RSI 14 has dipped below the 70 line, indicating the potential for further price declines. A new buying opportunity for CFD traders may be found at $1216.
The Euro and the British Pound rose against the US Dollar in overnight trade, adding 0.3 and 0.4 percent respectively as traders broadly sold the greenback after China announced a move toward a less rigid exchange rate policy.
Fundamental The Euro and the British Pound rose against the US Dollar in overnight trade, adding 0.3 and 0.4 percent respectively as traders broadly sold the greenback after China announced a move toward a less rigid exchange rate policy. The US Dollar came under intense selling pressure in Asian trade after the People’s Bank of China said it will proceed with reform of China’s currency regime “enhance [Yuan] exchange rate flexibility.
Technical Technical analysis shows the Euro may continue its uptrend. We notice the demand in the market by using indicators like MACD, which shows strength in the market. RSI is in an uptrend. Bollinger gives a bullish signal by closing the candle above the middle band.
EUR/USD (Daily Chart) The primary tendency is in a downtrend.
EUR/USD (4 Hour Chart) The pair start a minor uptrend.
EUR/USD (Hourly Chart) The Minor trend breaks Fibonacci upper band.
