Financial Market Turmoil

Oil prices plunge $5. Financial market turmoil has weighed on Dollar.

News and Events:

The Dollar surged against the Yen on Thursday and erased earlier losses versus the Euro as Oil prices plunged and investors worried that high energy costs and financial market turmoil were slowing global growth.
US stocks also rallied as Oil fell for a third straight day. That helped the Dollar post its biggest daily gain against the yen in more than three months.

Better-than-expected Q2 results from JPMorgan Chase & Co helped eased concern about the stability of the US financial sector that has weighed on the Dollar.

Oil has gained 35% this year alone, at one point hitting a record high 147.27. It fell more than $5 on Thursday to 129.29, its lowest level in six weeks.

Analysts said the Dollar's gains remained tentative, particularly given the state of uncertainty surrounding US financial markets and the slumping housing market.

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The Forex Market Today

The Markets Today Friday 18 July 2008 / 09:45h CET

EUR/USD	1.5850
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
Bullish trend-line held, it stands at 1.5785 this morning, while it holds the Euro is bid and a new rise towards 1.60 is likely, strong hurdle to overcome is 1.5885.		A break of the 6-week trend at 1.5785 risks short-term dip to 1.5725, a low weekly close is bearish towards 1.5350.	1.5820 MINOR 1.5885 STRONG 1.5785 TREND 1.5950 MINOR 1.5725 MINOR 1.6010 STRONG

GBP/USD	1.9910
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
Cable seems to make a bearish break here this morning. Closing the hour underneath of 1.9925 is bearish for 1.9830 immediately.		Watch out for a possible reversal, an hourly close above 1.9935 is firmly bullish for the day, 1.9960 intra-day key, a break there leads to new highs.	1.9910 MINOR 1.9960 STRONG 1.9835 STRONG 2.0000 MINOR 1.9750 STRONG 2.0100 STRONG

USD/JPY	106.30
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
It traded up as expected and while we can even push on for 107.35 we think the move will slow and the pair trade sideways 105.85 / 106.60		A fall underneath of 105.85 and low weekly close keeps the Dollar trapped and lower level will be likely next week.	106.15 MINOR 106.60 MINOR 105.85 STRONG 106.90 MINOR 105.50 STRONG 107.60 STRONG

USD/CHF	1.0200
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
We remain bullish for 1.03, 1.0245 initial resistance that may spoil the bullish view.		Short-term trend at 1.0195, an hourly break there stops the bullish view and we should remain in range 1.01 / 1.0250	1.0195 TREND 1.0215 MINOR 1.0135 STRONG 1.0245 STRONG 1.0100 STRONG 1.0320 STRONG

XAU/USD	961.00
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
It will remain volatile, a $10 or even $20 move up or down is possible, key levels to watch are 935 support and 972 resistance.		Intraday we prefer to SELL tops between 963 and 968. A weekly close above 973 keeps gold bid	952 MINOR 965 STRONG 946 STRONG 972 KEY 935 KEY 988 STRONG

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Forex Market Overview

Forex Market Overview 18 July 2008

Usd consolidated in Asian session, as the current environment paints a mixed picture creating indecision in traders. EurUsd in choppy trading ranged from 1.5783 to 1.5866 while UsdJpy was slightly stronger, rising above 107.00 in early trading, before retracting back to 106.13 as the day wore on. Jpy fueled carry trades followed a similar pattern. Commodity bloc ccy’s continued to hold up despite general pullback in commodity prices. AudUsd was able to rally off the 0.9680 session, lows to 0.9725. Try was able to gain on the back of their Central Bank raising rates 50bp with UsdTry falling to 1.1950. Usd sentiment is clearly varied and will stay so for today’s trading.

Equity markets in the US clearly got a boost from yesterday’s sharp fall in oil prices--down almost $5bbl to $129.50bbl (partially due to reports the US will attend nuclear talks with Iran, easing perceptions of geopolitical tensions). This optimism was also reflected in yields with 2-year up 2.50%. This weeks decline brings up an interesting situation if energy prices continue to decrease, many central banks will take this as positive sight that inflation pressures will also ease. Which will therefore, provide policy makers with the perceived opportunity to address deteriorating growth by lowering rates.

Australian terms of trade for Q2 were better than expected. Export prices for Q2 surged by 13.5% vs. 10% exp q/q, while import prices grew by only 1.4% vs, 1.7% exp q/q. The rise in export prices reflects a broad based surge of commodity demand. As stated above Aud and the rest of the commodity bloc remains supportive of commodity prices and yield differentials.

BoJ minutes revealed a slightly more hawkish view on inflation than expected, however it is clear that members will be focused on the downside risks near term. In addition Shirakawa noted that Japans economy is more insolated from external shocks than previously believed. We are targeting 108.00 despite the unsettled nature of risk appetite.

Another light day in European session and with summer Friday clearly in effect, we expect trading to be subdued.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9895
R 2: 0.9849
R 1: 0.9818
CURRENT: 0.9718
S 1: 0.9675
S 2: 0.9664
S 3: 0.9597

EURJPY
R 3: 170.00
R 2: 169.67
R 1: 169.11
CURRENT: 168.39
S 1: 165.23
S 2: 164.76
S 3: 163.60

USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3521
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

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Euro Will Likely Form a Low in Next Few Days

The EURUSD is consolidating above 1.58 but a drop below there is probable today or early next week before a tradeable low is in place. 1.5611 remains the bullish 'line in the sand'.

There is little new to add regarding EURUSD structure. The weight of evidence continues to favor bulls. Our preferred count treats the consolidation from 1.6018 to the end of June as a triangle in the wave IV position (within the 5 wave advance from 1.1640). From the 6/23 low on 1.5468, the EURUSD has rallied impulsively, declined correctively, rallied impulsively, and is currently declining (correctively to this point). The drop from 1.6039 is viewed as wave ii of 3. Look for support near 1.57 today or early next week. We are bullish against 1.5611.

Visit our recently updated Euro Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 1.5611, targets 1.6325 and above

The USDJPY decline from 107.75 could be the beginning of a 3rd wave within the decline from 108.57. Bigger picture, the advance from 95.72 is in 3 waves (A-B-C). Wave C is nearly 61.8% of wave A, a common relationship. The pair has broken the support line shown above and held below the 200 day SMA. We wrote yesterday to “look for resistance as high as 106.75/107.00; the former trendline and a congestion zone.” The USDJPY spiked into 107 yesterday and is pressuring the figure again this morning. If the bearish bias is to prove correct, then price needs to fall before 107.75.

Visit our recently updated Yen Currency Room for specific resources geared towards this currency.

STRATEGY: Bearish, against 107.75, targets 101.97 and below

Wave C of a triangle may be complete at 2.0156 and wave D could be underway now. However, we favor the count that treats the advance from 1.9364 as wave C of a flat, which will not end until above 2.04. The red line on this chart is the 200 day SMA, which the GBPUSD is holding above. Keep risk at 1.9810 and look for support in the 1.9884-1.9925 zone.

Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 1.9810, target TBD

The short term picture remains clouded. When in doubt, focus on facts. The facts are that the rally from .9647 is in 3 waves and that since early May the USDCHF has made a series of lower highs. This evidence is bearish. As long as price is below the most recent high (1.0352), a bearish bias is warranted. 1.0250 may provide resistance.

Wave E is still underway but is nearing an end. E waves (as we’ve written here often) are usually sharp and the decline has accelerated. In fact, do not be surprised to see a test of the lower triangle line near .99 before the USDCAD turns up. We’ll look to identify the bottom next week.

Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency

The AUDUSD setback has reached and bounced from just above the 50% of .9475-.9849. The drop from .9849 is clearly in 3 waves (corrective) to this point; therefore evidence continues to support bulls. A cautious bullish bias is warranted against .9677.

The NZDUSD fell sharply yesterday but a drop below .7587 is required in order to make the decline from .7761 an impulse and suggest that the trend has turned back down. Until then, gains (albeit correctively) are still possible.

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

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ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.

The Forex Markets Today

The Markets Today Thursday 17 July 2008 / 10:35h CET

EUR/USD	1.5860
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
It dropped but has so far not reached the bullish trend-line at 1.5770 today. While underneath of 1.5890 we like to be short and see a test of that key support.		An hourly close above 1.5890 is a buy signal for 1.5960 in the short-term and possible retry of 1.6030.	1.5840 MINOR 1.5890 STRONG 1.5775 TREND 1.5960 MINOR 1.5730 MINOR 1.6030 STRONG

GBP/USD	2.0000
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
Underneath of 2.00 there is space to drop further – target 1.9910 in a slow day, if volatile we can reach 1.9785.		Short-term bearish trend-line at 2.0030 is key to watch, stop short upon its break.	2.0020 TREND 2.0000 STRONG 1.9965 MINOR 2.0030 TREND 1.9910 STRONG 2.0100 STRONG

USD/JPY	105.30
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
A good bounce from the lows and an additional 100pips of upside potential today.		Strong support at 104.70, a break there stops the corrective upmove.	105.15 MINOR 105.60 MINOR 104.70 STRONG 106.20 MINOR 104.15 KEY 106.60 STRONG

USD/CHF	1.0160
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
1.00 has held and the Dollar recovered to 1.0185 so far. This is a good sign that the Dollar fall will end soon and we look to slowly move up towards 1.03		Short-term bullish trend at 1.0135 this morning, a break risks 1.0090, 1.00 remains key.	1.0135 TREND 1.0185 STRONG 1.0090 STRONG 1.0245 STRONG 1.0000 KEY 1.0320 STRONG

XAU/USD	963.00
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
Dropped through 965 and holding underneath. Stay short, place a tight stop at 966, expect a move down to 935.		A daily close above 965 will maintain Gold high with room to rise again towards 1000	958 MINOR 965 STRONG 947 STRONG 972 MINOR 935 KEY 980 STRONG

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

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Oil Slide And Wells Fargo Results

FX market Dollar fears receded after Oil slide and Wells Fargo results

News and Events:

Investor attention remains focused on the turmoil around Fannie and Freddie and fears about more credit losses at regional banks drove the Dollar sharply lower a day ago, with the Euro hitting a record high at 1.6037. But concerns about the US financial sector receded a bit on Wednesday after Wells Fargo, the fifth-largest US bank, raised its dividend despite a 23% decline in profit caused by bad loans.

Federal Reserve Chairman Ben Bernanke reiterated to a House of Representatives panel on Wednesday that the risks to US growth have increased along with upside inflation risks, mirroring remarks he made a day earlier before the Senate.

Analysts said FX investors were increasingly certain of at least one Fed rate hike before the year is out. US short-term interest rate futures are pricing in a 76% chance that the Fed raises interest rates from their current 2% by December.

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

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ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.

Forex Market Overview

Forex Market Overview 17 July 2008

Usd has been able to hold gain in the Asian session as risk appetite slowly crept back into the markets. EurUsd was range bound between 1.5801 – 1.5868 while UsdJpy bounced around the 104.70 - 105.30 levels. Jpy fueled carry trades saw renewed buying with AudJpy and EurJpy trending upward to 102.76 and 166.73. EM currencies also got a boost with UsdMxn and EurPln sliding to 10.2200 and 3.2083. The Usd was help as oil prices dropped sharply as EIA data showed an unexpected rise in inventories.

The Fed minutes released yesterday were perhaps slightly more hawkish then the market had anticipated. While members were clearly apprehensive with placing inflation worries over growth concerns, the minutes did state "the next change in the stance of policy could well be an increase in the funds rate". Note, that given the rapid evolution of events, these minutes are old news and therefore the weight we attached should be limited. Especially considering at the time of the FOMC meeting there was a general feeling that the US was stabilizing (which we know now is not the case). With yesterdays sharp increase in Junes headline inflation (5.0% vs. 4.5% exp) the Fed will have to stay diligent but given the downside risk to growth it would be irresponsible for the Fed to tighten. We expected the pause in Usd volatility will be short lived as uncertainty around domestic economic conditions, inflation and unsettled GSEs position are still very much outstanding.

With no major data to be released in the UK, Eurozone todays movement will be purely based on sentiment and positioning. A good way to guage what the fx market is thinking. In addition, keep an eye on other assets classes such as the equity market and energy prices for directional confirmation.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9895
R 2: 0.9850
R 1: 0.9817
CURRENT: 0.9767
S 1: 0.9709
S 2: 0.9664
S 3: 0.9597

EURJPY
R 3: 169.67
R 2: 168.95
R 1: 166.85
CURRENT: 167.16
S 1: 165.23
S 2: 164.75
S 3: 163.60

USDSGD
R 3: 1.3717
R 2: 1.3660
R 1: 1.3565
CURRENT: 1.3517
S 1: 1.3451
S 2: 1.3399
S 3: 1.3300

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

Profile regulatory information:

ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.

Forex Market Overview

Forex Market Overview 16 July 2008

Usd was range bound in Asian session as markets pause from dollar selling to evaluate current pricing. However we are anticipating another busy and volatile day. EurUsd bounced between the 1.5866 - 1.5932 while UsdJpy continued to slide from 105.12 to 104.27. With risk aversion reaching elevated levels, carry trades have suffered with EurJpy dropping to 165.80 and AudJpy falling to 101.77. With concerns over the credit market mounting, it is no surprise that VIX has climbed to 28.54 and fx implied vols are following. Currently, European equities are mixed but US index futures are pointing to the upside, due primarily to the sell off in crude, which is trading at wti 138.95bll.

The EurUsd reached an all time high yesterday, ahead of Bernanke's testimony, but was able to recover slightly as oil prices took a dive (on slowing global growth concerns). Interesting to note, Bernanke gave no indication that the Fed was going to follow the ECB and raise rates anytime soon. It seems after a brief period of stability the US might still slip into a recession in the second half of the year. With payrolls declining, housing prices tanking, equity markets falling, latest GSE crisis and energy prices elevated the down side risk to the US economy having become apparent once again. Given these risks should Trichet and the ECB come out with a more explicit hawkish comments on inflation we should see the EurUsd entrench itself above the 1.6000.

In Australia, Westpac leading index continued to drop, hitting 0.0% vs. the 0.4% prior reading. RBA Governor Stevens speech today was undecidedly dovish. Clarifying the fact that the RBA feels that the current interest rate level is sufficient to combat domestic inflation. Stating "It is understandable that pressure on underlying inflation, particularly from domestic sources, has also been somewhat greater. Monetary policy had to respond to that." The AudUsd fell to 0.9750 on the news but was able to rally back on Usd selling.

Given our statement above regarding Eurzone inflation, today's reading of second estimate of CPI inflation will be critical. We are expecting headline to rise to a new record high of 4.0% as rising energy price are having a clear effect on prices. Core should stay below the 2.0% price stability ceiling, however, should pressure on core increase we would expect the ECB to maintain their hawkish tone and fx market to push Eur higher.

US data will be covered in US report

14.00gmt - Fed Chairman Bernanke delivers semi-annual testimony on monetary policy and the economy before the House
18.00gmt - Fed's Hoenig speaks on "Monetary Policy and the Economic Outlook"

Daily Forex Pivot Points
AUDUSD
R 3: 0.9923
R 2: 0.9895
R 1: 0.9849
CURRENT: 0.9776
S 1: 0.9708
S 2: 0.9664
S 3: 0.9597

EURJPY
R 3: 169.67
R 2: 168.94
R 1: 166.86
CURRENT: 165.76
S 1: 165.70
S 2: 164.76
S 3: 163.60

USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3465
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

Profile regulatory information:

ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.