ForexGen NewsLetter

Forex Day Trading

2008-08-26T05:48:00.001-07:00

EURUSD Outlook

Yesterday the EURUSD bearish momentum seemed very limited. The trend line support on daily chart around 1.4695/1.4703 level should be the key level at this phase. A break to the downside could trigger further bearish scenario towards 1.4590. Initial resistance is seen at 1.4757 followed by 1.4807. CCI in neutral area on daily chart.

EURUSD Daily Supports and Resistances:

S1= 1.4696
S2= 1.4639
S3= 1.4584
R1= 1.4808
R2= 1.4863
R3= 1.4920

GBPUSD Outlook
Yesterday the GBPUSD made indecisive movement by opened and closed at almost the same price (1.8518 and 1.8526). My model goes mixed with neutral bias. Immediate support is seen at 1.8450 followed by 1.8405. CCI seems rejecting the -100 line on 4h and daily chart suggesting the pair might have a strong support area at this phase. However, I think the pressure to the downside is not over yet.

GBPUSD Daily Supports and Resistances:

S1= 1.8424
S2= 1.8322
S3= 1.8239
R1= 1.8609
R2= 1.8692
R3= 1.8794

USDJPY Outlook
The USDJPY bullish momentum was rejected yesterday. The pair bottomed at 109.02 and closed at 109.30. Resistance level at 110.66 area seems to be a key level at this phase. My model goes mixed with neutral bias. Immediate support is seen at 108.90 followed by 108.50. Initial resistance at 109.80. CCI in neutral area on all 3 time frames (hourly, 4h, daily).

USDJPY Daily Supports and Resistances:

S1= 108.78
S2= 108.27
S3= 107.52
R1= 110.04
R2= 110.79
R3= 111.30

USDCHF Outlook
The USDCHF is moving in ranging market between 1.1030 and 1.0840. We need a breakout to find a clearer direction. Immediate support is seen at 1.0950 followed by 1.0920. Initial resistance at 1.1030. An upside break from that level could trigger further bullish scenario towards 1.1105 area. CCI in neutral area in all 3 time frames (hourly, 4h, daily).

USDCHF Daily Supports and Resistances:

S1= 1.0907
S2= 1.0860
S3= 1.0798
R1= 1.1016
R2= 1.1078
R3= 1.1125

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Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Forex Day Trading

2008-08-26T05:48:00.000-07:00

Tue, 26th of August, 2008
By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
Yesterday the EURUSD bearish momentum seemed very limited. The trend line support on daily chart around 1.4695/1.4703 level should be the key level at this phase. A break to the downside could trigger further bearish scenario towards 1.4590. Initial resistance is seen at 1.4757 followed by 1.4807. CCI in neutral area on daily chart.

EURUSD Daily Supports and Resistances:

S1= 1.4696
S2= 1.4639
S3= 1.4584
R1= 1.4808
R2= 1.4863
R3= 1.4920

GBPUSD Daily Supports and Resistances:

S1= 1.8424
S2= 1.8322
S3= 1.8239
R1= 1.8609
R2= 1.8692
R3= 1.8794

USDJPY Daily Supports and Resistances:

S1= 108.78
S2= 108.27
S3= 107.52
R1= 110.04
R2= 110.79
R3= 111.30

USDCHF Daily Supports and Resistances:

S1= 1.0907
S2= 1.0860
S3= 1.0798
R1= 1.1016
R2= 1.1078
R3= 1.1125

Why ForexGen?

Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

FX Thoughts for the day - 25-Aug-2008 -1140 GMT

2008-08-25T14:11:00.000-07:00

USD-CHF @ 1.0984/88... Resistance at 1.1035 held again.
--------------------------------------------
R: 1.1000-25 / 1.1040-50 / 1.1100
S: 1.0975-50 / 1.0900-880 / 1.0850 / 1.0800
A rise in the pair has once again been restricted to 1.1035, where it faces a strong Resistance. Since then, a dip towards 1.097 has been seen.

Later in the day, expect a further dip towards 1.0955 where the pair has some Support and a rise from there could be seen once again to test the Resistance. A sip below 1.09, unlikely for now, could attract buying interest in the 1.0840 region.

GBP-USD @ 1.8495/99... Could rise towards 1.8564
------------------------------------------------
R: 1.8500 / 1.8560-80 / 1.8620-60
S: 1.8420 / 1.8365-50 / 1.8300
A small rise since morning has been seen in the pair. For the day, Cable could see a further rise towards the Max High for the day at 1.8564. The Support at 1.8480 is essential for the rise towards 1.8564 to materialize.

Overall the pair continues to remain in a downtrend and is expected to slide further towards 1.83 in the days to come. The UK economy has seen no growth in the last quarter and could continue to face further growth related and housing related issues.

BOE has still not shifted focus from inflation to growth. However, now there could be some rate-cutting action in the days to come, which could eventually take the pair further lower.

AUD-USD @ 0.8674/78... Could rise towards 0.88
-------------------------------------------
R: 0.8721 / 0.8765 / 0.8800 / 0.8850-65
S: 0.8650-25 / 0.8600 / 0.8581
Aussie had faced major Resistance on a rise to 0.88 last week. However, since then a fall towards 0.8614 has been seen. For the day ahead, a rise towards 0.8721, Max High for the day could be seen. Similarly a further rise towards 0.8750-0.88 cannot be ruled out completely as the Moving Averages are flat and indicating towards the possibility of a rise again.

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ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Dollar rose Friday helped by lower Crude Oil prices and Warren Buffer comments

2008-08-25T14:09:00.000-07:00

The Dollar surged on Friday, recovering from the previous day's losses, as gloomy British growth data backed views of a slowing global economy and raised prospects of interest rate cuts outside the United States. A sharp drop in US crude oil prices to below $115 per barrel and comments by influential investor Warren Buffett that he has no bets against the Dollar also added to the US currency's upward momentum. Federal Reserve Chairman Ben Bernanke's comments that a stable Dollar and falling commodities should help slow inflation this year and next. His remarks on Friday prompted analysts to reduce expectations of a US interest rate increase this year.

News and Events:

The Dollar surged on Friday, recovering from the previous day's losses, as gloomy British growth data backed views of a slowing global economy and raised prospects of interest rate cuts outside the United States.

A sharp drop in US crude oil prices to below $115 per barrel and comments by influential investor Warren Buffett that he has no bets against the Dollar also added to the US currency's upward momentum.

UK data showed the British economy stalled on Q2, suggesting a recession might be looming, and added to the outlook of a slowing European economy. It raised the possibility of European Central Bank and Bank of England monetary easing.

EurUsd dropped to a session low of 1.4758, edging toward a six-month low hit earlier last week at 1.4631. It was last trading at 1.4788, down 0.68%. UsdJpy jumped 1.52% to 110.09. GbpUsd dropped 1.32% to 1.8517. UsdChf rose 1.06% to 1.0988.

Federal Reserve Chairman Ben Bernanke's comments that a stable Dollar and falling commodities should help slow inflation this year and next. Bernanke's remarks at an annual Fed symposium in Jackson Hole, Wyoming, prompted analysts to reduce expectations of a US interest rate increase this year, which could diminish the Dollar's appeal to investors. But analysts said even without an interest rate hike this year, the Dollar would probably continue to recover.

Persistent problems at US mortgage finance companies Fannie Mae and Freddie Mac and speculation over the future of investment bank Lehman Brothers could make the road to recovery difficult.

Today's Key Issues (time in GMT):

00:00 GBP Market Holiday
07:30 DKK August Consumer confidence -8 vs -9.7
07:30 SEK July Trade balance 8.2b (mom)
09:00 EUR June Industrial new orders -6.3% vs -4.4% (yoy)
12:30 USD July National Activity Index -0.6
14:00 USD Existing home sale 4.92m vs 4.86m
22:45 NZD Merchandise trade 4b vs 3.81b
22:45 NZD Merchandise trade – expo 3.44b vs 3.59
22:45 NZD Trade Balance Month -526m vs -223m
22:45 NZD Trade Balance Year -4.2b vs -4.48b

The Risk Today:

EurUsd: Market dropped as low as 1.4631 last week, new initial support. Further weakness will put the focus on strong support 1.4366 22nd January low. On the upside, only a return over 1.5000 and 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200.

GbpUsd: Cable hit 2.0158 high 6-weeks ago and 1.8505 low last Friday. On the downside, further weakness would open the way down to 1.8395 end July 2006 low and maybe 1.8091 June 2006 low. Initial support holds 1.8414 today low. On the upside, initial resistance holds 1.8795 last week high. Former support 1.9363 holds also strong resistance. Key level holds 2.0100 resistance.

UsdJpy: Last 6-weeks recovery pushed the market up to 110.67 high. Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance and 108.14 last week low will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. Initial support holds 108.14 Thursday low.

UsdChf: Continuous Dollar strength consolidated over 1.0800 last week and hit 1.1041 6-months high on last Wednesday. Initial resistance holds 1.1107 13th February high. Strong resistance holds 1.1593 December 2007 high. On the downside, initial support holds 1.0863. Only renewed weakness below 1.0500 and 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.

Resistance and Support:

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ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Economic Surprise Index for the USD/JPY

2008-08-25T14:06:00.000-07:00

You can determine the expected strengthening or weakening of each currency and display the result by currency pair to form a fundamental context of each currency trade. Economic Surprise Index charts use cumulative weekly unexpected surprises from over 500+ daily economic events from eight countries that determine the magnitude and direction of the unexpected surprise component of news announcements.

ESI charts are independent of price, and are a leading indicator of price because they determine the expected strengthening or weakening of a currency pair using a standardized measure of how much and in what direction a country’s economic announcements are moving.

Shown below are the ESI and price charts for the USD/JPY. The ESI context of the trade changed in favor of the USD in March 2008, thus strengthening the USD/JPY. ESI charts display the cumulative unexpected economic surprises of a specific currency pair. You can also determine expected currency pair strengthening or weakening between any two points on the chart as of any given Friday throughout the year. For a more complete explanation of ESI charts and their usage, email info@quartustrading.com, Subject: ESI

Using the available Excel workbook, you can make, display, and print ESI charts for all currency pair from Australia, Canada, the European Union, Japan, New Zealand, Switzerland, the U.K., and the U.S. Select 2, 3, or 4 month cumulative surprises from over 500+ daily economic events formed as the news is released. Choose your own events from each country or use the supplied event lists. Also in the ESI workbook are standardized unexpected event or SUE scales for each of the 500+ announcements that you can print as a visual aid for trading the news. A weekly one hour workbook usage webinar is available free to subscribers.

Best regards and good trading,
Quartus Trading LLC

Attached Thumbnails

Why ForexGen?

Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Technical Market View

2008-08-25T14:05:00.000-07:00

AUD/USD

EUR/CHF

EUR/GBP

EUR/JPY

GBP/JPY

You can find the complete analysis at the pdf...

Technical analysis-Comments
G. Antonakos
Head of Analysis Dept.

DISCLAIMER

1. The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market.

2. We assume no responsibility for any kind of losses, profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions.

3. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action.

4. We reserve the right to change the terms and the characteristics of the analysis.

5. The contents of the analysis are solely intended for personal use. They may not be re-transmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights

Attached Images

Why ForexGen?

Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Technical Market View

2008-08-25T14:04:00.000-07:00

USD/CAD

Gold

SILVER

CRUDEOIL

DOW JONES

You can find the complete analysis at the pdf...

Technical analysis-Comments
G. Antonakos
Head of Analysis Dept.

DISCLAIMER

1. The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market.

2. We assume no responsibility for any kind of losses, profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions.

3. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action.

4. We reserve the right to change the terms and the characteristics of the analysis.

5. The contents of the analysis are solely intended for personal use. They may not be re-transmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights

Why ForexGen?

Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Euro to fall at 1.4279

2008-08-25T14:01:00.000-07:00

Economic Alarms

Mixed Performance of Euro zone and Satisfied data from US economy last week has let Euro to take satway Trend, where higher fuel price is a bitter experience for the Global Economic Growth.This week data from Euro would release saying Business conditions are shivering but still expecting for a better future, US got improvement in housing sector which is making greenish in consumer sentiment with good forecast as last Quarter GDP increased and forecast is higher.

Heads n Shoulders.

In weekly chart the clear "Head n Shoulder" would be interesting Trend. Before Euro rise back to 1.5 ish, it would fall to 1.4513 followed by 1.4279.

Taking look in the chart below:

Trend (Satway) with bullish Shadow.

13 days self adjust RSI at Over Sold Area.

Trading Below Pivot 1.4750

R3 = 1.5395 (STRONG)
R2 = 1.4906 (MEDIUM)
R1 = 1.4827 (MEDIUM)

S1 = 1.4673 (STRONG)
S2 = 1.4504 (MEDIUM)
S3 = 1.4279 (MEDIUM)

Opec's jealous for high Oil Prices would Find a support for Euro to not fall. where Supportive US data will keep euro in "Sell" mode for Short Time.

Best Buy "Bet" Observed at 1.4444. the risk observation is 165 pips.

Fundamentals are also considered to confirm the Trend.....

Why ForexGen?

Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
ForexGen offers Forex trading in the major currency pairs and crosses.
Low capital start, with $250 as a minimum account size.
Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Support on AUD/USD still looks solid

2008-08-25T14:00:00.001-07:00

Can you grade one level of support relative to another? Is a pause at a specific price point more important today than the same support level a month ago or 6 months ago? I think that there are ways to estimate one support level as more important than another. A good example is what is going on right now on the AUD/USD. Clearly we are at a long term support level having been here before in December and January during the last disruption in oil prices. However, what else is true is that we are at a level of extreme price movement based on a reading from the CCI or commodity channel index.

I use technical indicators like the CCI to grade support and resistance levels. When support coincides with a historically low level on the CCI where the market has reversed significantly before, I take note. That is the situation now. Support in the price action on the AUD/USD is occuring at the same time that we are clearing an extreme reading on the CCI. I have found that this is a good indicator that a continued trend is at risk and a bounce may occur.

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Currency Technical Analysis

2008-08-25T13:57:00.000-07:00

EUR/USD

Resistance : 1,4760-70/ 1,4800-10/ 1,4860/ 1,4900-10/ 1,4950/ 1,5000
Support : 1,4660-70/ 1,4630/ 1,4590-00/ 1,4550/ 1,4500

Comment : Euro formed an upward reaction last week, after the lows at 1.4600 area, reaching the area of 1.4900 on Thursday. Bears gained momentum at those levels, as expected, and euro was led towards 1.4700 area again. A move resumption to lower levels is possible, as we will see in the chart analysis below.
After such a sharp decline, which didn’t give much opportunity to be followed, the first reaction towards 1.4900-1.5000 was expected to meet sellers, as we had mentioned in our analysis last week.
We should keep in mind that the target that emerges from the double top formation, which was breached downwards, is found at 1.4500-50 area, while the basic trend line that links 2005 lows is reached at 1.4450 area.As we have mentioned in our previous analysis, the ranges for the decline are found at 1.4550 area, and the most extreme scenario-according to current facts- would be a reach of 1.4300 area.
The most likely scenario would be a formation of an important low between 1.4450 and 1.4550. From those levels, a correction (from 1.6040 tops) around 38.2% and 50% would be possible and a retracement to the previous base of 1.5300, which should be tested as resistance, is likely.
For the time being, the downward move is been continued from the 1.4900 reaction, and first targets are set at 1.4660-70 and 1.4620-40. A move to new lows will lead euro to the first important target area (1.4500-50), followed by the area of 1.4430-50.
Intraday resistance emerges at 1.4760-70 and 1.4800-25, which is more important. This negative outlook will change after a move above Thursday’s tops at 1.4910…

TRADING EUR/USD
SWING TRADING : Sell positions, that were opened at the retracement towards 1.4900, where our first targets were set, could have as first target a pullback to 1.4630 lows. The upper part could remain open for the reach of the basic targets at 1.4550 area. Below those levels buy opportunities will emerge for the short term, adding positions per 50-70 pips until 1.4370-00 area, with stops below 1.4300. First target will be at 1.5000 and according to the conditions that will be formed, we will follow until 1.5200-5300 area.

INTRADAY TRADING : The short term trend after the reach of 1.4900 is bearish and should remain at least until the area of 1,4660-80 or 1,4600-30. We will use the first reaction towards the middle Bollinger in the hourly chart for intraday sell positions, adding more at 1.4790-4805, and stops above 1,4835.
Short term (small) buy positions could be tried at 1,4660-70 and 1,4630-40 support levels, with tight stops and targets.

GBP/USD

Resistance :1,8450-60/ 1,8490-8510/ 1,8550/ 1,8590/ 1,8620
Support : 1,8400-10/ 1,8370/ 1,8350/ 1,8320-30

Comment : The beginning of the week finds the pound still weak, as the decline was continued on Friday, below the important support levels of 1.8500. Our targets are set at 1.8300-5, where our target after the break of the big consolidation (we can see it in the daily chart) and the two equal waves from 2007 tops (AB and CD in the daily chart) are found.
As a result, after a move below 1.8350 area, we will examine the formation of an important short term low scenario. We will abandon this scenario after a move below 1.8270, and if these levels are breached, next important targets are set at 1.8000. This would be an extreme but yet possible short term scenario…
Important intraday resistance is found at 1,8500-30 and 1,8580-8610, which is more important.

TRADING GBP/USD : The sharp decline on Friday was continued in the beginning of the week, leading to the 1.8400 area. For the short term, we will use any reaction towards 1.8500-30 area for sell positions with stops above 1.8560 and target at a retracement to previous lows. Sell orders could be tried again at 1,8590-8610 with stops above 1,8650…
A move below 1,8350 will be used for buy positions, adding more at 1,8300 and stops below 1.8250. Our target for these positions will be wider at 1,8900-1,9000…

USD/JPY

You can find the complete analysis at the pdf...

Technical analysis-Comments
G. Antonakos
Head of Analysis Dept.

DISCLAIMER
1. The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market.

2. We assume no responsibility for any kind of losses, profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions.

3. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action.

4. We reserve the right to change the terms and the characteristics of the analysis.

5. The contents of the analysis are solely intended for personal use. They may not be retransmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights

Attached Images

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London Session August 25, 2008

2008-08-25T13:54:00.002-07:00

After some trend continuation on the USD and Oil on Friday, Asia made a break of support on most USD pairs leaving London wondering where to go. Being a holiday in England was already going to reduce liquidity and without nearby support or resistance, some time was needed to lay some framework for a trade plan.

Watching the Majors closely we were able to find these clues. In this video I focus on just one of these plans involving the GBP/USD. After a series higher lows, cable showed a break of the 15m 21ema. Once this occurred we did a Fibonacci study and simply awaited some level of confirmation on a 1m chart in the 38.2-61.8 range. Sure enough within 30 minutes this entry presented itself in the mid 1.9420's.

As for profit targeting it was quite simple. A retest of previous support now resistance at 1.8500-8510, which also happened to be the hourly 21 was our first real stop. So ultimately we were risking maybe 15 pips for a 75 pippish goal from our fib entry, certainly a quality risk vs. reward setup. Although it seemed to take literally forever to play out, there was never a reason to get out. Slowly we 'Rode the 5ema' and made our way to the 1.8520 area before abruptly returning to 1.9485 or so (another fib). Boring night for sure, but a decent 65-95 pip move even from the fib area here made the waiting well worth it.

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ForexGen Trading Outlook

2008-08-25T13:54:00.001-07:00

REVIEW: 22 August 2008

Friday's strong reversal was due to a double hit of much weaker commodity prices (as global concerns begin to cool off) and a Bernanke inspired rally on the USD. The Fed chief seemed to indicate that the Fed is ready to fight inflation in the future as oil prices decline and the USD stabilizes. Those are mighty bold statements since forecasting energy prices and the USD that far in advance seems a little speculative but nonetheless, traders liked what he had to say. Equities surged, followed by the USD and a weak JPY. Overall, across the majors it was as though Thursday's price action had not even occurred. Risk still seems high and clearly volatility will give most traders a rough time in the near term.

PREVIEW: 25 AUGUST 2008

We start the week with Trade in New Zealand and start looking forward to the remaining economic announcements including FOMC minutes and GDP in the US. If there is one thing we can count on, it is volatility. Therefore, traders should be watching the intermarket environment for signs of trouble. In particular I think we should be paying attention to equity prices. Despite the dramatic reversal in favor of a weak JPY, equities are still trapped within a consolidation pattern and face a significant prior down trendPFX Forex Trading Outlook

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Elliott wave: OIL & Usd/Chf

2008-08-25T13:52:00.000-07:00

Gold hit the resistance area on Friday that was highlighted in our analysis, and along with a big drop in oil prices, pushed Eur/Usd lower. The euro now starts the week around 1.4700. The market may try to trade lower this week if the price of gold and oil continue their decline, and that may be lead by sentiment initially, but fed by a week of important U.S. based economic data. The moves on the euro automatically equate to new highs on Usd/Chf which bounced from the trend-line support that we have been looking at in recent posts, on Friday. We have an update on the one hour chart swissy chart, and have gone to the weekly oil chart to really get to the bottom of the technical story on oil. After all, who needs headlines when we have daily Elliott Wave analysis on the movers of the market?

OIL

Most currency pairs are highly correlated with Oil and Gold, they have to be in the respect that over 90% of all currency tickets has the Usd on one side of then or the other, as the Usd is the currency that international markets price oil in, traders should be watching commodities closely to find the right way on euro or swissy trends. We have kept this chart simple because that is the way that we like most charts to be; we have four clear waves with wave five to come. The chart is looking for technical support in wave four on Oil, which should slow down the short moves on Eur/Usd and push the Usd/Chf lower. Before that, we may need to see...

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Chart of the Day

2008-08-25T13:51:00.000-07:00

Chart of the Day - 8/25/2008 - EUR/GBP

8/25/2008 – EUR/GBP – Price on the EUR/GBP pair (a daily chart of which is shown) has reached the very top resistance line of a large symmetrical triangle consolidation that has been forming since late March. Each side of this triangle (represented on the chart by the yellow converging lines) has been touched by price around three times during the triangle’s life. Now that price action has reached the top of the triangle once again, oscillators like the displayed Stochastics are indicating severely overbought conditions, but not yet turning down. In the event that price turns down at or near triangle resistance, clear support to the downside resides around the bottom of the triangle. A clean breakout of triangle resistance, on the other hand, should target immediate further resistance around the 0.8030 region.

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The Return of History

2008-08-25T13:45:00.000-07:00

The fall of the euro from the heights does not mean that traders have resigned from recent currency history. Even after its unprecedented fall the united currency has only now returned to the middle of its rising trend against the dollar that has prevailed for six and a half years, since early 2002.

Very little in the Eurozone economic situation or world economic history had warranted the euro’s presence north of 1.5500. But nothing in the United States present economic condition indicates that it has broken its long term disability against the euro.

The Eurozone economies were never as immune to the sub prime contagion as dollar detractors proclaimed. And they have proven equally susceptible if not more to economic damage from high energy prices. But neither is the United States bound to respond to 325 basis points of central bank rate reductions with its usual vigor and in the normal time frame of six months to a year.

The old scenario which had the European Monetary Union (EMU) proceeding with moderate economic growth and a steady or hiking European Central Bank (ECB) paired with a recessionary America and an easing Federal Reserve has been abandoned. The new assumption has the benefit of initial proof, negative GDP in the Eurozone second quarter and positive US results, but it is essentially untested.

The American economy retains considerable known problems: the prolonged housing slump, the drag from gasoline and energy prices, the contraction of commercial credit; and several dangerous unknowns: the possibility of large failures in the financial system, a return to $140 or higher oil prices, and the degree to which the economy was bolstered by the Federal cash stimulus in the second quarter. Any one or combination of these could easily derail what positive economic momentum exists in the US. There is also the uncertainty attached to the presidential election and the candidates’ competing and quite different economic prescriptions. The proposed economic plans of each party stress voter friendly initiatives; few will be good for the dollar.

The ECB governors seem a bit surprised that mundane economic reality still applies to them. It was a scant three months ago when government and central bank officials were proclaiming their expectations for continued moderate economic growth in 2008. The Europeans have their share of problems as well. If the two major countries, Germany and France are not suffering the aftermath of a real estate bubble, that is not true of some of the smaller members, primarily Spain and Ireland. Energy costs are as great a drag on economic well being as they are in the States and they certainly have a greater effect on consumer outlook and spending. Russia, newly assertive and unmistakably threatening, sits astride European energy supplies, supplies for which there are no domestic alternatives. Finally any worldwide financial catastrophes will leave casualties in Europe, Asia, and America equally.

The change in economic outlook in the EMU has been enough to boost the dollar substantially as it put paid to unrealistic expectations for European autarky.

It is now the US economy that is expected to sustain a recovery first, or at least to grow faster than its European counterpart. Neither central bank is in a position to change its rate policy.

The ECB is constrained by inflation, its own rhetorical history, and institutional credibility. The members of the ECB governing board and President Trichet are intelligent, analytical and persuasive individuals. In setting a public inflation target they and their predecessors had to have known that a time might come when they would be forced to choose between inflation control and economic growth. That time is now. If the pending recession, which Trichet warned about six weeks ago, could not prompt an adjustment of ECB policy, another quarter of negative growth will not do so.

Likewise, the Federal Reserve cannot raise rates to combat 5.6% inflation. The US economy is weak, 2nd quarter GDP notwithstanding, with glaring vulnerabilities in finance and energy costs. For the next few months central bank rate policy is not likely to be the determining factor in the relation between the euro and the dollar.

The debunking of one unrealistic assumption in Europe does not mean another, almost equally unrealistic, the return of the US to robust growth, is about to happen. From November until February the market traded back and forth between 1.4400 and 1.4900. That is precisely the position now. A prolonged muddle could be ahead while traders wait for statistics to resolve their questions. The dollar run is not over, but its continuation will require further proof. An extension of dollar strength will have to go quite a bit further, to below 1.4000, before its six year fall against the euro can be broken. That is not a project that will be completed in the next few months.

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Technicals are likely to trump the news this week

2008-08-25T08:57:00.000-07:00

Because the markets are largely sitting on key support and resistance levels right now it makes technicals much more important and critical than some of the fundamentals we may normally be interested in. Market sentiment at these levels can be extremely volatile so I am watching those announcements that are likely to have the biggest impact on forex traders in the short term.

From that perspective it is tempting to get a little over focused on the USD, and with GDP and FOMC releases due this week that temptation is somewhat justified. Traders in general have been increasing their outlook for growth in the US recently as evidenced by the trend in equities. If the GDP prelim. numbers or consumer confidence or even the FOMC minutes appear soft we could get a rejection at resistance on the USD and therefore a continued reversal across the majors. Check out the video for our take on the rest of the week's news and what we think will matter most.

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Forex Daily Outlook

2008-08-25T06:13:00.000-07:00

EURUSD Outlook
The EURUSD failed to maintain it’s bullish correctional momentum on Friday. The pair bottomed at 1.4757 and closed at 1.4792 and the bullish channel on hourly and 4h chart was violated to the downside. The pair continued it’s bearish momentum early today in Asian market, traded around 1.4735 at the time I wrote this comment. My model goes mixed with downside bias. Immediate support is seen at 1.4675. Initial resistance at 1.4795. CCI heading down towards -100 line on 4h chart.

EURUSD Daily Supports and Resistances:

S1= 1.4733
S2= 1.4674
S3= 1.4591
R1= 1.4875
R2= 1.4958
R3= 1.5017

GBPUSD Outlook
The Sterling slumped against Greenback on Friday. GBPUSD failed to continue the upside correctional move and violated the bullish channel on hourly and 4h chart. The pair bottomed at 1.8504 and closed at 1.8529. Early today in Asian market the pair is traded around 1.8440 at the time I wrote this comment. My model is mixed with downside bias. Immediate support is seen at 1.8380. Initial resistance at 1.8520. CCI about to cross -100 line down on daily chart suggesting a potential bearish view.

GBPUSD Daily Supports and Resistances:

S1= 1.8428
S2= 1.8328
S3= 1.8152
R1= 1.8704
R2= 1.8880
R3= 1.8980

USDJPY Outlook
The USDJPY back to it’s bullish trend on Friday. The pair topped at 110.14 and closed at 110.07. My model goes mixed with upside bias. Immediate support is seen at 109.80 followed by 109.50. Initial resistance at 110.66. CCI heading up towards 100 line on daily chart.

USDJPY Daily Supports and Resistances:

S1= 108.94
S2= 107.82
S3= 107.22
R1= 110.66
R2= 111.26
R3= 112.38

USDCHF Outlook
The Swiss Franc slumped against Greenback on Friday. The pair topped at 1.0997 and closed at 1.0984. My model goes mixed with upside bias. Immediate support is seen at 1.0930. Initial resistance at 1.1040 followed by 1.1105. CCI in neutral area on daily chart.

USDCHF Daily Supports and Resistances:

S1= 1.0898
S2= 1.0812
S3= 1.0763
R1= 1.1033
R2= 1.1082
R3= 1.1168

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Financial Firms Affect US Dollar

2008-08-22T18:51:00.000-07:00

Investors hunt Yen and Swiss Franc on renewed US Financial worries.

News and Events:

The Dollar fell broadly on Thursday as worries of wider credit-related losses at some US financial firms made investors abandon risky trades, starting a rally in the Yen and Swiss Franc. They tend to attract flows during periods of uncertainty as the low interest rates reflect the capital surplus of their respective countries.

Worries over the US financial sector were back on investors' radar screen, with Citigroup cutting its Q3 earnings estimates for Lehman Brothers. It also lowered estimates for Goldman Sachs Group, Merrill Lynch & Co Inc, and Morgan Stanley, citing expected losses on hard-to-sell assets and lower client trading volumes.

ECB policymaker Klaus Liebscher said on Thursday that euro zone growth was expected to come in at the bottom end of expectations this year but an all-out recession in the region was highly unlikely.

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USD Declination In Assian Session

2008-08-22T18:49:00.000-07:00

Forex Market Overview 22 August 2008

The Usd continued to decline in the Asian session as worries over the US financial markets and surging crude prices weighed on the Dollar sentiment. The EurUsd climbed to the 1.4900 levels, before retracing slightly to 1.4876, while the UsdJpy declined and is now trading at 108.90. Crude rose across the board, with wti moving up $5.00, above $120.00bll. With concerns of a production cut swirling around the September 9th OPEC's meeting and Wednesday’s inventories lower than expected still lingering, crude has picked up a bullish tone. And given the high level of the Usd this commodity will be the prime driver in currency pricing today. In addition, 5-year swap spreads are now hoving around 100bp, the widest level since the Bear Stern disaster and before that you would have to go to 2001 and the equity market collapse to find spreads this wide. A gloomy sign if ever was one. Outside Bernanke’s scheduled speech in Wyoming (given the uncertainty surrounding the financial market, traders will be on a heightened state of alert) the market will be without any real events or data releases, so traders should be particularly aware of price-action in other assets classes.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8735
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 162.07
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4082
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Forex Daily Outlook

2008-08-22T06:19:00.000-07:00

EURUSD Outlook
Yesterday the daily CCI gave us a valid warning about an upside correction potential of EURUSD. The pair topped at 1.4907 and closed at 1.4896. I am expecting further upside scenario towards 1.4975. We have a valid bullish channel on hourly and 4h chart. As long as these channels are not violated we still have a potential further bullish scenario. Immediate support is seen at 1.4820 followed by 1.4750. Initial resistance at 1.4925 followed by 1.4975. CCI just cross 100 line down on hourly chart and in overbought area on 4h chart suggesting a downside risks as the pair is traded near the bullish channel resistance line.

EURUSD Daily Supports and Resistances:

S1= 1.4782
S2= 1.4668
S3= 1.4606
R1= 1.4958
R2= 1.5020
R3= 1.5134

GBPUSD Outlook
Yesterday the Sterling recovered against Greenback. The GBPUSD was corrected higher, topped at 1.8793 and closed at 1.8776. Technically this fact open the door for a further upside correction move towards 1.8960 area. Immediate support is seen at 1.8740 followed by 1.8666. Initial resistance at 1.8850. We have a valid bullish channel on hourly and 4h chart. As long as these channels are not violated we still have a potential further bullish correction scenario. CCI just cross 100 line down on hourly chart and in overbought area on 4h chart suggesting a downside risks towards bullish channel support line.

GBPUSD Daily Supports and Resistances:

S1= 1.8657
S2= 1.8539
S3= 1.8471
R1= 1.8843
R2= 1.8911
R3= 1.9029

USDJPY Outlook
Yesterday the Greenback slumped against Japanese Yen. The pair bottomed at 108.13 and closed at 108.47. My model is mixed with downside bias. A consistent move below 108.50 would open the door towards 107.35. Immediate support is seen at 108.11. Initial resistance at 108.90 followed by 109.50. CCI about to cross -100 line up on 4h chart suggesting an upside risks.

USDJPY Daily Supports and Resistances:

S1= 107.79
S2= 107.11
S3= 106.10
R1= 109.48
R2= 110.49
R3= 111.17

USDCHF Outlook
Like all other major currencies, yesterday the Swiss Franc was traded stronger against Greenback. The pair breakout to the downside from ranging area, bottomed at 1.0842 and closed at 1.0864. My model is mixed with downside bias. Immediate support is seen at 1.0828. Initial resistance at 1.0896 followed by 1.0930. CCI about to cross -100 line up on 4h chart suggesting an upside risks.

USDCHF Daily Supports and Resistances:

S1= 1.0805
S2= 1.0746
S3= 1.0651
R1= 1.0959
R2= 1.1054
R3= 1.1113

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Live Trading Room Daily Recap - August 22, 2008

2008-08-22T06:16:00.000-07:00

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Slow Growth In EURO

2008-08-21T18:48:00.000-07:00

Market is looking for Euro-zone and Britain for more evidence of slowing growth.

News and Events:

The Dollar rose on Wednesday, reversing a two-day losing markets, supported by views that slowing global economic growth would prompt a wave of interest rate cuts outside the United States. It gained in quiet trade despite a rebound in Crude Oil prices to $115.51 a barrel.

Data from Europe and Japan are increasingly pointing to deterioration in the growth outlook for those regions, leading
investors to anticipate early rate cuts from both the European
Central Bank and the Bank of England.

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There are worries that US home finance providers Fannie Mae and Freddie Mac may need a government bailout.

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Weaker USD In Majors

2008-08-21T18:45:00.000-07:00

Forex Market Overview 21 August 2008

The Usd was weaker across the board in the Asian session, as continued concerns over Fannie and Freddie weight on sentiment. The EurUsd climbed from 1.4741 to 1.4812, while the UsdJpy fell sharply from 109.90 to 108.79. The GbpUsd traded in a 1.8620 to 1.8669 range, before breaking out in late session trading. The Jpy fueled carry trades continued to come under selling pressure, as risk aversion has crept back, with the EurJpy trading down to 161.07 and the AudJpy to 95.06. Wall Street closed in the black, but Asian regional indexes have been unable to hold on to the positive momentum, with loses across the board. European stock indexes are all pointing to a lower opening, with the exception of the FTSE. Crude & Gold continued to gain ground (pressuring Usd) with wti trading at $116.83bll and gold up 0.93% to $821.28oz.

The Japanese trade balance was only 91.1bn vs. 234.9bn exp, as import value grew (18.2% y/y) driven by oil related-price increases. It's interesting to note that exports to Asia grew, while US and Europe destined exports remained weak. Machine Tool Orders dropped -8.9% vs.
-8.9% prior reading.

On the continent, the market will be watching Eurozone's PMI surveys for continued evidence of deteriorating business activity. Should the figures come in line with market expectations, this will suggest that the region is in the midst of a technical recession. Sharp declines were printed in July for both manufacturing and service PMI for the second consecutive month.

In the UK, the market will be focused on Retail Sales. With CBI's falling off the map to lows not seen since 1983 and with the BRC's measure that also fell, we expected retail sales to follow…however not to dire levels.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8750
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 161.04
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4102
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Forex Daily Market Commentary

2008-08-21T06:21:00.000-07:00

EURUSD Outlook
Yesterday the EURUSD attempted to push lower, bottomed at 1.4672, but failed to continue this bearish momentum by closed higher at 1.4743. Early today in Asian market, the pair is traded around 1.4780 at the time I wrote this comment. The pair is making a new soft bullish channel and CCI about to cross 100 line up suggesting a possibility of another soft bullish correction on 4h chart. My model goes mixed with neutral bias. Immediate support is seen at 1.4720 followed by 1.4672 (yesterday’s low). Initial resistance at 1.4820 followed by 1.4875. CCI just cross -100 line up on daily chart suggesting a potential bullish correction.

EURUSD Daily Supports and Resistances:

S1= 1.4674
S2= 1.4606
S3= 1.4540
R1= 1.4808
R2= 1.4874
R3= 1.4942

GBPUSD Outlook
Similar to EURUSD, yesterday the GBPUSD attempted to go lower, bottomed at 1.8539 but closed higher at 1.8613. We have a ranging market between 1.8722 and 1.8536 on 4h chart from the beginning of this week and need a breakout. I am expecting an upside breakout as a correctional move at least at 1.8750 resistance level since we don’t have a significant upside correction so far. Immediate support is seen at 1.8580. CCI just cross -100 line up on daily chart suggesting a potential bullish correction. Eyes on UK Retail Sales data today.

GBPUSD Daily Supports and Resistances:

S1= 1.8540
S2= 1.8467
S3= 1.8396
R1= 1.8684
R2= 1.8755
R3= 1.8828

USDJPY Outlook
Yesterday the USDJPY made no significant movement. The pair topped at 110.27 and bottomed at 109.60. My model remains mixed with neutral bias. We have a soft bearish channel on 4h chart and CCI just cross -100 line down suggesting a soft bearish correction potential. Immediate support is seen at 109.30 followed by 108.50. Initial resistance at 110.27 (yesterday’s high).

USDJPY Daily Supports and Resistances:

S1= 109.54
S2= 109.23
S3= 108.87
R1= 110.21
R2= 110.57
R3= 110.88

USDCHF Outlook
Yesterday the Swiss Franc wad traded weaker against Greenback. The pair topped at 1.1039 and closed at 1.0985. We have a ranging market between 1.0872 and 1.1039 since 14/08/2008. My model is mixed with neutral bias. Any breakout from ranging area would give us a clearer direction. CCI just cross 100 line down on daily chart suggesting a potential bearish correction.

USDCHF Daily Supports and Resistances:

S1= 1.0908
S2= 1.0831
S3= 1.0766
R1= 1.1050
R2= 1.1115
R3= 1.1192

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USD Rise Again

2008-08-20T18:40:00.000-07:00

Crude Rises on hurricane fears in the US, Dollar rises after yesterdays data-led correction

News and Events:

US Housing starts initiated a Dollar correction against majors yesterday, while hurricane fears in the U.S pushed Crude higher. Gold rose above $810/o.z on both strong demand and dollar slump. Today's trading to be influenced by continued dollar strength and news from Canada on retail sales and leading indicators.

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USD Stability in Assian Session

2008-08-20T18:38:00.000-07:00

Forex Market Overview 20 August 2008

The Usd was stable in the Asian session, despite the upside surprise in US PPI and slightly better than expected housing data. The EurUsd remained range bound between 1.4806 and 1.4742, and the UsdJpy traded between 109.90 and 109.62. Wall Street was lower yesterday lead by the financial sector and worries over Fannie and Freddie. Commodities bounced back with crude trading to $115.00bll, while gold rebounded back above $815oz. Asian regional stock indexes are surging with Shanghai higher by 7.55% and European indexes are poised to open higher with, the exception of the FTSE, down -2.28%.

The highlight of the European session will be the UK MPC minutes and we will see how close the BoE really is to raising rates. Judging from the price action of the Gbp, the markets are clearly expecting very dovish minutes echoing the dovish Inflation report. We expect the August vote to be identical to July's surprise vote, ie,7-1-1 (Tim Besley voting to raise rates). However, it is a bit astonishing that given the concerns over near term inflation stated in last weeks Inflation Report that in the same report would seem to endorse a rate move lower. There is considerable risk that, in light of the dovish Inflation Report, the market will view another 7-1-1 vote as slightly hawkish.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8703
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 162.28
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4108
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Australia Leading Economic Index Sees Slower Growth - Westpac/Melbourne

2008-08-20T10:23:00.002-07:00

A forward-looking index of Australian economic growth declined in June to an annualized rate of 2.0 percent.

The index, published by Westpac Bank and Melbourne University, shrank from a reading of 2.4 percent in May.

The index, which looks at where the economy is headed three to nine months ahead, registered a reading of 256.3 in June, compared to 256.0 in May.

Falling equities prices, tighter liquidity and weak home loan approvals combined with weak U.S. industrial production to reduce the leading index growth estimate.

The coincident index, measuring current economic activity, showed an annualized growth rate of 2.4 percent in June, down from May`s reading of 2.7 percent.

`This is the slowest growth rate of the index since July 2001,` said Westpac Chief Economist Bill Evans. Evans added that signals this week from the Reserve Bank of Australia virtually assure that that interest rate cuts are imminent.

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Fed`s Fisher Says Economy Could Stall In Second Half Of 2008

2008-08-20T10:23:00.001-07:00

The U.S. economy is in the midst of a `fierce correction,` Dallas Federal Reserve President Richard Fisher said Tuesday, adding that he thinks that U.S. growth will decelerate to a `snail`s pace, if not completely grind to a halt` in the second half of 2008.

`We are in the midst of a fierce correction from a prolonged period of indiscriminate behavior in the credit markets, a surfeit of home building, a global avalanche of cheap labor and correspondingly cheap imports, and other unsustainable financial and economic activity,` Fisher said at the Progress & Freedom Foundation summit in Aspen, Colorado.

Those forces, combined with a correction in the housing market that has yet to find its bottom, have made for `tempestuous` credit markets, he said. This will lead to slow, possibly stalled economic growth into 2009, Fisher predicted.

`I expect U.S. economic growth will decelerate to a snail`s pace, if not completely grind to a halt, in the second half of this year,` he said. `Indeed, we may see the slowdown extend into 2009 as the excesses that drove the housing markets unwind before the economy can again gear up to cruising speed.`

Fisher, one of the most hawkish voting members of the FOMC, has dissented at every FOMC meeting so far this year in favor of a less accommodative monetary policy. Inflation is one of Fisher`s chief concerns, and the recent consumer and producer prices data has underscored
his concerns.

The Labor Department`s recent reports on consumer and producer price inflation in the month of July showed increases in both consumer and producer prices that were double what economists had anticipated.

Although he acknowledged the recent tempering of energy prices and the possible calming effect that can have on inflation, Fisher emphasized that the Fed must stand strong against inflation.

`We cannot afford to gamble away our credibility,` he said of the FOMC. `That is why the FOMC has made it clear in its recent statements that we are keenly monitoring inflationary impulses.`

Keeping a close eye on inflation is key, Fisher said. Comparing the U.S. economy to a python in terms of its ability to swallow and digest a tough dinner like high inflation, Fisher suggested that it is too soon to tell whether inflation will cause increased disruption.

`I urge you to observe closely the noble python,` he said. `He might digest and dispatch the recent inflationary surge, or he might gag on it. It is too early to tell.`

`And until we have a clear sense of what will prevail, monetary policy makers must remain poised to act if slowing growth fails to contain inflationary pressures,` Fisher concluded.

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BoJ Downgrades Economic Assessment; Says Growth Likely To Remain Sluggish

2008-08-20T10:23:00.000-07:00

Wednesday, the Bank of Japan lowered its economic assessment saying that the growth will likely remain sluggish for the time being. The central bank expects the world`s second-largest economy to return to moderate growth after international commodity prices stabilize and other economies pick-up the growth momentum. The central bank noted that the economic growth has been sluggish against the backdrop of high energy and materials prices and weaker growth in exports.

In its monthly Report of Recent Economic and Financial Developments released a day after the central bank retained the overnight call rate unchanged at 0.50%, the apex bank said Japan`s export growth is expected to remain only modest for the time being as weakness in overseas economies is reducing demand.

In July, the central bank had said Japan`s economic growth is slowing further, mainly due to the effects of high energy and materials prices and added that the economy is expected to grow at a slower pace for the time being and gradually return onto a moderate growth path thereafter.

On Tuesday, at the conclusion of its two-day monetary policy meeting in Tokyo, the BoJ Board of Governors voted to leave the overnight call rate unchanged for the 21st consecutive meeting. After announcing the decision, the central bank governor Masaaki Shirakawa had said the economic recovery might be delayed as rising prices across the glob is reducing demand for Japanese exports.

In the second quarter of 2008, gross domestic product, or GDP, had decreased 0.6%, marking its first decline since the second quarter of 2007.

Further, the central bank said, as a result of an expected decrease in corporate profits and relatively weak real household income, growth in domestic private demand is likely to be sluggish for the time being. Public investment is also predicted to decelerate. Hence, production is expected to remain relatively weak.

On the price front, the central bank noted that domestic corporate goods prices are likely to continue increasing as rise in international commodity prices is still biting consumers. However, the BoJ said the pace of growth is likely to slow.

The year-on-year rate of increase in consumer prices is expected to be somewhat higher over the coming months but to moderate gradually thereafter, reflecting developments in prices of energy and food, the BoJ said.

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Our Forex Webinars Paying Off

2008-08-20T10:19:00.001-07:00

Dynamic traders, the weekend is over at last and another forex trading week is ahead of us.

Since our forex webinars the majority of you have been making consistent profits and that is really good to hear. A voice mail from Jaco over the weekend saying he has been in good profits two weeks in a row now was excellent news and so another happy student to add to the list of already profiting attendees. Last week, Bijal had five winning trades in a row which is further good news. Congratulations to both of you and to all who are following the rules and getting that consistency. It is good to know the webinars are paying off for many of you.

Good trading very much depends on good habits. Emotion is experienced by every trader at some point and with non educated traders or new traders having to deal with it more than most others. It is exciting when the trade goes your way but disappointment when it all goes wrong. Each time a loss is uncurred a traders confidence can take a knock and a lack of confidence makes it very difficult to trade. The opposite of that is over confidence which can appear after a string on winning trades. You start to risk more than you should on each trade and you may even start to over trade. This is common in new traders and some experienced traders.

All traders need to remove emotions from their trading. Yes this is easier said than done but following and sticking to the process we have been through on our webinars will really help. For those of you reading this that were not on our webinars and suffer from emotions, my advice is to create a trading plan for yourself and follow it. In addition, get yourself good forex education to learn how to trade the forex markets consistently.

If you are shorting the EURAUD then tighten your stops as this cross is not far from the support level and as you know we could get a pullback or reversal here be it intra day or longer. Look for a BOB for a continuation but right now make sure you manage this trade.

Advanced Get Euro Australian Daily Chart.

Dynamic Trader Forex Toolkit Daily Pivot Points.

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Awaiting BoE Minutes

2008-08-20T10:17:00.000-07:00

Good morning forex traders. Today we have the BoE minutes due out which an expectation of 7-2 in favour of keeping the rates unchanged.

As we have all witnessed the Dollar has accelerated to the upside recently. The brakes are on but for how long? The trend line resistance shown on the weekly Dollar Index chart below has been tagged. The daily is giving us a minor divergence and we hit the figure.

Advanced Get Weekly Dollar Index.

Daily Pivot Points from Dynamic Trader Forex Toolkit.

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Stronger USD In Asian Session

2008-08-19T18:34:00.001-07:00

Forex Market Overview 19 August 2008

The Usd was stronger in Asian session, as concerns over slowing growth persisted. The EurUsd traded lower from 1.4700 to 1.4651, the while UsdJpy rallied from mid day 109.69 lows to 110.24, as the day progressed. The AudUsd came under pressure, as RBA minutes showed the members did contemplate an "early reductions", which sent the pair from 0.8700 to 0.8635 and the NzdUsd followed falling, from 0.7172 to 0.7045. Concerns of a tropical storm directly impacting the gulf's oil production eased slightly overnight (although not completely clear just yet), while crude hovered around the $111.50bll mark, which was Usd supportive. Wall Street traded lower yesterday led by the financial sectors, as worries over Fannie and Freddie and larger then expected q3 losses scared investors. Asian stock markets are currently trading lower and European stock futures are pointing to a lower opening.

As was universally expected, the Bank of Japan decided to hold rates steady at 0.5%. The BoJ stated domestic demand could soften further and both downside risks to growth and upside risk to inflation remain intact. In addition, the assessment of the domestic economy was lowered again, as concerns growth hat weakness in the US (and weakness in general exports) will send Japan into a fully blown recession.

In Australia, the RBA minutes showed that members did consider an "early reduction" in rates. However, the concerns that elevated inflation could lead to rising wages kept the bank on hold. We believe that the overall tone of the minutes supports a September cut, but a stronger case can be made for 25bp then 50bp (roughly 70bp of cuts have already been price in this year).

European activity will be centered on the German ZEW. We are expecting continued deterioration and a surprise to the downside. Investors sentiment did tick up in August from a very low level, while current conditions are certainly under-pressure. However, from a macro perspective, ZEW has not been tightly correlated with GDP growth in the past, so any market reaction will be short lived.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8651
S 1: 0.8633
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 164.41
R 2: 163.88
R 1: 163.10
CURRENT: 161.11
S 1: 161.01
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4193
CURRENT: 1.4167
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Stronger USD In Asian Session

2008-08-19T18:34:00.000-07:00

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RBA Says Rate Cut May Be Needed To Avoid Deeper Economic Slowdown

2008-08-19T10:23:00.001-07:00

RBA Says Rate Cut May Be Needed To Avoid Deeper Economic Slowdown

The Reserve Bank of Australia`s Policy Board thinks an interest rate reduction might be necessary to help steer the nation`s economy away from a deeper economic slowdown.

Minutes of the RBA`s August 5 policy meeting, released Tuesday in Sydney, indicate the bank was poised to consider a drop from the current 12-year high cash rate of 7.5 percent.

`Indeed, less restrictive conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase,“ the minutes said. `On these considerations, a case could be made for an early reduction in the cash rate.`

The minutes showed committee members saw that `consumption spending had weakened considerably in 2008, with retail sales being essentially flat in value terms over the first half of the year.`

`On balance, it was now looking more likely that demand would remain on a slower track, and economic growth would be fairly slow, over the period ahead.`

The RBA Board`s next meeting is scheduled for September 2.

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European markets Likely to extend losses on weak global cues

2008-08-19T10:23:00.000-07:00

Global cues are pointing towards a lower opening for the major European markets on Tuesday. The U.S. market tumbled overnight after Fannie Mae and Freddie Mac fell to their lowest level in twenty years on concerns that the U.S. government may have to bail out the mortgage lenders. The Asian markets are trading sharply lower Tuesday on fresh fears about U.S. credit markets. Crude oil prices declined on Monday as Tropical Storm Fay steered clear of oil-producing infrastructure in the Gulf of Mexico.

However, the major European index futures are mixed. The FTSE 100 index futures show marginal strength, while the CAC 40 and DAX 30 index futures are showing weakness.

In the Asian session Tuesday, Brent North Sea crude was down 67 cents at $111.27 a barrel by 11:11 p.m. ET. In London Monday, October Brent crude futures fell 61 cents to settle at $111.94 a barrel on the ICE Futures exchange.

In Europe, the major economic data scheduled for release are the Euro-Zone and the German ZEW surveys for August and the German producer prices for July. In the U.S., traders await data on July housing starts and producer price index. Economists at UBS have predicted that housing starts and permits probably fell sharply in July.

The European markets fell for the first time in three days on Monday, as banking stocks edged lower following media reports of further troubles in the sector and a weaker dollar hurt export-sensitive stocks. The FTSEurofirst 300 index of pan-European blue chips closed down 0.1% at 1,189 and the narrower DJ Stoxx 50 index closed flat at 2,905. Around Europe, the U.K.`s FTSE 100 index slipped 0.08% to 5,450, France`s CAC 40 index declined 0.11% to 4,448 and Germany`s DAX index dropped 0.20% to 6,432.

On Monday, the Dow Industrials fell 1.55%, the broader S&P 500 index shed 1.51% and the technology-heavy Nasdaq composite index lost 1.45%.

In Asia Tuesday, Japan`s Nikkei 225 index is down 2.26%, South Korea`s KOSPI is down 1.95%, Australia`s All Ordinaries index is down 1.31% and Hong Kong`s Hang Seng index is down 0.65%. China`s Shanghai composite index is edging up 0.18%.

On the currency front, the euro slipped to a new multi-month low of 161.03 against the yen in Asian deals Tuesday, but it recovered against the dollar. The euro is largely choppy against the pound. At about 11:45 p.m. ET, the euro traded at $1.4695 and 0.7887 pound. The euro closed Monday`s European session at 0.7891 pound, 162.24 yen and $1.4740.

In the U.K., Brixton, Mears Group, Findel and Tribal Group are scheduled to report earnings. Kesa Electricals may see some activity after Goldman Sachs raised the rating of the company to `buy/cautious` from `sell/cautious`.

Renesola, the world`s largest recycler of scrap wafers used in solar panels, is scheduled to release a trading statement. Woolworths Group may react to a report by Financial Times that the grouping led by Baugur Group Hf, which was rebuffed by the board of Woolworths, has contacted other shareholders of the U.K. retailer in an effort to force its directors to open discussions.

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USD Against EUR

2008-08-18T18:32:00.000-07:00

Dollar posted 5-week gains against Euro

News and Events:

The Dollar jumped to a 6-month high against the Euro on Friday, helped by another drop in oil prices and growing views the US economic slowdown may be bottoming while growth in the euro zone stalls. It also posted a fifth week of gains as investors shifted their view on the global economy's ability to withstand a downturn initiated in the United States.

Data in the US on Friday showed an unexpected rise in manufacturing activity in the New York state area and an increase in industrial output and consumer confidence. By contrast, reports on Thursday showed the euro zone economy contracted in Q2 for the first time since the common currency's inception.

A steep drop in commodity prices also has lent support to the Dollar easing concern about the US economic outlook in the second half of the year. Crude oil prices slid further on Friday and ended 0.9% lower at 113.90 per barrel.

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Weakness In USD

2008-08-18T18:26:00.000-07:00

Forex Market Overview 18 August 2008

The Usd was slightly weaker in the Asian session and start of the trading week. This week will have market participants pondering the swift unraveling of the global growth decoupling story and sharp correction in commodity prices. The massive surge in the Usd caught many analysts off guard, causing a broad recalculation of forecasts. However, most are now predicting a short term tempering of Usd buying. We should like to see how this week's trading plays out, before expressing our short term bias. The EurUsd traded upward from 1.4649 to 1.4767, while UsdJpy fell slightly from 110.61 to 109.97 on light trading. The commodity bloc was able to gain some ground, with the NzdUsd moving sharply from 0.7040 to 0.7100 and AudUsd from 0.8654 to 0.8745. Crude is slightly higher trading at $115.11bll up 1.17% while gold is above the $800oz mark. The Asian regional indexes are following Wall Street mixed closed on Friday, with Shanghai down -4.61%. European futures are now pointing to a mixed opening.

With a relatively empty calendar today, the European session markets will be watching the EuroZone trade balance for signs of global weakness.

Daily Forex Pivot Point

AUDUSD
R 3: 0.8952
R 2: 0.8845
R 1: 0.8797
CURRENT: 0.8750
S 1: 0.8652
S 2: 0.8593
S 3: 0.8504

EURJPY
R 3: 164.40
R 2: 163.88
R 1: 163.10
CURRENT: 162.52
S 1: 161.845
S 2: 161.39
S 3: 160.15

USDSGD
R 3: 1.4265
R 2: 1.4220
R 1: 1.4193
CURRENT: 1.4123
S 1: 1.4025
S 2: 1.3890
S 3: 1.3820

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Australia Treaurer Tells Banks To Pass On Interest Rate Cuts To Customers

2008-08-18T10:23:00.002-07:00

Australian Treasurer Wayne Swan is again calling on the country`s banks to pass any future lower interest rates on to their customers.

In a broadcast interview on Monday, Swan reiterated his position that should the Reserve Bank of Australia drop its benchmark interest rate, there is `no excuse` for banks not to pass the reduction on to their customers.

Swan`s comments followed statements by Reserve Bank assistant governor Philip Lowe last week that there was `no reason` for banks not to pass on changes in the cash rate.

Most economists expect the RBA to trim interest rates from their current 12-year high of 7.25 percent at the next policy meeting September 2.

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Eurozone Trade Deficit Narrows In June

2008-08-18T10:23:00.001-07:00

The Eurozone trade balance showed a deficit of EUR0.1 billion in June, while economists were looking for a surplus of EUR1.2 billion, a report from the Eurostat showed Monday. However, the deficit narrowed from the EUR3.9 billion deficit recorded in May, revised down from the EUR4.6 billion estimated initially.

On a seasonally adjusted basis, the trade deficit was EUR3 billion, larger than May`s EUR1 billion deficit. Exports recorded a monthly growth of 1.4% in June, while imports rose 2.9%.

The extra-EU27 trade deficit was EUR20.1 billion in June compared with the EUR9.1 billion deficit in the prior year.

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Swiss Retail Sales Growth Slows More Than Expected In June

2008-08-18T10:23:00.000-07:00

Monday, the Federal Statistical Office said in a report that Switzerland`s inflation adjusted retail sales rose 0.7% year-on-year in June, at a slower pace compared to 7.4% rise recorded in May. A year earlier, sales had risen 5.1%. Economists had expected the growth to slow to 3.3% for June.

When adjusted for inflation and the number of shopping days, retail sales rose 4.7% year-on-year in real terms.

In June, sales of food, drinks and tobacco rose 2.5% and that of clothes and textiles was up 0.6%. Sales of other products edged up 0.1%.

Further, the statistical office said retail sales rose real 2.7% year-on-year in the second half of the year after adjusting for inflation. In nominal terms, sales grew 4.4%.

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Forex Daily Newsletter

2008-08-17T18:46:00.000-07:00

Forex - Dollar demand waned on Tuesday after US trade deficit unexpectedly shrank in June

The Dollar slipped against the Euro on Tuesday, breaking a five-session rally as investors locked in profits ahead of key economic data later in the week. EurUsd has already dropped 4.11% this month with help from a sell-off in Oil prices and growing fears economies elsewhere may slow at a faster pace than in the United States.

Yesterday, EurUsd slid to a six-month 1.4816 low after breaking a series of key chart levels, convincing some analysts that the Dollar may be ending its seven-year slide. Also, Dollar demand waned on Tuesday and investors shrugged off data showing the US trade deficit unexpectedly shrank in June. The Dollar also accelerated its losses against the Yen in late afternoon trading after selling on Wall Street picked up speed.

EurUsd edged up 0.13% at 1.4891 after earlier touching a six-month low of 1.4816. UsdJpy was 0.79% lower at 109.29, a day after hitting a seven-month peak of 110.40. EurJpy fell 0.91% at 162.74. GbpUsd fell to a 1-1/2 year low at 1.8954, down 0.84%. UsdChf rose 0.13% to 1.0878 after hitting 1.0926 6-months high.

Oil prices traded down 1.31% on Tuesday at $113 per barrel, after dropping more than $35 since a record 145.45 high hit in July. Fears of rising oil prices had been weighting on the outlook for the US economy.

Losses in the Dollar were limited as investors awaited data on US retail sales and consumer prices for July, due out Wednesday and Thursday. The economy is still ailing, with the financial sector recovering from a year-old credit crisis. Data on Tuesday showed the US trade deficit shrank unexpectedly in June to $56.8b, down from a revised $59.2.

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Interest And Economic Outlook

2008-08-17T18:08:00.000-07:00

Dollar posted it biggest one-day gain against majors on changing interest and economic outlook

News and Events:

The Dollar rallied on Friday, posting its biggest one-day gain versus the Euro in 7-1/2 years as the Market changed outlook on interest rate amid signs the US slowdown was spilling over to the global economy.
EurUsd traded below $1.5000 for the first time since February helped by Oil prices tumbling below $115 per barrel.

Other major currencies, including Sterling and the Swiss franc, fell 1% or more against the Dollar, which some analysts suggest may finally be emerging from a broad downtrend that has lasted almost seven years.

European Central Bank President Jean-Claude Trichet's highlighting of increasing risks to euro zone growth on Thursday had left traders to conclude that monetary policy would have to become looser, analysts said.

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Forex Market Overview

2008-08-17T18:07:00.000-07:00

Forex Market Overview 12 August 2008

The Usd saw broad based gains in the Asian session, as commodities continued to come under pressure. The EurUsd fell to a 6 month low to 1.4816, while the UsdJpy trended upwards to 110.23. Crude oil rebounded off lows, but is currently trading safely around $115.00bll, providing momentum to the Usd rally. Wall Street saw a firm finish, but Asian regional equities are currently mixed, with Shanghai significantly lower, down -5.20%, as the China growth story gets questioned. European stock futures are comfortably in the green and are pointing to a higher open (FTSE 0.90%).

Last night, ECB's Smaghi warned that the Eurozone economy is decelerating quicker than originally forecast, and the coming quarters could potentially see extended weakness. He restated Trichet's comments from last week's ECB policy meeting, that risks which were earlier mentioned by the central bank are presently materializing.

In Norway, inflation data released showed underlying CPI surged y/y 2.9%, vs. expectations of 2.6%y/y. Headline inflation also came in elevated at 4.3%. This surge in inflation is the first time since 2002 that core inflation has moved above Norges Bank's long-term target of 2.5%. With the Norge Bank meeting on Wednesday, the expected hold could easily come into question. Currently we expect a hike in September, but with this news we might reconsider.

In Japan, the Industrial production saw a m/m -2.2% decline, creating a flat annualized rate, while consumer confidence dropped to a new record low at 31.4 vs. 32,6 prior reading. As risk appetite stays high and Usd momentum continues, we believe that the Jpy strength is limited.

On the docket today is UK's CPI, after the nasty jump in June's readings (headline inflation 3.8% vs. 3.3% exp while core climbed to 1.6% vs. 1.5% prior). That said, July's figures don't look to bring any real relief. Recent fall in food and energy commodity prices won't show up in these readings. However, with retail sales figures dropping there could be room for easing. Overall, we expected headline to creep up to 4.0% from 3.8%, with inflation peaking in September.

Daily Forex Pivot Point
AUDUSD
R 3: 0.9070
R 2: 0.8952
R 1: 0.8846
CURRENT: 0.8891
S 1: 0.8836
S 2: 0.8768
S 3: 0.8690

EURJPY
R 3: 167.82
R 2: 165.60
R 1: 164.33
CURRENT: 164.40
S 1: 161.73
S 2: 161.25
S 3: 160.15

USDSGD
R 3: 1.4265
R 2: 1.4220
R 1: 1.4142
CURRENT: 1.4074
S 1: 1.4025
S 2: 1.3890
S 3: 1.3820

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Consumer Spending - Economy`s Achilles` Heel

2008-08-17T10:24:00.000-07:00

The U.S. economy is relaying mixed messages. The rest of the global economies have shown vibrancy and the dollar has remained weak, which in turn has supported exports from the U.S. An increase in exports is a positive for growth. That said, retail sales growth forebodes troubles on the consumer front. Specifically, spending on high-value consumer discretionary items is on the downhill.

Retail sales fell 0.1% in July, with the decline spearheaded by a 2.4% drop in motor vehicle sales. Sales excluding autos rose 0.4%, partly benefiting from higher gasoline sales. The core retail sales, which exclude autos, gasoline and building materials, rose 0.3%.

Food and gas have used much of the economic stimulus due to the fact that energy and food prices have risen significantly. Wachovia Securities expects consumer spending for the second-half of the year to show a decline, primarily due to a decline in real household income growth and difficult credit market. Nevertheless, consumer sentiment seems to be making a turn for the better. The preliminary reading of the University of Michigan`s consumer sentiment index for August edged up slightly to 61.7, although the increase was less than what many economists were predicting. Wachovia is of the view that the worst of the credit crisis is behind us, although it expects the workout to last for quite some time - at least till the end of the year.

However, one can derive some comfort from the recent steady descent in oil prices. Although falling energy prices could mitigate some downside risks to the economy, their impact on inflation environment is yet to be manifested.

The Labor Department`s inflation report for July showed that consumer prices rose 0.8% on a monthly basis, lifting the annual inflation rate to 5.6% from 5% in the previous month. Energy prices climbed 4% and food prices escalated 0.9%, with the increases in these categories due to higher gasoline prices and prices of food away from home, respectively.

The core consumer price index rose at a monthly rate of 0.3%, marking an annual increase of 2.5%. Meanwhile, another report released by the Labor Department showed that import prices rose at a staggering 21.6% year-over-year rate in July, marking the biggest increase since 1980.

Among the other important economic reports released during the bygone week, the Commerce Department`s trade balance report for June showed a narrower deficit of $56.8 billion compared with a deficit of $59.2 billion in May. Exports increased 4% on a monthly basis due to strong performances of capital goods, industrial supplies and auto-related products. Meanwhile, imports increased 1.8% in nominal terms, with the increase primarily due to an increase in oil prices. In real terms, imports declined 0.6%. The improvement in the trade deficit bodes well for second quarter growth.

Hopes of growth holding up well on the support provided by exports may evaporate, as most economies turned in dismal GDP data in the second quarter. The Japanese as well as the euro area economies showed a contraction in GDP.

The upcoming week`s economic calendar is fairly light, with only a very few market moving economic reports scheduled to be released. Traders are likely to focus their attention on the two housing market report for the week, namely housing starts for July and the National Association of Homebuilders` housing market index for August. Additionally, some interest may be evinced on the results of the Philadelphia Fed`s manufacturing survey for August, the Conference Board`s leading indicators index for July and the producer price index for July.

Housing Starts, which were inflated in June due to a change in the building codes in New York City that forced builders to start multi-family constructions before July 1st, could see a reversal. Likewise, building permits for the month of July are also expected to see weakness.

According to Global Insight`s Brian Bethune, the supply cut in response to still relatively high inventories of unsold homes will continue to generate a large negative drag on overall growth in the second half of 2008.

The producer price inflation report is unlikely to generate much interest, given the fact that it is due to be released after the consumer price inflation report. Producers are not very successful in passing the higher input prices to consumers due to weak domestic demand. Economists expect a modest increase in the producer price index for July, as they expect seasonal factors to nullify much of the increase in gasoline prices. The pullback in gasoline price happened in late July to be reflected in the month`s producer price index.

Meanwhile, the leading indicators index is likely to continue to decline for the third consecutive month due to negative contributions from initial claims for unemployment benefits and stock prices. The coincident index, which measures current economic activity, is expected to remain in the same tight range it has been nestling in.

Monday

The National Association of Homebuilders` is scheduled to release the results of their survey on homebuilders` confidence on Monday.

The housing market index for July declined to a new record low of 16. The component indexes, namely the indexes gauging current sales conditions, sales expectations and buyer traffic also hit record lows.

Tuesday

A report on housing starts, which refer to the number of privately-owned new homes on which construction has been started over some period, and building permits, which is the number of permits issued for new housing units each month, is slated to be released at 8:30 AM ET on Tuesday. Economists estimate housing starts for July of 963,000 units and building permits of 949,000.

Housing starts rose 9.1% in June to a seasonally adjusted annual rate of 1.066 million units from a revised rate of 977,000 units for May. Economists had estimated housing starts to come in at an annual rate of 960,000 units compared to the initially reported reading of 975,000 units.

However, on a year-over-year basis, housing starts declined 26.9%. Building permits, a leading indicator to housing starts, rose at a monthly rate of 11.6%, but they were down at a year-over-year rate of 23.9% to 1.091 million units.

The U.S. Labor Department is scheduled to release a report on the producer price index for July at 8:30 AM ET on Tuesday. The index measures the average change over time in the prices received by domestic producers of goods and services. Economists expect the headline index for July show 0.6% growth and the core reading to show 0.2% growth.

Producer prices for June showed a 1.8% increase, while the core producer price index increased 0.2%. Economists had expected the headline index to show 1.3% growth and the core reading to show 0.3% growth.

Food prices rose 1.5%, while energy prices showed 6% growth. On a year-over-year basis, the producer price index rose an unadjusted 9.2%.

Wednesday

The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 AM ET on Wednesday.

The weekly petroleum inventory report for the week ended August 8th showed a 0.4 million barrel-drop in crude oil inventories to 296.5 million barrels. Crude oil stockpiles are now in the lower half of the average range for this time of the year. Gasoline inventories and distillate inventories also declined by 6.4 million barrels and 1.7 million barrels, respectively. Refinery capacity utilization averaged 86.8% over the four weeks ended August 8th compared to 87.7% in the previous week.

Thursday

The Labor Department is due to release its customary weekly jobless claims report at 8:30 AM ET on Thursday.

The number of individuals claiming unemployment benefits declined 10,000 in the week ended August 9th to 450,000 from the previous week`s revised average of 460,000. Economists had expected claims to have eased to 436,000 from the originally reported 455,000 for the previous week.

The four-week average that removes volatility rose 19,500 in the recent week to 440,500 from the previous week`s revised average of 421,000. Continuing claims, which is calculated with a week`s lag, rose 31,000 in the week ended August 2nd to 3.417 million.

The Conference Board is scheduled to release a report on the U.S. leading index for July at 10 AM ET on Thursday. The consensus estimate calls for a decline of 0.2% for the month.

In June, the U.S. leading index declined 0.1%, in-line with expectations, and marking the second consecutive month of declines. The board revised the May month`s small increase to represent a small decline. While the coincident index rose 0.1%, the lagging index fell 0.3%. Four of the 10 indicators that make up the leading index, namely building permits, interest rate spread, index of supplier deliveries and manufacturer`s new orders for consumer goods and materials contributed positively to growth.

Meanwhile, the largest negative contributors were stock prices, average weekly clams for unemployment benefits, average weekly manufacturing hours, the index of consumer expectations and manufacturers new orders for non-defense capital goods.

The results of the Philadelphia Federal Reserve`s manufacturing survey are due out at 10 AM ET on Thursday. Economists expect the diffusion index of current activity to show a reading of -14.1 for August, an improvement over the previous month`s -16.3.

The July survey showed that the manufacturing sector continued to contract. The diffusion index of current activity rose 0.8 points to -16.3 in July. Among the sub-indexes, the new orders index was unchanged at -12.1 and the shipments index fell 1.3 points to -8. Readings on pricing spelt trouble, with the prices paid index rising 6 points to 75.6, marking its highest level since March 1980. The future business activity index, though declining 3.3 points, remained comfortably in positive territory at 18.

Friday

There is no important economic report due out on Friday.

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Industrial Production Shows Unexpected Increase In July

2008-08-16T10:24:00.000-07:00

Government data released on Friday showed that output from the nation`s industrial sector rose in July. The increase marked a slow-down from the pace of growth seen in the previous month but still represented an improvement over economists` expectations.

The Federal Reserve said industrial production increased by 0.2 percent in July. This followed a revised 0.4 percent increase in the previous month. Economists had expected production to come in unchanged compared to the 0.5 percent increase originally reported for June.

July marked the second consecutive month of growth in industrial production after several months of declines.

The increase in July was led by a 0.9 percent increase in output at the nation`s mines. There was also a 0.4 percent increase in manufacturing output, which was boosted by a 3.6 percent increase in the production of motor vehicles and parts.

These combined to offset a 1.9 percent contraction in output at utilities. This segment of the industrial sector has been volatile lately. Output in utilities grew by a revised 2.3 percent in June, after contracting by 2.2 percent in May.

Industrial production was 0.1 percent below its level at the same time last year.

The Fed added that the capacity utilization rate edged up to 79.9 percent in July. This measures how efficiently industrial firms are using their resources.

Friday`s report showed a revised 79.8 percent capacity utilization rate in June. The measure had been expected to slip to 79.8 percent from the 79.9 percent originally reported for the previous month.

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Forex Market Overview

2008-08-15T18:01:00.000-07:00

Forex Market Overview 15 August 2008

The Usd was slightly stronger in the Asian session, as commodities, specifically precious metals, weakened. The Gold fell below $800oz for the first time this year and silver followed right behind down a whopping -11.00%. The EurUsd slipped from 1.4803 to 1.4754, while UsdJpy trended higher from 109.57 to 110.34. The GbpUsd continued to come under selling pressure on the back of BoE inflation report, dropping steadily from 1.8710 to 1.8628. The commodity bloc gave up much of their gains over the past few days, with the AudUsd continuing to slide from 0.8732 to 0.8635. Wall Street closed higher yesterday and Asia regional indexes are all positive, with the exception of the Hang Seng down 0.84%. European stock futures are pointing to a higher opening.

In New Zealand, retail sales declined 1.5% q/q slightly better than the -1.8% expected fall. However, the drop was the largest on record and the second consecutive quarter of declines. The Nzd advanced on the news, but then reversed as the market released this figure just pointing to a continued economic weakness. We are still expecting the RBNZ to cut 25bp at the next meeting (in a string of cuts), which should continue to weigh on the Nzd sentiment

With no major events or data scheduled for European session, the market will have to wait for the US session. With Industrial Production, Capacity Utilization and Consumer confidence on the docket, the market will have their hands full. The Michigan confidence might have benefited from a modest recovery in equities and decline in gasoline prices. However, the housing markets will still weigh on the consumer.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8952
R 2: 0.8846
R 1: 0.8797
CURRENT: 0.8629
S 1: 0.8625
S 2: 0.8593
S 3: 0.8513

EURJPY
R 3: 165.59
R 2: 164.41
R 1: 163.88
CURRENT: 162.56
S 1: 162.01
S 2: 161.39
S 3: 160.14

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4159
CURRENT: 1.4164
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Weakness In Oil Prices | ForexGen Newsletter

2008-08-15T14:49:00.000-07:00

Renewed weakness in oil prices and a break of 1.4850

News and Events:

The Dollar rallied to an almost six-month high against the Euro on Thursday amid growing concern over euro zone economic weakness and accelerating inflation in the United States.

Traders sold the Euro after reports showed contraction in the Euro zone's economy in the second quarter. The Euro zone single currency accelerated its losses and fell below 1.4800 after it broke through key technical levels, analysts said. Government data showed US consumer prices rose at twice the rate expected in July. Analysts said higher prices in the short term may help boost the case for interest rate hikes by the Federal Reserve, although they warned that over time, inflation would hurt the economy.

Oil prices are down more than $30 from a record high 145.45 hit in
July. Crude oil settled 1.26% lower on Thursday at $114.93 a barrel.

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Consumer Sentiment

2008-08-15T10:18:00.000-07:00

Expect some volatility on the markets today as consumer sentiment will be released. The expectation is 62% and if the actual value released is greater than the 62% expectation then that will normally indicate strength for the Dollar.

Euro had a minimal intra day bounce before it's downtrend continuation but a further continuation or a reversal could pend on today's consumer sentiment.

We took another position on the AUDJPY with 80 pips in profit zone and managing the trade. It is unlikely we will hold this position over the weekend.

Below are today's daily pivot points.

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Currencies Risk Manager

2008-08-13T18:48:00.000-07:00

Currencies Risk Manager 13-08-2008

EurUsd Market dropped to 1.4816 low on Tuesday following Friday break below 1.5304 former strong support from 13th June. Further weakness below 1.5000 will put the focus on 1.4779 26th February low. Strong support holds 1.4685 22nd January low. On the upside, only a return over 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. A break up there would open the way to Trendline resistance 1.6200.

GbpUsd Cable hit 2.0158 high 4-weeks ago and 1.8953 low yesterday. Key level holds 2.0100 resistance. On the downside, Friday break below on 1.9337 January low support lead to market below 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Former support 1.9363 holds strong resistance. Initial support holds 1.8953 yesterday low.

UsdJpy Last 3-weeks recovery pushed the market up to 110.40 high on Friday. The last break of 108.59 former resistance put focus on 110.10 strong resistance (Trendline). Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. Initial support holds 108.53 today low.

UsdChf Recent Dollar strength pushed over 1.0500 last week and hit 1.0926 high yesterday. Market broke up resistance of the 3-months upper trendline at 1.0766 last week. Initial support holds 1.0500 key level. Renewed weakness below 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.

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Dollar Demand

2008-08-13T18:03:00.000-07:00

Dollar Demand Waned On Tuesday After US Trade Deficit Unexpectedly Shrank In June

News and Events:

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Economic Slowdown In Europe

2008-08-12T18:06:00.000-07:00

Signs of economic slowdown in Europe, Asia and Australia reduced outlooks for higher interest rates and boosted demand for Dollar

News and Events:

The Dollar rallied to a five-and-a-half month high against the Euro on Monday, boosted by another drop in Crude Oil prices and speculation that the US economy slowdown was spreading worldwide. Mounting signs of economic difficulties in Europe, Asia and Australia have diminished prospects of higher interest rates outside the United States, bolstering demand for the Dollar.

The euro briefly recouped some of its losses after European Central Bank council member Klaus Liebscher warned that policy-makers remained focused on taming high inflation. Liebscher told Market News International that inflation risks remained to the upside in the medium term and that there is no room for "complacency" on euro zone interest rates and inflation.

Declining Oil prices helped ease worries about the impact of higher energy costs on the US economy and also helped boost demand for the greenback.

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Forex Market Overview

2008-08-11T18:10:00.001-07:00

Forex Market Overview 11 August 2008

The Usd was broadly stronger in Asian session, as market prepare for a heavy week of economic indicators. Perhaps the most interesting aspect of last week aggressive Usd rally was the lack of strong confirmation from other financial markets, specifically rate and oil. The EurUsd strength clearly outpaced the gains in crude prices, while across practically all maturities the interest rate differential between the euro area and US are unchanged. This suggests the Usd is overbought. The EurUsd broke the critical 1.5000 support, trading down to 1.4911, while UsdJpy climbed to 110.40 before easing back to the figure. The AudUsd consolidated around the 0.8860 level, as August Statement of Monetary Policy held no real surprise one way or the other.

In Australia, the Statement of Monetary Policy didn't provide evidence that rates would be coming down near term. The main paragraph was unchanged from the last statement "On the assumption that the subdued demand conditions are likely to continue, scope to move to a less restrictive monetary policy stance in the period ahead is increasing." If there was a noticeable change in the statement it was a shift in the usual upbeat tone regarding China and India.

Consideration this week will be focused on if the long-bullish sentiment surrounding the Eur has come to an end, due to the slide in commodity prices and change in market perceptions regarding the direction of ECB monetary policy.

In the UK, today's PPI report might show that prices pressures have peaked. However, the CPI released due Thursday is unlikely to have such positive news. We are expecting CPI to rise to 4.1%, with the potential to peak in September

Daily Forex Pivot Point
AUDUSD
R 3: 0.9206
R 2: 0.9131
R 1: 0.9074
CURRENT: 0.8873
S 1: 0.8889
S 2: 0.8875
S 3: 0.8819

EURJPY
R 3: 169.97
R 2: 169.49
R 1: 167.82
CURRENT: 164.58
S 1: 165.01
S 2: 163.00
S 3: 161.73

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4058
CURRENT: 1.4072
S 1: 1.3925
S 2: 1.3819
S 3: 1.3767

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Forex Market Overview

2008-08-11T18:10:00.000-07:00

Forex Market Overview 11 August 2008

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Dollar Rose Broadly Against Majors

2008-08-08T18:11:00.000-07:00

Dollar rose broadly against majors on surprising data and lower expectations for ECB rate increase

News and Events:

The Dollar rose broadly and hit a 5-1/2-month high against a basket of currencies on Thursday, bolstered by a surprise rise in June Home sales and diminished expectations for euro zone interest rate increases.

European Central Bank President Jean-Claude Trichet, in remarks after the bank held rates at 4.25%, said he expects economic growth in the euro zone to weaken substantially this year, even as he sees inflation remaining above the ECB's target. Following his comments, investors unwound bets for ECB interest rate increases this year.

Further pressuring the Dollar was an increase in Crude oil by 0.94% to 119.92 per barrel after falling to a three-month low 117.14 on Wednesday.

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US Financial Turmoil

2008-08-07T03:35:00.000-07:00

US financial turmoil is worsening but FX market await data later this week

News and Events:

The Dollar eased on Monday, amid concern losses at US financial companies will continue to weigh on the slowing economy, after Merrill Lynch said Lehman Brothers may post a loss in the Q3 and take an additional $2.5 bio write-down on home loans for the period.

Negative sentiment was completed by comments from Minneapolis Fed President Gary Stern saying that the next two to three quarters could be disappointing.

British house prices fell for a tenth straight month in July causing the EurGbp to rise to a session high of 0.7933 before retreating to last trade at 0.7894. Unexpectedly strong New Zealand trade data lifted NzdUsd 0.54% to 0.7459. But it stayed near the six-month low of 0.7388 traded last Thursday.

Market focus this week will shift to a deluge of data, particularly Q2 US GDP on Thursday and Friday's US jobs figures.

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Forex Market Overview

2008-08-07T02:35:00.000-07:00

Forex Market Overview 07 August 2008

The Usd was vaguely weaker during the Asian Session, as participants seem to be content with their positions ahead of the critical BoE & ECB rate announcement today. The EurUsd traded higher to 1.5451 from 1.5401, while the UsdJpy traded up to 109.90 (7-month highs), on rumors of option barriers triggered on the break of 108.55. With no surprise, the Jpy fueled carry traded continued to see strong gains as the EurJpy climbed to an August. high at 169.43 and the “King of Carry”, the TryJpy, peaked at 94.45. The commodity bloc found some relief in Asian trading, with the AudUsd climbing from 0.9080 to 0.9120, while NzdUsd reversed earlier gains slipping from 0.7218 to 0.7175. We are seeing some pullback in EM appetite, with the UsdMxn looking to retest the 10.00 resistance and the EurPln continued to rally off 3.200 support to 3.2433. Wti crude is slightly frimer at $118.89bll, as well as gold at $884.15oz. Wall Street closed up and regional Asian stock markets are mixed, with Nikkei leading the losers down -0.93%. European stock futures are pointing to a mixed open.

The BoE & ECB rate announcement will dominate the European session.

In the UK, the BoE is expected to hold rates at 5.00%. Since the MPC is unlikely to issue a accompanying statement, market reaction will be limited. Recentley the market has witnessed a string of gloomy economic data not seen since the last recession. However, the tone of the last meeting minutes suggest that rates are more likely to go up to combat rising inflation than to fall….but that was before this last more economic deterioration and financial turmoil. We are expecting Besley to call for a hike and might find some support, given that the Inflation Report will be released this month. But with this commodity prices easing and a slight dropping in public’s inflation expectations, the BoE might be getting some relief. But right now, showing a “stiff upper lip” in spite of deteriorating fundamentals might be enough to anchor inflation expectations.

On the continent, the ECB is widely expected to hold rates at 4.00%. We doubt, given the clear signs of economic deterioration and headline inflation expected to fall with easing commodity prices, that a move upward would be prudent. Trichet will have to stick with the usual hawkish rhetoric. There is significant risk that this month’s statement will put greater emphasis on the slowing growth story (again helped by declining commodity prices), which the market will perceive as dovish and as the reconsideration of the “no bais” mindset.Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service.
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ECB And BOE

2008-08-07T02:33:00.000-07:00

ECB and BOE are both expected to leave rates steady

News and Events:

The Dollar rose for a fourth straight day overall to a seven-month peak versus the Yen and a six week high against the Euro on Wednesday, as the slide in oil prices to a new three month low raised hopes economic growth would pick up and inflation would subside.

Earlier this week, Fed kept short term interest rates unchanged but was perceived as being slightly more concerned about slow economic growth than it was about inflation

Demand for the Euro fell ahead of the European Central Bank policy meeting today. While the bank is expected to leave benchmark borrowing costs steady at 4.25%, analysts think ECB President Jean-Claude Trichet could soften his hawkish rhetoric, citing more data pointing to slower euro-zone growth.

Bank of England is also expected to leave rate unchanged at 5%, the lowest since December 2006.

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ForexGen customer satisfaction is our major objective. To reach our business goals, we strive to put our client's goals in focus. We highly value our clients and always aim to exceed their expectations and cross the limitations encountered by the sophistication of the Forex trading industry.Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service.
ForexGen services are all controlled by the international banking and financial regulatory standards.
ForexGen is continuously providing the Forex market's safest trading terms & conditions. Providing professional currency trading services that meet our client's expectations is our first priority.

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The Forex Markets Today

2008-08-07T02:32:00.000-07:00

The Markets Today Thursday 07 August 2008 / 10:15h CET

EUR/USD

1.5470

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

Down to 1.5400 folowed by a 60-pip pullback. Bearish trend now at 1.5510, while underneath the Euro should continue to soften. We lower our target to 1.5290

A daily close above 1.5510 ends the bearish move and risks to see the pair hold in a range of 1.5450/1.5750 a while longer.

1.5450 MINOR	1.5475 MINOR
1.5425 STRONG	1.5510 TREND
1.5350 TARGET	1.5540 STRONG

GBP/USD

1.9500

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

A new low of 1.9460, this is a strong support and we risk to reverse up to 1.9565 before resuming the down-trend.

A break through 1.9460 has room for 1.9330. On top a daily close above 1.9565 can see a larger pull-back to above 1.97

1.9495 MINOR	1.9510 MINOR
1.9460 STRONG	1.9565 STRONG
1.9330 TARGET	1.9620 STRONG

USD/JPY

109.30

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

Top of 109.75 means target achieved. Minor bullish trend at 109.35, a break there risks a fall back to strong 108.30

The market may want to see the 110 handle trade and keep the pair in high range all day.

109.35 MINOR	109.80 STRONG
108.90 STRONG	110.05 MINOR
108.30 KEY	110.30 STRONG

USD/CHF

1.0555

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

1.0620 high and back to the rising support at 1.0550. While this holds we can attempt 1.06 again, target remains 1.0660

A break of 1.0550 on the 4-H chart risks a dip to 1.0485 key, a lower daily close stops the bullish view.

1.0550 MINOR	1.0585 MINOR
1.0485 KEY	1.0620 MINOR
1.0445 STRONG	1.0660 TARGET

XAU/USD

883.00

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

Expect Gold to remain range-bound 872 / 888, bias is to widen the downside towards 865 or even 850

A daily close above 888 could see Gold try the 905 key resistance tomorrow.

880 MINOR	888 STRONG
872 STRONG	894 MINOR
865 STRONG	906 KEY

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The Forex Markets Today

2008-08-06T14:03:00.000-07:00

The Markets Today Wednesday 06 August 2008 / 09:50h CET

EUR/USD

1.5500

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

Down to 1.5440 and back. Medium-term bearish trend-line at 1.5545 this morning, sell any spikes, continue to target 1.5350 this week.

The Euro may not spike and simply fall back to 1.5470 with space to fall further. A daily close above 1.5550 stops the immediate bearish view.

1.5470 MINOR	1.5515 MINOR
1.5435 STRONG	1.5545 TREND
1.5350 TARGET	1.5610 STRONG

GBP/USD

1.9560

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

The downside was widened to 1.9510, since any recovery has been short-lived and pressure is still on the downside. Looking to extend the current fall to 1.9430 or even further

Strong initial resistance 1.9600. Intra-day allow for spikes to 1.9630 to sell again, a daily close higher risks 1.9800

1.9515 MINOR	1.9600 STRONG
1.9460 STRONG	1.9630 STRONG
1.9430 TARGET	1.9720 STRONG

USD/JPY

108.30

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

It has made a new high overnight and for now remains above old 108.25 high. Stay long, expect a rise to 109.50-ish.

Stop longs upon breaking 108.15, stronger support 107.80, a daily close lower risks a correction.

108.20 MINOR	108.50 MINOR
107.80 STRONG	108.85 MINOR
107.50 MINOR	109.30 TARGET

USD/CHF

1.0515

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

Very short-term bullish trend broke this morning, the pair may see a set-back to as low as 1.0445, buy dips.

A return back above 1.0530 turns us bullish, medium-term target remains 1.0660

1.0495 MINOR	1.0535 MINOR
1.0445 KEY	1.0590 MINOR
1.0395 STRONG	1.0660 TARGET

XAU/USD

884.00

EXPECTATION

THE RISK

SUPPORT AND RESISTANCE

Gold fell as low as 872 before starting to turn. Currently on a minor upswing it may try the 888 level and could even reach 895. SELL rallies

A new dip underneath of 880 has space for at least 865 or even 850

880 STRONG	888 MINOR
873 MINOR	895 STRONG
865 STRONG	903 STRONG

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FOMC Expected Rates

2008-08-06T03:01:00.000-07:00

FOMC Kept Rate Steady At 2% As Expected

News and Events:

The Dollar climbed to seven-week peaks against the Euro and major currencies on Tuesday, as oil prices plunged and the Federal Reserve maintained its focus on slowing persistent US inflation pressure in the economy.

Analysts said Tuesday's Fed statement was more balanced than what the market had expected, as it expressed concern about both economic growth and inflation. Another comment showed the Fed statement does not point to one clear rate path.

The drop to a three-month trough of $118 per barrel helped ease fears that high energy prices will continue to weigh on the US economy at a time consumer prices are showing an unexpectedly fast rise.

AudUsd was among the weakest performers on Tuesday, falling to a four-month low at 0.9133.

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Forex Market Overview

2008-08-06T02:50:00.000-07:00

Forex Market Overview 04 August 2008

The Usd was broadly unchanged for Friday's close in the Asian session. The EurUsd closed at 1.5560 and is now trading at 1.5580, while the UsdJpy closed at 107.60 and is now trading at 107.80. The Jpy fueled carry trades gained slightly, with EurJpy easing up towards 168.00 and the AudJpy strengthened to 100.50. Emerging Asia was slightly stronger, with the UsdSgd falling to the 1.3690 support. The commodities are seeing a broad rally, with crude wti up 0.76% to $126.06bll and gold up 0.37% to $914.35oz (also giving the commodity bloc ccy a small bounce). Regional Asian equity markets are following Wall Street weak close across the board, with Shanghai's down -1.00%. European stock futures are pointing to a negative open lead by the FTSE down -1.17%. Ominous start to the week, where most analysis are calling for continued Usd gains.

A big week for Central Banks (and currency markets), with the Fed, RBA, BoE and ECB deciding on rates. In this event studded lineup, perhaps the most anticipated event will be the ECB accompanying statement and Trichet's subsequent comments. We have seen recent economic data in the Eurozone hit a soft patch, while commodities have sold off. The market is gambling on that in the near future the ECB will change its hawkish tune, which will push the EurUsd even lower. In addition, with increasing probability that Central Banks in the developed countries will now have room to stave out economic collapse with inflation expectations declining, the dollar seems to be in the driver's seat. Note: CFTC positioning data for the week up to July 29 points to an adjustment out of USD short positions against the G10, with only the Aud holding a significant net long position against the greenback.

In the European session, the Eurozone producer price inflation will have the markets attention. We are expecting another surge in prices across the region (currently at it highest level in 25 years). While we expect the ECB to stay hawkish, with the economy stagnating and food and energy prices softening, the interest rates will not rise again.

Daily Forex Pivot Point
AUDUSD
R 3: 0.9528
R 2: 0.9476
R 1: 0.9419
CURRENT: 0.9306
S 1: 0.9286
S 2: 0.9276
S 3: 0.9206

EURJPY
R 3: 169.73
R 2: 169.19
R 1: 168.31
CURRENT: 167.70
S 1: 166.98
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3728
CURRENT: 1.3721
S 1: 1.3651
S 2: 1.3606
S 3: 1.3567

Forex Market Overview

2008-08-06T02:48:00.000-07:00

Forex Market Overview 05 August 2008

The Usd was broadly stronger in Asian session, as traders position themselves for today's FOMC rate announcement. The EurUsd slid from 1.5590 to 1.5524, while the UsdJpy took a weaker tone in the Asian afternoon, falling to 108.05 from 108.32. The AudUsd & NzdUsd continued to be sold off on the back of the RBA comments, dropping to 0.9223 and 0.7259 respectively. The Jpy fueled carry trades took a bearish tone with EurJpy pulling back from yesterday's 168.78 highs to 167.96. After a busy day of trading, the crude is current softer down -1.08% to $120.09bll, while gold closed below the psychological $900oz lvl, now trading at $887.83oz. The Asian stock markets are following Wall Street lower, with the Hang Seng down -2.23%, while European stock futures are looking at a mixed open.

In Australia , the RBA held rates at 7.25% as was widely expected. What was unexpected was the absolutely frank talk from the central bank. In today's communication, the RBA stated "with demand slowing, the board's view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing". We view this transparent comment as an admission that unless we witness and economic miracle in the next 4 weeks, the market should expect a 25bp cut in September. With the market now shifting expectations to a 25bp cut in September and possibility of a 50bp cut in December, we expect the Aud to continue to come under selling pressure.

In the Eurozone retail sales, PMI and industrial production will keep the markets busy. We are expecting all three indicators to show weakness and putting pressure on the ECB to act.

In the UK , July's CIPS/Markit report on services is likely to verify that activity in the sector is slowing significantly. The index dropped sharply from 49.8 to 47.1 in June, (below the 50 level that theoretically separates contraction from expansion). We expect the GbpUsd to continue its downward market to 1.9300.

The highlight of the trading day will be the FOMC rate announcement. We are expecting the Fed to hold at 2.00%. Since they were unwilling to move higher in June we doubt conditions warrant have changed for the better. With renewed troubles in the financial markets and weakness in economic data, from our perspective the window for higher rates has closed. In addition, we expect the accompanying statement will be relatively unchanged and will disappoint the market by not taking a more hawkish tone. We still see upside inflation and downside economic risk to be basically balanced. Currently we expect the Fed to hold until 2009.

Daily Forex Pivot Points

AUDUSD

R 3: 0.9419
R 2: 0.9347
R 1: 0.9301

CURRENT: 0.9213

S 1: 0.9164
S 2: 0.9032
S 3: 0.8979

EURJPY

R 3: 169.97
R 2: 169.73
R 1: 169.19

CURRENT: 167.14

S 1: 167.32
S 2: 166.98
S 3: 166.01

USDSGD

R 3: 1.3850
R 2: 1.3827
R 1: 1.3775

CURRENT: 1.3756

S 1: 1.3651
S 2: 1.3606
S 3: 1.3567

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Forex Market Overview

2008-08-06T02:20:00.000-07:00

Forex Market Overview 06/08/2008

The Usd was slightly weaker in Asian session, as the market digested the FOMC decision to hold rates at 2.00%. The EurUsd gained from 1.5450 to 1.5509, while the UsdJpy ranged between 108.20 to 108.47. The Jpy fueled carry trades performed well, with EurJpy piercing through 168.00 support and the TryJpy reached a 7 month high at 94.11. Wall Street rallied on the Fed decision, with the Dow up 2.93% and a majority of Asian regional indexes are following. The European stock markets are looking to open higher with FTSE futures trading up 2.78%. The commodity bubble continues to deflate with crude wti trading below the psychological $120.00bll and currently at $118.83bll.

The FOMC decision to hold rates at 2.00% was really not a surprise. However, the fact that Fed member ultra hawk Plosser didn’t join Fisher in voting for a hike was notable. The lack of additional votes subtly suggests that members view the current rate level as correct and downside risks to economic growth as still fragile. The accompanying statement was little changed, with acknowledgement that commodity prices are declining, changing the last statement wording in regard to energy prices from “continued increases” to just “elevated”. With commodity prices falling and inflation expectations softening, and while the risks to US growth still persist (it would be extraordinary for the Fed to raise when payrolls are collapsing), we don’t expect the Fed to act any time soon. For this week, the fate of the Usd lies in the outcome of Thursday ECB rate decision.

AUDUSD

R 3: 0.9419
R 2: 0.9347
R 1: 0.9301

CURRENT: 0.9190

S 1: 0.9134
S 2: 0.9091
S 3: 0.9032

EURJPY

R 3: 169.73
R 2: 169.19
R 1: 168.79

CURRENT: 168.05

S 1: 166.86
S 2: 166.01
S 3: 165.33

USDSGD

R 3: 1.3850
R 2: 1.3827
R 1: 1.3817

CURRENT: 1.3779

S 1: 1.3651
S 2: 1.3606
S 3: 1.3567

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EUR/USD Narrow Ranges

2008-08-05T02:46:00.000-07:00

Euro/Dollar would trade in narrow ranges before Fed’s decision today and ECB meeting on Thursday

News and Events:

The Dollar rose against the Yen on Monday as the Oil price's drop to a three-month low and some better US economic data generated optimism about the economy outlook. But caution ahead of Tuesday's Federal Reserve meeting to decide on US interest rates saw the Dollar ease against the Euro.

Data last week showed that the US economy expanded at an annual rate of 1.9% in Q2, up from 0.9% in Q1 of 2008. That raised outlook of higher US interest rates by the end of the year. But analysts generally expect the Fed to leave its benchmark overnight lending rate steady at 2% on Tuesday and deliver a neutral statement on future policy.

Traders will also await rate decisions from the Bank of England and European Central Bank on Thursday. ECB President Jean-Claude Trichet's statement may focus on rate-raising possibility.