Forex Market Overview

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

Forex Market Overview 31 July 2008

The Usd traded sideways in Asian session, after the stronger ADP figures and rally on Wall Street pushed the greenback higher. The EurUsd traded in a 1.5525 to 1.5602 range, while the UsdJpy traded between 107.80 and 108.34. US stocks gained, as ADP pointed to a 9k gain vs. -60k, giving hope that Friday's NFP will prove stronger then the -75k expected. The S&P gained 1.7% and 2 year Ts dropped by 2.6%. Crude rallied to $126.88brl, but with global demand slowing we expected upside to be limited.

Yesterday's decision by the Turkish Constitutional Court not to close the AKP was clearly seen as positive for markets, with Try and equities gaining on the report (with a positive gap at the open today). While the verdict has not ended all domestic concerns, it will go a long way to ease investors concerns.

The Japanese Industrial production fell by -2.0% m/m vs. -1.7% exp. The government has already cut forecasts for industrial output, as surveys point to further weakness ahead.

The European Session will be focused on Eurozone's July flash CPI. The market is expecting a new record high of 4.1% and there is little evidence to suggest otherwise. This figure, combined with the sharp drop in key Economic Sentiment Indicator, will mean at some point soon the ECB will have to make a tough choice. Inflation or Growth.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9637
R 2: 0.9590
R 1: 0.9528
CURRENT: 0.9438
S 1: 0.9404
S 2: 0.9328
S 3: 0.9276

EURJPY
R 3: 171.81
R 2: 171.07
R 1: 169.97
CURRENT: 168.27
S 1: 167.50
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3717
CURRENT: 1.3685
S 1: 1.3606
S 2: 1.3567
S 3: 1.3501

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Forex Market Overview

Forex Market Overview 22 July 2008

Usd was slightly weaker in Asian session on light trading and higher oil prices. EurUsd traded up to 1.5930 from 1.5832 while UsdJpy slipped from 106.93 to 106.32. The GbpUsd continued to outperform despite mounting bearish sentiment climbing above the 2.000 handle to 2.0039. AudUsd consolidated around the 0.9750 level while Nok is beginning to regain its forward momentum, with UsdNok pushing lower to 5.0550. Crude prices paired back gains made in US session, with wti $130.50bbl which had pressured US equities lower on the day. Asian stock indexes are trading lower, with the exception of the Nikkei which is up 2.56%. European stock futures are looking to buck downward the trend and are all currently trading higher. VIX continues to decline, as risk appetite increased helping push yield slightly lower.

Japan’s All industry Index came in line with expectations at 0.4% m/m but lower than the prior 0.85 reading. Supermarket Sales jumped 0.9% vs. -1.1% prior reading.

With a light economic calendar this week, the market will be extra sensitive to comments from policy makers. Today’s comments from ECB members Bini-Smaghi and Liebscher sounded less hawkish than usual and downplayed the risk to economic growth. However, Bini admitted that the European recovery might take longer than forecast while the ECB’s July 3rd hike is beginning to take effect producing “visual benefits”. In regard to US officials, despite the potential of hawkish sounding rhetoric we don’t believe the Fed has the maneuverability to tighten without some signals of stability in housing sector, financial markets and perhaps most importantly, labor markets. Should the FX markets react to a hawkish comment, we would see this as an opportunity to sell Usd.

No major events or data scheduled for release in the UK or Europe .

12.30gmt - Fed's Plosser speaks on economic outlook

Daily Forex Pivot Points
AUDUSD
R 3: 0.9895
R 2: 0.9849
R 1: 0.9818
CURRENT: 0.9760
S 1: 0.9675
S 2: 0.9664
S 3: 0.9597

EURJPY
R 3: 171.07
R 2: 170.00
R 1: 169.92
CURRENT: 169.61
S 1: 168.25
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3519
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300

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Forex Market Overview

Forex Market Overview 16 July 2008

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

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

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

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

US data will be covered in US report

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

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

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

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

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

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

Profile regulatory information:

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