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

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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Euro to fall at 1.4279

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.....

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The Return of History

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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Slow Growth In EURO

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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USD Against EUR

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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Economic Slowdown In Europe

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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US Financial Turmoil

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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FOMC Expected Rates

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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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.

Forex Market Overview

Forex Market Overview 01 August 2008

The Usd was able to hold on to late day gains in the Asian session, as weak initial jobless claims threaten to end the greenback strength. However, a late US session sell off in oil and less than hawkish comments from ECB members, quickly came to the Usd aid. The EurUsd traded lower from 1.5605 to 1.5550, while the UsdJpy bounced between 108.40 and 107.55. The AudUsd fell sharply lower, as a local media reported that the RBA was ready to start easing, trading down to 0.9360.. In the late Asia trading FX markets have gotten very quiet, as market seem willing to wait until this afternoon’s release of US Non Farm Payrolls. Crude is slightly weaker at $123.34bll, while gold is trading down to $910.50oz. As the trend of falling economic activity continues in the G10, we expect commodity prices to continue to soften, which, in turn, should support the Usd.

Paulson said yesterday in Washington that… "While the stimulus is making our economy stronger than it would have been otherwise, the housing correction, credit market turmoil and high energy prices remain a considerable drag on the economy -- and the effects of this drag can be seen in the soft job market". Paulson also expressed that he sees improvement in the US economy saying..."We are making progress, although not in a straight line. Housing continues to be at the heart of our economic challenges and remains our most significant downside risk…We must work though the necessary adjustments in housing and credit markets to return to growth next year and beyond."

A lack of data in European session will have the market squarely focused on the US session and the release of non-farm payrolls. The much better than expected ADP figures, which printed at 9k, has once again provided intrigue to today already volatile release. We still believe, after yesterday’s jump in initial jobless claims and further deterioration in the Conference Board survey (job component), that the risk are skewed to the downside. In addition, ADP has been overly optimistic in recent months. While we are expecting something slightly higher than the 75k consensus, our gut is saying that anything is possible today, especially how events and sentiment are falling in place for Usd bulls.

Daily Forex Pivot Point

AUDUSD
R 3: 0.9528
R 2: 0.9476
R 1: 0.9419
CURRENT: 0.9369
S 1: 0.9357
S 2: 0.9328
S 3: 0.9276

EURJPY
R 3: 169.73
R 2: 169.19
R 1: 168.31
CURRENT: 167.23
S 1: 167.10
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3717
CURRENT: 1.3694
S 1: 1.3606
S 2: 1.3567
S 3: 1.3501

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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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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.

Forex Market Overview

Forex Market Overview 30 July 2008

The Usd was higher in Asian session, as a combination of stronger bank stocks and lower crude prices gave the greenback a broad based boost. The EurUsd slid to 1.5554 from 1.5599, while UsdJpy was able reversed its downward trend in early Asia , rebounding to 108.20 from 107.88. The NzdUsd broke below critical 0.7368 support, trading to session lows of 0.7333, as bad news from the Kiwi financial sector and lower commodity prices weighed on the Nzd. Jpy fueled carry trades were range bound, despite lower volatility, with the EurJpy trading between 213.80 and 214.25. Wall Street rallied strongly, with the Dow up 2.39% and Asian regional indexes are following, with the Hang Seng currently up 2.05%. Lower commodities price across the board help equities, with wti crude trading at $121.81bbl and gold at $916.11oz.

Oil was sold heavily, as worries over slowing demand ahead of today's inventory data and remarks by OPEC president Khelil, cautioning that crude prices could fall to $70bbl-$80bbl (long term) as the greenback goes through a period of strength. There is evidence in trading momentum and a growing sense of optimism that the markets are actively looking for the US economy to stabilize and for the Usd to begin its move towards a period of strength.

In Japan, the Industrial production for June dropped m/m - 2.0% vs.
-1.7% exp. The Japanese government has trimmed its forecast for industrial output, conceded the sector is slowing, as surveys show further signs of weakness up ahead.

In New Zealand, RBNZ Governor Bollard spoke on the subject of inflation targeting. Outside the core subject, the key take away was when he mentioned that he sees 'plenty of room' for rates to drop further. While the RBNZ has already signaled their intention to ease further, Bollard's remarks today are the most unambiguous reference yet that the market will see significantly lower rates. We see a significant period of Nzd weakness and perhaps the main rational for any support seems to be coming from Japanese margin traders, who are extensively long Nzd.

In the European Session, the market will be focused on July's EC Economic Sentiment Indicator. We are expecting this figure to continue the string of negative data from the Eurozone, especially given the sharp fall in industrial confidence and slump in PMI survey.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9637
R 2: 0.9590
R 1: 0.9528
CURRENT: 0.9484
S 1: 0.9451
S 2: 0.9404
S 3: 0.9328

EURJPY
R 3: 171.80
R 2: 171.05
R 1: 169.97
CURRENT: 168.41
S 1: 167.50
S 2: 166.00
S 3: 165.33

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3715
CURRENT: 1.3688
S 1: 1.3567
S 2: 1.3500
S 3: 1.3448

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.

ForexGen principals:

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.

Forex News | Dollar VS Oil

Dollar rallies to one-month high on Oil drop and Confidence rise

News and Events:

The Dollar soared to a one-month high against a basket of currencies on Tuesday, benefiting from a steep drop in oil prices and an unexpected rise in US consumer confidence.

Analysts said Merrill Lynch's announcement late on Monday of yet another write-down and capital-raising exercise also helped support the Dollar, as they raised hopes the turning point in the yearlong credit crisis was close.

Oil fell as low as 120.42 yesterday before ending only $2.5 down at 122.19. A decline in oil prices tends to benefit the Dollar, as it eases some of the growth concerns.

Second-quarter US GDP on Thursday and Friday's US non-farm payrolls figures for July will be the market's main focus later this week.

Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service.
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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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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.

Crude Oil And Better US Data

Market is looking for direction with lower Crude Oil and better US data

News and Events:

Last week upbeat readings on US durable goods orders, new home sales and consumer sentiment released buoyed the Dollar by lifting some of the gloom over the US economy.

The ongoing slide in crude oil prices is also supporting the greenback.

FX market is eyeing the direction of crude oil prices and US non-farms payrolls data, which is due on Friday.

European corporate earnings due this week may provide some direction to the Market.

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.

ForexGen principals:

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.

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

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Chile to Buy U.S. Dollars to Weaken Peso

The Central Bank of Chile will be buying the U.S. dollars in 2008 in order to stimulate the economy by the weaker national currency.

This year, starting April 14 Chile’s central bank will be buying $50 million every day on the Forex market to increase the overal country’s currency reserves from current $18 billion to $26 billion.

This step is rather controversial as the weakening of the peso will spur the consumer prices, while the inflation in Chile is already at a highest high level since 1996. CPI was at 8.4% in March (year-to-year) with the central bank’s target value between 2% and 4%.

On the other hand, weaker peso will bust the competitiveness of the exporting companies, increasing the economy output growth. Chile is a very export-orientated country with a large part of copper in the national export. Copper is sold for U.S. dollars and, with a cheaper peso, costs of production will remain low.

Although, the dollar purchasing process probably won’t affect the U.S. dollar rate against the other currencies, as it will be performed rather slowly, without sharp interventions, it may create some additional demand that will keep dollar from the fast falls during the volatile sessions.

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