ForexGen Trading Outlook

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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Technicals are likely to trump the news this week

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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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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Forex Market Overview

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

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 News

Dollar rallied last week on better economic data and lower stress in financial markets

News and Events:

The Dollar climbed to five-week peaks against the Euro and three-week highs against the Sterling on Friday as better-than-expected economic data reduced worries about a much sharper slowdown. The Yen gained broadly helped by stress in financial markets on news that General Motors had hefty losses in Q2. That dragged US stocks lower and triggered safe-haven bids for Treasuries.

Friday's data showed that US employers eliminated 51k jobs in July, lower than market expectations for a payrolls decline of 75k. A separate report said US factory activity was unchanged in July, compared with the previous month, but above market forecasts.

Investors widely expect the Fed's policy-making Federal Open Market Committee (FOMC) to keep its benchmark federal funds rate steady at 2% when it meets on Tuesday.

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 17 July 2008

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

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

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

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

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

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

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FOMC Report

FX market turn over Euro as FOMC left rates on hold

News and Events:

The FOMC left rates on hold at 2% which was widely expected but voiced their growing concern about inflation but also said that they expect price pressure to moderate through the year. These comments lead many to believe that the chance of the Fed hiking rates has become more limited and thus we see an easing of the Dollar against the Euro. Overall the chance of the Fed raising rates during Q3 has already been priced into the market so it’s likely that the Dollar bulls will be disappointed with the news.


With the ECB likely to be raising rates at some stage in the near term then the big winner was the Euro.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

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Oil dipped to just above $134 barrel on a surprise rise in stocks. Plenty of data released later including US home sales which may have climbed as prices have become attractive to those who can get credit.

Forex Market Overview

Forex Market Overview 26 June 2008

Usd was stable in the Asian session after being sold off in response to the FOMC meeting. EurUsd ranged between 1.5660 and 1.5685 while UsdJpy trended upwards from 107.75 to 108.05. Carry trades continued to exhibit strong momentum with EurJpy finally breaking thru 168.80 resistance, climbing to 169.40 and AudJpy followed that trend by breaking thru 103.48 resistance, reaching new highs at 103.69. In addition, given the fact that the EurJpy has historically proven to be a good indicator of risk appetite we expect continued demand of yield driven currency trades.

US stocks ended higher Wednesday after oil prices fell and the Fed left rates unchanged at 2%. The major indexes retreated from their post-FOMC highs in late-afternoon trading, with the Dow barely closing in positive territory. Asian markets trading higher this morning after the Fed said downside risks to growth appear to have diminished and gave no signs that it will raise interest rates anytime soon. Sony & Nintendo led the advancers. Oil prices pulled back after an unexpected increase in crude stockpiles but pared their losses after the Fed statement; the Aug '08 contract was down $2.45 to $134.55. Gold prices closed lower on the back of lower oil prices; the most active was the Aug '08 contract down $9.30 to $882.30. We also saw Sep '08 silver -13.2 ¢ at $16.607/oz.

Yesterday the Fed left rates unchanged at 2.00% and the statement showed the downside risks have diminished slightly and upside inflation risks have increased. Overall the statement had a less hawkish tone then what the market was expecting and failed to indicate that the fed is in any real hurry to begin hiking rates. As expected Fisher voted for an immediate hike (on the record saying the fed shouldn’t have moved below 3.5%). What was interesting and perhaps the strongest signal to the market that rate expectation have become over done was Plossers vote to hold rates along with the majority. In addition, the lack of assessment by the Fed of how inflation measured against growth ie which measurement would steer the Fed monetary policy suggested again that members are in no rush to hike given the unsettled domestic condition. With both rate cuts and hikes off the table in the near term much depends on economic data. We currently are not expecting much for the US and believe data will point to an economy just getting by but with significant downside risk. This should keep the Usd under pressure and we are watching for EurUsd to begin creeping upwards.

While data out of New Zealand has little monetary policy effect, a wider Current account deficit was not what official were hoping for (declined to 2.160bn deficit in Q1 from 3.410bn in Q1). Account deficit GDP ratio at 7.8%. Net income deficits worsened while exports outstripped imports.

Austria data was mixed with Conference Board indicators printed higher then expected at 0.3% vs. -0.4% while job vacancies rose 3.4% after a drop in April of -2.5%.

In the UK five members of the MPC will testify to the treasury committee on May inflation report (not a position we envy). This should be a good time for the markets to receive some clarity regarding how seriously the members are considering a rate hike. Especially given last weeks mixed communications signals. But overall we expect that we will see a diverse view of how each member views the inflation verse growth situation.

Daily Forex Pivot Point
AUDUSD
R 3: 0.9655
R 2: 0.9648
R 1: 0.9604
CURRENT: 0.9578
S 1: 0.9490
S 2: 0.9448
S 3: 0.9405

EURJPY
R 3: 171.00
R 2: 170.00
R 1: 169.15
CURRENT: 169.13
S 1: 166.77
S 2: 166.00
S 3: 165.51

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3666
S 1: 1.3635
S 2: 1.3580
S 3: 1.3554

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.

Forex Market Overview

Forex Market Overview 25 June 2008

FX markets were unusually calm in the Asian session as markets await the news from the FOMC meeting. EurUsd was stuck in a 10 pip range for most of the session trading from 1.5565 to 1.5577 before breaking to the downside as Europe prepared to open. UsdJpy provided little excitement ranging from 107.67 to 107.94 despite trade data showing that exports jumped a whopping 3.7%. GBP traded between 1.9695 and 1.9712 as it followed the rest of the currencies against the USD. Carry trades eased slightly from their elevated levels with EurJpy falling to 167.64 & AudJpy 102.90.

Stocks ended up lower after a choppy session Tuesday in the wake of consumer confidence data that fell to a 16 month low in June and after UBS’s profit warning. Asian markets are mostly trading down this morning due to a fall in metal prices that weighed heavily on the mining companies. Japanese stocks were lower on the back of default concerns around developer and consumer-finance companies. Oil prices closed higher, but below the day’s peak of near $139, ahead of today’s rate announcement and US petroleum inventory data. The Aug '08 contract is up $0.26 to $137.00. Gold closed with gains, as weakness in the dollar underpinned demand for the precious metal; the most active Aug '08 contract up $4.40 to $891.60 and Sep '08 silver -15.7 ¢ at $16.739/oz.

In New Zealand The Westpac consumer confidence index fell sharply from 96.5 to 81.7 and is just above the extreme lows recorded in the early 90's recession. The RBNZ was looking for more evidence of weakness in the household sector and this clearly helps build a case. We expect the central bank to begin cutting in the fall.

If you haven’t heard already the FOMC will be announcing their rate decisions and releasing an accompanying statement later today. We are inline with market expectation and believe the Fed will hold rates at 2.00%. We expect some slight changes in the accompanying statement specifically regarding inflation and inflation expectations, however we are less hawkish then most. On the growth side, better then expected retail sales, inventories and external trade indicates that GDP will just miss contracting in Q2, while both ISM manufacturing and non-Manu have strengthened in recent months. However, we expect the downside risk to the US economy, which has been highlighted by a string of soft housing, consumer confidence data, and the decline in households’ real incomes and wealth shrinking to influence the Fed decision (we are expecting 1-2 members to vote for a hike). Overall we expect the market to be slightly disappointed by the dovish tone and lack of willingness to pre commit to any rate hike near term. Should our base scenario prove correct we should see some Usd weakness as the 60bp already priced in for 2008 looks over done.

However, it should be noted that recently The ECB has been trying to pour cold water on recent comments that there will be a more aggressive rate increasing policy by saying they have not spoken about a series of rate hikes in the Eurozone. Basically it seems that policy makers at the ECB are concerned that investors have jumped the gun and that the latest data could make it harder to raise rates that previously thought.

In addition to the FOMC, the Norge Bank (Poland Central bank is also releasing and are expect to raise 25bp to 6.00%) will also announce rates and publish its monetary policy report today. Risk is slightly skewed to a hold, but with 40% of economists that were polled looking for a hike of 25bp this will be a close one to call. We are expected a 25bp hike in the next 6 months, however this will not be the meeting. We expect the MPR to show inflation projection being revised upward which keep the NOK supported.

Daily Forex Pivot Point
AUDUSD
R 3: 0.9655
R 2: 0.9648
R 1: 0.9588
CURRENT: 0.9555
S 1: 0.9490
S 2: 0.9449
S 3: 0.9405

EURJPY
R 3: 170.00
R 2: 169.10
R 1: 168.39
CURRENT: 212.36
S 1: 166.78
S 2: 166.00
S 3: 165.53

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3681
S 1: 1.3634
S 2: 1.3580
S 3: 1.3554

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.