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

USD-CHF @ 1.0984/88... Resistance at 1.1035 held again.
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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
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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
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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 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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USD Stability in Assian Session

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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Swiss Retail Sales Growth Slows More Than Expected In June

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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Dollar Rose Broadly Against Majors

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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Forex Market Overview

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.
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 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 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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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.

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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.