Rupee Rose on Earning Conversion

The Indian rupee rose today as the exporters had to convert their overseas earnings after the India’s currency has been losing significantly to the U.S. dollar in May.

The rupee recovered from two days of losses this week as the oil continued to drop today, easing the concerns that the commodity importers will have to sell even more rupees for dollars. On the other hand, large exporters found 13-month high USD/INR rate attractive enough to start converting their overseas earnings.

The demand for rupee formed by the exporters offers a nice support level for the Indian currency as at such low levels natural currency conversion will always be profitable for some companies. Apart from that, dollar demand may slow even further if oil prices go for a large scale correction soon.

From the other point of view, in case energy prices continue to rise at a current pace, the India’s current-account deficit may double by the year’s end. Judging from that, such investment banks as JPMorgan Chase & Co. and Goldman Sachs Group Inc. decreased their forecasts on rupee.

USD/INR dropped almost 0.3 percent to 42.855 as of 8:11 GMT; it may continue to drop even further during the next weeks, after gaining almost 5.3 percent in May.

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.

Euro Tumbles As A Break In Employment Overwhelms Strong Retail Figures

US Dollar Rally Extended As Growth, Rate Forecasts Lifted
Conditions seem to be improving for the ailing US dollar. A strong showing from the economic docket, falling crude prices and a boost to interest rate expectations all helped to drive the greenback to its third consecutive rally today. Looking at the fundamental source of this dollar strength, the first quarter GDP revision took the lead. Though the change to the annualized figure from an initially reported 0.6 percent clip to 0.9 percent merely matched economists’ expectations, the rebound helped sideline fears of an impending recession. The breakdown of the growth report revealed the narrowing of the trade balance to a five-year low - thanks to record exports and curbed imports - marked the largest positive change to the headline reading. However, consumer spending was unchanged at 1.0 percent growth from the year before – the slowest pace of expansion since the 2001 recession. This statistic should act as a warning for traders not to be too optimistic on the outlook for the second half. Indeed, the past two quarters expansion was still the worst period of growth in five years and consumer spending is expected to drop much further as the housing recession deepens and employment trends recede. Looking beyond the economic calendar, the pickup in the growth number added to the hawkish outlook for the June FOMC rate decision that has already been padded by the heavy inflation concerns in the minute’s forecasts and recent Fed speak. Fed Fund futures suggest the market is pricing in a 98 percent chance that rates will be held in June and a 34 percent probability of a quarter point hike in September.

Euro Tumbles As A Break In Employment Overwhelms Strong Retail Figures
The euro dropped nearly 120 points against the US dollar and 50 points against its British counterpart Thursday as a mixed batch of data found bears a little more receptive to fundamentals. From well-stocked European economic calendars, the title of top event risk went to the frequently market-moving German employment numbers. Recently, this indicator has lost some of its clout among the FX crowd as the series has steadily improved for over two years. With the May figures, the unemployment rate was unchanged at a 15-year low 7.9 percent. However, the unemployment change was a considerable surprise when the indicator printed the first increase in jobless claims since January of 2006. The news clearly caught the market off guard; but such a reading was long overdue considering the cooling in exports and sharp rise in input costs that has weighed on business sentiment was bound to catch up with hiring trends. And, while the employment numbers are restraining growth forecasts for vigil rate watchers, the session’s other releases may still have an impact on the speculation down the line. The Bloomberg German retail PMI marked its biggest jump in 18 months - a strong sign for domestic spending. If tomorrow’s German retail sales figure confirms today’s PMI, the balance may be restored to euro and EURUSD can recover some of its losses.

British Pound Weighed Down By Sharp Drop In UK Home Prices
While the British pound recovered somewhat from a steep decline during the European trading session, the release of weaker-than-expected house price data undoubtedly took a toll on sentiment on the currency. UK home prices, as measured by Nationwide Building Society, tumbled 2.5 percent during the month of May – the sharpest decline since record keeping began in 1991 – while prices fell 4.4 percent from a year earlier. Indeed, tighter lending standards have cooled demand for properties and mortgages, leaving the UK housing sector a major soft spot for the national economy. However, given the fact that recent consumer price growth has proven to be stronger than expected and is only forecasted to accelerate faster in coming months, the Bank of England has very little scope to cut rates from the current level of 5.00 percent. If the reality of this situation takes a hold of the markets, GBP/USD could regain footing to climb toward 2.00.

Commodity Dollars: Why Canadian Q1 GDP Could Be Stronger Than Expected on Friday
A reversal in commodity prices, including oil and gold, weighed on the Australian and New Zealand dollars on Thursday. However, the Canadian dollar was impervious to the plunge in crude – with which the currency normally has a strong correlation – as Canada's current account balance nearly doubled forecasts as exports of goods surged through the first quarter. The current account balance jumped to a C$5.6 billion surplus that was not only a strong rebound from the previous reading but also the largest positive gap for the series since the third quarter of 2006. Even more encouraging for the health of trade was the fact that the fourth quarter balance was revised from its previously stated deficit to a positive C$0.8 billion surplus. The data bodes very well for Friday’s Canadian Q1 GDP release. According to a Bloomberg News poll, economists expect growth to slow to a tepid 0.4 percent pace from 0.8 percent in Q4 2007. However, given the significant jump in exports, the data could be surprisingly strong and lead the Canadian dollar to rally, but regardless, traders should expect a pick up in volatility on this release.

Japanese Yen Tumbles Versus the US Dollar, British Pound
While the Japanese yen traded wildly across most of the majors but made little headway, the currency tumbled against the US dollar and British pound. Indeed, market-wide we’ve seen that traders are becoming a bit more risk seeking, as indicated by the sell-off in the yen and government bonds, and mild gains in equities. Upcoming event risk for the Japanese yen includes CPI and industrial production, but as usual, Japanese fundamentals are not likely to play a big role in price action for the currency. Nevertheless, it’ll be worth watching to see if inflation pressures pick up in line with expectations, and if industrial output continues to falter amidst weaker foreign export demand.

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.

Yen Rises as Carry Trade Suffers

The Japanese currency rose today on Forex during the Asian trading session as the stocks market drop spurred carry trade sell-offs and the liquidation of the yen-based high-risk assets.

The yen gained against Great Britain pound, U.S. and Australian dollars, while remaining relatively weak against the euro today. German Ifo report on business climate in the country was released today at 8:00 GMT strengthening the euro’s position with a better than expected index value for May.

Although the worries of recession and the worst financial market slumps are slowly fading in the investors’ field of view, the low-yielding currencies, such as yen and Swiss franc, are still seen as a safe haven, when markets are suddenly falling and $130/barrel oil prices threaten to hurt global growth.

The USD/JPY rate declined today for a second day straight — from 103.62 to 103.43 as of 8:33 GMT with a daily minimum at 103.14. GBP/JPY dropped from 203.86 to 203.46 with a daily low at 202.74. AUD/JPY was falling from 99.29 to 98.87 during the Forex Asian session today.

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.

ForexGen Trading Today

The USDJPY is testing critical support. A break below 102.50 would lead to an acceleration of the downtrend. Cable has soared as expected and the next level to watch is 1.9980/2.0025. The USDCAD could be about to turn higher (emphasis on could). Risk there is .9710.

The EURUSD has advanced as expected this week and faced resistance just above 1.5800. The possibility remains that this rally will reach a new high within the next 3 to 4 weeks so longer term bulls should be patient. Even if a larger correction is underway from 1.6018, then a test of 1.60 is possible, if not probable, because the drop from 1.6018 is in 3 waves. This would be wave A of a flat and B waves of flats often retrace 100% of wave A. In summary, stay bullish until further notice.

STRATEGY: Bullish, against 1.5630, target TBD

Visit our recently updated Euro Currency Room for specific resources geared towards this currency.

There is no change to our USDJPY analysis as the pair has chopped lower and a bearish bias is warranted against 104.68. The potential for a sizeable decline in a 3rd of a 3rd wave within the bear cycle from 105.70 is what keeps us patient. This count remains favored but the alternate treats the consolidation since 105.70 as an X wave (probably will form into a triangle), which will lead to a new high in wave Z before the larger decline resumes. A drop below 102.57 would inspire confidence in the larger bearish bias.

Visit our recently updated Yen Currency Room for specific resources geared towards this currency.

STRATEGY: Bearish, against 104.68, target TBD

As expected, Cable has soared this week in what is probably the final leg of a corrective advance from 1.9337. Expectations are for the pair to eventually exceed 2.04. Near term, the break through a short term resistance line sets sights on a longer term trendline near 1.9975. Also, expect resistance from former highs in the 1.99-2.0025 range. Risk on longs can be moved to 1.9683.

Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 1.9683, target above 2.04

There is no change to the USDCHF pattern as the pair is tracking our preferred count. “We view the rally from .9674 as an A-B-C advance (corrective) but this does not mean that the larger downtrend is back underway (similar to the EURUSD). The advance may well be the first leg in a larger, more complex upward correction but a sizeable decline is expected regardless (probably into parity).” Short term resistance is at 1.0322.

STRATEGY: Bearish, against 1.0572, target TBD

We should know very soon whether or not we are completely wrong in our assessment of the USDCAD. We’ve been bulls and waiting for a buying opportunity. We were given that opportunity as the USDCAD dropped into support from the 78.6% of .9710-1.0324 at .9841. The pair must remain above .9710 for us to remain bulls.

Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency

STRATEGY: Bullish, against .9710, target above 1.0324

The rally from .8952 is wave C of a large 5th wave diagonal that could extend to a measured objective just below 1.00 in coming weeks (.9936). There is no reason to fade this trend as long as price is above the trendline shown on the chart above.

Kiwi is tracking our preferred count (short term) and came just pips from triggering the bullish objective at .7915 this morning. “There are 5 waves up from .7536 and a corrective decline to .7710, indicating with a high probability that the next leg up in the NZDUSD is underway. A bullish target is .7947 (100% extension).”

STRATEGY: Bullish, against .7710, target .7915

Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com

[1] STRATEGY is a summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.

ForexGen Latest News (N.Korea Tests Missle)

Usd was steady in Asian session as volumes were thin. Majors were range bound for most of the morning with a jolt of risk aversion as news of the latest missile test by North Korea hit the market. Yesterday US data was broadly better then expected giving the Usd a temporary reprieve from selling. However we see this bullish sentiment to have a very short half life. US consumer consumption unexpectedly revised to 2.3% from 1.9% while inflation indicators eased moderately. Markets are still uncertain about how much of the US downbeat economic condition is already priced in to the Usd. However even if a large portion of weakness is already accounted for we believe that when traders will actually see the disturbing data which corresponds with a recession such as negative GDP or Wednesday's durable good orders, the Usd will come under renewed pressure. With BoJ Governor Suda hinting to a possible rate hike yesterday markets were particular interesting in Japan. Inflation pressure was recorded across the board with core CPI hitting 1.0% vs. 0.9% exp. UsdJpy trended down to 99.31 before North Koreas action reversed the downward slide and the market began to price in a lower probability of a rate cut in the next 12 months (from 17bp to 14bp). Nzd and Aud were both strong performers in Asia. New Zealand real GDP q4 increased 1.0% q/q & 3.7% y/y, the strongest quarterly growth since q3 2004. RBNZ Governor Bollard commented that inflation pressures in New Zealand remain relatively strong and the current setting of 8.25% with a flat outlook remains appropriate. Both currencies are still highly coupled with US and Europe growth and commodity prices. In the US the market will be watching Feb income and spending for signals on the health of the consumer and hints to q1 GDP. Retail sales increased moderately which suggests real consumer was stable providing more support that GDP contracted in q1.

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.