The Markets Today

The Markets Today tuesday 22 July 2008 / 09:25h CET

EUR/USD	1.5920
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
1.5800 held and the top broke Monday afternoon. 1.5930 initial resistance, clearing that will see the pair stretch up to 1.60, in a volatile market 1.6100 could be reached.		Rising trend only at 1.5850 this morning, hence room for an intra-day set-back, BUY dips and stop only upon a break of 1.5800.	1.5885 MINOR 1.5930 MINOR 1.5850 TREND 1.6000 STRONG 1.5800 KEY 1.6120 TARGET

GBP/USD	2.0030
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
Cable managed breaking 2.00 and closed the day above. We remain bullish, expect a rise to 2.0130 key resistance.		Initial support at 2.00, an hourly break there stops the short-term rise and we can dive to 1.99, a daily close lower turns us bearish.	2.0000 STRONG 2.0045 MINOR 1.9985 MINOR 2.0130 KEY 1.9900 STRONG 2.0165 STRONG

USD/JPY	106.50
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
It rose to the 107.15 key and returned to 106.30. Strong support 106.40 this morning, while this holds we can retry the top – a daily close above 107.15 would be bullish.		We see high risk of a fall from here today, 105.20 target, a low daily close could see continued selling down to 103-ish by Friday.	106.40 STRONG 106.90 MINOR 106.10 MINOR 107.10 STRONG 105.20 STRONG 108.30 STRONG

USD/CHF	1.0170
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
1.0250 could not be bypassed, this morning the pair is underneath of 1.0185 and we expect a fall to at least 1.0100		Only an hourly close above 1.02 may stop the short-term bearish sentiment.	1.0160 MINOR 1.0185 STRONG 1.0100 STRONG 1.0210 MINOR 1.0020 KEY 1.0275 STRONG

XAU/USD	972.00
EXPECTATION		THE RISK	SUPPORT AND RESISTANCE
The top of the range broke, we like to attempt longs here for a rise to at least 985, 995 is likely.		Stop longs underneath of 969 with room to fall to bullish trend-line at 960. A lower daily close turns us bearish for 925.	970 STRONG 976 MINOR 960 TREND 985 STRONG 944 STRONG 995 STRONG

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Dollar Decline May Slow but Will Continue

The U.S. dollar decline versus the European currency has slowed down recently as the investors relied on the intervention by the G7 to overcome the global currency imbalance and strengthen the dollar.

Although the finance ministers of the Group of Seven countries are concerned with the overapreciation of the euro against the U.S. dollar, the currency volatility is their primary concern. Elevated volatility is what brings the economies to the risk, according to their April 11 statement.

One of the main reasons for the European Central Bank and similarly thinking officials not to act against the euro appreciation lies in the role that the strong currency plays in fight with the inflation. Consumer prices in Eurozone grow fast and if the euro starts to fall against dollar, many commodities and hi-tech goods price will accelerate.

Even if the dollar will continue its drop, but will be doing it gradually against the euro, the central banks may abstain from taking any actions against such a behavior. But keeping down the volatility may include interventions by the European nations to support dollar and weaken euro.

Today EUR/USD started below its previous week’s close level on Forex — it opened at 1.5813 and grew to 1.5863 as of 8:58 GMT, but it’s still trading lower than Friday’s open level (1.5893).

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BoJ holds at 0.50%

Usd was slightly weaker in Asian session global equities stayed negative and traders paired down high yielders and moved back into Jpy. Looks as if markets are poised for another bout of risk aversion as European stock futures are set to open below fair value and commodities deleveraged.

The Fed minutes of March 18th provided no significant revelations which had added to uncertainty in the markets. However, it did come to light that Fisher and Plosser, the two dissenters, opposed the rate cut because "in light of heightened inflation risks, they favored easing policy less aggressively". We conjuctured this to mean that they were looking for a smaller cut rather then a hold. Overall the Feds focus still lies squarely on growth risks and futures rate decision will depend on the incoming data and status of the financial markets. Currently the markets are unsure whether the Fed will cut the rates by 25bp or 50bp at the next FOMC meeting but we are leaning towards a 25bp at this juncture. Much rests on next week's retail sales, since there are significant downside risks conveyed through consumer and business surveys, and of course the critical Q1 GDP release. Until we get greater clarity for the US data, expect the Usd to be range bound against the majors (with a slight exception to Gbp).

The BoJ voted unanimously to hold rates at 0.50% as was universally expected. Members cited the slowing domestic economy and turmoil in the financial markets as reason for this decision. Meanwhile, Shirakawa was appointed the new BoJ governor as his nomination was approved by both houses of Parliament. However, nominee for vice-governor, Watanabe, was rejected because of his MoF background.

RBNZ Governor Bollard made some strongly worded comments regarding the New Zealand economy and the low probability of easing rates. He stated that the kiwi economy remains strong despite yesterday's NBNZ business survey signaling a deterioration in business conditions in Q1.

The final release of euro-zone GDP Q4 07 is doubtful to reveal any major surprises for the headline growth rate. While UK industrial production and manufacturing output should avoid an outright recession this year, recent surveys, including CBI and CIPS/RBS, have sent mixed signals. Overall we are expecting a more downbeat assessment of the UK economy and further pressure on the BoE to move rates on Thursday.

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 In European Session

ForexGen were actively in European session as a few discrete events had traders scrambling.
First were the comments from BoE Governor Meryn King during MPC testimony to Treasury Select Committee who stated "[...] this is not an economy that has completely grounded to a halt but we are looking ahead and expect some slowing…." GbpUsd sold off as the market hurried to price in easing as early as April.

Second was the German IFO which caught the market completely off guard. Most participants had risk slanted to the downside but that was not to be. German IFO Current Assessment printed up to 111.5 vs. 109.5 exp while hit Expectations 98.4 vs. 97.8 exp. With the economic engine of the Euro zone still humming along in light of an elevated Eur and slowing global demand this was clearly a positive. An economy which is declining at a moderate pace will give the ECB greater maneuverability with interest rates and keep supporting the Eur.

And the final event was US durable Goods Order Feb which fell -1.7% vs. 0.7% exp on the back of weak Jan figure. This is just further indication that when an economy drops into recession things unwind very quickly. Watch for further Usd weakness.

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.