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Posted by HY Markets on Thursday July 29, 2010 9:50 am
As extreme market volatility continues, the U.S. dollar is once again
drowning under weaker-than-expected economic data. A report released
today showed new U.S. claims for jobless benefits climbed more steeply
than anticipated, with a showing of 464,000. The report followed other
data earlier in the week showing weakness in the housing sector and
yesterdays comments from Federal Reserve Chairman Ben Bernanke, who
said that the economic outlook as "unusually uncertain."
Compounding the dollar’s weakness was the sharp contrast of the U.S.
data to that of the eurozone which today released
stronger-than-expected European economic data reviving market appetite
for risk.
The euro has strengthened on the back of strong economic data which
showed that the private sector surged ahead in July. Additionally, a
separate report showed eurozone industrial new orders rose in May at
their fastest annual rate in 10 years.
Traders are now eagerly anticipating the results of the Bank stress
tests. Though the tests are largely expected to show that all the major
European banks have sufficient capital, investors are still in a wait
and see position. Some in the foreign exchange market say the test
results could be positive for the euro if they reveal no unpleasant
surprises, but doubts linger over whether the checks are tough or
transparent enough.
Sterling was supported by better-than-expected data as British
retail sales came in higher than expected, alleviating some concerns
about the economy. UK retail sales volumes received a World Cup boost
in June after strong sales of electrical goods drove a
faster-than-expected 0.7% monthly rise. The pound surged following the
unexpectedly strong GDP recovery in the second quarter, while the other
foreign currencies futures marked time overnight and they open little
changed in the US. Even the euro is only modestly higher despite the
respectable increase in the Ifo survey. Traders don’t want to be caught
wrong footed before the release of the results of the European banks’
stress tests later today; two-thirds of the Eurozone’s banking sector
are tested to assess whether they will be able to withstand future
adversities in the financial sector. This could be a game changer
With investor appetite for risk returning, the Canadian dollar
is showing its third consecutive day of gains against the USD.
Supported by rallying global stocks and strong oil prices, Canada's
commodity-linked currency is on the rise.
The Japanese yen remained firm, near recent seven-month highs against
the USD. The rise in the yen has been hampered by caution that Japanese
policymakers may try to talk it down as it nears a 14-year high around
85 yen per dollar hit last November.
The Australian dollar held recent gains, surging to a 2-month high
against the USD. The yield advantages have limited selling pressures in
the pair.
The Asia/Pacific stock markets surged in line with the US
indexes, the European bourses are little changed on both sides of zero,
while the gold/oil spread rose. The US stock indexes are slightly
higher in pre-open market.
The short-term outlook remains sideways and dependant on the
performance of the stock indexes for all of the foreign currencies
futures. The medium-term outlook is sideways for most of the foreign
currencies futures. My model is now short only on the euro.
Posted by HY Markets on Tuesday July 27, 2010 8:24 am
EUR/USD closed higher on Monday as it consolidates above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. However, stochastics and the RSI have turned bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews the rally off June's low, the 38% retracement level of the 2009-2010-decline crossing s the next upside target.
USD/JPY closed lower due to profit taking on Monday. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging and are turning bearish hinting that a short-term top might be in or is near. Close below the 20-day moving average crossing would confirm that a short-term top has been posted. If it extends the rally off May's low, last November's high crossing is the next upside target.
GBP/USD closed higher on Monday and the mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are turning neutral to bullish signalling that sideways to higher prices are possible near-term. If it resumes the rally off May's low, the 50% retracement level of the 2009-2010-decline crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.
USD/CHF closed lower on Monday and below the 10-day moving average crossing signalling that a short-term low is in or is near. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it extends the rally off June's low, the 75% retracement level of the 2009-2010-decline crossing is the next upside target.
Posted by Finotec on Tuesday July 27, 2010 8:14 am
The Euro hit a one-week high against the US Dollar as risk appetite held up overnight.
The Euro hit a one-week high against the US Dollar as risk appetite
held up overnight. A tame European calendar puts the onus on US
consumer confidence data and another round of second-quarter earnings
reports. The Euro inched higher in overnight trade, adding nearly 0.2
percent and reaching a high of 1.3017 to the US Dollar, the strongest
in a week. The British Pound was little changed, tracking sideways in a
narrow range below the 1.55 figure.
Trading Tactics
A clear uptrend could be an opportunity to buy EUR/USD.
A buying point is at 1.2988; Pivot point is the take profit at 1.3075; Fibonacci 23.6% is the stop loss at 1.2900
A selling point is at 1.2880; Fibonacci 50% is the take profit at 1.2775; Pivot point is the stop loss at 1.2960
Technical: Euro breaks standard error channel
middle line upwards and may continue the major uptrend. A move back
higher could set up a test of 1.3075
To strengthen our analysis; we use many other indicators, starting
with MACD (Moving Averages convergence divergence); we notice MACD is
in a bullish direction; RSI (Relative Strength Index) and Momentum are
pointing upwards; stochastic oscillator crosses %D line downwards.
*Analysis is for information purposes only and does not constitute
advice in any form. Past performance is not an indicator of future
performance. Trading in financial products carries a high degree of
risk to your capital and it is possible to lose more than your initial
investment.
EUR/USD (Hourly Chart)
Posted by HY Markets on Monday July 26, 2010 2:44 pm
Forex
– The euro rose against the dollar on Friday after most euro
zone banks passed stress tests, though analysts worried the checks were
not strict enough to reveal the true health of the sector. The four top
French banks and all but one German bank were judged to have sufficient
capital cushions to survive potential losses on their sovereign debt
holdings. Seven of 91 banks failed the tests, including ones in Greece
and Spain, for an overall capital shortfall of $3.5 billion euros. Fear
of a euro zone debt crisis and its impact on European banks drove the
euro below $1.19 last month, its lowest level since 2006. But it began
a swift recovery in July and hit a 10-week high above $1.30 earlier
last week. That was partly driven by data showing the euro zone economy
has been holding up better than anticipated, even as governments
tighten their belts to reign in large deficits. German business
sentiment posted a record jump in July to reach its highest level in
three years, a closely watched survey showed on Friday. The
Munich-based Ifo think tank said its business climate index, based on a
monthly survey of some 7,000 firms, rose to 106.2 from 101.8 in June.
The euro fell sharply last Wednesday against the dollar while the yen
rallied after Federal Reserve Chairman Ben Bernanke expressed concern
about the US economy and dampened risk appetite. Bernanke, in testimony
prepared for delivery to the Senate Banking Committee, said the US
economy faces "unusually uncertain" prospects and the central bank was
ready to take further steps to bolster growth if needed. The comments
pushed the euro down more than 1 percent versus both the dollar and yen
as worries about the health of the global economy spurred investors
into the safe-haven US and Japanese currencies.
The Bank of Canada raised its key interest rate by 25 basis points to
0.75 percent on Tuesday, as expected, but cautioned that the domestic
and global recoveries will be slower than previously expected in a hint
that any further hikes may be gradual. After lifting its overnight rate
for the second straight month from emergency lows, the bank cut its
domestic growth forecast for this year to 3.5 percent from 3.7 percent
and said Europe's efforts to reduce sovereign debt would temper the
pace of the global recovery as well. It cut its growth outlook for next
year to 2.9 percent from 3.1 percent but raised its 2012 forecast to
2.2 percent from 1.9 percent.
Britain's economy grew almost twice as fast as expected in the second
quarter of this year buoyed by a sharp pick-up in services output and
the fastest rise in construction output in almost 50 years, official
data showed on Friday. The Office for National Statistics said gross
domestic product jumped 1.1 percent on the quarter, the fastest rise in
four years, and rose by 1.6 percent on the year, the highest in two
years. The figures, which were well above even the highest forecasts,
may raise doubts over how long the Bank of England will keep interest
rates at their record low, particularly with inflation running so far
above target.
Posted by HY Markets on Monday July 26, 2010 3:44 am
EUR/USD closed higher on Friday as it consolidates above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Monday. However, stochastics and the RSI have turned bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews the rally off June's low, the 38% retracement level of the 2009-2010-decline crossing s the next upside target.
USD/JPY closed higher due to profit taking on Friday. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are diverging and are turning bullish hinting that a short-term low might be in or is near. Multiple closes above the 20-day moving average crossing would confirm that a short-term low has been posted. If it extends the decline off May's top, last November's low crossing is the next downside target.
GBP/USD closed sharply higher on Friday and posted a new high close for the rally off May's low. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning neutral to bullish signalling that sideways to higher prices are possible near-term. If it resumes the rally off May's low, the 50% retracement level of the 2009-2010-decline crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.
USD/CHF closed higher on Friday and below the 10-day moving average crossing signalling that a short-term low is in or is near. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought, diverging and are turning bullish hinting that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. If it extends the decline off June's high, the 75% retracement level of the 2009-2010-rally crossing is the next downside target.
Posted by HY Markets on Friday July 23, 2010 5:36 am
EUR/USD closed higher on positive data for Europe's manufacturing and service sectors on Thursday and above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Friday. However, stochastics and the RSI are turning bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews the rally off June's low, the 38% retracement level of the 2009-2010-decline crossing is the next upside target.
USD/JPY closed slightly higher on Thursday and the high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are diverging and are turning bearish hinting that a short-term top might be in or is near. Multiple closes below the 20-day moving average crossing would confirm that a short-term high has been posted. If it extends the decline off May's high, last November's low crossing is the next downside target.
GBP/USD closed higher on Thursday as it rebounds off support marked by the 20-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it resumes the rally off May's low, the 50% retracement level of the 2009-2010-decline crossing is the next upside target.
USD/CHF closed lower on Thursday and the low-range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought, diverging but are turning neutral hinting that sideways to lower prices are possible near-term. If it extends the decline off June's high, the 75% retracement level of the 2009-2010-rally crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted.
Posted by GCI on Wednesday July 21, 2010 3:44 pm
€
The euro depreciated
vis-à-vis the U.S. dollar today as the
single currency tested bids around the US$ 1.2750 level and was
capped around the $1.2910 level. The common currency came off after
Federal Reserve Chairman Bernanke reported the economic outlook
remains “unusually uncertain” in Senate testimony and reiterated the
Fed’s plan to keep interest rates at very low levels for an
“extended period.” Bernanke also noted the Fed is “prepared to take
further policy actions as needed” to support the U.S. economic
recovery but stopped short of noting what those actions may
include. Bernanke drove home the point that the U.S. economy is
likely to avert a double-dip recession but made it clear the Fed
continues to view economic output as “fragile.” Some traders
believe the Fed might reopen some of its emergency lending and
stimulus programs if the economic situation worsens and economic
growth is jeopardized. U.S. equities were higher before Bernanke
spoke but lost momentum and sank given the uncertain outlook on the
economy. Data released in the U.S. today saw MBA mortgage
applications move higher by +7.6% in the latest week. Last week,
the Fed released updated economic projections that evidenced
forecasts for low growth, high unemployment, and muted inflation.
Bernanke also provided support for the new financial regulatory
legislation that President Obama signed into law today. In
eurozone news, there were no major data released today. The big
day for markets is Friday when the results from stress tests on up
to 91 eurozone banks will be released. It has already been reported
in the media that some banks have failed their stress tests. PMI
data will be released in the eurozone tomorrow. Euro offers are
cited around the US$ 1.2830 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today
as the greenback tested bids around the ¥86.85
level and was capped around the ¥87.50 level. The pair continues to
inch lower to levels where some traders believe the government may
intervene, specifically around an ¥85 handle. An anonymous Bank of
Japan source this week suggested the central bank may intervene
around the ¥85 level if the pair depreciates to that area and
continues to trade there. Japanese monetary authorities have not
officially intervened for years but they will clearly not want the
pair to risk a move below the ¥80 figure. The pair briefly traded
below this level in 1995 before a massive dollar-buying intervention
was implemented to boost the greenback. Data to be released in
Japan overnight include all industry activity. The Nikkei 225 stock
index lost 0.23% to close at ¥9,278.83. U.S. dollar bids are cited
around the ¥86.29 level. The euro moved lower vis-à-vis the
yen as the single currency tested bids around the ¥110.80 level and
was capped around the ¥112.805 level. The British pound moved
lower vis-à-vis the yen as sterling tested bids around the
¥131.70 level while the Swiss franc moved lower vis-à-vis the
yen and tested bids around the ¥82.50 level. In Chinese news,
the U.S. dollar depreciated vis-à-vis the Chinese yuan as the
greenback closed at CNY 6.7767 in the over-the-counter market, down
from CNY 6.7783. Prime Minister Wen this week warned the Chinese
property market may be in for difficult times. The Chinese
government now accounts for about one-third of global economic
growth and economists fear a crash in the housing sector there may
result in significant problems for global output.
GBP
The British pound
depreciated vis-à-vis the U.S. dollar today
as cable tested bids around the US$ 1.5155 level and was capped
around the US$ 1.5335 level. Sterling tracked the euro lower
following Bernanke’s speech but the big news in the U.K. today was
the release of the minutes from the July Bank of England Monetary
Policy Committee meeting in which policymakers voted 7-to-1 to keep
the Bank rate unchanged at 0.5%. The minutes read “On balance, most
members thought that it was appropriate to leave the stance of
monetary policy unchanged. The committee considered arguments in
favour of a modest easing in the stance of monetary policy. The
softening in the medium-term outlook for GDP growth over recent
months would put further downwards pressure on inflation, once the
impact of temporary factors had waned.” MPC member Sentance voted
again to raise interest rates. There is talk of a possible
three-way split on the MPC this year if one or more policymakers
voted to expand policy accommodation. Some believe the MPC may
resort to increasing its asset purchase program. Cable bids are
cited around the US$ 1.5140 level. The euro appreciated
vis-à-vis the British pound as the single currency tested offers
around the £0.8505 level and was supported around the £0.8425 level.
Posted by HY Markets on Tuesday July 20, 2010 3:57 pm
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The euro touched a fresh two-month high versus a broadly weaker dollar
on Friday as rising European money market rates continued to underpin
the shared currency, bringing large option barriers into play.
•
The dollar stayed pressured, slipping to two-month lows versus a
currency basket, after a series of U.S. data this week underscored a
slackening in the economy's recovery.
•
"The euro's going up on light volume, there's not much liquidity today
but European yields are rising and that's helping to drag the euro
higher," said Paul Mackel, director of currency strategy at HSBC.
•
The recent rise in euro-priced bank-to-bank lending rates picked up
pace on Friday, pushed on by the sharp drop in spare European Central
Bank cash in money markets.
•
The euro has risen more than 9 percent from a four-year low hit on June
7 after smooth government debt auctions in Greece, Portugal and Spain
eased concerns about the euro zone's sovereign debt problems.
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Posted by HY Markets on Tuesday July 20, 2010 3:56 pm
The Japanese currency advanced against majors, especially the dollar,
on worries the United States may fall in a double-dip recession after a
series of downbeat data and announcements by the Fed.
Last week, retail sales and manufacturing output dropped ahead of the release of Michigan confidence data.
Also, the Fed lowered growth forecasts for the current year to range
between 3.0% and 3.5% instead of 3.2% and 3.7% and expressed its
worries about unemployment and inflation, which confirmed that the
current low interest rate will remain for a longer period.
Concerning the dollar-yen pair, it fell on the daily charts
for the third day on uncertainty in the U.S. which drove the yen
towards its highest level this year versus the greenback. However, the
pair is getting strong support at 86.90 where the pair has reached a
low of 86.95. For now, the pair is trading at 87.07 recording a high of
87.05, whereas support is seen at 86.40 while resistance is at 88.00.
Regarding the euro-dollar pair, it is continuing its rise on
the daily charts despite the downbeat report released today showing
that European trade surplus turned into a deficit in May. For the
moment, the pair is trading at 1.2971, recording a high of 1.3007 and a
low of 1.2887, while it is predicted to move between support and
resistance at 1.2850 and 1.2985 respectively. The pair is confirming
predictions that the breakout of 1.2680, which represents a neckline to
a bullish technical pattern, will take the pair to 1.30 levels.
As for the sterling-dollar pair, it did a downside correction
on the daily charts after the previous three days rally which sent the
sterling to the highest level in more than two months versus the green
currency.
Watch this week:
Monday the 19th a Marine Day holiday in Japan, Eurozone May Current
Account, Construction Output, UK July Rightmove House Prices and US
NAHB Housing Market Index while top US financial regulators meet for
the first of four public hearings on updating rules.
Tuesday German June PPI, UK Public Finances, Money Supply and Mortgage
Approvals, US Housing Starts and Building Permits while the Bank of
Canada decides on rates (many expect a 25 basis point increase to
0.75%).
Wednesday just Bank of England July 7th/8th MPC Minutes and the Fed’s
Bernanke delivers his semi-annual report to the Senate Banking
Committee.
Thursday Japan May All Industry Activity Index, EZ16 Industrial New
Orders, UK June Retail Sales, US Existing Home Sales, Leading
Indicators, May House Price Index, July Manufacturing PMI’s for various
European countries and Eurozone Consumer Confidence.
Friday German July IFO, UK May Index of Services, June BBA Mortgages
and Q2 GDP plus more interestingly the results of Europe’s bank ‘stress
tests’.
Markets are nearly always thin in July and early August,
exacerbating price swings; volumes are usually poor so that often
bankers question their job prospects. Watch FX weekly closes for
important breaks, 87.00 for dollar/yen and $1.3000 on the Euro. Another
round of generalized US dollar selling is likely if not next week then
next month, something which should prop up commodity prices.
Posted by HY Markets on Tuesday July 20, 2010 12:34 am
Forex
–The euro retreated on Monday from a two-month peak against
the dollar as investors said the currency was overbought ahead of
European bank stress test results due next week. The yen struggled
overnight after Japan's ruling party suffered a stinging defeat in a
weekend parliamentary election but recouped its losses during North
American trade. Details of the stress tests on 91 European banks are
due on July 23 as the European Union seeks to restore confidence in the
sector. A recent string of weak U.S. economic data has raised
speculation the recovery may be losing momentum, hurting the dollar.
Those fears also helped the yen recover its post-election losses, as
the currency tends to rise when investors grow averse to risk and
unwind trades financed with borrowed yen. The euro hit a two-month high
above $1.27 on Tuesday after a smooth Greek treasury bill auction eased
some concerns about Europe's debt crisis and took the sting out of
another credit rating downgrade for Portugal. Sterling rose on Tuesday,
shaking off early losses as investors speculated that data showing
stubbornly high UK inflation would add fuel to the argument that
interest rates may have to rise. Despite the slide, year-on-year CPI
stayed above the BoE's 2.0 percent target rate. It recovered from a
slide to $1.4949 on Monday, its lowest since the start of the month,
after ratings agency Standard & Poor's warned that the UK remained
in danger of losing its triple-A rating due to its large debts.
Markets, however, still expect growth in the U.S. economy to outpace
that of its counterparts in Europe and Japan, which should continue to
support the dollar against the euro. And on Wednesday, the euro hit a
two-month high and the U.S. dollar fell against the yen after the
Federal Reserve's minutes of its last meeting showed policy makers were
concerned the U.S. recovery may be slowing. The Federal Open Market
Committee minutes weighed on the greenback which had fallen earlier in
the day after data showed U.S. retail sales declined for a second
straight month. Strong U.S. corporate earnings being released this week
encouraged investors to seek higher-yielding currencies, including the
euro, but have not helped the greenback as some investors see them as a
lagging indicator of economic health. Sterling soared to a 10-week high
as better-than-expected UK employment data added to speculation the BoE
may have to start thinking about raising interest rates. The U.S.
dollar fell broadly on Thursday and the euro soared to a two-month high
above $1.29 as soft inflation and manufacturing data added to concerns
about the strength of the U.S. economy. The euro stepped back after
touching a two-month high versus a broadly weaker dollar on Friday as
investors bet that gains supported by rising European money market
rates were overdone. A private survey showing U.S. consumer sentiment
weakened in early July to an 11-month low added to negative sentiment
on the greenback and drove the dollar to a seven-month low against the
yen.
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