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Daily Forex News

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Forex − U.S Trade deficit hoorah is short lived as retail sales are set to disappoint

Wed, Jan 14 2009, 11:39 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Forex News and Events:

The dollar corrected from a five-week high against the Euro on speculation today’s Retail sales and manufacturing output would show the ravages of a widespread recession. The dollar fell for the first time in 4 days against the Sterling after Federal Reserve Chairman Ben Bernanke stated fiscal policy alone was insufficient to quell the fires of a deep recession. He also said the U.S Government didn’t rule out further capital injections and guarantees may become necessary to stabilize financial markets. The Euro gained against the dollar as the German government announced a further EUR50Bn over two years to bolster public investment in infrastructure. The EURUSD rose from yesterday’s lows of 1.3150 to 1.3336 before the dollar fought back, bringing the pair into 1.3240 territory – the 61.8% retracement on the previously mentioned move. Cable saw a move take it from Friday’s highs of 1.5351 to 1.4471 last night before seeing the Sterling rise sharply in the night, briefly touching 1.4708 but not holding (coinciding with the 23.60% retracement on the Jan 9 – Jan 13 move) before falling sharply again to 1.4492. The statement by Morgan Stanley that the banking Giant HSBC would have to raise capital and slash it’s dividend sent European stocks south, continuing a 6 day losing streak. Energy and commodities rally back from a day of weakness as Gold rose from yesterday’s lows of $814/oz to end the day at $821/oz after going as high as $831.08/oz during the afternoon. Crude traded very much the same way from a low of $36.10/bbl to a high of $39.50/bbl yesterday – a 9.4% rise as OPEC says it will cut production further in March if demand continues to be low to bring prices back into line.

Today's Key Issues (time in GMT):

13:30 USD Advance Retail Sales (DEC)
13:30 USD Retail Sales Less Autos (DEC) -1.2% vs -1.8%
13:30 USD Import Price Index (DEC) -1.4% vs -1.6%
13:30 USD Import Price Index (YoY) -9.6% vs -4.4%
15:00 USD Business Inventories (NOV) -0.5% vs -0.6%
19:00 USD FED Beige Book 23:50 JPY Machine Orders (NOV) -8.0% vs -4.4%
23:50 JPY Machine Orders (YoY) -20.8% vs -15.5%
23:50 JPY Domestic Corporate goods price index -1.5% vs -1.9%

The Risk Today:

EurUsd Market traded as high as 1.3336 yesterday but reversed most of its gains down to 1.3190 low this morning. Dollar – yet again - defies bad numbers to break 1.3400 (61.8% retracement on the 1.2571 – 1.4736 move in December) the previously mentioned resistance tested twice yesterday. Initial resistance holds at 1.3336 in the short term and could extend to 1.3715 if broken. On the downside, 1.3400 gives way to 1.2575 – the beginning of the December move. In the nearer term 1.3081 (November 25 high) and 1.3000 remain clear targets.

GbpUsd Sterling fought back the sharp decline since the 9th of January that brought the pair from 1.5348 to 1.4471 yesterday – strong support at the 1.4470 level. On the downside, strong support can be found in the 1.4370 – 1.4390 area as this level was tested three times near the end of 2008 and beginning 2009 – mentioned yesterday as 1.4376 as Dec 31st low. Sentiment remains mixed to negative but renewed strength may open the way to 1.4678 and 1.4800 – with an eye on 1.5374 January 8th high.

UsdJpy With the dollar expected to remain heavy against the Yen on continued risk aversion – the move that started last week that saw the Yen rally from 94.64 – 88.78, with 88.78 being tested several times before a retracement to 89.95. Initial resistance holds at 90.00 (previous support) then 91.71 (50% retracement on Yen rally) with 94.59 (Jan 6th high) still on the radar. Strong support holds at previously mentioned 88.78 level, further down 87.13 (Dec 17th Low) and continued strong downtrend may open way to 79.70 April 1995 low.

UsdChf Market traded as high as 1.1279 on Tuesday as the dollar extends gains and recovers Jan 8th low of 1.0865. Uptrend resistance stands at 1.1282 - former support and possible trend up to 1.2298, 21st November high. Initial support at 1.1088 then 1.0863 (level tested 3 times between Jan 7th and 9th) Renewed weakness may break down 1.0735 and return toward 1.0500 and 1.0375.

Resistance and Support:

Published on  Wed, Jan 14 2009, 11:47 GMT