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U.S. Update: Dollar mixed, bullish against Euro

Thu, Jan 28 2010, 14:03 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

After past FOMC decision that helped Wall Street close positive, a moderate recovery in risk appetite pushed the dollar and yen slightly lower in first Asian hours, yet the movement did not last: EUR/USD fell to a fresh six-month-low as worries about some European countries' fiscal health prodded investors to reduce their holdings of the single currency. Adding to Greece troubles, now Portugal issues are keeping the single currency under pressure, as the ECB has no aims to bailout Greece.

Also, fears that China is trying to slow the pace of its economic growth, send commodity prices lower and kept risk aversion alive in markets. Dollar however, was unable to gain against Pound that has reached a fresh weekly high at 1.6275 and remains consolidating around that zone.

Regarding fundamental news, euro zone confidence in the economic outlook improved as an index of executive and consumer sentiment increased to 95.7 from a revised 94.1 in December. But German unemployment rose for the first time in seven months climbing to a seasonally adjusted 6,000 to 3.43 million; the jobless rate rose to 8.2 percent from 8.1 percent. Rising joblessness in Germany underscores the stumbling rally in Europe’s biggest economy and weight on the hegemonic currency most of the European session.

In another order of things, several central banks said they will stop the emergency U.S. dollar lending introduced during the financial crisis, indicating growing confidence and that the financial system is returning to health past Wednesday; the decision, announced in coordinated statements, involves ECB, BOE, BOJ, SNB, BOC, RBA and central banks of Zealand, Mexico, Brazil and Sweden that said they will let their dollar "swap" arrangements with the U.S. Federal Reserve expire on February. No doubts, this could be the most important announcement of this year, despite market seems not ready to understand the consequences.

U.S. data show unemployment  claims in the week ending Jan. 23 fell 8,000 to 470K, yet from a revised to the upside 482K past week, well above market expectations of around 450K. The four-week average of initial claims rose to 456K, not a good reading a week before Non Farm Payrolls; Durable Orders also rose in December, for the first time since September yet the increase of 0.3% was way under expectations of a 1.7% rise.

What to expect

U.S. futures turned bearish after the data, while gold is slightly up on the day. Yen regained the upside with the risk aversion data, while majors remain tight in range with no much change from early Europe trend despite the noisy morning.

Dollar mixed against majors likely to remain the same. Expect further downside pressure for both Euro and Swissy, while  Pound and Yen have still further chances to extend their rallies against the American currency.

These are the short term levels to watch:

EUR/USD 1.4065 1.3930

GBP/USD: 1.6750 1.6160

USD/CHF: 1.0560 1.0480

USD/JPY: 90.55 89.70

AUD/USD: 0.9030 0.8940

USD/CAD: 1.0630 1.0550

Published on  Thu, Jan 28 2010, 14:49 GMT

U.S. Update: Waiting for the FOMC

Wed, Jan 27 2010, 13:57 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Quiet Asian session kept supporting last days risk aversion mood across the board, with dollar and yen again being overall winners. However, Bank of Japan had a busy day, that halted Japanese yen strength, as  "Japan's economic conditions are likely to continue improving, although the pace of improvement is likely to remain moderate for the time being," the BOJ said in its monthly economic report; good news show exports in Japan rose on year for the first time 15 months in December, but finally, the statement form Bank of Japan Governor Masaaki Shirakawa, restating the central bank's position of keeping monetary policy very accommodative to fight deflation, seem to have weighted more on market players.

No schedule news in the euro zone this morning, but Germany Axel Weber statement that the ECB will only gradually phase out its special liquidity measures because the euro zone's economic upswing will be muted this year, keep Euro under pressure, and send it to test a fresh 6-month low around 1.4021. Pair has been unable to regain the 1.4080, and remains range trading ahead of FOMC.

Pound however, had a more profitable morning: GBP/USD rose to test the key 1.6240/60 resistance area, after U.K. public inflation expectations for the year ahead rose to 2.2% in January from 1.9% in December, marking their highest level in over a year; also favored by comments of a BOE member, suggesting the U.K. economy grew more strongly in the final three months of last year than the Office for National Statistics has estimated yesterday.

Pound almost ignored the fact that the Retail Sales volume for January fell strongly to -8 from a 13 reading past month, and hold above the 1.6200 level.

What to expect

U.S. futures are down before the opening bell, and dollar and yen slightly positive, yet mostly ranging waiting for the major events of the day: in an hour or so, U.S. housing data will hit the wires; New Homes Sales are expected to the upside, around 372K against 355K rise past month. Housing data has been quite disappointing lately in the U.S., so a bad reading likely to exacerbate risk aversion.

Anyway, investors seem to just be waiting for the FOMC statement later in American afternoon: at this point, rates are expected to remain unchanged, with the attention focused probably on the growth expectations. A hawkish tone that lifts Wall Street indexes could quickly be translated into a dollar selling rally across the board. Remember risk is ruling these days.

These are the short term levels to watch:

EUR/USD 1.4120 1.4025

GBP/USD: 1.6250 1.6160

USD/CHF: 1.0500 1.0440

USD/JPY: 89.80 89.10

AUD/USD: 0.9030 0.8940

USD/CAD: 1.0660 1.0600

Published on  Wed, Jan 27 2010, 13:58 GMT

U.S. Update: Risk aversion still rules

Tue, Jan 26 2010, 13:55 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar and yen extended their rally past Asian and current European session, as more signs that China is putting the brakes on excessive lending prompted buying of the safe-haven Japanese currency, on worries about tighter monetary conditions pushing up risk aversion. Japanese yen reached the 89.50 area  against dollar while EUR/JPY  fell to a 9-month low of 126.20, after several news agencies reported that banks in China have been asked to curb lending, despite the People's Bank of China hasn't said so officially.

Worries about further tightening had triggered a major risk aversion rally that favored yen over all, and dollar then, making market players ignore early European positive news:

German business confidence rose to an 18-month high in January as the Ifo institute in Munich said its business climate index, increased to 95.8 from 94.6 in December. That’s the highest since July 2008; meanwhile, euro zone current account rose 0.1B from a previous reading of -4.6B; yet it was not enough to help Euro: EUR/USD fell to the 1.4070 area, and remains close to that level ahead of U.S. opening.

In the U.K. economy resumed growth by less than economists forecast in the fourth quarter: GDP rose 0.1% from the third quarter, the Office for National Statistics said today in London, generating doubts about the economic recovery, and reducing chances of a hawkish BOE statement next week. Pound fall against greenback to the 1.6100 area, and corrective movements have been capped under 1.6150.

What to expect

Waiting for U.S. data, American futures are already in red while gold quotes around $ 1087/oz, very close to past December low of $ 1074/oz. If this last gives up, more downside likely to see there, with 1030 as next key level to watch.

In a few minutes, first U.S. report regarding housing prices will hit the wires, followed an hour later, by Consumer confidence, expected quite positive, around 53.6 against 52.9 past month. Worse than expected readings, or even worse than past data, could exacerbate current risk aversion rally, favoring at the end, further dollar gains across the board, except against Japanese yen.

These are the short term levels to watch:

EUR/USD 1.4120 1.4025

GBP/USD: 1.6170 1.6090

USD/CHF: 1.0500 1.0440

USD/JPY: 89.80 89.30

AUD/USD: 0.8980 0.8920

USD/CAD: 1.0660 1.0600

Published on  Tue, Jan 26 2010, 13:56 GMT

U.S. Update: Risk aversion still here

Mon, Jan 25 2010, 14:03 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

In a quiet Asian session, dollar rebounded against the Yen, as regional players bought the American currency following reports Sunday that U.S. Federal Reserve Chairman Ben Bernanke is set to be reappointed for a second term. Speculation amid Bank of Japan is also prepared to increase purchases of government debt later this week also support the movements.

But in general, market sentiment remains negative, dominated by uncertainty over the strength of the U.S. economic recovery, and following the new banking regulations proposed by U.S. President Barack Obama late last week.

Dollar is slightly down in Europe, as local indexes are positive on the day. Still, safe haven status will weight on the crosses later in the U.S. session.

Only report early Europe show German consumer sentiment GfK survey come out at 3.2 for February, from a revised 3.4 in January, moving dow as worries over unemployment hit Europe's largest economy.

What to expect

Wall Street is heading for a mixed opening with S&P futures slightly up, while DJIA futures are down; further fall in equities could retrigger risk aversion rallies, as Existing Homes Sales is pointing towards a slower-than-expected recovery:  sales of existing homes are expected to had fell in December, with economist projecting a 9.8% slump; that would be the biggest since comparable records began in 1999 and follow a 28% surge over the previous three months.

These are the short term levels to watch:

EUR/USD 1.4200 1.4120

GBP/USD: 1.6170 1.6090

USD/CHF: 1.0440 1.0360

USD/JPY: 90.40 89.80

AUD/USD: 0.9070 0.8980

USD/CAD: 1.0600 1.0550

Published on  Mon, Jan 25 2010, 14:04 GMT

U.S. Update: Dollar back up

Fri, Jan 22 2010, 15:06 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar has been slightly down since U.S. President Barack Obama's surprise proposals to tighten banking regulation and reduce the risk of another banking collapse were realized yesterday afternoon. However, greenback remains quite strong against most of its rivals compared to early week quotes: EUR/USD remains close to the 6 months low reached past Thursday, while GBP/USD lost the 1.6300 level to reach current 1.6100 area. No doubts, bigger loser in this risk aversion days are commodity currencies, with both CAD and AUD strongly down against dollar.

Early Europe, U.K. retail sales rose less than s forecast in December as price increases squeezed spending during the holiday season, casting doubt on the strength of a domestic recovery. The volume of sales rose 0.3% from November after dropping by the same margin in October.

Euro zone industry orders gave Euro some support after recovering more than expected in November, printing a 1.6% increase from a previous also revisited to the upside -1.9%. The rebound still left new orders slightly below September's level, and far below from 2006/2007 levels.

Japanese yen was also favored by the risk aversion environment, gaining strongly against most rivals this week: USD/JPY lost briefly the 90.00 area past Asian session, yet remains trading range bound under strong 90.50 area. Against Pound and Euro, the Japanese yen has gain more than 4 whole cents from this week high at current levels, setting fresh bearish trend in the crosses.

What to expect

Gold has also helped greenback these days, as continues falling now quoting around $1087/oz. approaching to past December low of $ 1073/oz, weekly close under that level will open doors for further falls next week.

Wall Street slump continues during this first minutes of activity, suggesting risk aversion rallies are not over yet. Watch for further dollar and yen appreciation today.

These are the short term levels to watch:

EUR/USD 1.4160 1.4030

GBP/USD: 1.6160 1.6070

USD/CHF: 1.0480 1.0400

USD/JPY: 91.50 89.80

AUD/USD: 0.9070 0.8970

USD/CAD: 1.0600 1.0550

Published on  Fri, Jan 22 2010, 15:07 GMT

U.S. Update: Dollar falls sharply after Obama unveils plan

Thu, Jan 21 2010, 17:13 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Investors had been again dollar supportive since Asia opening, as worries about a market bubble in China continues spreading risk aversion across the board. News across the board had been quite encouraging however, particularly in Europe.

Japanese demand for bank loans dropped the most in more than five years as companies cut spending, a central bank survey showed in Asia.  The report indicates that an increase in exports that pulled the economy out of its worst postwar recession last year hasn’t been enough to encourage companies to borrow more. Bank lending fell for the first time in four years in December, the central bank also said.
In Europe, the euro zone's dominant services sector continued to expand in January, although at a much slower pace than expected, while the manufacturing sector grew at its fastest pace in nearly two years: Flash Services Purchasing Managers Index, dropped to 52.3 in January from December's 25-month high of 53.6.

In the U.K., Public sector net borrowing hit a record high in December coming at Stg15.719 billion in December, up from Stg13.828 billion in December 2008. This was the highest level for a December on record.

Meanwhile the ZEW Indicator of Economic Sentiment for Switzerland edged up in January 2010 by 2.2 points, reaching the 56.2 mark.

The European Central Bank signaled it intends to keep interest rates at a record low for some time as the economy recovers gradually from recession and inflation pressures remain subdued. “The Governing Council expects the euro-area economy to grow at a moderate pace in 2010, recognizing that the recovery process is likely to be uneven and that the outlook remains subject to uncertainty,” while Trichet also said that problems may deepen and last longer as recovery will likely be moderate and uneven.

What to expect

Stock fell sharply in U.S. during first half of American session after worst than expected weekly unemployment claims that rose to 482K from 446K previous week, while Philadelphia manufacturing index also fell sharply to 15.2 from 22.5.

However, dollar is in a massive downside corrective movement as Obama unveils new restrictions for big banks: new proposal would force institutions to choose between commercial banking and proprietary trading for their own profit, while seeking to limit the size of megabanks.

The White House plan, backed by former Federal Reserve Chairman Paul Volcker, would prevent commercial banks and institutions that own banks from owning and investing in hedge funds and private equity firms, and limit the trading they do for their own accounts.

A second proposal seeks to limit the size of any one financial firm in relation to the entire sector by updating the current 10% cap on the share of insured deposits.

These are the short term levels to watch:

EUR/USD 1.4140 1.4030

GBP/USD: 1.6250 1.6160

USD/CHF: 1.0480 1.0400

USD/JPY: 91.20 90.50

AUD/USD: 0.9200 0.9020

USD/CAD: 1.0520 1.0440

Published on  Thu, Jan 21 2010, 17:14 GMT

U.S. Update: Sentiment rules again

Tue, Jan 19 2010, 15:28 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar extended its fall in Asian session, particularly against Japanese Yen and Pound, on speculation that U.S. financial sector earnings may come in weaker than expected, which would likely hurt U.S. shares and weigh on long-term Treasury yields. USD/JPY tested the 90.30 support area, while Pound rose to 1.6460, while Euro remained weak as worries about Greece kept weighting on the hegemonic currency.

Early Europe, things reversed strongly, as piles of mixed data hit the wires, and market players needed to translate that in movements: staring with inflation in the U.K. that rose as expected on yearly basis to 2.9%, supporting pound continued climb against greenback; such reading in fact, makes a rate hike in the U.K. more likely, yet one has to wonder at this point, how sustainable could be a rate hike forced by a reflection of negative developments rather than a sign of economic recovery.

Anyway at this point, prospects for the U.K. economy look promising: growth is picking up, house prices are rising at the fastest rate in a year, inflation pressures are increasing and the BOE looks ready to quit QE next February. 

Euro zone ZEW survey was in fact the trigger for a dollar rally, after the report showed German investor confidence declined more than economists forecast, with the index of investor and analyst expectations dropping to 47.2 this month, from 50.4 in December. Euro fell to an intraday low of 1.4265, triggering a dollar rally across the board, with mixed results: while Swiss Franc and commodity currencies fell strongly following market, Pound hold good part of it’s early gains and recovered the bullish tone after an intraday retest of key 1.6300 support zone. Japanese Yen also fell after the data, yet remained capped by the 91.00 level against dollar.

What to expect

Stocks started the day in negative, only to turn quickly to the upside, while dollar holds its bullish tone as investors adjust their expectations for global economic growth, determining the U.S. is likely to continue to emerge from the crisis at a faster pace than the euro zone; U.S. net foreign purchases of long-term securities rose to $126.8 billion in November from $19.3 billion in October, the largest monthly net purchases since October 2007, giving also support to greenback.

These are the short term levels to watch:

EUR/USD 1.4335 1.4260

GBP/USD: 1.6420 1.6300

USD/CHF: 1.0370 1.0320

USD/JPY: 91.20 90.50

AUD/USD: 0.9270 0.9180

USD/CAD: 1.0360 1.0300

Published on  Tue, Jan 19 2010, 15:31 GMT

U.S. Update: Dollar weakness exposed

Mon, Jan 18 2010, 12:35 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

As usual these last months, Mondays are slow motion journeys in forex market; Asian session exposed dollar weakness as this month data has fade any hope of a rate hike in the U.S.: unemployment negative numbers plus worse than expected Retail sales, had left dollar tumbling against most rivals.

Euro however, seems to be an exception for that. The Greece's debt problems continued to weigh on the euro this morning, leaving the hegemonic currency as the only loser against dollar in this also quiet European session. Beside fears that Greece will default on its debt, there is concern that other euro-zone members could now face further credit rating downgrades. EUR/USD holds under 1.4380 area, while Pound reached a fresh 5 weeks high around 1.6380.

Pound rally against major rivals has remained quite firm since past week, with small intraday downside corrective movements, yet printing higher highs; such technical behavior suggest we could see more strength there this week, with 1.6550 as key probable target for GBP/USD.

What to expect

With no data in Europe, and U.S. banks closed due Martin Luther King’s holiday, expect dollar bearish trend to slowly extend during next American session, except as mentioned above, against Euro. However,  ahead of one of the most busy weeks of the month, don’t expect any breakout in majors today; market players will be watching carefully this week data to define what could probably be a midterm trend for greenback.

These are the short term levels to watch:

EUR/USD 1.4410 1.4330

GBP/USD: 1.63280 1.62550

USD/CHF: 1.0320 1.0230

USD/JPY: 91.20 90.50

AUD/USD: 0.9270 0.9180

USD/CAD: 1.0320 1.0240

Published on  Mon, Jan 18 2010, 12:36 GMT

U.S. Update: Risk aversion driving markets

Fri, Jan 15 2010, 15:23 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar and yen were the major winners past Asian session, as risk aversion returned to markets Thursday: bad retail sales in the U.S. and ECB President Jean-Claude Trichet comments that the central bank isn't about to help Greece with its debt problems, after stating that the bank isn't going to give "special treatment" to any single country that finds itself in trouble, raised speculations on a Greek default.

Early Europe, dollar held gains against most rivals, particularly against Euro that lost the 1.4400 level, and commodity currencies that are strongly down across the board following gold and oil slump. Data was far from positive also: euro zone trade balance printed a monthly surplus of 3.9B against a revisited to the downside 4.7B past month, and an expected 5.4B increase.

In the U.S., the consumer price index increased 0.1%, after a 0.4% rise in November, the slowest pace since July. The core CPI, excluding food and energy costs, was up 0.1% in December after remaining flat in November, while the Empire State index rose to 15.9 in January from an upwardly revised 4.5 in December.

U.S. industrial production rose in line with expectations, 0.6% while University of Michigan Consumer sentiment print a 72.8 reading under expectations, and coming from a revisited to the downside 72.5 for December.

What to expect

Market remains far from being able to find a trend. With stocks falling and also commodity prices, traders have no hesitations on quickly run back to save havens, and Euro is the one paying it harder against dollar.

With European majors approaching to key supports, expect the movement to extend if they give up in the next hour.

These are the short term levels to watch:

EUR/USD 1.4440 1.4350

GBP/USD: 1.6320 1.6240

USD/CHF: 1.0320 1.0230

USD/JPY: 91.20 90.50

AUD/USD: 0.9270 0.9180

USD/CAD: 1.0320 1.0240

Published on  Fri, Jan 15 2010, 15:23 GMT

U.S. Update: Dollar down on weak US data

Thu, Jan 14 2010, 15:17 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

In a quite busy European morning, majors are mixed against greenback after Wall Street opening, thus general dollar sentiment turned negative in the last few hours.

Starting the day with good foot across the board, with a slightly positive tone, major crosses had spiked up and down without being able to confirm an intraday trend.

Early Europe, German inflation accelerated in December to the fastest in eight months rising to 0.8% t from a 0.3% in November, the Federal Statistics Office in Wiesbaden said today. Meanwhile, Industrial production in the euro zone rose 1% in November, for a decline of 7.1% from the same month last year, giving some support to Euro, that however remained capped under 1.4535 resistance area.

In the UK, manufacturers´ organization EEF warned that manufactures will only see a modest recovery in their fortunes this year, after their survey of sentiment in the sector found manufacturing firms expect production to grow by an average of 1.2% this year, rising to 3.4% in 2011. For the economy as a whole, the EEF predicts growth of 0.9% this year. "The outlook for the UK economy this year is far from certain". However, Pound held its bullish tone against major rivals, well supported above 1.6250 area, against greenback, and  close to 1.6300/20 resistance zone.

Finally, ECB President Jean-Claude Trichet said interest rates in the 16-nation euro region are “appropriate,” while the economy will expand at a “moderate” pace this year as rising unemployment weighs on growth. Inflation pressures are “subdued,” he said. Statement was far from hawkish adding nothing new to current economic stance. After leaving rates on hold, U.S. Retail Sales was the real market mover today: sales unexpectedly fell in December following a gain the prior month that was larger than previously estimated. The 0.3% p decrease came after a 1.8% rise the prior month, Commerce Department figures showed today in Washington.

Jobless claims were also dollar negative, as first-time claims for state unemployment benefits rose in the latest week by the most in five weeks to 444,000, while claims in the previous week were revised to 433,000 down from 434,000.

What to expect

Quite dollar negative data send dollar down across the board, except against Euro and Swiss Franc that hold around pre reports levels. Commodity currencies are the major winners today, rising strongly against dollar.

After past week employment monthly readings and adding current Retail sales report, greenback seems to be back under trouble. Won’t be easy to see the American currency recover past December strength. 

These are the short term levels to watch:

EUR/USD 1.4535 1.4440

GBP/USD: 1.6320 1.6240

USD/CHF: 1.0230 1.0165

USD/JPY: 91.70 91.05

AUD/USD: 0.9330 0.9240

USD/CAD: 1.0320 1.0250

Published on  Thu, Jan 14 2010, 15:19 GMT

U.S. Update: Seeking for direction

Wed, Jan 13 2010, 14:06 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite dollar rose against the yen in Asia, and majors remained under pressure, situation reversed in Europe.

Dollar, that found support from some FED’s member hawkish comments regarding start rising rates and unwinding quantitative easing despite sluggish employment and to prevent inflationary pressure, had been short lived, as market players believe is unlikely for the FED to change current economic policy for the time being.

Both Euro and Pound are higher in Europe, even breaking above strong resistance levels; daily close at current zones or even higher, will keep dollar under strong pressure.

Euro is above 1.4565, 38.2% retracement of the last daily fall, suggesting further rises despite concerns about Greece's budget problems or data showing that Germany's economy shrank by a large 5% last year.

Pound is also up on increasing speculation on a rate hike, approaching to the 1.6300 area, and rising for a fourth day against the dollar, its longest run of gains since November. Gbp found support after Bank of England policy maker Andrew Sentance was cited as saying interest rates may have to increase this year. Also, manufacturing output remained unchanged for the second consecutive month in November, thus 5.4% down on the year.

What to expect

U.S. stock are set to open unchanged today, after some disappointing earnings report earlier in the week; market has been showing a degree of hesitation this week, that lead to choppy trading; however, weak employment data past Friday is still weighting on greenback, that slowly but firmly is losing ground against major rivals since early morning.

Market is seeking for a direction, and general sentiment suggest dollar will be the overall loser in that game. Today’s technical close could well confirm that bias.

These are the short term levels to watch:

EUR/USD 1.4620 1.4530

GBP/USD: 1.6310 1.6240

USD/CHF: 1.0200 1.0135

USD/JPY: 91.70 91.05

AUD/USD: 0.9270 0.9200

USD/CAD: 1.0400 1.0310

Published on  Wed, Jan 13 2010, 14:07 GMT

U.S. Update: Still no definitions

Tue, Jan 12 2010, 14:10 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

In a quiet Asian session, greenback rose against some higher- yielding currencies after China signaled a move toward raising interest rates favoring demand for the safety of the U.S. currency. Japanese yen also rose in Asia, as risk aversion slightly returned to market.

Dollar extended its rally, founding supports after Peng Junming, an official from China Investment Corporation's asset allocation department, said that the dollar "is at its bottom,” suggesting there will be lithe space for the dollar to drop further.

Early Europe, majors stayed ranging, with Pound gaining some ground after the U.K.'s seasonally adjusted deficit on trade in goods and services fell to GBP 2.9 billion in November from GBP 3.1 billion in October, with November exports jumping to a 13 months high. That helped to narrow the UK's trade deficit with the rest of the world to £6.78bn, from £7.02bn in October 2009. The trade gap with the European Union widened to £3.75bn, the largest since January 2008.

Later, U.S. Trade figure showed deficit widened more than expected in November, as stronger consumer and manufacturer demand pushed imports to the highest level in nearly a year: the monthly trade gap grew 9.7 percent to $36.4 billion, from an upwardly revised estimate of $33.2 billion in October. The report also show that the oil volume imported was the lowest in more than 10 years, sending USD/CAD to the 1.0400 level, as Canada Trade Balance printed an unexpected deficit of 0.3B against an expected surplus of 0.8B.

What to expect

Stocks are set to open lower in the U.S., losing ground since early European morning, and accelerating after the data. In general, dollar is in favor as some risk aversion seems to be hitting the market.

Gold is down at the $ 1145/oz area, while crude barrel fell to $ 81, after the data, also supporting further dollar strength due to risk aversion despite Euro remains around 1.4480 since the past 4 hours. Only Japanese Yen is seizing the chance to regain the upside, also favored by the seasonally repatriation ahead of Japan’s fiscal year close in March

These are the short term levels to watch:

EUR/USD 1.4530 1.4440

GBP/USD: 1.6160 1.6090

USD/CHF: 1.0200 1.0135

USD/JPY: 91.70 90.80

AUD/USD: 0.9260 0.9170

USD/CAD: 1.0400 1.0350

Published on  Tue, Jan 12 2010, 14:11 GMT

U.S. Update: Dollar weak with no rate hikes at sight

Mon, Jan 11 2010, 15:28 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Greenback started the Asian session in a weak tone that extended during European session as past Friday unemployment data send away any small chance of a rate hike in the U.S. this first semester of the year.

Early Europe dollar fall extended across the board except against Japanese yen, that remained consolidating in range; crude barrel reached the $ 84 level, while gold rose above $ 1160, putting further pressure on greenback.

Risk appetite was also exacerbated by China positive perspectives: the exports grew 17.7% last month from a year earlier, the first increase in more than a year, and imports rose to a record, adding momentum to China’s growth, contributing about 7.5% points to growth in GDP.

With no much data early Europe, Switzerland's retail sales that slipped by a seasonally adjusted 1.7% in November, and a 0.6% on the YoY reading, were just enough to halt Swissy appreciation that reached the 1.0135 level against dollar holding a strong tone.

What to expect

Wall Street opening to the downside reverted risk appetite rallies, and majors are giving up some ground during current American session. With no more data for today, expect majors to consolidate past Friday’s gains against dollar; still Euro and Pound are far from confirming an upside continuation in the long term, and current movements could be consider corrective, as long as EUR/USD remains under 1.4565, and GBP/USD under 1.6250 area.

These are the short term levels to watch:

EUR/USD 1.4565 1.4440

GBP/USD: 1.6160 1.6090

USD/CHF: 1.0200 1.0135

USD/JPY: 92.80 92.10

AUD/USD: 0.9320 0.9260

USD/CAD: 1.0350 1.0260

Published on  Mon, Jan 11 2010, 16:47 GMT

U.S. Update: Dollar stronger ahead of Payrolls

Fri, Jan 8 2010, 12:18 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

As usual before Payrolls, almost nothing happened in the Asian session: majors remained range bound in tight ranges, with USD/JPY testing the 93.75 area and retreating after Japan’s new finance minister toned down his rhetoric about a weaker domestic currency, cooling speculation that Tokyo might act to push its currency higher if deemed necessary. Yet pair managed to hold the 93.00 level for most of the session as well as during early Europe.

Data has been quite relevant in Europe today, showing that German Industrial Production rise under expectations, to 0.7% against 1.1% expected; French trade Balance show a wider deficit of -5.3B against -4.4B previous month, while euro zone unemployment rate rose to 10.0% reaching the same level than U.S. one. Not a minor data. Euro remained under pressure most of the European morning, testing 1.4290 area, only to rebound slightly back above 1.4300.

Pound regained the upside, after PPI show a stronger than expected reading: U.K. producer prices jumped more than twice as much as economists forecast in December, a sign the economy is picking up. The cost of goods at factory gates rose 0.5% from November, sending GBP/USD to test 1.6030 area, where pair settle awaiting for U.S. data.

Regarding stocks, Nikkei 225 close the day positive, and while European markets are fighting to hold in green, U.S. futures are slightly up before the opening. Gold fell and quotes at $ 1125/oz, having tested the $ 1120 area. Oil however remains well bid above 82.00.

Finally, Canada employment data come out well under expectations. The country lost 2.6K jobs against an expected rise of 20.2K increase, while unemployment rate remained at 8.5%. USD/CAD jumped 70 pips to the upside, dragging dollar higher across the board.

What to expect

NFP are expected around -3K from -11K in November, yet there is lots of speculation of a positive reading for the first time since 2007. Meaning market has too high expectations: a bad reading could tear apart dollar. An important thing to consider is the unemployment rate: is expected around 10.1% from 10.0% in November and 10.2% past October. Pay attention to any number above 10.3% or under 9.9% as if unemployment rate changes that much could lead the way; past month revisions could also me meaningful.

These are the short term levels to watch:

EUR/USD 1.4365 1.4270

GBP/USD: 1.6060 1.5970

USD/CHF: 1.03400 1.0320

USD/JPY: 93.40 92.80

AUD/USD: 0.9200 0.9070

USD/CAD: 1.0400 1.0330

Published on  Fri, Jan 8 2010, 12:19 GMT

U.S. Update: Dollar attempting to come back

Thu, Jan 7 2010, 14:02 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session started with risk appetite in full shape after Australian Trade Balance and Retail Sales come way above expectations: AUD/USD raised strongly dragging dollar lower against major rivals, except for Japanese Yen. But it did not last:  a number of bad news, including a surprise rate hike in China on its three-month bills for the first time since August, intensifying its grip on liquidity a day after it promised to keep credit growth in check, and a return to Dubai credit issues, supported dollar gains since mid Asian session that extended over European one.

Early news in Europe show German Retail Sales fell 1.1% m/m while previous month reading was revisited to the downside, printing 0.0%. No good news for Euro that tested the 1.4365 support zone. Later, German Factory Orders were revisited to the upside previous month, form -2.1% to -1.9%, yet last month increase was just of about 0.2% against 1.6% expected. Euro extended the fall to 1.4330 zone, and remained under pressure.

Switzerland's consumer price index or CPI rose 0.3% year-on-year in December after recording zero growth in November. On a monthly basis, the CPI fell 0.2% in December after rising at 0.2% on November. Moreover, the statistical office said the average inflation rate for the year 2009 was negative 0.5%, supporting previous data suggesting that the Swiss economy is not so robust after all. USD/CHF regained the upside and approached to 1.0365 resistance zone, while EUR/CHF that fell to 1.4765 area during Asian session, regained the 1.4830 level.

Meanwhile, in the U.K., news that two ex-cabinet ministers tried to organize a secret ballot on Gordon Brown's leadership sent Gbp down before BOE’s policy statement, to the 1.5910 area. Later and as widely expected, the Bank of England left its key lending rate unchanged at a record low 0.5%. The central bank also announced no change to its 200 billion pound asset purchase program, with almost no reaction in Fx market.

The Pound was already under pressure since early this week on fears that the country will face a downgrade after the election unless the next administration is able to come up with a plan to reduce the budget deficit created by Gordon Brown's government.

Gold and oil lost past sessions upside momentum and fell from yesterday’s highs, thus oil remains quite strong ahead of U.S. opening, while gold hovers around the $ 1131/oz level.

Finally, new Japanese Finance Minister Naoto Kan clearly supported a weaker yen, sending USD/JPY to the upside; as expected rally was halted at the 93.40 strong resistance area.

U.S. unemployment data came out better than expected, with jobless claims rising just 1K to 434K against 433K previous week and the 449K expected. Dollar spiked even higher, with EUR/USD testing levels under 1.4300 and GBP/USD reaching 1.5895 low, yet the movement did not last and both pairs rebound slightly to the upside from that zone.

What to expect

Ahead of U.S. opening, American indexes head for a negative opening, with futures down since yesterday’s close. Dollar risk aversion rally seems a bit over extended at this point, and seems hard to see greenback extending gains ahead of tomorrow’s employment data. Some corrections are expected ahead, yet today, I’m not really sure if market will keep on hold as it usually does previous to U.S Payrolls.

These are the short term levels to watch:

EUR/USD 1.4365 1.4300

GBP/USD: 1.5965 1.5850

USD/CHF: 1.0365 1.0280

USD/JPY: 93.40 92.80

AUD/USD: 0.9230 0.9150

USD/CAD: 1.0360 1.0290

Published on  Thu, Jan 7 2010, 14:03 GMT

U.S. Update: Dollar extends the fall

Wed, Jan 6 2010, 14:13 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session saw greenback and the euro up against the yen on buying by Japanese pension funds, as rising commodity prices and recent strong U.S. data encouraged purchases of higher-risk currencies.  Pound, that has been under pressure most of this week, remained mostly range bounded with the upside capped by the 1.6060 level, while Japanese yen also fell against other rivals after the resignation of the Finance Minister Fujii.

Early news in Europe send EUR/USD to test the 1.4280 support, mounted on worse than expected data: Industrial New Orders slump to -2.2% from a previous reading of 1.7% and PPI print a 0.1%, keeping the European currency under pressure this morning, along with comments of ECB member Stark about the European Union won’t come to Greece’s rescue. However, pair quickly rebounded at that level, to trade back at the 1.4360 area. EUR/USD has spent most of the session trading in a tight 40 pips range, unable to define a clear continuation.

Meanwhile Japanese Prime Minister signaled Naoto Kan as new Japanese Finance Minister that in contrast to his predecessor Hirohisa Fujii, has been expressing his preference for a weak yen. That helped to keep Japanese yen mostly down against major rivals.

U.S data show private-sector shed 84,000 jobs in December, according to the ADP employment report released a few minutes ago. It was the fewest jobs lost since March 2008, yet the private-sector has shed jobs for 23 months in a row. In November, a revised 145,000 jobs were lost compared with the 169,000 originally reported; news triggered a risk appetite rally that send gold strongly above $ 1130/oz and U.S. futures higher, while dollar lost ground against major rivals. However, the spike did not last and majors remain trading inside today’s tight ranges, except maybe for AUD and CAD, both continuing with it’s strong upside rally.

What to expect

Market will likely wait for next U.S. data to be published in the next hours, that include a quite positive reading for the Non manufacturing ISM and later the FOMC Minutes; weather data will favor dollar or risk appetite is something we will need to wait and see.

These are the short term levels to watch:

EUR/USD 1.4385 1.4320

GBP/USD: 1.6060 1.5950

USD/CHF: 1.0365 1.0280

USD/JPY: 92.50 91.70

AUD/USD: 0.9180 0.9070

USD/CAD: 1.0430 1.0330

Published on  Wed, Jan 6 2010, 14:14 GMT

U.S. Update: Risk game is back

Tue, Jan 5 2010, 14:21 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar extended its fall against most rivals during Asian session, except Gbp that remained under pressure. Yen rose against all majors, on speculation some of the nation’s exporters took advantage of its declines to covert overseas earnings back into their own currency. Yen reached the 91.60 area against dollar, while GBP/JPY sunk to the 147.00 area after reaching the 150.80 level past Monday.

Dollar downside pressure was also favored by commodities: a rally in oil, gold and stocks at the start of the year also helped demand for riskier assets, with oil around $82 a barrel, while gold is up 0.8%. Wall Street futures along with European stocks were up since opening, also shitting greenback.

 Early data show   German unemployment fell by 3,000 to 3.421 million in December, the fifth consecutive month of decline, while the number of job vacancies rose further; as expected, the unemployment rate remained stable at November's 8.1%. Also, consumer prices in the euro zone picked up steam again in December, rising 0.9% on the year the strongest figure seen since February 2009. EUR/USD rose to the 1.4485 area before retreating back near 1.4400 that keeps holding the downside pretty well before U.S. opening.

Pound on the contrary, was undermined by the construction PMI index that rose to 47.1 in December from 47.0 in November, still under the 50 mark that separates growth from recession. GBP/USD fell to 1.5980, losing last day’s upside momentum, to consolidate around 1.6000.

What to expect

Dollar managed to recover some ground late Europe, as oil and gold gave up some ground, thus market players likely to be waiting for U.S. Pending home expected negative in about an hour. As risk remains the market driver today, a bad reading could trigger some risk aversion and favor greenback, while a better than expected reading can also favor dollar as confidence in the American recovery resumes.

These are the short term levels to watch:

EUR/USD 1.4460 1.4365

GBP/USD: 1.6060 1.5970

USD/CHF: 1.0365 1.0280

USD/JPY: 92.10 91.40

AUD/USD: 0.9180 0.9070

USD/CAD: 1.0430 1.0330

Published on  Tue, Jan 5 2010, 14:22 GMT

U.S. Update: Commodities pushing dollar down

Mon, Jan 4 2010, 13:57 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Since Asian opening, dollar has been under pressure, thus fall accelerate after European opening and strong rise in commodities that surged fueling demand for riskier assets. Oil topped $81 a barrel, while silver and copper jumped more than 2% on the back of stronger manufacturing data from China and India. European equities are higher, while gold keeps hovering under $ 1120/oz.

Commodity currencies such as Canadian and Australian dollar are leading the gains, with the dollar below the key C$1.04 level and approaching to $0.9100 against the last.

Meanwhile Euro received some support by early data, showing Europe’s manufacturing industry expanded for a third month in December, as the euro zone's purchasing managers index for manufacturers rose to 51.6 from 51.2, as initially estimated, hitting the highest level in 21 months.

Swiss Franc remains strong, as EUR/CHF hit a fresh 9-month low of 1.4809 before rebounding to trade as high as 1.4880, still under strong bearish pressure. The bounce was driven by fears that the Swiss National Bank would intervene to stop the franc's rise, although there wasn't any sign that the central bank was in the market, and Swissy trend remains bullish against both, Euro and Dollar.

Regarding the U.K. manufacturing activity also rose, hitting a 25-month high in December, with the PMI reaching 54.1 in December, up sharply from 51.8 in November. In addition, the average reading for Q4 2009 as a whole was the highest since the final quarter of 2007. Also, mortgage approvals rose at their fastest pace since March 2008 in November and net mortgage lending grew by more than expected, Bank of England figures showed on Monday.

In general dollar remains under pressure ahead of U.S. opening, with U.S. stocks futures also up, indicating a strong opening for Wall Street.

What to expect

Waiting for U.S.  opening and U.S manufacturing PMI, market players expect that manufacturing  probably expanded at a faster pace in December, capping a 2009 rebound that helped pull the U.S. out of recession; a positive reading above or close to the 54.1 expected, could halt dollar fall during next session, and favor some greenback recovery across the board.

These are the short term levels to watch:

EUR/USD 1.4460 1.4365

GBP/USD: 1.6250 1.6130

USD/CHF: 1.0365 1.0280

USD/JPY: 92.80 92.10

AUD/USD: 0.9100 0.9030

USD/CAD: 1.0430 1.0360

Published on  Mon, Jan 4 2010, 13:58 GMT

U.S. Update: Dollar retreats in tiny trade

Thu, Dec 31 2009, 14:07 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite half Asian markets were closed, stocks market managed to close to the upside, as market players seize the change to close the year positive, sending dollar slightly down across the board, except against Japanese yen. In general, market remained in tight ranges, moving inside this week values; profit taking after past Wednesday dollar rally, could also supported greenback fall.

Gbp is the shining star today, rising 4 full cents since yesterday’s low of 1.5831 against dollar, and holding the bullish momentum  against other rivals: GBP/JPY has reached the 150.00 level, in Europe, a 6 weeks high.

Pound remains favored due to early U.K. data that showed were more willing to lend to home owners and companies in the final three months of 2009, while default rates on unsecured consumer loans fell unexpectedly, while house prices rose for the eight straight months in December by 0.4%. As a result, house prices have risen sharply to an average price of GBP162.116 in December from an almost five year low of GBP147.746 in February this year, although the Nationwide Building Society warned that prices may not increase much further in 2010.

Dollar had a bearish tone most of the European session, despite China's forex regulator said that the U.S. dollar will continue to be a key reserve currency in the near term and the main asset in China's foreign-exchange reserves, while diversifying the country's reserves "appropriately" will help spread out risk.

In a press conference, ECB’s Bini Smaghi Governor stated that euro zone unemployment level is expected to continue rising in the coming months, while sectors like construction, cars, finance will never return to pre-crisis growth levels; EUR/USD spent the session consolidating early winnings around the 1.4410 level.

European stocks are marginally higher, continuing the positive tone seen in Asia and the U.S., as investors looked forward to 2010 with a degree of confidence in the global economic recovery; oil reached the $ 80 per barrel, while gold regained the $ 1103 level after approaching past Wednesday to $ 1080 support.

What to expect

After Chicago PMI’s labor sub-component moved into expansionary territory for the first time in a long time, and FED clearly focusing on labor market to decide either or not to remove the stimulus measures only U.S. data today show weekly unemployment claims fell 22K to 432K from a revised 454K past week, triggering a dollar spike across the board.   

These are the short term levels to watch:

EUR/USD 1.4410 1.4365

GBP/USD: 1.6250 1.6185

USD/CHF: 1.0320 1.0280

USD/JPY: 92.80 92.10

AUD/USD: 0..9000 0.8940

USD/CAD: 1.0520 1.0460

Published on  Thu, Dec 31 2009, 14:08 GMT

U.S. Update: Dollar extends rally

Wed, Dec 30 2009, 14:12 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar remains quite positive since past Asian session, as appetite for riskier assets dilutes across the world: Asian stocks ended mostly negative, while Europe and U.S. futures are down since early Europe.

Gold also gave up ground, quoting around the $ 1090/oz level, favoring dollar gains. The metal has a monthly low at $ 1074.50, so that’s the support level to watch today, as $ 1103 area is first strong upside resistance zone.

Early data in Europe, show loans to households and companies in Europe posted their third straight annual decline in November as the economic slump curbed credit demand and made banks more reluctant to lend. Loans to the private sector fell 0.7% from a year earlier after a drop of 0.8 %  in October, the European Central Bank said today.

Also, Switzerland's economic recovery seems to be losing momentum, according to the KOF research institute, after its leading growth barometer posted only a small rise in December; the KOF indicator rose to 1.68 in December from 1.62 in November, the KOF Swiss Economic Institute said. However, Swiss Franc remained strong most of the European morning, with  EUR/CHF losing ground quickly, back around the 9 months low of 1.4855.

EUR/USD remains under pressure, capped by the 1.4365 area, and pointing for a break under 1.4300, while Pound rebounded slightly to the upside after posting an intraday low of 1.5831.

Japanese ye holds its negative tone across the board, as reached the 92.40 area where the pair remains consolidating ahead of further rises. Commodity currencies erased almost all past sessions winnings, and return to the negative bias against greenback.

What to expect

Chicago PMI to be release after Wall Street opening, is expected around 55.2 points, from a previous month reading of 56.1.  A better than expected reading should favor further dollar gains across the board, more strongly than a negative one; dollar could fall only if the reading come out much worse than expected. Remember fundamental news tend to favor trend rather than generate it. Also, tiny volume likely to exacerbate market reactions.

These are the short term levels to watch:

EUR/USD 1.4365 1.4275

GBP/USD: 1.5920 1.5830

USD/CHF: 1.0400 1.0320

USD/JPY: 92.80 92.10

AUD/USD: 0.8940 0.8870

USD/CAD: 1.0520 1.0460

Published on  Wed, Dec 30 2009, 14:13 GMT

U.S. Update: Dollar still under pressure, commodities lead the way

Tue, Dec 29 2009, 13:45 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session remained quiet with major crosses ranging following thin trading past American session, yet with dollar slightly up against Japanese yen, as hedge funds bought the greenback, betting that rising long-term U.S. interest rates could prompt global investors to purchase securities denominated in the U.S. currency.

Dollar is down since European opening, particularly against commodity currencies, that rose above key levels: AUD/USD regained the 0.8940 area, 76.4% retracement of the monthly fall 0.98/0.60, while USD/CAD managed to break under 1.0400, and remains trading under that level, base of the daily range of the last two months.

Thin year trading keeps dollar under pressure across the board, with EUR/USD reaching the 1.4445 level before retreating to 1.4420 support, while Pound reached the 1.6060 area early Europe, after BOE report individuals injected a net total of GBP 4.9 billion into housing equity in the third quarter compared with a revised net injection of GBP 6.9 billion in the second quarter. In the third quarter of 2008, the net injection was GBP 5.8 billion.

Still GBP/USD fell back to the 1.6000 area, where the pair is consolidating ahead of U.S. data later in the American session.

Another early report show Swiss consumption rose to a 14-month high in November, climbing to 1.28 in November, its highest level since September 2008 and up from 0.88 in October. Swiss Franc remains one of the strongest currencies of the board, quoting under 1.0300 against dollar, and reaching a fresh 9 months low against Euro at 1.4850. Despite market expectations, SNB is still not taking measures on such EUR/CHF appreciation, and this is no doubts, another factor weighting against greenback.

Stocks markets are up around the world, with many indexes hitting fresh 2009 highs, spurring investor appetite for riskier assets, to the detriment of the U.S. dollar.

Another important announcement early today come from the FED, that proposed a program to sell term deposits to banks to absorb some of the banking system’s $1 trillion in excess reserves now threatening to accelerate inflation as the economy recovers. The plan, subject to a 30-day comment period, “has no implications for monetary policy decisions in the near term,” the central bank said yesterday in a statement released in Washington.

What to expect

Market players likely to be waiting for house price data to be release in a couple of minutes, and U.S. consumer confidence in about an hour. Dollar could change bias and start gaining the lost ground if data is better than expected, thus nothing can be take for granted in this Christmas and New Year's holiday breaks; U.S. equities are set to open higher, while  gold remains unchanged around the $ 1105/oz level. Remember, thin trading conditions tend to exacerbate market moves.

These are the short term levels to watch:

EUR/USD 1.4460 1.4380

GBP/USD: 1.6010 1.5920

USD/CHF: 1.0365 1.0280

USD/JPY: 91.85 91.30

AUD/USD: 0.9015 0.8940

USD/CAD: 1.0400 1.0350

Published on  Tue, Dec 29 2009, 13:46 GMT

U.S. Update: Holidays keep dollar under pressure

Mon, Dec 28 2009, 13:48 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Market is lithe changed since past Friday’s close amid thin trading and holidays around the world: past Asian session, Australia and New Zealand markets remained closed, thus regional stocks market ended higher, with Nikkei 225 up 1.3% supported by firm USD/JPY and Japanese industrial production data, that rose to 2.6% on monthly bases, compared to 0.5% increase past month, the fastest pace in 6 months. Jpy fell against almost any major rival despite in tight ranges. 

China has been in focus also during Asian session, after industrial companies’ profits surpassed pre-crisis levels in the past three months, underscoring a strengthening economic rebound in response to record fiscal stimulus and credit growth. China’s benchmark stock index rose to its highest level in almost two weeks on optimism earnings will keep accelerating as Premier Wen Jiabao maintains the stimulus measures. Could market keep watching growing imbalances between east and west during next year? Seems possible. However and despite Prime Minister Wen said fiscal policy will remain 'proactive' and monetary policy 'moderately loose', further comments from Chinese officials that they may move to tighten lending and restrain China's property market, kept market on hold, waiting for further clues.

European session with U.K. on holidays, is passing by with a slightly bearish dollar as gold and oil recover some strength: oil futures approach to $ 80 a barrel, pushing USD/CAD lower close to the 1.0400 area, base of past months daily range; gold regained the $ 1110/oz area, and consolidates just above that level.

EUR/USD remains capped by the 1.4410/20 area, while Pound seems unable to retest 1.6000 level; USD/JPY holds in a quite tight 40 pips range just past week high of 91.85. Meanwhile Swiss Franc remains strong, reaching the 1.0320 support against greenback, while quoting at 9 months low against Euro: EUR/CHF keeps falling quoting around 1.4880; remember past 3 months SNB non official intervention took place by the end of the month.

What to expect

Despite tiny market conditions that would likely extend during this week, market is speculating on U.S. companies are ready to bring back earnings on overseas assets before the year ends, and that last-minute repatriation by U.S. firms before year-end would likely favor greenback after Wall Street opening.

Supporting dollar gains after U.S. opening, are also  U.S. reports due tomorrow,  that include an expected strong rise in Consumer confidence; if so, market will understand that the world’s largest economy is recovering, backing the case for the Federal Reserve to withdraw emergency stimulus measures.

These are the short term levels to watch:

EUR/USD 1.4420 1.4350

GBP/USD: 1.6010 1.5920

USD/CHF: 1.0365 1.0280

USD/JPY: 91.85 91.30

AUD/USD: 0.8900 0.8850

USD/CAD: 1.0480 1.0400

Published on  Mon, Dec 28 2009, 13:48 GMT

U.S. Update: Dollar back up

Thu, Dec 24 2009, 14:21 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Slow Asian session as Christmas and Year End holidays spread,  majors remained mostly quiet and range bound thus yen managed to appreciate slightly against greenback, reaching again the 91.30 support area.

Dollar extended its fall across the board, still movement remains limited and still corrective of this December run higher. With no data early Europe, as half the region markets are closed, Euro seize the chance to recover to the 1.4420 area, supported by  Greek parliament has approved a deficit-cutting budget for next year.

Meanwhile Pound managed to regain briefly the 1.6000 level that quickly gave up after U.S. data:

Unemployment claims fell to 452K from 480K previous week, While Durable Orders rose to 0.2%, market was expecting a 0.6% rise, yet reading is good after past month -0.6%, while the Core reading reach 2.0% far above expectations. Dollar jumped to the upside across the board, while U.S. futures are higher, and gold under 1100.

What to expect

Wall Street is expected to open higher, as futures are higher in this half trading day. Dollar fall past sessions could be consider corrective, and seems bullish trend is ready to come back despite the low volume.

These are the short term levels to watch:

EUR/USD 1.4400 1.4320

GBP/USD: 1.6010 1.5920

USD/CHF: 1.0440 1.0365

USD/JPY: 91.85 91.30

AUD/USD: 0.8860 0.8720

USD/CAD: 1.0520 1.0430

Published on  Thu, Dec 24 2009, 14:23 GMT

U.S. Update: Tiny market favors corrections against greenback

Wed, Dec 23 2009, 15:24 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

After tight ranges during most of Asian and European sessions, market woke up with Wall Street opening; U.S. data has been quite disappointing today, as despite spending by U.S. consumers increased in November for the sixth time in seven months 0.5% and following a 0.6%  gain in October, while incomes climbed 0.4%, the biggest increase since May, reading were under market expectations, triggering a shy corrective movement against dollar that was exacerbated by new home sales: purchases of new homes in the U.S. unexpectedly fell last month, dropping 11% to an annual pace of 355,000 after a 400,000 rate in October that was lower than previously estimated.

EUR/USD break above 1.4300, while Swiss Franc lost the 1.0400 level; both currencies seem ready to extend the rally during next hours, while Japanese yen recovery against dollar remains capped by the 91.20 area.

Pound remains weak unable to leave the range 1.5920/1.5980 the pair has been trading for the past two sessions.

Gold is recovering also, quoting above the $ 1090/oz level after hovering most of the day 10 dollars lower. Still corrective, movement is the well deserved corrective movement greenback needed, exacerbated by tiny volume.

Most interesting pair right now, is EUR/CHF, showing clearly Euro weakness: the pair is around 1.4884, at 9 months lows and pushing lower. Could we have some intervention there today? Seems possible still, unlikely as hours go by, but I don’t think SNB will let the pair extend to much to the downside.

Under 1.4870, supports there lie at the 1.4830 area, and 1.4760. Resistances for the pair lie at 1.4920, and 1.4970 area, no doubts will be interesting to watch market reactions there.

What to expect

Expect current dollar bearish momentum to extend across the board, during current session, and market conditions to get thinner as we approach to Christmas.

These are the short term levels to watch:

EUR/USD 1.4340 1.4220

GBP/USD: 1.6010 1.5920

USD/CHF: 1.0440 1.0365

USD/JPY: 91.85  91.15

AUD/USD: 0.8800 0.8720

USD/CAD: 1.0550 1.0470

Published on  Wed, Dec 23 2009, 15:26 GMT

U.S. Update: After U.S. Data

Tue, Dec 22 2009, 16:02 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar trend remains intact despite the low volumes of this week, favored by gold that continue losing ground. After U.S. opening the metal approaches to the 1080 level, where some market rumors say that China and India could come back to buy to increase their reserves. Thus with the metal under the 61.8% retracement of last daily rally around 1102, strong resistance level ahead, I would expect further downside pressure there. If 1050 gives up, maybe we will need to get ready for more falls.

Early data today, show German consumer confidence declined for a third month : market-research company GfK AG said sentiment index for January, based on a survey of about 2,000 people, fell to 3.3 from a revised 3.6 in December. Meanwhile, Moody’s became the last of three major credit rating services to downgrade Greece’s debt. Traders were not surprised by the news, yet is another factor playing against Euro these days.

In the U.K., economy shrank less than previously estimated in the third quarter as a jump in construction and fixed investment brought the longest recession on record closer to ending. GDP fell 0.2% from the second quarter, compared with a previous measurement of a 0.3% drop, the Office for National Statistics said today in London. However, Pound lost the 1.6000 level and spent most of the European session struggling with the level, finally lost after U.S. opening

Regarding the U.S. data under estimations was unable to undermine the dollar strength. GDP was revised lower for a second time, suggesting the economic rebound was far less than originally reported and giving less momentum as Q4 began. Q3 real GDP was revised to 2.2% from 2.8%, and well below the original estimate of +3.5%. But Existing Home Sales rose 7.4% to a 6.54 million seasonally adjusted annual rate, the National Association of Realtors reported Tuesday. The sales pace was the highest since February 2007 and was the third straight large increase. Sales are up 28% since August. Finally Richmond manufacturing indexes fell to -4 from a previous reading of 1.

What to expect

Dollar strength will extend supported by sentiment, despite currency being technically overbought against major rivals. Thin volume seems to be exacerbating only trend favorable movements, so is not the best time for attempting counter trend trades hoping for a correction. Pullbacks and entering with the trend, remains in favor these days.

These are the short term levels to watch:

EUR/USD 1.4310 1.4180

GBP/USD: 1.6020 1.5910

USD/CHF: 1.0510 1.0440

USD/JPY: 92.00 91.30

AUD/USD: 0.8800 0.8720

USD/CAD: 1.0620 1.0550

Published on  Tue, Dec 22 2009, 16:02 GMT

U.S. Update: Thin pre Christmas trading

Mon, Dec 21 2009, 14:08 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Thin pre Christmas trading is here, and volume remains mostly thin since Asian opening, with greenback still favored despite ranging across the board. Swiss Franc appreciation is no doubts the main driving factor of markets.

EUR/CHF reached a 9 months high early Europe, triggering a “non official” SNB intervention in markets, that drove the pair higher, thus the bearish momentum persists. EUR/USD fell to 1.4280 at that time, still recovered to current 1.4350 zone, still holding the bearish trend; current movements should be considered corrective, as Euro will likely remain to be hurt by renewed risk aversion as central banks around the world tighten monetary policy. Also sentiment in the euro zone will be damaged by the fiscal troubles of its weakest members, while foreign central bank reserve managers have kept away from buying the euro on dips after the single currency reversed this month.

German Finance Ministry, stated also early morning that the euro's strength against the dollar is a burden for German exporters but foreign trade may have boosted gross domestic product in the fourth quarter nonetheless, as German exports in October reached their highest level in the entire year, while imports fell, meaning a favorable economic impulse from foreign trade in the fourth quarter.

Pound also has been under pressure since early Asia, unable to regain the 1.6160 resistance area, and testing levels under 1.6100. Hovering around that zone,  pair also holds a general bearish bias thus market seems to forget both Pound and Yen this European session, and mostly focusing on euro, swissy and commodity currencies:

Gold and Oil are slightly up, today, with gold at $ 1118/oz, and oil around $ 75 a barrel; OPEC reaffirmed earlier today their decision of keep production unchanged, so expect the commodity to remain ranging between 70/80 dollars per barrel.

What to expect

With no reports due today during U.S. session, stocks likely to be the market driver again. Asian share markets close to the downside, yet Europe, as well as U.S. futures remain positive, suggesting downside will remain limited.

Dollar corrective movement could extend so, as due to thin markets, movements could be exacerbated during U.S. session.

These are the short term levels to watch:

EUR/USD 1.4410 1.4300

GBP/USD: 1.6160 1.6050

USD/CHF: 1.0440 1.04365

USD/JPY: 90.75 90.10

AUD/USD: 0.8910 0.8830

USD/CAD: 1.0620 1.0510

Published on  Mon, Dec 21 2009, 14:09 GMT

U.S. Update: The trend remains the same

Fri, Dec 18 2009, 14:02 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session started with a run to safe havens, triggered by some rumors of a coup in Pakistan, lately denied by government. Those rumors send EUR/USD to test the 1.4300 level, favoring not only dollar and Japanese yen, but also Swiss Franc. The currency fell to a multi-weeks low against Euro, reaching 1.4910 before rebounding to the upside, still capped by the 1.50 zone. Chances of intervention there coming from SNB are big, particularly a weak after last the bank said they won’t tolerate such appreciation.

Meanwhile, the dollar fell versus the yen as BOJ failed to extend previous month QE policy, despite signs that they may continue with some easing policy to tackle deflation. USD/JPY reached an intraday low around 89.60 before regaining the upside during European session.

Early European data show German PPI rose to 0.1%, less than expected, around 0.2% while the IFO survey show German business sentiment improved more than expected in December, as the assessment of current conditions topped analysts' forecasts, the Ifo institute said Friday. IFO’s business climate index rose 0.8 point to 94.7, the highest level since August 2008.

Finally euro zone Trade Balance rose to a seasonally adjusted EUR 6.3 billion from a revised EUR 4.3 billion in September, the Eurostat reported Friday, while Current Account fell under expectation, to -4.6B.

Asian share markets closed to the downside, while Europe remains positive. American futures are down, as well as gold, fighting the $ 1102/oz area.

What to expect

With no  more fundamental news to be publish today, and volume getting thinner ahead of Christmas and New year holidays, American session should not gave much surprises: trend remains dollar positive in general, with Euro particularly weak; this are the short term levels to watch:

EUR/USD 1.4410 1.4300

GBP/USD: 1.6200 1.6120

USD/CHF: 1.0480 1.0400

USD/JPY: 90.75 90.10

AUD/USD: 0.8910 0.8830

USD/CAD: 1.0730 1.0620

Published on  Fri, Dec 18 2009, 14:03 GMT

U.S. Update: Dollar ready to extend the rally

Thu, Dec 17 2009, 14:08 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Optimism over the U.S. economic recovery pushed dollar higher since past Asian session, after FOMC statement on Wednesday, slightly more hawkish than usual, when FED raised expectations that the end of the central bank's crisis policy is approaching; with dollar strength, bad data coming from other major’s economies, trigger the break out rally we are seeing before U.S. opening:

The Pound was hit hard by a disappointing set of U.K. retail sales numbers, that dropped 0.3% on the month after rising 0.6% in October, the Office for National Statistics said today in London. GBP/USD hit an intraday low of 1.6080, and despite a shy upside corrective movement, pair remains consolidating barely above that level, waiting for U.S. data.

The Euro weakened after the ECB’s indirect assistance to the Greek government, after S&P Corp. downgraded Greece’s credit rating for the second time this year. Fears about more credit issues in the euro zone banking system send EUR/USD to 1.4330, where the pair keeps consolidating also

USD/JPY on his own, remains above the 90.00 level, after failing to break above 90.30 area.

What to expect

With gold at 1115, barely 5 pips away from this month low, and majors at daily/ several week lows against dollar, this could well prove to be a turning point for the U.S. currency in the longer-term, despite short-term gains seems limited for today, as dollar is quite overbought particularly against European rivals. Market is waiting for U.S. employment data and Philadelphia Manufacturing index to be release in about an hour.

EUR/USD 1.4460 1.4320

GBP/USD: 1.6160 1.5980

USD/CHF: 1.0550 1.0440

USD/JPY: 90.30 89.50

AUD/USD: 0.8940 0.8830

USD/CAD: 1.0770 1.0680

Published on  Thu, Dec 17 2009, 14:10 GMT

U.S. Update: Waiting for the FOMC

Wed, Dec 16 2009, 14:03 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session pass away leaving no much new to past American session, with dollar stronger ahead of today’s FOMC decision, yet majors mostly trapped in ranges, except maybe for Pound, that had resisted dollar strength over the last two weeks.

European session started with more action yet not like yesterday: EUR/USD rose after the PMI reports for the euro zone showed that activity was stronger than anticipated. The composite PMI for the region as a whole came in at 54.2. The forecast had been for the index to rise to only 53.9 from 53.7.

But Pound was the overall winner against greenback during early session, as GBP/USD rose to 1.6365, after U.K. unemployment unexpectedly fell for the first time since February 2008; claims for jobless benefits declined by 6,300 in November to 1.63 million, the Office for National Statistics said in London today.

Early U.S. data show that the cost of living in the U.S. accelerated in November from a month earlier, led by higher prices for energy and medical care, increasing 0.4%, but excluding food and energy costs, the core index was unexpectedly unchanged, sending stocks lower and dollar higher across the board.

At the same time, U.S. current account deficit widened to $108 billion in the third quarter, or 3.0% of GDP while new construction of U.S. houses rebounded in November from a sharp drop in the prior month, as housing starts rose 8.9% in November to a seasonally adjusted 574,000 annualized units.

What to expect

Overall, market is quiet, waiting for FOMC statement. Market players had increasing hopes of a hawkish U.S. Federal Open Market Committee statement, after last weeks’ economic data from the U.S. has come in stronger than forecast, helping the dollar.

Although the Federal Reserve could acknowledge the improved growth prospects, the central bank isn't expected to tighten rates. Either if they sustain the “extremely low, for an extended period”, or not could be the key words to pay attention to. 

While a hawkish statement could support greenback rises, a dovish stone could trigger a rather stronger sell off for greenback.

EUR/USD 1.4620 1.4510

GBP/USD: 1.6380 1.6320

USD/CHF: 1.0420 1.0330

USD/JPY: 90.10 89.10

AUD/USD: 0.9040 0.8930

USD/CAD: 1.0665 1.0520

Published on  Wed, Dec 16 2009, 14:05 GMT

U.S. Update: Dollar up across the board

Tue, Dec 15 2009, 13:49 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

After a more than quiet Asian session, European opening bring a strong dollar recovery across the board, despite news that Abu Dhabi is essentially bailing out Dubai Word. Risk appetite failed to rule markets, while sentiment reversed over the American currency, due to much better data published earlier this month, related to employment and retail sales.

Euro broke lower losing key 1.4620 support, after continued disappointment about the recovery in the euro zone, Greece's failure to come up with a credible debt recovery plan as well as concern about Austria's banking system, and the downgraded in credit ranking suffered also by Spain.

Early news with German ZEW Survey show investors’ confidence declined for a third month in December with the index slipping to 50.4 from 51.1 in November, putting further pressure in the Euro.

Meanwhile in the U.K. inflation accelerated more than economists forecast in November to the fastest pace in six months, with CPI increasing 1.9% from a year earlier, compared with a 1.5% gain the previous month, the Office for National Statistics said today in London. On the month, prices rose 0.3%. News were in line with what finance minister Alistair Darling said  past week, regarding  inflation rate will likely rise next year to about 3% close to the upper government’s limit, before dropping again. That helped to keep Pound slightly stronger against dollar than other currencies, as despite fresh weekly lows against greenback in Swiss Franc, Euro and Yen, GBP/USD remained ranging above 1.6200 far from past week low of 1.6165.

Also, recognition by the Bank of Japan that the Japanese economy is not about to rebound has added to the yen's woes. The deflation government recognized added to a strong currency that harm exports, and the strong recovery in the U.S. economy, is diluting Japanese Yen strength, and the currency likely to resume downtrend sooner than later.

U.S. data trigger almost no reaction in currency markets, thus U.S. futures are plunging before the opening, as well as gold, that hovers just above the 1110 zone.  PPI climbed more than expected, 1.8% for November; that points for a rates hike and market players now it. On contrary, New York Factory index declined to a five months low in December, to 2.6 from 23.5 past November,

What to expect

The dollar is strongly higher across the board, as confidence in the U.S. economic recovery increases and market participants await hawkish comments from the Federal Open Market Committee meeting later today.  European majors are consolidating close to daily lows, yet chances of some consolidation ahead of FEDs’ statement are likely, for the next hours. Levels to watch are as follows:

EUR/USD 1.4620 1.4510

GBP/USD: 1.6310 1.6160

USD/CHF: 1.0440 1.0380

USD/JPY: 90.10 89.10

AUD/USD: 0.9130 0.9040

USD/CAD: 1.0665 1.0520

Published on  Tue, Dec 15 2009, 14:36 GMT

U.S. Update: Waiting for Wall Street

Mon, Dec 14 2009, 14:04 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

After past Fridays’ U.S. retail sales much better than expected, dollar managed to close a quiet positive week across the board, reaching some strong key levels against major rivals. Market continues working to leave for good the inverted correlation we had for almost one year, between stocks and dollar. Still the American currency behavior remains more attached to gold price than stocks, despite sentiment trade has ruled Asian session.

High yielding currencies rose slightly in what could be consider so far a corrective movement after past days fall, as worries about Dubai's debt crisis waned on news that it will get $10 billion in financing from Abu Dhabi to pay off some of the debts of the troubled state-owned conglomerate Dubai World.

However, rally against greenback did not last, and dollar spent most of early Europe regaining the lost ground, despite European indexes and U.S. futures are up. An hour before Wall Street opening, most majors crosses are around past Asian session opening, with EUR/USD hovering around 1.4620, and GBP/USD back under 1.6250 quoting between 1.6210/1.6260.

Japanese yen managed to regain some strength against both Euro and Dollar, as the currency bullish trend remains in place; however, fears over BOJ further intervention movements cap, for now, attempts to run higher. USD/JPY remains consolidating around 88.53.

What to expect

Lack of fundamental news today, will made investors turn to Wall Street and gold for further clues about currencies, with a lot going on there:

Stocks are set to open higher after Dubai secured financing, helping to stem the country's ongoing debt troubles, and Citigroup announced it will repay its bailout funds. Also, Exxon Mobil said Monday it will buy natural gas producer XTO Energy Inc. for $41 billion in a stock and debt transaction.

If rising stocks, will favor or harm dollar, is something that we just will need to wait and see: as commented above, the inverse correlation has been losing steam since U.S. Nonfarm Payrolls, and chances favor dollar rises.

Mostly American session could remain in current consolidative tone, as volume tends to decrease amid Year End and Holidays; here are the most relevant levels to watch for each one of the majors crosses:

EUR/USD 1.4690 1.4610

GBP/USD: 1.6340 1.6210

USD/CHF: 1.0380 1.0300

USD/JPY: 89.10 88.30

AUD/USD: 0.9130 0.9070

USD/CAD: 1.0665 1.0620

Published on  Mon, Dec 14 2009, 14:42 GMT

U.S. Update: After Retail Sales

Fri, Dec 11 2009, 13:41 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Another quiet session in Asia, with majors mostly consolidating at previous days ranges, with the exception of Japanese yen, that lost ground against major rivals, as strong Chinese economic data fueled optimism about the global economic recovery, to the detriment of the safe-haven, Japanese currency.

A timid wave of risk appetite drove the dollar lower and the euro higher in early Europe, after Moodys’ rating agency asserted that it has no plans to downgrade the triple-A ratings of the U.K and the U.S., and will wait to see how the effects of the global recession and the financial crisis play out.

Only relevant data released show the U.K. PPI rose at the fastest annual pace in nine months in November signaling some inflation pressures are building as the recession eases. The prices of goods at factory gates climbed 2.9% from a year earlier, while from past month, prices increased 0.2%. Quite positive reading that was not enough to send GBP/USD above the 1.6340 area, yesterday’s highs.

Mostly the European session saw a weaker dollar, trading lower against major rivals ahead of U.S. Retail Sales data. EUR/USD rose to 1.4775, close to past Wednesday’s high around 1.4780. USD/JPY reached 89.00 before halting the bullish rally triggered early Asia, while commodity currencies hold yesterday’s strong tone, as gold manages to regain some upside strength and quotes around $ 1140/oz.

Finally U.S. Retail Sales come out much better than expected, printing a 1.3% increase against a 0.6% expected while Core Retail Sales come out at 1.2% against 0.2% previous month, and 0.5% expected. The much better than expected reading send gold down stocks up and dollar quickly higher against major rivals in a first spike.

What to expect

Ahead of Wall Street opening and after the U.S. report, and with one more data to watch, University of Michigan consumer Sentiment, expected at 68.6 from a revised to the upside 67.4, dollar is up across the board, despite stocks. Gold continues falling; level to watch there is the 1126 support 50% retracement of last daily upside rally. If UoM data comes better than expected and again dollar regain the upside, we are seeing the end of the inverted correlation between greenback and stocks. Levels to watch remain mostly as yesterday, here they are. Remember a weekly close either under or above them, will be key for next day’s dollar destiny.

EUR/USD 1.4780 1.4680

GBP/USD: 1.6370 1.6250

USD/CHF: 1.0320 1.0240

USD/JPY: 89.10 90.30

AUD/USD: 0.9220 0.9130

USD/CAD: 1.0555 1.0440

Published on  Fri, Dec 11 2009, 13:43 GMT

U.S. Update: Quiet consolidation before the run

Thu, Dec 10 2009, 13:49 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite Wall Street yesterday’s timid gains, Asian shares fell, failing to trigger some risk appetite across the board. Majors spent most of Asian, and early European session consolidating in tight ranges, while gold falling under the 50% retracement of the daily rally 1032.50/1226.30, around 1126. That keep dollar steady, despite rising stocks in Europe, and positive U.S. futures.

Early data in Europe hardly affect markets, thus negative production readings in the euro zone keep hitting the wires: this time, was French Industrial Production that 0.8% against 0.6% rise expected.

Both Switzerland and England left their rates unchanged and also there monetary policy, with currencies having almost none reactions to the news. While EUR/USD remained trapped around 1.4730 with a slightly bearish bias and USD/CHF also consolidating in a tight range around 1.0260, Pound managed to regain the upside before BOEs’ announcement, yet also contained to the upside.

Something quite interesting to notice, were ECB’s Nowotny comments regarding further euro appreciation against dollar having a negative effect on the euro zone economy. Seems authorities are ready to start with this light verbal intervention way before pair reached the 1.60 level as rumored past weeks. He also stated that he expect U.S. to have a stronger recovery than the euro zone itself, and that exit strategies need to be taken step by step and carefully.

Greenback started losing ground after the release of U.S. Trade Balance, showing a better than expected deficit of around 32.9B against previous reading of -36.5B. Weekly unemployment claims rose to 474K from 457k the week before. News triggered a quick spike to the upside in stocks and gold, sending dollar lower against major rivals, except for Japanese yen, that remains steady above 88.00, in a short lived spikes, as stocks quickly gave up the win ground as well as European majors against greenback.

Commodity currencies remain stronger against dollar,, with AUD testing the 0.9200 level and CAD under 1.0500 against greenback, after past Asian session New Zealand hawkish economic statement. NZD is the biggest winner against dollar today, after data show the country is likely to start removing stimulus measures during first half of 2010.

What to expect

Market players are more cautious than usual, and uncertainty rules today. Majors will need to break current ranges and confirm to trigger more interesting moves. These are the levels to watch either say of the charts:

EUR/USD 1.4780 1.4680

GBP/USD: 1.6370 1.6250

USD/CHF: 1.0320 1.0240

USD/JPY: 88.30 87.70

AUD/USD: 0.9220 0.9130

USD/CAD: 1.0555 1.0440

Published on  Thu, Dec 10 2009, 13:49 GMT

U.S. Update: Wide movements lead by Pound

Wed, Dec 9 2009, 13:56 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Risk aversion triggered yesterday after Fitch Ratings downgraded its view on Greece Tuesday and Dubai stocks tumbling further, extended during past Asian session, sending EUR/USD to a weekly low of 1.4665 and Pound to the 1.6160 area against greenback.

Safe assets surged, with Japanese yen regaining the upside despite Japan’s economy expanded by much less than fist estimated in the 3rd quarter, as the revised figure print a 1.3% from a previous estimate of 4.8%. Dollar sunk against yen, hitting a session low of 87.36, from where pair rebounded back to test the 88.00 zone later in Europe.

Early data show German exports rose in October as the global recovery stoked demand for goods from Europe’s largest economy. Sales abroad increased 2.5% from September, when they gained 3.6%. Still, exports declined 15.9% from a year earlier.

Gold remaining the main market driver, rebounded from past Tuesday low and regain some strength reaching the $ 1145/oz level, triggering some dollar downside corrective movements across the board.

The U.K. remains in focus after the annual pre budget report, as Moody’s reminded market players that the U.K. has to cut its deficits if it wants to hold on to its triple-A credit rating.  Yet as hinted earlier this week, finally Darling repeated his previous posture of halving the deficit in four years and allowing the VAT to return to 17.5% on January 1st.

The ECB will probably keep lending banks unlimited funds at weekly operations until all other special liquidity measures have been withdrawn, ECB Governing Council member Axel Weber said late on Tuesday. Weber told the International Club of Frankfurt Business Journalists that the ECB's ultimate goal was to return to its pre-crisis schedule of liquidity operations and widen the gap between its main policy rates, but this would happen gradually.

Finally, U.K. trade deficit in goods widened to 7.1 billion pounds ($11.6 billion) in October from a revised 6.9 billion pounds in September, the Office for National Statistics reported Wednesday.

What to expect

Before Wall Street opening bell, U.S. futures are slightly positive after yesterday’s strong fall, while movements in currency markets has been fairly attached to GBP rallies most of the European session. Dollar is slightly down against most rivals, yet risk aversion sentiment persists, and the American currency is not far away from weekly lows.  Early to say, current movements against greenback could be consider corrective, as long as major crosses remain contained by following levels:

EUR/USD 1.4780

GBP/USD: 1.6370

USD/CHF: 1.0200

AUD/USD: 0.9130

USD/CAD: 1.0555

If dollar loses those zones, likely extend the fall during next American session. Meanwhile, USD/JPY remains strongly bearish as Yen overlaps Dollar in the run to safe havens. Pair needs to regain at least the 88.60 zone to reverse intraday trend, while another attempt under 87.80 likley to trigger further downside movements.

Published on  Wed, Dec 9 2009, 13:58 GMT

U.S. Update: Dollar will remain under pressure

Mon, Nov 30 2009, 16:16 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Following past Friday’s optimism recovery dollar fell since early Asia, supported also by rising stocks: Nikkei 225 close up 2.91%, while gold correct slightly to the downside, yet remains quite close to record highs, around $ 1170/oz. EUR/USD rose to the 1.5080 area, while Pound reached an intraday high of 1.6591, from where the pair retreat strongly.

Dubai World’s debt remains a strong issue these days, as Dubai government stated that they won’t support the company. Fears among that debt, send European stocks to the downside, with Pound suffering the most, reaching the 1.6460 area, late Europe. Data from the U.K. helped the slide, after the BOE’s favored measure of money supply contracted for a second consecutive month in October. The central bank said M4 excluding certain types of financial corporations fell by 10.3 billion pounds ($17 billion), or 0.7%, in October, after a decline of 12.9 billion pounds, or 0.8% in September. Also, total U.K. consumer credit fell by a net 600 million pounds in October, the largest fall since the current statistical series began in April 1993, printing the weakest growth on record.

Regarding euro zone, consumer prices increased for the first time in seven months in November rising 0.6% from a year earlier after falling 0.1% in October, the European Union statistics office in Luxembourg said today.

Finally, Chicago PMI showed business activity in the U.S. unexpectedly accelerated in November as orders climbed, signaling the economic recovery will carry through into 2010. The Institute for Supply Management-Chicago Inc. said today its business barometer increased to 56.1, the highest level since August 2008, from 54.2 the prior month.

What to expect

With U.S. stocks above past Friday’s close, and gold unable to extend the downside, greenback remains quite weak, followed by Pound, while Japanese yen remains the strongest currency of majors, followed by Euro.

After hitting a 14 years low, all the Japanese authorities decided to start talking about probable future intervention, yet this far, remained in verbal intervention, far away from facts. Unless they decided to take real measures, like asking both the U.S. and Europe to help curb yen’s advance, the Japanese currency likely to remain strong, as despite some upside corrective movements, USD/JPY remained under key 87.00 level. Combine this with a likely repatriation of Japanese investor funds as seasonally happened for the end of the fiscal year next March, pair could drop to the 83.00 area before we see some real action coming from BOJ.

Following Dubai debt issues, fears of more emerging markets having trouble with repayments  (talks already about Greece to be next one) likely to favor a continued decline in risk appetite, favoring overall the Japanese currency, as rates differential makes dollar less attractive.

Published on  Mon, Nov 30 2009, 16:17 GMT

U.S. Update: Far from a change

Fri, Nov 27 2009, 16:44 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Starting yesterday early Europe, after U.K. banking stocks sinking due to bad debt issues in Dubai World, a huge constructing firm, risk aversion has triggered outrageous rally in dollar and yen. Past Asian session, a few minutes before Nikkei opening, yen started and upside rally that push the currency to fresh 14 years high against dollar, at 84.80, while several weeks highs against Pound and Euro.

Nikkei 225 closed strongly down, European stocks opened to the downside, American futures fell, and gold hit $ 1137/oz. Markets players’ whispered “black Friday”.

However, majors where unable to follow trough key levels, and better than expected American stocks market, erased most of dollar winnings, and only a part of Japanese Yen ones.

Barely positive on the day, dollar can close the day positive, but seems won’t be able to close the week with gains, but maybe against commodity currencies. Even there, that could be understood as merely corrective;  the fact that EUR/USD was unable to break the daily descendant trend line around 1.4820 coming from early March, and bounced back strongly above 1.4900, is no minor fact. Even Pound managed to regain the lost ground, despite its weakness, and reached the 1.6500 level back above 1.6460 support.

USD/JPY, reached the 50% retracement of this week fall around 86.95, and consolidates just under it. If pair does not manage to regain before the end of the day at least the 87.60 level, more downside pressure will be seen, unless Japan authorities decided to stop talking and start to act (something they usually do on weekends, triggering strange movements Sunday opening).

USD/CHF is back above parity, yet EUR/CHF is under 1.5070, level that has triggered intervention in the last 6 months. Could Monday, last day of the month, bring more non official reactions? Seems unlikely now, as level to act has been downgraded to the 1.5000 area; however, Swiss Franc appreciation will continue to be strong if gold, stocks and risk appetite, continue rising as past week.

Entering December, market conditions keep stretching, and volume decreasing. Long and unexpected rallies will be seen more and more, as well as exacerbated reactions. Expect this, to be a surprise end of year, more than we are use to in this market.

Published on  Fri, Nov 27 2009, 16:44 GMT

U.S. Update: No relief

Wed, Nov 25 2009, 16:24 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Gold keeps appreciating giving dollar no relief ahead of U.S. Thanksgiving Holiday. Both Euro and Yen had made substantial gains against greenback since early Asia, reaching several months highs, while as usually later, gold printed a fresh record high this time just under $ 1183/oz.

EUR/USD break above 1.5020 resistance area send the pair to a yearly high of 1.5095, during European session, with the pair setting comfortable at current 1.5060 zone; corrective downside movements remained quite limited, suggesting rally is far for over, despite IMF consider Euro is over valuated against dollar, and had make that public; IMF also said they likely warn Euro zone ministers about this next week.

Data in America was mixed today with a surprise coming from weekly unemployment claims, that came out bar beyond expectations at 466K, the lowest level in more than a year, while durable goods orders  fell in October, declining 0.6% on weaker demand for machinery, the Commerce Department reported Wednesday. Excluding transportation goods, orders fell 1.3%.

Another surprise come from spending by U.S. consumers that rebounded in October more than anticipated increasing 0.7%. Incomes climbed 0.2%, also exceeding expectations. Later, New Home Sales in the U.S. rebounded more than anticipated in October rising 6.2% to an annual pace of 430,000, the highest level since September 2008, the Commerce Department said today in Washington.

What to expect

U.S. good news are keeping stocks bid while gold seems unable to correct more than a couple of bucks after each news ride of $ 10.00. Majors had already completed short term corrections, and seem ready for further gains today against greenback.

Another attempt of EUR/USD close to the 1.5100 level, likely to send the pair to test next resistance at 1.5150, confirming more upside ahead; only daily close under 1.4970 could revert the situation, not seen at this point.

USD/JPY has confirmed even further the downside trend, and approaches slowly but steady, to the year low around 87.10. If that zones gives up, or daily close approach to that level, expect more selloff in the pair, with the 86.20 area, a 1995 monthly high as next support level to watch. Daily close above 89.40 descendant trend line, is the only chance of a turn, and seems we are too far away.

Published on  Wed, Nov 25 2009, 16:25 GMT

U.S. Update: Inside weekly ranges and attached to gold

Tue, Nov 24 2009, 16:22 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite Monday fresh high in gold, and dollar losing ground against most rivals, major crosses were still unable to leave past week ranges, and greenback bounced slightly up this Tuesday, since Asian opening. Nikkei 225 Stock Average was down 0.9%, while share prices in Hong Kong, Singapore and Korea were also lower, dragging Euro but more Gbp to the downside.

Early Europe, Pound fall deeper after BOE’s   Governor Mervyn King said the central bank will raise the benchmark interest rate and sell assets purchased during its emergency plan over a two to three-year period. “The difficult judgment, which is the overriding problem, is to know by how much and when to do it,” he told Parliament’s Treasury Committee in London today. USD/GBP  fell to an intraday low of 1.6490 holding the general bearish perspective as the pair remains under the 1.6620 level, 38.2%  retracement of the last daily fall.

But Eur remains well bid, supported not only by gold, but also by better-than-expected euro zone economic data: industrial new orders in the euro zone rose by 1.5% in September compared to the preceding month. In the European Union as a whole, orders increased by 1.7%. Yet the European currency is still unable to break above 1.5000 level, as it remains more attached to gold lately, than to stocks: the metal is correcting today quoting at the 1163 area, 10 dollars under record high.

U.S. data show Consumer confidence rose in November, with the index printing  49.5, up from a revised 48.7 for October, also second reading of third quarter GDP show the economy grew at a 2.8% annual rate, rather than the 3.5% pace it estimated last month. It was still the fastest pace since the third quarter of 2007.

What to expect

Ahead of the U.S. Thanksgiving holiday, most currencies are expected to remain in recent tight ranges, yet closely linked to gold movements. Some profit taking approaching to the end of the year could favor greenback in the coming days also, but market conditions remain unchanged: dollar bearish trend could be bottoming after several failure attempts to break lower, yet technical confirmations had not started. Keep an eye on gold, as a deep correction there, could be dollar trigger for a strong upside correction.

Published on  Tue, Nov 24 2009, 16:23 GMT

U.S. Update: Gold keeps leading

Mon, Nov 23 2009, 16:01 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

While dollar started the week slightly up following past Friday’s general risk aversion sentiment, gold sudden gap to the upside to a fresh record high that keeps beating hour after hour, reversed risk sentiment and send greenback back down during both Asian and European sessions.

Better than expected Euro zone economic activity also helped EUR/USD to retest  the 1.5000 level, after latest PMI figure rose to 53.7, up from 53 in the previous month, confirming economic recovery is underway.

Stocks in Europe surged, as well as American indexes, with S&P approaching to this year high and DJIA at a fresh one around 10500 points, in the first trading hour.

Seems that market players had turned the attention to liquidity, and the different postures economies are taking regarding the unwind of measures to support the financial system: while the ECB clearly warned banks against an "addiction" to cheap credit, signaling a first step towards turning off the liquidity facilities, FED’S Bullard state past Sunday that he would prefer to keep the central bank's asset-buying program active beyond its current cutoff date.

U.S. housing data better than expected, helped to exacerbate markets: sales of existing U.S. homes increased more than forecast in October to the highest level since February 2007, rising 10.1% to a 6.1 million annual rate from a 5.54 million pace in September.

What to expect

Despite strong sentiment and rising gold prices, majors are unable to break higher and leave ranges for good. EUR/USD retreat from 1.5000 daily high, while GBP/USD halted its recovery at the 20 SMA in the 4 hours charts; Japanese yen remains flat fighting the 89.00 level against dollar, suggesting a long term bottoming and turn, thus a long way must develop before that.

Gold surged almost $ 20 today above previous record high, yet majors just approach to top of range. With gold giving up a couple of dollars, dollar regains some of the lost ground faster than the contrary move develops. Still no changes at sight for dollar trend, as unless gold change bias, dollar will remain under pressure. 

Published on  Mon, Nov 23 2009, 16:02 GMT

U.S. Update: More dollar corrections

Fri, Nov 20 2009, 16:15 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian stocks falling, plus Japan’s government officially declaring that the economy has fallen into deflation due to weak domestic demand, has kick started a dollar rally that extended to American session; adding to negative sentiment regarding high yielding currencies, was the approach of the year end, that push investors to adjust positions.

 Early economic data show that the Swiss recovery is not strong as it was believed: retail sales earlier this week were quite disappointing and after a 0.3% contraction in the economy in the second quarter, the SNB itself now acknowledges that GDP may not turn positive until the fourth quarter.

Also, nationwide reported that growth in U.K. unemployment during 2010 will put downward pressure on house prices, sending Pound to an intraday low of 1.6460 against greenback; the fact that that government borrowing hit a new record October high, helped to keep the currency subdue, even after later recovery across the board.

What to expect

Despite dollar highs against major rivals, the fact that gold is unable to correct is halting further gains in the American currency, that at current levels, will only be correcting it’s still in play bearish trend. No doubts, many will question that trend at this point, and it has been over reacted, or if it’s just a consolidation stage.

Far from the week close, at current levels dollar is about to close with gains against most rivals except Japanese Yen; if this last was unable to run further on this risk aversion movement, was due to the recognition of the nation deflation. Gains are more substantial against commodity currencies such as AUD, CAD and NZD despite neither gold, not oil, are far from year highs. As we approach the year end, maybe not only adjustment but profit taking, could trigger further dollar gains.

Published on  Fri, Nov 20 2009, 16:16 GMT

U.S. Update: Risk appetite fades

Thu, Nov 19 2009, 15:54 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Following Wall Street, Asian shares fell dragging dollar and yen higher across the board, a movement that extended to Europe, and continues in American session.

However, Euro managed to hold above 1.4840 support area against greenback, despite general risk aversion sentiment has pushed gold almost $ 20 to the downside, from yesterday’s high. Battle among dollar destiny, is no doubts in the European currency hands: as long as the pair remains above the 1.4740 area, greenback recovery will remain limited to corrective movements inside ongoing trend.

We should keep in mind also, that Euro tend to strengthen at this time of the year, because is typically when European financial firms repatriate their overseas investments ahead of the year end.

Another factor favoring dollar today is gold that quotes around 1135 in this first American session hour, from yesterday’s record high above $ 1153/oz. Early news show that gold appreciation was mainly due to the fact that the supply of gold on the world market fell during 3Q mainly due to central banks being net buyers ;  rally has paused today on dollar strength and lower stocks, yet metal is far from losing its bullish trend.

Pound fell strongly, despite some positive data mounted on market sentiment and the inability of breaking above the 1.6840 level, 50% retracement of last monthly fall. Capped now under 1.6660 area, only above that level pair could recover some of its previous upside strength.

Still, movements in most majors remain inside recent ranges, without offering not new real cues on the long term destiny of greenback. In general dollar remains under pressure and is far away from a trend change, as long as rates differentials play against the currency. Yesterday FED’s members comments about possible movements in rates only starting around 2012,surely won’t favor more than current corrections.

What to expect

Despite Japan policy meetings hardly affect market, many investor are expecting the Japanese government to declare Friday that the nation's economy is in deflation, putting BOJ under pressure, and also yen. Despite a fresh 6 week low, against greenback, Japanese currency was unable to extend the rally, as market rather wait for next Friday’s data to take another step.

U.S. stocks continue pushing lower as well as gold, both close to intraday lows. Rally has no signs of halting yet, and will probably extend to next Asian stocks markets session, favoring further greenback recoveries. Still, as long as inside mentioned ranges, bearish perspective for the American currency, remains as mentioned, unchanged.

EUR/USD Outlook

Holding under 1.4880, pair lack of definitions is clear in the daily charts, with 20 SMA flat and price moving between 1.4800/1.5000 since past Thursday; daily ascendant trend line, today a bit above static support area at 1.4740, remains first key support for the pair, followed by 1.4610, 61.8% of the monthly fall 1.6038/1.2330, also neck of the probable double roof formed at 1.5050 area. Only a weekly close under that level, could trigger a trend change in the pair, quite unlikely at this point. On contrary, 1.5020 is the first level to watch to the upside, followed by early high of 1.5062, 1.5100 level, and above 1.5150 area, 76.4% of the same monthly rally.

Levels to Watch

EUR/USD: 1.4740 1.5020
GBP/USD: 1.6510 1.6840
USD/CHF: 1.0030 1.0240
USD/JPY: 88.20 90.70

Published on  Thu, Nov 19 2009, 15:56 GMT

U.S. Update: Swings in mood

Tue, Nov 17 2009, 15:45 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Another sign of how mixed and fragile is current market sentiment come again from Asia, after the Reserve Bank of Australia admitted that the pace of further Australian rate increases is an "open question”, halting optimism across the board. Australia is receiving this king of attention, as it has been the first major economy to start moving rates higher since the credit crunch. However, without confirming further raises for next months, is retreating from previous hawkish posture, making investors doubt again, on the pace of the economic recovery.

Stocks take a breath along with gold, correcting to the downside, still far from losing momentum, and greenback as usual, is following the moves: EUR/USD come back from 1.5000 to an intraday low around 1.4850, while GBP/USD also correct to the downside, contained by the 1.6752 intraday low.

Both majors, remain consolidating above those levels, yet far from yesterday’s highs despite U.S. stocks are barely red on the day, fighting to recover the upside after U.S. data show dollar attracted around $ 133B in capital inflows past September, while PPI fell under previous month readings, as well as Industrial Production.

What to expect

Corrective movements are due both in currencies and stocks markets. Gold also seems to be ready for some short term corrections, after reaching a fresh record high around $1145/oz.  Still dollar is far from confirming any strong movement: should at least break under past highs against major rivals to change current strongly negative bias.

Mid-Term Levels to Watch

EUR/USD: 1.4740 1.5020

GBP/USD: 1.6510 1.6840

USD/CHF: 1.0030 1.0240

USD/JPY: 88.20 90.70
 

Published on  Tue, Nov 17 2009, 15:46 GMT

U.S. Update: Dollar back down; recovery chances fade

Mon, Nov 16 2009, 15:46 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Since early Asian opening, dollar weakness was clear across the board; after past Friday failure to extend Thursday rally, as disappointing U.S. data failed to seriously dent the positive mood on Wall Street and stocks keep rising along with gold, greenback regained the bearish momentum.

In Japan, stronger-than-expected -quarter growth data, along with a rally in the price of gold to a new record high (already overcome in U.S. session) contributed to the rise optimism. Even yen regained the upside, despite losing some support after China denied that it will allow the Yuan to appreciate in the near term. Hopes that China might soon release the Yuan’s peg to the U.S. currency had previously been seen as helpful for the yen.

Rising stocks in early Europe send EUR/USD to test the 1.5000 level, while GBP/USD remained range bound above 1.6660 capped by the 1.6740 area, probe strong in the past, yet with a clear bullish perspective.

What to expect

Quiet Monday, market remains attached to sentiment yet with dollar clearly weak. Despite fresh highs in stocks and gold European majors failed to accomplish new highs, as technically, signs of exhaustion are seen in the short term. However, the week is just starting: low volume should increase, only to drive dollar lower.

Published on  Mon, Nov 16 2009, 15:48 GMT

U.S. Update: After U.S. Trade Balance

Fri, Nov 13 2009, 14:01 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite stocks fell with Nikkei closing down 0.35%, dollar failed to extend the rally started early Thursday, and lost some ground against major rivals as Asian investors maybe take the chance of profiting from their dollar trades.

Supporting also dollar falls, was early European data, that shown euro zone is out or recession, at least from the GDP point of view: the third quarter data from Germany and France data show, German economy expanded at a faster pace 0.7%, while France GDP come out positive after several quarters of bad readings. The GDP in the economy of the 16 nations using the euro rose 0.4% from the second quarter, when it fell 0.2%

However Eur/Usd reaction was a bit hesitant and the pair was unable to break back above the 1.4900 area, from where the pair retreat to 1.4860/70 area. GBP/USD, free of macroeconomic data, extended the upside rally to levels near the 1.6700 area, holding a nice bullish bias during the European morning.

Greenback was mostly lower due to a shy rebound in optimism after GDP data, yet attached to tight ranges waiting for U.S. Trade Balance, that finally come out showing an increase in deficit, to 36.5B in September. After a first spike against dollar, majors returned to pre report levels, and seem to be waiting for Wall Street opening.

U.S. futures hardly reacted to the data, let’s see what happens when stocks open over the next 30 minutes.

What to expect

Worst than expected data should favor risk aversion and so, dollar and yen rises after U.S. opening; however, we should not forget about gold: if the metal, that quotes around $ 1108/oz, regains the upside,  dollar gains likely to remain limited this last day of the week.

EUR/USD outlook

EUR/USD weekly close could be key for the pair destiny: if above the 1.4900720 area, pair likely to resume uptrend and attempt a higher high above the 1.5060 area; on contrary, under 1.4810, pair will be breaking a strong midterm support zone, and starting a more extended downside corrective movement as double roof in the daily chart at the 1.5050/60 area, has a neck line around 1.4650 and only under that level, pair could signal a trend reversal.

Published on  Fri, Nov 13 2009, 14:02 GMT

U.S. Update: Things are starting to change

Thu, Nov 12 2009, 15:14 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session started very different from what we are seeing now in Europe and America: after better than expected Australian employment data, dollar fell across the board, pointing for more risk appetite as also gold reached the $ 1120/oz level, record high. However, chance rapidly change after regional stocks fell, sending EUR/USD back under the 1.5000 level, and GBP/USD under the 1.6600 zone.

Early Europe, dollar rally extended across the board, despite European stocks managed to stay green; data from the euro zone show industrial production dropped 12.9% year-on-year in September, compared to the 15.1% fall in the previous month. On a monthly basis, industrial production increased 0.3% in September, slower than the 1.2% growth in the preceding month, and under expectations of a 0.5% increase.

Despite not much more data was published, lot’s of talking from authorities had hit markets: ECB monthly bulletin  was very much like last policy statement, talking about economic activity in the euro zone was expected to improve in the second half of this year but recovery would be gradual next year.

Also, Japanese Senior Vice Finance Minister Yoshihiko Noda said that the government would consider the current economic outlook in setting a second supplementary budget for the current fiscal year, which the government will use to fund an economic stimulus package; at the same press conference, Parliamentary Secretary for Finance Shin Ichiro Furumoto also stated that Japan wants stability in foreign-exchange rates and for the dollar to be strong. Japanese yen regained the Y90.00 level against dollar, and extend the upside rally above 90.30 resistance area, while waiting for U.S. opening. Yen also rose as U.S. equity-index futures declined and Chinese Premier Wen Jiabao said the world faces an uneven recovery, discouraging demand for higher-yielding assets.

Finally, Timothy Geithner decided to support greenback, stating in a television interview that it’s “very important” the U.S. maintains a “strong” dollar. He also said that, while it’s too soon to withdraw stimulus measures, the Obama administration is committed to reducing the record U.S. fiscal deficit, a legacy of reliance on overseas funds and unprecedented stimulus spending to counter the crisis.

Only data in the U.S. today, show initial jobless claims remain hovering above 500,000 for 52 straight weeks, yet last week drop to 512K, the lowest reading since past March; a bit tricky reading, as it does not much with job’s creation, but with less people receiving the benefits after their time is complete.

What to expect

U.S. indexes opened to the downside and remain in negative territory, while gold lost some ground and quotes around $ 1112/oz, as gloomy global sentiment still prevails, helping the dollar to make gains against most other counterparts, still a corrective movement and far from a trend change: dollar bearish tone due to general speculation that its status as the world’s dominant reserve currency may be lost is not yet over, particularly after past week unemployment rate 10.2% reading.

However, Geithner’s more insistent tone on a stronger dollar and some technical exhaustion signs among high yielding assets, with investor’s disappointment over fresh highs for majors against dollar, is favoring a very shy intraday recovery of the American currency; early to call for a change, at least is clear things are not exactly the same: when EUR/USD reached the yearly high of 1.5062, gold was around 1070/oz; now, gold at 1115/oz is not supporting further Euro rises, but just halting the fall. Optimism fades, and maybe time has come for a real dollar correction.

Published on  Thu, Nov 12 2009, 15:16 GMT

U.S. Update: Low volume, fresh highs, dollar up

Wed, Nov 11 2009, 16:46 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Market has spent the week in a tight range, still with dollar bearish across the board, after past Friday’s unemployment data; with U.S. markets close due to Veteran’s day, trading remains choppy and volume extremely low across the board.

Despite that, U.S. futures keep rising, with S&P above 1100 points and DJIA around 10310 points, pointing for more risk appetite as optimism grows, also supported by gold price, that reached the $ 1118/oz.

Majors are giving up some ground at the end of the European session, with greenback slightly positive against major rivals, nothing that can change current bearish trend. EUR/USD rally was halted at the 1.4960 area, while GBP/USD broke yesterday’s low and approaches to the 1.6550 zone. Yet is the lack of volume what’s triggering current downside rallies, and unless we see EUR/USD breaking the 1.4910 area, and GBP/USD reaching levels under 1.6480 (that will generate strong doubts among investors, and trigger further buying positions unwind) majors likely to recover the upside with Japan opening. Also failure to break above yearly high, could have lead investors to take profits in EUR/USD.

USD/JPY remains immune; after the failure attempt to break the 89.20 support, pair come back to consolidate between 89.60/90.00 zone where it has been since week started. Japan Finance Minister Fujii yesterday, stating that he never supported a strong yen, but now supporting a strong dollar, has left the pair directionless.

I still do believe that majors have gone too far against greenback; I do recon American economy is in bad shape. I do also understand that besides maybe Australia, the rest of the world is more or less in the same conditions. For how long economies can support a strong currency and weak exports, that I don’t know for sure, but I don’t think it will take long before we saw more interventions from Central Banks to devalue their overvalue currencies. Action likely to start with CHF, CAD and NZD maybe not the strongest or more watched currencies, yet no doubts, it will spread like powder.

Published on  Wed, Nov 11 2009, 16:47 GMT

U.S. Update: After BOE and ECB

Thu, Nov 5 2009, 15:49 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

After the so long awaited data, and usual spikes, both Euro and Gbp are barely above pre data levels against dollar, as any of both Central Bank had shock markets, keeping rates and policy accordingly to expectations.

First, BOE said Thursday that the world economy has shown signs of recovery, with a number of
emerging markets economies experiencing a strong rebound, but that financial conditions remain fragile. They kept rates unchanged and slowed the pace of bond purchases, announcing plans to increase it by 25 billion pounds to 200 billion pounds; the Committee believes that the prospect is for a slow recovery in the level of economic activity, so that a substantial margin of under-utilized resources persists, bearing down inflation for some time to come.

Pound reached an intraday high of 1.6635 after the data, from where the pair retreated to consolidate around 1.6570 area, holding a bullish tone, supported by rising stocks markets and gold.

A few minutes later, ECB left also rates unchanged, and market waited for Mr. Trichet words to send EUR/USD to the 1.4920 resistance area. The ECB president said officials will withdraw some of the emergency liquidity measures “in a timely and gradual fashion” in order to “counter effectively any threat to price stability over the medium to longer term”.

Interesting to notice, Trichet does not see improved economic performance, saying recent data has shown some strength but also weakness, capping Euro rally. Still risk appetite and dollar weakness remain strong across the board, favoring both European currencies to the upside.

What to expect

With DJIA approaching to the 10.000 level, and gold hovering around $ 1090/oz, greenback is being punished across the board; Japanese yen, the other safe haven currency is also losing some ground, yet quite limited compared to dollar weakness.

Majors likely to move a bit more during next hour or so, tending to consolidate at current levels, waiting for the last key event of the week: U.S. Nonfarm Payrolls early Friday. While market is expecting an improvement in job loses, unemployment rate is expected to the downside.

Anyway, dollar fate remains quite dark, and no doubts, attached to stocks behavior.

Published on  Thu, Nov 5 2009, 15:51 GMT

U.S. Update: Waiting for the FOMC

Wed, Nov 4 2009, 15:38 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Since gold break previous historical high last Tuesday, risk appetite remains in good shape across the board. The metal reached a $ 1095/oz high early Europe, supporting dollar and yen loses across the board.

Pound rose strongly after an improvement in Services PMI that rose to 56.9 above expectations, sending GBP/USD to an intraday high of 1.6540, where the pair consolidate till U.S. opening.

Despite U.S. data failed to accomplish previous month readings , as both ADP and ISM Services PMI come under expectations, American indexes are rallying early Wednesday as investors eyed higher commodity prices and stronger overseas markets, as well as a pair of labor market reports that implied the pace of layoffs is slowing.

Pound broke higher reaching the 1.6560 level, while EUR/USD quotes around 1.4830 after breaking 1.4810 strong resistance level. Both pairs remain strongly bullish ahead of FOMC decision later in the day.

What to expect

For the next hours, majors should consolidate around current levels, ahead of FED statement, issued around 2pm EST Wednesday; market don’t expect any change in the current rate, yet no doubts investors will be watching for any change in the “extremely low, for an extended period” language the US central bank has been using for the last months regarding rates.

A dovish,  unchanged statement, will likely keep dollar under strong selling pressure, while a change in the terms of how long will they took to rise rates back, will be a double blade knife: whether if market decides to favor more rise in stocks, and send dollar lower, or finally support dollar gains, something quite unlikely at this point, is something that we will just need to wait to see.

Published on  Wed, Nov 4 2009, 15:40 GMT

U.S. Update: Gold halting dollar recovery

Tue, Nov 3 2009, 15:44 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

With markets close in Japan due to holiday, thin conditions exacerbated moves across the board, and we are currently seen the consequences. Action started after RBA rose rates to 3.5%, 0.25 bp as expected, triggering a spike of risk appetite against majors.  However, the lack of confirmations of further rate hikes ahead, quickly reverted the situation in the market, and after Aud fall majors follow favoring a strong greenback recovery that extended during European morning, as optimism fades. Japanese Yen however, didn’t follow its safe haven counterpart, and remained in tight ranges against major rivals.

Early European data show U.K. Construction spending fell to 46.2, not only under expectations, also under previous month reading of 46.7, triggering more pessimism across the board. European stocks fell sharply, along with oil, making EUR/USD break key support zone around 1.4680/1.4700, from where the pair fell to an intraday low of 1.4625; trading close to that level and under previous support now strong resistance, greenback is consolidating last win ground, prepare to extend the movement.

Pound reached the 1.6250 strong static area, also 20 SMA in the daily chart, starting a strong come back from that level, still trading inside previous day’s range. Pair likely to remain range bound ahead of BOE this Thursday, with clearer definitions to come after the more QE mystery unveils.

What to expect

If something is halting dollar from running higher, is gold: the commodity is quoting around $ 1068/oz, close to historical highs and pushing higher, while U.S. stocks remain in negative territory after U.S. factory orders come under expectations, despite improving to 0.9% from previous month reading of -0.8%.

EUR/USD remains subdue, close to daily lows, and unable to retest the 1.4680/1.4700 area. Fresh intraday low could trigger more downside movements for the next hours.

GBP/USD is in better shape, regaining some upside strength, still under 1.6410/40 key resistance zone; seems hard to see a break above that level pre BOE.

USD/JPY remains consolidating between 90.30/90.70 area, favored by gold rises, and ignoring for now, the slump in stocks.

At this point, seems that we need to expect the main fundamental events of the week, (FOMC, ECB and BOE, followed by U.S. Nonfarm Payrolls) to find clearer long term definitions in currencies.

Yet keep an eye on gold: breaking higher could revert current market conditions quite fast.

Published on  Tue, Nov 3 2009, 15:46 GMT

U.S. Update: Directionless market defined by U.S. data

Mon, Nov 2 2009, 16:38 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite week started with dollar and yen higher against major rivals, movement did not last and high yielders revert early opening loses, to spent all the European morning directionless; with Euro and Swiss Franc practically unchanged from past Friday’s closing levels, Pound slump to an intraday low of 1.6330 after plans surfaced over the weekend to create three new banks from sold-off assets of three major U.K. banks that had been bailed out by the government. Also market is likely pricing in more QE to come this Thursday’s BOE meeting.

USD/JPY that reached 89.15 pre interbank opening, regained the upside to consolidate just under the 90.00 level, while EUR/USD consolidated between 1.4740/1.4800, after better than expected manufacturing data in the euro zone and Sweden offered market players some relief over global economic conditions.

What to expect

After market has hesitated since Asia opening, U.S. better than expected data finally decided dollar destiny: the safe haven along with it’s counterpart the Japanese yen are falling heavily with Wall Street strongly up and gold reaching 1060/oz, after the release of better than expected ISM PMI that hit 55.7, while Pending Home Sales rose above expectation 6.1%.

Ahead of a week fulfill by critical economic data, that includes the policy meeting of 3 central banks, Australia, ECB and BOE, and U.S Non Farm Payrolls, risk appetite has seems to resume. However, expect markets to stretch as key data approach.

EUR/USD Outlook

Pair failed several times to break the 61.8% of the last daily rally around 1.4700, suggesting a corrective movement before next up movement. However, the upside also remains limited by the 1.4840 area, 38.2% of the same rally, while 20 SMA in the daily comes to offer resistance at the same exact zone. Daily close above this area, will support the upside bias, while as long as between levels, there are no clear perspectives for the pair. 

Published on  Mon, Nov 2 2009, 16:38 GMT

U.S. Update: GDP surprise switch markets back to risk appetite

Thu, Oct 29 2009, 16:08 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite being the most important and expect report of the day, many things happened since Asian opening: Japanese yen continued rising after Nikkei 225 lost more than a 2% in the first hour, breaking under 10000 points level, and sending Euro briefly under the 1.4700 level. Pessimism ruled the Asian session, with dollar consolidating or extending gains across the board, and yen gaining ground at a strong pace.

Pound was a clear exception, remained well supported against greenback above the 1.6330 area, extending above yesterday’s high during early European session around the 1.6460 level, only to quickly fell back.

The 3.5% expansion in U.S. gross domestic product –better than the expected 3.2%, and positive for first time in more than a year - interrupted recent broad slide in riskier asset classes and currencies as investors bid stocks and commodities back higher. Both dollar and yen begin to lose ground, against major rivals, with commodity currencies leading the way: AUD recovered above the 0.9100 level, while GBP/USD reached an intraday high of 1.6600. EUR/USD followed the crowed, thus raise has been more limited in the pair. Intraday high post report, reached the 1.4835 level.

What to expect

With European session ending, stocks and gold remain to the upside, suggesting more dollar (and Yen) losses for the rest of the day. After bouncing at the 61.8% retracement of the last daily up leg, EUR/USD is slowly approach to next key level, 1.4840, 38.2% of the same rally. Fighting right now with the 20 SMA still with a bearish slope, today’s close could be key for the pair: A confirmation above 1.4840 will suggest correction is over and pair will try to resume previous uptrend. Under 1.4770, pair will likely attempt to break the key 1.4700 support again.
 

Published on  Thu, Oct 29 2009, 16:10 GMT

U.S. Update: Another wave of risk aversion

Wed, Oct 28 2009, 16:37 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

As happened since weak started, Asian session has been mostly corrective particularly for European majors, with small dollar contrarian movements; falling local stocks triggered more risk aversion, sending investors to seek refuge in dollar and yen that raised against major counterparts on speculation the global economic recovery will slow down.

Euro continued losing ground, unable to regain the 1.4800 level clearly against greenback, while GBP/USD hold a slightly bullish tone, unable to break clearly under the 38.2% of last daily up leg around 1.6320.

Commodity currencies in general drop big, pre announcing further dollar strength, supported by an Australian report showing inflation slowed, easing pressure on the central bank to accelerate interest-rate increases.

Early Europe CPI in three German states fell on the year in October, pointing to price pressures remaining weak in the broader euro zone. Yet majors remained waiting in tight ranges ahead of U.S. data, that as all week long, has triggered the daily action:

Durable goods orders in the U.S. for September rose by 1.0% as expected after plunging an unrevised 2.6% in August. Durable goods have now risen in four of the last six months, but are still down an unadjusted 24.1% over the year. The September increase was due in part to a 1.7% increase in manufacturing of unfilled orders, a 0.3% increase in orders for primary metals and a 7.9% jump in machinery orders, which was the largest increase since March 2008. But disappointing U.S. new home sales that unexpectedly fell 3.6% in September, triggering another wave of risk aversion and sending dollar higher across the board.

What to expect

Dollar and yen continue strength as global shares extend their slide. Investors are quickly reducing risk exposure, more after gold finally break lower, quoting under 1031 support level, previous historical high. While GBP/USD remains consolidating between 1.6310/1.6410, EUR/USD is quickly approaching to a key support zone: 1.4700 level, 61.8% of last daily rally, from 1.4480 to 1.5063. Crossing now 200 EMA in the 4 hours charts, a daily close under that level could trigger more selling pressure in the sessions to come, thus a short term upside bounce since likely if the level is reached in the next couple of hours.

Published on  Wed, Oct 28 2009, 16:39 GMT

U.S. Update: Dollar favored on risk aversion

Tue, Oct 27 2009, 16:11 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Asian session saw majors developing due corrective movements after past Monday’s rallies, limited by strong dollar support levels, and setting next sessions trend. U.S. treasuries hold the uptrend and stocks turned negative, supporting more dollar safe-haven demand across the board.

Early Europe, Euro remained under pressure, after the ECB said the euro zone M3 money supply growth slowed to 1.8% year-on-year in September from 2.6% in August. Market was expecting a rise to 2.2%, while the three-month average of the annual growth rates of M3 over July to September decreased to 2.5% from 3.1% in the three months ended August. EUR/USD holds under the 23.6% of the last daily up leg at 1.4925, and fell back down to the 1.4870 area.

Meanwhile Pound turned positive, supported by a surprise grow in retail sales. The Confederation of British Industry's distributive trades survey reported sales balance rose to +8 in October from +3 in September, better than economists' forecasts of a rise to +5. GBP/USD reached 1.6440 resistance area, retreating from that level, yet still positive in the day.

But action started after U.S. opening, with disappointing consumer data: the CB Consumer Confidence index printed 47.7 against previous month reading of 53.4. The Conference Board said labor markets played a "major role" in the weaker assessment, and this is not a minor data. Dollar quickly gained ground over concerns about the economic recovery, sending EUR/USD to an intraday low of 1.4787.

What to expect

Despite Wall Street remains in positive territory, gold continues printing lower lows, approaching to 1031 support level. Being previous historical high, break under that level could accelerate the fall in the commodity, and drag dollar higher, as greenback remains more firmly attached to it than stocks.

Euro seems to be the more affected currency, and having break the 1.4840 level, a daily close under this zone, will open doors for further falls this week. Tomorrow U.S. Durable Orders, will likely define the matter.

Published on  Tue, Oct 27 2009, 16:15 GMT

U.S. Update: Mixed sentiment

Mon, Oct 26 2009, 14:55 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Majors started the week close to past Friday’s closing levels, with dollar slightly up; however, it lost ground on China’s a report appeared in a Chinese newspaper backed by the Peoples Bank of China suggesting that the bank needs to diversify more of its reserves in the euro and the yen; also regional shares rose, pushing EUR/USD back to the year highs of 1.5060; GBP/USD reached an intraday low of 1.6250 before regaining some strength, yet Pound remains week after past week GDP report, showing economy keeps contracting in the U.K.

Lack of fundamental data keep majors range bound during most of the European session, yet only European data, show German Gfk survey about consumer sentiment fell to 4.0 from 4.2 in October, weaker than median forecast of 4.5; EUR/USD remained supported by the 1.5000 level, yet unable to retest the highs.

Cable continued extending previous session recovery, supported by U.S. opening: American indexes remain quite strong and bullish in this first hour of activity, supporting also USD/JPY rises that reaches the 92.20 level on firmer U.S. bonds.

What to expect

Too early to say, stocks could lose momentum and favor some dollar recovery against majors thus seems no important break will take place today, as market players will likely wait for next Tuesday and Wednesday data, that includes first line reports such as U.S. Durable Orders, among others.

Gold continues leading currencies behavior, as well as oil, and as long as both commodities remain strong, dollar will remain mostly weak.

Japanese yen, and Gbp, are the next weaker currencies in order despite latest Pound recovery. While USD/JPY needs to overcome the strong resistance area between 92.30/50, GBP/USD could reach even 1.6410 level before resuming downtrend. From the fundamental side, rumors of further QE in the U.K. will weight on any Pound attempt of recovery.

Published on  Mon, Oct 26 2009, 15:01 GMT

U.S. Update: Majors on their ways

Fri, Oct 23 2009, 16:01 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Weekend thoughts

Majors are ending the week less related to greenback that what a first glance can say. Most relevant data in Europe gave support to Euro that holds comfortable above 1.50, since early Asia. An improvement in euro zone manufacturing and services PMI, plus an increase above expectations of industrial orders, support the EUR/USD upside bias, despite falling stocks and commodities. Won’t be an easy level to break for Euro, yet a daily close under 1.4940, not seen at this point, could support more greenback gains ahead of next week, while general bias remains bullish.

But Pound fell nearly two cents in Europe Friday after U.K. GDP showed that the economy contracted 0.4% in the third quarter instead of starting to expand as forecasters had expected. GBP/USD continues pushing lower, consolidating at the daily lows, supporting more downside pressure to come in the rest of the day, and even more next week, if pair manages to close American session under 1.6320 area, 38.2% retracement of the last daily up leg from 1.5707 to 1.6692 high from last Asian session.

Swiss Franc continues approaching to parity, following more sentiment and risk appetite than own strength. After failing to regain the 1.0100 zone, pair is back under pressure, as not many investors seem to be worried about interventions. However, don’t get surprise if the pair quickly change bias: parity could be a great reason for central banks movements, thus most of them usually take place in the European session. Pair could even break under parity after London close, so be aware.

Japanese yen continues falling, reaching the 92.00 level against greenback; USD/JPY remains consolidating close to that zone, suggesting more upside to come in the week ahead. Pair is slowly regaining ground, exactly in the same way that lost it: consolidating around each rounded number. As long as above 91.40, bias remains quite positive for this cross.

Commodity currencies, AUD and CAD continued gaining ground, yet compared to gold at $1060/oz and crude barrel above $ 80.00 as seen earlier, majors had been shy of winnings. Seems it’s time to consider some exhaustion there, thus talking about a reversion is too early: Australian dollar is far from breaking key 0.90 zone that could change the midterm bias, while Canadian dollar turning point is even more far away: consider 1.1000 zone, before talking of a bullish midterm change.

Gold remains market main driver since a couple of months ago, and seems to be quite comfortable consolidating in between two key points: 1080 and 1042. Above first one, inevitable target seems to be 1200, translated into more risk appetite and dollar falls, while under 1042 corrective movements will begin. Only under 980 we could start considering a bias change in the metal.

Finally, FED has supported some dollar rises earlier today, suggesting rates could not remain “extremely low” as they had make us believe in the last months. We need to wait for next FOMC speech to find furthers clues there in a couple of weeks, yet we can read at this point FED is begin to sow some worries about dollar weakness. Printing money no doubts, don’t favor a currency strength yet, they could take action sooner than market is expecting, not today, not next week, but anyway, trigger a dollar trend change.

Published on  Fri, Oct 23 2009, 16:05 GMT

U.S. Update: Full action despite holiday

Mon, Oct 12 2009, 14:08 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite most of the big stocks market have been closed today, both Japan and U.S., currencies did not rest. Neither does gold that is back above $ 1050/oz while crude tested the $ 72.00 a barrel area. Commodities keep leading the way, sending U.S. futures higher, and dollar down across the board. Among currencies correlated with commodities, Canadian Dollar is the main winner today, after reaching 1.0315 levels, a 1 year high against greenback.

Despite Wall Street remains close, U.S. futures hit fresh yearly highs, with S&P reaching the 1080.25 level and DJIA 9926.5 points. Triggering a strong risk appetite rally among currencies, Euro enters the American session close to the 1.4800 area.

Pound remains weak after printing a five-month low early Europe, at 1.7530 area; despite an upside correction, pair remains strongly bullish in 4 hours charts, and as long as under 1.5920 chances of a recovery dilute.

No mayor data has been published today, except for U.K. Prime Minister Gordon Brown announcement, confirming that he planned asset sales of 16 billion pounds over the next two years as part of a deficit reduction strategy.  Brown plans are set to help cut a budget deficit expected to exceed 12 percent of GDP this year, while rates likely to remain low till 2011.

Japanese yen that fell to key 90.40 area against greenback, retreat from that zone as sellers come to market between 99.20/40 area. Pair needs to clearly overcome that area to confirm further upside movements, not seen today.

What to expect

Market will return fully open later in Asian session, and dollar likely to remain under selling pressure against majors rivals; currency market remains under the risk aversion/appetite mode, and as long as stocks and gold keeps rising, current trend overextend or not, no doubts will remain in place. Don’t expect Pound to regain the upside anytime sooner.

GBP/USD Outlook

Daily charts in GBP show pair continues drawing a perfect figure, after breaking the neck of the head and shoulders figure past September 24th, and even completing a pullback to that zone. Scaling down trough strong support zones, daily indicators hold a bearish bias strongly supported now by 20 SMA that rotated to the downside, about to cut 20 EMA. 20 SMA acting as dynamic resistance zone, will set around 1.6100, close to key 1.6110 figure neck above mentioned, the inflection zone for the pair: only clear daily close above that level, together with a volume increase of buying, could deny current perspective, thus to call for a bullish movement, in the midterm, pair needs to move at least above 1.6240, not seen at this point. Immediate supports come at 1.5770 and 1.5720, while above 1.5860, resistances lie at 1.5920 and 1.5950.

Published on  Mon, Oct 12 2009, 14:09 GMT

U.S. Update: Changing perspective

Fri, Oct 9 2009, 15:19 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Closing another week in market, this time with a slightly change been felt across the board; despite gold keeps strong and hit a fresh yearly historical high at $ 1060.50/oz, optimism has lost steam; EUR/USD failed to regain the 1.4800 level, thus bias remain slightly bullish at current point. One could have expect an approach to 1.50 area with such a strong movement in gold, compared to past weeks correlation with dollar and the commodity; however, we did not see a fresh yearly high in the pair.

Commodity currencies however, remain strong, with all the small dollars reaching fresh yearly highs; Australian dollar remains comfortable above 0.9000 area, reaching almost 0.9100 past Thursday; technically overbought, no signs of reversal there, as long as above mentioned 0.90, pair seems to be addressing to next key level, 0.9300 area. Canadian dollar better than expected employment report today, send the currency to the lows 1.0400 as we were expecting; at current levels, pair has no much till parity: weekly close under 1.0500 could be first confirmation of such movement. New Zealand dollar, has retreat from the 0.7450 yearly high, with Central Bank Governor complaining about such strength damaging economic recovery.

And he is not alone in that; many central banks are complaining about the exaggerated strength of their currencies, mostly in Asia, yet Canada is also there. Still we have no signs of a change in dollar bearish trend, at least this comments has made majors enter in current consolidative stage, from where we could start planning next movements.

Pound remains the second weakest currency across the board, and as long as under 1.6000, no doubts midterm bearish. Clear break under this week low of 1.5860 area will confirm an extension of current movement, with next key level to watch close to 1.5720 area. While EUR/USD could extend the upside, GBP/USD bullish movement remains quite limited at this point.

Japanese yen also strongly bearish, seems to have based around 88.00; clear sign of such bottoming needs a movement above 90.40 area, to confirm midterm upside corrections. With unemployment expected to keep worsening, more steps will be needed there, so strength should remain limited in the Asian currency.

What to expect

U.S. Stocks regain the upside strongly this week, and remain close to yearly highs; market player’s attention is leaving partially gold and moving there. Fresh highs there will put dollar under more pressure mostly against European rivals, and likely push Japanese Yen down.

However, we should not discard interventions; keep in mind, Switzerland has had no troubles in downgrading there currency, and despite pre election talking, Japanese Prime minister already talk about intervention if yen remains one sided. Canada and New Zealand could be next ones to move in that direction, triggering some risks aversion across the board, that will end favoring greenback.

Published on  Fri, Oct 9 2009, 15:21 GMT

U.S. Update: Another quiet monday

Mon, Oct 5 2009, 16:28 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Market started the week in slow motion, with no much definition across the board. With Sydney close on holiday, majors spent most of the Asian session in tight ranges, except for Japanese yen crosses, that lost ground against most rivals, after Japanese Finance Minister Fujii state in G7 meeting he would likely intervene markets if yen remains one bias.

Despite stocks movements, mostly down in Asian session, dollar is still depending on gold movements. With the commodity established comfortably above $1000/oz, risk aversion rallies favoring greenback remain limited.

Early data show England PMI print a better than expected 55.30 reading, showing signs of improvement in the U.K. economy; however Pound remains weak, and failed to breach above 1.6020 resistance area, retreating strongly to current 1.5920 support.

U.S. data also show an improvement in ISM Non Manufacturing PMI, that print a 50.9 showing that services industry expanded for first time in more than a year. U.S. stocks turned positive, yet failed to trigger risk appetite: EUR/USD remains capped under 1.4630 area, a daily descendant trend line coming from 1.4842 high, also 20 SMA in daily chart.

What to expect

With a heavy-data week ahead, seems unlikely majors will change current consolidative stage till next Thursday BOE and ECB rates decision in the schedule. Despite both central banks are expect to remain with no changes, market players will be watching them carefully.
Gold remains leading the way: as long as the commodity quotes above 1000/oz, dollar will remain under pressure. Watch there to the downside, the 980 support zone, and to the upside, 1031, historical high. Dollar destiny is in gold hands.

Published on  Mon, Oct 5 2009, 16:30 GMT

U.S. Update: Lots of things going on

Wed, Sep 30 2009, 15:22 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

No doubts, lots of things are going on in markets this end of September. Despite usually we have quiet days by the end of the month, markets are far from quiet. Asian session, dollar fell across the board, mounted on a strong recovery in gold prices, and U.S. futures, along with local shares market. Dollar fell to intraday lows of 1.6110 against GBP and 1.4680 against EUR, bringing back to markets optimism on global economic recovery. Gold regained the 1.000/oz level, and triggered risk appetite across the board, that last till U.S. opening.

Also data in Asia and Europe support the bias, as mostly come out better than expected, except for euro zone CPI;  inflation print another negative reading even under expectations. Deflation is extending above Europe, despite whatever Mr. Trichet says.

But U.S. data was the one that triggered contrarian movements, with ADP printing a worst than expected -254K and Chicago PMI far under 50.00, previous month reading and division line between growth and recession, coming out at 46.1. U.S stocks change to negative while gold fell to 995 level, triggering a dollar rally across the board.

Also influencing market, was the non official Swiss Franc intervention, that jumped almost 100 pips in a couple of minutes; SNB is determinate to avoid appreciations in their currency, they had act in the past, and they are now show how strong that determination is. Swiss reached the 1.4150 area against dollar, and 1.5240 against Euro.

What to expect

At this point, seems we have no clear definitions to talk about a trend. Sentiment flip flaps still remind us that the bright future is not that bright. Economic recovery is not around next corner, and strong appreciations harm that recovery, despite crowds like it or not.

We are in a consolidation stage, ahead of further definitions, that should come during this and next week, with the main reports of the month, U.S. Non Farm Payrolls, and ECB and BOE decisions.

EUR/USD Outlook

Daily chart in Euro, is showing quite a zone at the 1.4600 level, where we have both, the 38.2% retracement of the last up leg, and the 20 SMA that holds a bullish slope. However, indicators had turned to the downside, with momentum about to cut the 100 line, and RSI close to cut the 50 level, in not the best angle to suggest some downside continuation. Still, that 1.4600 zone that’s capping the downside is the first stone pair has in a probable way down; daily close under that level, will put the pair under pressure, with 1.4515 not so strong support ahead of more important 1.4440 area; that zone will be key as under such level, chances of stronger falls growth. To the upside, 1.4680 is the first level to watch, followed by 1.4720 area, as regained of that zone will suggest current movements are just downside corrections, and trigger more upside rally for the days to come.

Published on  Wed, Sep 30 2009, 15:24 GMT

U.S. Update: Gold return to lead; dollar holds

Tue, Sep 29 2009, 15:22 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Key points for majors

Doubts among investors extend, and the sentiment is quite good reflected in the currency markets. On one hand, we have the dollar strong bearish rally seen the past couple of weeks giving up, as traders found it may have been an overreaction; greenback seems ready for further gains in the midterm and close to confirm such movements, against a number of majors. On the other hand, gold, under $ 1000/oz, still strong and above the 980 support area, is keeping dollar contained from a more interesting run. Yet overall, safe haven dollar will likely regain it’s status, on rising concerns over the global economic recovery strength.

 U.S. indexes to the downside and losing ground support further dollar appreciation for next hours, with major crosses close to key points:

EUR/USD needs to break under 1.4500/15 area, 50% retracement of the last upleg, to extend current rally, while only above 1.4650, not seen today, pair could regain previous upside trend.

GBP/USD failure to regain the 1.6000 area, so we need a daily close there above 1.6020 to call for a recovery; under 1.5880, the downside will be exposed again.

USD/JPY continues pushing higher, and could be signaling a midterm bottom at the 88.20 low reached past Monday, thus we need the pair to overcome 90.35 and better 90.70 resistance area to confirm the bias. Under 89.60, chances dilute and put yen strength back in place.

USD/CHF key level to watch to the upside is the 1.0420/40 zone. A daily close above that level, should send the pair close to next midterm strong resistance at 1.0550, while the downside should remain limited by key 1.0320 zone. To confirm further falls however, pair needs to move under 1.0250, not seen at this point.

Published on  Tue, Sep 29 2009, 15:24 GMT

U.S. Update: Slow Monday, strong movements

Mon, Sep 28 2009, 15:46 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Despite seems to be a slow Monday as usual lately mayor changes had come across the board. Asian opening with Nikkei strongly down as all regional shares, triggered risk aversion across the board, sending dollar and yen higher with different strength and results. No doubts, Japanese Yen become the star as the USD/JPY hit an eight-month-low at 88.23 due to a growing view that U.S interest rates will remain low for longer than expected, and the Japanese Finance Minister Hirohisa Fujii comments about current yen appreciation not been abnormal.  Later in the day, the minister ease his pro yen bias saying that present movements seem little one sided, sending the pair back to past Friday New York closing levels around 89.50.

Euro and Gbp remain under pressure against dollar, as fresh concerns about global economic recovery triggered some risk aversion following stocks. Gold, remains slightly under the $ 1000/oz mark, still with no clear definitions. Yet while GBP/USD sunk to 1.5760 area, Euro failed to break under 1.4550 strong resistance zone.

Only important data in Europe show German inflation continues to fall, as preliminary CPI fell to -0.4% from 0.2% last month; however, ECB’s President Jean Claude Trichet refused to talk about deflation in his speech, and continued affirming inflation in the euro zone,  seen positive but “subdued” in coming months.

What to expect

Wall Street recover from negative opening as investors used last week's selloff and a number of merger announcements as a reason to jump back in to equities, and continues pushing higher, sending dollar slightly down across the board. GBP/USD regained the 1.5900 level, while EUR/USD keeps hovering around 1.4650 area far from definitions at this point, yet unable to leave the bullish tone of past week.

Dollar will likely extend the fall today, with Gbp clearly weak and Japanese Yen strong; being the end of the month, some profit taking could be seen and dollar could benefit from that, but general sentiment  remains strongly bearish for the U.S. currency.

Published on  Mon, Sep 28 2009, 15:47 GMT

U.S. Update: Dollar bearish trend remains intact

Fri, Sep 25 2009, 16:15 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Week is about to end exactly as it started: with a strong dollar bearish sentiment across the board, and with GBP being the only exception.

Gold prices, that reached the $ 1020/oz. zone early in the week, are now just under the $ 1000 level, while U.S. stocks that begin the week clearly positive, had turned to the downside and are about to close negative, after these past two days not so encouraging U.S. data; despite that, and some short lived risk aversion rallies, seen here and there, EUR/USD bounced at the 1.4600 area, 62.8% retracement of the monthly fall 1.6038/1.2330, and seems investors had found a comfortable consolidation range between 1.4600/1.4850 for the days to come.

USD/CHF spent the week capped under 1.0320 level, and failure to break above. Trend remains strongly bearish there, and a weekly close under 1.0210 will put parity on the table. Seems SNB has decided to backup from intervention, and will likely wait to see EUR/CHF close to 1.5000 to worry about the Swiss Franc appreciation.

USD/JPY hit today the 89.50 finally breaking the 90.00 psychological level, after new Minister of Finance state they are not willing to weaken their local currency. Close at current levels will reaffirm bearish trend and a retest of the 87.10 yearly lows.

GBP/USD is playing another game. Pair confirmed the break of the neck of a head and shoulders figure in daily charts at 1.6110, also under another key level, 1.6040, 38.2 % retracement of the weekly fall from 2.0158/1.3502; about to close the week under that zone, will likely signals further falls in the midterm in the pair.

Commodity currencies, particularly AUD and NZD related with gold price, remain strongly positive, close to yearly highs, as the commodity price remains around the $ 1000/oz. Canadian dollar, supported by BOC’s Governor warnings about a strong currency harming local recovery, and falling oil prices turned to the downside, and as GBP, is closing a losing week against dollar.

Day is not yet over, thus seems unlikely to see majors break key levels in the next few trading hours. Anyway, watch these levels:

EUR/USD 1.4600

GBP/USD 1.5910

USD/CHF 1.0320

USD/JPY 90.35

Weekly close under or above them could gave greenback the air American currency is needing. Have a great weekend!

Published on  Fri, Sep 25 2009, 16:17 GMT

U.S. Update: Just waiting

Wed, Sep 23 2009, 15:02 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Early Asia, dollar tumbled across the board, hitting fresh annual lows against Euro, Swiss Franc and commodity currencies, after the release of a better than expected GDP in New Zealand; the report, supported a risk appetite spike, that send dollar down to 1.4840 against Euro, from where the pair quickly retreat.

Later, greenback regained some of the lost ground as Asian stocks went into negative territory, but with half markets closed due to holiday, volume remained low ahead of FED decision to be release in the next few hours.

Early Europe, market attention focused on Gbp and the BOE’s September minutes, that show that the Committee voted unanimously to keep both interest rates on hold, and QE at 175 billion, not discussing about cutting the rate the BOE pays on commercial banks' deposits. That pushed GBP to the upside, and send it to the 1.6450 area, yet trading remained thin most of the day, ahead of FOMC.

Also, euro zone's industrial new orders rose 2.6% month-on-month in July, slower than a revised 4% rise the previous month, while German manufacturing PMI come out better than previous month, yet under expectations and still under the key 50 level.

What to expect

Overall, dollar remains weak across the board, supported by the idea that the U.S. rates will remain at very low levels for a sustained period, minimizing the appeal of U.S. dollar holdings. All will depend of what FED officials may signal: it they maintain previous comments that the U.S. economy has started to recover while maintaining their pledge to keep the benchmark interest rate near a record low for an “extended period”, greenback could resume downtrend across the board, while an extension of their emergency program will likely had the same effect. On the contrary, quite unlikely at this point, if Ben Bernanke and his colleagues create expectations that they will begin raising interest rates sooner, greenback could recover more than some ground.

Levels to watch

EUR/USD: 1.4840 / 1.4730

GBP/USD: 1.6520 /1.6360

USD/CHF: 1.0320/1.0210

USD/JPY: 91.70/90.45

Published on  Wed, Sep 23 2009, 15:04 GMT

U.S. Update: Dollar can't hold

Tue, Sep 22 2009, 15:55 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Holidays extend past Asian session, yet majors managed to keep running against greenback, with market unchanged: gold remains pretty well bid above $ 1000/oz, while risk appetite is in full shape, both pushing dollar day after day to fresh intra year lows against most rivals. Asian session trigger was better than expected NZD Current Balance that push the currency higher and dollar lower across the board. Only Gbp and Jpy remain far from year highs while the rest of the currencies continue extending gains. 

Again mo major fundamental decided currency destiny, but gold and stocks. Gold reached again the 1020 level, while U.S. indexes keep rising close to the year highs, with no signs of giving up. EUR/USD reached the 1.4820 level, and as usually these days, spend the past hours consolidating around that level. GBP/USD also rose close to the 1.6400 zone, 61.8% of the last Fibonacci rally 1.6567/1.6135.

What to expect

With BOE minutes and FOMC decision to be release tomorrow, seems unlikely majors extend current rallies in the next few hours, yet also seems quite unlikely to see some dollar strength even corrective. As long as stocks and gold remain to the upside, greenback has no chances.

However, any mention of rate hikes in the short term, or easing QE could change dollar bias very fast. Better supported will be if gold moves under 1000, also not likely at this point. Some profit taking from institutions, could trigger some risk aversion across the board and be the kick start of the correction, but no doubts, we will have to wait for the FED.

Published on  Tue, Sep 22 2009, 15:56 GMT

U.S. Update: Dollar correction underway

Mon, Sep 21 2009, 14:51 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

With holidays in several Asian markets, including Japan, Singapore and India, greenback managed to regain ground in low-volume trade, bouncing back against dollar and yen, in what at this point could well be consider just profit taking and a technical correction after past week bearish rally.

Gbp remains under pressure since Asian opening, unable to recoup ground with speculations of rate cuts ahead for next months. Gold, the main market driver had pullback to the $ 1000/oz area, and keeps hovering under that level unable to confirm a break.

Stocks in Europe remained under pressure, supporting dollar upside continuation: EUR/USD reached 1.4610 support zone, while GBP/USD approached to key 1.6110 level, neck of a daily H&S figure; if the pair manages to close the day under such level, figure will be confirmed and further loses are expected for Pound.

With almost no fundamental news to take care of, and with U.S. stocks in negative territory, dollar rally was halted by the U.S. leading economic indicators, that rose in August for the fifth straight time, capping the longest stretch of gains since 2004 and adding signals that the recovery is under way. The index rose 0.6%, after a revised 0.9% rise in July, according to data that the New York-based group released today.

What to expect

Greenback's two-week slide will likely slow and we are probably entering into a consolidation stage, as investors will be waiting for further for clues about when the Federal Reserve might start to raise U.S. interest rates, as the FOMC is schedule to announce its rate decision on Wednesday. Of course, no change is expected, but the focus will on the statement which accompanies the decision, particularly the ones regarding QE: FED is also expect to leave it unchanged, yet any comments about easing QE or indications of a shift towards an early increase in policy rates would be positive for the greenback, which has been hurt not only by rising gold, but also by low expectations for U.S. interest rates.

EUR/USD Outlook

Pair opened the week inside the daily ascendant channel, and started a downside correction: RSI now at 64.40 after reaching almost 74.00 was pre announcing this, for now, corrective movement. 20 SMA remains far under current price, around the strong 1.4440/60 level. Only confirmations under that price could made pair fall further, thus before such level, 1.4550 seems strong enough to keep the downside capped. General bias remains bullish, mostly drive by sentiment, yet as commented above, market will likely wait for Wednesday’s FED decision to define either a deeper correction or confirm further rises in the term. Daily key resistances levels to watch are 1.4720 and 1.4770 ahead of stronger 1.4860 area.

Published on  Mon, Sep 21 2009, 14:55 GMT

U.S. Update: Gold keeps pressing dollar

Wed, Sep 16 2009, 15:51 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Market had today one of those volatile, yet narrow trading days, with risk being the main driver of currencies. Gold reached an intraday high of 1020/oz, sending dollar to fresh yearly lows against most rivals, something we are seeing on daily basis at this point. EUR/USD reached the 1.4720 level early Europe, and Japanese Yen hit the 90.00 level, after Japan’s incoming Finance Minister Fujii says current forex moves are not rapid, that he is opposed to forex intervention if forex moves gradual, and in fact a strong yen has merits for the Japanese economy; however, at list in the short term, both majors retreat from such levels, unable to break higher. Gbp remained all day capped under 1.6520, still unable to regain the upside after yesterday’s BOE Governor’s King comments.

Commodity currencies such as AUD and NZD break above major resistance levels after gold rally, that has settle comfortably above 1000 and consolidates around 1015, suggesting a very soon retest of the historical high of 1030/oz. Break above that level, will be very harmful for greenback.

Mid American session, rumors of two members of the FED wanting to hike rates sooner than expected trigger a dollar rally, that send Euro to 1.4650 and JPY to 91.40 zone, as nervous traders rather took profit that risk chances of such circumstance. However, seems unlikely the FED will do such thing in the short term. Next meeting will be next September 22-23, so we need to pay extra attention to this month minutes.

What to expect

Stocks in the U.S. keep rising, and I want to share this S&P chart with you: the index is about to break above the 61.8% retracement of the last weekly fall, coming from  August past year. A weekly close above 1060 will be quite important, as will suggest further recoveries there in the term and no doubts, confirm a trend change in stocks. Will that change dollar trend also? Well, there will come a time when rising stocks will mean rising greenback, as it used to be; we are having better macroeconomic data that supports the U.S. recovery; we have a chance of a rate hike. The worst disadvantage I see at this point, that will made dollar reverse more painful and not soon enough, is gold above $ 1000/oz. If the commodity lose that level, something I can’t see at this point, market could surprise as all and turn around. 

Published on  Wed, Sep 16 2009, 15:53 GMT

U.S. Update: U.S. data surprise to the upside. Now what?

Tue, Sep 15 2009, 15:48 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Quiet Asian session, with Japanese yen mostly lower across the board, after finance minister Kaoru Yosano on the undesirability of rapid foreign-exchange movements helped to support the dollar and euro against the currency. Majors mostly ranged, with Nikkei 225 closing the day negative, due to worries from local exporters; dollar trend remained generally bearish against any other rival.

Plenty of data today both in Europe and the U.S., show that  German’s  investor confidence rose to the highest level in more than three years in September after the ZEW index of economic expectations, which aims to predict developments six months ahead, increased to 57.7 from 56.1 in August.

In the U.K. macro show that inflation has fallen to its lowest level since January 2005: the CP) dropped to an annual rate of 1.6% in August from 1.8% in July. But the Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments and housing costs, rose, to -1.3% from -1.4%. The Bank of England aims to maintain inflation at 2% to keep both prices and the broader economy stable. However, comments of Governor King made Pound slump after he state that the BOE, is considering cutting the rate it pays on reserves from commercial banks to encourage them to channel more money back into the economy. As commented yesterday, Gbp remains the second weaker currency after dollar, and breaking under the 1.6520 key support has helped to accelerate the fall.

Much better than expected data in the U.S. with Retail Sales surging in  August by the most in three years, a 2.7%  increase that exceeded the median forecast of economists. Also, PPI rose by 1.7% in August, powered by the biggest gain in energy prices since November 2007. Finally, manufacturing in the New York region grew in September at the fastest pace in almost two years, as the Empire State index rose to 18.9 from 12.1 in August. Last month’s report was the first time since April 2008 that the reading was above zero, the dividing line between expansion and contraction for this index.

What to expect

Seems strange that market players keep talking of a falling greenback due to uncertainty over the strength of the U.S. economy; today’s data overcome any positive expectation, sending stocks higher, with dollar up across the board at this hour, slightly up against Euro, Swissy and commodity currencies, stronger against Gbp and Yen. Wall Street opened and remained in red territory, while the main market driver, gold, remains hovering and consolidating around the $ 1000/oz. Maybe that’s one of the main reasons of dollar weakness, as despite winning some ground today, general perspective remains bearish for the greenback and is quite far from changing bias.

GBP/USD Outlook

Pair lost more than 200 pips from today’s high, and halted exactly at the 20 SMA in the daily, that usually acts as dynamic support/resistance for the pair. Clear close under it, no doubts will mean further falls; being flat, with momentum turning down, and CCI about to cross the 0.00 line, pair has a bearish perspective for the days ahead; 4 hours charts however seem exhausted, so we would likely see some upside correction in the pair before another leg down. Key resistance to watch in that case will be the 1.6520 area. From current level, intermediate resistance lie at 1.6480, while under today’s low of 1.6400, supports come at 1.6376 and 1.6320.

Published on  Tue, Sep 15 2009, 15:49 GMT

U.S. Update: Dollar down again

Mon, Sep 14 2009, 15:44 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Greenback extend losses this Monday, despite some recovery during Asian session, triggered by  speculation trade protectionism between the U.S. and China will increase, boosting demand for the relative safety of Japan’s currency. The yen gained versus all 16 major counterparts after China announced a probe into the alleged dumping of American auto and chicken products, sparking concern trade disputes could derail the global economic recovery, yet Japan Minister of Finance, halted the yen appreciation talking again, about “watching closely currency markets”; USD/JPY tested the 90.20 level before recovering to the 90.80/91.00 area, yet remains strongly bearish in bigger time frames.

Early Europe, a report show that the euro zone industrial production slipped 0.3% in July from the previous month compared to a revised 0.2% drop in June. Annually, industrial output was down 15.9% in July, while economists were looking for an annual 16.7% drop. The decline for June was revised to 16.7% from 17%. Euro fell to as low as 1.4520, while Gbp reached key 1.6520 support on Moody’s negative outlook of U.K. banks.

American session opening reverse the situation, and dollar fell sharply across the board, with Euro soaring to a fresh yearly high of 1.4652, with Wall Street up and gold back above $ 1000/oz.

What to expect

Despite some corrective movements, dollar bearish trend remains in place. Maybe Japanese yen could be close to losing it’s strength, yet we are far from confirmations there. Also, Gbp recovery to the 1.6600 level, is keeping the pair in the wide 3 months range we have been seeing, remaining the second weakest currency after greenback. 

In about an hour U.S. President Barack Obama, will be talking to Congress urging for the approval of the US regulatory regime. In a speech to mark one year since the collapse of Lehman Brothers bank, he will also mount a vigorous defense of his administration's economic policies. The US president will focus on "the need to take the next series of steps" in regulatory reform. With sentiment strongly ruling market, seems hard any speech, or fundamental, will be able to change dollar bias this days.

EUR/USD Outlook

Daily charts remain bullish, with the pair close to the roof of an ascendant channel, around 1.4650. Daily close above that level could be key, as will no doubts suggest further upside continuation in the pair. RSI around 69.00 suggest pair is approaching to overbought levels, and could trigger some downside corrective movement before an attempt to break higher, with next resistance at the 1.4720 area, ahead of 1.4810 level. Immediate support comes at the 1.4550 level, and only under 1.440 pair could give change bias, not seen at this point.

4 hours charts, on the other hand, changed after U.S. opening and momentum remains strongly bullish with current candle opening above 20 SMA and with a slightly bullish slope. Current candle forming a doji could signal upside rally is done for today, yet, we need to wait for the close before confirming such tough.

Published on  Mon, Sep 14 2009, 15:45 GMT

U.S. Update: First warning

Thu, Sep 10 2009, 14:54 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

During Asian session majors mostly consolidate waiting for further clues to advance. BOE decision early Europe, was one of the main factors that kept market quiet, despite strong rise in Asian share markets.

Maybe news don’t involved directly dollar, or Euro or Gbp, however two very important things happened past Asian session, that we all must take into account: one, New Zealand leave rates unchanged at 2.5% historical low, yet holding the easing bias, after governor Bollard state that NZD appreciation is not good for an economic recovery; speech was quite dovish, despite market expects a rate hike sooner than later; the second thing, was that unemployment in Australia grow beyond expectations, also limiting chances of a rate hike there. Both countries are expected to be the first ones to raise rates, despite central banks are not stating such thing.

In fact, the strong appreciation in all currencies against dollar, triggered by risk appetite and rising gold prices, producing overextended rallies in almost every other currency, could not be welcome by fragile economies on recovery process.

Canada also leave rates unchanged, yet again a bank member complained about economy being harmed by the dollar speculative fall. Even more, Swiss Franc has been intervened again once approached to the 1.0360 support zone. Leaving Japanese yen aside, central banks seems to have decided to take more aggressive measures to send market players a message, and that seems to be, it’s enough.

Still early to call for a reversal in dollar trend, or even for a top in majors, we could not ignore what these last 24 hours central banks have said. Anyway, U.S. stocks remain close to the year highs, while gold holds around 990/oz, so don’t expect changes to come today.

Early Europe, U.K. house prices rose for a second month in August by 0.8% to an average of 160,973 pounds ($266,000) after rising 1.2 percent in the previous month. Prices were down 7.6% from a year earlier. The report adds to evidence that the property slump is easing. Mortgage approvals rose to a 15-month high in July.

Data in the U.S. was quite disappointing as the trade deficit widened in July: the gap between imports and exports increased 16% the most in more than a decade, to $32 billion from a revised $27.5 billion in June that was larger than previously estimated. Imports soared 4.7%, outpacing a 2.2% gain in exports.

What to expect

Majors are far from yesterday’s high, despite gold and stocks; due to the overbought state most currencies have against greenback this seems to be a logical corrective movement. Whether or not dollar will regain some bullish strength, will depend on the break of some technical key points that anyway, are also far from current levels:

EUR/USD needs to break under 1.4445/60 strong area to turn down; Gbp/Usd, now above 1.6600, should breach at least 1.6550 to lose bullish momentum, while Swiss Franc needs to recover the 1.0520/50 area to avoid further falls. Japanese Yen, that remains strongly bearish is moving on it’s own: at this point, an approach to the 90.00 are seems more than likely and even a break of that level to the 87.00 lows. 

Watch for commodities currencies, such as Aud, Cad and Nzd: they will lead the way along wit stocks.

Published on  Thu, Sep 10 2009, 14:56 GMT

U.S. Update: Endless dollar weakness

Wed, Sep 9 2009, 15:37 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

After past Tuesday greenback bearish rally trough mayor key points, Asian session was mostly consolidative, advancing another wake of dollar weakness; gold prices, above $ 1000/oz, where no doubts the main driver of this dollar fall, also supported by rising stocks both in Europe and Wall Street, that keep well performing today.

Fundamental data released today show that U.K. visible trade balance for the month of July printed a widened deficit to 6479 million pounds relative to the revised 6515 million pounds from 6451 million pounds deficit and the forecasted 6250 million pounds deficit. Total trade balance, it also showed a widened trade gap to 2447 million pounds from the prior deficit of 2176 million pounds which was revised to 2366 million pounds which is worse than the predicted 2000 million pounds deficit. Another key factor that keeps on weighting on Pound, ahead of tomorrow’s BOE decision. GBP remains to be the weaker currency against greenback, with the 1.6550 level capping the upside.

Also, German inflation was flat in August, while in July, consumer prices fell by 0.5%, mainly owing to lower energy costs in comparison with their spike to record levels a year earlier. Prices for household energy and motor fuels fell by 7% in August on a 12-month basis, while food prices were 3% lower, giving support to already rising Euro that hit a fresh year high at 1.4591, following also stocks recovery. Seems EUR/USD will attempt to retest the 1.4720 zone, past December high; that point will be a key long term level to watch: break above, will accelerate the upside, thus still seems unlikely the euro zone will tolerate such rise for too long.

The dollar remains at its lowest level this year against the Euro, the Swiss Franc, and Australian and New Zealand dollars, although most of this crosses show greenback is over sold against this currencies, aiming for a correction, yet not for a trend change.

The Dollar Index, which uses to track the greenback against the currencies of six major U.S. trading partners, fell as much as 0.6% today to the lowest level since September 2008, adding to dollar bearish bias.

What to expect

In the next 24 hours, 3 Central Banks will be announcing their monetary policy: New Zealand, the U.K. and Canada. Besides in a couple of hours, the U.S. will be releasing the Beige Book. Market will likely to settle down and consolidate ahead of such data, yet leaving aside the Pound, any dollar strength will likely to be corrective; don’t expect any sudden trend change for this week.

EUR/USD outlook

Pair remains clearly above past month ranges, and continues gaining upside momentum; form today’s high around 1.4600, pair has no mayor resistance till December high of 1.4720, followed by the 1.4870 zone; technically overbought in 4 hours charts, corrections should remain capped above the 1.4460 zone to keep the bullish bias intact. Under such level, a retest of 1.4250 seems possible yet not quite likely at current levels. Short term resistances lie at 1.4600, 1.4660 and the mentioned 1.4720; supports on the other hand, are at 1.4550 1.4510 and then 1.4460 area.

We know that market is being drive by sentiment. And not by fundamentals, but despite economic recovery signs we are seeing, ECB officials have warned several times about the fragility of such recovery and the need of a weaker euro to accelerate it. How long sentiment could keep Euro bid, is a question we all need to start asking at this point.
 

Published on  Wed, Sep 9 2009, 15:41 GMT

U.S. Update: Quiet Monday

Mon, Sep 7 2009, 14:38 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Majors remain mostly in range since early Asian opening, thus risk sentiment keeps dollar under some selling pressure across the board. Commodity currencies remain the main mover since early Europe, following gold prices that reached $ 995/oz, sending Australian and New Zealand dollars to fresh year highs.

Market is extending last Friday’s sentiment, after the latest employment data from the U.S. failed to undermine a positive tone for greenback. Although the number of non-farm payrolls fell less than forecast, the rate of unemployment in the U.S. rose more sharply than expected last month to 9.7% from 9.4%. The market had only been looking for an increase to 9.5%.

Early Europe, German factory orders rose for a fifth month in July, raising a 3.5%t from June, when they gained 3.8%. , Market was expecting an increase of just 2% percent, helping EUR7USD to reach an intraday high of 1.4360. However, orders remain still 19.8% lower than a year earlier.

Market attention was also focused on G20 finance ministers meeting: focus was on quantitative easing, as group made clear that a premature reversal of the unconventional easing of monetary policy that was adopted last year might threaten the global recovery, also boosting sentiment; due to U.S. holiday, seems likely market reactions will come on Tuesday markets.

Gbp remains under pressure, after failing to break above 1.6440 resistance area, after U.K. Prime Minister Gordon Brown said: "The risks still very much remain. To start now reversing the extraordinary measures would be a serious mistake." Also BOE’s meeting this Thursday, and rumors about another rate cut, are affecting pound.

What to expect

Majors will likely remain range bound today, due to thin volume; gold prices and commodity currencies will keep on leading the way, and probably set tomorrow’s opening; also watch for U.S. futures, as they continue rising: S&P is around 1021, close to the year high of 1031.75, while DJIA futures reached 9475 today.  That should keep dollar and yen under pressure for the next sessions, and market movements will likely to start with Nikkei 225 opening in Asia Tuesday.

GBP/USD outlook

Pair has lost the upside momentum, and daily charts show a probable reversal of past week strength as pair remains under 20 SMA and indicators turned to the downside. Quoting still inside the range we are seeing since early June, longer term trend is far from definitions, yet seems to be slowly turning to the downside; bias will remain valid as long as pair remains under key 1.6520 area, while likely to accelerate under 1.6107, past week lows.

For the rest of the day, expect the pair to remain in a tight range, with supports at 1.6360 and 1.6320 zone. Resistances lie at 1.6410, 1.6445, and finally 1.6480 area, not seen today.

Published on  Mon, Sep 7 2009, 14:40 GMT

U.S. Update: Getting used

Fri, Sep 4 2009, 15:40 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

At this point, we are getting used to be disappointed by market reactions. The so long awaited Nonfarm Payrolls report, show that, the number of unemployed people increased 216.000 last month, making the 20th consecutive month that the U.S. economy shed jobs, while unemployment rate rise to 9.7%; with market having the 10% figured already priced in, the news failed to send majors out of the ranges we are seeing since early June.

Euro approached to 1.4190, rebounding to the upside, to remain capped under 1.4250; Gbp test the 1.6280 area, to finally stabilize at 1.6330; Japanese yen attempted to breach above 93.00, and spent most of the day consolidating a few pips under that level.

U.S. stocks barely react to the news, and hovered around opening price, giving currency market no certain cues.

Only AUD remains pretty bullish close to the yearly high, but that’s mostly due to gold prices that rose to $998/oz. this Thursday, and remains quoting around $990/oz. Gold rise is also another factor that held dollar back; G20 meeting being held this weekend, will certainly gave no more clues but we will be hearing about being early to abandon stimulus despite signs of recovering.

Most likely, majors will close the day near pre payrolls levels, making uncertainty about further movements even deeper across traders. Only strong Japanese Yen seems to be the current trend to follow, while watching Aud reaction at the 0.8500 level (and gold if continues approaching to 1000) could be the answer to this trendless market.

Published on  Fri, Sep 4 2009, 15:41 GMT

U.S. Update: Preparing for Payrolls

Thu, Sep 3 2009, 15:52 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia and Europe

Currency market remains moving regarding stocks mood, so the  sharp rally in Chinese shares boosted sentiment in risky assets and pushed the dollar and the yen back down; early Europe, sentiment remain strong, sending GBP to test the 1.6410 level, and Euro close to 1.4340 resistance zone.

Early data also support the rise in both currencies, as Euro zone final services rose to 49.9 from a previous reading of 49.5, while the U.K. Services PMI also rose printing a 54.1 reading in August. But retail sales in the 16 nations that use the euro fell 0.2 % during July as summer sales and warm weather failed to tempt shoppers into spending. . Worries over rising unemployment have slowed consumer spending over the past year despite a real fall in energy and food prices from record highs last summer.

ECB finally decide to leave rates unchanged at 1.0% historical low, while market waited for Trichet’s speech: ECB President remained cautious in his assessment of the economy despite acknowledging some early signs of stabilization. He stated that the deep economic contraction of Q1 appears to have ended and that in Q3 the euro zone economy will likely stabilizing further. However, he also said that the recovery is likely to be very gradual, noticing that “Prudence and caution are of the essence” and that monetary policy remains “appropriate for now”. That sent Euro down under 1.4300, also supported by worst than expected U.S. data as the number of U.S. workers filing new claims for jobless benefits fell last week, by 4,000 to a seasonally adjusted 570,000 in the week ended August 29 from an upwardly revised 574,000 the prior week.

U.S. stocks erased early gains and fell following the data, sending dollar and yen higher across the board. EUR/USD reached an intraday low of 1.4236, quickly rebounding from there to stabilize just under 1.4280 resistance zone. GBP/USD remains under selling pressure, and reached 1.6330 before halting the downside movement.

However, the U.S. services sector shrank again in August, but an index measuring activity was at its highest in nearly a year. The ISM said its services index rose to 48.4 in August from 46.4 in July. That was slightly above the 48.0 median forecast, yet still below 50 the level that indicates expansion in the sector. The last time the index was at the 50 mark was September 2008.

What to expect

Stocks in the U.S. recover some upside momentum, and remain slightly green at this point with DJIA up 20 points and S&P up 2.6, still under the 1000 key mark.
 Market is getting thinner as usual before payrolls; don’t expect too much movement for the rest of the day. Maybe some covering, and some positioning, yet more likely, a short consolidation range.

Published on  Thu, Sep 3 2009, 15:55 GMT

U.S. Update: No way out?

Wed, Sep 2 2009, 15:14 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia and Europe

Despite risk aversion/appetite movements, despite falling rising stocks and despite good and bad fundamental data, majors remain trapped in previous three month ranges. Except maybe Japanese yen that looks a bit stronger, yet also approaching to strong midterm support level, still market has not found a way out.

Uncertainty continues ruling forex market, yet from early Asia, a general decline in equity markets helped dollar and mostly yen to post gains against major rivals.

In the U.K., construction activity fell at its slowest pace in 18 months in August after the construction PMI index rose to 47.7 in August from 47.0 in July, giving Pound some aims to recover the 1.6200 level. Euro also regained some ground and test the 1.4250 level, but failed to break above, and fall down to the 1.4200 area.

In the U.S., nonfarm private employment decreased 298,000 from July to August 2009 on a seasonally adjusted basis, according to the ADP National Employment Report. The estimated change of employment from June to July was revised by 11,000, from a decline of 371,000 to a decline of 360,000. Despite this August employment decline was the smallest since September of 2008, the report triggered a risk aversion rally, sending stocks to the downside, with dollar and yen quickly following to the upside. USD/JPY reached a fresh 7 weeks low and remains clearly bearish, aiming for a retest of the key 91.70 midterm support zone.

What to expect

Since Wall Street opening, currencies are just following stocks moving accordingly to DJIA and S&P in the short term. S&P remains under 1000, yet struggling to regain the level, while DJIA is just above 9300 level. No range, any support or resistance level broken, except in Japanese yen crosses that remain pretty bearish, we have FOMC Minutes in a couple of hours. But at this point, seems unlikely the statement could wake up this sideways market.

Gbp/Usd Outlook

Slightly bullish today, pair still looks bearish in the daily chart: capped by a descendant trend line, and with 20 SMA well above current price and turning bearish; current rally has been halted for now, by the strong 1.6250 area after pair rebound from the 1.6110 lows. Immediate resistance above mentioned 1.6250 comes at the 1.6320 area, where we have the trend line, ahead of stronger 1.6375/80 highs. Supports from here, lie at 1.6520, 1.6160 and 1.6110.

Published on  Wed, Sep 2 2009, 15:19 GMT

U.S. Update: Dollar down on commodities

Mon, Aug 31 2009, 15:30 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia and Europe

Majors started the week almost unchanged, except for Japanese Yen, that after an historic election victory for Japan's main opposition party, appreciated against major rivals, with  USD/JPY falling  to as low as Y92.54 - its lowest level since July 13. The EUR/JPY fell to Y132.17, its lowest level since July 17, while GBP/JPY reached 150.00 zone. Later strong fall in Asian shares, lead by Shanghai composite that lost 5.3% triggered some upside corrections in Japanese Yen crosses.

The fall in Chinese equity markets overnight produce some safe-haven demand, supporting the lower-yielding dollar and yen against riskier assets.

Early Europe and due to a bank holiday in London, liquidity was more than thin, with European majors capped in a 40 pips range since Asia opening, EUR/USD between 1.4250/1.4300, while GBP/USD between 1.6180/1.6220 area.

A Eurostat report show also that the euro zone annual rate of inflation was negative in August for the third consecutive month. Prices fell 0.2% in the past month following a record 0.7% fall in July, on yearly estimated basis.  Inflation in the euro zone has been dragged down by lower energy and food prices and by falling demand from both companies and households. The downward trend began in June with a 0.1% fall in prices.

What to expect

Early U.S., Chicago PMI, that measures U.S. business activity rose more than forecast in August, adding to signs that the economy may be entering a recovery, as readings above 50 signal growth. The business barometer increased to 50, the highest level since September, from 43.4 in July.

U.S. stocks tumble at the opening, losing more than 100 points in the first 30 minutes, following Asian shares fall; however, majors are quickly rising against greenback, as month-end flows are making act of presence in forex market; besides oil and gold rising prices seem to have turned into market main driver today: dollar falls on commodities appreciation.

Expect the downtrend in stocks to accelerate as September approaches as it tends to be historically a negative month for stocks.  Don’t expect too much more action for the rest of the day, as market likely remain in past days range, GBP capped by 1.6300, and Euro holding under 1.4385/1.4400 strong resistance area. Swiss Franc again rebounded on 1.0550 critical level: now needs to overcome 1.0630 to reverse the downside bias.

Eur/Usd Outlook

After previous sessions tight range, Euro managed to overcome 1.4300 but failed to reach strong 1.4385 resistance zone. Trapped back in range, daily charts remain flat with no clear bias for the pair, yet slightly bullish at the end. However, pair needs to clearly break above 1.4450 to extend the rally in the midterm.

4 hours charts indicators have turned slightly bullish also after strong break higher, with 1.4355 and 1.4385 as immediate resistances to consider, ahead of 1.4410, daily descendant trend line. Pair can lose upside momentum only under 1.4300, with 1.4280 and 1.4250 as immediate supports.

Published on  Mon, Aug 31 2009, 15:33 GMT

U.S. Update: Dollar testing year lows

Fri, Aug 28 2009, 14:55 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia and Europe

After late U.S. session strong dollar bearish rally, majors spent most of Asian session consolidating around New York closing levels. Japanese yen lost some ground against dollar and Euro, as Japanese importers bought the two currencies ahead of their month-end book-closing. But rallies did not hold as weak Asian share markets encouraged short-term investors to buy back the safe-haven yen.

Early Europe, dollar remained consolidating close to year lows against most rivals, as data supported European currencies: in the U.K. economy contracted 0.7% showing the fall in GDP was less than the 0.8% previously calculated last month. Anyway, report also show that the economy shrank 5.5% from a year ago, the most since records began in 1955.

In Europe, confidence in the economic outlook increased more than economists forecast in August, adding to signs ending recession; a consumer sentiment index of the euro zone rose to 80.6, the highest since October, from 76 in July.

However major pairs were mostly in an overbought state, as well as American indexes (that reached fresh year highs before the opening bell) and crude oil were also overbought, signaling that a strong move to the upside in majors was quite unlikely.

Data in the U.S. show consumer spending edged up in July but incomes, were flat. Consumer spending is key when talking about the economy attempts to emerge from recession; meanwhile University of Michigan index was revised up to 66.6 for July, yet less than July reading of 70.5. Not very encouraging data send Wall Street down from earlier highs, still in positive territory at this point.

With Gbp still being the weakest currency across the board, Gbp/Usd quickly fell under 1.6300 following stocks. No doubts, the pair holds the bearish tone despite general risk appetite sentiment.

Euro however, continues holding above key 1.4340 area, and the bias remain bullish as long as the pair continues in current levels. That’s also keeping USD/CHF under pressure, as the pair barely holds above the 1.0550/1.0520 level. Despite previous interventions by SNB should not attract sellers at this point, bearish tone persists.

Japanese Yen remains strong ahead of general elections, unable to regain the 94.00 despite whatever stocks do. Won’t be a surprise if the pair opens next Asian session with some huge gap.

What to expect

With summer about to end, would be interesting to see what will happen when liquidity returns to market; would market players take profits from this year lows, or will dollar bearish trend finally set to stay?  After three months of more or less narrow ranges, will majors finally break or will they remain struggling to find a direction? Hopefully, the answers will be here in a couple of weeks.

Published on  Fri, Aug 28 2009, 14:56 GMT

U.S. Update: Dollar higher; don't blame it on stocks

Wed, Aug 26 2009, 15:45 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia and Europe

Past Tuesday quiet extended during Wednesday Asian session, with dollar and euro slightly up against the yen, following firmer regional share markets; Nikkei 225 was up 1.4%, compared with its closing price of 10,497.36 Tuesday. Meanwhile, the Shanghai Composite Index, commonly seen as a gauge of the state of the Chinese economy, was 1.5% higher, recovering some of past week losses.

European morning was also quiet, despite German business confidence rose for a fifth month in a row, bolstering confidence that economy is improving. The Ifo business climate index increased to 90.5 in August, the highest level since September and above economists’ forecasts for a reading of 89. Euro rose again to the 1.4340 area, where pair failed again to breach higher. Gbp was unable to regain the upside, and continued falling after breaking under 1.6270 key support.

European stocks spent most of the day in negative territory, thus near to close, are barely 0.45% down.

America data surprise both in numbers, and market reaction:  Orders for durable goods rose last month by the largest amount in two years, increasing 4.9% in July, the third rise in the past four months. Orders for June were revised up to a 1.3% drop, from a 2.2% decline. As core durable orders come under expectations increasing just 0.8%, stocks reacted to the downside, yet dollar trigger a strong rally, pushing higher against European rivals; but was after the New Home Sales publication, that also rose this time 9.6% for a fourth straight month in July to set their fastest pace since last September, that dollar extend the rally trough key resistance/support zones.

EUR/USD lost the 1.4250 area and reach an intraday low of 1.4206; pair remains hovering around that zone, suggesting rally is not over yet thus we could see some short upside corrections due to over sold state in smaller time frames.

GBP/USD fell to 1.6160 from where the pair began a small upside correction, yet 1.6270/1.6300 should keep the upside capped today. Consolidation at current level, will be just a rest in the new born downtrend.

USD/JPY hold above 94.00 and remains trapped in range. Pair seems unable to define a trend for now, in there we will have to wait for next weekend general elections results in Japan, that could bring some surprises in Sunday opening.

USD/CHF regained the upside after forming a triple floor at the 1.0550 area. Quoting around 1.0700, rally also seems overextended, and longing for a downside correction, that could reach the 1.0650 area without harming current trend. Above 1.0730, expect the pair to extend the rally despite over bought conditions.

 
What to expect

Stocks inched lower Wednesday morning, with energy and financial shares leading the decline, as investors took a step back after pushing indexes to fresh 2009 highs Tuesday, yet holding the positive territory; however at this time of the day, DJIA is 20 points down, while S&P lost 3.3 points.

At this point, seems dollar needs a downside correction before another leg up against majors rivals. Yet as long as we remain under those mentioned and broken levels, dollar could easily extend it’s gain during the rest of day.

Published on  Wed, Aug 26 2009, 15:50 GMT

U.S. Update: Still in range

Tue, Aug 25 2009, 16:05 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia and Europe

Asian session was mostly a slow range session, with Pound crosses extending previous last Monday their fall. The Shanghai Composite Index (Chinese stocks, closely watched these days, due to strong relation between China and U.S.) fall a 2.6%, while Nikkei 225 also fall 0.79%, falling to break above previous yearly high around 10630. European stocks spent the morning in red, while currencies barely move ahead of U.S. consumer confidence data.

Confidence among U.S. consumers increased in August as consumers became less worried about the outlook for the labor market. The Conference Board’s confidence index rose to 54.1, more than forecast and the first gain in three months, from 47.4 in July, while prices of U.S. single-family homes rose for the second consecutive month in June: the S&P/Case-Shiller composite indexes of 10 and 20 metropolitan areas both rose 1.4% in June from May, almost three times the 0.5% from previous month.

Storm after the quiet, reports triggered a strong reaction in markets: U.S. indexes hit fresh year highs pushing high yielding currencies to the upside, with Euro reaching the 1.4360 area and Gbp strongly coming back from daily lows; however, spike did not last and both, stocks and majors fell to key support levels, from where again both stocks and crosses regained the upside.

What to expect

Dollar and yen are mostly down on the day except against Gbp that remains under strong selling pressure, yet for the most, all majors remain  inside past sessions range. Summer lack of trend is keeping majors with no definitions; true we are following stocks yet, considering American indexes have reached fresh highs for the year, the fact is that Gbp is around 600 pips away from that high, while Euro is having a hard time to reach the 1.4400 level.

As days gone by, investors are losing faith in global recovery, as , there is growing evidence that their confidence is misguided: moderating home prices in the U.S., the threat of more U.S. bank failures, slow euro-zone credit growth and lower corporate profits have all been flagged as developments that will ensure that third-quarter growth fails to match the healthy bounce seen in the second quarter and that the risk appetite sentiment will come under threat rather sooner than later; Gbp probed exhausted after failing to regain the 1.6600 level;  Euro breaching 1.4270 area, could follow its neighbor  steps.

EUR/USD Outlook

While daily charts show the pair has been trapped in a tight range since early June, yet with indicators showing some shy bearish divergences, 4 hours charts remain bullish, thus again pair failed to breach above 1.4350 area. Only clearly above that level we can call for some upside continuation, thus strong 1.4445 yearly high should made the pair retreat. Key support level lies at 1.4240/70 area: if broken pair could trigger some fear selling rally, and approach back to the 1.4050 zone.

Published on  Tue, Aug 25 2009, 16:07 GMT

U.S. Update: Dollar stronger despite rising stocks

Mon, Aug 24 2009, 15:57 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Greenback has been in positive territory since early Europe, even against yen that fell as gains in Asian shares bolstered investors' risk appetite and prompted increased buying of risk-sensitive units, against the Japanese currency.

Only data in European today show euro zone industrial orders increased more than economists forecast in June, rising 3.1% from May, the biggest gain in 19 months. Despite that, EUR/USD remained capped under 1.4340 resistance level, spending most of the day consolidating between 1.4300 and 1.4340, holding a slightly bearish tone.

Meanwhile in the U.S., the Chicago Federal Reserve says that improved production and income indicators help lift the July National Activity Index to -0.74 from a revised -1.82 in June, providing another sign of stabilization in the U.S. economy; that’s helping keep greenback positive across the board despite U.S. stocks continue rallying since pre opening, with the Dow Jones, S&P 500 and Nasdaq touching new 2009 highs, as investors extended the summer advance on hopes that the economy is close to recovering. The Dow Jones industrial average gains around 63 points at this time, while the S&P added 7 points so far.

Against what has been usual lately, European majors are unable to run mounted on rising stocks, and remain under selling pressure, particularly GBP that fell to an intraday low of 1.6400, still around that level and with signs of downside continuation.

What to expect

Seems dollar is finding some support in this quiet consolidative Monday, as failure of Europeans to break higher and signs of stabilization in American economy continue heading for some dollar strength; still, market is not quite convinced and with no doubts, will take a good couple of better than expected data to favor that perspective.

There are other two factors that could gave as further clues about currencies trend for the upcoming Q4: one, the end of summer and so, summed doldrums; the other, the continued speculation of a rate hike here or there: as closer a country or region becomes to a rate hike, as stronger the currency will be.

GBP/USD Outlook

As  we have been commenting since past week, several failure attempts to break above the 1.6600 level had increase the odds of a fall in Pound; since Asian opening, pair has been capped by a lower yet strong resistance level, 1.6520. Now hovering around 1.6400, daily charts had turned quite bearish, thus a daily close today under 1.6370/80 area will add strength to the bias.  Immediate support comes at 1.6320 ahead of 1.6260 and key longer term 1.6200 support zone. To the upside, resistance are located at 1.6440 1.6475 and the mentioned 1.6550. Longer term bias could turn bullish only if pair confirms above now far away, 1.6660.

Published on  Mon, Aug 24 2009, 15:59 GMT

U.S. Update: Dollar beats risk appetite

Fri, Aug 21 2009, 15:44 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Asian session started with dollar slightly positive as Nikkei lost 1.4% with auto manufacturers struggling due the prospects of the very successful U.S. "cash for clunkers" incentive scheme ending next week. The Shanghai Composite index managed to end the session with a 1.7% gain and restored some appetite for risk, after dipping on talk that the People's Bank of China was considering tightening bank capital requirements.

Early Europe dollar fell to intraweek lows against all rivals, as Europe’s manufacturing and service PMI contracted at the slowest pace in 15 months in August, adding to signs the worst recession in more than six decades is easing. Readings were above expectations for the euro zone, Germany and France, sending EUR/USD above 1.4300, and GBP/USD close to 1.6585.

Japanese yen, reached an intraday low of 93.40 against dollar, extending previous days rally.
Risk appetite triggered a strong short lived spike after the release of U.S existing homes sales jumped more than forecast in July to the highest level in almost two years, signaling the housing crisis that crippled the world’s largest economy is easing. Purchases climbed 7.2 % to a 5.24 million annual rate. EUR/USD soared to 1.4375, while GBP/USD hit 1.6625 after U.S. indexes climbed to fresh year highs.

Yet all of a sudden, rallies reversed and Euro fell to reach the 1.4280 support, while Gbp sunk to 1.6460 area. USD/JPY, trigger a strong upside rally, breaching above the 94.00 level and reaching 94.70 zone before halting the run.

What to expect

Stocks remain strong as well as greenback against all rivals; S&P is at 1.25 points, while DJIA is close to 9500, levels not seen since past October 2008; despite that, seems unlikely to see European majors reached today’s high in the next hours.

As we continue with the concept that economy is improving around the world and that the worst of the crisis is over, there will come a time when on daily basis, things will be like today: good data for U.S. will mean rising dollar and not the opposite. However, it will still take some time to convince market players. Next few trading hours, will probably be range ones, far from daily highs.

Published on  Fri, Aug 21 2009, 15:45 GMT

U.S. Update: Risk flip flaps

Thu, Aug 20 2009, 15:47 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Despite a strong rebound in Asian stocks, majors remain inside previous day range; dollar and euro gain some ground against the yen, but the rise was limited as Japanese exporters were willing to sell the currencies to settle their accounts. Nikkei 225 Stock Average was up 1.7% at 10,374.97 as of 0450 GMT after it closed down 0.8% on Wednesday. China's Shanghai Composite Index was up 2.1% at 2,844.05, recovering part of Wednesday's 3.0% loss.

Early Europe, Pound hit an intraday high of 1.6602 on higher than expected retail sales to quickly lost more and break under 1.6500 on the back of a sharp increase of UK public deficit. Euro spent most of the European morning consolidating between 1.4200 and 1.4250, despite higher commodity prices and positive stocks.

U.S. data, supposed to add clues to this non directional market, show a strong increase of unemployment that hit 576K past week, sending dollar up across the board, on falling stocks. However, business activity has improved against expectations in the Philadelphia area in August, as the Philadelphia Fed Index rose to 4.2 from -7.5 in Jul, against the market expectations of a milder improvement, to -2.0%.

What to expect

Commodities lost the gained ground, while U.S. stocks open and remain in positive territory, thus currencies remain unable to leave ranges: USD/JPY moves between 94.00/94.30 area, USD/CHF consolidates between 1.0630/1.0680, while Euro remains trapped in the above mentioned range. Gbp, remains capped under 1.6500/20 area, yet above key 1.6440 support zone.  Seems consolidation will extend during all American session, as no further macro data will be published till late Asia. Watch for confirmations as false breaks are likely today.

Eur/Usd outlook

EUR/USD is unable to break the range where the pair has been trapped since early Europe. Consolidating between 1.4200/1.4260, pair is moving inside a small consolidation channel in 4 hours charts, usually understood as a continuation figure, thus take a look at this 4 hours charts: past 6 candles have been dojis, showing how much uncertainty the market have today. Clear breaks and confirmations are not seen at this point, thus indicators are turning bearish; smaller time frames remain quite flat, we must need a strong trigger to see the pair breaking the range and seems is not going  to happen today.

Published on  Thu, Aug 20 2009, 15:48 GMT

U.S. Update: Risk flip flaps

Tue, Aug 18 2009, 14:54 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Asian session was mostly corrective after yesterday strong risk aversion rally that push dollar and yen up across the board. Nikkei 225 open slightly down yet managed to recovered, sending Japanese yen back down, regaining the 95.00 level against dollar, while Euro managed to stay above 1.4100.

Early Europe, the U.K. inflation rate unexpectedly held at 1.8% a sign the economy continues staving off deflation as the recession eases. The annual gain in consumer prices was the same as in June, which was the lowest level since September 2007. The report helped GBP/USD to reached a session high of 1.6480, from where the pair retreat to the 1.6430 zone.

Regarding euro zone, Investor confidence in Germany rose sharply in August as hopes grew that the economy will recover faster than previously expected: the ZEW survey, which measures investors' outlook for the next six months, rose to 56.1 points in August from 39.5 points in July, far beyond expectations, lifting Euro to an intraday high of 1.4140, barely under key 1.4150 selling zone reported from Asian banks.

Pairs fell sharply however in a spike of risk aversion, after U.S. data: housing starts and permits unexpectedly fell in July; the Commerce Department said housing starts fell 1% to a seasonally adjusted annual rate of 581,000 units, well below market expectations for 600,000 units. June's housing starts were revised up to 587,000 units from the previously reported 582,000 units. However, groundbreaking for single family homes the worst part of the housing market, rose 1.7% to an annual rate of 490,000 units, the highest since October. PPI also fell 0.9% in July, as prices for energy and food dropped, easing inflation concerns, while the core producer price index, which excludes volatile food and energy prices, fell 0.1%.

Wall Street opening dilute the risk aversion spike after stocks bounced, regaining some momentum after a two-day selloff, as better-than-expected earnings from Home Depot helped soothe some worries about a strapped consumer.

What to expect

With DJIA and S&P in positive territory and commodities back up, risk sentiment flip flapped again to appetite, and GBP/USD regained the 1.6520 level, comfortably addressing to 1.6550 key zone. EUR/USD struggles to hold above 1.4100, while USD/JPY hovers around 94.75 area.  Intraday long swings inside previous days range seem to be the name of the game for this summer August.

Eur/Usd outlook

Despite weaker dollar across the board, the pair is unable to regain the upside after spent most of the European session struggling with the 1.4100 level. Daily charts indicators remain bearish while price is well above 20 SMA that lost the bullish slope. 1.4150 remains fist key level for the next hours, ahead of stronger 1.4200 zone, that should keep the upside capped.  Still far above the daily ascendant trend line, 1.3980/1.4000 remains key support to the downside, ahead of dynamic trend line today around 1.3920. under that level, pair could resume downtrend, thus not seen for this week. Mostly expect the pair to remain range bound between 1.4050and 1.4200.
For the next hours, supports lie at 1.4080 and 1.4045, while resistances above 1.4110, lie at the mentioned 1.4150 and the 1.4200 zone.

Published on  Tue, Aug 18 2009, 14:56 GMT

U.S. Update: Dollar stronger on risk aversion sell off

Mon, Aug 17 2009, 15:18 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Following past Friday negative sentiment, market has decided to extend the risk aversion rally, after Asian shares drop sharply this Monday. Japan's economy grew for the first time in five quarters in the April-June period, with preliminary GDP printing 0.9%, even though it was less than expected.

Also, during Asian session, the Rightmove HPI show U.K. house prices fell sharply to -2-2% from a  previous reading of 0.6% as sellers priced their homes at more realistic levels: Gbp, break under 1.6440 key support and trigger a strong sell off that send GBP/USD to test 1.6275 during Asian session, where the pair bounced slightly in what is was just some profit taking.

Despite euro zone trade balance posted the biggest monthly trade surplus for two years in June as exports outpaced imports, with levels of trade remained depressed compared with last year due to the global economic crisis, EUR/USD was unable to detach from risk aversion and falling stocks: the pair hit an intraday low of 1.4045 with American opening, and remains under pressure, as Wall Street continues losing ground.

What to expect

Dollar and Yen are taking the lead today, and rally seems ready to extend as majors are unable to even trigger some short term corrections. Stocks remain hovering at daily lows and seem investors are quickly unwinding what seems to have been a too fast too optimistic rally.
Expect more downside pressure ahead of America, with maybe some late short term corrective movements before renewed strength send dollar higher. EUR/USD key support lies at 1.3980, while GBP/USD could extend the fall to 1.6200 before attempting a corrective movement.

Gbp/Usd outlook

Pair breached under the long term ascendant trend line and accelerated the fall. Daily charts remain bearish at this point with an immediate support at 1.6250 ahead of 1.6200; still inside long term range from early June, if 1.6200 finally gives up, 1.6000 is next important support level to consider, ahead of stronger 1.5750 zone. Corrective movements should remain capped under 1.6400/1.6440 area.

Published on  Mon, Aug 17 2009, 15:20 GMT

U.S. Update: Risk aversion returns

Fri, Aug 14 2009, 15:55 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

U.S. data continues disappointing after the U.S. consumer price index in July remained unchanged from June, while core CPI, which excludes food and energy prices, rose 0.1%. CPI falls 2.1% from a year ago, the largest 12-month decline since January 1950. Later, the fall in UOM consumer confidence index to 63.2 trigger a major sell off in stocks that push dollar higher across the board: aversion regained trading desks and EUR/USD reached an intraday low of 1.4208, while GBP/USD failed to hold above 1.6600 and come back to strong 1.6520 area. This far both pairs remain inside previous week range, giving no clear clues for what we could expect ahead of next week. Far from a trend change, movements, even in stocks remain just corrective.

Early Europe, euro zone CPI was slightly worse than expected, dropping 0.7% versus expectations of -0.6% for both the monthly and yearly figure on the back of falling energy prices. Meanwhile, the core CPI rose 1.3% from last year. Rising unemployment also put downward pressure on CPI, that fell at the fastest rate on record in July; still, yesterday’s news of returning economic growth both in  Germany and France may lead to an earlier-than-expected emergence from deflation.

In the mid time, dollar falls to its lowest level in more than a week against the yen, printing an intraday low at 94.41, yet also inside past week trading range.

Commodity currencies have been the top movers today, with AUD/USD down from 0.8478 highs to 0.8300 and USD/CAD reaching 1.0948 from an intraday low of 1.0812. NZD/USD also fell after printing an 11-month high of 0.6884, and quotes around 0.6775.

As we approach to London close, greenback continues gaining ground against major rivals, thus as previously mentioned, just corrective; closing at current levels, will probably mean some interesting opening gaps for next Sunday Asian session opening. 

Published on  Fri, Aug 14 2009, 15:56 GMT

U.S. Update: Uncertainty rules

Thu, Aug 13 2009, 14:59 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Yesterday’s strong positive sentiment that triggered strong risk appetite all trough Asian session is tumbling early U.S. session, after worst than expected data in America.

The number of Americans filing claims for jobless benefits unexpectedly rose to 558,000 last week, while the number of people on unemployment rolls dropped to the lowest since April, signaling the labor market may be stabilizing as the recession eases. But Retail Sales unexpectedly dipped 0.1% in July after rising in the two previous months, signaling weak consumer demand amid a long recession.

Strong stocks rally halted and reversed dragging European majors from intraday highs: GBP/USD, that reached the 1.6670 area, fell quickly under 1.6600, to test key support around 1.6560, from where the pair recover previous bullish trend. 

Early Europe, Germany reported second-quarter growth of an unexpected 0.3 percent on the first quarter of the year, while France preliminary GBP also come out better than expected rising a 0.3%, giving Euro further support: EUR/USD rose to test the 1.4300 area, and reached an intraday high of 1.4330, before American data harm sentiment, and push it down to 1.4260 area, from where the pair return just under 1.4300.

What to expect

Despite U.S. negative data and a first risk aversion spike that didn’t last, majors regain previous bullish trend against greenback, as sentiment remains strong. Stocks remained hovering around the opening, with no clear clues yet still strong despite negative data. Seems we are entering in a consolidation stage ahead of further definitions. 

Eur/Usd outlook

Eur/Usd remains quite strong biased, struggling to confirm the 1.4300 level. Daily indicators have turned slightly bullish as well as 4 hours ones. First important resistance zone comes at 1.4340 level, that if broken will find quite a clear way till 1.4400. Above that lies 1.4475 year high. For the next hours, clear movements under 1.4260 must be seen, to call for a corrective movement with immediate support around 1.4240 and then 1.4200 that should keep the downside capped in order to sustain the bullish perspective.

Published on  Thu, Aug 13 2009, 15:00 GMT

U.S. Update: Stock up, dollar down

Wed, Aug 12 2009, 16:09 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

American stocks rallied since the opening, as investors welcomed a narrower-than-expected trade deficit and an upbeat profit report from Applied Materials ahead of the latest from the Federal Reserve. Dow Jones gained 117 points, or 1.3%, in the first hours and continues rising, while the S&P 500 index rose 11 points.

Majors leave previous two days range and European currencies gained upside momentum, particularly GBP that reached the strong resistance zone at 1.6550, daily 20 SMA. Euro regained the 1.4200 level and is struggling to hold above it, while Japanese Yen breached above 96.00 against greenback after reaching an intraday low of 95.12.

As the Fed concludes it’s two day policy meeting today, policy makers may acknowledge economic growth will be faster than they anticipated, while expected to hold rates steady at historic lows near zero percent. The Federal Open Market Committee is scheduled to issue its statement around 2:15 p.m. East Time in Washington.

Market players will be closely watching statement, and comments regarding QE. Despite the FED is not expected to say much about what the exit strategy may be after putting so much stimulus into the financial system, is neither expected to extend that policy. The lack of cues regarding how soon rates will rise, could disappoint market, sending stocks lower and dollar higher later in the day.

Eur/Usd outlook

Eur/Usd strong rebound from 1.4080 low, reached the 1.4220 level, 20 SMA in the daily. 4 hours indicators have turned bullish after American session opening run, and the pair is comfortably consolidating above the 1.4200 zone ahead of FOMC decision; with an immediate resistance at 1.4240 ahead of 1.4290, if the pair manages to approach to that zone, more bullish continuation is expected for the rest of the week. Supports in the midterm come at 1.4150, 1.4080, and the daily ascendant trend line at 1.4020.

Published on  Wed, Aug 12 2009, 16:10 GMT

U.S. Update: What to expect ahead of FOMC

Tue, Aug 11 2009, 16:51 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

Despite intraday swings, European majors come to the end of American session trapped in small ranges. Euro is between 1.4100/1.4190 since past Asian opening, while GBP/USD remained between 1.6430/1.6520, ahead of tomorrow´s FOMC decision; despite the FED is widely expected to leave the funds target range at 0.0 percent - 0.25 percent, and since past January they anticipated rates will remain exceptionally low for some time, market fears an extension of the QE program, after past Thursday BOE shocking decision. Besides, investors usually remain unwilling to make any hefty moves before policymakers offer their latest take on the economy and inflation.

Market attention will be whether if FOMC decides to extend or cut their QE efforts. An extension of quantitative easing, will signal things are not so good as market consider after past Friday’s payroll, and we could see a sharp fall in stocks; due to actual inverse correlation, that will probably mean a stronger greenback, yet more likely a stronger yen across the board; ending the QE program, or suggestions of a rather sooner than later rate hike, will trigger optimism in America recovery, and we could well see a strong rally in U.S. indexes; again chances favor an inverse correlation with dollar, and the result well could be a stronger Euro and Gbp. Despite both currencies had been under selling pressure since past Friday, longer term bullish bias remains intact as key long term support zones remain intact.

Last scenario, but less likely, will be a stronger dollar on stronger stocks as seen during Payroll publication. The only currency that will straight follow stocks will be Japanese yen, that has reached and holds the highest correlation with S&P since early July; watch the market to remain thin in Asia, thus I don’t discard more yen appreciation across the board, as Nikkei 225 will probably follow Wall Street negative tone.

Gbp/Usd outlook

That the pair remains inside a bullish trend, is quite clear taking a look at this chart; that the bias could tumble under long term ascendant trend line, supported by bearish indicators, is also a good point. Wednesday FOMC minutes could well offer the trigger market is waiting for: above 1.6550/1.6600 area, the bullish trend will turn firmer while break under the trend line, around 1.6370, could accelerate the fall. Still, pair has some strong support levels (at 1.6200, previous consolidation range base, and 1.6000 psychological level) to beat, before confirming the trend change. If finally 1.6000 gives up. 1.5700 is next logical target in the midterm.

Published on  Tue, Aug 11 2009, 16:53 GMT

U.S. Update: Dollar extends gains

Mon, Aug 10 2009, 14:43 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Quiet start for the week as usual lately, supported by the lack of fundamental data ahead in Europe and America. Majors gave up some ground against the yen in Asia Monday, more likely some profit taking after past Friday’s rally; anyway, Japanese Yen may remain under selling pressure as growing expectations of a global economy recovery extended with U.S. unemployment report.  Nikkei 225 closed 1.08% up, at 10524 points, levels didn’t see since past October.

Gbp has briefly benefitted from a slight rebound in Asian stocks, yet dipped faster along with Euro as both currencies, along with Swiss Franc, remained under selling pressure.

What happened in Europe

Only report in Europe early morning, show that the latest Sentix survey in the euro zone rose to -17 for August, the highest reading since August 2008. Economists were expecting the index to rise to -25.8 from -31.3 in July. Among the sub indicators, the current situation index moved up to minus 39 from minus 53.75 and the expectations index showed a positive reading of 8 points in August, after reporting a negative reading of 5.5 points in July. Despite that, Euro spent most of the journey struggling to regain the 1.4200 level but failed: with U.S. opening, EUR/USD quickly fell to test past week low at 1.4150, strong support area, while GBP/USD also fell to test 1.6550.

Adding to falling European stocks, the extension of the QE in England past Thursday ahead of this Wednesday’s Inflation Report, has triggered a strong negative sentiment on Pound. Fighting with deflation, the U.K. recovery perspective slumped, along with their currency.

What to expect

Wall Street opened to the downside this Monday as investors took a step back after a big rally that pushed the Dow and S&P 500 to the highest levels in 9 months; yet despite indexes need an important downside correction, 1 hour after the opening are struggling to turn positive: DJIA is 16 points down while S&P lost barely 2 points at this time.

This week, a full slate of U.S. economic data will put on trial this new dollar strength, and if signals of continue economic recovery extend, we could be well seeing the reversal of a market tendency that has held over the past year of recession.

Gbp/Usd outlook

GBP/USD has reached key support level 1.6550 zone, 20 SMA in the daily chart. Over sold in 4 hours charts, yet with no signs of correction yet, strong fall from 1.7045 could signal a potential top and send the pair to retest the ascendant trend line coming from March lows at 1.3653, now at 1.6380. Confirmations under that line, could trigger a longer term bearish rally in the pair, with 1.5700 as a probable target zone.

For the rest of the day, immediate resistance levels at 1.6600 and 1.6660 should keep the upside capped to validate the view. Break under 1.6550 not seen, will find next supports at 1.6520 and 1.6470 zone. Daily close at such levels could accelerate the fall this week.

Published on  Mon, Aug 10 2009, 14:46 GMT

U.S. Update: BoE surprise market

Thu, Aug 6 2009, 14:45 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Quiet session in Asia, European majors remained in tight ranges ahead of BOE and ECB decisions. Yen drop on strong Nikkei 225 rise, and lack of yen supportive factors. Euro remained capped under 1.4400, while Gbp hold above previous 1.6940 support but unable to regain the 1.7000 zone. 

What happened in Europe

BOE surprise markets by extending their QE by 50B billions, triggering a strong fall in Gbp. The U.K. pound has shown the largest-scale losses against the dollar so far, dipping by over 0.8% to hit a low of $1.6825 against the dollar, before recovering some ground thus unable to regain the 1.6900. The increase of QE signal that improvement in the U.K. economy could not have been as much as investor thought and that’s the main reason of the fall, supported also by U.S. stocks negative tone.

Meanwhile ECB as expected held its main reference rate at 1.00%, and in the press conference later,   ECB President Jean-Claude Trichet's remarks played into a modest recovery off earlier lows for the euro. He also indicated that while euro-zone economic recovery is likely to be gradual and inflation pressures low for some time yet, there are increasing signs that the global recession is reversing and confidence is recovering faster than earlier expected. Finally he added that the ECB will withdraw economic stimulus in a timely fashion when required. Euro remained practically flat around 1.4380 after the announcement.

What to expect

Despite the number of U.S. workers filing new claims for jobless benefits dropped more sharply-than-expected last week, boosting views that the labor market and the economy were stabilizing, stocks are sharply down on the day, favoring some greenback wins across the board. Unemployment insurance benefits fell 38,000 to 550,000 in the week ended August 1 from 588,000 the prior week.

Stocks remain lower on the day, overcoming early gains; Euro break briefly under 1.4350 but rebounded at 1.4335 and quickly regained the level; Gbp reached an intraday low of 1.6790 before regaining the upside, as low come in intraday extreme oversold conditions. Despite that, both currencies remain quite bearish in 4 hours charts, and falling stocks add to the bias.

Usd/Jpy outlook

Pair is slowly regaining the bullish perspective in the midterm thus still trapped in the daily descendant channel we are following since early April. Above 95.90 maximums zone, 96.35, roof of the mentioned channel will be the key level to watch. Nonfarm payrolls tomorrow, will also be key: a better than expected reading could trigger more stocks rises, and push the pair higher; weekly close above channel roof, will open doors for further rises with 97.20 as first resistance to consider ahead of stronger 98.00 zone. On the contrary, supports will lie at 95.40, 95.00 and 94.70 zone. Further falls are not seen at current levels.

Published on  Thu, Aug 6 2009, 14:53 GMT

U.S. Update: Dollar weakness steady

Wed, Aug 5 2009, 15:30 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Majors remains mostly in consolidation mode past Asian session with yen slightly up  against the dollar and euro,  as weak Japanese stocks prodded investors into buying the safe-haven Japanese currency, while some players took profits on a spike overnight in the European unit. Nikkei 225 closed down 1.18%, sending U.S. futures slightly down. Gbp remained as the strongest currency across the board, well bid above the 1.6940 zone.

What happened in Europe

Gbp rose to a fresh 9 months high of 1.7040, mounted on more positive data early Europe: rise in U.K. industrial output data and in Services PMI help keep Pound higher across the board, despite falling stocks and directionless market.
Meanwhile, ADP private survey in the U.S. come out worst than expected, yet the 371K fall is the smallest monthly decline since October, according to payroll services firm ADP.

What to expect

U.S. service industries unexpectedly contracted in July as concern over rising unemployment gripped consumers. The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 46.4 from 47 in June, triggering some dollar strength across the board on falling optimism and stocks. However Euro managed to hold above key 1.4360 level, while Gbp quickly regained the upside after rebounding around 1.6940 area.

Dollar weakness against major rivals remains intact, despite optimism fade after U.S. ISM. Corrections have been limited, so expect to continue falling, as long as mentioned levels remain intact.

Eur/Usd outlook

Mostly flat in 4 hours, charts, the pair failed to break above the consolidation flag we are moving in since past Monday, yet also rebounded strongly when approached to the base. Flat 20 SMA along with slightly bearish indicators suggest 1.4444 high won’t be easy to break.  That’s the immediate level to watch for a break higher, that could send the pair close to 1.4500 zone. Base around 1.4350/60 should continue holding the downside, ahead of the last two days of the week, full of first line fundamental data: thursday will bring BOE and ECB economic policy decisions, will on Friday, the U.S. will publish Nonfarm Payrolls. Range should hold till then.

Published on  Wed, Aug 5 2009, 15:36 GMT

U.S. Update: Risk appetite on

Mon, Aug 3 2009, 15:15 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Weak start for greenback in Asia, as risk appetite continues moving on: the Euro rose close to the year high against greenback at 1.4310 as falling U.S. long-term interest rates and concerns over U.S. consumer spending weighed on the greenback. Gbp pushed up and resume midterm uptrend, after breaking 1.6742 till yesterday, the year high. Japanese yen fell against major rivals, and seems ready to extend the decline as risk appetite continues increasing.

What happened in Europe

Crisis bottoming signs feed risk appetite early Europe, as stronger than expected recovery in U.K. and euro-zone manufacturing PMI in July is fueling hopes in Europe: the U.K.'s manufacturing purchasing managers' index - a key gauge of conditions in the sector - rose to a 16-month high of 50.8 in July from 47.4 in June, while euro zone final PMI rose to 46.3 from 46.0 previous month reading. 

Being 50 the mark between expansion and contraction, the fact that the U.K. manufacturing expanded above that mark for the first time in more than a year, no doubts weighted on GBP that settled above 1.6800 during early Europe, while Euro remained just under 1.4300 after German retail sales fell by 1.8% in June from a month earlier.

Japanese yen lost momentum and spent most of the morning struggling to regain the 95.00 level against greenback, while break above 160.00 against Gbp, a seven-week high for the pair.

What to expect

U.S. manufacturing, also shrank less than forecast in July, after ISM rose to 48.9, an 11-month high, from 44.8 in June, recovering from a low of 32.9 in December, while  construction spending beat expectations and rose 0.3 percent in June. Both reports trigger a major rally in stocks, sending S&P briefly above 1000 while DJIA remains close to 9285 the year high.

Despite the week is full of first line data, investors don’t fear to run into higher yielding currencies as signs of recession continue easing strongly across the world. Technically, majors seems way overbought against greenback, thus correction should be triggered soon. Those corrective movements however, will likely to remain limited due to strong sentiment.

Gbp/Usd outlook

Pair has resume midterm uptrend, after breaking to the upside, both, 61.8% retracement of last weekly fall, and the roof of the range the pair has been trapped since early June. First strong resistance level comes at the 1.7120 area, followed by 1.7400 level. Downside corrections will find support around 1.6700, that should hold to keep bias intact. Intraday supports come at 1.6950 and 1.6900, while resistances from actual price lie 1.6980 and 1.7030.

Published on  Mon, Aug 3 2009, 15:18 GMT

U.S. Update: Optimism swings

Fri, Jul 31 2009, 14:56 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Dollar and Yen continued losing ground as optimism about the global economy has helped to boost risk appetite early in the day, also supported by Nikkei that gained 1.9% closing above 10.300 points, highest level of the year.

Also, sentiment received an additional boost from the news that an auction of 7-year Treasury notes had attracted strong support from overseas central banks, unlike auctions for 2- and 5-year notes earlier in the week. 

EUR/USD break above 1.4100, reaching 1.4155, 50% retracement of the last down leg 1.4300/1.4000 while GBP/USD also regain bullish steam and well sit above 1.6500, reached key 1.6550 zone. Japanese Yen corrections against greenback held above 95.20, ahead of U.S. GDP later in the day.

What happened in Europe

News in Europe early Friday, show European consumer prices fell by the most in 13 years in July after prices in the euro region dropped 0.6% from a year earlier, exceeding the 0.4% decrease forecast by economists,  while euro zone rose to a 10-year high of 9.4% in June, though the level was less than expected. Coming from a revised to the downside 9.3%, the number was the highest since June 1999.

Optimism fade after the publication of the U.S. GDP advance for the 2Q, showing that despite economy contracted at a slower-than-expected pace in the second quarter, revision for the Q1 print a -6.4% the biggest decline since a matching fall in the first quarter of 1982 from a previously  reported 5.5% drop. U.S. GDP has fallen for four straight quarters.

What to expect

Euro fell on the news, reaching 1.4100 while Gbp breached temporally 1.6500 on falling U.S. futures, pre America opening, thus the movement was short lived. Stocks struggle to regain the upside at the opening, and Chicago PMI gave the impulse needed: the business barometer increased to 43.4 from 39.9 the prior month, thus we need to remain that readings below 50 signal a contraction, and as long as we remain under that level, there’s not much to cheer about.

Dollar fell against European rivals with Euro quoting above 1.4160 level and Gbp again regaining 1.6500. Stocks remain positive, yet Japanese Yen continues appreciating after failing to break above yesterday’s 95.88 against greenback, reaching an intraday low of 95.10.

Eur/Usd outlook

Taking a look at daily charts, pair remains clearly trapped in past two months rage, thus the bias seems to have turned slightly bullish, after recent marginal break of the 1.4100 didn’t hold. Early to say, and hard to break, weekly close above 1.4220 area will be bullish supportive for next week. Strong positive sentiment in stocks still is not enough to push euro up, and as longer the 1.4300/35 area caps the upside, the less chances we have of an upside run. On the other hand, weekly close under mentioned 1.4100, also not seen while mean another retest of the 1.4100 zone. Pair remains stuck in range, and seems conditions could extend this August. Any attempt to the downside, should remain capped by the ascending trend line around 1.3960 to keep the range valid. That is the key point to the downside, as break under such level will probably precede another midterm bearish leg.

Published on  Fri, Jul 31 2009, 15:01 GMT

U.S. Update: Stocks higher, yen down

Thu, Jul 30 2009, 15:49 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

After past Wednesday dollar rally, Asian session was mostly corrective for currencies. Supported by comments from China that it isn't about to tighten monetary, global risk appetite returned to markets. Nikkei 225 closed at 10175 points, above previous year high. Anyway, Euro correction was halted just under 1.4100 as the hegemonic currency remained under pressure since past failure attempt to break above 1.4300.

Gbp/Usd rebounded strongly at daily 20 SMA that has been holding the downside from quite a long time already, and regained the 1.4660 level.

What happened in Europe

Early data in Europe, show German unemployment fell by 6000 yet the underlying change show unemployment rose in July as companies cut jobs to protect profits even as signs mount that the worst of the recession may be passed. The number of people out of work increased to 3.46 million from 3.41 million on an unadjusted basis, while unemployment rate remained steady at 8.3%.

Equity markets follow Asian ones and put dollar and yen under pressure during European morning, as investors dare to take back some riskier assets. Yet comments from the IMF kept Euro under pressure: the IMF’S European department told today that “more needs to be done” regarding euro zone, even calling for further rate cuts. They also add the ECB should be ready to counter deflation should the threat arise.

European confidence increased in July, after an index of executive and consumer sentiment in the 16 nations that use the euro rose to 76, the highest since November, from 73.2 in June, the European Commission in Brussels said today.

Gbp/Usd, mounted on general positive sentiment rose to test key resistance level around 1.6520, and despite failure to break above, remains better positioned than Euro.

Only news in America show unemployment applications rose by 25,000 to 584,000 in the week ended July 25, higher than forecast, yet less that the more than 600,000 claims were filed every week last month.

What to expect

American indexes reach fresh year highs and remain in positive territory, with S&P around 990 points and DJIA above 9200. Risk appetite get boosted today, thus Euro seems unable to mount on such optimism. Again market is teaching us that nothing is for granted, and a risk in stocks won’t necessary be reflected in currency markets. Japanese yen remains the main loser of this situation as against greenback, break above key 95.50 level. Daily close will likely gave more clues about pair destiny, while bearish longer term is not yet over.

Japanese yen next resistance lies at 96.10 zone, while roof of the daily channel should offer some strong rebound around 96.60 today. Weekly close above it, could confirm a bias change in the pair, and not before. At actual levels, 94.70 seems the probable floor for the rest of the week.

Published on  Thu, Jul 30 2009, 15:53 GMT

U.S. Update: Dollar wins this battle

Wed, Jul 29 2009, 15:52 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Asian session left investors with a strong negative feeling as stocks and future markets come into pressure after the 5% decline in China’s Shanghai Composite Index. Nikkei 225 managed to close in positive territory, yet currencies could not handle the sentiment and felt against dollar and yen ahead of U.S. data later in the day.

Euro and Gbp remained under selling pressure till Europe opening, where dollar favored rally extend across the board, amazingly even against Japanese Yen.

What happened in Europe

Early Europe U.K. mortgage approvals for house purchase hit their highest level in more than a year in June after loan approvals numbered 47,584 in June, up from 44,169 in May and above analysts' forecasts of 47,000. That was the highest reading since April 2008, and the report gave some temporal support to tumbling Gbp, that regained the 1.6400 level briefly.

In Germany, Europe’s consumer prices posted their first annual decline in more than 22 years in July dropping 0.6% from a year earlier, putting more pressure on Euro that breached the 1.4100 level following the negative market mode against the hegemonic currency.

Finally the Durable Orders report so longed expect by market add to dollar bullish scenario, after the report show a 2.5% drop in bookings for goods,  first decrease in three months following  a 1.3% increase the prior. Excluding transportation equipment, orders unexpectedly climbed 1.1%, the most in four months.

What to expect

Markets and stocks are waking different paths today: stocks struggle around opening level, slightly bearish at this point, nothing that justifies the strong greenback run across the board. Falling crude and gold prices are adding to dollars winnings even against Japanese Yen that regained the 95.00 level and seems ready for a continuation.

Euro reached the 1.4020 zone in extreme over sold conditions and seems ready for an upside correction before a new push lower.

Gbp/Usd remains capped by daily 20 SMA around 1.6350. Clear break under could trigger some strong selling in the pair, thus not clear for now.

Swiss Franc reached the 1.0900 level also in extreme conditions in smaller time frames and seems ready for a downside correction.

Still dollar fate and daily close, will depend on market reaction to the U.S. Beige Book publication, in about 2 hours.

Published on  Wed, Jul 29 2009, 15:53 GMT

U.S. Update: Stocks down, dollar wins

Tue, Jul 28 2009, 15:43 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

With majors in range and Nikkei 225 with no changes (in fact, the index close -0.01%) high yielding currencies begin to lost support after several failed attempts of running higher, and drawned first signs of dollar and yen upward correction. Japanese yen against dollar, break unde5 95.00 level, what Asian session note was for commodity currencies, as Australian dollar rose to a 9 months high, after RBA Governor Glenn Steven made some hawkish remarks suggesting that the Australian economy could well be coming out of recession in advance of most other countries. Understood as a probable rate hike, currency rose to 0.8337 very close to the 61.8% of the huge monthly fall at 0.8370. Canadian dollar also hit a multi months high on increasing oil prices, reaching 1.0745 pre Europe opening.

What happened in Europe

Lack of macroeconomic data leave stocks leading the way early Europe, and with U.S. futures in negative territory, dollar regained the upside since early morning.

Early U.S. data show homes grew on a monthly basis in May for the first time in nearly three years, with a 0.5% increase , according to the report from financial data company Standard & Poor's. This was the first increase in the monthly index since July 2006.

But was worse than expected U.S. consumer confidence that fell for second month in a row in July, what finally triggered market. The index, that slid to 46.6 in July from 49.3 in June send stocks in a strong downside movement that send Euro far under 1.4200 while Gbp is breaking under the daily ascendant trend line, coming form 1.6030 lows, now at 1.6430. Daily close under that line could confirm further falls in the next days, despite we are still above monthly range base of 1.6200.

Correction was stronger in commodity currencies, as gold and oil prices are also falling strongly in the American session, with USD/CAD close to 1.0900 and AUD/CAD approaching to 0.8200.

What to expect

Despite the strong fall in stocks, DJIA holds above 9000 while S&P is around 971 points with the 960 level as key support to the downside. Strong break under mentioned levels, logical correction to past two weeks upside rally, could accelerate dollar and yen winnings across the board. Watch that levels either for a hold or break; that will continue leading market movements. For the rest of the American afternoon, both Timothy Geithner and Ben Bernanke will be speaking, and those speeches are the only chance these corrections rallies have to halt or even turn.

Gbp/Usd Outlook

Gbp/Usd continues has accelerated to the downside after current candle opening under 20 SMA in 4 hours charts, and now is also breaking under the ascendant trend line coming form 1.6030 lows. With price struggling around 1.6400, clear break of immediate support at 1.6380 previous daily lows, under that level pair could continue today at least to the 1.6320 next strong support zone. To the upside pullback to the line should contained rises at 1.6430 level, while current candle close above the line will mean a failure break and pair could extend rise to the 1.6480 zone. 

Published on  Tue, Jul 28 2009, 15:45 GMT

U.S. Update: Still no changes

Mon, Jul 27 2009, 15:41 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Quiet start in Asia, with majors practically unchanged from past Friday’s New York close. Nikkei rose above 10.000 points, and managed to close with nice gains above 1% following the good mood that’s pushing stocks higher across the world.

Japanese Yen was slightly down against major rivals, mounted on a recovery of risk appetite, thus unable to clear the 95.00 level against greenback; Euro rose also during Asian session, while Gbp remained capped under 1.6500 level.

What happened in Europe

The lack of major data continues thus some early reports in Germany were Euro supportive, as German consumer confidence rose for a third month, increasing to to 3.5 from a revised 3 for July, a 14-month high. Also the import price index dropped 11.3% year-over-year in June, compared to the 10.4% fall in the previous month. This was the highest price decline since February 1987.

But rising stocks and higher crude oil prices that briefly surpass the $ 71.00 a barrel, boosted sentiment during European morning, sending Euro to the 1.4300 level and leaving yen falling against both euro and dollar. Gbp struggle all morning around the 1.6500 unable to define a clear trend, while Usd/Jpy get a boost from U.S. housing report.

Purchases of new homes in the U.S. climbed 11% in June, the biggest gain in eight years. Sales increased to a 384,000 while the number of houses on the market dropped to the lowest level in more than a decade.

What to expect

Despite the better than expected reading, stocks were unable to continue rallying and fell from intraday highs turning negative after Wall Street opening. More likely, seems to be just a corrective and consolidation stage, as DJIA remains well above 9000, now at 9071 points, while S&P hovers above 970.00.

From a technical perspective, most majors remain trapped in the same old ranges we have been seeing since early June. Euro failed to break above 1.4300 and come back to test the lows 1.4200. As mentioned, Gbp remains stuck to 1.6500, and maybe more interesting yet still limited movement belong to USD/JPY that settles above past week high, and continues pushing higher above 95.30 despite stocks.

Eur/Usd Outlook

Still undefined, pair has a slightly bullish tone due to higher highs and lower lows we see in daily charts, thus indicators remain flat and attached to center line. 20 SMA along with 200 EMA under current price both in daily and 4 hours charts suggest downside will remain limited still. 1.4160 is first support level to watch today, if pair manages to confirm under 1.4200 while 1.4250 is our immediate resistance level before another push higher. Longer term perspective should get confirmations either above 1.4225 year high or under 1.4100 level, that could  change current bias in the pair.

Published on  Mon, Jul 27 2009, 15:43 GMT

U.S. Update:10 days rally

Fri, Jul 24 2009, 13:02 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

After past Thursday rally, several Asian players seize the chance to profit for dollar’s rise to Y95.30, sending the par slightly down in the session, along with EUR/JPY. Still, Japanese yen was unable to regain previous strong bullish trend and remained consolidating before another likely push down, to test Y95.50 against dollar and the Y 135.00 against Euro.

Gbp failed to hold the 1.6500 and begin a downside movement that extended early Europe, while Euro regained the 1.4200 level against dollar.

What happened in Europe

Early news in Europe show German business confidence rose for a fourth month in July, after the Ifo survey increased expectations to 87.3 from 85.9 in June. The index reached a 26-year low of 82.2 in March. Also, both euro zone's services and manufacturing sectors contracted less than expected in July, despite firms continued to slash jobs in a bid to reduce costs. Euro zone Flash Service PMI climbed to 45.6 in July from 44.7 in June, its highest level since last October, while manufacturing PMI also beat expectations for 43.5, climbing to 46.0 from 42.6 in June. Despite the better than expected readings, both indexes had remained under the 50.0 mark that divides growth from contraction for more than a year now. Data was Euro supportive and EUR/USD rose to 1.4250, roof of these past days range, and failed to break above.

Gbp was under strong selling pressure after U.K. economy shrank more than twice as fast as expected in the second quarter to register its biggest annual decline since comparable records began in 1955. GDP fell by 0.8% on the quarter, taking the annual decline to 5.6%. This suggest that recovery could take longer than expected and may boost expectations that the BOE could yet add more stimulus to the economy in the near future. GBP/USD fell to the 1.6400 area before U.S. opening, to test an ascendant daily trend line coming from 1.6030 low.

European stocks rose slightly, barely holding the 10 days accumulated rally. U.S. futures are slightly down from year highs reached yesterday set for a struggle at the opening.

What to expect

After being rally since the beginning of previous week, stocks seem ready for a pullback in the short term. Better than expected Q2 earnings, and yesterday’s housing report, send DJIA above 9000 points, S&P to a fresh year high of 976, while Nasdaq print the biggest earning in 17 years. Despite the short term pullback, we could well be at the early stages o a longer term bullish rally there. Question will be if dollar will continue the inverse correlation with stocks, or finally manage to mount on optimism and regain the upside. At this point, market players seem reluctant to continue pushing higher yielding up despite stocks rally.

In the next hours, University of Michigan revised Consumer Sentiment (expected better than previous reading) and Fed Chairman Bernanke Testimony at 14:30 GMT will probably define stocks, and currencies trend for this last day of the week.

Gbp/Usd Outlook

Testing the base of the 4 hours ascendant channel, the pair for now, has failed to break under despite selling pressure remains strong. Indicators had turn also to the downside while price finally break under 20 SMA that turned flat, and lies above actual price. New candle opening under the base of the channel, will confirm the movement with immediate support around 1.6320 minimum’s zone, followed by 1.6270, 200 EMA in 4 hours charts. Under this last, lies the strong 1.6240 zone, ahead of the 1.6200 level. Above 1.6460, pair could regain the upside with immediate resistances around 1.6520 and the strong 1.6550 that should keep the upside capped.

Published on  Fri, Jul 24 2009, 13:05 GMT

U.S. Update: Risk appetite boost

Thu, Jul 23 2009, 16:05 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Yen fell sharply against major rivals in Asia Thursday, as firm Asian shares despite Wall Street negative tone, trigger some optimism across the board. Besides, rumors of Japanese funds buying dollar and euro denominated assets this week also hurt the yen that regain the 94.00 level before Europe opening. Risk appetite remained pendent of Q2 earning reports later in the day, thus supported by yen selling.

While Euro remained consolidating around 1.4200, Gbp regained the upside during Asian hours, settling above 1.6500. Swiss Franc lost some ground an attempt to regain the 1.0700 zone, but finally recede to risk appetite moves and fell back under 1.0680.

What happened in Europe

Early news in the U.K. show Retails Sales jumped on discounted goods to 1.2% m/m vs. 0.3% m/m expected, giving further support to Gbp that retested the 1.6550 highs. Also, the number of mortgages approved for house purchase hit its highest level since March 2008 according to the British Bankers' Association (BBA) showing that 35.235 mortgages were approved during June, up 61% on a year earlier.

Meanwhile in the U.S., the number of Americans filing claims for unemployment benefits jumped last week from a six- month low: applications rose by 30,000 to 554,000 in the week ended July 18, in line with forecasts, figures from the Labor Department showed today in Washington. Claims had fallen by 93,000 over the previous two weeks, making data a bit more encouraging at the end.

Also, existing home sales in the U.S.,  rose again in June, in the third straight month of gains. The National Association of Realtors said sales rose 3.6 percent to an annual rate of 4.89 million units from a downwardly revised 4.72 million pace in May. June's reading compared with forecasts for a 4.84 million unit annual pace.

What to expect

Stocks in the U.S. trigger a major risk appetite rally, after Ford auto maker posts 2Q earnings of $2.3 billion after recording a $3.4 billion gain tied to its debt-restructuring actions in April. Excluding items, Ford loses 21 cents a share, much better than Wall Street expected as it slows its cash burn amid speculation that it may issue more equity to reduce its debt. Shares rise 8%.

Dow Jones Industrial Average rose above 9000 from first time since June 6th and approaches to the year high of 9083, while S&P remains above the year highs and prints 975.15 points.
Despite the strong rise in stocks, Euro and Gbp rallies remain capped and majors are attempting some downside corrections after the storm, thus both seen higher from now on. Euro quotes at 1.4260, while Gbp remains above previous 1.6550 highs. Japanese Yen against dollar, needs to clear the 95.00 level to continue rallying and regain the upside bias.

Eur/Usd Outlook

Intraday range 1.4160/1.4250 has been broken to the upside and pair hit a fresh high at 1.4290. The weekly opening above the triangle is a technical sign of upside continuation. Add to that, we are above the 50% retracement of the long fall 1.6037/1.2330. There is just one thing between euro and an upside rally: 1.4337, the year high posted past May. If the pair manages to close the week above that level, I expect the pair to continue thus, the 61.8% around 1.4620 should cap the upside quite strongly, and even revert trend. If the week closes under the mentioned 1.4337 level, we will still be inside the range, and we will have to wait for a clearer signal. Under 1.4160, the mentioned 50% chances of an upside run will be limited.

Published on  Thu, Jul 23 2009, 16:08 GMT

U.S. Update: No way out of ranges

Wed, Jul 22 2009, 15:19 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Quiet session in Asia with Nikkei up 0.6% making investors doubt about the good health of riskier assets trend, as also concerns about .S. lender CIT Group Inc. may go bankrupt, hurting the U.S. economy, come back.  Yen continued winning across the board, breaking under key 93.50 level against greenback, and pushing crosses also down. Thus, majors end session slightly down compared to New York close, waiting for the result of more Q2 earning reports.

What happened in Europe

Lack of fundamental data this week is supporting range trading yet some news early Europe remained us the discouraging situation we had around the world: U.K. manufacturing orders fell more than expected and at their fastest rate since January 1992 this month, as the order book balance fell to -59 in July from -51 in June, below analyst expectations for a reading of -45. The quarterly business situation balance rose sharply to -16 in July from -40 in April -- the highest since October 2007. BoE voted unanimously to maintain their asset-purchase program in July, saying there was no clear evidence to support an increase as the risks to the economy had probably diminished.

Meanwhile, euro zone industrial orders plunged by nearly a third year-on-year in May and fell from April despite expectations of a rebound, pointing to continued contraction of the economy. Orders fell 0.2 % month-on-month for a 30.1 % annual drop.

Currency market remained most of the session trendless, watching for clues in stocks that also had no clear bias during European morning.

Q2 earning reports show that Morgan Stanley's income plunged 87% on charges related to mergers and its repayment of government funds and weakness at its wealth-management and institutional securities businesses. Stocks futures fell and Euro approached to the base of the range, thus contained by 1.4160 zone.

What to expect

Wells Fargo & Co.'s however, printed a 81% rise in earnings last quarter, reversing stocks and currencies. Euro clearly broke above 1.4200 and points for further gains, while Gbp seems to have settle above the 1.6400 area.

Barely 20 points from today’s high, Dow Jones is the chart to watch: above 8950 lies the 9000 resistance, followed by 9083, this year high. Break above such levels could lead to an acceleration in stocks, and so in European currencies.

Usd/Jpy Outlook

While technical’s suggest downside trend is far from over, today’s reaction to rising stocks show the cross is quite related to stocks sentiment, particular since early July. Clear stocks break above key levels could trigger some upside momentum in the pair, yet only above 94.10 the pair could confirm further rises. Above, the 94.60/80 zone should hold for the next hours, as has probe strong these last couple of months. Clearly above 95.50 pair can change long term bias and retest the roof of the daily descendant channel around 96.60. Failure to regain 94.00 will keep the pair under pressure, with immediate supports at 93.20 strong area ahead of 92.60.

Published on  Wed, Jul 22 2009, 15:22 GMT

U.S. Update: Lack of definition extends

Tue, Jul 21 2009, 15:31 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei 225 regained the upside closing above 9600 points and following positive tone of Wall Street. However, yen rose against major rivals after Federal Reserve Chairman Ben Bernanke wrote in a Wall Street Journal column that the central bank will need to tighten monetary policy down the road. His comments prompted selling the euro and dollar for the safe-haven Japanese yen, as the Fed moving too early to end its loose monetary policy could harm U.S. growth.

What happened in Europe

Gbp also fell across the board, despite good tone in indexes, hitting an intraday low of 1.6380, where buyers quickly come into play. During European morning, Gbp spike again up and failed ot break above key 1.6500 level, lo finally stabilize around 1.6450.

Euro spend the morning close to daily highs supported by rising futures in the U.S. spiking to a fresh daily high at 1.4280 before Federal Reserve Chairman Ben Bernanke testimony. Better-than-expected U.S. earnings reports spurred stocks and oil, with DJIA clearly above the 8900 level, and S&P at 950. Euro remained well supported by 1.4200 level that continues capping the downside.

What to expect

After Federal Reserve Chairman Ben S. Bernanke testimony, signaling economy is showing some signs of stabilization, he add that “the central bank intends to maintain a “highly accommodative” monetary policy for “an extended period” , sending dollar and stocks up in a short lived spike. Bernanke comments were not enough to dilute optimism and at this point, both currencies and stocks remain well bid and with bullish bias for the rest of the day.

That does not include falling safe haven yen that continues appreciating across the board. Against dollar, pair continues hovering around 93.60 daily low, with a clear bearish trend.

Gbp/Usd Outlook

Intraday wide swings in the pair send it to retest the base of an ascendant channel clear in 4 hours charts. Pair was unable to confirm the fall and regained the upside, still closing/opening candles above 20 SMA, with a very poor for now, bullish slope. Momentum regained the upside while CCI rebounded in the 0.00 line suggesting more upside bias in the pair for the next hours. Watch for a break above key 1.6500 zone, for a retest of 1.6550 yesterday’s high. Under 1.6380, pair could resume downtrend after breaking channel base and address to next support around 1.6320 zone, ahead of stronger 1.6240.

Published on  Tue, Jul 21 2009, 15:56 GMT

U.S. Update: Corrections before more runs

Mon, Jul 20 2009, 15:24 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Japan holiday was not enough to halt dollar bearish momentum and general optimism and majors run, with Gbp leading the way after the Rightmove's report that U.K. house prices rose 0.6% this month. Euro, manage to break above 1.4200 level, supported by news that CIT Group has come to an arrangement to avoid bankruptcy and expectations of more good second-quarter earnings from the U.S. this week continued feeding the positive sentiment.

Japanese yen lost some ground thus limited strong bullish sentiment on the pair, still capped by key levels against major rivals: USD/JPY halted the rally around 94.60 strong level, still unable to break above. GBP/JPY reached the 156.40 area, while EUR/JPY approached to 135.00 area. Crosses could resume uptrend if Japanese yen finally manages to break key 95.50 area against dollar, just 100 pips away from current levels.

Although Nikkei 225 remained close due Japan holiday, other Asian stock markets remained buoyant after the Dow Jones Industrial Average posted gains past Friday. 

What happened in Europe

Rising risk appetite keep dollar and yen under pressure against high-yielders in Europe Monday, despite data show German producer prices continued to drop for the fourth month in June. The producer price index or PPI fell 4.6% year-on-year in June, the fastest fall since December 1968 when producer prices dropped 5%.Lack of data keep pairs mostly consolidating during European morning, with Euro hitting a fresh multi week high at 1.4250 and Gbp reaching 1.6550. Both pairs reach such levels in extreme overbought conditions in the hourly, starting a downside corrective movement that at this point, remains capped and just corrective.

What to expect

U.S. stocks open with modest gains early America, encouraged by CTI good news, and despite remaining positive, failed at this time, to break above today’s high, supporting some dollar corrections, that seem posed to remain limited. Euro continues holding above 1.4200, after Jean-Claude Juncker remarked at the end of last week that the euro's strength against the dollar is structural and therefore not worrying. Gbp rally seems to have overextended, and the pair is due for further corrections in the next hours, if manages to break under 1.6440 zone, first support to consider.

Eur/Usd Outlook

Daily break above the roof of the symmetrical triangle clear in daily charts supports some longer term bullish momentum, thus the pair needs to break above key year high around 1.4337 to confirm the bias. Next longer term target comes at the 1.4600 zone, while failure to remain above 1.4150 will keep the pair inside past weeks range, again with no definitions. From actual levels immediate supports come at 1.4150, followed by 1.4100 and 1.4040 zone. To the upside, resistance lie at today’s high of 1.4255, 1.4290 and above the 1.4335 zone. 4 hours charts show the pair a bit exhausted to the upside, and pointing for a downside corrective movement in the next hours.

Published on  Mon, Jul 20 2009, 15:29 GMT

U.S. Update: Positive data failled to trigger more optimism

Fri, Jul 17 2009, 15:32 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei 225 closed up 0.5% at 9395.32, yet Euro fell slightly in Asia Friday, as the overall sentiment towards the currency stayed limited ahead of Citigroup and BofA earnings reports. Gbp fell under 1.6400 level, and continue falling though most of the session, extending the downside rally after breaking key 1.6350 support.

Yen regained some strength still remained trapped in range except against Gbp, where the Japanese currency reached an intra-day high of 152.40, only to give up later in the day.

What happened in Europe

Early in Europe,  euro zone trade surplus narrowed slightly to EUR 1.9bn in May from an unrevised EUR 2.7bn last month, with the trade balance posting a third consecutive month in positive territory. Stocks struggle the whole morning to remain positive, with EUR/USD dipping to 1.4060 before regaining the lost ground. GBP/USD print an intraday low of 1.6264, only to regain the 1.6300 level after earning reports from two of the biggest American Banks print much-better than expected results for the second quarter. Citigroup surprised Wall Street after reporting a $4.3 billion profit, while Bank of America posted second-quarter earnings of $3.2 billion, or 33 cents a share.

Also, housing reports in the U.S. come out better than expected, providing further signs of stability, after new U.S. housing starts and permits jumped more than expected in June, propelled by a rise in single-family. Housing starts climbed 3.6%, while single-family home starts jumped 14.4% the biggest rise since December 2004. Permits in June leaped 8.7% the highest since past December.

What to expect

Despite better than expected data, stocks are unable to regain ground and hover around daily open. Japanese Yen declined to session lows against the greenback after the data, above Y94.00, while crude hit a weekly high of 65.45 before giving up some ground. European currencies remain mired in recent ranges against dollar, with EUR/USD around 1.4100 and GBP/USD just above 1.6300.

Positive data seems to have failed to trigger more optimism across the board, and seems hard to define what can make currencies leave this range/consolidation stage. Overall, dollar positive data  of the week, 2Q earnings, and economist comments regarding U.S. economy making a substantial way back from the abyss, (that in White House economic adviser Larry Summers words) should in term end weighting on forex market, and support a dollar rise.

With Chinese central banker Zhou says China is happy with its dollar-heavy reserve position as long as returns are reasonable, diluting (again) chances of dollar losing it’s status of reserve currency and ECB’s president Jean Claude Trichet supporting a strong greenback to accelerate Europe recovery, is just a matter of time to see dollar recoup it’s strength
 

Published on  Fri, Jul 17 2009, 15:35 GMT

U.S. Update: Consolidation times

Thu, Jul 16 2009, 16:06 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Corrections started early Asia after past Wednesday rally, as Chinese second-quarter GDP disappointed some investors and prompted hedge funds to reduce risky bets. Japanese yen gained ground after failing to break key resistance zone against dollar around 94.60, suggesting bearish trend remains healthy for the currency.

Euro and Gbp corrected the overbought conditions reached late in America, still remained above key support levels. Nikkei close barely up 0.81%, while U.S. companies earnings reports and stocks price movements remain as the key determinants of the currency market.

What happened in Europe

With no data released in Europe, majors spent most of the European morning consolidating in a tight range, till early U.S. reports; first, dollar fell to intraday lows against Euro and Pound the release of the latest U.S. weekly jobless report. The number of U.S. workers filing new claims for state jobless benefits had the largest drop on record, printing 522K for the last week, triggering a mew spike of optimism in traders that did not last: TIC’s turned negative despite jump in investments from China. The outflows came after a surplus of 11.5 billion in May into US securities, which are mostly US Treasury bonds and notes, but also include US government agency and corporate debt and equities. Later, Philadelphia factory activity fell in July, for the 10th consecutive month in July, posting a worse than expected decline that raised questions about the speed of economic recovery. Index was at -7.5 in July versus -2.2 in June.

Poor American data made risk appetite tumble, and stocks come back down thus DJIA still holds above 8600 points while S&P holds the 930. Euro and Gbp spent most of the past 3 hours in a very tight range while Japanese yen seize the chance and regain the upside against dollar, quoting under 93.70 level.

What to expect

Poor American data made risk appetite tumble, and stocks come back down thus DJIA still holds above 8600 points while S&P holds the 930. Euro and Gbp spent most of the past 3 hours in a very tight range while Japanese yen seize the chance and regain the upside against dollar, quoting under 93.70 level.

EUR/USD outlook

Still bullish in the daily, pair still remains capped inside the daily triangle, and this far, daily candle is forming a doji, suggesting investors are not sure to take upside chances at current price. Daily close will be key for the pair, as if manages to close above the line, upside pressure could return with coming resistances at 1.4200 this month high, and 1.4337, that will be key for the long term trend in the pair. Close inside triangle, will made investors hesitate further, and correction could approach to the 1.4000 zone in the  next 24 hours.

Published on  Thu, Jul 16 2009, 16:08 GMT

U.S. Update: Optimism back ahead of FOMC

Wed, Jul 15 2009, 16:04 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Despite Intel Corp. reported greater-than-expected revenues in the April-June period, and forecast further gains in the current quarter, risk appetite remain subdue in Asian session, with Asian equity markets rising slightly. Dollar and Yen hedged down against major rivals, still trading inside past days ranges.

What happened in Europe

News in the U.K. supported the pound that rose to 1.6467 after unemployment claims rose the least in a year in June, adding to evidence that the worst of the recession may have passed. Jobless benefit claims climbed from May by 23,800 to 1.56 million, the highest level in 12 years.
In Europe, euro zone June inflation confirmed at +0.2% as expected, and Euro spent most of the session slowly gaining ground, to reach the key 1.4075 zone, that finally broke with U.S. better-than-expected macro data.

In the U.S. CPI jumped to 0.7% after printing 0.1% previous month, while Core CPI come out as expected at 0.2% .Empire State Manufacturing Index print a -0.6 from a previous reading of -9.4, triggering more optimism in market and sending dollar and yen down across the board.

Industrial production decreases just 0.4% in Jun from 1.1% drop posted in May, a better than expected 0.6% decline data. Capacity utilization fallen to 68.0% in June, above of 67.8% expected by market but less than 68.3 published in May.

What to expect

Dollar and yen tumbles further in early US session on the back of better than expected economic data as well as strong open in equity markets. DJIA along with S&P continue rising ahead of FOMC minutes to be release later today. FED decide to keep rate unchanged in their last meeting, and didn’t expand the QE program. The FED also decided to calm market speculation that it may hike rates in expressing its commitment to keep low rates for an ‘extended period’ in an effort to ease market concerns.

Today, eyes will be put in comments about its revised quarterly economic outlook. Private forecasters expect the new updates to show the economy is to grow by 1.9% next year, inflation to average at 1.8%, and unemployment is expected to average at 9.7% throughout next year. However, markets expect very disappointing data regarding employment that could be the only risk aversion factor that could halt present dollar fall.

EUR/USD outlook

Pair continues pushing higher, approaching to the roof of a symmetrical triangle, clear in daily charts. Current resistance due to trend line, lies at 1.4135, very close to actual price. If pair manages to close the day above such level, we could well be at the beginning of a new bullish leg in the midterm for the pair, with next long term resistance at the 1.4337 highs. Failure above that line, will mean pair would likely remain capped in range in the next sessions, still with the downside capped by the ascendant trend line around 1.3880. Immediate resistances come at 1.4170 and 1.4220 while supports for the next hours lie at 1.4050 and 1.4010.

Published on  Wed, Jul 15 2009, 16:06 GMT

U.S. Update: Uncertainty extends

Tue, Jul 14 2009, 15:28 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Japanese yen fell against major rivals in Asia Tuesday as higher Asian shares and expectations that U.S. banking giant Goldman Sachs Group Inc. may report strong earnings results later in America prompted short-term players to buy riskier currencies. Euro and Gbp also gain some ground with Euro hitting an intraday high of 1.4015 and Gbp rising above 1.6300 level. Nikkei closed 2.34% up after 8 days closing in negative territory.

What happened in Europe

Early news in the U.K. gave no surprises supporting more Gbp rises to the 1.6340 zone also supported by comments made by BOE member designate Posen,  that he sees sterling stronger than euro in the medium term.
Euro remain capped by the 1.4000 zone and under strong selling pressure after ZEW German survey show economic expectations fell unexpectedly in July,  decreasing to 39.5 from 44.8 in June. However, euro zone industrial production recorded a monthly growth of 0.5% in May, reversing a revised 1.4% fall in April, the Eurostat announced.
U.S. producer prices rose 1.8% in June, beating economists' expectations, the Labor Department reported Tuesday and diluting deflation odds. Retail Sales rose in June, helped by incentives on autos and higher gasoline prices boosted service-station receipts. The 0.6% increase was just above past month reading, while Core Retail Sales come slightly down at 0.3%.

What to expect

Stocks struggle since the opening in U.S., as investors welcomed better-than-expected results from Goldman Sachs and Johnson & Johnson, but showed caution ahead of other corporate reports due later in the week. Goldman Sachs second-quarter net income was $3.44 billion, or $4.93 a share, the New York-based bank said today in a statement. That surpassed the $3.65 per-share average market was expecting.
Despite spikes up and down across the board, majors remain barely 30 pips away from U.S. opening and late Europe if not less. Both Dow Jones and S&P remain in the same conditions, a few points await from yesterday’s close. Stocks mood continues ruling currency strength and seems definitions will neither come today. Watch for majors to remain in current ranges, with dollar and yen suffering light pressure preferred bias.

GBP/USD outlook

Holding the 1.6300, pair has reached 20 SMA in the daily that tends to act as strong support/resistance level in the pair. With CCI pointing to cut downside up the central 0.00 line, while flat momentum, price should rise above mentioned 20 SMA, now around 1.6345 level to favor the bullish bias in the next days. Failure above that level, could sent the pair to the 1.6200 support, before more definitions come thus bigger time frames remain favoring the upside, as long as the daily ascendant trend line coming from 1.3656, past March 11th low remains intact. Immediate supports from actual level come at 1.6240 and 1.6200, while resistances lie at the mentioned 1.6345, the strong static zone around 1.6415 and above 1.6460 zone.

Published on  Tue, Jul 14 2009, 15:30 GMT

U.S. Update: Stocks lead the way

Mon, Jul 13 2009, 16:01 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Majors stayed quiet in Asia, with dollar and yen slightly stronger following Nikkei 225 still falling. The index closed 2.6% down, sending USD/JPY to retest the 91.70 zone. Japanese Economy Minister Yoshimasa Hayashi said Monday that recent signs of a pickup in the domestic economy aren't sufficient to say it is a recovery, and that they must work hard so sat that. Japanese yen strength results in great part from investors buying the currency as a safe-haven asset amid global economic jitters. 

What happened in Europe

Early Europe, market remained choppy amid stock uncertainty and falling oil. Gbp weakness extend to as low as 1.6030, before halting the fall, recovering to 1.6200 with rising stocks in American.

ECB President Jean-Claude Trichet said on Monday, that it may take time for the European Central Bank's massive liquidity boost to translate into extra bank lending. Trichet also urged banks to remember their responsibilities to lend to firms and households, but said they also had to digest the record 442 billion euros in 12-month funds provided late last month. Euro remains trading around past Sunday opening consolidating in a 1.3890 1.4000 range.

What to expect

Traders eyes will be on  the start of the Q2 reporting period from companies such as Goldman Sachs, Bank of America, Citigroup and JPMorgan Chase, along with tech leaders Google, Intel and IBM, starting today after U.S. close. Japanese Yen and Dollar strength will no doubts suffer due corrections, if reports end to be a bit better than expected. DJIA continues rising approaching to 8335, past week high. Break above that level could trigger some extra confidence momentum and push safe havens even lower. S&P also regained the upside, 5 points under key 900 zone. Oil that reached an intraday low of $ 59.20 a barrel but regained the $ 60.00 level, is keeping high yielders from rising.

USD/JPY outlook

Pair tested again the floor of the ascendant channel where buyers come quickly to avoid further losses. Triple floor forming around 91.70, needs to see the pair above the 93.80 level in the daily, to confirm further upside corrections in the daily.  Intermediate resistances come at 93.00 and 93.40 zone, while failure to regain the upside could send the pair back to 92.20 later in the day. Break under mentioned lows forming a triple floor, will deny any bullish bias and send the pair close to 90.00 level in the next days.

Published on  Mon, Jul 13 2009, 16:04 GMT

U.S. Update: Safe havens win the week

Fri, Jul 10 2009, 15:17 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Quiet session in Asia, with dollar slightly up against the yen as Japanese trust funds bought the U.S. currency despite Japanese yen may soon resume falling due to growing pessimism over the global economy and equity markets weakness. Dollar also recovered ground against European majors, regaining past Thursday lost ground.

What happened in Europe

Early Europe, falling stocks along with falling oil prices and concerns about next week's second-quarter earnings season continued helping greenback and yen across the board. Risk aversion ruled most of the European morning, with Euro and Gbp under pressure. The end of the G8 meeting is not having any impact on sentiment with the leaders only expected to repeat warnings that the global recession may not be over, and don’t discussing dollar reserve currency status.

The move towards safety helped dollar and yen against many of its higher-yielding counterparts, sending USD/JPY to test Y92.00 early in the American session. Situation reverted only temporally after U.S. trade deficit unexpectedly fell in May to the lowest level in almost a decade as exports jumped while imports of crude oil and auto parts declined. The gap between imports and exports decreased 9.8 percent to $26 billion, the smallest deficit in almost a decade. Stocks regained the upside and even turned into positive territory, before U.S. University of Michigan survey show consumer sentiment fell sharply in early July, to 64.6 from 70.8 in June dragging stocks back down.

What to expect

Both dollar and yen are closing the week to the upside, with yen even stronger than greenback. Both Euro and Gbp, are close to end the weeks with doji candles, reflecting how strong uncertainty is across the world. Both currencies against dollar remain stuck in ranges but close to the base of such ranges, and upside weakness had been more than clear all week long.
Ahead of next week, expectations will be on banks' second-quarter results. Banks should show solid second-quarter results, as capital raising and a pickup in deposits and mortgage activity allow them to cushion the blow from rising loan weakness tied to rising unemployment. And is the job market that generates the biggest uncertainties after economic recovery hopes fell hardly with this month nonfarm payrolls.  Bank’s reports will define stocks and mood and so, currency majors destiny.

Published on  Fri, Jul 10 2009, 15:19 GMT

U.S. Update: Back with no definitions

Thu, Jul 9 2009, 15:30 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

After past Wednesday rally, yen retreated against the dollar and the euro in Asia, as speculators took profits on the yen and Japanese importers scooped up sliding foreign currencies. Currency safe haven condition will like it to keep it well bid, now that fears about economic recovery returned to markets. European majors spent the session in tight range, mostly awaiting for BOE monetary decision, yet slightly bullish also correcting previous session’s rallies.

What happened in Europe

Early Europe, German exports plunged by 24.5% in May compared to an year earlier, yet on a monthly basis however, the leading European exporter posted a slight rise of 0.3 percent, and an overall seasonally-corrected trade surplus of 10.3 billion euros (14.3 billion dollars), supporting some Euro strength. Against dollar, the currency reached 1.4000 also after China comments (again) after establishing a different currency reserve system (meaning diversifying dollars) to accomplish stability.

In the  U.K. trade deficit narrowed in May to the smallest in three years as imports dropped, a sign the recession and the weakness of the pound is hurting demand for foreign products. The goods-trade gap was 6.3 billion pounds compared with 7.1 billion pounds in April. Gbp however, regained the upside to hit an intraday high of 1.6266, after the BOE surprised markets by announcing no expansion of its quantitative easing scheme, and keeping rates unchanged at a record low of 0.5%. With markets widely expecting the BoE to increase its asset purchase target by 25 billion pounds, Pound gained quickly, only to fade later on the day on U.S. tumbling stocks.
In America, the number of U.S. workers filing new claims for jobless benefits fell sharply last week but the decline was amplified by seasonal adjustments. Unemployment fell to 565K past week, from 617K prior week.

What to expect

Since Wall Street opening, stocks are struggling for gains, while Oil breached under $ 60.00 a barrel, yet European currencies hold to the so hard earned ground. Greenback is set to continue falling during next hours, thus fall seems to be limited by the strong uncertainty that rules the market these days.

Eur/Usd outlook

Pair continues pushing higher approaching to the 1.4000 level, crossing downside up 20 SMA in the daily. Indicators remain flat to tell, yet a daily close above this level, could sent the pair to retest the descendant trend line around 1.4150 that should keep the pair capped in range. 1.3950 is first support to the downside, followed by 1.3880 and then 1.3810/20 zone. 4 hours charts remain slightly bullish with momentum crossing 100 level thus not quite clean; intermediate resistances lie at 1.4050 and 1.4100.

Published on  Thu, Jul 9 2009, 15:33 GMT

U.S. Update: Panic rules, yen gains

Wed, Jul 8 2009, 16:27 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

After spending most of the European session in tight ranges, Yen trigger a massive upside rally across the board, despite stocks remain modestly lower in the U.S.. supporting dollar and yen strength are falling oil prices that reach the $ 61.00 dollars a  barrel after the publication of oil U.S. stocks.

Euro accelerates to the downside after finally breaching the 1.3900 zone, while Gbp is now attempting to break under 1.6000 level. But is Japanese yen, and Japanese housewives that have acted as the guardians of the country’s vast household savings, who lead the way. More than Y1,500,000bn (some $16,800bn), in savings are considered the world’s biggest pool of investable wealth. Most of it is stashed in ordinary Japanese bank accounts; a surprisingly large amount is kept at home in cash, in tansu savings, named for the traditional wooden cupboards in which people store their possessions.

Japanese yen crosses are falling apart, losing hundreds of pips per hour, with GBP/JPY reaching a multi weeks low of 147.40 and Eur/Jpy at 127.50 (200 MA in the daily). USD/JPY has hit an intraday low of 92.14, after falling almost 300 pips in the day. Thus yen crosses are way oversold, don’t expect any correction at the moment as bearish strength remains intact.

Usd/Jpy outlook

Quoting under the 61.8% of the weekly Fibonacci retracement measured from 87.10 to 101.44, pair continues falling approaching to the base of the daily channel we have been following since past week around 91.70. next support from actual price. Next supports under there, lie at 91.30 (Jan 19th high) and then 90.80 zone. Upside will remain capped by the mentioned Fibonacci level at 92.60 and above the 93.00 zone. Movements above 93.30 could signal a more interesting upside correction.

Published on  Wed, Jul 8 2009, 16:38 GMT

U.S. Update: No definitions yet

Tue, Jul 7 2009, 16:04 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Not much action in Asia, majors remained hovering around previous range zones. Euro regained the upside but failed to break above 1.4000 while Gbp rebounded just under 1.6300. Regional shares barely move in Asia, with Nikkei up 0.2%, but as lately, risk aversion favored Japanese yen that continues pushing higher across the board.

What happened in Europe

U.K. factory production and industrial production both surprise as unexpectedly fell in May for the first time in three months, suggesting the economy is still in the grips of the recession. Manufacturing output dropped 0.5 percent from April, while previous month was revisited to the downside at 0.0%. Industrial production also fell 0.6% and previous reading was revisited to 0.2%, keeping Gbp under pressure. In Europe, German manufacturing orders jumped the most in almost two years in May, after rising 4.4% from April, printing the biggest gain since June 2007.

What to expect

Despite Euro remains pushing the 1.4000 zone, upward momentum remains weak. Falling stocks keep sentiment overdue, and dollar supported as safe haven. Uncertainty continues ruling markets, while traders wait for more clear clues to come, as hopes of a soon recovery dilute. Gbp is more likely to lead the way, after breaking under past weeks range 1.62/1.66 to the downside, and pointing for a retest of key 1.60~ level. Japanese yen will remain in a tight range, thus bearish in term, as long as under 97.00.

Eur/Usd Outlook

Downward pressure remains intact in the pair, yet daily candle formation clearly reflects the uncertainty of market players a long shadows doji, still under 20 SMA. Daily indicators remain flat, while pair consolidates between 1.38/1.41. To the upside, break above 1.4130, daily descendant trend line, and lately above 1.4380 zone, is needed to see the pair define a bullish trend, while only under 1.3740 ( and before 1.3820 ahead of that) pair can show some bullish momentum in the term. As long as we remain inside those levels, favor range trading between 1.39 and 1.41.

Published on  Tue, Jul 7 2009, 16:07 GMT

U.S. Update: The art of easing optimism

Mon, Jul 6 2009, 15:27 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Optimism fading and stocks falling send yen up across the board in Asia Monday, as global economic negative outlook drove speculators to buy the safe-haven Japanese currency. Greenback also grain ground particularly against Gbp, as Pound continues suffering selling pressures ahead of BOE meeting this week.

What happened in Europe

Lack of data was not enough to hold back market sentiment, and dollar continued rising against most rivals, except for Japanese Yen, as risk aversion remained elevated while stocks and commodities fell strongly. Gold remains close to intraday low of $918.00/oz, while Oil remains between $63.00 and 64.00 a barrel.

Euro reached 1.3875 low before correcting to the upside while Gbp regain a whole cent after hitting an intraday low of 1.6085 against dollar. Japanese yen broke under 95.00 and remains bearish. Daily close under 94.40 zone, could send the pair to retest the 92.00 lows in the next days.

In the U.S., service industries contracted last month at the slowest pace in nine months, as measures of new orders and employment improved. The ISM index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 47 from 44 in May, halting stocks falls and greenback appreciation for a while.

What to expect

General sentiment remains dollar (and yen) positive today, due to it’s safe haven condition. S&P continues unable to regain the 900 level, while DJIA barely holds above 8200. Expect limited corrections before dollar next bullish run.

Gbp/Usd Outlook

Daily break under 20 SMA accelerate the downside in the pair, that breach briefly under 1.6100 before starting an upside correction. Now fighting the base of past weeks range around 1.6200, daily charts remain quite bearish, suggesting more downside pressure in the days to come. 1.6060 is first strong support to consider, followed by the 1.5920 zone; under this last, expect a retest of the mid 1.57, that should offer some rebound and consolidation stage before setting a longer term trend. Daily close above this 1.6220/50 zone, could favor an upside movement to the 1.6400 zone, 20 SMA in the daily, that should cap the upside. Candle opening above that level, could send the pair back to retest the 1.6600/60 zone, roof of range.

Published on  Mon, Jul 6 2009, 15:36 GMT

U.S. Update: Dollar stronger

Thu, Jul 2 2009, 16:24 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Dollar regained the upside during Asian session, as risk aversion return to markets after a report raising doubts over Russia's banking sector prompted players to sell the risk-sensitive unit. Gbp remained under selling pressure, while Japanese yen managed to hold the 96.00 level against dollar. Currencies traded in narrow ranges ahead of early European morning data.

What happened in Europe

The Euro zone unemployment rate has increased to a ten year high of 9.5% in May from a revised 9.3% with unemployment having surged from 7.3% in May last year, providing more bad news from the labor market, as jobless rate is expect to continue rising in the next few months. Bad news, help greenback as safe haven currency ahead of ECB; finally, the Governing Council decided to leave rates unchanged at 1.0%, triggering a first spike against greenback, quickly diluted after the release of Nonfarm Payrolls in the U.S. America lost 467K jobs, while unemployment rate rose less than expected also to 9.5%. Stocks and futures fell after the release, as well as long term treasuries, sending dollar and yen up after the news, that send traders out of riskier assets. Gbp continued under selling pressure as the U.K.'s economic recovery is proving to be not as easy as market anticipated, after the Bank for International Settlements and the Organization for Economic Cooperation and Development warned the country's public finances are only going from bad to worse.

What to expect

While stocks continue falling and close to key support levels, (S&P is barely holding above 900), majors remain in the same range we have been seeing since early June. True, closer to the base of the range, but no major break outs have happened today. Euro holds just above the 1.4000 level, while Gbp hover around 1.6400 after reaching an intraday low of 1.6330. Yen could have been the most benefited currency of the day, still 10 pips away from 96.00. With volume decreasing rapidly, expect majors to consolidate around actual levels, and tiny markets to begin growing. Welcome to summer doldrums.

Published on  Thu, Jul 2 2009, 16:25 GMT

U.S. Update: Dollar suffering employment data

Wed, Jul 1 2009, 16:03 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Following what happen in America, yen fell across the board reaching Y97.00 against dollar and Y136.60 against euro, as optimism return to markets past Tuesday in America. European currencies spent most of the session consolidating around yesterday’s lows, as investors remained reluctant to compromise positions ahead of U.S. employment data, and ECB policy statement.

What happened in Europe

Early in euro, U.K. manufacturing activity fell at its slowest pace in more than a year as manufacturing PMI index rose to 47.0 from a previous reading of 45.4, supporting Gbp that remained after selling pressure after BOE gloom perspective. Regarding Euro, euro zone manufacturing activity contracted less than previously estimated, after the manufacturing PMI rose in June to 42.6 from 40.7 in May, the highest reading of the year. With indexes and futures up, dollar remained under pressure most of the European session, as risk appetite seems to may have recovered some ground. Euro regained the 1.4100 zone, while Gbp rose close to 1.6500 before American data release. Japanese Yen, despite it’s safe heaven condition, remains weak across the board. Early in the U.S., ADP report shown companies in the U.S. cut more jobs than forecast in June, showing the labor market will be slow to improve even as other parts of the economy indicate the recession is abating. The 473,000 drop in the ADP Employer Services gauge followed a revised reduction of 485,000 workers in May. However, challenge Job cuts print a -9% suggesting the cut could be less than expected. The Manufacturing ISM Report come out better than expect, at 44.8 against 42.8 in May, While pending home sales ticked up just 0.1% in May, after an upwardly revised gain of 7.1% in April.

What to expect

Greenback remains down against higher-yielding, despite the release of disappointing data reports that usually boost safe-haven buying. U.S. stocks along with crude oil futures halted the advance as session develops. Expect some short corrections before calm return and a volatile decrease ahead of tomorrows data.

Published on  Wed, Jul 1 2009, 16:05 GMT

U.S. Update: Fear returns to markets

Tue, Jun 30 2009, 15:25 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Risk appetite extended during early Asia, sending Europeans up above past weeks range: Euro spent the session above the 1.4100 while Gbp break the 1.6600 level and hit a fresh year high at 1.6745. Yen gained against dollar and euro, as Japanese investors bought the currency for month-end settlement and the half-year's repatriation of their overseas assets for bookkeeping. Macro data in Japan show unemployment rose in May to 5.2% , the highest level since June 2003, signaling government stimulus effects are not appearing in economy yet.

What happened in Europe

Early Europe, European consumer prices recorded their first annual decline this month, with prices dropping 0.1% in euro region, the first since compilation of the data began in 1996. Meanwhile, German unemployment rose to the highest since 2007 in June as the number of people out of work increased a seasonally adjusted 31,000 to 3.5 million. The adjusted jobless rate rose to 8.3% from 8.2 %. But no doubts, data in the U.K. get all the attention as The U.K. economy shrank more than previously estimated in the first quarter in the biggest contraction since 1958: GDP fell 2.4% from last Q of 2008, compared with the previous estimate of a 1.9% drop. Also, the UK recorded a current account deficit of GBP 8.5 billion in the first quarter, down from a deficit of GBP 8.8 billion in the fourth quarter. The current account deficit was equivalent to 2.5% of GDP in the first quarter compared to 2.4% in the fourth quarter of last year. Finally, U.K. house prices increased for a second month in June as the average cost of a home climbed 0.9% to 156,442 pounds ($259,000) after rising 1.3% in May. Gbp fell to test an ascendant trend line around 1.6560 that finally broke with U.S. data.

What to expect

Risk appetite turn to strong risk aversion after the Conference Board’s sentiment index in the U.S. decreased to 49.3 from a revised 54.8 in May. Stocks sunk in America, triggering a mayor sell off specially in European currencies, sending Euro down to test the 1.4000 level, and Gbp to 1.6420 losing more than 300 pips from intraday high. Majors are back in previous days range after fake breaks against greenback.

Usd/Jpy Outlook 

Despite the risk aversion rallies, Japanese yen continues losing ground against dollar, after breaking the daily descendant trend line around 96.00. At this point, sellers seem to be capping the upside at the 96.50/60, thus a clear break above that level, could gave the pair the momentum needed to approach to next key level, the97.20 zone, not seen today. 4 hours indicators, along with daily ones, support the view, as long as 95.80/96.00 zone holds the downside, while smaller time frames point for a correction before next upleg.

Published on  Tue, Jun 30 2009, 15:51 GMT

U.S. Update: Summer low volume beginning today

Mon, Jun 29 2009, 15:29 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei 225 hedged lowed after a quiet, full of uncertain session: Japan registered a 1.1% deflation rate - the worst recorded since its consumer price index was introduced 38 years ago, another sign that the so hopeful crisis bottoming across the world seems a bit too much at this time. Risk appetite, boosted past week by both, FED and ECB seems to be retrieving ahead of next Thursday events and the summer doldrums.

What happened in Europe

Quiet session in Europe, majors remained in a very narrow range, almost unchanged from last Friday’s close. European confidence in the economic outlook raised more than economists forecast in June, as a minor index of executive and consumer sentiment in the 16 nations that use the euro increased to 73.3, the highest since November, from a revised 70.2 in May. Still Euro remained capped by the 1.4080/1.4100 zone, with no clear strength to break above recent highs. Gbp get some support and break above 1.6500 level, becoming the top mover of the day, after the property market continued to pick up in May, after the number of mortgages approved for house buying rose to 43,414, up from the figure of 43,191 the month before, printing the fourth month in a row of rising.

What to expect

With no macro data in the U.S. today, dollar is slowly gaining ground after a non-expect rise in Wall Street. Dow Jones along with S&P index are quite bullish today, along with oil that again is above the $ 70.00 a barrel. Stocks turned higher benefiting from quarter end and repositioning ahead of the macro data of the week. Euro and Swiss Franc remain in tight ranges while Gbp is slightly up, pushing for a retest of the 1.6600 level. Rising stock are sending Japanese yen lower across the board, quoting around Y95.70 against greenback, sill with a bearish outlook in the term, as long as remains under Y97.20 zone.

Gbp/Usd Outlook

Daily range continues with the pair tending higher and approaching to the top. Consolidation stage previous next serious movement favors the upside at the time, as clear break above the very close 1.6600 zone, will open doors for further rises in the pair, with first resistance at the year high around 1.6663. Daily close above 1.6600 will support midterm rises to the 1.68/1.70 zone in the coming days, while strong rebound around that zone, if reached, could bring as back to the lows 1.62~ . Immediate supports come at 1.6500, 1.6440 and 1.6380 while above 1.6575, the mentioned 1.6600 zone and 1.6663 are the resistances to consider.

Published on  Mon, Jun 29 2009, 15:31 GMT

U.S. Update: Week close with no definitions

Fri, Jun 26 2009, 15:53 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei rose in Asia, closing 0.8% up, and Euro seize the opportunity to slowly regain the upside against dollar and yen, despite the general outlook for the hegemonic currency remains shady. Anyway rising stocks and oil prices supported a bearish dollar as growing demand for derivates mirrors improvement in the global economy, and such wakes appetite for riskier assets.

What happened in Europe

Early Europe, Germany’s inflation rate remained at zero in June, the lowest level in more than 12 years, while consumer prices, rose 0.4% in the month. The annual figure is the lowest inflation reading since harmonized data were first compiled in 1996. In Switzerland, the KOF indicator, which points to the economy's likely performance in six months' time, rose to -1.65 from -1.85 points in May that was also upwardly revised from a previously reported -1.86 points, printing the first clear increase in almost two years.

Downside pressure for greenback continued in Europe, after comments from China's central bank that said that it will push reform of the international currency system to make it more diversified and reduce over-reliance on the current reserve currencies, primarily the U.S. dollar. Euro hit an intraday high of 1.4108 while Gbp rose to 1.6534. Swissy, also gain ground on dollar weakness thus the aggressive intervention of SNB past Wednesday and Thursday proved that the Swiss authorities are committed to stop the franc's rise against both, euro and dollar, with market players aware of this and cautious.

In the U.S. Consumer spending rose in May for the first time in three months as incomes jumped by the most in a year surging 1.4%, the most since May 2008, but savings also surged, as people opted to sit out the recession rather than spend.

What to expect

University of Michigan sentiment index rose to 70.8 in June, versus 68.7 printed in May, but was not enough: stocks remain under selling pressure after past Thursday rebound, with DJIA barely above 8400 points and S&P hovering around 910 level. Lack of definitions continues across the currency markets, and attention now will turn to next week ECB decision and U.S. Nonfarm Payrolls. Range movements will continue to in deep as no real clues of macroeconomic improvement are here, despite the excess of speculation about bottoming crisis across the world.

EUR/USD Outlook

Consolidation continues in the pair, thus bias has changed to slightly bullish in the daily as seems likely to see a daily close above the 20 SMA and momentum about to cross the 100 line. Inside a triangle, today’s high reach exactly the descendant trend line of it and come back, yet price remain quite close to breaking point; as long as price remains above 1.4000, chances of an upward continuation are valid for next week. Break and confirmation above such figure, will find immediate resistance at 1.4170 zone, followed by the 1.4337 highs. Above this level, probable target will remain between 1.45/1.46 zone. Failure to hold above 1.4000, will expose the downside with 1.3900, ascending trend line as mayor support. Under that level, 1.3750/1.3800 is the zone to watch for a longer term bearish break.

Published on  Fri, Jun 26 2009, 15:56 GMT

U.S. Update: Consolidation journey

Thu, Jun 25 2009, 16:19 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei 225 rose fallowing U.S. good tone, and banks decisions taken as dollar supportive, (as the FOMC did not take additional stimulus measures such as boosting its Treasury purchase program) help to keep currencies range bound close to previous session lows against greenback, that despite still inside daily range, regain some bullish tone for the rest of the week.

What happened in Europe

Quiet session in early Europe, Euro zone industrial new orders plunged again in April, a record decline led by falling demand for capital and intermediate goods, data showed on Thursday. Orders fell 1.0% monthly basis, and 35.5% annual drop, European Union statistics office Eurostat said, helping to bost dollar against Euro. Gbp, also fell early Europe to as low as 1.6220 against dollar, despite the lack of macro data for the U.K.

Early in the U.S., reports show GDP dropped at a 5.5% annual rate in the first quarter after shrinking 6.3 % in the fourth quarter of last year and 0.5% in the third quarter. Market was expecting a 5.7% contraction. Meanwhile, unemployment claims unexpectedly rose last week, indicating the labor market is far from stabilizing. Initial jobless claims rose by 15,000 to 627,000 in the week ended June 20, from a revised 612,000 the week before, the Labor Department said today in Washington. The number of people collecting unemployment insurance gained by 29,000 in the prior week, to 6.74 million.

What to expect

Wall Street is slightly up, erasing early losses, turning higher as investors shrugged off worries about the morning's weaker-than-expected jobless claims report and scooped up commodity and retail shares. Dollar is losing some ground along with Japanese Yen, still seems today is just a consolidation journey, with majors stuck in tight ranges.

Usd/Chf Outlook

Pair remains bullish, and chances of Swiss Franc buying seem very limited after SNB determination to avoid the currency appreciation. Pair remains quoting above the top of the past range consolidation, something we must take into notice. Forming a small continuation figure in 4 hours charts, as long as 1.0920/0950 previous resistance now turned into mayor support holds, break above 1.1020 will mean further rises in the pair in the days to come. Immediate resistance lies at 1.1060 and 1.1110, while intraday supports under the mentioned level lie at 1.0880 and the most 1.0840, 20 SMA. Clear break under this zone will deny previous bullish bias in the pair, and we will likely see a retest of the lows 1.0700.

Published on  Thu, Jun 25 2009, 16:23 GMT

U.S. Update: Lack of definitions ahead of FOMC

Wed, Jun 24 2009, 15:59 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei 225 opened to the upside past Tuesday, sending Europeans up against dollar as renewed optimism was seen in early Asia, after also, a better than expected Japanese Yen Trade Balance surplus. Japanese Yen remained well bid, yet the upside seems limited at actual levels, as further strength could harm the economy exports.

What happened in Europe

Early Europe, dollar rose sharply after SNB intervention to avoid Swiss franc appreciation, yet continue trading in range ahead of FOMC decision. Meanwhile, Euro zone current account balance on a seasonally adjusted basis showed a deficit of EUR 5.9 billion in April, smaller than the EUR 7 billion deficit registered in March.

In the U.K. BOE Governor King said Britain’s recovery will be slow and “uncertain.” “There has to be a risk that it will be a long, hard slog” because of the problems in the banking system. “I feel more uncertain now than ever because this is not the pattern of a recession coming into recovery that we’ve seen since the 1930s. Having an open mind and not pretending to foresee the future when it’s so uncertain is important.” King said that there’s “not much evidence to change our view” since the bank released forecasts in May showing that the economy won’t return to growth on an annual basis until the second half of next year. Gbp, that rose to the 1.6600 fell sharply after this statement and remain close to 1.6500 level.

U.S. Durable Goods Orders print +1.8% from an expected -0.6% and a revised to the downside 1.7%. Core Durable Goods Orders come out at +1.1% while market was expecting a -0.2% and previous month reading also revised to the downside at 0.4%. Better than expected U.S. data triggered more optimism in markets, with European indexes and U.S. futures rising fast.

Purchase of new homes in the U.S. unexpectedly fell in May as builder discounts failed to keep pace with the foreclosure-driven slump in prices for resale. Sales decreased 0.6 percent to an annual pace of 342,000 after a revised 344,000 rate in April.

What to expect

Now, market is just waiting for FOMC decision regarding Treasury purchases to define next move. Holding in wide ranges, the expectation is on whether the FED will stick to it’s plan or decide to modify the amount of purchases. Also market will be paying special attention to any comment regarding improved economic data, of if the FED will express concerns about the economic outlook. Either way watch price levels after the release, could finally take us out of current ranges.

Gbp/Usd Outlook

Pair continues consolidating in the daily chart, unable to regain the 1.6600 level that retested again today. Now struggling around 1.6500, BOE´s call for a weaker Gbp will no doubt limit the upside for today. Longer term perspective remains unchanged, as long as we remain inside 1.6100/1.6600. Turning to 4 hours charts, the upside seems limited as indicators turned from exhaustion levels. Break under 1.6440 could push the pair lower, with immediate supports at 1.6410, 1.6370 and 1.6330 zone. Resistances for the next hours, will be at 1.6510, 1.6560 and 1.6600.

Published on  Wed, Jun 24 2009, 16:02 GMT

U.S. Update: Euro approaching to range roof

Tue, Jun 23 2009, 15:43 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Market remained choppy and a bit brutal since Asian opening, with positioning across the boards provoking wide movements either way. Thus majors remain contained in range, and lack of trend remains a fact, risk sentiment has returned will full strength to markets, ahead of this week macroeconomic events.

Japanese yen appreciation extended during Asian session approaching to 131.00 against Euro and 95.00 against dollar, and at the time remains the stronger and cleared currency across the board. Canadian and Australia dollar on the other hand, remained the weakest due to falling commodities prices and stocks excess in China rumors.

What happened in Europe

Greenback was mostly lower in Europe today despite rising risk aversion. Euro has benefited by latest German consumer confidence and euro-zone purchasing managers' surveys understood as more evidence that the worst of the downturn is over. German consumer confidence rose in June to 2.9 from 2.6 in May, while the purchasing managers' surveys showed a more mixed picture with manufacturing still improving but service industries declining against expectations. The overall composite index rose to 44.4 from 44.0. Euro hit an intraday high of 1.4020 despite falling stocks and remains very close to that level, suggesting another probable upside leg for the next hours.

What to expect

Early in America, stocks turned lower as Existing Home sales report resulted weaker than expected, printing 4.77 M against a revised to the downside 4.66 past month. Richmond manufacturing index rose to 6 from 4, but stocks along with greenback remain under selling pressure. In about an hour, President Barak Obama adding more volatility to actual market, thus we expect conditions to remain the same till Thursday’s FED’s meeting.

Eur/Usd Outlook

Pair remains quite bullish in the 4 hours charts, attempting to break the upper side of these past days range, with 1.4045 zone as main resistance from actual price. Clear break above that level, could take the pair closer to 1.4100 thus seem a bit too much for today. Hourly indicators show the pair a bit exhausted at actual levels, yet downside correction won’t start till under 1.3980 zone, with 1.3950 and 1.3920 as following supports for today.

Published on  Tue, Jun 23 2009, 15:49 GMT

U.S. Update: Choppy market still in range

Mon, Jun 22 2009, 15:45 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

With Nikkei 225 falling at the open, send dollar and yen up in Asian session with yen reaching 95.78 against dollar and 133.00 zone against euro. Despite Nikkei recovered and return to positive zone, investors dismiss the rise and kept betting on safe haven currencies all session long.

What happened in Europe

German business confidence jumped in June, with IFP index hitting its highest level since November, coming out at 85.9 points.

Dollar was generally higher on a return to risk aversion, although the yen is an exception, gaining ground against most major including the dollar. News the World Bank cut its forecast for the global economy in 2009 and escalating political tensions in Iran and North Korea contributed to the gains.

Mid morning, ECB President Jean-Claude Trichet gave a speech warning European governments against taking further fiscal stimulus measures to shore up their weak economies, he also stated that despite CPI continues falling, they will maintain current CPI expectations, and that policy measures can be easily unwound, despite risk of unexpected turbulence remains.

What to expect

Uncertain regarding what the U.S. Federal Reserve's Open Market committee will announce on Wednesday is contributing to an uncertain mood among investors, which turn weighing on stocks and other riskier asset classes. DJIA break under 4800 while S&P barely holds above 900 points. Majors remain quite choppy and as lately this month, with no clear definitions. Conditions will continue and probably in Asia, ahead of tomorrow’s U.S. Durable Goods Orders, and mentioned FED announcement, among other key macroeconomic indicators to be release this week.

Gbp/Usd Outlook 

Pair continues consolidating in the daily chart, unable to regain the 1.6600 level, and holding just above 1.6200. Bearish today, turning to 4 hours charts pair has break under 20 SMA and confirm the downside, thus 1.6300 should hold today. Break under that level, and even daily close, could send the pair to retest the daily ascendant trend line around 1.6240 that will be key for the pair. Daily close above 1.6400 will deny the perspective for tomorrow.

Published on  Mon, Jun 22 2009, 15:48 GMT

U.S. Update: Options expiring dollar weak

Fri, Jun 19 2009, 16:01 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Market remained quiet in Asia, with Nikkei 225 barely up 0.25% following Wall Street woes. BOJ minutes were released without anything new to add to previous meetings. In general lines, they state they must keep an eye on deflation and that financial conditions remain tight. Gbp regained the upside, while Euro held above 1.3880 reached late America. Yen lost some ground against major rivals particularly Gbp, but market stayed mostly range bound all session.

What happened in Europe

Lack of fundamental news early Europe, kept Euro under pressure, while Gbp continued pushing higher following European stocks that rose for second day, as optimism that the worst of the global recession is over In Europe, the EU leaders spotted the first signs of a “sustainable economic recovery” from the worst recession since World War II and started talking of planning an exit strategy. They also agreed to overhaul financial regulation after banking supervision failed to contain the crisis sparked in the U.S. housing market. However that was not enough to support Euro. The currency spent all the European session between 1.3900/1.3950, unable to regain the upside. Wall Street also opened higher, while oil made a spike above $ 72.00 a barrel, supporting some dollar weakness. As these past days, Gbp remains highly volatile, but reaffirming the longer term bullish tone, after breaking to the upside, a small descendant channel coming from 1.66~ highs.

What to expect

Despite today’s positive tone, both DJIA and S&P are closing a negative week for the first time in almost a month. Comments on recession easing seem not to be enough to convince investors this week. Options expiring today are adding to dollar weakness across the board. Weekly close above 1.4000 for Euro, and 1.6500 for Gbp, will add to bearish greenback.

Published on  Fri, Jun 19 2009, 16:02 GMT

U.S. Update: Wall Street up, dollar and yen down

Thu, Jun 18 2009, 16:03 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Slow session in Asia, with Nikkei 225 down 1.39% and majors in range. Majors consolidate ahead of next sessions key data, as doubts about recovery continue hitting trading desk, and making traders cautious. Euro fail to break above the 1.3990 zone, while Gbp remained inside the 4 hours descendant channel, that had kept the pair under pressure these last days.

What happened in Europe

U.K. retail sales unexpectedly dropped in May for the first time in three months falling 0.6% from April, accumulating 1.6% drop from a year earlier, while factory export orders slump to a decade low in June after overseas demand for goods collapsed. An index of factories’ export order books dropped to -52, the least since October 1998, the U.K.’s biggest business lobby reported today. An index of total orders rose to - 51 from- 56. Gbp fall to an intraweek low of 1.6185 and American rising stocks save the pound for falling further today Some positive data in the U.S. suggest recession is slowing down and a recovery should begin by the end of the year, the Conference Board said Thursday as it announced that the index of leading economic indicators rose 1.2% in May, the second straight increase. Besides continuing jobless claims decreased by 148,000 to 6.9 million, the first drop since January, while manufacturing in the Philadelphia region contracted at the slowest pace in 9 months as measures of orders and sales improved. The Federal Reserve Bank of Philadelphia’s general economic index climbed to -2.2 from -22.6 in May.

What to expect

Treasury Secretary Timothy Geithner urged lawmakers to accelerate consideration of the administration’s proposal to reshape U.S. oversight of Wall Street. “Every financial crisis of the last generation has sparked some effort at reform, but past efforts have begun too late, after the will to act has subsided,” Geithner said in “We cannot let that happen this time.” This statement, along with yesterday´s regulatory overhaul presented by President Barack Obama, also calling FED to monitor the biggest, most interconnected banks, sets up a new agency to oversee consumer financial products and brings hedge funds and private equity firms under federal supervision for the first time.

Gbp/Usd Outlook

Despite regaining the upside supported by rising stocks, daily charts remain slightly bearish in the pair, as long as we remain inside the descendant channel. Pair reached today 20 SMA in the daily, and failed to broke to the downside, suggesting bearish perspective is not as strong as it seems. However, we need to see a daily close above the 1.6415 zone to confirm further raises in the days to come, as is current roof of descendant channel. Above that lies 1.6500 ahead of 1.6660 maximums zone. 20 SMA and daily ascendant trend line continue to be the key support for the pair in the midterm. Break under 1.6150 is needed to confirm a bearish bias.

Published on  Thu, Jun 18 2009, 16:05 GMT

U.S. Update: Uncertainty consolidation

Wed, Jun 17 2009, 15:04 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei opened to the downside, yet managed to close 0.9% up, leaving currencies with no clear leads during Asian session. While European currencies attempt some shy recoveries, against greenback, Japanese yen continues to be the stronger currency across the board, and remained close to Y96.00 against dollar, and pushing higher in all crosses. Market entered in a consolidation stage that seems to be extending along the day.

What happened in Europe

Macro data was unable to help Gbp that continued falling across the board after BoE policy makers voted unanimously to continue their money-printing program this month and keep the benchmark interest rate at a record low, saying it was too early to know if the measures are working. Also, the U.K. unemployment rate in the three months ending in April rose to 7.2%, up from 6.5% in the three previous months, nothing really encouraging. In the euro zone, external trade surplus increased in April as the year-on-year plunge in exports was marginally smaller than in imports, data showed. The surplus in the 16 countries came to 2.7B Euros, compared with an upwardly revised 1.8B Euro surplus in March and a 2.2 billion surplus in April 2008. Early in the U.S. reports show consumer prices increased 0.1% in May as higher gasoline prices were largely offset by falling food prices. It was the first increase in the consumer price index in three months, while the core CPI also 0.1% in May. The CPI has fallen 1.3% in the past year, the sharpest decline in prices since April 1950. The Federal Reserve has warned that deflation remains a major risk to the economy, with the global recession putting downward pressure on prices. This report helps to discard any rate movement in rates in the U.S. and put some pressure on greenback that didn’t last. Finally the U.S. current account deficit shrank in the first quarter to $101.5 billion, the smallest deficit since the fourth quarter of 2001, declining from an upwardly revised $154.9 billion in the fourth quarter of 2008. Current deficit represents 2.9% of GDP, a sharp drop from 4.4% in the fourth quarter, and the lowest since 2.8% in the first quarter of 1999.

What to expect

Leaving aside yen appreciation, uncertainty rules the market during most of the European session, extending also to America after Wall Street opening. Sentiment is reaching a climax of extreme stress; neither stocks not currencies are able to find a way. Taking a look at daily charts, we can just see some wide ranges of consolidation, even in Usd/Jpy that clearly reflects markets doubts. Falling oil and gold prices, are giving some support to greenback, but definitions are out of sight. Watch S&P index: is about to break key 900 support level, and that could be the trigger market is waiting for.

Usd/Jpy Outlook

Pair continues clearly bearish in 4 hours charts, although momentum is fiving some signs of exhaustion. Daily ascendant trend line around 95.60 will be key in the next hours: strong rebound around that level (not really seen at this point) could support some upside corrective movements in the pair to the 97.00 zone. Break under that level, or even better, daily candle closing under it, will open doors to the downside, and send the pair to retest the 93.80 zone. Immediate support lie at 95.20 94.80 and 94.40 zone, while resistances from actual price are at 96.10 96.50 and the 96.90 zone.

Published on  Wed, Jun 17 2009, 15:06 GMT

U.S. Update: Japanese Yen winning on falling stocks

Tue, Jun 16 2009, 15:57 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Japanese yen shined during Asian session, winning big against Euro, Gbp, and Dollar, after stocks open to the downside and following oil fall. Despite Minister Yamato state that dollar will remain as reserve currency and support the strength of greenback in general, yen advance over dollar reaching weekly highs and extreme over sold conditions. Euro and Gbp were dragged down against dollar also, reaching strong support zones that hold the downside.

What happened in Europe

Early Europe, both Euro and Gbp regained the upside, favored by quite encouraging macroeconomic reports. U.K. inflation slowed less than economists forecast in May after consumer prices rose 2.2% from a year earlier, compared with 2.3 percent in April. Euro rose to 1.3932 against dollar after a stronger-than-expected reading of German economic sentiment. The ZEW institute's economic sentiment index came in at 44.8 in June, improving significantly from 31.1 in May and exceeding forecasts for a 35.0 reading; also euro zone inflation rate dropped to zero in May as energy costs retreated and the global economic slump forced companies to lower prices. Inflation is at the lowest level since the data were first compiled in 1996 and is down from 0.6 percent in April. In America, U.S. housing starts bounced back in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after plunging 12.9% in April, while prices paid to U.S. producers rose less than forecast in May as food expenses dropped, leading to the biggest 12-month slump in wholesale costs in a half century. The 0.2 percent increase in prices paid to factories, farmers and other producers followed a 0.3 percent gain in April. Later in the day, and also in the U.S. industrial production tumbled a larger-than-expected 1.1% in May, while output also was negative, printing a 0.7% decline

What to expect

Wall Street is following previous session’s negative tone, and stands barely positive at this moment, unable to move away from opening levels. Yet, only Japanese yen is winning on risk aversion/negative stocks. Greenback remains negative across the board, with European majors pointing to made further gains in the next days. Japanese yen appreciation has reached extreme levels, expect some important corrections there, as bulls will come sooner than latter.

Gbp/Usd Outlook

Pound is regaining the upside, very close to confirm a continuation in 4 hours charts: with indicators pointing north and far from exhausted. Candle opening above that level, will confirm the view, with immediate resistance at 1.6510 zone, yet tending to year high around 1.6662. Daily close under 1.6460 will bring a different perspective, as pair will attempt to hit the channel base projected to the 1.6100 zone, where we also have the big strong ascendant trend line in daily charts. That line will be key for a rebound/break definition and set longer term definitions in the pair.

Published on  Tue, Jun 16 2009, 16:01 GMT

U.S. Update: Dollar up across the board

Mon, Jun 15 2009, 16:08 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Since Asia opening, dollar has been the shinning start trough the sessions, and continued gaining ground across the board. In Tokyo Nikkei 225 fell around 70 points, maybe not a big amount f points if we consider actually closed above the 10.000 level. Some profit taking also helped greenback , but a report showing worsening credit conditions for large German companies weighed on the euro against the dollar and yen in Asian trading pushing euro down 150 pips. Japanese yen also strengthened against dollar, after Russian Finance Minister Alexei Kudrin said in an interview that "it's too early to speak of an alternative" to the dollar.

What happened in Europe

Dollar has climbed against all major currencies in early European trading session, as investors showed relief that the weekend's meeting of the world's leading finance ministers generated nothing to shake the currency's reserve status. Euro continued to be hit by bad loans and securities positions that are estimated to total $650 billion over the 2007/ 2010 period. Early American session, macro data U.S. data was anything but encouraging after New York Manufacturing index showed business worsened in early June. The Empire state index fell to negative 9.4 in June from negative 4.6 in May, indicating the downturn broadened to more firms. Readings under zero indicate more firms said business was worsening than said it was improving. Meanwhile Long term securities purchasing fall to 11.2 billion prom 55.4B in March.

What to expect

OPEC does not want a rapid, destabilizing rise in oil prices, but the Secretary General says that a move to $80 would not hurt the global economy. Despite that, oil is falling under $ 70 a barrel, helping dollar positive tone that reached the key 1.3770 zone against Euro. Gbp fall is contained by the 1.6300 zone, while Japanese Yen continues hovering around 98.00. Due to extreme over bought conditions of dollar against major rivals I expect some corrective movements

Eur/Usd Outlook

Pair has lost around 220 pips during the day, and bearish pressure continues. Around actual levels, the pair is breaking the neck line of a daily head and shoulders formation, and after a pullback to the mentioned neck, if happens to the zone around 1.3830, the pair may well resume down trend, with a first important support around 1.3740. Figure height is of around 560 pips, so consider a probable target of around a 70% of that for the daily movement. Under 1.3740, pair could reach the 1.3500 zone, sooner than later. Daily close above 1.3840 will deny the perspective as figure will remain unbroken.

Published on  Mon, Jun 15 2009, 16:13 GMT

U.S. Update: Dollar consolidates no recovery yet

Fri, Jun 12 2009, 16:01 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

After some consolidation, greenback edged higher in Asia Friday, despite Nikkei 225 closed above the 10.100 mark zone. Many traders choose to close positions and take profits ahead of the weekend G8 meeting of finance ministers. Gbp also corrected to the downside, after failing to regain the 1.6600 level.

What happened in Europe

Dollar continued advancing early Europe, as corrective movements extended freely do to the lack of strong macro data. However a report showed Euro zone industrial production shrank by more than a fifth in April compared to a year earlier, a new record contraction pointing to continued economic weakness. Production fell 21.6 percent in the 16-country area, exceeding the previous record decline of 19.3 percent logged in March. Meanwhile Jean Claude Trichet, ECB’s President, state that the mandate to ensure price stability will shield the euro-zone's economy against deflation. Let’s remember the ECB defines price stability as an annual inflation rate of just below 2% over the medium term, or 18-24 months.

Early in the U.S., Confidence among U.S. consumers rose this month for a fourth straight time, more signs that recession could be bottoming, as The University of Michigan preliminary index of consumer sentiment increased to 69, the highest level in nine months, from 68.7 in May. Also, price of goods imported into the U.S. rose in May for the third straight month, reflecting the increasing cost of oil that threatens to undermine the economy just as it struggles to pull out of the recession. The index gain 1.3%, the largest since July 2008 and in line with forecast.

What to expect

So far, daily charts show greenback is set to close higher, yet overall, bearish trend persist. Weekly charts show it has been a bad one for dollar. And down trend is set to persist after this consolidation stage, despite Gbp is better positioned to regain the upside than Euro, that continues suffering economic woes, and has no real macroeconomic reason, to raise.

Published on  Fri, Jun 12 2009, 16:04 GMT

U.S. Update: Retail Sales

Thu, Jun 11 2009, 16:45 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Poor action in majors during Asian session, majors remain steady across the board, as Nikkei failed to break above 10.000 points, and close the session with small winnings. Macro data come from Australia, and New Zealand, sending both currencies up against dollar, putting some pressure on greenback against other currencies. In general, risk appetite kept increasing on global recovery prospects, but market hold ahead of U.S. data.

What happened in Europe

Greenback remained steady early European morning, yet Gbp continued climbing, supported by perspectives of a sooner recovery and some rising inflation expectations in the U.K. With no much fundamental data, attention turned to crude oil futures that traded above $72 a barrel to their highest levels since October.

Early U.S. data, with retail sales and unemployment rates, provide the excuse market was needing to wake up: Retail sales rose in May for the first time in three months, printing a 0.5% increase as forecast and following a 0.2% drop in April. Core Retail sales also rose above expectations, while unemployment claims fell to 601K last week. With retail sales more encouraging than employment, both reports signal bottoming crisis. Treasuries, which had fallen earlier in the day, reversed losses, with yields on benchmark 10-year notes at 3.94 percent at 10:46 a.m. in New York, little changed from late yesterday.

What to expect

While first spike after the good news favored greenback, dollar reverses winning quickly and turn bearish against major rivals, except maybe for Japanese Yen, following risk appetite that not only send stocks up, but also gold and oil: both commodities continue pretty bullish at this time, with oil actually around $72.0 a barrel and gold above $ 960./Oz. Euro/Usd is now above 1.4100, while Gbp/Usd remains close to an intraday high of 1.6560. Both currencies, over bought in smaller time frames, have still continuation signals thus I expect a small correction from actual levels before next leg up.

Eur/Usd outlook

Despite current bullish momentum daily charts indicators are showing bearish divergences with price action, suggesting the upside will remain limited at this point. 20 SMA, with a nice bullish slope, still holds the downside as pair has been unable to confirm a daily opening under it. This is the level and circumstance to watch for a confirmation of a deeper fall in the pair. First resistance comes at 1.4150 zone, followed by 1.4240 and the highs around 1.4335. Break above those levels, will deny further falls in the pair, and confirm a bullish continuation in the midterm. Supports will come at 1.4010 and the mentioned dynamic support around 1.3940. Once MA is cleared, watch for 1.3805 as mayor longer term support, as clear break under that level, will confirm a head and shoulders formation in the daily chart, with an objective of around 500 pips.

Published on  Thu, Jun 11 2009, 16:49 GMT

U.S. Update: Focusing on sentimet ad commodities

Wed, Jun 10 2009, 15:42 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Greenback regained some ground against the yen in Asia Wednesday, helped by Japanese investors' bargain-hunting and an easing in risk aversion due to rising regional stocks, thus Japanese yen is expected to remain under the 100.00 levels over the coming days, the currency has lost previous month strength and points for a bias change in the midterm. Gbp continued gaining against major rivals, extending previous sessions rally to the 1.6440 zone.

What happened in Europe

Strong movements across the board, as gold and oil rose to multi month highs early morning, send dollar further down. Mayor rally come after the central bank of Russia’s first deputy chairman said they will reduce the share of reserves invested in US Treasury´s and buy IMF bonds instead; Gbp reached an intraday high of 1.6472 while Euro rose to 1.4545, before starting a major come back, following stocks and commodities. Macro data publish was practically ignored by markets, yet supporting Pound, UK industrial output rose by 0.3% unexpectedly in April - the first month-on-month climb since February 2008, while European data, was far from encouraging: German final CPI was confirmed at -0.1%, while French industrial Production fell to -1-4% and previous month revised o the downside print a -1.7% reading. Mid morning, ECB Governing Council member Axel Weber said central banks may have to raise interest rates before inflation risks materialize as a precaution to prevent future crises. Early in the U.S. trade deficit widened in April for a second month as exports dropped to the lowest level in almost three years. The gap between imports and exports grew 2.2% to $29.2 billion, in line with forecasts, from a revised $28.5 billion in March that was larger than previously estimated. Foreign demand for U.S. goods dropped 2.3 percent, exceeding a decrease in imports.

What to expect

Stocks retrieve most of early gains together with gold and oil that gave up some ground too, changing the intraday bias, and sending dollar up across the board. Part due to profit taking, part due to risk aversion and retrieving prices in commodities, dollar is still far from intra week highs against major rivals, yet regaining the upside even against Japanese yen that tend to be the less dollar sensitive currency these days. Longer term perspective remains favoring a bearish perspective for greenback thus we could be entering a consolidation stage before more certain definitions come to markets.

Usd/Jpy Outlook

Pair made a nice come back from the 97.20 lows, and is facing first important resistance at 98.30, a short term descendant trend line coming for 98.90 highs. New candle opening above that zone, will send the pair to test a longer term one around 98.60. Supported by CCI cutting the 0.00 line and price above the 20 SMA yet contained by the strong selling level around 99.00, expect more rises once first line is cleared. Bigger time frames are slowly changing bias, and the bullish perspective will remain valid, as long as the pair holds above the 97.00 zone.

Published on  Wed, Jun 10 2009, 15:46 GMT

U.S. Update: Greenback slipped back

Tue, Jun 9 2009, 15:32 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

While euro fell further against the dollar and the yen in Asia Tuesday, a good report in the U.K. housing sector send Gbp up across the board. The Euro, was down as regional stocks declined, prompting hedge funds to keep taking profit on the risky currencies including Euro that reached a low around 1.3850. Japanese yen continued stuck in a tight range, with the upside capped by selling orders, at the 98.50 zone.

What happened in Europe

Early Europe, German trade surplus printed a 9.0B Eur versus 8.9B in March, lower than median forecast of 9.4B. Exports were down -4.8% while imports lost -5.8%, quite disappointing figures, along with also industrial production falling beyond previous month. But after receiving support over the last two days from optimistic projections of U.S. economic recovery and a faster turn toward higher U.S. interest rates, greenback slipped back decisively from recent highs. Oil and gold rose strongly early Europe, pushing dollar down across the board. Euro regained the 1.4000 zone while Gbp continued rallying up. Japanese yen finally break the range to the downside, and rally against greenback accelerated across the board. In the U.S., wholesale inventories shrank for the eighth month in a row in April to $405.4 billion, their lowest since September 2007. The 1.4 % drop in inventories was greater than the 1.1% decline analysts expected, as wholesalers primarily shed stocks of metals and motor vehicles and car parts. Positive data for the U.S. yet neither dollar, not Wall Street could take a spike after the release.

What to expect

With Wall Street struggling around the opening, and tending lower greenback continues under strong pressure across the board. Correlations are not clear at this point, and seems that after due corrections, longer bearish dollar trend could well resume from actual levels, after Non Farm Payrolls noise. Euro key level to watch will be around 1.4040 and Gbp 1.6330, both probable tops for the rest of the day, if majors manage to continue.

Gbp/Usd outlook

Clearly bullish in the hourly, the pair has regain most of the lost ground. As mentioned above 1.6330, 61.8% of the last down leg seems to be a good rebound/breakout zone for the next hours. Price above the 20 SMA that still needs to change slope to support further rises. Longer term trend as mentioned in previous updates, remains intact as long as the pair remains under daily 200 EMA around 1.5700.

Published on  Tue, Jun 9 2009, 15:34 GMT

U.S. Update: Dollar gains could well be considered corrective movements

Mon, Jun 8 2009, 16:12 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Dollar gains extended during Asian session, particularly against European currencies that mostly spent the session in range yet pushing lower. Japanese yen moved in a tight range thus contained by the strong 98.90 zone where some selling orders have been noticed in Asia.

What happened in Europe

Early Europe, the dollar jumped against a major currencies Monday, extending Friday's gains, as a credit downgrade for Ireland pushed the euro lower, and following falling stocks, both dismissing risk appetite. Political woes continue in the U.K. with more resigns in Brown’s cabinet, and a disastrous election result for the Labour Party, sending Gbp to test daily 20 SMA around 1.5800 zone.

With no much fundamental data to take care of, Europeans fall to fresh weekly lows before reaching over sold conditions against dollar, and trigger some short lived upside corrections, that remain capped by mid strength resistance levels.

What to expect

Till now, and despite the rally, dollar gains could well be considered corrective movements to past weeks over extended rally in majors. Technical points for majors are as follow: Eur/Usd 1.3960 and Gbp 1.6040 resistances where corrections should end to see the pair resume down trend. Usd/Chf 1.0840 and Usd/Jpy 98.20 supports also to regain the upside. Euro should break support around 1.3740, Gbp at 1.5730, Swissy resistance at 1.1020 and Japanese yen the 99.00 level. Confirmation of those breaks will resume dollar bullish trend, and does not seems likely at this today.

Wall Street remains weak ahead of bank’s capitalization plan, and took a step back after three months gains. As days go by, previous correlation between stocks and dollar continues fading and tending to revert, yet process is far from being complete.

Usd/Jpy outlook

Pair regained some bullish trend, but as comment, still 99.00 seems the key level to break to confirm a more accurate rally, as we have there a daily descendant trend line coming from the 110.28 highs. Downside is contained by the Ichimoku cloud roof along with the 200 EMA, both providing strong support around 98.20. Yet, 20 SMA has not yet regain a strong bullish slope, and we need to see a daily open above the mentioned line to trigger some bullish momentum in the pair, as the indicators has not enough strength at this point. Break under 96.80 support zone, not seen at this point, could well be signaling the resume of downtrend in the term for the pair, thus will have a number of strong supports from there to the 93.50 zone that could keep the pair struggling. Above the mentioned 99.00 zone, one probable target seems to be 101.00 zone, avery long term weekly descendant trend line coming from 123.66 highs. If the pair manages to break above, also roof of Ichimoku cloud in the weekly charts, downside trend will be over for good.

Published on  Mon, Jun 8 2009, 16:16 GMT

U.S. Update: Dollar benefiting from encouraging report

Fri, Jun 5 2009, 16:25 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened

Majors mostly consolidate during the Asian session, as usually happens before U.S. Nonfarm Payrolls. Gbp was slightly bullish after the political woes on Brown’s Cabinet, and later today, another member resigned, this time it´s Transport Secretary Geoff Hoon.

Yet, for the first time in many months, greenback is benefiting from an “encouraging” economic report: against an expected loss of 520K, America lost 345K jobs past month. Despite unemployment rate rose beyond expectations to 9.4%, market favored greenback and dollar appreciated across the board, changing perspectives for European majors. Euro, Pound and Swiss Franc, fell to fresh weekly lows and continue pushing lower after London close this Friday, despite Wall Street remains barely positive on the day. The combination of the data and its affect on the Treasury market and comments from officials of the Federal Reserve have currency traders considering the Fed could soon hike interest rates, giving further support for rising dollar.

Japanese yen, lost almost 2 cents since Asian opening against greenback, and change the pair perspective for the next days.

What to expect

Trends are tumbling across the board, with euro under 1.40 and Gbp fighting the 1.60 level. Despite corrections have been expected, the in deep of actual movements put in doubt dollar weakness, and if rates hikes become a reality, majors won’t look back in a long time.

Interesting to notice how currencies detached from stocks and risk. Let’s see how long it last, as I still expect some risk/sentiment reaction in the next weeks. However, this could well be the beginning of the end.

USD/JPY outlook

Pair reached by the book, the daily descendant trend line around 98.25, after breaking previous daily highs exactly 100 pips under. Next Asian session will confirm the bias, yet if the pair manages to break above this line, bearish trend will be over in the pair, and a retest of the 101.40 maximums is quite likely for the coming days, as the pair is also breaking above the 200 EMA in the daily. Still, we need to see price beat the descendant trend line to confirm further rises. Failure above mentioned levels, could send the pair to first mayor support, the mentioned 97.50 zone. If this gives up, a retest of the 94.50 lows seems likely, and break under the base of the big daily triangle, will confirm the longer term bearish view, a bit out of sight at this point.

Published on  Fri, Jun 5 2009, 16:32 GMT

U.S. Update: Rates and rumors

Thu, Jun 4 2009, 15:37 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Yen fell during Asian session, pushing euro a bit higher as players bargain-hunted the European unit after its overnight fall, but rise remain limited in high yield currencies, ahead of central banks decisions. Euro found support after U.S. Federal Reserve Chairman Ben Bernanke's overnight warned on the ballooning U.S. budget deficit, but aside from Yen fall, majors mostly consolidate and correct.

What happened in Europe

Both central bank, ECB and BOE, left interest rates unchanged, in a widely anticipated move. The European Central Bank kept its benchmark interest rate at a record low of 1 percent while BOE left interest rates unchanged at a record low of 0.5 percent for the third month; regarding quantitative easing, BOE and said it would continue its 125 billion pound asset-buying program, while ECB President Jean- Claude Trichet indicated the ECB has no immediate plans to increase its asset-purchase plan or cut interest rates further as the economy shows signs of recovery. “After a stabilization phase, positive quarterly growth rates are expected by mid-2010,”

Gbp fell around 2 cents in a couple of minutes, after a rumor of Prime Minister Gordon Brown was set to resign; finally, the idea was dismiss as a "complete nonsense," from an official speaker, but Pound remained unable to regain the lost ground. Despite a dollar positive initial spike, bearish trend in dollar remains strong, and Euro and Gbp managed to stay above key support levels, regaining the upside after market digest the news.

What to expect

Despite not so encouraging data in the U.S. with weekly unemployment claims at 621K and some productivity revised to the downside report, Wall Street struggles higher, sending dollar back down. Oil and gold are also regaining ground, supporting greenback fall. Trend remains strong, however, trading will remain cautions, ahead of tomorrow U.S. Non Farm Payrolls. Expect volume to decrease and tinny movements as long as the rest of the day goes by.

Eur/Usd outlook

With pair still clearly bullish, divergences are becoming more notorious in the daily chart, still with no signs of an imminent correction. Strong rebound around 1.4100 early today, clearly points for a continuation movement ahead, thus not much of reaction expected for today. 1.4245 should hold the upside in the next hours, but a clear break above that will confirm the upside momentum, ahead of the 1.3445 maximum zone. Break above this last, will take us to the 61.8% retracement around 1.4660.

Published on  Thu, Jun 4 2009, 15:40 GMT

U.S. Update: Corrections day

Wed, Jun 3 2009, 14:52 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Dollar decline continued in Asian session, hitting fresh lows against Pound and Australian dollar, (Australian GDP for the first quarter was better than expected) and following rising stocks optimism. In early Asian hours, higher Asian shares encouraged short-term players in the region to buy higher-yielding currencies against the low-yielding U.S. and Japanese units, but sentiment turn to cautious as movements have been over extended in the past days.

What happened in Europe

Dollar get boosted in Europe by some profit taking, and Euro begin to fell despite the purchasing managers survey for the euro zone, which showed the composite index for May coming in at 44.0, a little above market expectations for 43.9 and well up from April at 41.1. U.K. services PMI rose above 50.0 for the first time in several months supporting global crisis has bottomed. Yet, some political instability harmed pound, as senior cabinet members have started to resign ahead of a widely expected reshuffle after European Parliament elections Thursday. Falling stocks as well as oil and gold falling prices gave further support to greenback.

The movement accelerated early American session, after worst than expected data send stocks and risk appetite down. Factory Orders for U.S made goods rose 0.7% in April, and excluding transportation, factory orders climbed by 0.1% in the month. Shipments, meanwhile, fell by 0.2% in April, while ISM non-manufacturing index rose to 44% from 43.7. Both reports came under expectations, along with ADP private survey, that sees May US private sector losing 532.000 jobs.

What to expect

With Wall Street on negative territory, and commodities far from these day’s highs, dollar will probably continue rising thus bearish trend remains strong. Current movements are corrective, and we have a long way to go, before seeing dollar came back strong. Euro has a tough support around 1.4140, 50% of the weekly retracement, and as long as daily candles close above that level, downside movements will remain limited.

Gbp/Usd outlook

Pair has reached exactly the 14.6% retracement of the daily Fibonacci rally, 1.4395/1.6662. Despite the 200 pips fall, sentiment keeps Gbp well bid and tending higher. Daily indicators are showing signs of exhaustion, suggesting under 1.6320 correction could continue as far as the 1.5800 zone, 38.2% of the mentioned rally, without really harming actual trend. Break above today’s high, could send the pair close to 1.71~ before a serious reversal could take place. Turning to 4 hours charts and ahead of next sessions, pair is right now fighting with 20 SMA, unable to break under. Moving average holds the bullish slope, giving additional support to the view. If the pair manages to regain the 1.6460 zone, next resistances will come at 1.6520 and 1.6590. Supports from actual price lie at 1.6350, and 1.6320, that if broken could accelerate the fall with no mayor supports till the 1.6200 area.

Published on  Wed, Jun 3 2009, 14:54 GMT

U.S. Update: Could Euro hold gains?

Tue, Jun 2 2009, 14:50 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

After falling to multi months low against major rivals, dollar attempted a short lived correction during Asian session, as bearish dollar trend pushed majors to extreme oversold conditions across the board. Japanese yen regained some ground against the dollar in Tokyo, as Japanese exporters and foreign hedge funds bought the currency on its lows, after falling almost 2 cents in previous sessions. European currencies correction remained limited, as Nikkei managed to close 26 points up in a quite choppy stocks session.

What happened in Europe

Early in Europe, Swiss 1Q GDP contracted by 0.8 a bit better than the expected reading of -1.5%, another signal that the economy is starting to stabilize, yet we should not ignore that the fourth quarter reading however, was revised lower from -0.3% to -0.6%, the most in 15 years. For the euro zone, things are not as good as it seem: unemployment in the 16 countries increased in April to its highest level in nearly ten years rising to 9.2% from 8.9% in March, the highest rate since September 1999, the Eurostat data agency said. Unemployment in the European Union rose to 8.6% in April from 8.4% the previous month. Eurostat estimates that 20.8m people in the EU were unemployed in April. This was an increase of 556,000 from past March's figure.

In the U.K., the Construction Purchasing Managers’ Index (PMI) printed the highest reading in 13 months, after rising to 45.9 from 38 in April, adding to GBP strength that retested the 1.6500 zone in the European morning.

What to expect

Pending home sales in the U.S. are up for third consecutive month with the index rising to 6.7%, triggering another risk appetite spike. Wall Street is at a multi week high, approaching to the 8800 level, while oil and gold continue pushing higher. Pending home sales report seem to have set the dollar bearish trend for the rest of the day, as greenback seems not to find a floor yet. Majors need to consolidate before any attempt to correct, and that stage is not at sight.

Eur/Usd outlook

Pair continues rising and 4 hours charts clearly show how strong the trend remains: after reaching over bought conditions past Monday, pair correction failed to break under bullish 20 SMA and regain the upside, setting a new intraday high at 1.4280. Rising risk appetite will probably push the pair above that level, with 1.4310 as very close first resistance level, roof of a daily ascendant channel. Break above that level, could take the pair to the weekly highs around 1.4360 where we expect some short term rebound. Consolidation above channel roof will set bases for a new midterm rise with 1.4500 zone as next target. Failure above the channel roof, not seen at this point, could take the pair back to the 1.4200 zone.

Published on  Tue, Jun 2 2009, 14:57 GMT

U.S. Update: Too much too far

Mon, Jun 1 2009, 15:56 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Greenback continues under heavy selling pressure since Asia opening, as risk appetite continues improving, and news that General Motors will file for bankruptcy later in the day. Dollar weakness was bigger against Gbp and Jpy, as Pound reached an intraday high of 1.6430 and spent most of the session close to that level. Japanese yen tested again the 94.50 key support zone, but failed to break under and rebounded quickly. Euro gained the 1.4200 zone, and found a comfortable support at 1.4185, 50% retracement of the monthly fall 1.6010/1.2330.

What happened in Europe

Dollar downside trend continued supported by rising stocks across the world. Little data in Europe, with German and French bank holidays, show U.K. manufacturing sector contracted at its slowest pace in a year in May as the pace of decline in new orders, output and employment continued to ease.. The CIPS manufacturing purchasing managers' index rose to 45.4 last month from a revised 43.1 in April, still below the 50 level, that marks growth. Also, Euro zone factory activity contracted at a much less severe pace in May but a recovery in growth may still be some time away, and unemployment will continue to creep higher. The Euro zone Manufacturing Purchasing Managers Index for May rose to a seventh-month high of 40.7, giving extra support to high yielding rise.

Majors continued pushing higher along with stocks raising that changed Japanese yen safe haven condition. The currency continues falling strong across de board as treasury yields rebound and dow test the 8700 level.

What to expect

Early news in the U.S. also come better than expected, with construction spending unexpectedly posted its biggest increase in eight months in April, advancing for a second straight month as the private sector put money into both residential and nonresidential projects, according to a government report on Monday; manufacturing sector contracted in May, but at a slower rate, as the index of national factory activity rose to 42.8 from 40.1 in April.

If the rise in U.S. Treasury yields that took place last week continues, as many expect there could be a major reassessment of the global outlook and risky assets will lose their attraction again. Besides, technically majors are due to a correction after these past days’s rally, as optimism seems to have gone too far too soon. We cannot deny dollar bearish trend, but rallies seem to over extended. Expect some corrections before another long attempt in Europeans.

Gbp/Usd outlook

Gbp/Usd soared to 1.6430 and come back a bit, yet bullish trend remains strong. Now in a fresh high at 1.6440, the pair is moving inside an ascendant channel with the roof around 1.6500, probable target for today. From that zone, I expect some downside rebound today, as the pair is way overbought. Resistances from here lie at 1.6430 1.6480 and the 1.6500 zone. Under 1.6350 the pair could begin a downside correction with next supports at 1.6315, 1.6240 and finally 1.6170 zone.

Published on  Mon, Jun 1 2009, 16:00 GMT

U.S. Update: Dollar down trend

Fri, May 29 2009, 14:47 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Dollar down trend continued over Asia, with European currencies slowly regaining the upside and Japanese yen rising against major rivals, helped by strong factory output data in Japan: industrial production rose 5.2% in April, the biggest gain since March 1953. Good data suggest the worst is over for Japan’s economy, rising confidence together with risk appetite across the world.

What happened in Europe Rise in risk appetite extended early morning in Europe, lifting global stock prices as well as high-yielding currencies. Oil broke above the $66.0 a barrel, while gold remains around $975/Oz, helping boost European currencies; Gbp gained the 1.6100 zone, while Euro spike above the 1.4100 level.

European data support bearish greenback against Euro, as German Retail Sales, Europe’s largest economy, increased in April for the first time in four months, rising 0.5 percent from March. Yet, also in the euro zone, the annual rate of inflation dropped to 0.00 in May, for the first time in more than 10 years. Risk of deflation in the area grows but is not the day market will care about it.

Finally, ECB’s Trichet said that is a bit early to say when emerging markets will bottom out, but some data is “somewhat encouraging”, in a press conference early today, after affirming that global economic environment remains “very difficult and unpredictable”.

U.S. data show The U.S. GDP shrank at a 5.7% percent annual pace in the first quarter of 2009, capping its worst six- month performance in five decades and reflecting slumps in housing, inventories and business investment. The contraction was smaller than estimated, but higher enough to boost market against greenback.

Chicago PMI print the worst reading of the year, falling as low as 34.9, while revised Michigan University consumer sentiment, print a better reading at 68.7 from previous 68.0.

What to expect

Oil and gold continue rising, and while Wall Street struggles to remain positive, dollar continue falling across the board. Majors keep printing higher highs and lower lows, except for Gbp, but including against Pound dollar downside midterm trend is setting good bases. Both European currencies, Euro and Pound are closing the month above key Fibonacci levels: euro above the 1.3740, 38.2% and Gbp also above the 30.2% of the monthly fall at 1.6040. With majors overbought, those levels should hold greenback corrections in the days to come, and become the bases for further upside movements.

Eur/Usd outlook

Close to next key weekly level at the 50% retracement of the 1.6018/1.2330, pair could extend today’s rally to the 1.4180 zone, as despite the overbought state in smaller time frames, no signs from reversal are seen yet. Greenback is closing the week signaling further losses ahead, and if managed to break above the mentioned zone, 1.4600 will become a probable target in the midterm. Strong rebound at the mentioned level, could send euro back to test the1.3740 zone without harming general bullish tone. In the short term, I expect the 1.4180 zone to hold the upside today, and some downside corrections to the 1.4060 zone if breaks under 1.4100.

Published on  Fri, May 29 2009, 14:49 GMT

U.S. Update: Wide choppy trade continues

Thu, May 28 2009, 16:25 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Yen fell across the board since Asian opening, on mounting speculation that Japanese institutional investors will buy a lot of foreign assets prompted overseas investors to sell the yen. After failing to break under the important Y93.50 the pair spent the week consolidating just above that mark, and once range was broken to the upside, stop losses help push the pair higher. Meantime, Euro and Gbp advance little against dollar, waiting for U.S. fundamental data.

What happened in Europe

Early in Europe, Germany's unemployment rate fell to 8.2 percent in May from 8.6 percent the previous month, The improvement was in large part the result of a change in the way unemployment is calculated however, and one analyst warned that the jobless rate in Europe's biggest economy would worsen further in coming months. Euro zone economic sentiment improved more than expected in May rising to 69.3 points in May from 67.2 in April, the second straight improvement from a trough of 64.7 points in March. Little or none action in European currencies at the time, yet Japanese yen continued falling to as high as Y97.05 against greenback.

Early U.S. news show that unemployment claims fell by 13,000 to 623,000 in the week ended May 23, lower than t a revised 636,000 the prior week. But was the Durable Goods order report that jumped more than forecast due to a rebound in auto demand and surge in defense spending, what market was waiting for: Durable Goods orders increase by 1.9%, the largest since December 2007, while core number also rose to 0.8%, triggering some risk appetite spike that didn’t last.

Already in the American session, New Home sales rose in April for the second time in three months as lower prices and cheaper financing stabilized demand. Sales increased 0.3 percent to an annual pace of 352,000, lower than forecast, after a 351,000 rate in March.

What to expect

Wall Street is up, but rise is limited by GM bankruptcy, thus dollar remains slightly strong across the board as Treasuries seem to be regaining the upside. The fact is that, despite strong fall past week, majors still remain stuck in wide ranges, and choppy/sentiment fear trading continues ruling market moves. Seems a dollar continuation is likely at least today and tomorrow, last trading day of the week.

USD/JPY outlook

Pair regained the upside, and daily charts have turned bullish, with CCI giving clear signs of continuation. If pair manages to close above 20 SMA now around 96.60, continuation seems the most likely scenario with the 98.60 a daily descendant trend line, as the most probable target for the next days. Clear break above will resume uptrend and pair should finally break above the 100.00 key zone. To the downside, 96.00 and 95.50 are the support zones to consider, to keep the bullish perspective intact.

Published on  Thu, May 28 2009, 16:27 GMT

U.S. Update: Gbp takes advantage

Wed, May 27 2009, 15:37 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Asian stocks closed to the upside, in response of a good demand for U.S. government debt that eased worries over the U.S. and global economies, boosting investors' risk appetites. Japanese yen fell to Y95.51 against greenback, but was unable to push higher. Euro remained in consolidation mode, as despite the big movements we are seeing these days, and with the exception of Gbp, majors remain stuck in big ranges.

What happened in Europe

With strong risk appetite around the world, Gbp takes advantage and reach a multi-month high at 1.6040, despite net mortgage lending by British banks rose by 2.7 billion pounds ($4.3 billion) in April, the smallest increase in eight years. Mortgage approvals for house purchases totaled 27,685 in April, up from 26,671 in March. Re-mortgaging approvals totaled 25,418, down from 26,595 in March and the lowest reading since 1999, the BBA said. The house purchase part of the mortgage market appears to have stabilized, still far from recovering. Choppy large range trading was the note of European session.

What to expect

U.S. Existing Home Sales in rose in April , with purchases increasing 2.9 % to an annual rate of 4.68 million, close to forecasts, from 4.55 million in March, while the median price slumped 15 % from a year earlier, the second- biggest drop on record, Record-low mortgage rates, tax credits and falling prices may keep boosting demand in homes, giving some bases to American economy. Risk sentiment continues leading market movements, as confidence in the US and Euro-zone fundamentals remain fragile.

Gbp/Usd outlook

Take a look at this monthly chart: pair has reached today, exactly the 38.2% retracement of the huge monthly fall, at 1.6040. The level offered a nice rebound yet I don’t discard a retest of the zone yet. with month close two days ahead, new candle opening above that level will likely mean Gbp reach the 1.60 to stay. Turning to smaller time frames, indicators point to the downside, yet pair strength is undeniable. Hourly charts remain bullish with 20 SMA acting as dynamic support at 1.5960, followed by an ascendant trend line at 1.5910 that should hold any attempt to the downside. Break above today’s high could trigger some bearish momentum to the 1.6100 zone, and above there, pair has not much to take care of until the mid 1.62~ zone. Around there, if reached in the next days, we should expect a bigger correction to begin.

Published on  Wed, May 27 2009, 16:01 GMT

U.S. Update: Dollar resumes downtrend

Tue, May 26 2009, 15:46 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Dollar managed to regain ground during the Asian session past Tuesday, with Euro falling strong after a report in the U.K.'s Daily Telegraph about Germany's bad loan problems added to worries over the economic outlook in Europe. Euro selling helped yen to hold gains against major rivals, with USD/JPY still in range.

What happened in Europe

Since past Monday North Korea nuclear tests, risk aversion continued helping dollar strength, with early European data harming Euro: the German economy contracted 3.8% on a sequential basis in the first quarter, which was the fourth straight quarter of decline and biggest fall since records began in 1970. Also, the import price index dropped 8.6% year-over-year in April, compared to the 7.1% fall in the previous month. This was the highest price decline since March 1987. Finally, euro zone’s current account deficit narrowed to 6.5 billion euro from a revised 7.8 billion euro in February. Euro fell to an intraday low of 1.3860, while Gbp halted at the 1.5770 zone, where corrective movements were completed. Both currencies reached oversold state against greenback and resume bullish trend.

What to expect

Shocking good news in the U.S. trigger a major risk appetite rally, after Consumer confidence rose to 54.9 from a revisited 40.8 in previous month. Also, Richmond Manufacturing Index, print a positive reading of 4 after several months of negative readings, sending Wall Street 150 points up, raising bets the economy is stabilizing. Dollar and Yen will probably continue losing ground, expect the yen to fall harder in Asian session. Dollar down trend seems to be here to stay.

Eur/Usd outlook

Pair resume uptrend as expected after due correction, now again close to the 1.4000 level. Rally seems to be contained by the roof of an ascendant channel, today around 1.4080. Clear break above previous highs of 1.4040 will confirm the upside for the next sessions, despite RSI show some over bought state, pair has room to continue to the 1.43~. 20 SMA cutting 200 EMA in the daily support the bias and we expect another spike in Asia, as long as price remains above 1.3900. Shorter time frames support the continuation, with intermediate resistances at 1.4010, and 1.4040. Short term supports lie at 1.3950 1.3910 and 1.3860.

Published on  Tue, May 26 2009, 15:46 GMT

U.S. Update: Holiday consolidation

Mon, May 25 2009, 15:32 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Dollar begin Asian session slightly lower against major rivals, but some risk aversion was triggered after North Korea surprised markets by conducting a nuclear test and then reportedly testing a short-range missile on the same day. Greenback rose against major rivals, although limited ahead of U.S and U.K. holidays. The modest increase in risk aversion has primarily hit the yen, that fell to Y95.20 against dollar and Y 133.41 against Euro, despite some positive economic developments.

What happened in Europe

Only report in Europe, show German business confidence rose for a second month in May: The IFO institute in Munich said its business climate index, based on a survey of 7,000 executives, increased to 84.2 from 83.7 in April, less than the expected 85.0. Meanwhile, Axel Weber said the ECB had decided in favor of generous liquidity supply because it was easy to control. It was an important aspect of the ECB's decision that the exit from this policy is "relatively simple," Weber said, speaking to a German-Finnish business association in Helsinki today. With majors in range do to tin volume, European currencies rose to the upper band of the range but rebounded back around 40 pips. What to expect Despite holiday, Wall Street futures are rising, and that could give further support for greenback later in the Asian session, when market returns to normality. DJIA is struggling with the 8300 level, while S&P is under key 900 points. Watch those levels for clues of what could happen in Asia.

Gbp/Usd outlook 

Comfortable around 1.5900, daily indicators seem exhausted to the upside yet another spike up is not discarded in the near future, with 1.6030 zone as the 38.2%retracrement of the monthly fall from 2.0158 to 1.3502. The level should offer some downside interesting rebound if reached, and overbought conditions could reaffirm the view if pair does not correct to the downside earlier. 1.5450 is the probable target for such correction. Clear break above the Fibonacci level, has no important resistance until the 1.64~

Published on  Mon, May 25 2009, 15:34 GMT

U.S. Update: Dollar under heavy pressure

Fri, May 22 2009, 15:21 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

After a long day of dollar assets selloff due in part to U.S credit ranking conditions, finally a Moody’s Investor Service spokesman said U.S. credit ranking remains at AAA. Despite that, dollar was unable to regain ground against mayor rivals, and remained under heavy pressure during Asian session. Nikkei closed to the downside, losing 39 points or 0.41%. Japanese yen reached a fresh two months high at Y93.86 earlier Friday after Japanese Finance Minister Kaoru Yosano said the government has no plans to intervene to boost the U.S. currency, but the pair is having a hard time to remain under the 94.00 mark. What happened in Europe Early in Europe and with no major news driving the currency markets, dollar continued falling across the board, with Euro reaching the 1.4000 zone to stay, and Gbp close to the 1.60 level. Dollar bearish trend remains firmly in place, as currency markets lost previous correlation with stocks markets in one day. European stocks are slightly down, and Gbp seems more willing to correct the overbought state than Euro. Greenback remains weak, hit by ongoing worries surrounding the burgeoning US government debt burden. Gold and oil continue rising due to continued dollar assets liquidations.

What to expect

At this point, dollar is set to begin a longer term falling trend. Could it last? Euro zone remains facing the worst recession since WW II and rising oil prices won’t favor the outlook. Despite the jump in confidence, still seems reaction is overextended as current strength could also give ECB the chance to decide more aggressive monetary policy if needed. U.K. credit conditions have been downgraded this week from stable to negative, while despite Yosano’s words a strong yen is never welcome in Japan. Not to mention SNB has repeatedly announce more intervention if needed for the Swiss Franc. U.S. stocks are rising quickly ahead of next Monday holiday, and dollar is rising across the board. Expect Europeans correction to extend during the rest of the session.

Usd/Jpy outlook

Early to say, Usd/Jpy seems to found a base around Y94.00 and is slowly regaining the upside. Take a look at this daily chart: pair started the day just above the 50% retracement of the last upleg from 87.10 to 101.40. Actual candle formation suggest a probable reversal (not yet confirmed, day is far from over), so let’s see what happens. Clear close above this level, could target the 38.2% of the same retracement around 96.00. On the other hand weekly close under that level, will keep the pair under selling pressure, and next target will be at the 92.65 zone. Weekly charts remain bearish, while smaller time frames show immediate resistance at 94.90, 20 SMA in 4 hours charts, still quite bearish. Next candle open above could confirm further rises with next resistances at 95.20 and the key 95.60 zone. Supports for the next hours will be at 94.29. 94.00 and 93.86.

Published on  Fri, May 22 2009, 15:24 GMT

U.S. Update: Again risk appetite rules

Thu, May 21 2009, 15:29 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team  |  View company's profile

What happened in Asia

Nikkei 225 followed Wall Street as expected, closing 0.86% down, pushing dollar to a fresh 2 month low against yen, after FED statement that the American economy will take more time than expected to recover. Gbp continued pushing higher reaching a multi month high against greenback at 1.5813. Euro was little changed and remained close to 1.3800 zone.

What happened in Europe

Early Europe, euro zone's services and manufacturing sectors contracted less than expected in May, giving further support to Euro, and showing more declines in the pace of slow. The Flash PMI Index rose to 44.7 in May from 43.8 last month, beating the consensus estimate of 44.5. That was the third month in a row it has picked up and took it to its highest level since October, although the figure remains well below the neutral 50.0 level.

Pound was hit early morning by Standard & Poor's decision to lower its outlook for the U.K.'s triple-A rating to negative from stable, while retail sales rose for a second month in April rising 0.9% from March reading. Sales also rose 2.6 percent from a year earlier. Gbp fell quickly more than 200 pips, but the bullish trend remains there and the pair is quickly regaining ground. Euro also gave up some ground in what could be understood just as profit taking, still above the key 1.3470 zone.

Early in the U.S. data keep harming dollar and stocks after unemployment claims rose to 631K while previous week was revisited to the upside to 643K. Philadelphia manufacturing index was better than previous month but under expectations, printing a -22.

Finally, Treasury Secretary Timothy Geithner said that a bailout for banks was steadying the financial system but care must be taken to ensure that normal market forces are allowed to operate. He also add that, once economic recovery is under way, the government will have to move swiftly to ratchet down deficits that are swelling as the government pumps hundreds of billions of dollars of capital into banks.

What to expect

The dollar rebound in Europe is extending by falling stocks: DJIA is under 8300 points while S&P breaks under 900, triggering again some risk aversion in market: dollar and yen are pushing higher thus appreciation seems limited at this time. A longer term perspective will need to consider the fact that, despite the global economic outlook is improving, high yield currencies appreciation seems a bit over extended at this point. Be aware we need some consolidation at actual levels and further upside confirmations to see majors again winning fast, and from a fundamental perspective, that is not sustainable in time.

Eur/Usd outlook