Daily Forex Analysis

Daily Forex Technicals | Written by FOREXYARD | Aug 04 08 08:03 GMT |

Headlines

US Economic Outlook Keeps USD From Rising.

Economic News

USD

Personal Spending and Factory Orders Will Determine USD Value.

The USD underwent a bullish trading session last week, as it appreciated versus all of its major currency rivals. The greenback saw significant bullishness on Tuesday and Wednesday as the Consumer Confidence Index beat our forecasts and the ADP Nonfarm Employment Change which was expected to be a low negative figure, turned out positive at 9K. Crude Oil also affected the USD and was very volatile last week. Traders noted that the Crude Oil was traded around $120 a barrel for part of the trading session on Tuesday. At the end of the week, the USD was traded around the 1.55 level against the EUR and 107.00 level against the JPY. Traders should also notice that towards the end of last week, the USD took advantage of the GBP's bearishness as the GBPUSD dropped to the mid 1.97's.

This week should be highly volatile for the greenback, as many crucial news events are expected to be released from the U.S. The major releases on tap this week will be: Personal Spending which will be announced today, the Federal Funds Rate which is expected to stay at 2.00% and ISM Non-Manufacturing Composite both on Tuesday and the very fragile Pending Home Sales which will affect the greenback very much on Wednesday. It might sound repetitive, but the Crude Oil will also be a huge factor in the USD's value and besides the pure economic data, the Crude Oil Inventories will affect the 'Black Gold's' price.

Looking specifically at today's economic calendar in the U.S, there will be a batch of releases. The USD's own volatility will be determined by the actual values of the Core PCE Price Index, Personal Spending and Factory Orders. With the current forecasts, look for the Personal Spending and Factory Orders to neutralize each other and both should cause some effects on the American stock market. Because of the number of data releases, the greenback should see some volatility; however its value shouldn't change much if the figures come out as expected.

EUR

Weak EUR Data May Reinforce Fears And Limit the Scope for EUR Gains.

The EUR saw a very bearish trading session last week, losing grounds to all of its currency crosses, besides the CHF. Overall there seemed to be a lack of impactful data releases to come out of the Euro-Zone compared to the average week and most of the major releases were bearish for the EUR. Germany, the Euro-Zone's biggest economy, had a bad week as the German Consumer Confidence and German Retail Sales both declined compared to their previous values and were lower than forecasted. The EUR was also hurt by the USD's success, which causes the cross to trade in the mid 1.55's, a steady trading zone that hasn't been reached in more than 2 months.

This week should be a little more interesting for EUR traders, as there is an ECB Press Conference and the announcement of the Minimum Bid Rate. Also look for more German economic data to come out as the German Factory Orders and German Industrial Production will be released on Wednesday and Thursday respectively. Both figures are forecasted to be higher than their previous values and this should help the EUR rebound against its currency rivals. There are minor data releases expected today from the Euro-Zone and it seems like the USD will be the dominant volatility source. The Sentix Investor Confidence monthly PPI will be released today and both are expected to be lower than their previous values so the EUR could fall even lower today.

JPY

Last Week's Drop in the Crude Oil Helped JPY Gain Grounds.

The JPY saw a fairly bullish trading session last week as it gained value against most of its currency crosses besides the USD. The week started with a drop in the Crude Oil prices that helped the export focused Yen gain grounds against most of its rivals. The better than forecasted yearly Overall Household Spending and Retail Sales also helped spark the positive momentum for the JPY. The Yen lost some of its positive trading trend with a lower than expected Prelim Industrial Production during the week, but overall saw bullish week. Most notable was the EUR/JPY that dropped to under 168 towards the end of the previous trading week.

No much Japanese made volatility will be seen this week as only three data releases are left to be announced. The two most impactful figures will be released on Wednesday and are expected to be bearish for the JPY. The focus should be going to the Core Machinery Orders, which is expected to significantly depreciate to -9.6% after recording a positive figure of 10.4% last month. As always, the American Crude Oil Inventories will also affect the JPY as the Crude Oil prices could get volatile after this release. Look for most of the Yen's trading trends to be caused by its currency crosses' momentum.

Oil

Oil is Up on Storm Factor.

Oil prices jumped above $126 a barrel today during the Asian session on concern that a showdown over Iran's nuclear program could threaten crude supplies out of the Middle East. Crude also continued its rising trend for a second day as a tropical storm Eduard threatens U.S. output in the Gulf of Mexico, and Israeli and U.S. officials sought additional sanctions against Iran. Light Crude for September delivery rose $1.20 to $126.30 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract gained $1.02 on Friday to settle at $125.10 a barrel. Last week, hedge fund managers and other large speculators reduced their bets on falling Oil prices, according to Commodity Futures Trading Commission data. Overall, while the U.S. economy may be heading toward recession, demand in India and China remains strong, markets now expect the Oil to reach $175 a barrel before the end of the year.

Technical News

EUR/USD

The ongoing tight range continues without a break of any significant importance. The daily chart is maintaining a slightly bearish indication yet with no distinct conclusion. The Bollinger Bands on the 4 hour chart are tightening which indicates that the break might be imminent. Traders are advised to hold for the break and then swing into it.

GBP/USD

The intensive bearish trend is calming on the hourly charts, yet shows no real indication of a halt or a correction move. In fact, on the hourlies and the 4 hour chart a bearish formation is still intact. A negative slope on the daily chart's Slow Stochastic validates that notion. Going short seems to be a good choice today.

USD/JPY

After reaching the 107.23 level, the pair has marked it as a very strong support level and is showing difficulties breaking it locally. If that support will sustain an additional attempt, we may see a strong bullish correction move that might take the pair to the 108.20 level as a first step. Traders should pay close attention to that level as it holds high profit potential.

USD/CHF

The pair's movement is quite moderate and characterized by relatively low liquidity, with a slightly bullish move. Indicators on the 4 hour level shows mixed signals, as the daily studies are still a bit bullish. Waiting for a clear signal on the hourly level before entering the market might be wise.

The Wild Card

NZD/USD

The pair is in the middle of a strong bearish move ever since it peaked at 0.8220, and is now traded at 0.7230. The pair continues its nonstop bearish journey overlooking every possible support level and shows no sign of a stop. All oscillators on the daily chart are still bearish and the trend appears to have more room to run. Forex traders should note that being on the short side appears to be a wiser move during the day.

Indicators

Date	Time (GMT)	Country	Event	Period	Previous	Forecast	Importance
2008-08-04		CAD	Holiday: Civic Holiday		*	*	*
2008-08-04	01:30:00	AUD	House Price Index	q/q	1.1%	-1.0%	***
2008-08-04	07:30:00	CHF	SVME PMI		54.9	53.3	***
2008-08-04	08:30:00	EUR	Sentix Investor Confidence		-9.3	-10.0	*
2008-08-04	08:30:00	GBP	Construction PMI		38.8	37.6	***
2008-08-04	09:00:00	EUR	PPI	m/m	1.2%	0.9%	*
2008-08-04	11:30:00	USD	Challenger Job Cuts	y/y	46.7%	-	*
2008-08-04	12:30:00	USD	Core PCE Price Index	m/m	0.1%	0.2%	***
2008-08-04	12:30:00	USD	Personal Spending	m/m	0.8%	0.5%	***
2008-08-04	12:30:00	USD	Personal Income	m/m	1.9%	-0.1%	*
2008-08-04	14:00:00	USD	Factory Orders	m/m	0.6%	0.7%	***
2008-08-04	23:30:00	AUD	Services PMI		45.4	-	*

FOREXYARD