FOREX TRADING

ADP Signals Ongoing Weakness in Jobs, While Chicago PMI Signals Activity Remains Weak!

The U.S. economy continued to show signs of improvement in the second quarter of this year, as the pace of contraction eased noticeably from the first quarter of this year, as the economy contracted by an annual rate of 6.4% back in the first quarter, however, conditions improved drastically since then and the U.S. economy seems to be on its way to recover from the worst recession since WWII.

The U.S. economy contracted by 0.7% according to the final GDP estimate for the second quarter of this year better than median estimates of a 1.2% contraction and revised from the prior 1.0% contraction, whereas personal consumption declined by 0.9% only revised lightly higher from the prior reported 1.0% drop. (more…)

Daily Technical Analysis For Forex Trading

EURUSD Outlook

The EURUSD attempted to push lower yesterday, bottomed at 1.4527 but closed higher at 1.4583. Although bearish correction seems limited now, on h4 chart below we still have a valid bearish channel and the pair still able to move below 1.4595 for now, indicating bearish correction remains valid testing 1.4440 area. However price is now testing the upper line of the bearish channel and struggle around 1.4595 which could be a critical technical point at this phase. A violation to the bearish channel and failure to keep moving below 1.4595 could be a potential threat to the bearish correction and aim for 1.4720 and 1.4850 before targeting 1.5000.

(more…)

Confidence Drop as Americans Still Fear the Outlook for the Labor Market!

Consumer confidence retreated in September according to the U.S. Conference Board, as conditions are still challenging amid rising unemployment and tightened credit conditions, though the economy has been showing signs of improvement recently, yet consumers are yet to feel a drastic change over the outlook of the economy.

Consumer confidence dropped in September to 53.1 from the prior revised estimate of 54.5 and below median estimates, as the present situation index dropped to 22.7 from 25.4, while the expectations index dropped slightly to 73.3 from 73.8, whereas people saying business conditions were bad rose to 46.3 from 44.6. (more…)

Daily Technical Analysis

EURUSD Outlook

The EURUSD had a bearish momentum yesterday but not as strong as I had expected. Moving in a volatile market, the pair attempted to push lower, slipped below 1.4595, bottomed at 1.4563 but bounced higher at 1.4678 before closed lower at 1.4612 after Trichet’s comment. As reported by Bloomberg, Trichet said that strong Dollar is “extremely important”. I really want to see how the market react today and days ahead to this statement. Will it trigger a bearish reversal? Well, I think although that comment doesn’t necessarily trigger a bearish reversal, but at least provide some support to the Dollar. Why buying the Euro if the President of ECB prefer strong Dollar? Now let’s check on technical side.

On h4 chart below we still have a valid bearish channel so further bearish correction warning is still a live and kicking although rejection to consistently move below 1.4595 should keep bullish scenario intact. A violation to the upside of the bearish channel could potentially put the bearish correction to it’s end but for me only a break above 1.4850 should be seen as bullish continuation towards 1.5000. Immediate support at 1.4563 (yesterday’s low). Break below that area should trigger further bearish momentum targeting 1.4440 and 1.4190.

(more…)

No Call For A New Reserve Currency From The G-20

Growth will come from multiple sources

USD traded mixed Monday as the G-20 meeting ends without a fresh call to replace the USD as the world’s reserve currency. G-20 officials announced Friday that the G-20 will supplant the G-8 as the international economic council and include developing nations like China, Brazil and India. The G-20 proposes a comprehensive approach to rebalancing the global economy which will include assessments of fiscal and monetary policies, trade and Forex. The G-20 also pledged to increase representation of emerging market and developing countries. The G-20 communiqué made no mention of USD reserve status. World Bank President Robert Zoellick says the US should not take for granted USD status as the world’s reserve currency. Zoellick said there are a number of options emerging and that the G-20 meeting presents a good start towards increased global cooperation. According to Zoellick forces are shifting and now is the time to prepare for the fact that growth will come from multiple sources. Reuters reports that Zoellick said ‘we need a system of international political economy that reflects a new multi polarity of growth.’ (more…)

Daily Technical Analysis

EURUSD Outlook

The EURUSD bullish scenario is still intact by a rejection to move below 1.4595 and bounce to the upside on Friday. I think we are in no trading zone now and the bearish correction/reversal warning is still there. A look at my h4 chart below we can see that after violated the bullish channel the price retreat to the upside toward the bullish channel’s lower line which is normal, but we still have potential bearish correction/reversal.

Still on my h4 chart below, with another look from another technical point of view, can you see that the price is potentially making a head and shoulders pattern? After bouncing to the upside on Friday, we might see another upside movement, even to the 1.4766 resistance area, but that will only make the H&S formation perfect and we have another downside reversal scenario. The 1.4595 area is also the neckline of the H&S, which potentially trigger further bearish momentum if price fall below that area targeting 1.4440 or even 1.4190. This bearish scenario warning by H&S can only be canceled if price break above 1.4850 area, targeting 1.5000. Be patient and don’t rush jump into the market.

(more…)

Weekly Economic and Financial Commentary

U.S. Review

A Huge Week for Policy Announcements

• The U.N. General Assembly, G-20 and FOMC meeting overshadowed this week’s economic news. Stimulus efforts remain in place but some programs are approaching expiration and plans were announced for an orderly winding down of the Fed’s quantitative easing.
• This week’s key economic news included reports on new and existing home sales. New home sales rose 0.7 percent, whereas existing home sales fell 2.7 percent.
• Weekly first-time unemployment claims fell more than expected, dropping 21,000 to 530,000. (more…)

Durables Sink While Confidence Inclines Sending Mixed Signals about Recovery

The world’s leading economy continues to suffer the aftermath of the worst recession in over seven decades whereas housing data along with durable goods indicate that the credit crunch continue to hammer down economical activities due to tight credit conditions and high unemployment rates, whereas conversely consumer confidence continued to rise amidst the recent development seen in major sector such as the manufacturing and services sectors.

Starting with Durables that witnessed a severe decline beyond expectations due to producers slashing off production along with spending and inventories to cope with the current low demand in the United States whereas the Durable Goods Orders declined in August to -2.4% from the previous revised estimate of 4.8%, in addition Durables Ex Transportation remained unchanged during the same period compared with the previous revised estimate of 0.9%. (more…)