FOREX TRADING

U.S. Reversal Holding During Asian Session

Overall, Forex Market trade desks in the U.S. session and the Asian desks seem all too happy to continue that trend during the session. It will be interesting to see what happens in the following European and U.S. sessions. A report released from RICS showed that house prices in the U.K. continued to rise in August.

The euro (Eur/Usd 1.4636) has found some strength during the Asian session for the second time. The pair is running into near term resistance at the 1.4650 level which was also the high of the previous day.

The pound (Gbp/Usd 1.6621) has strengthened by 31 pips or 0.19 percent in the early Asian session. The pair is finding intermediate resistance at the 1.6629 level which also acted as resistance during the previous session. Should this strength continue the pair will find more resistance at the 1.6740 area while the 20 and 50 day moving averages at 1.6420 and 1.6468 respectively, will provide support. (more…)

September Blow-Out Top

As has been previously reported in recent LFB headlines, the month of September equity trade is 50/50 at best in regard to ending in the green. “The Stock Market handbook goes back to the time that dirt was young, and records September as a poor month in equities” TheLFB Trade Team said. “$1000 invested just in September since 1919 was worth $800 in the year 2000, and interestingly, the first week or so is not so bad, it is weeks three and four that have done the damage” they added.

At this time the Japanese fiscal half year-ends, (September is the final month of Japan’s fiscal first half), and is when Japanese corporations have accounting incentives to repatriate funds back to Japan from overseas investment. This is also the time of year that the U.S. Mutual Fund year end on October 31st comes into focus. “Outside of historical trends, we start to see reasons behind the pattern of trade” TheLFB Trade team said.

“The fact that we go into September at yearly highs may help in regard to forward momentum, but the moment greed is replaced with fear of loss, the automated sell button tends to get jammed down.”

There is nothing that a 95% automated trading environment likes more than to overshoot a target, just for good measure, and with liquidity still being kept in very tight circles, there is a high probability chance that a blow-out reversal day is coming. “Hopefully it will be a one-off, and things quickly stabilize.” they added.

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Japanese Yen Strength Continues

The yen is maintaining a firm tone and there will also be further speculation over capital repatriation to Japan which will support the yen. There is likely to be further institutional dollar support at current levels which will offer significant dollar protection and verbal intervention remain a significant risk. Overall, the yen should maintain a firm tone in the near term, but looks to offer little value without a corrective retreat to at least 92.20 against the dollar given the probability of strong support close to 90.0.

The US currency dipped to lows near 91.40 in New York on Thursday as underlying dollar sentiment remained weak with the yen also broadly resilient on the main crosses.

The Japanese data was weaker than expected with second-quarter GDP revised to a reading of 0.6% following a 0.9% preliminary increase, primarily due to lower inventories which will maintain some degree of caution over the outlook. The Chinese data was generally robust which maintained confidence in regional equity markets. (more…)

There were more signals that the U.S. economy was improving, as a string of positive data was released yesterday from the U.S. the most important was the Chicago PMI, which printed higher-than- anticipated figures in the month of August. This indicator is a primary gauge of manufacturing sector, acting as the main driver of the U.S. economy. On top of this good news, rise in demand for U.S. goods from abroad is also probably to help boost the U.S. economy in the coming months.

USD – Chicago PMI Data Pushes the USD Lower

Evidence is increasing that the worst of the global recession is passed. Business activity in the U.S., the world’s biggest economy, rose more than economists forecast in August, the Institute for Supply Management-Chicago Inc. said Monday. The Chicago PMI report is further indication that the U.S. economy is starting to improve; the data eased risk aversion among investors analysts said, with positive data negative for the Dollar and Yen.

The USD fell versus a basket of currencies due to the decline in U.S. equities, as fears that the recent rally has overheated. This decline was led by the 7% fall in China’s stock market index. As a result, the Dollar was hurt as traders fled to currencies such as the GBP and EUR. The greenback fell by about 50 pips to the 1.4336 level vs. the European currency. Against the British Pound, the Dollar slid by over 50 pips to 1.6283. The USD did make some gains, as the USD/JPY cross rose by 30 pips to the 92.95 level. Note, this is the first time in 3 days that the USD closed higher against the JPY. (more…)

Forex trading to today are set to be driven by a batch of data from both the U.S. and Britain. The main release from the U.S. today that traders are waiting for is the Consumer Spending, also known as the Personal Spending report from the U.S. at 12:30 GMT. Estimates put the figure at approximately 0.2% in July, about half the increase of June. Nevertheless, the arise is mainly owed to the cash-for-clunkers program. In spite of this, a positive figure may actually hurt the USD, as such a result could increase risk appetite. Consequently, in order to take advantage of end-of-week market behavior, open your positions in the USD, EUR, and GBP now.

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Today’s U.S. Consumer Confidence data release is set to dominate the trading between the Dollar and its major currency pairs. A number of other factors are also likely to impact the forex market today, such as the British BBA Mortgage Approvals at 8:30 GMT. The results of today’s data are likely to determine the USD’s trend going into rest of the week’s trading. (more…)

Last week noticed a sharp drop in the US Dollar’s value, specially versus the EUR and the CHF. The biggest question for this week is whether the Dollar will continue to see bearish trends against the major currencies, or reverse. It seems that the upcoming data from the U.S. economy will play a main role in this week’s trading, and traders are advised to follow these main publications closely. (more…)

The Greenback came slightly off highs versus major currencies on Monday, after a report that showed improved manufacturing conditions in the New York region in August. The Dollar earlier received a boost as commodities sold off following a sharp drop in Chinese equities overnight. Today the US Dollar declined before the Commerce Department reports housing data at 12:30 GMT on speculation the U.S recession likely eased further. The affect of a stronger- then-expected number will be positive from a risk point of view, analysts said, therefore reducing demand for the dollar as a refuge. (more…)

The Greenback fell on Wednesday toward its lowest point this year versus the EUR, giving up gains stemming from a decline in U.S. equities and a disappointing report from the U.S. services sector. The Dollar drifted sideways against the EUR, which was steady from late New York on Tuesday at $1.4411. The US Dollar also fell 0.2% against the Japanese yen to 95.02 from 95.25 yen on Tuesday.

The US Dollar has slid broadly since March as riskier assets, such as equities and commodities, rallied on improving economic data, eroding demand for the safe-haven USD. The Dollar’s inverse relationship with investor appetite for risky assets has reasserted itself in recent weeks, analysts have said. The USD has also lost ground as equities posted a strong global rally and investors rushed into assets perceived as more risky. (more…)

The economic calendar is filled up with high impact data this week that threatens to sow in large volatility into the market. By the across-the-board range of news reports, ForexYard gives notice its traders to pay special attention to the U.S Manufacturing PMI, Pending Home Sales, Non-Farm Employment Change and EUR Minimum Bid Rate reports.

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The rally in global stock markets has led to a sell-off of the safe haven currencies and pushed investors to higher riskier assets as many see the global recession coming to an end. The encouraging global economic data has also been helping push Crude Oil to the $69 price level.

USD – USD Depreciates, Consumer Confidence Growing

The steady improvement to risk appetite over the previous week has helped push the EUR/USD above 1.4200 at the start of this week’s trading. While the greenback has been trading relatively flat versus the other major currencies, it is nonetheless accelerating towards intense volatility at the start of this week. The rally in global stock markets has helped convince investors to pull away from the safety of the dollar in exchange for riskier assets. In the forex market, this means a diversification towards the EUR, CAD and even AUD.

A sudden surge in the Asian stock markets at the end of last week has helped reduce demand for safe-havens like the USD and JPY, but their attraction has remained steady enough to prevent vast drops in value. Confidence may be climbing the world over, but investors may not yet be brave enough to jump whole heartedly back into riskier investments. A demand for safe-havens remains despite the boost in optimism.

Looking ahead this week, we’ll complete another part of the picture for the US housing market with the New Home Sales report expected later today at 14:00 GMT. A more intricate look into American optimism will be delivered on Tuesday with the CB Consumer Confidence report, and week’s end will provide traders with a look into the first portion of this year’s second quarter GDP, which tends to have the most impact of the 3 reports released on this figure. These reports will no doubt put the USD at center-stage for the duration of the trading week and investors would be unwise to skip over this week’s news events surrounding the US economy.

EUR – EUR Strengthens as GBP Sinks; Risk Appetite Climbing

The spectacular results from last week’s PMI and German Ifo Business Climate report helped push the EUR higher against most of its currency pairs. However, the British Pound suffered heavy losses at the end of last week’s trading due to worse-than-forecasted GDP results. Climbing back above the 1.42 level against the USD, and even spiking upwards of 0.8650 against the Pound Sterling, the EUR’s gains were unmatched last week.

Precisely opposed to the value of the EUR, as pertaining to risk appetite, the Euro-Zone currency indeed strengthened due to the perception that its regional economy is stabilizing. This belief has helped stoke the notion that recovery is on the way by the end of this year. The subsequent return to riskier assets helps devalue safe-havens such as the Dollar, while pushing more diverse currencies, such as the EUR, higher against the other currencies.

No doubt the devaluation of the Pound also led to a boost in the value of the EUR by the sheer weight of regional competition. As the wave of risk appetite took hold last week, the GBP may not have offered investors the necessary level of security, which also helped boost the gains made by the EUR.

While economic releases from the Euro-Zone led the market last week, and also helped revive demand for the EUR, this week’s trading will see no such thing. The EUR is surprisingly absent from this week’s calendar as the US economy takes the wheel. If US data can encourage the recent return to risk appetite, then the EUR’s rally may continue this week.

JPY – JPY Anticipating European Market Opening

The recent rise in risk appetite has helped the mild return of the Yen-denominated carry trade. With the JPY climbing modestly against most pairs, the gains seem to be muted as investors weigh the JPY as a safe-haven or carry-trade, and the balancing act has led to a series of consolidation trends in the JPY crosses.

It appears the Japanese Yen has leveled-off versus almost all of the major currencies in anticipation of a rather large impending movement. If the rally in Asian stocks continues from last week, investors may see the JPY lose value as the carry-trade returns with full force. For the time being, it appears as if traders the opening of the European markets to weigh in on positions placed at the end of last week. If expectations are correct, forex market participants could see a sharp drop in the value of the Yen in today’s early trading hours.

Crude Oil – Oil Reaching $70 as Market Optimism Surges

As the US Dollar has declined over the last few trading days, the value of a barrel of Crude Oil has been appreciating. The steady climb back towards $70 a barrel has helped boost the GDP of many oil-producing Arab countries. The downside is the ever-present and growing connection between Middle Eastern economic growth and fluctuations in the price of oil, which has wrought havoc on these countries over the past few months despite efforts to diversify investment and industry.

Market optimism has helped return many investors away from the USD and into riskier assets. This helps boost the demand for commodities as a method of portfolio diversification. While the current price range of Crude Oil may not be justified by recent supply and demand levels, it nevertheless reflects the value derived by speculation of future growth. The surge in market optimism helps bring about the purchase of Crude Oil as investors anticipate industry growth world-wide. If this week’s news events continue to boost this optimism, Crude Oil may easily climb above $70 in the days ahead.

Article Source – Dollar Falls as Investors Turn to Riskier Assets

The USD is set for another volatile action-packed trading day as this weeks’ trading comes to a close. The Dollar saw sharp moves against the EUR, GBP and JPY yesterday. This type of behavior is set to continue today as vital economic news is set to come out of the U.S. The economic events that are set to lead the forex market are the publication of U.S. Revised UoM Consumer Sentiment at 13:55 GMT, Federal Reserve Chairman Ben Bernanke’s Testimony and Treasury Secretary Timothy Geithner’s speech on U.S. economic recovery both at 14:30 GMT.

USD – Dollar Rallies vs. Yen on Economic Recovery Hopes

The U.S. Existing Home sales notched a 3rd monthly rise in June, and prices hit their highest since October. This fueled hopes the housing sector is finally on the mend, and many analysts hope this will help propel a broader economic recovery. According to analysts, the data suggests that the U.S housing sector is beginning to stabilize. This is a necessary component for a more meaningful U.S. recovery, and hence a stronger USD in the long term.

The U.S. Dollar soared against the Japanese Yen yesterday, due to the U.S. housing data. The USD rose 1.2% to as high as 95.30 vs. the JPY on Thursday. However, the pair finished trading at the 94.63 level. Against the EUR, the Dollar traded near a 7 week low at $1.4292, the weakest level since June 3. The pair finished trading much lower at the 1.4162 level. This was despite the greenback falling in early trading as the U.S. stock-index futures advanced on speculation that the worst of the recession may be over, prompting investors to purchase higher-yielding assets.

A number of analysts cautioned that the rally in risk sentiment on Thursday could be short-lived, as sentiment remains fragile and markets are probably quite near to seeing risk aversion returning to the forefront. This will be clearer to forex traders today, as 3 vital economic events are set to take pace in the U.S. These include the Revised UoM Consumer Sentiment at 13:55 GMT, Federal Reserve Chairman Ben Bernanke’s testimony at 14:30 GMT and Treasury Secretary Timothy Geithner’s speech on the economy also at 14:30 GMT.

EUR – EUR Hits 7 Week High Against the U.S Dollar

The European currency made gains against the U.S Dollar in early trading after data on U.S. jobless claims in the latest week came broadly in line with expectations. However, this was short lived, as the U.S. housing data was very optimistic, resulting in the pair closing far lower at the 1.4162 level. The EUR also fell against the GBP to the 0.8589 level as confidence returned to the British currency. However, the EUR/JPY pair was unchanged as demand for the safe-haven JPY fell yesterday.

The British Pound traded near the highest level this month against the USD, as advances in retail sales and mortgage approvals prompted speculation the recession in Britain is abating. In turn, this leads economists to the conclusion leading to speculation that the Bank of England (BOE) will increase its Interest Rate. The Bank of England reduced the main Interest Rate to a record low 0.5% in March. The Sterling also gained for a 2nd day against the EUR and the Yen as a government report showed Retail Sales increased last month at 4 times the pace forecast by economists.

There is much data coming out of Britain and the Euro-Zone today that is expected to determine the GBP and EUR crosses, as this week’s trading comes to a close. From Britain, the Prelim GDP and Index of services figures are set to be published at 08:30 GMT. From the Euro-Zone, the German Ifo Business Climate and Flash Manufacturing PMI are set to be released at 08:00 GMT. Forex traders are also advised to follow U.S. economic news too, as the market is set to be very volatile throughout the day.

JPY – Yen Loses Ground Amid Economic Recovery Hopes

The Japanese currency fell against the U.S Dollar and the GBP on Thursday, paring losses made the previous day. The JPY hit its lowest level in more than 2 weeks against the Dollar on Thursday, and a 3 week low against the EUR as traders in Asia sold Yen in anticipation of outflows from Japanese investors. The Yen also dropped versus the Swedish Krona and Norwegian Krone yesterday as Japanese financial companies prepared to raise at least 700 billion Yen ($7.42 billion) for funds that will be invested globally.

Much of The Japanese currency’s decline came about after the Finance Ministry said the contraction in the nation’s exports slowed to 35.7% in June from a year earlier. Japan’s trade data however provided hard evidence that the global economy is now on the mend, analysts stated. As the risk sentiment improves on the back of receding wariness about the prospects of the global economy, the Yen may weaken further against higher-yielding currencies.

Crude Oil – Crude Oil Eyes $67 a Barrel

The Crude Oil prices rose above $66 a barrel Thursday, ending at the highest level in 3 weeks at the $66.88 level. This came about as U.S. home sales data lifted stock markets and raised hopes for an economic recovery. Oil advanced 2.7% after the National Association of Realtors said home resales increased in June for a 3rd consecutive month.

Crude has risen in 6 of the recent 7 trading sessions. The rally came even after U.S petroleum data continued to show weak demand and rising inventories. Crude Oil and other commodities have tracked equity markets in recent months as analysts seek signs of a better economic outlook after the downturn cut world energy demand for the first time in a quarter of a century.

Article Source – Dollar Trading To Be Dominated By Bernanke and Geithner Testimony

Witnessing a steady decline during yesterday’s trading sessions, the USD became weakened as traders unwound their Dollar buy positions in exchange for riskier assets, such as stocks. The global stock market rally seen yesterday may have been one of the leading causes of the Dollar’s depreciation. With recent market optimism, traders may continue to see a small downward trend in the U.S. Dollar, as its positions are unwound in exchange for higher yielding assets.

USD – Dollar Outlook Remains Weak

The USD continued its decline against the EUR, as well as other risk sensitive currencies on Wednesday. However, the overall direction of the market was subdued due to unsteady equity markets. While the Dollar sentiment is bearish, the EUR seems unable to really take off. On Wednesday, the Dollar index was at 78.745, down from 78.920 on Tuesday

Strong performances from the stock markets continue to put downward pressure on the Dollar, as investors move to riskier higher yielding assets. Furthermore, the Dollar outlook suffers from concerns over U.S monetary policy. With growing uncertainty about the framework of the monetary and fiscal policies, particularly in light of the proposed health care reform, the outlook on the Dollar looks very weak despite the Fed’s and Treasury’s assurances.

Looking ahead to today, several important news releases are expected from the U.S, including the Unemployment Claims at 12:30 GMT and the Existing Home Sales at 14:00 GMT. These indicators are very important since they are leading indicators of economic health and tend to create great market volatility.

EUR – EUR Rises on Weaker Dollar

The EUR experienced a moderate rise against the Dollar and Yen yesterday. Late Wednesday, the EUR was at $1.4211 from $1.4197 late Tuesday and at ¥132.96 from ¥133.01. The Pound depreciated 0.3% to 153.92 Yen, and traded at 86.41 pence versus the EUR. The British Pound also appreciated slightly versus the Dollar, trading at $1.6463 from $1.6436.

The Pound’s drop against the EUR came after the National Institute of Economic and Social Research stated that home values will resume their decline. The institute also predicted Gross Domestic Product (GDP) will shrink by 0.4% in the second quarter, slightly worse the 0.3% expected by economists. Also putting downward pressure on the Pound were losses in equities throughout the trading day.

While no major news releases are expected from the Euro-Zone today, traders should follow the release of British Retail Sales that is due at 8:30 GMT. As this is a leading indicator of economic activity, it is likely to cause great volatility for the GBP pairs.

Yen – Yen Benefits from Stock Market Losses

The Yen gained for a fourth day against the Dollar, and for a second day against the EUR yesterday following a larger than expected second-quarter loss by Morgan Stanley, as well as a statement by Wells Fargo & Co. stating that bad loans jumped. The Yen traded at 132.87 per EUR from 133.18 and at 93.56 versus the Dollar from 93.68 yesterday.

With reports from CIT Group Inc. and American Express Co., risk aversion today will likely stay prominent as the expectation is for weak earnings announcements. As the Yen is highly sensitive to moves in the equity markets, any negative earnings reports will revive risk aversion among investors and push them toward the safety of the Japanese currency. The Yen may also rise today ahead of the U.S Unemployment Claims report which is expected to show an increase in claims.

Crude Oil – Oil Prices Slide on Disappointing Inventories Report

Crude Oil for September delivery settled down 21 cents, or 0.3%, at $65.40 a barrel Wednesday, snapping a five-day rally following the release of slightly worse than expected U.S Oil inventories. However, losses were limited due to a weak Dollar and equity gains.

With inventories remaining high and OPEC members not sticking to quotas, there is still too much supply and not enough demand. While rising equity markets and a weak Dollar continue to push Oil prices up, the fundamentals are still weak and do not supports another rally to the $70 price level. Furthermore, any negative news from the stock market, or signs of a faltering economic recovery might send Oil back to the $60 level.

Article Source – Global Stock Rally Dominates USD Trading

The U.S Dollar rose against most other major currencies Tuesday, as comments by Ben Bernanke eased concerns that policy-makers won’t act decisively to head off inflation spawned by efforts to counter the credit crisis. The Federal Reserve Board chairman’s testimony was favorable for the USD, as his assessment on the U.S. economy revived the greenback’s safe-haven appeal.

USD – Dollar Rises on Increased Risk Aversion

The U.S. Dollar rebounded while U.S. stocks retreated yesterday after initial gains were overshadowed by cautious outlooks on the economy from corporate executives and Federal Reserve Board Chairman Ben Bernanke. As a result, the USD finished yesterday trading session 100 pips higher against the GBP at the1.6410 level. The greenback also saw bullishness against the EUR and closed at 1.4175.

U.S. government debt prices rose sharply on Bernanke’s comments that an easy money policy would likely be needed for an extended period. Moreover, risk appetite had increased in the past few days after stronger-than-expected U.S. corporate earnings. The latest to report higher-than-expected quarterly results was manufacturer and Dow component Caterpillar Inc. yesterday.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Crude Oil Inventories report at 14:30 GMT. Traders will be paying close attention to today’s announcement as it has the potential to boost the USD in the short-term. Traders are also advised to follow Federal Reserve Board Chairman Ben Bernanke’s testimony at around 14:00 GMT. This testimony is very important as it is very likely to impact the Dollar’s volatility. Traders are advised to watch closely, as this is likely to set the pace of the USD going into the rest of the week’s trading.

EUR – EUR and GBP Erase Gaines on all Fronts

The EUR weakened against most of its major currency rivals yesterday on concerns CIT Group Inc. may file for bankruptcy, renewing demand for a refuge. By yesterday’s close, the EUR fell against the JPY, pushing the oft-traded currency pair to 133.17. The EUR experienced similar behavior against the CHF and closed at 1.5160.

The British Pound also fell against the U.S Dollar as a report showed the U.K budget deficit climbed in June to the highest per month since records began in 1993, fueling concern the government will struggle to find buyers for its assets. The drop pushed the GBP down from near the highest level this month against the Dollar. The budget shortfall rose to 13 billion Pounds from 7.5 billion a year earlier. Gilts reversed earlier declines after Federal Reserve Board Chairman Ben S. Bernanke told Congress that policy makers will keep Interest Rates “exceptionally low.”

Today, there is plenty of economic news coming from the Euro-Zone that will determine the GBP and EUR levels by the end of today’s trading. From the Euro-Zone, there are the European Industrial New Orders, and French Consumer Spending figures. From Britain, the most important news will be the MPC Meeting Minutes and CBI Industrial Order Expectations figures. All these news events will be important in helping set the strength of the GBP and EUR in this week’s trading.

JPY – Yen Strengthens on Bernanke Testimony

Japan’s currency rose against most of its major counterparts after Bernanke mentioned that at some point the Fed “will need to tighten monetary policy” to counter the emergence of an inflationary problem. The Yen also advanced from near a 2 week low against the U.S dollar on speculation Japanese exporters bought the currency after its 1.8% decline last week.

Traders today have very little fundamental news emanating from Japan as the only indicator being released is the trade balance report. Analysts forecast the figure to increase from its previous reading. This indicator typically generates small amounts of volatility. However, the USD and the GBP appear to be clutching the reins of today’s market. Traders would be wise to note its future direction as it usually carries a heavy impact on the other currencies.

Crude Oil – Oil Stabilizes after Steady Appreciation

Crude Oil slid down slightly, to just above $65 a barrel, on Wednesday, after data showing an unexpected rise in U.S. crude stocks underscored worries about persistently weak demand from the world’s top oil user. The U.S. crude oil stockpiles rose unexpectedly last week as domestic refining activity slumped, the American Petroleum Institute (API) said on Tuesday. However, firm equity markets and a weak Dollar could lend some support to Oil, analysts say.

Crude prices climbed 8.7% for the past week as investors bought futures on expectations of higher fuel demand. Optimism that the worst of the global recession is over followed gains in U.S. leading economic indicators and as financial service companies said earnings climbed.

Article Source – Greenback Rebounds from 6-Week Low