Forex Chart

Cable buying picked up after the U.K

2009-10-28T04:02:00.000-07:00

Cable buying picked up after the U.K. construction PMI rose to 47.0 in July. The pair rallied out of 1.6920 after the earlier pull back from 1.7000 ran its course. There is evidence of strong selling pressure from the 1.7000-05 area and further technical resistance at 1.7020-25, which is contributing to the decent supply capping gains. Sellers at the highs have included investment managers and reserve names, perhaps taking advantage of the lofty levels. Pull backs should remain limited however, with a softer dollar backdrop and the shifting U.K. policy outlook encouraging GBP demand. Elsewhere, EUR-GBP continues to find support after bids at 0.8480 held and a move back above 0.8500 is eyed.

The pound has seen choppy

2009-10-28T04:01:00.001-07:00

The pound has seen choppy price action after testing 1.7000 despite a jump in construction activity. The Construction PMI reading rose to 47.0 from 44.5 adding to signs that the economy is stabilizing. Indeed, we saw the manufacturing sector move into expansion which should keep the BoE from adding to their asset purchase program at Thursday policy meeting. The crowd is starting to jump on the sterling bandwagon which could see the GBP/USD look to test 1.7332 the 50.0% Fibo of 2.1168-1.3503, but could see a sharp reversal thereafter.

The dollar started to firm overnight as we are seeing profit taking after yesterday’s rally in equities and commodities but has failed to generate consistent support. Markets appear to be taking a breather ahead of the significant event risk to close the week including European interest rate decisions and US non-farm payrolls. Personal spending and income data today could spark volatility as a dearth of consumer consumption is the dark cloud over a potential recovery. An expected 0.2% increases in personal spending will ease some concerns but the forecasted 1.0% decline in personal income will cast doubt on its sustainability. The concerns remain that the mounting job losses will ultimately lead consumers to continue to retrench which would jeopardize future growth once government spending abates. Although we are expecting Friday’s employment report to show job losses easing to 325K from 467K, the unemployment rate is forecasted to rise to 9.6%.

Price action ahead

2009-10-28T04:01:00.000-07:00

EUR-USD price action turned choppy after another failed attempt to break mooted 1.4450 option barriers. The pair pulled back from 1.4420 early on and tested 1.4375 bids, which held on the first attempt, leaving narrow sideways action just adrift of 1.4400. Plain vanilla strike interest is reportedly influencing in the absence of large flows and ranges should remain narrow in to the European afternoon. U.S. releases and equity market movement is likely to drive price action ahead. The underlying trend is favorable for further EUR-USD gains, with recent longs targeting a test of 1.4500 ahead of the ECB policy meeting and Friday's U.S. NFP data. Intra-day, should see bids underpin between 1.4375 and 1.4350, while on the topside stops are building through 1.4450-70.

Monday's trading

2009-10-28T04:00:00.002-07:00

The EUR/USD rose to as high as 1.4444, before closing at 1.4421. This was the USD's weakest rate against the European currency since the middle of December last year. The Dollar fell by about 250 pips vs. the British Pound to 1.6980. This was the Dollar's lowest level vs. the GBP since about the middle of October last year. One of the only currencies that the Dollar gained ground against yesterday was the Yen. The USD/JPY cross increased by about 70 pips to the 95.43 level, as demand for higher yielding assets increased throughout much of Monday's trading.

Looking ahead to today, forex traders can expect much of the same volatility in the market. The Dollar is set to move a lot against its major pairs, such as the GBP, EUR, JPY, and CAD. This is likely to occur, as investors continue to trade on much of yesterday's data. Additionally, the U.S. market is set to be the main market mover again with the with the release of Personal Spending and Personal Income data at 12:30 GMT, and the publication of U.S. Pending Home Sales at 14:00 GMT. In order to take advantage of the very volatile forex market, it's advisable that you open your USD positions now.

Lowest level in 7 months.

2009-10-28T04:00:00.001-07:00

he U.S. Dollar tumbled on Monday after the publication of far better than forecast ISM Manufacturing PMI from the U.S. economy. The reading rose to an 11 month high of 48.9, notably higher than the forecasted figure of 46.4. Construction data in the U.S. also showed some big improvements. This led to a drop in the demand of the USD, as risk appetite grew throughout the day. The greenback tumbled against virtually all of its major currency pairs, as traders feel that the recession is nearly over, and economic growth will soon return to the U.S. economy. As a result, the USD fell to its lowest level in 7 months.

The Euro continues to consolidate

2009-10-28T04:00:00.000-07:00

The Euro continues to consolidate its gains from yesterday as we are seeing a pull back in risk appetite. Lower European equity markets are weighing on the single currency, which has kept the EUR/USD trading around the 1.4400 price level. Euro-Zone producer prices falling to a record low of -6.6% on a yearly basis could raise concerns of further measures from the ECB and add to the heavy trading. However, a 0.3% price increase in June could ease concerns as it may be signaling an end to deflationary pressures.

The first monthly gain in producer prices since July, 2008 will have a major influence over the ECB’s decision on whether to add to their covered bond purchase program. The central bank has maintained that deflation is no longer a concern as they expect that emerging growth and rising energy costs will bring prices back to their target rate of 2.0%. Indeed, energy costs rose 1.4%during the month but still remain 15% lower from a year ago which dragged the annual rate to its record low. The central bank has only exercised 4 billion of its 60 billion purchase program signaling that the bank will refrain from adding to it as it maintains its measured approach. However, Euro-Zone banks continue to tighten lending standards and their deposits remain at elevated levels. The EUR/USD still appears to have potential to reach 1.4613-61.8% Fibo of 1.6037-1.2325

Current economic crisis

2009-10-28T03:59:00.002-07:00

The JPY fell by 70 pips against the USD to the 95.43 mark. The Japanese currency plummeted to 137.38 from 134.84 on Monday vs. the EUR. Against the British Pound, the Yen dropped nearly 360 pips to the 161.91 level. As a whole, the Yen it still a strong currency. However, if economies such as the U.S., China and Britain start showing growth in the coming months, then we may see the JPY lose lot of the strength that it gained since the start of the current economic crisis.

Barclays Bank

2009-10-28T03:59:00.001-07:00

The European currency soared to a 7 month high versus the USD yesterday, as optimistic global manufacturing data from the Euro-Zone, U.S., Britain and China led to a decline in demand for the safe-haven USD. In addition, the British Pound jumped against the Dollar, as the British economy showed really clear signs that it may rise out of recession by the end of the 3rd quarter. This was following the publication of very positive British manufacturing data, and the much better than expected pre-tax profits of HSBC and Barclays Bank.

The GBP/USD pair rose by over 250 pips in Monday's trading to the 1.6980 level. This may also have been helped as the USD may have come under increasing pressure from the rise in Oil and other commodity prices. The EUR/USD cross climbed by 190 pips to 1.4421, the highest level since December 2008, just weeks after the collapse of Lehman Brothers. Both the EUR and GBP rose against a string of other currencies, such as the JPY, as demand for higher yielding assets rose, along with risk appetite, as yesterday's trading dragged on.

Tuesday's trading

2009-10-28T03:59:00.000-07:00

Tuesday's trading is set for another action packed day. The 2 most important releases from Britain will be the Construction PMI at 08:30 GMT and Nationwide Consumer Confidence figures at 23:01 GMT. From the Euro-Zone, we can expect the PPI figures at 09:00 GMT. These releases are expected to help drive market volatility for the EUR and GBP throughout the trading day. Furthermore, it is advisable to follow economic events coming out of other leading economies, such as the U.S. as they are likely to also impact these 2 currencies.

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2009-10-28T03:58:00.002-07:00

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2009-10-28T03:58:00.001-07:00

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The Japanese Yen fell

2009-10-28T03:58:00.000-07:00

The Japanese Yen fell against all of its major currency pairs yesterday, following the release of optimistic manufacturing data from the world's leading economies. This helped push-down demand for lower yielding assets such as the JPY and USD, and push-up demand for high yielding assets such as the GBP and EUR. Also, as the day dragged on, so did risk appetite. This led to the sell-off of the JPY and the buy-up of foreign assets. Analysts said this is trend is likely to continue as the global economy continues to recover.

The Dollar fell

2009-10-28T03:57:00.002-07:00

The Dollar fell to its lowest levels this year on Monday after the Institute for Supply Management's index on U.S. manufacturing improved more than expected in July. Along with some better earnings reports from foreign banks, the data supported equity markets and spelled trouble for the U.S. currency because investors no longer desire its safe-haven status.

Dollar's drop

2009-10-28T03:57:00.001-07:00

The USD fell to its lowest levels this year on Monday after the release of the ISM Manufacturing PMI, which showed U.S manufacturing improved more than expected in July. This report was one of a number of reports that showed manufacturing around the world is picking up. Better than expected earnings reports as well as the rise in Crude Oil prices further intensified the Dollar's drop.

After the sharp drop

2009-10-28T03:57:00.000-07:00

After the sharp drop in the USD last Friday, many investors were anticipating a rebound for the greenback, but none has been forthcoming so far in today's trading. Various reports from Europe and Britain have pushed risk appetite higher in those countries, pushing many investors into the higher yielding currencies such as the EUR,

The July manufacturing

2009-10-28T03:56:00.001-07:00

The July manufacturing ISM report surged to its highest level since August 2008 at 48.9 versus 44.8 from June. The employment index rose sharply to 45.6 compared with 40.7 in the previous month.

The key highlights for foreign exchange traders this week will be a barrage of US economic reports, including personal consumption, personal income, pending home sales, durable goods orders and Friday’s key July labor report. The July unemployment rate is expected to climb higher to 9.7% from 9.5% in June. The non-farm payrolls report is seen improving sharply to post a loss of 340k jobs versus 467k jobs shed in June.

This is the first weekly prediction

2009-10-28T03:56:00.000-07:00

This is the first weekly prediction of this month, so I recommend that you read my subsequent articles from now on. Today, we saw the British Pound soar against most of its major currency pairs. Monday’s GBP rally was ignited by the ISM Manufacturing PMI that was published from the U.S at 14:00 GMT. The immediate result was an abandonment of the safe-haven USD.

Romania's central bank

2009-10-28T03:55:00.001-07:00

Romania's central bank lowered its key policy rate by 50 basis points to 8.5%.The reduction was in line with economists' expectations. In June, the bank had reduced its key interest rate to 9% from 9.5%.

At the same time, the bank slashed the minimum reserve requirements ratio on foreign currency commercial deposits to 30% from 35%, effective on August 24.

The Board of the National Bank of Romania also decided to actively use open-market operations in order to ensure an adequate management of liquidity in the banking system.

Tuesday, Romania's central bank lowered its key policy rate by 50 basis points to 8.5%.The reduction was in line with economists' expectations. In June, the bank had reduced its key interest rate to 9% from 9.5%.

Dollar to fresh lows

2009-10-28T03:55:00.000-07:00

The greenback tumbled to fresh multi-month lows against the euro at 1.4443 and the sterling at 1.6934 as traders move to break the major pairs out of recent ranges. With equities extending recent gains and commodities edging higher, the dollar remains under pressure amid a shift toward riskier assets. Optimism over a global economic rebound continues to improve, reinforcing sentiment that the worst of the recession may be over.

The week ahead will provide further insight into state of the US economy, providing fodder for equity market bulls and ultimately sending the dollar to fresh lows.

A wave of renewed risk aversion

2009-10-28T03:54:00.001-07:00

A wave of renewed risk aversion on the back IMF downgrading global economic outlook and news that the UK debt management office revised its 2009/10 gilt issuance total up to GBP220 billion from previously estimated GBP180 billion, has produced a sell off of approximately 250 pips for the Pound.GBP/USD has dropped from 1.4660 levels before the IF press release, to reach 1.4400, the lowest level since Apr 1 after news of the gilts issuance revision, to pick

The euro is losing major ground

2009-10-28T03:54:00.000-07:00

The euro is losing major ground against the greenback ahead of the release of major U.S. data Thursday.The euro has broken through the key 1.32 support level and U.S. equity futures are retreating ahead of the release of U.S. inflation, to be released at 8:30 a.m. EDT.Ashraf Laidi, senior market strategist from CMC Markets said markets could be disappointed if the data shows that inflation is not falling. Economists are forecasting a drop in headline CPI -

Currency still remains very negative

2009-10-28T03:53:00.001-07:00

benefiting the yen. In Europe, a report is likely to indicate that producer prices declined at a strong pace, damping demand for the European common currency. Emergent-market currencies like the South African rand, and Commodity-linked currencies like the Australian dollar, posted the sharpest losses versus the yen, as these currencies tend to have a higher volatility due to their riskier profile.

Analysts indicate today’s movement as a correction, and also a pause in the current rally that higher-yielding currencies are imposing versus the yen. A number of traders are selling their positions in emergent-markets to take profits from last week’s rally, but it does not mean that the yen is starting a recovering pattern, the outlook for the Japanese currency still remains very negative.

Six major servicers

2009-10-28T03:53:00.000-07:00

GBP/JPY traded at 160.29 as of 9:53 after topping at 162.17 hours earlier. EUR/JPY traded at 136.11 from 137.69.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Analysis & Trading Signals4/16/2009Obama's Mortgage Rescue Plan Finally In EffectThe United States Treasury Department announced that the Obama Administration's Mortgage Rescue Plan, designed to help homeowners by modifying their existing mortgage loans, is finally underway.Six major servicers.

The Canadian dollar reached a 10-month high versus

2009-10-28T03:52:00.001-07:00

The Canadian dollar reached a 10-month high versus its U.S. counterpart as corporate earnings, mainly in North America, but also in Asia and Europe, posted better-than-expected numbers, pushing investors to the already attractive Canadian currency.

The crude oil price rally during the past weeks has been favoring the Canadian dollar massively, since one of the main national exports to the U.S. is the oil, which experiences an increase on its price as demand for energy tends to grow in a recovering economy. Corporate earnings this week in the U.S. and Asia helped high-yielding currencies to gain even further, as the greenback and the yen tumbled to the lowest levels in more than a year. Manufacturing in China figures published yesterday, indicated the highest climb in a year, suggesting that the Asian nation is also being helped by global signs of economic recovery, as a higher demand influences its industrial production.

feel free to reply below

2009-10-28T03:52:00.000-07:00

Analysts state that equities market gains have still a reasonable range to continue, and that the Canadian dollar is very likely to follow these movements. The crude oil may also help the Canadian dollar to climb, and it is not impossible that the loonie will be traded one-to-one versus its U.S. counterpart before the end of the year.

USD/CAD traded at 1.0697 as of 9:13 GMT from a previous rate yesterday of 1.0780.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.