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Clear Picture Remains In Affect

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Jul 15, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
    Likes Received:
    BY Mercaforex

    The USD turned in a mixed day as it held its ground against the EUR, picked up a bit of steam against the JPY, and lost value to the GBP. The news that dominated trading was the quarterly report from Goldman Sachs and Wall Street turned in good day with the positive sentiment as backing. Retail Sales figures were released from the U.S. and came in with contradictory information. Core numbers were worse than expected, while the broad numbers showed a slight gain. Business Inventories were published too and the result was a minus -1.0%, slightly off of the estimated decline of -0.9%. The results on the stock market yesterday were positive as noted but equities did not produce the gains that they did in the previous session, perhaps because the Goldman Sachs numbers were already anticipated and traders had entered the marketplace the day before the actual report came out.

    Quarterly earnings will continue to dominate market sentiment today with a slew of companies reporting their incomes and business outlooks. One company in particular that investors will watch is Abbot Labs because of it wide business spectrum and the reflection it will be able to give for existing economic conditions. The U.S. will issue CPI data today, but inflationary concerns will take a back seat and the Empire State Manufacturing Index may be the most important release. The manufacturing report from the New York Fed is expecting to post a minus -5.3 reading, which would be better than last month’s outcome. Industrial Production and Crude Oil Inventories numbers are also on schedule. Tomorrow the weekly Unemployment Claims will lead the parade, besides the earnings data from corporations which will keep coming. The USD continues to trade mainly within the domain of risk appetite sentiment. A clear picture has emerged which will likely remain, showing that the USD’s value is trading in an inverse manner with the results from Wall Street.

    The EUR battled to maintain its value on Tuesday as less than wonderful news was produced from Germany. The ZEW German Economic Sentiment survey was published, but the expected positive surge met a cold hard place when it turned in a negative reading of 39.5 compared to the forecast of 44.2. The broad Industrial Production numbers from the European Union were also released and produced a minus 0.5% outcome, worse than the estimate of 1.5%. The negative data kept the EUR in waters that did not allow it to pick up as much value against the USD compared to the performance the GBP turned in. Europe will release its CPI numbers today and investors will continue to monitor these figures not so much for inflation but actual deflation. Tomorrow the Italian Trade Balance report is on schedule. Europe’s dose of poor economic data yesterday served as a reminder that while some are speaking about the possibility of growth coming about by year’s end, that there are warning signs that the recession’s grip is strong and may persist for a longer duration. The EUR was not able to gain on a day when the equity markets should have given it some impetus and this highlights that the currency may continue to find some headwinds if the stock markets should stumble.

    The positive day from the equity markets helped propel the Sterling’s value on Tuesday. CPI data released by the U.K. showed it meeting expectations, which left the GBP to trade on the good sentiment. The Claimant Count Change numbers are on cue from the U.K. today and are forecasted to show a number of 41.4K compared to last month’s figure of 39.3K. The unemployment numbers from the U.K. could become critical if a surprise were to transpire. The economic picture from Britain remains speculative in the sense that some are speaking about improving data, while others continue to point out that the slump has merely slowed and it doesn’t meant that actual growth is taking place. Thus, the Sterling remains firmly in the midst of sentiment trading that will be likely dominated by the returns in equities. If share prices do well, the GBP should perform better, and if stocks tumble, it is likely the Sterling will do so as well.

    In what is proving to be a long running saga, the JPY lost ground to the USD as equity markets showed positive gains globally. Having traded to the stronger side of its range last week against the USD as risk adverse trading took precedent, the JPY has now lost two days in a row to the greenback as risk appetite has increased. Gold climbed back to the 926.00 USD mark, showing that the precious metal continues to trade within tried and true habits. Look for the JPY to remain a barometer for caution as the currency markets move largely in step with the equity markets worldwide.

    Technical Analysis

    This pair has been floating the last three days in a wide range between 1.3910 to 1.4072 with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily chart is floating near the 55 line. The preferred strategy today will be trading in a range.

    This pair is now nearing the upper barrier of the bullish channel on the one hour chart. If this pair breaches the resistance level 1.6450 then we could see some sharp upward movement. The Oscillators also support a bullish notion. Going long with tight stops appears to be preferable.

    The hourlies show that the pair is in a bullish configuration as volatility is increasing, and showing bullish signals However according to the 4 hour chart this pair is moving without a clear trend and swinging around RSI at the 45 level. Going long with tight stops appears to be preferable.

    The floating of this pair continues in a very tight range with no distinct direction. The Oscillators are relatively flat on the hourly level and the RSI on the daily and the 4 hour chart is floating near the 50 line. In addition we can see mixed signals with no specific direction. The preferred strategy today will be to wait for clearer signal before taking any position.

    The Wild Card
    Gold is now floating with no distinct direction. Both the Daily RSI and the Slow Stochastic are floating in neutral territory. The preferred strategy today will be to wait for clearer signal before taking any position.

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