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Economic Data Will Be Watched This Week

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Jul 27, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
    Likes Received:
    by Mercaforex

    Friday proved to be a day of mostly range trading for the USD against the major currencies as equities markets provided slight gains but were not able to maintain their continuous upward move. After a nearly two weeks of a rally from Wall Street, the USD finds itself going into this week struggling on the weaker side of its range against both the EUR and GBP. The surprising gains on the international bourses have certainly increased risk appetite as some investors have left the so-called safe havens of the USD and JPY. This week currency traders will monitor what has become a proven equity correlation, but economic data may become an important barometer once again in these coming days. Today the U.S. will release New Home Sales and it is expecting a number of 353K compared to last month’s outcome of 342K.
    The next two weeks will produce a good combination of reports, which will help show the recession has stabilized and is possibly receding – or on the other hand cause negative sentiment to re-surface. Tomorrow the CB Consumer Confidence reading is on schedule and U.S. data will continue unfolding during the week leading up to the Advanced GDP on Friday. These coming days will be vital as investors position themselves for the rather low volume in equities that is likely to unfold in August as summer trading begins to pervade. Thus the coming data will provide a unique test - for or against - the recent rally we have seen on Wall Street which has left skeptical investors scratching their heads in disbelief. The USD has weakened on the better than expected quarterly reports on average that corporations have produced, but it remains to be seen if the real economy and U.S. data can support the rosier outlook.

    The EUR maintained the gains it has made against the USD on Friday as PMI data among others were released from the European Union. The German Flash Manufacturing PMI numbers came in with a 45.2 outcome, above the estimate of 42.1 and their Services PMI figures also showed a better statistic with a 48.4 reading compared to the forecast of 45.9. The French Flash PMI data showed a mixed result with the Manufacturing showing an improved number, but the Services release coming in worse than anticipated. The German Ifo Business Climate report also showed a better result coming in with a 87.3 outcome, slightly above the projection of 86.6. Today the German GfK Consumer Climate survey is on schedule and is expecting a reading of 2.9. The remainder of the week will consist of inflationary data from the European Union. The EUR has gained and been able to hold onto its better value against the USD the past two weeks. The EUR is likely to continue to trade within an equity based parameter for the time being and its results a product of investor risk appetite.

    The Sterling traded in a fairly consolidated manner on Friday as the Preliminary GDP number from the U.K. proved slightly disappointing. A result of minus -0.8% was worse than the anticipated figure of minus -0.3% for the GDP. Officials were quick to point out that the downturn in the U.K. economy has started to show stability and that the scale of recession is lessening. There will be no major economic data from the U.K. today but tomorrow the CBI Realized Sales numbers will be on the table. Mortgage Approval and Consumer Confidence figures will come forth later in the week. The GBP was pushed near the higher part of its range against the USD the past two weeks and traders may continue to try and test the Sterling’s current range.

    The JPY continued its trading in range against the USD as international equity markets showed modest gains. There will be manufacturing and industrial data from Japan early this week but the crux of the matter for the JPY remains the results from the likes of international bourses and the amount of risk appetite that emanates from investors. Gold had a relatively quiet day of trading on Friday, but it did maintain it rather lofty price of 955.00 USD without too much pressure.

    Technical Analysis

    On the 4 H chart the Slow Stochastic is crossing at the 76 level and the RSI is at the 70 level which indicates that we are in overbought territory. In addition the daily chart also gives bearlish signal. The preferred strategy will be a short position. Support level: 1.4110 resistance level: 1.4300

    This pair is now trading near the upper barrier of a tight bullish channel. Indicators are relatively neutral on the hourly chart. However just like in the case of the EUR/USD pair the daily chart supports a bearish movement. Therefore a short position will still be preferable.
    Support level: 1.6350 resistance level: 1.6530

    Bollinger bands are tightened indicating that this pair could trade in a tight range today. However both the dailies and the hourly’s support a bearish move. It seems that going short will be preferable. Support level: 94.50 resistance level: 95.50.

    On the 4 hour chart the Slow Stochastic is crossing at the 77 level and the RSI is at the 80 level which indicates that we are in overbought territory. In addition the daily chart also gives bearish signal. The preferred strategy today will be a short position.
    Support level: 0.8140 resistance level: 0.8290

    The Wild Card
    Crude oil:
    The crude oil is now showing bullish momentum as seen by the hourly oscillators. Both the daily and hourly charts support another bullish move. Therefore, it seems that Forex traders will be able to maximize gains today by entering a long position. Support level: 67.10 resistance level: 69.10.

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