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Forexpros.com Daily Analysis - 05/08/2008

Discussion in 'Fundamental Analysis' started by ForexAnalysis, Aug 5, 2008.

  1. ForexAnalysis

    ForexAnalysis Contributing Member

    Apr 13, 2008
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    Read the Daily Forex Trading Analysis

    Today’s US Dollar Trading
    • USD starts mixed then rallies
    • USD/CAD rallies to a new high
    • Volumes moderate

    Overnight Preview
    • Likely early follow-on buying of USD
    • Should be quiet ahead of FOMC

    Looking Ahead to Thursday
    All times EASTERN (-5 GMT)
    • 10:00am USD ISM Non-Manufacturing Composite
    • 2:15pm USD FOMC Statement
    • 2:15pm USD Federal Funds Rate

    The USD is higher against most pairs today after a mixed start overnight. A dropping oil market helped the Greenback and the early rally extended after the London fix for USD/CAD and USD/JPY. Both pairs made highs into the end of the trading day surprising most desks with the firmness on the move. The rumored option barrier at 1.0310 area in Loonie fell as stops above got triggered for a high print at 1.0371 as the rate ground through reported offers around the 1.0340/0 area. The rate is now sitting at the highest level it’s been at all year and possibly set to take on a new high. Traders report more offers layered ahead of the 1.0380 through 1.0400 areas so action could get choppy. Stops out of range on the day but just barely; aggressive traders can hold open shorts. USD/JPY also rallied today clearing light stops at the 108.10/20 area for a high print late in the day at 108.30; still technically an inside range day. Forex traders note offers are remaining thick and exporters are on the offer actively. Additionally, volumes were light on the move suggesting the rate may have had some extra chop due to thin conditions. EURO had a nice rally touching the 1.5620 area before being pushed back; high prints at 1.5632 as oil rallied this morning but once oil fell back the Greenback flew higher taking out light in-range stops set by early longs. Across the board the USD firmed after the London fix, GBP had the lows on the day late in sympathy with EURO most agree; GBP now under the July lows suggesting more weakness on the way. In typical technical fashion the GBP had a lot of interest in cross-rates today with Sterling-Yen and EURO/GBP both having a two-way day. For the most part, today’s USD trading was technical in nature as the USD found close-in stops to help drive action today. On a pre-report day such as tonight/tomorrow more technical trading is expected. Look for the Greenback to remain range bound and sideways; it should get real quiet as the markets brace for FOMC on Tuesday. Market sentiment is for no rate change and no change to the statement. I look for the majors to consolidate for the most part.

    GBP/USD Daily

    Resistance 3: 1.9850
    Resistance 2: 1.9820/30
    Resistance 1: 1.9780
    Latest New York: 1.9623
    Support 1: 1.9600
    Support 2: 1.9550/60
    Support 3: 1.9520

    Rate follows EURO higher then lower, finds stops on post-news drop; good bids seen on the dip into 1.9600. Fails to hold early gains on very light volumes. Nothing really happening; some cross trading likely but not a lot of chatter about sterling crosses overnight. Traders report some reserve-manager buying on the dips but also offers capping. Rate is two-way in sympathy with EURO. Possible buying from semi-official names so watch the news. Offers above the market mixed with stops from late shorts so be ready for whipsaw the next few days. Traders expect GBP to track EURO through this week. Continue to expect a lot of cross-trading.
    Data due Tuesday: All times EASTERN (-5 GMT)
    Tentative GBP Halifax HPI m/m
    4:30am GBP Manufacturing Production m/m
    4:30am GBP Services PMI
    4:30am GBP Industrial Production m/m
    7:01pm GBP Nationwide Consumer Confidence
    7:01pm GBP NIESR GDP Estimate

    EUR/USD Daily

    Resistance 3: 1.5750
    Resistance 2: 1.5700/10
    Resistance 1: 1.5620/30
    Latest New York: 1.5586
    Support 1: 1.5540/50
    Support 2: 1.5520/30
    Support 3: 1.5500

    Rate two-way all day but holds support, rate remains in tight range but toolbox gives a buy signal. Low prints again at MAJOR support. Hard and fast break from US data last week meets with no follow-on selling; likely to encourage a round of short covering next day or two. Look to re-short later; rate feels like it wants to rally off these lows. Aggressive traders can buy this dip for a return to resistance. Continued trade under the 1.5700 area pressures buying signals; “dead cat bounce” is likely today but if volume are there, need to hold a bit. Rate continues to track Cable and vice-versa. Stops above the 1.5820 area likely back out of range for today after the drop last week. Now that stops are cleared a rotation higher is coming.
    Data due Tuesday: All times EASTERN (-5 GMT)
    4:00am EUR Services PMI (r)
    5:00am EUR Retail Sales m/m

    Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

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