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Mercaforex analysis

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Aug 17, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The USD advanced against the Sterling and Euro during last Friday’s trading session, nevertheless, lost ground against the Japanese Yen. This happened when the U.S. stock market went down. In this sense, Wall Street retreated, and the three main indexes went down, finishing with the uptrend of four consecutive weeks. It is important to note that confidence in the market was shaken, because new doubts appeared on the scene and some investors questioned U.S. capability for economic growth. The Consumer Sentiment numbers elaborated by the University of Michigan, which determine consumer attitudes concerning the present situation and future expectations, was published last Friday and showed that consumer sentiment fell with strength during the first days of August. This index registered its lowest mark since March, with a reading of 63.20, when was estimated at the 69.10 mark. Also during last Friday, the Core Consumer Price Index (CPI) was published, which is a derivative of the Consumer Price Index (CPI) that omits the Food and Energy items, and showed a number of 0.1% according to expectations. Also the Industrial Production numbers were published, which determine the total worth of output produced by factories, mines, and utilities, and the final number was 0.5%, despite prediction of 0.4%. Industrial Production in the U.S. improved in July for first time in nine months, but it is important to note that was a minimal improvement. On the other hand, the Core CPI numbers hint that the inflationary issues in the U.S. may be stable.

    As for today, we are waiting the U.S. Empire State Manufacturing Index, with an expected reading of 2.8. Also today the US TIC Long-Term Purchases will be published with analysts awaiting a number of 17.7 billion. And finally we are going to see the NAHB Housing Market Index, which determines the demand outlook of single-family home builders and which is estimated at number of 18, when last reading was 17. Tomorrow, the main indicators are going to be the Building Permits, which determines the level of new residential building permits issued, and is estimated at 0.58 billion. The Producer Price Index (PPI), which determines the rate of inflation experienced by manufacturers when purchasing goods and services, will be published tomorrow and is estimated a number of -0.2%. It seems that risk aversion is again in the market, and it is going to be very interesting if traders once again keep themselves with the U.S. dollar.

    During last Friday’s trading session, the European currency lost ground against the U.S. dollar, nevertheless, the Euro made some weekly profits against the greenback. Before we entered the weekend, the Consumer Price Index (CPI), which determines the rate of inflation experienced by consumers when purchasing goods and services, was published and showed a reading of -0.7%, when analysts awaited a mark of -0.6%. Also, last Friday we saw the Core CPI numbers, which is a derivative of the consumer Price Index (CPI) that omits the Food and Energy items, and showed a 1.3%, down from the 1.4% estimated. Deflation a not Inflation is what is making echo in the market. As for today we are waiting the European Trade Balance numbers, which determines the difference in worth between imported and exported goods, and is estimated at 1.4 billion when last reading was at 0.8 billion. Tomorrow, the German ZEW Economic Sentiment, which determines institutional investor sentiment, will be published and is estimated at a number of 45.2. Also European ZEW Economic Sentiment is going to be published and is estimated at number of 44.6. As for today investors should carefully follow the European currency evolution, because is going to be a week full of events, and if German indexes surprise, probably the Euro is going to take all the advantages, getting back to business.

    Last Friday the Sterling lost ground against the U.S. dollar, nevertheless the GBP could maintain its weekly gains. Last Friday was quiet in the UK, and no risky event was published. This trend is going to be back for today, because no reports are going to be published. But tomorrow, is on schedule with the Consumer Price Index (CPI) that will be published with an estimated 1.5% reading. The CPI determines the rate of inflation experienced by consumers when purchasing goods and services. Also the Core CPI is on schedule, with an estimated reading of 1.5%. Finally on Tuesday, we are going to see the Retail Price Index (RPI) number, which differs from CPI in that it only determines goods and services bought for the purpose of consumption by the vast number of households. It is important to note, that the UK is still in a recessionary ground, but last week we had good news, because Supermarket´s sells improved significantly in England. This is the consequence of five million Britons that stayed at home during these holidays, and supermarkets are still fighting for extra customers. Today, it will be crucial to follow the stock market developments, with the risky events that are going to be published, and this way adjust sterling positions.

    The Japanese Yen finished the week with high profits against the major currencies. Against the greenback, the Yen advanced in particular, although the U.S. stock market went down during last Friday session. Yesterday in Japan, the preliminary GDP was published with a final reading of 0.9%, down from the estimated 1.1%, but we should notice that last number was -3.8%. These numbers are estimated to benefit the Japanese Yen, and only on Wednesday there is going to be a publication in Japan, while the rest of the week will be quiet. On Wednesday, the All Industries Activity numbers will be published, but its impact on the market will be limited. On the other hand, Crude Oil value fell more than 4% in the United States, after the surprise of the Consumer Sentiment numbers. Light sweet Crude Oil for September, finished the session at 67.51 U.S. dollars per barrel, losing 3.01 U.S. dollars or 4.3%, regarding Thursday’s session. In other news, China again is showing its interests in the Oil market, and National Petroleum Corp. & Cnooc Ltd. offered 17.000 USD million for taking full participation in Repsol YPF SA, on its subsidiary in Argentina. If this transaction will be reached, it is going to be the main and fist international transaction that China fulfills.
    Technical Analysis

    Same recommendation as Friday: “The equity market is playing the range. If we manage to break above 1018, it should be relatively clear sailing to 1044. On the downside we are looking at a move down to 992.4 and support around 970, and 956.23. This a great range to trade. Any move past initial support and resistance will probably be at least a 10-15 point attempt, so be poised to strike!”

    Like many of the other products we had been trading a channel of sorts for the last 10 days or so. Yet, oil is the first to really buck the trend and break. We had a $4.5move that broke through support (which is now resistance) of 68.855. Our next support level is 62.705. I expect us to play this wider range due to the various fundamental and technical factors that are building up around the world. It will make for an interesting week.

    The Yen continues to push higher. We have traded the whole range (97.785 – 94.445). Expect to see further attempts to take this pair lower. If we break again below 94.445 true support is a long way off at 91.785. Along the way there is a small support level around 93.120. Caution is the word of the day.

    As predicted, we are back in the trading range. Support, 1.6242, 1.5802, Resistance 1.6744. I am looking for a push downwards to try and test the initial support point. US dollar may be gaining strength as it returns to its safe haven status.

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