Posted: 10 Jul 2010 03:00 AM PDT

American retail sales, consumer sentiment and inflation numbers will dominate this week’s trading. There are important releases from other parts of the world. Here is an outlook for the major market moving events.

EUR/USD extended its gains in the past week, edging up to new levels. But is this sustainable? The pair cannot rally solely on weak US data. We have a major German survey this week. Let’s start:

British Final GDP: Published on Monday at 8:30 GMT, delayed from two weeks ago. Britain came out of recession only in Q4 of 2009, and continued growing slowly in Q1. The initial release of a weak 0.1% growth rate in Q1 was later revised to a 0.3% rise, and it’s expected to be confirmed at this rate in the final release.
British CPI: Published on Tuesday at 8:30 GMT. Inflation is becoming an issue in Britain. Prime Minister David Cameron and one MPC member, Andrew Sentance, want to take care of it. While the annual price rise fell from the 3.7% peak to 3.4%, this is still above the government’s target. A new rise will put pressure for a hike and boost the Pound.
German ZEW Economic Sentiment: Published on Tuesday at 9:00 GMT. This all-important survey well reflected the recent crisis in Europe as it collapsed from 48.7 to 28.7 points last month, hurting the Euro, not for the first time. This highly regarded indicator is now expected to recover.
American and Canadian Trade Balance: Published on Tuesday at 12:30 GMT. This simultaneous release always rocks USD/CAD and emphasizes Canada’s better situation. A trade surplus in Canada and a trade deficit in the US will probably be seen once again.
British employment data: Published on Wednesday at 8:30 GMT. Britain enjoyed four months of big drops in the number of unemployed people, all exceeding early expectations. The drop of over 30K in the Claimant Count Change (an early figure) will probably be seen once again. The unemployment rate fell from 8% down to 7.9%. This is a late figure.
American Retail Sales: Published on Wednesday at 12:30 GMT. This all-important consumer related figure was very disappointing last month – sales dropped by 1.2% and core retails sales by 1.1%. This hurt the dollar last month. A recovery now will support it.
American FOMC Meeting Minutes: Published on Wednesday at 18:00 GMT. In the last rate decision, held on June 23rd, the Federal Reserve not only left the rates and the interest rate forecast unchanged, but also lowered the economic outlook, hurting the dollar. We’ll now get to know exactly why these forecasts were lowered. This will rock the markets.
Japanese rate decision: Published on Thursday morning. The Japanese yen stopped rallying after the recent political crisis broke out. The wording at the BOJ press conference will be closely watched and will rock the markets. Regarding the interest rate, no change is expected this time – it will be left at 0.1% as deflation is still strong.
American PPI: Published on Thursday at 12:30 GMT. American producer prices fell in the past two months, erasing a sharp gain three months ago and reassuring that there are no inflationary pressures. A small rise this time will show again that a rate hike is very far, weakening the dollar.
American Unemployment Claims: Published on Thursday at 12:30 GMT. After a positive surprise last week, with a drop back to 454K. All in all, this tight range isn’t too good. Only a drop under 430K will give hope of a serious improvement in the job market. A rise above 480K will be worrying.
American Philly Fed Manufacturing Index: Published on Thursday at 14:00 GMT. This important indicator ended many months of steady rises with a crash from 21.4 to 8 points, hurting the dollar. This survey of about 250 manufacturers will probably edge up this time, but won’t approach the previous levels.
American Federal Reserve nomination vote: Begins on Thursday at 14:00 GMT. An appointment of 3 FOMC members doesn’t happen everyday. The US Senate will vote on Sarah Bloom Raskin Peter Diamond and Janet Yellen, in a vote that will shape future decisions for quite a while. If they aren’t approved, or if many questions are raised, the dollar could be hurt.
American CPI: Published on Friday at 12:30 GMT. A rise in consumer prices is the key for a rate hike, but this isn’t due soon. CPI dropped by 0.2% last month and is expected to tick up this time. Core CPI, which is closely watched by the Federal Reserve, rose by only 0.1% last month, and no big change is due this time.
American TIC Long-Term Purchases: Published on Friday at 13:00 GMT. This indicator shows the flow of foreign money into the US, and serves as a vote of confidence (or fear of trouble in other countries). Two months ago saw a huge surprise, as this indicator passed 140 billion. Although calming down last month to 83 billion, the number is still high. Another drop is expected this time.
American Consumer Sentiment: Published on Friday at 13:55 GMT. The preliminary release of consumer sentiment from the University of Michigan provides a dramatic close for the week. Sentiment cautiously edged up in the past three months and reached 76 points. From these heights, it will probably drop.

That’s it for the major events this week. Stay tuned for coverages on specific currencies.

Further reading:

For EUR/USD, check out the Euro/Dollar Forecast.
For GBP/USD (cable), look into the British Pound forecast.
For the Australian dollar (Aussie), check out the AUD/USD forecast.
For the New Zealand dollar (kiwi), read the NZD/USD forecast.
For USD/CAD (loonie), check out the Canadian dollar forecast.

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EUR/USD Ending Bullish Correction?

Posted: 10 Jul 2010 01:42 AM PDT

Euro/Dollar had another positive week, but it failed to break above the important long term resistance line. Also the short term trends show an exhaustion. Will it turn down?

EUR/USD began a strong upwards move on last week’s Non-Farm Payrolls but couldn’t break the resistance line. These moves came on top of US weakness and not on an improvement in Europe. I already wrote about these issues earlier this week. Now let’s look at another technical aspect.

Looking at the hourly chart, we can see a rising uptrend channel that accompanied the Euro in the past week. This can be seen in the graph. The top of this uptrend channel was challenged more than 3 times, and is very clear. As the Euro climbed upwards, it closely followed this top border.

The bottom border of this line was approached three times. While the pair stayed away from this line during most of the week, it closed at 1.2639, quite close to it. Together with the failure to making a convincing break above 1.2672 (which was the peak on May 21st) and settling at the bottom of the uptrend channel, this shows again that EUR/USD is out of air.

Apart for the regular events that are expecting us (detailed in the Euro dollar forecasts), there’s a very important one-time event on July 23rd – results of the bank stress tests. This will determine how the European banks are dealing with the debt crisis, the big issue looming over the Euro-zone in the past few months.

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Forex Links for the Weekend

Posted: 09 Jul 2010 02:00 PM PDT

Here is a collection of interesting forex-related articles for the weekend. All the linked pieces have a long-term scope. Enjoy:

Larry Greenberg assesses the greater long term US price risk – inflation or deflation. The Euro is enjoying US weakness, but this doesn’t seem to last.
Kathy Lien lays out 8 points regarding the recent Euro rally.
Andrei presents a poll – do you trade only during specific sessions?
Michael Greenberg analyzes the recent wars between forex brokers.
Francesc Riverola offers you to test Tradency’s platform before anybody else does.
Casey Stubbs discusses trends in forex trading.
James Chen presents his webinar about finding high probability setups.
James Wooley compares three 200 day moving averages: SMA, EMA and TEMA.