Forex Crunch EUR/USD Can’t Break Higher After Economic Sentiment Crumbles |
- EUR/USD Can’t Break Higher After Economic Sentiment Crumbles
- British Inflation Sliding Towards Target
- EUR/USD Aug. 17: Will Consolidation End?
- Fundamental Overview – Market Movers Last Week – 8/16/2010
- Forex Daily Outlook – August 17 2010
- [Video] Euro and Yen Bears, Pound Bulls and More
| EUR/USD Can’t Break Higher After Economic Sentiment Crumbles Posted: 17 Aug 2010 02:02 AM PDT
The important ZEW Economic Sentiment survey fell once again, showing that Europe isn’t really doing much better than the US. The Euro erases early gains and drops. German ZEW Economic Sentiment fell from 21.2 to 14 points. Early expectations stood on small slide to 20.9 points. The survey of 350 German institutional investors is a highly regarded survey, and the drop sends it much closer to the tipping point where optimism turns into pessimism – a negative score. The Euro is retreating: EUR/USD now trades at 1.2870 after dropping from 1.29 – gains that it made earlier. These move mean that EUR/USD failed to break the 1.2880 resistance line, at least for now. A significant drop will send the pair towards the 1.2722 support line, which held it at the wake of the new week. A rise will find resistance at the round number of 1.30. Note that the ZEW Economic Sentiment for the whole Euro-zone rose from 10.7 to 15.6 points, but this considered less accurate. Earlier today, the Current Account for the Euro-zone was published. It showed that the deficit dropped to 4.7 billion. This was worse than earlier expected – 3.7 billion. Also last month’s figure was a disappointment – it was revised from a deficit of 5.8 to 7.4 billion. The Euro shrugged off this data, as it was awaiting the main figure. The Euro went up earlier today on successful Irish bond sales. This is another positive sign that the debt issues are fading away. Ireland is one of the problematic countries in terms of debt. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..       |
| British Inflation Sliding Towards Target Posted: 17 Aug 2010 01:32 AM PDT
British consumer prices are still above target. CPI dropped from 3.2% to 3.1%, exactly as expected. Other inflation related figures were softer than predicted, and the immediate reaction of the Pound was a small drop. Core CPI unexpectedly dropped from 3.1% to 2.6%, showing that the higher inflation isn’t really strong. Also the RPI (Retail Price Index) which is often considered a good gauge for what consumers actually pay, dropped from 5% to 4.8%. All the figures are annualized. GBP/USD reacted with a dip:GBP/USD dropped by 30 pips after the release, from 1.5645 to 1.5615, but was quick to erase these losses. It’s currently enjoying a weaker dollar, so the fall is limited. Earlier this week, GBP/USD managed to recover some of its gains and bounce of the strong support line of 1.5520. These gains were limited within the current trading range, that is capped at 1.5720. A breakout on the upside will find resistance at 1.5833, which is now only a minor line of resistance, and then by the round psychological 1.6000 mark, which capped the pair before Bernanke’s move, and was the highest level in 6 months. Below, 1.5470 that held the pair a few weeks ago now is the next immediate line of support. More significant support is found at 1.5350, and it’s followed by 1.5230. The bears and bulls are struggling on the Pound, with no decisive winner. Tomorrow is a light day in the markets, but one important British event stands out – the MPC Meeting Minutes. It will be interesting to see if Andrew Sentance continues to be the sole member voting for a rate hike, or if someone else joined him in the last meeting. Although Mervyn King returned to dismissing inflation and painting a grim view for the economy, more members concerned about inflation mean that he might have to change his mind. But as it seems now, this won’t be necessary. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
| EUR/USD Aug. 17: Will Consolidation End? Posted: 16 Aug 2010 11:18 PM PDT
The Euro made some limited gains, but failed to break above the resistance line. It now trades in a very narrow range. When will it explode? This busy day could send it out of range. Here’s a quick update on fundamentals, technicals and community trends.
EUR/USD Technicals
EUR/USD Fundamentals
EUR/USD Sentiment
Note – This is a new and still experimental section on Forex Crunch. It’s still in development. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
| Fundamental Overview – Market Movers Last Week – 8/16/2010 Posted: 16 Aug 2010 06:00 PM PDT
Guest post by ForexTraders.com The U.S. Dollar's fortunes reversed considerably last week, as the Greenback rallied on increased risk aversion after China showed disappointing import figures. Also helping the Dollar's fortunes was the FOMC's indication that the Fed would be buying long term Treasuries with repayments from agency debt and mortgage backed securities. The Greenback gained significantly against all the major currencies, with the Euro losing 4.2%, Sterling coming off 2.4% and the Yen falling 1.0% on the week. The Commodity Dollars also fell considerably versus the Greenback, with the Kiwi falling a whopping 3.9%, the Aussie down 2.9%, and the Canadian Dollar down a more moderate 1.3% on the week.
Dollar Rises Against All Other Major Currencies The biggest rise in the Greenback was against the Euro, where the Dollar gained 4.2% aided by continued economic uncertainty in the Eurozone on the part of the ECB. This was followed in magnitude by its change seen versus the New Zealand Dollar against which the Dollar rose 3.9%. More moderate U.S. Dollar losses were sustained against the Australian Dollar of 2.9% and the Pound Sterling of 2.4%. The Japanese Yen and the Canadian Dollar held onto their recent gains the best, only falling 1.0% and 1.3% respectively. Forex Market Implications Despite last week's impressive run in the Greenback, the fundamental outlook for the United States continues to be questionable. With the FOMC's statement and plans to implement what many are calling "QE lite" or a mild form of quantitative easing, the U.S. Dollar still looks like it is being set up for a fall, rather than actually being capable of making a sustained rally. Another factor which should be considered is the situation in China. A weakening economy in China tends to signal a global economic slowdown. This will in turn affect the U.S. Dollar considerably, especially if one takes into account the amount of exposure that the PBOC — the Chinese central bank — has in Dollar denominated investments. While shorting the almighty Dollar may seem like lunacy given last week's strength, this continues to be the favored play since the U.S. Dollar index has been steadily dropping for the last nine weeks, thereby indicating a global retreat from the U.S. currency. The Japanese Yen presents a good example, having risen to fresh 15 year highs last week before eventually settling somewhat lower on the week. This indicates that this latest U.S. Dollar rally may merely be a significant pullback, rather than a reversal. Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 8/16/2010 The Greenback roared back last week on renewed risk aversion in the currency markets along with the FOMC's surprise plans for the Fed to reinvest agency loan repayments it was receiving into long term Treasuries. The Fed's new modified version of quantitative easing which was announced on Tuesday also hit the stock market, causing the DJIA to lose over 3% last week. In addition, the Fed made good on their "extended period" to hold down rates, leaving the benchmark Fed Funds rate at 0.25%, as was widely anticipated. Read full report Weekly Recap and Outlook for EURUSD – 8/16/2010 The Euro started near its weekly high of 1.3307 against the Greenback last Monday after the previous Friday's disappointing U.S. Non Farm Payrolls number. Nevertheless, the rate soon started to fall in spite of mostly good numbers seen out of the Eurozone. For example, the German Trade Balance out on Monday came in showing a 12.3B surplus, near the 12.4B surplus anticipated, and considerably better than the 10.6B surplus seen last month. In addition, the Eurozone Sentix Investor Confidence survey index showed considerable improvement, printing at 8.5 against the market consensus of just 2.1. This was substantially higher than the former reading that was the negative -1.3 level. Read full report Weekly Recap and Outlook for GBPUSD – 8/16/2010 GBPUSD fell substantially last week as the U.S. Dollar came back with a vengeance against all major currencies. The rate began the week by trading down from its weekly high point of 1.5995 that was seen on Monday. Monday's U.K releases included the RICS House Price Balance which declined by -8% — a fall that was significantly below the market's consensus of a rise of 5% — with predictable negative implications for Cable. In addition, the previous number was revised down from the 9% level to 8%. Read full report Weekly Recap and Outlook for AUDUSD – 8/16/2010 AUDUSD traded off substantially last week, with the sharp drop exacerbated by slowing import numbers out from China that indicated a potential future slowdown in the global economy and also raised risk aversion in the forex market. The week started as the rate traded off from its weekly high level of 0.9204 seen on Monday after Australian ANZ Job Advertisements came out showing a disappointing rise of 1.3% on the month against a previous print of 2.8%. In addition, Australian Home Loans fell by -3.9% for the month against the lower expected drop of -2.1%, although the previous number saw a significantly upward revision from 1.9% to 3.0%, thereby neutralizing the overall effect. Read full report Weekly Recap and Outlook for NZDUSD – 8/16/2010 The Kiwi was sold off especially strongly last week, as the commodity dollars and the Euro lost favor. The rate initially opened on Monday near its weekly high point of 0.7338, but lacking any important economic data out of New Zealand, the rate soon fell under pressure as the Aussie sold off significantly. Read full report Weekly Recap and Outlook for USDJPY – 8/16/2010 USDJPY gained overall last week as the Greenback recovered some of the previous week's losses, despite having made fresh 15 year lows. The pair started the week on a positive note Monday as the Japanese Current Account came out with a surplus of ¥1.36T versus a consensus of a ¥1.44T surplus and Japanese Bank Lending which dropped by -1.8% year on year versus a previous decline of -2.0%. Read full report Weekly Recap and Outlook for USDCAD – 8/16/2010 Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. USDCAD rallied last week on the back of greater market risk aversion, although also being propelled higher by the general corrective strength shown by the Greenback. The rate began the week near its low point of 1.0253 seen on Monday that was most likely still being influenced by the poor Canadian and U.S. employment data that had been released the previous Friday. Read full report    |
| Forex Daily Outlook – August 17 2010 Posted: 16 Aug 2010 02:00 PM PDT
A very busy day filled with interesting news. Building Permits in US, German ZEW Economic Sentiment in Europe, RBA Gov Stevens Speaks in Australia and more. Let’s see what awaits us today. In the US, Building Permits the Annualized number of new residential building permits issued during the previous month; stabilizes on 5.8%, released monthly, and it’s an excellent gauge of future construction activity because obtaining a permit is among the first steps in constructing a new building.
Later in the US, Producer Price Index (PPI), a leading indicator of consumer and measures the change in the price of finished goods and services sold by producers, is about to rise by 7%. While the Core PPI that measures the price of finished goods and services, excluding food and energy; is about to rise by 1% and me More in the US, Building Permits stabilized on 5.8M. An excellent gauge of future construction activity that measures the annualized number of new residential building permits issued during the previous month. More in the US, Industrial Production, the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities, is about to rise by 4% and have impact on the business cycle and is correlated with consumer conditions such as employment levels and earnings. More in the US, Capacity Utilization Rate a It’s a leading indicator of consumer inflation – when producers are nearing full capacity they respond by raising prices, and the higher costs are usually passed on to the consumer; is about to rise by 0.5%. Finally in the US, Treasury Secretary Timothy Geithner speaks at the conference on the Future of Housing Finance, in Washington DC; his speeches are often used to communicate the US President’s economic policies and signal policy shifts to the public and to foreign governments; In Canada, Foreign Securities Purchases, Total value of domestic stocks, bonds, and money-market assets purchased by foreigners during the reported month is decreases by 12.84B. Demand for domestic securities and currency demand are directly linked because foreigners must buy the domestic currency to purchase the nation’s securities More in Canada, Manufacturing Sales, the total value of sales made by manufacturers; decreases by 8% and changes in manufacturers sales can be an early signal of future activity such as spending, hiring, and investment; For more on USD/CAD, read the Canadian dollar forecast. Also in Europe, German Zentrum fur Europaische Wirtschaftsforschung (ZEW) Economic Sentiment, decreases by 0.3 points. Survey of about 350 German institutional investors and analysts which asks respondents to rate the relative 6-month economic outlook for Germany, a leading indicator of economic health and an early signal of future economic activity, while the ZEW Economic Sentiment that measures the diffusion index based on surveyed German institutional investors and analysts; indicates optimism of 10.6 points. For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis. In Great Britain, Consumer Price Index (CPI), the price of goods and services purchased by consumers decreases by 0.1% and lead the central bank to raise interest rates out of respect for their inflation containment mandate. The Core CPI (excluding the volatile food, energy, alcohol, and tobacco items) has a mild impact relative to other countries, and also decreases by 0.1%. Read more about the Pound in the GBP/USD forecast. In Australia, Reserve Bank of Australia (RBA) Governor Glenn Stevens speaks about the role of finance at the 2010 Shann Memorial Lecture – Octagon Theater, in Crawley; and influence the nation’s currency value More in Australia, Monetary Policy Meeting Minutes, that is released 11 times per year, 2 weeks after the Cash Rate is announced; It’s a detailed record of the Reserve Bank of Australia (RBA); Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. For more on the Aussie, read the AUD/USD forecast. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It's free.    |
| [Video] Euro and Yen Bears, Pound Bulls and More Posted: 16 Aug 2010 11:41 AM PDT
On the weekly interview on Forex TV, I spoke with Julie Sinha about the Euro and yen bears, the Pound bulls and also looked at the major events that will rock the markets this week. Enjoy: Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
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