| EUR/USD Outlook – August 9-13 Posted: 07 Aug 2010 05:00 AM PDT 
After riding the Non-Farm Payrolls, a busy week expects Euro traders, with the best kept for last – GDP figures on Friday. Here’s an outlook for the European events, and an updated technical analysis for EUR/USD. EUR/USD chart with support and resistance lines marked. Click to enlarge: 
The Euro enjoyed the reports that the US central bank will take new steps to boost the economy, by printing dollars. Now, the focus returns to the European core figures. Let’s start: - Sentix Investor Confidence: Published on Monday at 8:30 GMT. This official European survey of 2,800 analysts and investors has significantly improved in recent months, but the output was still negative – minus 1.3 last month, meaning that the overall mood is still pessimistic. A rise to 2.4 points, a positive number will boost the Euro.
- German Final CPI: Published on Tuesday at 6:00 GMT. After a few volatile months, Germany’s consumer prices stabilized at small changes. The initial figure of a small 0.2% rise will probably be confirmed now.
- French Industrial Production: Published on Tuesday at 6:45 GMT. Europe’s second largest economy rebounded nicely last month, with a 1.7% growth rate. This time, a drop will probably be seen.
- ECB Monthly Bulletin: Published on Thursday at 8:00 GMT. Following the rate decision with its optimistic sentiment, we’ll get to see what the data was based on. This release shows what data the members of the ECB saw when making their decision. This could boost the Euro.
- Industrial Production: Published on Thursday at 9:00 GMT. This publication for the whole continent comes after Germany and France already released their own numbers. Nevertheless, the overall picture is very important. After a surprising 1% rise last month, a rise in a scale of 0.7% will probably be seen now.
- German Prelim GDP: Published on Friday at 6:00 GMT. Germany has been the locomotive of the whole Euro zone, showing impressive industrial output and dropping unemployment. So, the positive growth rate of 0.2% seen in Q1 will probably be followed with a strong 1.3% in Q2, and might be even stronger, boosting the Euro.
- French Prelim Non-Farm Payrolls: Published on Friday at 6:45 GMT. This quarterly release showed a small growth in French employment – 0.2% in Q1. Q2’s figure will probably be similar – 0.3%.
- French GDP: Published on Friday at 6:45 GMT. Published 45 minutes after the German figure, this number can stabilize the Euro before the release of the figure for the whole continent. The weak growth rate of 0.1% in Q1 is likely to be followed by a slightly stronger growth rate – 0.4%, or an unchanged figure. Contraction will hurt the Euro.
- Flash GDP: Published on Friday at 9:00 GMT. There’s a big difference between the different members of the Euro-zone. While Germany, France and Holland march forward, Italy, Spain, Portugal and Greece suffer. After three quarters of growth, there’s a big danger of seeing new contraction – a double dip recession. But, expectations are very high – a growth rate of 0.7%. This figure will rock the Euro and other currencies as well.
EUR/USD Technical Analysis At the beginning of the week, EUR/USD made an initial breakout above 1.3114. It then traded between this line, that turned into a strong support line, to the next barrier, 1.3267. On Friday, it leaned on the channel support line, which stood on 1.3160 at that time, before jumping higher. From the peak of 1.3333 it managed to settle at 1.3280, a weekly gain of 220 pips – a sixth consecutive week of gains. Some lines were added on last week’s outlook. The pair currently ranges between 1.3267, the line it broke on the Non-Farm Payrolls, and 1.3435, the next barrier, which was a strong support line in February. Higher, 1.3545 serves as the next line of resistance after providing support for the pair in March. 1.37 is the next line of resistance, working as in April, and it’s followed by 1.3850 which is a strong and clear line of both support and resistance. Looking down, 1.3114 which was the place where the pair collapsed from in May, is now a strong support line. Also in the past week, it turned from a clear resistance line to a clear line of support. Lower, 1.3028 had a minor role in the recent Euro rally. It’s followed by 1.2880, which was a support line in 2009 and then by 1.2722 which held the pair temporarily in July. There are many lines below, but they’re too far now. It’s also important to notice the steep uptrend channel, also marked on the graph. EUR/USD is currently in the middle of this uptrend channel, far enough from falling. I am neutral on EUR/USD. US weakness, as seen in the Non-Farm Payrolls, continues to fuel EUR/USD. It might get a fresh boost from the new dollar printing schemes by the Federal Reserve, but could suffer a disappointment from the European GDP, as expectations are high. This pair receives excellent reviews on the web. Here are my favorites: - Andrei marks technical levels and sees a sell trend.
- James Chen focuses on the uptrend channel and marks the next targets.
- Mohammed Isah’s technical analysis sees hesitation but a continued uptrend.
- Tim Black, on Casey’s site, sees a swing trade opportunity on EUR/CAD.
- Piphut sees mixed signals.
- TheGeekKnows provides a review of the past week and a look forward.
Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| Forex Weekly Outlook – August 9-13 Posted: 07 Aug 2010 02:00 AM PDT 
The big event this week is the American rate decision, holding expectations for new easing steps – expectations that already hurt the greenback. Apart from this event, we have employment figures in Britain and Australia, European GDP and lots more. Here’s an outlook for the major market moving events in the upcoming week. Note that at the beginning of the week, the echoes from Friday’s Non-Farm Payrolls will still impact trading, Then, Bernanke will set the tone. Let’s start: - Japanese rate decision: Published on Tuesday morning. No one expects the Bank of Japan to raise the Overnight Call Rate, standing at 0.10% for a long time. In these times, the yen is too strong for Japanese policymakers. In the accompanying statement and press conference, they could hint an intervention to weaken the currency, or even act, something they haven’t done for a long time. USD/JPY and the Japanese crosses will rock.
- US rate decision: Published on Tuesday at 18:15 GMT. Also here, this rate decision is special, and also here, no one expects Ben Bernanke to raise the Federal Funds rate. With signs of a slowdown becoming stronger, the Federal Reserve may declare a new program for buying assets, or printing dollars if you wish. This is what the market expects. If it won’t happen, the dollar will rise strongly, but if the capacity of the program is large, the dollar will fall.
- British employment data: Published on Wednesday at 8:30 GMT. British employment has been improving very nicely in recent months, and this trend will probably continue. Claimant Count Change is expected to show a sixth consecutive month of a drop in the number of unemployed people in July. The unemployment rate, for June is expected to remain unchanged at 7.8%.
- British BOE Inflation Report: Published on Wednesday at 8:30 GMT. This quarterly event always rocks the Pound, especially as the debate about inflation became heated. Mervyn King, that began showing concern from inflation, still refuses to raise the rates. We’ll get a fresh report, and also comments from Kind and possibly other members, in a press conference that relates to this report.
- US and Canadian Trade Balance: Published on Wednesday at 12:30 GMT. This simultaneous release shakes USD/CAD. The US suffers from a high deficit of over 42 billion, while Canada has a small deficit. A return of Canada to a surplus, which is predicted now, will send USD/CAD down.
- US Federal Budget Balance: Published on Wednesday at 18:00 GMT. Worries about severe debt hurt the dollar. The government’s deficit squeezed in the past month to 68 billion and is expected to stay around these levels. A rise in the deficit to 165 billion, alongside a wide QE program on the previous day, may weigh heavily on the greenback.
- Australian employment data: Published on Thursday at 1:30 GMT. Australia enjoyed 4 excellent months of growth in jobs (employment change), exceeding expectations each time. This was accompanied by a drop in the unemployment rate, to 5.1%. Good figures are expected again, with a gain of 20,000 jobs and an unchanged unemployment rate. The Aussie should enjoy it to push higher.
- US Unemployment Claims: Published on Thursday at 12:30 GMT. Last week’s disappointing rise touched the high range of jobless claims. This weekly number, that is a good indicator for the NFP, is expected to drop to around 450K, in the middle of the range, staying too far from 430K, a number it reached only by accident.
- European GDP: Published on Friday at 6:00 in Germany and at 9:00 GMT for all the continent. The second quarter was quite wild for Europe. At the beginning of May, the debt issues significantly damaged economic growth, but afterwards, things improved. First, we’ll get Germany’s number – the Euro-zone’s locomotive is expected to show more growth – 1.3%. Is this enough to carry the whole continent forward? We’ll get the answer 3 hours later. Flash GDP for the whole continent holds hopes for a 0.7% rise. Note that these figures are the preliminary releases, and not the final ones, but the impact will be strong on the Euro. Reminder: In Q4, the Euro-zone didn’t grow.
- US CPI: Published on Friday at 12:30 GMT. The double-feature release with retail sales will create high volatility around this time. A rise in consumer prices is the key for a rate hike. Up to now, both CPI (-0.1% last month) and Core CPI (+0.2%), stayed around zero, and don’t seem to budge. Similar numbers are expected now.
- US Retail Sales: Published on Friday at 12:30 GMT. Both retail sales and core retail sales dropped last month, triggering the fears of an economic slowdown. Now, both indicators are expected to rise. Only a rise in a scale above 1% will boost the greenback.
- US Consumer Sentiment: Published on Friday at 13:55 GMT. Completing the picture for the mood of American consumers, the preliminary release of consumer sentiment from the University of Michigan is expected to recover this time. Last month’s number was very disappointing – a drop from 76 to 67.8 points. A bounce above 70 points is necessary for the dollar.
That’s it for the major events this week. Stay tuned for coverages on specific currencies. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| Forex Links for the Weekend Posted: 06 Aug 2010 02:00 PM PDT 
After an exciting week that ended with Non-Farm Payrolls, it’s time to relax with some long-term forex related articles, before a new week begins. Here are my picks. Enjoy! Note that most of the links come from blogs that are in my list of top 10 forex blogs. - Michael Greenberg analyzes the annual report from the Foreign Exchange Committee for 2009. All in all, forex is on the rise.
- Kathy Lien points out the correlation between USD/JPY and US yields.
- Larry Greenberg looks back and states that double-dip recessions are extremely rare in the US.
- Macro Man discusses deflation and inflation in his special style.
- Casey Stubbs emphasizes the importance of being picky and patient in forex trading.
- Andrei finds many similarities between drinking and forex trading.
- Adam Kritzer interviews Roland Manarin that states: “Don’t try to beat the market”.
- Francesc Riverola provides more details about the upcoming “Forex Trader of the Year” contest.
- James Chen brings an educational article about trading forex volatility.
- Alan talks about the impacts of global crises on forex trading.
Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| EUR/USD Rises on NFP, But Gains Could Be Capped Posted: 06 Aug 2010 05:32 AM PDT 
US Non-Farm Payrolls dropped by 131K, double the median expectations. This result is very disappointing. EUR/USD leaped from 1.3170 before the release to 1.3220 immediately afterwards. Note that the private sector, which is in the limelight added 71,000 jobs, so the Euro might not have the strength needed to break higher. The unemployment rate remained unchanged at 9.5%, slightly better than a rise to 9.6% that was expected. But this isn’t important: What is important is that the private sector gained jobs – 71,000. This is a better report than the ADP number (48K), although slightly worse than expected (90K) and it could ease the fall of the dollar, despite the terrible headline figure. So, 1.3267 – the peak at the beginning of the week which is also an important resistance line, could hold. Update: EUR/USD made the break higher but stayed close to the resistance line – 1.3267. Earlier this week, the ADP Non-Farm Payrolls report was slightly better than expected. It showed a gain of 48,000 jobs in the private sector. This created hope for a better result in the official Non-Farm Payrolls, especially as the government’s census in May still has an impact on the headline number. As written in the NFP preview, the private sector part of the NFP was in the limelight, making also the ADP report more important. The US dollar lost ground up to Wednesday’s ADP report, the dollar lost ground, and then it stabilized. On the other hand, Thursday’s weekly jobless claims report was disappointing – it rose to 479K, just below the top border of a range that characterizes this figure in recent months. But this didn’t have too much impact on the greenback – tension remained high and trading became quite tight before the release. EUR/USD got close to the bottom border of the uptrend channel, but managed to stay away before the release, and even escape it as the New York session opened at 12:00 GMT. As aforementioned, it later jumped. EUR/USD Technicals A break above 1.3267 will open the road to 1.3392, the uptrend resistance (currently at this zone), and then to the important 1.3435 line, which was a support line in the past. A drop will send the pair to support around 1.3160, which is the uptrend support line at the moment and further below to 1.3114 – which turned from a strong line of resistance to a strong line of support this week. Other Currencies The Canadian dollar suffered from losses against the greenback, due to its own employment data. Canada lost jobs in July – this disappointing outcome sent USD/CAD above 1.02. Other currencies remained around earlier levels before the release, and reacted in a similar way to the Euro afterwards. –Updates to come – Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
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