USD/CAD Daily Fundamental Analysis for August 23, 2011

The USD/CAD pair extended its drop on Monday, as optimism amid speculations the Fed will announce more stimulus to help the economic recovery regain its momentum, where traders increased their bets of a third round of quantitative easing by the Federal Reserve Bank, which weighed down on the U.S. dollar, and provided the CAD with momentum to push the USD/CAD pair to the downside.

If the Fed announces QE3, we should expect the USD/CAD pair to extend its losses over the coming period, since it will weaken the USD and will also boost demand for riskier assets, which will provide the CAD with strong momentum to push the USD/CAD pair further to the downside.

Tuesday August 23:

Canada will release the retail sales index for the month of June at 12:30 GMT, where retail sales are expected to rise by 0.5%, compared with 0.1% in May, while retail sales less autos are expected to rise by 0.2% in June, compared with 0.5% in May.

The United States will start the data at 14:00 GMT with the New Home Sales for July which are expected with 1.0% rebound to 315 thousand from 312 thousand.

EUR/CHF Daily Fundamental Analysis for August 23, 2011

The EUR/CHF started the week with tight ranged trading with a slight upside bias as investors bet on further intervention from the SNB to stem the currency’s gains.

The euro started the week with upside gains with the lack of major fundamentals which let the market sentiment guide the movement which supported equities and commodities on expectations central banks will take more action.

Expectations for monetary support and QE3 signals from the Fed weakened the dollar and the franc was fragile with expectations the SNB might act again to stem the franc’s rally, especially if the Federal Reserve is moving closer to introducing QE3.

We still see chances for heavy volatility on Tuesday, especially with the heavy data awaited that will affect the euro and the franc, where the downbeat data might again ignite haven demand on swissy and bias the pair south.

The data will start with the Swiss trade figures for July are due at 06:00 GMT as investors will assess the impact of the appreciating franc on trade after Switzerland reported a trade surplus of 1.74 billion in June with 5.2% rise in exports and 2.5% rise in imports.

The euro area starts the fundamentals this week with the flash estimate for the August PMI at 08:00 GMT. The Manufacturing PMI is expected to contract in August at 49.5 from 50.4 while the services PMI is expected to slow to 51.0 from 51.6 and the Composite PMI is expected flat at 50 from 51.1.

The euro Area ZEW Economic Sentiment Index is due also at 09:00 GMT and likely declined in August following -7.0.

EUR/USD Daily Fundamental Analysis for August 23, 2011

The EUR/USD started the week with continued volatility and the odds favored the euro with the lack of major fundamentals from both nations which kept the euro stronger on expectations for further Fed easing.

European stocks and commodities moved to the upside while the dollar weakened most of the session which supported the euro higher as investors increased the bets that the Federal Reserve will likely signal in a strong tone further support for the economy and possible QE3 in Jackson Hole this week.

Still, the heavy data on Tuesday will refuel the volatility and choppy trading with the heavy data from the euro area which are expected to be downbeat confirming the slowing pace of the recovery.

Germany will start at 07:30 with the flash Manufacturing PMI for August which is expected to slow to 51.0 from 52.0 while the PMI Services is also expected weaker at 52.0 from 52.9.

The euro area starts the fundamentals this week with the flash estimate for the August PMI at 08:00 GMT. The Manufacturing PMI is expected to contract in August at 49.5 from 50.4 while the services PMI is expected to slow to 51.0 from 51.6 and the Composite PMI is expected flat at 50 from 51.1.

Germany will return with the ZEW Survey for August at 09:00 GMT with the Current Situation Index expected to slow to 85.0 from 90.6 while the Economic Sentiment to slow to -25.0 from -15.1.

The euro Area ZEW Economic Sentiment Index is due also at 09:00 GMT and likely declined in August following -7.0.

The United States will start the data at 14:00 GMT with the New Home Sales for July which are expected with 1.0% rebound to 315 thousand from 312 thousand.

GBP/USD Daily Fundamental Analysis for August 23, 2011

On Monday, the pound showed advance against the dollar amid the glimpse of hope that prevailed at the beginning of the week with the increasing expectations the Fed Chairman would announce a third round of stimulus in his speech at the an annual central bank conference in Jackson Hole to boost growth that slowed down, which boosted demand on high-yielding currencies.

On the other hand, the dollar remained under pressure after lackluster reports released last week which worsened the outlook for the world’s no.1 economy.   

On Tuesday, theU.K.will release CBI trends for August at 10:00 GMT, yet it is not expected to have an impact on the pair.

In theU.S., new home sales report for July, due at 14:00 GMT, is expected to show 1.0% advance from the prior 1.0% fall. The data is expected to be carefully watched as it will provide evidence about the status of the housing market that led to the eruption of the 2008 financial crisis.

 

 

USD/CHF Daily Fundamental Analysis for August 23, 2011

On Monday, the dollar showed declined against majors, including the Swiss franc, weigh down by lackluster reports released last week which worsened the outlook for theU.S.economy. Yet, gains in the franc were minimized by speculations the SNB would continued monetary intervention to halt the franc’s runaway. The general sentiment showed some hopes, with the beginning of the week, that the Fed Chairman would announce a third round of stimulus in his speech at the an annual central bank conference in Jackson Hole. 

On Tuesday, at 06:00 GMT, the Swiss economy will release important trade data for July with exports and imports during the month as the recent reports showed a rise in exports despite the franc’s appreciation, where a better than estimated and or worse than expected reading would probably affect the pair’s movements.

In theU.S., new home sales report for July, due at 14:00 GMT, is expected to show 1.0% advance from the prior 1.0% fall. The data is expected to be carefully watched as it will provide evidence about the status of the housing market that led to the eruption of the 2008 financial crisis.

USD/JPY Daily Fundamental Analysis for August 23, 2011

The USD/JPY pair fluctuated with the beginning of the week, where the Japanese currency retreated against the dollar early Monday before it returned to last week’s levels.

Threats of another intervention from the Bank of Japan in the FX markets increased the pair’s volatility, even after the last week’s better than expected GDP which returned some hopes to the Japanese economy.

On the other hand, the yen is still the safe haven for traders, and this fact increased demand for the Japanese currency and forced the BOJ to intervene in the FX markets.

Furthermore, the bearish bias dominated the USD/JPY pair even after the BOJ intervened in the FX market, as the current financial situation in U.S. and EU fueled more fears regarding the global recovery outlook.

On Tuesday at 14:00 GMT, the U.S. economy will release the new home sales for July, where it’s expected with 1.0% rise from 312 to 315 thousands.

The Richmond Fed Manufacturing Index for August will be up at 14:00 GMT where it had a previous reading of –1.0 and expected to at -8.0.

NZD/USD Daily Fundamental Analysis for August 23, 2011

The second round of quantitative easing in U.S. was part of the reason behind a jump in commodity prices and recorded historical levels along with the increased risk appetite in the market that supported investors demand on commodities, damping the demand for higher yielding currencies such as the New Zealand dollar.

Furthermore, the New Zealand dollar (Kiwi) also slumped to a 2-month low versus the dollar as the European debt crisis escalated once again because of Italy and Spain threat of falling, so investors’ fears are escalating which is a negative impact on the market movements, where Italian and Spanish 10-year governments bonds plummeting in the European session.

The kiwi dropped against greenback to the lowest level during the month after Asian stock markets started the week with a sharp decline, which comes as a negative outlook for Asian companies, reducing demand for Kiwi.

On Tuesday, the New Zealand economy is to release its 2-year inflation expectations for the third quarter at 03:00 GMT, where the prior reading inclined by 3.0% in the second quarter of the year.

At 14:00 GMT, the U.S. economy will release the new home sales for July, where it’s expected with 1.0% rise from 312 to 315 thousands.

The Richmond Fed Manufacturing Index for August will be up at 14:00 GMT where it had a previous reading of –1.0 and expected to at -8.0.

AUD/USD Daily Fundamental Analysis for August 23, 2011

The Australian currency dropped against the U.S. dollar to the lowest level in a week on concern the global economy is losing momentum, reducing demand for higher yielding currencies.

On the other hand, Asia markets will probably continue to respond to the market sentiment as global recession fears keeps investors on the edge, which is has a negative impact on Asian currencies.

Furthermore, the Australian economy faces many obstacles at this period that hurt the economic recovery, where the weak Australia job market might force the Reserve Bank of Australia to cut interest rates during the next months, adding that demand for Aussie will decline.

The European debt crisis increased the concern about the global economic recovery, which pressured Asian stock market lower.

On Tuesday at 14:00 GMT, the U.S. economy will release the new home sales for July, where it’s expected with 1.0% rise from 312 to 315 thousands.

The Richmond Fed Manufacturing Index for August will be up at 14:00 GMT where it had a previous reading of –1.0 and expected to at -8.0.

EUR/USD Technical Analysis August 22, 2011

The EUR/USD rose on Friday, but managed to find the top of the recent downtrend channel resistive. The pair looks like it is stuck between two levels at the moment, the 1.4250 and 1.45 levels. The market is confused, as the two currencies involved belong to two economies that are both suffering. This will continue to make this a scalper’s pair, and not a long-term trading environment. The closer we get to 1.45, the more likely we are to try a short position. The closer to 1.41, the more likely we are to try a long position. Either way, those are going to be small positions that we will be taking profit quickly from.

USD/JPY Technical Analysis August 22, 2011

The USD/JPY pair fell hard on Friday, especially during the US session. The pair is suffering from the “flight to safety” trade at the moment as traders buy the Yen in droves around the world. This pair is important to watch however, as the Bank of Japan intervenes as a direct result of what happens here. The breaking of 76 will certainly pique the interest of the bank. The last intervention was at 77, and the BoJ has been very vocal about watching this pair. Intervention is probably a certainty at this point. It only comes down to when now. The daily candle looks supportive as traders certainly didn’t want to be short of this pair over the weekend with all of the risk involved in selling it.

GBP/USD Technical Analysis August 22, 2011

The GBP/USD pair rose above the 1.65 area again on Friday, and fired off a lot of stops in that area. However, it should be noted that the area also produced a shooting star, and this could be a sign of selling to come at this point. The USD certainly could get a boost from a flight to safety, and this would have this pair reentering the 1.60 – 1.65 consolidation area. The pair will be directly affected by the trader sentiment on Monday. A break below the lows on Friday is a sell signal. The breaking of the highs is a very bullish signal as well.

USD/CHF Technical Analysis August 22, 2011

The USD/CHF pair had a fairly quiet day on Friday, even though the stock markets weren’t quiet at all. The pair is being artificially held up by the Swiss National Bank at the moment, and the lack of motion shows this. The pair is certainly in a down trend, and the SNB might be overrun if the situation in Europe gets any worse. The pair can’t be bought, and it really can’t be sold at this point either. We need a large candle in one direction or another to show us the way forward. The 0.8000 level just above should be resistive, and if it gives way would be a bullish sign.

EUR/CHF Technical Analysis August 22, 2011

The EUR/CHF pair continues to sit still as the Swiss National Bank has stepped into the market to keep it afloat. The pair cannot fall because of the SNB, but one gets the impression it is only a matter of time before it gets overrun again. The troubles in Europe aren’t going away, and this pair will eventually fall as a result. The market is temporarily contained at this point, but it is only a matter of time before we see a large candle on the daily chart. The trend is down, so we suspect it might be a red candle.

AUD/USD Technical Analysis August 22, 2011

The AUD/USD initially rose on Friday, but was pushed back at the 1.05 level as trader began to sell off everything risk related again. The pair now sits a little bit above the 1.03 area, which could serve as support. Although this pair looks weak in the short-term, that area will certainly provide some kind of support, and we feel selling would be hard to do. If we can break above the 1.06 level – this pair goes to 1.0750 and 1.10 eventually. Until then, we will sit on our hands. A break below parity would be a long-term signal to sell.

USD/CAD Technical Analysis August 22, 2011

The USD/CAD pair had a wild day on Friday as the market sold it off, and then bought it later. The resulting candle looks somewhat similar to a hammer, but is in the middle of consolidation. The oil markets have been rocked back and forth, and as a result – this pair seems like it doesn’t know what to do. We have two important levels that we are watching: parity and 0.98. If either one of those areas get broken on a daily close – we are trading in that direction.

NZD/USD Technical Analysis August 22, 2011

The NZD/USD pair rose, and then fell on Friday. The candle for the day looks very weak, and is actually a bit of a shooting star. The pair looks set to test the 0.8000 level, and if that area doesn’t hold – we expect a lot of room to the downside as this would be seen as a major break of support. The pair could rally, but it is looking increasingly weak, and we would be interested in selling it we do. Until then, this pair could bounce around quite a bit.

EUR/USD Technical Analysis for the Week of August 22, 2011

The EUR/USD rose this past week, but failed to break above the 1.45 level for more than the briefest of moments. Because of this, we think the pair may still be struggling to gain any real traction. The potential flag is still intact, but then again so are the downward channel, and the consolidation area between 1.40 and 1.45! This pair is an absolute mess, and we need to see a close above 1.45 on the daily if not weekly to go long. A break below and daily close below 1.40 should push us much lower. Until one of those two things happen, this pair won’t be suitable for longer-term trading.

USD/JPY Technical Analysis for the Week of August 22, 2011

The USD/JPY pair fell this past week, but ended the session by forming a hammer on both the Friday candle, and the weekly candle. With the Bank of Japan wanting to push this pair up, it is probably only a matter of time before they intervene. The risk is obviously on traders’ minds as well, as they have backed off in the end. The intervention level of 77 is roughly 100 pips above where we stand at the close, and the markets are possibly bracing for that Yen selloff that the BoJ is talking about. We would buy on a break above 77.50, but never sell.

GBP/USD Technical Analysis for the Week of August 22, 2011

The GBP/USD pair rose above the 1.65 area during the week, but failed to close above it. Although the pair looks more bullish than bearish, the global worries about financial issues can play havoc with this pair as it is highly sensitive to trader’s sentiment. The pair is closing just below the 1.65 level, but with the news flow being what it is – it will always be at risk against shocks. A weekly or even daily close above 1.65 could propel this pair to 1.68, but traders involved should use tight stops. Ultimately, if we can break above 1.70 – this pair would go much, much higher. A break of 1.60 would get us to be massive sellers, but that move looks less and less likely in the short-term.

USD/CHF Technical Analysis for the Week of August 22, 2011

The USD/CHF pair had a fairly quiet week as the pair seems to be stuck between the Swiss National Bank’s desire to devalue the Franc, and the massive resistance area in the form of the 0.8000 level. This pair is decidedly bearish, and we would like to trade it as such. The breaking to the upside of the hammer from last week should have been rather bullish, but you can see the pair went nowhere. In the meantime, we are waiting for a large candle to point the way. This pair is a scalper’s pair at best currently, and has no real substance for the longer-term trader.