USD/JPY Technical Analysis July 28, 2011

USD/JPY had a hard fall at the beginning of the Wednesday session, but then bounced just as hard as the market rose again. This formed a hammer on the daily chart, and this could be the start of a bounce. The central banks are watching and intervened just below, and as such – this could be a decent place to attempt a buy position if we can break the highs of Wednesday. Of course, it is counter trend, and as such – the action can be quite choppy even if it does go your way on a long.

USD/CAD Technical Analysis July 28, 2011

The USD/CAD pair had a bullish day on Wednesday, tying in with the oil markets falling. The pair has been dictated by the CL contract lately, as it does from time to time. The pair looks like a bounce could come, but the trend is decidedly down, and we think it better to wait for a nice bounce to sell.

USD/CHF Technical Analysis July 28, 2011

The USD/CHF pair had a quiet day Wednesday, finishing basically unchanged as the market is currently sitting just above the 0.80 level. The pair is extraordinarily weak, and this chart does nothing to dispute that trend. We know that the 0.80 may be tough to break through, but the truth is that every time we think we find a bottom – this pair goes lower. We expect further weakness.

NZD/USD Technical Analysis July 28, 2011

The NZD/USD pair fell on Wednesday, forming a shooting star at the end of the day. This signals a very likely fall from this level, but the pair is so strong that we don’t like selling it. The real signal to sell will be if we get below the 0.85 level. The area could be supportive, and if it holds – we are buyers. If not, we sell.

EUR/CHF Technical Analysis July 28, 2011

The EUR/CHF pair fell again on Wednesday, and retested the 1.15 level as support. The level could be important as it is a large psychological number, but the pair has already broken through it previously, so a move lower isn’t all that surprising if it happens. The pair is certainly a “sell only” pair, and we have made a lot of money doing just that, so we sell rallies.

AUD/USD Technical Analysis July 28, 2011

The AUD/USD fell hard in the American session after originally rising during the Asian session. The pair is sitting over the 1.10 level, and even formed a hammer on the 4 hour chart at that level. This of course is positive, but the markets are far too skittish for us to play games with it. We only buy the Aussie, and as such – we are looking for pullback to get involved. If 1.10 holds, we like going long. If not, we like looking around the 1.08 area.

USD/CAD Daily Fundamental Analysis for July 28, 2011

The USD/CAD pair rose back on Wednesday after falling to the lowest level since November 2007 on Tuesday, as the U.S. dollar gained back momentum against major currencies, albeit U.S. lawmakers continue to debate over a deal to raise the debt ceiling and reduce the swelling deficit, where rising pessimism around the globe pushed investors away from risky assets, which weighed down on the CAD, and pushed the USD/CAD pair higher.

Moreover, crude oil prices fell on Wednesday after the EIA report showed crude oil inventories rose last week above expectations, which put negative pressure on the CAD, and provided the USD/CAD pair with bullish momentum.

The U.S. debt ceiling plan will continue to dominate markets, and it seems that the U.S. dollar will remain weak so long as U.S. lawmakers fail to reach an agreement to raise the debt. Moreover, data from the United States is due tomorrow, although we don’t expect the pair to change its bearish trend.

Thursday July 28:

At 12:30 GMT we have the weekly jobless claims after they rose unexpectedly last week by 418,000.

At 14:00 GMT the Pending Home Sales for June are due and expected with 2.0% drop following 8.2% surge in May.

Debt Ceiling Saga Continues to Spread Pessimism in Global Financial Markets

Stock markets extended their drop on Wednesday amid rising concerns that U.S. lawmakers will fail to reach an agreement to raise the debt ceiling and reduce the deficit with less than one week remaining before an August 2, deadline set by the U.S. Treasury Department.

Moreover, the U.S. Commerce Department released the durable goods orders for the month of June, where durable goods fell below expectations to confirm the weakness in economic activities during the second quarter of this year.

Pessimism continued to be the dominant theme in global financial markets, as global equity markets fell on Wednesday, while investors sought low yielding and safe assets against higher yielding ones, which pushed stocks and other higher yielding assets to drop.

Stocks in the United States fell by opening on Wednesday, where the Dow Jones Industrial Average was down by nearly 1.0% to trade around 12,376, while the S&P 500 index was down by nearly 1.50% to trade around 1312. European stock indexes were lower before closing on Wednesday, where FTSE 100 was down by nearly 1.25% to trade at 5854 and the DAX was down by nearly 1.60% to trade around 7232.

The U.S. dollar rose back against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 73.70, compared with the opening level at 73.51. The Euro dropped against the Dollar, where the EUR/USD pair traded at $1.4426, compared with the opening level at $1.4508, and the British Pound also dropped against the Dollar, where the GBP/USD pair traded around $1.6372, compared with the opening level at $1.6418.

Gold prices rose on Wednesday to a new record high at $1628.38 an ounce, where gold was trading around $1625 an ounce recently, and crude oil prices fell after the EIA report showed crude oil inventories increased above expectations, to trade around $97 a barrel.

EUR/CHF Daily Fundamental Analysis for July 28, 2011

The Swiss Franc maintains its strength and strong appeal in the market amid the rising uncertainty and pressures and haven demand is keeping the EUR/CHF biased to the downside with the upper hand still Swiss!

On Wednesday renewed debt woes in the euro area supported the franc to gain more stability and continued to trade around its historic highs versus the euro.

The euro weakened further after German finance minister Wolfgang Schaeuble said they are not going to issue “any blank checks” to fund the bond purchases. His comments fueled already lingering fears that the EFSF is not sufficient to prevent a crisis in Italy and Spain which are too big to fail and the fund is surely insufficient to salvage them.

Spanish and Italian bonds declined on the comments and the bond market remained jitter, though the drop was not exceptional and remained within the recent established range following the summit decision.

The focus in the market remain on the high uncertainty over the outlook for the debt crisis in Europe, the debt ceiling debate in the United States and the future of the global economic recovery and this heightened uncertainty is keeping the haven demand evident on swissy and favors the currency for more gains versus the euro.

On Thursday the market will focus on the vote in the United States on Boehner’s tow-step plan to raise the debt ceiling and cut $3 trillion in expenditure, the vote was already postponed from Wednesday and President Obama already threatened a veto. The jitters will prevail and will affect even the EUR/CHF and the strength of swissy with haven demand.

Other news that will affect the pair will start from Germany at 07:55 with the jobs report for July. Unemployment change is expected with a drop of 17,000 improving from 8,000 thousand added in June. Unemployment rate seasonally adjusted is expected to hold at 7.0%.

Thursday is the euro area confidence day with the report due at 09:00 GMT. The Business Climate Indicator is expected to slow to 0.84 from 0.92, Economic Confidence expected to drop to 104.0 from 105.1; the Industrial Confidence expected also lower to 2.0 from 3.2 and Services Confidence to 9.4 from 9.9. The final estimate for Consumer Confidence is expected unrevised at -11.4.

EUR/USD Daily Fundamental Analysis for July 28, 2011

The EUR/USD continued to trade with high volatility and choppy trading was dominant on Wednesday with the mixed sentiment over the outlook for the debt crisis at both ends of the Atlantic.

The debt woes in the euro area emerged once again to pressure the euro negatively, where the skeptic outlook for the capability of the endorsed measures at the euro leaders’ summit to contain the crisis and prevent contagion increased following downbeat comments from Germany.

German finance minister Wolfgang Schaeuble said they are not going to issue “any blank checks” to fund the bond purchases. His comments fueled already lingering fears that the EFSF is not sufficient to prevent a crisis in Italy and Spain which are too big to fail and the fund is surely insufficient to salvage them.

Spanish and Italian bonds declined on the comments and the bond market remained jitter, though the drop was not exceptional and remained within the recent established range following the summit decision.

Already, the debt ceiling debate is a pressure on the bond market in general and not just on U.S. markets with the risk of downgrade still eminent even if the decision to raise the limit was reached. On Thursday the market will focus on the vote in the United States on Boehner’s tow-step plan to raise the debt ceiling and cut $3 trillion in expenditure, the vote was already postponed from Wednesday and President Obama already threatened a veto. This helped the market unwind the heavy shorts on the dollar ahead of the vote that will be a major focus on Thursday and fuel the EUR/USD fluctuations.

Germany will start the day at 07:55 with the jobs report for July. Unemployment change is expected with a drop of 15,000 improving from 8,000 thousand added in June. Unemployment rate seasonally adjusted is expected to hold at 7.0%.

Thursday is the euro area confidence day with the report due at 09:00 GMT. The Business Climate Indicator is expected to slow to 0.83 from 0.92, Economic Confidence expected to drop to 104.0 from 105.1; the Industrial Confidence is expected also lower at 1.8 from 3.2 and Services Confidence to 9.2 from 9.9. The final estimate for Consumer Confidence is expected unrevised at -11.4.

At 12:30 GMT we have the usual weekly jobless claims after they rose unexpectedly last week by 418,000.

At 14:00 GMT the Pending Home Sales for June are due and expected with 2.0% drop following 8.2% surge in May.

GBP/USD Daily Fundamental Analysis for July 28, 2011

At 23:01 GMT, the UK will release Gfk consumer confidence, while the main highlight will be on US data; the US economy will release initial jobless claims for the week ending July 23 and continuing claims for the week ending July 16 will be available at 12:30 GMT. At 14:00 GMT, pending home sales report is expected to show 2.0% drop in June relative to 8.2% rise recorded in May.

Meanwhile, the main concentration is on the U.S. debt limit problem which is intensifying as U.S. officials, so far, had failed to bridge the difference among them which is raising concerns that they will not reach an agreement before an August 2 deadline.

On Tuesday trading, the pound retreated against the dollar as the jittery situation in the market triggered demand on low-yielding currencies, amid the lack of important fundamentals from the U.K.

On the other hand, fundamentals from the U.S. showed that durable goods orders fell 2.1% in June compared with the revised 1.9% advance, causing the dollar to surrender some of its gains.

USD/CHF Daily Fundamental Analysis for July 28, 2011

While the Swiss economy lacks fundamentals, the U.S. economy will release initial jobless claims for the week ending July 23 and continuing claims for the week ending July 16 will be available at 12:30 GMT. At 14:00 GMT, pending home sales report is expected to show 2.0% drop in June relative to 8.2% rise recorded in May.

Still, the main highlight in the market is on the debt ceiling issue as concerns still persist that U.S. officials will not reach an agreement before the August 2 deadline which will make the world’s largest economy prone to downgrade by rating agencies as well as possible default on debt obligations due to expected climb in yields on treasury bills.

On Tuesday, U.S. President Obama warned that he will use the “veto” if the Congress approved Speaker John Boehner two-step plan to raise the debt ceiling and cut government expenditure by $3 trillion.

On Wednesday trading, investors resorted to safe havens, yet the Swiss franc showed advance over the dollar as U.S. debt limit problem vis-à-vis the stable economic conditions in Switzerland made the Swiss franc more attractive.

Regarding fundamentals, the franc was not much affected by the drop in Swiss leading indicator to 2.04 in July from 2.23 in June.
On the other hand, the green currency was negatively affected after the release of report showing that U.S. durable goods fell 2.1% in June relative to the prior 1.9% advance.

High Demand on Safe Haven Yet the U.S. Dollar Continues to be Weak

Although demand on safe haven persisted today, the U.S. dollar continues to be weak, trading around 73.50 since this morning, as traders remain worried that U.S. lawmakers will fail to reach an agreement to raise the debt ceiling and cut spending, which could lead to downgrading the AAA credit rating for the U.S.

A possible default could also slow the global economic recovery, thereby caution and demand for safe haven persisted today. Gold climbed to a new record high today at $1625.46. The CHF also reached a record high at 0.7993. The New Zealand dollar also climbed to a new all-time record high at 0.8764.

The yen continues to trade near a 4 months high at 77.55, while the Australian dollar set a new 28-year high after the Australian CPI showed prices pressures rose at the fastest pace during Q2 since late 2008, boosting speculations that the RBA might raise the interest rates sooner than expected.

The euro is trading around the 1.4500 level since this morning, with a slight downside momentum, since investors are reluctant to enter the market amid the huge uncertainties surrounding the outlook of the global recovery with the U.S.deadlock and Europe’s sovereign debt crisis.

Although the euro had a remarkable performance since the euro area ministers reached to an agreement over Greece’s second bailout package last week, the long term problems are not gone yet, and investors still doubt Europe’s ability to manage its sovereign debt crisis till the end.

The pound is almost unchanged today, and as of this witting is trading around the 1.6410 level, with only the CBI total orders on schedule today, which could have a disappointing outcome. Europe lacks the important economic data today, so markets will continue to focus on the developments from across the Atlantic.

The U.S. will release today its durable goods orders for June and the crude oil inventories, as well as the Fed’s beige book later in the day. The month of August is around the corner, when markets are usually quiet because of summer holidays, yet this year’s developments may keep markets volatile.

USD/JPY Daily Fundamental Analysis for July 28, 2011

The USD/JPY pair fell to its lowest level since March 11 earthquake, as demand increased for the Japanese yen as a safe haven after investors lost faith in the greenback due to the debt ceiling dilemma.

The debate between Democrats and Republicans to raise the U.S. debt ceiling sparked fears in financial markets, where investors abandoned the U.S. currency due to the uncertain outlook for the U.S. economy.

The Japanese yen soared against dollar and other major currencies; however fears also increased regarding the expected intervention of the Bank of Japan in the foreign exchange markets to prevent any further gains in the yen which could hurt the Japanese economy.

On Thursday at 23:50 GMT (Wednesday), Japan will release the retail trade index for June, which showed a rise of 2.4% the previous month and expected to come at 1.0%. On the other hand, the annual retail trade had a previous reading of – 1.3%, and expected to come at 0.4%.

Also on Thursday, the U.S. economy will issue at 12:30 GMT its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 418 thousand last week.

The pending home sales for June will be released at 14:00 GMT and expected with 2.0% drop following a strong 8.2% surge in May. On the year sales are expected with 14.4% rise easing from the previous 15.5% rise.

NZD/USD Daily Fundamental Analysis for July 28, 2011

The New Zealand dollar (Kiwi) soared to the highest level in more than 25 years before the business confidence report that will pressure the central bank to raise interest rates tomorrow or at least change the rhetoric.

The New Zealand dollar is near a record-high and confidence has recovered since the Feb. 22 earthquake in Christchurch, which caused sentiment to plummet in March by the most since the onset of the global financial crisis in 2008.

The New Zealand economy has faced natural disasters that hit the nation in the first half of the year, but we can see that the NZ economy has many resources that help the recovery. The nation’s GDP expanded more than expected during the first quarter as milk and lumber exports rose.

We can see that the Kiwi will retreat from its highest levels on speculation that the Reserve Bank of New Zealand (RBNZ) is to keep tomorrow the interest rates at the current low 2.50%, pressuring kiwi to the downside.

On Thursday, at 21.00 GMT (Wednesday) the Reserve Bank of New Zealand is to release its decision about the interest rates, where the expectations are for the bank to keep the rates steady at 2.50%.

Also on Thursday, the U.S. economy will issue at 12:30 GMT its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 418 thousand last week.

The pending home sales for June will be released at 14:00 GMT and expected with 2.0% drop following a strong 8.2% surge in May. On the year sales are expected with 14.4% rise easing from the previous 15.5% rise.

AUD/USD Daily Fundamental Analysis for July 28, 2011

Aussie inclined sharply against its major counterpart the U.S. dollar and other majors after the Australian economy reported that the consumer price index rose more than expectations in the second quarter of this year, increasing the pressure on the RBA to increase the borrowing costs during the next meeting.

The Australian dollar kept its upside movement as the dollar declined before the US house votes on a plan to cut government spending in exchange for raising the debt ceiling, damping demand for the U.S. dollar.

In the meantime, the Australian currency will retreat as the RBA signaled this month that the economy is unlikely to reach its forecast of 4.25% growth this year as the resumption of coal exports from flooded mines is taking longer than expected.

On Thursday, U.S. economy will issue at 12:30 GMT its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 418 thousand last week.

The pending home sales for June will be released at 14:00 GMT and expected with 2.0% drop following a strong 8.2% surge in May. On the year sales are expected with 14.4% rise easing from the previous 15.5% rise.

USD/JPY Technical Analysis July 27, 2011

USD/JPY had another down day on Tuesday, and more significantly, broke below the lows on the Monday hammer. This is a very bearish sign, but again – the central banks are certainly watching this pair. The Bank of Japan keeps ratcheting up the rhetoric about the appreciation of the Yen, something they will do from time to time, just before intervening.

The reality is that if you are looking to sell here, there is a good chance you are chasing the trade. The Forex world offers plenty of opportunities, and if we have missed the shorting of USD/JPY, so be it – there will be other trades, and in fact are many other ones out there to be had.

USD/CHF Technical Analysis July 27, 2011

The USD/CHF pair continued its massive move south on Tuesday as traders rushed into the Franc for its safe-haven status. Oddly enough, the world’s stock markets have done reasonably well in the midst of the US debt talks stalling, so it is particularly striking that the Franc is being bought in droves. We see the 0.80 level as a massive support area, and at the time of this writing, the markets are coming to grips with it. We like selling on rallies, and a break of the 0.80 level, with a pullback and confirmation of that level turning into resistance.

USD/CAD Technical Analysis July 27, 2011

The USD/CAD fell hard on Tuesday, and made fresh new lows. This is a recipe for selling, but it must be said that this market can be quite choppy – something that any of you in it right now clearly understand. The pair tends to chop around for a while, and then make sudden moves. We believe the next major move is down, and as we are under massive support (again) in the 0.9450 area – we feel ultimately short selling will be rewarded. Just be forewarned: There are other markets that give smoother moves than this one right now. We sell rallies.

NZD/USD Technical Analysis July 27, 2011

NZD/USD continues its march northward on Tuesday as traders are ready to sell Dollars against almost anything out there. The Kiwi was strong to begin with, so this recent drama in DC is only exacerbating the situation. We like buying the NZD/USD on dips, and believe that the 0.85 level is the new floor.