GBP/USD Daily Fundamental Analysis for August 12, 2011

On Thursday, the showed slight rebound, where the pound hovered around three-week low versus the dollar, after falling in the previous three sessions.

Yet, the pair is predicted to continue its downside direction as the undergoing tensions are expected to lower demand on high-yielding currencies.

In addition, the sterling remains under pressure after the release of August’s quarterly inflation report which included cutting of growth and inflation outlook by the BoE. The BoE said growth outlook is now weaker and inflation will decline below target in the medium term.  

On Friday, the week ends with the release of some fundamentals from the U.S. which are retail sales for July, University of Michigan confidence for August and business inventories for June at 12:30 GMT, 13:55 GMT and 14:00 GMT respectively, while the U.K. lacks fundamentals. 

The released data may have an impact on the pair especially if it showed further deterioration as it will increase fears in markets, particularly after the S&P downgrade toU.S.rating; therefore, the pair may return to the downside direction.

 

Gold Breaks the $1,800 Level on Renewed Fears About Europe

With conditions stabilizing in the U.S., investors turned their attention towards Europe. They fear that officials will fail to contain the sovereign debt crisis, especially after rumors ignited about a possible downgrade for France, which kept demand on risky assets limited.

However the rumors were denied and markets felt some relief in the afternoon. Yet it was too late for the Asian stock markets which fell today by almost 0.4%. Stocks in Europe managed to rise after some French banks defended their status, giving an upside push to the euro as well.

Concerns from a damaged financial system kept confidence fragile and investors will seek shelter if any bad news will emerge from Europe or the U.S. As uncertainties continue to be high and the outlook for the global recovery unclear, the earnings expectations for exporters started to drop.

As sentiment witnessed some improvement and the U.S. equities are expected to continue rising today, demand on the USD dropped. The dollar index fell to the lowest at 74.32 and now is trading around the 74.50 level. Markets await today the release of an improved trade balance report and a weak jobless claims report.

The CHF weakened today after officials indicated they might act again to stop the Swiss Frank’s strength. The CHF was trading around 0.7390 as of this writing. The Yen however continued to strengthen reaching the lowest of 76.29 despite BoJ’s record intervention last week.

The AUD rose today although the economy witnessed an unexpected rise in the jobless rate. However the gold’s strength and the appetite for risk sustained the Australian dollar which is trading around the 1.0270. The euro is trading with an upside bias around the 1.4240, while the GBP is trading at 1.6155.

The Chinese yuan rose today beyond 6.4 per dollar for the first time in 17 years. The country’s strong economic growth is giving investors the confidence to buy the yuan especially after the U.S. vowed to maintain the interest rates near zero till mid 2013.

Gold climbed to a new record high today breaking the $1,800 level. However for now it retreated towards the $1790.00 after the margin on gold contracts was increased 22% by the world’s largest futures market, CME Group Inc, since the volume of gold’s futures and options surged to a record on Tuesday.

Crude oil extended its gains today supported by a weaker dollar and the rise in risk appetite, and as of this writing is trading around the $83.00 per barrel level. Europe and U.K. will be light with fundamentals today, however tensions will continue to be dominant and volatility will persist within the Forex markets.

NZD/USD Daily Fundamental Analysis for August 12, 2011

The New Zealand dollar inclined for the first time against the dollar after heavy losses during last past period especially after the Standard & Poor’s cut reduced the US’s long-term credit rating. However kiwi recovered in a relief rally on the slight improvement for commodities and equities.

Commodities recovered slightly which supported the New Zealand dollar to gain versus greenback, also it increased after data showed consumer confidence rose.

On Friday, at 22:45 GMT, NZD retail sales Ex. inflation for the second quarter is due after the recorded 0.9% in the first quarter.

At 12:30 GMT, the U.S. economy will release the advanced retail sales for July, where the previous reading was 0.1% and expected to come at 0.4%. The University of Michigan confidence for August will be released at 09:55 GMT, where the preliminary reading is expected to come at 63.2 from the previous of 63.7.

The U.S. business inventories for June will be released at 10:00 GMT, where it had a previous of 1.0% and expected to come at 0.6%.

AUD/USD Daily Fundamental Analysis for August 12, 2011

The Australian economy is still struggling at this period as a result of the natural disaster that hit the nation in the first half of the year, along with the European debt crisis and the slowing global growth, all reducing the demand for higher yielding assets.

On the other hand, Australian unemployment increased to the most since October 2010 as a result of higher interest rates after the central bank sought to restrain inflation with 175 basis points of rate increases from October.

The outlook for the Australian economy worsened with the negative events that face the nation’s economic recovery as the Bank sees that the economy needs time to recover, adding that the Bank isn’t going to increase borrowing costs until the year’s end to support the recovery.

Moreover, the Bank has noted that Australian policy makers won’t increase the interest rates until the end of the year, as the government wants to support the economic recovery amid the negative obstacles that face the global economy.

On Friday, Australian isn’t going to release any fundamental data, but at 12:30 GMT, the U.S. economy will release the advanced retail sales for July, where the previous reading was 0.1% and expected to come at 0.4%. The University of Michigan confidence for August will be released at 09:55 GMT, where the preliminary reading is expected to come at 63.2 from the previous of 63.7.

The U.S. business inventories for June will be released at 10:00 GMT, where it had a previous of 1.0% and expected to come at 0.6%.

USD/JPY Daily Fundamental Analysis for August 12, 2011

The USD/JPY pair remained aggressively bearish as the pair hovers near post-war lows, where the Japanese yen enjoys the strongest performance against the majority of its major counterparts on concerns over the global economic outlook.

Fears over Europe’s debt crisis increased demand for the safest assets, in addition to the Federal Reserve which assured the loose monetary policy and pledged to keep the interest rate at all time low till mid-2013.

The USD/JPY pair is now trading near pre-intervention levels, which fueled fears of another intervention from the BOJ, especially with the ongoing slump across global bourses which increased demand for safe haven currencies like green back and the Japanese yen.

On Friday at 04:30 GMT,Japanwill release the industrial production for June, where the previous reading was 3.9%, as for the annual reading it had a prior reading of – 1.6%.

At 12:30 GMT, the U.S. economy will release the advanced retail sales for July, where the previous reading was 0.1% and expected to come at 0.4%. The University of Michigan confidence for August will be released at 09:55 GMT, where the preliminary reading is expected to come at 63.2 from the previous of 63.7.

The U.S. business inventories for June will be released at 10:00 GMT, where it had a previous of 1.0% and expected to come at 0.6%.

EUR/USD Technical Analysis August 11, 2011

EUR/USD continued its choppiness on Wednesday as the pair fell back to the 1.41 level again, and then promptly started to bounce back up again. The pair looks like what it truly is: a fight between two currencies most people don’t want to own. The consolidation area between 1.41 and 1.44 should continue to hold for a short time. Once we break either higher or lower – that will be your signal as to what direction you want to be trading in. In the meantime, it is a good market to scalp.

USD/JPY Technical Analysis August 11, 2011

USD/JPY fell on Wednesday again, but managed to form a hammer, at the 77 support area. The pair is certainly being watched by the Bank of Japan, who has intervened recently and has been making statements about doing it again. Because of this, we won’t sell this pair anymore as the risk simply isn’t worth it. The pair rising past 77.50 would be enough for us to try a small long position.

GBP/USD Technical Analysis August 11, 2011

GBP/USD fell on Wednesday, breaking below the 1.63 support area that had been the bottom of a recent rectangle pattern. We see this pair as being in two rectangles at the same time, with one being between 1.63 and 1.65, and the larger one being within the 1.60 and 1.65 levels. The pair will continue to be choppy, but with the unrest in England at the moment, as well as fears around the world in various markets – the USD is probably the stronger of the two currencies at the moment. Because of this, we look to sell any rallies now.

USD/CHF Technical Analysis August 11, 2011

USD/CHF barely moved on Wednesday, even as the rest of the markets around the world fell apart. The pair was unusually quiet, and as such – we feel that a bounce could be coming. This would only be a selling opportunity of course, and the 0.75 level would be a great place to short from, but we will have to wait to see if this comes about. The breaking of the lows would be a selling opportunity as well, and we wouldn’t hesitate to take that signal. The market being this quiet certainly has us becoming more and more patient for the longer-term set up that surely will come soon.

EUR/CHF Technical Analysis August 11, 2011

EUR/CHF rose, and then fell on Wednesday as traders sold off the world’s stock markets in a fear that the banking crisis in Europe is getting worse. The pair has been falling for a very long time now, and as such – we still prefer selling rallies. The 1.05 level held on Wednesday, and we think it holds again if we get there. The real question is whether or not we get that chance again. The breaking of new lows would have us selling as well.

AUD/USD Technical Analysis August 11, 2011

The AUD/USD pair fell again on Wednesday as the world shunned risk in the marketplaces. The pair has broken down below the 1.02 support level, and looks set to continue the move downward, although it must be said that the area is support, and a bounce could come. But you never see two plunges like this in such a short amount of time without there being some kind of truth to them. We are selling rallies in this pair, but won’t sell at the 1.02 area as we see a real fight brewing here.

USD/CAD Technical Analysis August 11, 2011

USD/CAD rose on Wednesday as traders ran from anything even remotely risk related, and the CAD suffered as a result. It should be noted that we stopped at the 0.9920 level, and that since then, we are pulling back. The trend is down, and as such we feel this will still be a “sell the rally” pair until we close above parity. The pair looks set to consolidate between parity and 0.98 for a while, which this pair can do. It often consolidates in tight ranges, and then breaks hard in one direction or another. We still prefer selling when the set ups arrive. At the moment, it is a scalper’s market.

NZD/USD Technical Analysis August 11, 2011

NZD/USD fell hard on Wednesday as the markets around the world fell. The pair most certainly has plenty of support in the .80 area, and a bounce could come there, but we are starting to see that it is a bullish market that seems easy to knock back down. Because of this, we are starting to consider selling all rallies. Our advice is to let this market finish out the week, and then look at our weekly video for possible clues to the future direction of this pair as it appears to be at a crossroads of sorts now.

USD/CAD Daily Fundamental Analysis for August 11, 2011

The USD/CAD pair rose back on Wednesday, as despite the Fed’s pledge to keep rates unchanged through mid 2013, yet mounting concerns over the outlook for growth in the United States, and the ongoing fears that the European debt crisis will continue to spread into other major economies within the Euro Zone, maintained the pressure on higher yielding assets, as traders opted for safe havens and low yielding assets, which provided the USD/CAD pair with bullish momentum.

The huge pessimism that continues to dominate global financial markets should continue to boost demand for lower yielding and more safe assets, and accordingly, we preserve our bullish outlook for the USD/CAD pair, and any downside movements are not expected to prevail, since risk aversion will provide the USD/CAD pair with the needed bullish momentum.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

Canada will release the new housing price index for the month of June at 12:30 GMT, where the new housing prices rose by 0.4% in May, while compared with a year earlier, the new housing price index rose by 1.9% back in May.

Canada will also release the international merchandise trade balance for the month of June, where the trade deficit is expected to widen to 1.0 billion CAD, compared with the prior deficit of 0.8 billion CAD.

The data from the United States will start as usual with the weekly jobless claims at 12:30 after they rose last week by 400 thousand.

Also at 12:30 GMT the trade balance for June is due and the deficit is expected to narrow to $47.5 billion from $50.2 billion.

European Debt Crisis Fears and U.S. Growth Outlook Concerns Dominate Markets

U.S. stock markets turned sharply lower on Wednesday, after rising strongly on Tuesday, where the FOMC pledged to keep rates unchanged at exceptionally low levels through mid 2013, and signaled the Fed is ready to use any necessary tools in order to support the economy and boost confidence in markets, which led to speculations the Fed will soon announce QE3.

Nonetheless, the FOMC statement provided a gloomy outlook for the economy, where the Fed signaled that downside risks to the outlook are increasing, while conditions in the labor market seem to have deteriorated, and spending levels are still flat, which all supports the idea that economic growth is slowing down in the world’s largest economy.

Moreover, fears from the European debt crisis continued to dominate markets, as investors are concerned that major economies within the Euro Zone will be facing fiscal difficulties as well, where the European debt crisis could spread to Italy and Spain, the third and fourth largest economies within the Euro Zone respectively.

Stocks in the United States rebounded to the downside by opening on Wednesday, where the Dow Jones Industrial Average was down by nearly 2.50% to trade around 10,960, while the S&P 500 index was down by nearly 2.20% to trade around 1147. European stock indexes were also lower before closing on Wednesday, where FTSE 100 was down by nearly 1% to trade at 5113 and the DAX was down by nearly 1% to trade around 5856.

The U.S. dollar rose back against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 74.45, compared with the opening level at 74.02. The Euro erased most of Tuesday’s gains against the Dollar, where the EUR/USD pair fell to trade at $1.4230, compared with the opening level at $1.4354, and the British Pound extended its drop against the Dollar after the Bank of England revised its growth and inflation projections lower, where the GBP/USD pair traded around $1.6186, compared with the opening level at $1.6304.

Gold prices continued to rise on Wednesday amid the rising pessimism in markets, which boosted demand for the safe haven, as gold rose to trade around $1772 an ounce slightly below its all time record high, and crude oil prices dropped to trade around $80 a barrel.

GBP/USD Daily Fundamental Analysis for August 11, 2011

On Wednesday, the pair showed further decline as the jittery sentiment eroded demand on high-yielding currencies, thereby pushing the pair to the downside.

The Fed’s pledge to keep interest rate at its record low through mid-2013 and readiness to use a wide range of tools to boost recovery that slowed down could not ease the tensions in markets.    

In addition, the sterling fell more after the release of August’s quarterly inflation report which included cutting of growth and inflation outlook by the BoE.

The BoE said growth outlook is now weaker and inflation will decline below target in the medium term.

On Thursday, at 12:30 GMT, the U.S economy will release trade balance report which is expected to show a narrowed deficit of $47.5 billion in June from $50.2 billion deficit a month earlier. At the same time, initial jobless claims for the week ended August 5 and continuing claims for the week ended July 30 will be available, while theU.K.lacks fundamentals. 

Further deterioration inU.S.data may increase fears in markets, especially after the S&P downgrade toU.S.rating; therefore, the pair may continue its downside direction.

 

USD/CHF Daily Fundamental Analysis for August 11, 2011

On Wednesday, the pair rebounded slightly after the Swiss National Bank decided to increase the supply of liquidity in markets, raise sight deposits to 120 billion francs from 80 billion francs and adopt foreign-exchange swap transactions to reinforce liquidity.

The SNB insists on curbing the franc’s advance, which is hurting Swiss exporters, yet it is facing a hard mission as investors resort to the franc amid the undergoing tension and fears.  

It is clear that the SNB is ready to use any methods to halt the franc’s rally which “poses a threat to the development of the economy inSwitzerlandand has further increased the downside risks to price stability,” according to the SNB.

Thus, the pair is expected to continue its rebound with the SNB monetary tools used and as the dollar is facing downside pressure due the risks surrounding theU.S.economy which led to the downgrade ofU.S.top sovereign rating.

The Fed’s pledge to keep interest rate at its record low through mid-2013 and readiness to use a wide range of tools to boost recovery that slowed down could not ease the tensions in markets.    

On Thursday, at 12:30 GMT, the U.S economy will release trade balance report which is expected to show a narrowed deficit of $47.5 billion in June from $50.2 billion deficit a month earlier. At the same time, initial jobless claims for the week ended August 5 and continuing claims for the week ended July 30 will be available.

Further deterioration inU.S.data may increase fears in markets, especially after the S&P downgrade toU.S.rating.

EUR/USD Daily Fundamental Analysis for August 11, 2011

The EUR/USD continued to trade with high volatility on Wednesday following the fed’s pledge to keep rates at record low to support growth which still did not much offset the prevailing downbeat pressure with fears over a double-dip recession.

The European Central Bank and the Federal Reserve both took more measures to ease the pressure and tension in financial markets and so far investors lack faith in the policy markers’ ability to contain the crisis. European markets remained under pressure following a relief rally on the Fed’s decision as the debt woes continue to be the main pressure.

The ECB’s intervention in the secondary market eased the pressure slightly off the Italian and Spanish governments by easing borrowing costs, but still the uncertainty is clear and investors see that slowing growth and the fiscal imbalances are a toxic mix that threatens the euro area’s stability and also the monetary union.

On Thursday, the lack of major fundamentals from major economies will keep the focus on the sentiment and the outlook for growth and the debt crisis.

From the euro zone eyes will be on the ECB will monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50% on hopes that it will cool the jitters which will surely pressure the pair higher if investors confidence improved in the ECB’s ability to contain the crisis.

The data from the United States will start as usual with the weekly jobless claims at 12:30 after they rose last week to 400 thousand.

Also at 12:30 GMT the trade balance for June is due and the deficit is expected to narrow to $47.5 billion from $50.2 billion.

EUR/CHF Daily Fundamental Analysis for August 11, 2011

The EUR/CHF continued to trade with high volatility an in a tight range on Wednesday though off record low for the pair after the SNB took more measures to ease the franc’s gains which still did not prove sufficient.

The Swiss National Bank said in a statement that they will increase the supply of francs in the market and expand the sight deposits to 120 billion francs from 80 billion and also conduct foreign-exchange swap transactions to increase the liquidity, further measures to ease the strong currency rally that is adding more downside recovery on the economy.

The bank said the franc shows “massive overvaluation” which is why the bank stepped up the efforts to stem the gains, yet so far the franc is holding the gains against the euro on the evident jitters and fear over the outlook for the slowing growth and deepening debt crisis.

After all the measures taken by central banks in the past week, the sentiment remains fragile and investors have lost hope in the strength of the recovery and outlook for growth and ability for central banks and government to contain the crisis.

The volatility will prevail on Thursday and the choppy trading will remain evident with the mixed and fragile sentiment, especially with the lack of major data.

Eyes will be on the ECB will monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50% on hopes that it will cool the jitters which will surely pressure the pair higher if investors confidence improved in the ECB’s ability to contain the crisis.

NZD/USD Daily Fundamental Analysis for August 11, 2011

New Zealand’s dollar recovered against greenback but remains marginally weak on concern that global growth prospects are too limited to sustain demand for higher-yielding currencies.

The New Zealand dollar moved in a narrow range even after China’s trade surplus surged to $31.5 billion in July, the highest level in more than two years and exports rose 20.4% from a year earlier, which exceeded expectations.

Meanwhile, Asian stock markets declined, as lower profit forecasts increased concern that a slowing global economic recovery will crimp earnings.

On Thursday, at 23:30 GMT (Wednesday) New Zealand will release the business performance of manufacturing index for July, and the prior reading was 54.3 in June.

Moreover, the New Zealand consumer confidence index for August is due at 01:00 GMT following a drop of 2.3.

The U.S. trade balance for June will be released at 12:30 GMT, where it’s expected to show a deficit of $47.5 billion from the previous deficit of $50.2 billion.

At 12:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance increased 400 thousand last week.