EUR/CHF Technical Analysis August 18, 2011

EUR/CHF had a wild day on Wednesday as the Swiss National Bank announced a series of ideas to keep the Franc down against the Euro. However, a lot of traders expected a peg, so this was actually very bearish for the Franc. During the day we saw that sentiment change a bit though, and because of that – we exited the day fairly flat.

We think the 1.15 area should be rather resistive, and would be willing to sell on weakness at this level, but we are not seeing it currently. 1.20 would be the next possible selling opportunity in this pair. With all of the problems in Europe, one feels it is only a matter of time before this pairs starts to fall, overwhelming the Swiss National Bank yet again.

AUD/USD Technical Analysis August 18, 2011

The AUD/USD pair rose above the 1.05 level, and managed to hold above that level on Wednesday. The pair now looks set to try and reach the 1.0750 level as the gold market is strong, and the USD is weak in general. The pair is now becoming a bit of a “buy on the pullbacks” type of currency pair again, and as such – we will trade it that way.

A break below 1.05 could get buyers to come back in, especially at the 1.02 level which should be support. Parity is important as well – naturally. The fundamentals in AUD are firmly tied to China as it supplies that country with a lot of its raw materials, and as long as China remains bullish – so does Australia.

USD/CAD Technical Analysis August 18, 2011

The USD/CAD pair fell below the all-important 0.98 level on Wednesday, only to bounce back up and above it. The resulting candle looks a lot like a hammer and as such, we think this pair could consolidate in the 0.98 to 0.99 level yet again. The oil markets are vital to this pair, and they are going to have to overtake the $90 level in the CL contract in order to push this pair lower.

However, we should note that the trend is certainly down, and a bounce from here has a long way to go before that changes. Because of this, we like selling on a close below 0.98 or a failure to break above parity.

NZD/USD Technical Analysis August 18, 2011

The NZD/USD pair rose on Wednesday, but managed to fall slightly at the end of the session. The pair is decidedly bullish, and it appears we could be building a bit of a base between 0.80 and 0.83 from which to launch the next bullish move. However, is also should be said that the pair looks like it might take a while to do this.

The NZD/USD has a long history of going nowhere for a long period of time, and then exploding in one direction or another. This is because the market for the Kiwi is relatively small, and as such – the moves become a bit more explosive. We recommend buying on the dips in anticipation of a large move to the upside.

USD/CAD Daily Fundamental Analysis for August 18, 2011

The USD/CAD pair fell on Wednesday, where rising risk appetite around global financial markets supported demand for higher yielding assets, as commodities including crude oil prices rose on Wednesday, which provided the Canadian dollar with strong momentum to rise against the U.S. dollar, and accordingly, pushing the USD/CAD pair to the downside.

The uncertainty 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 for long, since risk aversion will provide the USD/CAD pair with the needed bullish momentum.

Thursday August 18:

The United States at 12:30 GMT will continue with inflation data and the Consumer Price Index for July which is expected with 0.2% rise following 0.2% drop to an annual 3.3% from 3.6%. Core CPI inflation is expected with 0.2% rise in July to an annual 1.7%.

Also at 12:30 GMT the weekly jobless claims are due after last week’s unexpected decline to 395 thousand.

At 12:30 GMT, Canada will release the wholesale sales index for June, where wholesale sales increased by 1.9% back in May.

At 12:30 GMT, Canada will also release the leading indicators for the month of July, where the leading indicators expanded by 0.2% back in June.

The busy U.S. day will continue with the leading indicator for July at 14:00 GMT and is expected to ease to 0.2% following 0.3%.

Existing home sales for July are also due at 14:00 GMT and expected with 2.7% rebound to 4.90 million from 4.77 million.

U.S. Markets Gain on Improving Confidence, While European Debt Crisis Jitters Continue

Mixed sentiments spread through global financial markets on Wednesday, where U.S. equity markets rose by opening supported by better than expected earnings, and rising energy prices, which boosted energy shares, while European markets will still feeling some pessimism, as traders were concerned over the outlook of the European debt crisis, despite talks between French President Nicolas Sarkozy and German Chancellor Angela Merkel, since investors doubted the two leaders will be able to solve the European debt crisis from spreading into the Euro Zone region.

Meanwhile, the United States released the producer price index for the month of July, where PPI showed that pries pressures mounted in July at the fastest pace in six months on higher tobacco and light truck prices.

Stocks in the United States rose by opening on Wednesday, where the Dow Jones Industrial Average was up by nearly 0.80% to trade around 11,500, while the S&P 500 index was up by nearly 1.20% to trade around 1207. European stock indexes were mixed before closing on Wednesday, where FTSE 100 was down by nearly 0.20% to trade at 5346 and the DAX was down by nearly 0.55% to trade around 5961.

The U.S. dollar fell against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 73.53, compared with the opening level at 74.05. The Euro rose against the Dollar, where the EUR/USD pair rose to trade at $1.4499, compared with the opening level at $1.4380, and the British Pound extended its gains against the Dollar for a fifth day, where the GBP/USD pair traded around $1.6550, compared with the opening level at $1.6442.

Gold prices gained on Wednesday, as gold rose to trade around $1792 an ounce, and crude oil prices rose to trade around $88 a barrel.

GBP/USD Daily Fundamental Analysis for August 18, 2011

On Wednesday, the pound pared its earlier drop against the dollar after a report showing thatU.S.producer prices advanced 0.2% in July compared with the prior month’s 0.4% drop.

The sterling fell earlier on Wednesday after the release of a lackluster job report which showed that jobless claims rose to 37.1 thousands in July, the highest level in more than two years, to 1.56 million, from the revised 31.3 thousands, while ILO unemployment for the three months through June inclined to 7.9% from 7.7%.

The grim report worsened the outlook for the British economy, especially after the BoE had lowered growth and inflation outlook last week. Other releases from theU.K.showed that the vote for August’s rate decision was unanimous on holding interest rate at record low as both Dale and Weale joined the majority as the outlook for the economy weakened, according to the BoE minutes.     

On Thursday, at 08:30 GMT, theUKwill release retail sales for July; analysts are predicting a decline to 0.5% in the reading with auto fuel from 0.7% in June.

Lower-than-expected retail sales figures may cause some downside pressure on the pound, especially after the grim unemployment data released on Wednesday.

For theUS, eyes will be on a batch ofUSdata including important inflation data 12:30 GMT which is CPI which is expected to edge down to 3.3% in the year ending July from 3.6%. At the same time theUS, initial jobless claims for the week ending August 12 and continuing claims for the week ended August 6 will be available. Thereafter, particularly at 14:00 GMT, Philadelphia Fed, leading indicators and existing home sales will be out. 

The news is expected to have an impact on the pair as the investors are tracking the latest development in theU.S.economy amid the undergoing sluggish growth pace engulfing global econmeis.

 

USD/CHF Daily Fundamental Analysis for August 18, 2011

On Wednesday, the dollar fell against the franc, for the first time after four sessions of incline despite the new measures announced by the SNB to halt the franc’s advance.  

The SNB said on Wednesday it would raise sight deposits to 200 billion francs from 120 billion francs, repurchase outstanding SNB bills, and adopt foreign exchange swaps, plus it revealed that it may take further measures if needed.

However, these measures were reckoned as weak compared with expectations to see a target level or pegging the franc to the euro, causing the franc to strengthen.  

On Thursday, eyes will be on a batch ofUSdata including important inflation data 12:30 GMT which is CPI which is expected to edge down to 3.3% in the year ending July from 3.6%. At the same time theUS, initial jobless claims for the week ending August 12 and continuing claims for the week ended August 6 will be available. Thereafter, particularly at 14:00 GMT, Philadelphia Fed, leading indicators and existing home sales will be out. 

The news is expected to have an impact on the pair as investors, meanwhile, are tracking the latest development in theU.S.economy amid the undergoing sluggish growth pace engulfing global econmeis.

The outlook for the pair will depend on whether the SNB will be able to continue its monetary intervention which is against the bearish market sentiment that is enhancing demand on the franc as a refuge.

EUR/USD Daily Fundamental Analysis for August 18, 2011

The EUR/USD continues to the choppy trading and fluctuated heavily on Wednesday following the unproductive meeting between Merkel and Sarkozy.

The market was disappointed after the leaders refrained from any comments on a joint euro bond, expanding the EFSF or other decisive measures leaving their pledge the only means to calm markets and that they will intensify the pressure on realizing fiscal consolidation and as laws in the region.

Still, the measures are not convincing to investors, their pledge for tougher deficit rules, harmonized tax rates, plans to resubmit financial transaction tax are all measures to ensure future stability and not close to resolve the current crisis.

The pair fluctuated and the euro strengthened on its rivals weakness which further pressured the dollar in a relief move and after rising inflation in the US contradicted the slowing price pressure in the euro area, confirming the steadier economic path at least, as inflation is the last thing the Fed needs to take action.

We still see broad downside pressures evident and the euro to remain weak on the mounting debt woes as the market sentiment is still fragile and affecting trading strongly.

On Thursday, the euro area will release the construction output for June at 09:00 GMT following 1.1% slump in May.

The United States at 12:30 GMT will continue with inflation data and the Consumer Price Index for July which is expected with 0.2% rise following 0.2% drop to an annual 3.3% from 3.6%. Core CPI inflation is expected with 0.2% rise in July to an annual 1.7%.

Also at 12:30 GMT the weekly jobless claims are due after last week’s unexpected decline to 395 thousand.

The busy U.S. day will continue with the leading indicator for July at 14:00 GMT and is expected to ease to 0.2% following 0.3%.

Existing home sales for July are also due at 14:00 GMT and expected with 2.7% rebound to 4.90 million from 4.77 million.

EUR/CHF Daily Fundamental Analysis for August 18, 2011

Trading was very volatile on Wednesday for the EUR/CHF after the Swiss National Bank indulged in more easing to offset the pressure on the franc and stem its record appreciation.

The SNB on Wednesday said it will expand the current measures to count the franc’s rally, as the bank decided to expand the sight deposits yet again to 200 billion franc from 120 billion and said would act again if further measures are needed to halt the currency’s strength.

Swissy remained somehow strong and is still holding against the euro with the deepening debt crisis. On Thursday the reaction to the SNB’s move might start to take place as on Wednesday the franc was not much weaker as investors saw the move fell short from their expectations from fix currency rate or a peg as they anticipated.

More measures are to follow from the SNB and the government and although the volatility is high we still see the franc gradually starting to respond to the easing measures by the SNB after it took rates to zero and extended the swap operations to expand the money supply.

The focus will be on the sentiment with the lack of major data on Thursday. We only have the euro area will release the construction output for June at 09:00 GMT following 1.1% slump in May.

Caution Keeping Gains Limited

Forex markets witnessed limited gains today, since investors were encouraged to avoid safe haven due to the rise seen this morning in the equity markets; yet the uncertainties surrounding the outlook for global growth is putting negative pressures on the higher yielding assets.

The European debt crisis plays a big role in the caution prevailing on markets. The French and German meeting in Paris proved ineffective yesterday. Merkel and Sarkozy proposed a eurozone government to oversee EU’s finances for a greater economic discipline within the European nations.

But since no immediate financial measures to counter the accelerating debt crisis in Europe were seen and no other details were revealed, market participants were disappointed, which brought losses to the euro and the European stocks early this morning.

But as the day passed investors were encouraged by the rising equity markets in Asia, which rose on improved earnings, while in Australia a report indicated that wages grew at a faster pace which improves the country’s economic outlook. This drove the AUD higher today, trading around 1.0526 as of this writing.

As investors started targeting the higher yielding assets once again, the euro rose today and now is trading around 1.4430. The pound however fell trading around 1.6405 after the jobless claims rose in July, while BoE minutes indicated that there were no votes for a rate hike this month.

The dollar index is trading with a downside bias around the 73.80 level. The U.S. will release today its PPI report for July in addition to the EIA crude oil inventories data expected to show an improvement from last week, giving an upside push to oil prices, which is trading around $87.78 level.

The Japanese yen, the CHF and the precious metal continued to climb, showing that caution is still present, where the yen is trading around 76.54, gold is trading around $1792.85, while the Swiss Franc is trading around the 0.7860  level especially after the fresh SNB steps were disappointing.

USD/JPY Daily Fundamental Analysis for August 18, 2011

The USD/JPY pair retreated early Wednesday reaching its pre-intervention levels, as market jitters remain which drove investors to increase demand for low yielding currencies.

On the other hand, the Japanese currency advanced against other majors despite comments from the Japanese Finance Minister saying that the government is monitoring the yen’s movements, and another intervention in the FX market could be witnessed.

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

On Thursday at 23:50 GMT (Wednesday), Japan will release the merchandise trade balance for July, where it’s expected to show a surplus of 71.0 billion yen from the previous surplus of 70.7 billion yen.

The adjusted merchandise trade balance for July had a previous deficit of 191.2 billion yen and expected to show a deficit of 152.5 billion yen.

At 05:00 GMT, Japan will release coincident index for June, where it had a previous reading of 108.6, while the leading index for June had a previous reading of 103.2.

The U.S. economy is to release the consumer price index for July at 12:30 GMT, where it is expected to rise by 0.2% following 0.2% drop, and on the year expected at 3.3% from the prior reading of 3.6%.

At 12:30 GMT, U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance eased to 395 thousand last week.

The U.S. leading indicators for July will be released at 14:00 GMT and expected with 0.2% rise following 0.3%. The Philadelphia Fed for August is expected to come at 4 from the prior reading of 3.2.

At 14:00 GMT, the U.S. economy will release the existing home sales for July, where it’s expected to come at 4.94 million rising 3.5% from the previous 4.77 million.

NZD/USD Daily Fundamental Analysis for August 18, 2011

The New Zealand currency, nicknamed Kiwi, declined to the most level in two days against the dollar after the nation reported that the producer input prices declined at a slower pace, output costs rose.

The nation witnessed some improvement in the second three months after the natural disasters that hit the economy. Further, the European crisis along with the sluggish U.S. economy growth had affected the recovery outlook.

The New Zealand economy is on track, where higher consumer spending and employment add to evidence the nation’s economy grew modestly in the first quarter, buoyed by record-low interest rates and a surge in commodity prices. Continued growth in domestic demand this year may prompt central bank Governor Alan Bollard to raise interest rates as early as the fourth quarter.

On Thursday the U.S. economy will release the consumer price index for July at 12:30 GMT, where it is expected to rise by 0.2% following 0.2% drop, and on the year expected at 3.3% from the prior reading of 3.6%.

At 12:30 GMT, U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance eased to 395 thousand last week.

The U.S. leading indicators for July will be released at 14:00 GMT and expected with 0.2% rise following 0.3%. The Philadelphia Fed for August is expected to come at 4 from the prior reading of 3.2.

At 14:00 GMT, the U.S. economy will release the existing home sales for July, where it’s expected to come at 4.94 million rising 3.5% from the previous 4.77 million.

AUD/USD Daily Fundamental Analysis for August 18, 2011

The Asian stock markets continued their downside movements which had a negative impact on the Australian dollar (Aussie) that dropped against the U.S. dollar for a second day in a row.

Moreover, major Asian currencies move in a narrow range, while the Australian dollar dropped versus its U.S. counterpart as the global economic recovery is losing momentum pressing investors to abandon higher yielding investments.

Aussie curbed its losses after the nation reported its wage price index (which measures hourly pay rates excluding bonuses) rose in line with economists’ expectations in the second quarter and a leading economic index was little changed in June.

On Thursday, Australia will end the week with its average weekly wages (QoQ) due at 01:30 GMT and expected to hold at 1.0% in line with the previous.

The U.S. economy is to release the consumer price index for July at 12:30 GMT, where it is expected to rise by 0.2% following 0.2% drop, and on the year expected at 3.3% from the prior reading of 3.6%.

At 12:30 GMT, U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance eased to 395 thousand last week.

The U.S. leading indicators for July will be released at 14:00 GMT and expected with 0.2% rise following 0.3%. The Philadelphia Fed for August is expected to come at 4 from the prior reading of 3.2.

At 14:00 GMT, the U.S. economy will release the existing home sales for July, where it’s expected to come at 4.94 million rising 3.5% from the previous 4.77 million.

EUR/USD Technical Analysis August 17, 2011

The EUR/USD held up surprisingly well on Tuesday, even though French leader Sarkozy and German leader Merkel didn’t accomplish much with their meeting. One would have thought with the debt crisis taking center stage that the meeting would have been more important. However, the idea of a Euro bond has already been scoffed at by the Germans, so that did let some of the air out of the meeting.

The pair still looks like it wants to break to the upside as it fell on Tuesday, only to rise again to form a hammer. The breaking of the 1.45 level on a daily chart confirms that we are header much higher. Otherwise, a break of the low on Tuesday sends this pair back towards 1.40 or so.

USD/JPY Technical Analysis August 17, 2011

The USD/JPY pair continues to sit in a stagnant fashion as the psychological game between the trading world and the Bank of Japan continues. The threat of intervention by the BoJ continues to keep this pair from falling much farther than the 76 handle, but few are willing to buy the Dollar against the Yen either. Because of this, the pair looks “stuck” to us as the traders have simply left this market. Because of this, we are waiting for a large candle in order to pick a direction. Until then, there are going to be better pairs to trade.

GBP/USD Technical Analysis August 17, 2011

The GBP/USD pair continued to climb on Tuesday as traders were pleasantly surprised by a slightly higher than expected inflation report out of the UK this week. The pair still is stuck between the 1.65 and 1.60 levels, but pressure is increasing to the upside in general, and it might only be a matter of time before the level gives way. The real fight then would be fought between 1.65 and 1.70, which is a much more formidable area to deal with. We would advise letting the Wednesday candle print before making any decisions in this pair although it looks like 1.65 would more than likely hold, it has to be noted the latest fall only went as low as 1.61, and not the bottom of the range. This can often signal a break out coming. At the close on Wednesday, we should have more clarity.

USD/CHF Technical Analysis August 17, 2011

The USD/CHF pair had a bullish day on Tuesday as session saw a retest of the bullishness on Monday. The Swiss National Bank is set to make an announcement on Wednesday as to their intentions to devalue the Franc. This has the markets on edge, and traders are simply not willing to buy the Franc because of this. The truth is that this pair needed a pullback from the massive downtrend, and this move makes a lot of sense. Of course, the announcement on Wednesday will be crucial, so any positions before seeing that and more importantly the reaction – would be foolish as this is likely to rock the markets back and forth.

EUR/CHF Technical Analysis August 17, 2011

The EUR/CHF pair is without a doubt one of the most interesting pairs in the FX markets right now. Tuesday saw this pair fall slightly, but rise in the end, testing the 1.15 area again. The 1.15 area seems to be relatively resistive, and might be the key for further upside.

The Swiss National Bank is expected to announce measures to stem the rise of the Franc against the Euro (and other currencies) on Wednesday, and as such – we think this market will be very volatile and dangerous during the Wednesday session. If the announcement is made, and the pair cannot rally above 1.15 for any significant amount of time – this becomes a screaming sell. If it does rise above that level – the pair is best left alone in our opinion.

AUD/USD Technical Analysis August 17, 2011

The AUD/USD pair fell on Tuesday as the markets in general did, but then found a bid late in the day to form a bit of a hammer. Although it is at the top of the recent range, the candle means the same thing – potential bullishness. One of two things can happen here: Either the candle breaks to the upside, and we see that as a bullish move up to about 1.0750 or so, or we get a break to the downside, making that candle a “hanging man”, a very bearish signal indeed. The trend is up, so knowing that – you know which direction is more likely. However, waiting until one of the ends of the candle gets broken is the wise thing to do.