Forex Tips & Daily Analysis

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USD

Yesterday was an amazing trading day for the USD. The USD saw bullish trends against all its currency counterparts. The increase in the greenback's value was most notable against the EUR as the cross feel from above 1.57 to under 1.56 and against the GBP as the cross fell from the midd 1.99's to under 1.98. The Dollar's rally was sparked by the better than expected S&P/CS HPI Composite-20 and Consumer Confidence Index. Simultaneously, the Crude Oil prices fell sharply, which also helped the USD gain strength.

The two economic releases that were announced yesterday both helped the bullish trends by the USD. The S&P/CS HPI Composite-20, which measures the change in the price of single-family homes in 20 metropolitan areas did drop but less than expected. More assurance was sparked by the Consumer Confidence Index which was forecasted to be lower than the previous reading, but was actually higher at 51.9.The greenback also took advantage of the drop in Crude Oil prices that occurred because of beliefs that record prices are eroding the world's thirst for energy. The strength in the American economy was shown by the Dow Jones and S&P 500 gains of over 2% yesterday.

On tap from the US today, all eyes will be on the very important ADP Nonfarm Employment Change. This estimate by ADP, which measures the estimated change in the number of employed people during the previous month, excluding the farming industry and government, was off last month and was valued at a very low -79K. Today's release is expected to be negative, but not as low as the previous reading and should help strengthen the USD. The other impactful release today will be the Crude Oil Inventories, which are expected to remain negative, but not as low as last week, which will be very interesting for the Crude Oil prices that are on a continuous bearish trend.

EUR

The Euro lost grounds to most of its currency counterparts, besides the CHF in yesterday's trading. It was an interesting day for the EUR, as the only economic data that was released was the German Prelim CPI, which rose and beat the forecast. As the USD saw bullish trends based on its data releases, the EUR took a hit. Adding to the bearish trend of the EUR that was based on its rivals' bullishness was news that came from Slovenia. Slovenia's Economy Minister said on Tuesday the adoption of the euro in 2007 made an important contribution to a rise in the country's inflation which reached a 6-year high in June. Vizjak also noted that rounding up of prices after euro adoption and the difficulties people had in making the transition to the new currency contributed a lot to inflation. As the EUR has been adopted in most of Europe, it was alarming for trades to hear these negatives words coming from one of the new Euro members.

Today should be a quiet trading day for the Euro as there is only one economic release expected to come out of the Euro-Zone. The Consumer Confidence is expected to continue declining as the mood of consumers in regard to economic conditions seems to be weakening in the Euro-Zone. Another important factor for the Euro will be the Crude Oil price, which should see volatility based on the American Crude Oil Inventories and the ADP's effect on the USD's value.

JPY

Besides the bearishness against the USD, the JPY saw bullish trends against all of its other major currency counterparts. The USD was unstoppable because of its economic data and like the Dollar's other crosses, the JPY lost grounds against it, but the JPY showed its strength against its other crosses. The export based Japanese economy took advantage of the drop in Crude Oil prices, which should help lower the transportation prices of the Japanese goods across the world. The only data release that was announced yesterday was the Prelim Industrial Production, which saw a bigger than expected decline in June as makers of cars and semiconductor chip processing equipment cut production to deal with rising inventories and slowing demand.

There will only be one data release from Japan today as the Manufacturing PMI will be announced during late trading. There is no official forecast for this measure and a rising trend will have a positive effect on the nation's currency. Besides the JPY's crosses' trading trends, the Crude Oil will be the other major influence and the Yen will need the bearishness of the Black Gold to continue in order for the JPY to keep strengthening.

Technical Analysis

EUR/USD

The hourlies show that this pair is continuing its bearish rally and indications are that there is still steam left in the downtrend. The pair is in the middle of a very strong downtrend and is testing fresh lows on a daily basis. The support level of 1.5600 has been breached and a bearish cross on the 4 hour cart's Slow Stochastic suggests further bearish move is impending. Going short might be preferable today, as the next target price might be around 1.5500.

GBP/USD

There is a very distinct bearish channel forming on the hourly chart. The Slow Stochastic and the RSI on the hourlies support this bearish notion indicating there is more room in this movement. As well all the oscillators on the daily chart point to this bearish conception. Thus going short might be a preferable strategy for today.

USD/JPY

This pair has through a relatively choppy trading session of late and seems to be unable to pick up a sustained trend. Bollinger bands are widened indicating increased volatility. Indications on the 4H are giving a bullish signal and this pair should target the 108.50 level today.

USD/CHF

The Slow Stochastic on the 4 hour chart formed a bearish cross in the overbought territory. Yet this bearish cross is around the 85 Slow Stochastic zone, indicating that the pair can go in either direction in the next few hours. As such investors are advised to wait for clearer signals before entering the market.

Wild Card

Silver

The Slow Stochastic on the 4 hour chart points towards a current bullish momentum. The daily Slow Stochastic strongly supports this notion. This might be a great opportunity for forex traders to join a very promising bullish trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5685	1.9910	109.00	1.0540	0.9580	0.7965
	1.5655	1.9880	108.70	1.0510	0.9550	0.7935
	1.5625	1.9850	108.40	1.0480	0.9520	0.7905
Support	1.5555	1.9770	107.60	1.0410	0.9440	0.7835
	1.5525	1.9740	107.30	1.0380	0.9410	0.7805
	1.5495	1.9710	107.00	1.0350	0.9380	0.7775

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-30	01:30	AUD	Building Approvals	m/m	-6.5%	1.0%
		Building Approvals Measures the number of new construction intentions. This data is a leading indicator for the construction industry since the issuance of a building permit is one of the first steps in the construction process.
2008-07-30	09:00	EUR	Consumer Confidence		-17	-19
		Consumer Confidence Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. GfK, a leading German market research company, publishes this indicator monthly. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-07-30	09:30	CHF	Leading Index	m/m	1.01	0.96
		Leading Index Measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The index is published monthly by The Conference Board, a leading private US research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.
2008-07-30	12:15	USD	ADP Nonfarm Employment Change		-79K	-58K
		ADP Nonfarm Employment Change Measures the number of new jobs created in the previous month, excluding the farming industry. ADP, a leading provider of employment solutions for businesses, releases this indicator two days before the highly anticipated official Nonfarm Employment Change. ADP claims that this indicator has predictive value in regard to official statistics, but it hasn't yet gained acclaim from traders due to it's short history.
2008-07-30	12:30	CAD	RMPI	m/m	3.1%	3.3%
		RMPI The Raw Materials Price Index (RMPI) measures the rate of inflation for raw materials purchased by manufacturers. A rising trend has a positive effect on the nation's currency because when manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer.
2008-07-30	12:30	CAD	IPPI	m/m	0.6%	1.0%
		IPPI The Industrial Product Price Index (IPPI) measures the rate of inflation for goods as they are leaving the plant gate. Unlike other inflation measures, the IPPI excludes indirect taxes and all costs that occur between the time a good leaves the plant and the time the final user takes possession of it, such as transportation, wholesale, and retail costs.
2008-07-30	14:35	USD	Crude Oil Inventories		-1.6M	-1.2M
		Crude Oil Inventories The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly increase in barrels of commercial crude oil held in inventory by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces.
2008-07-30	23:01	GBP	GfK Consumer Confidence		-34	-37
		GfK Consumer Confidence Level of a diffusion index based on surveyed consumers
2008-07-30	23:15	JPY	Manufacturing PMI		46.5	*
		Manufacturing PMI The Manufacturing Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the manufacturing sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.