Forex News

The Cable peaked above the psychological 1.65 level and our 3rd tier trend lines after BBA mortgage approvals and retail sales exceeded analyst expectations while U. S. equities surged to new 2009 highs. However, the GBP/USD has reversed quickly after Prelim GDP came in 5 basis points below expectations (-0.8% vs -.03%E).

Japan’s trade balance came in below analyst expectations late Wednesday, yet surging U. S. equities trumped the disappointing data point as we anticipated. A recovery in U. S. corporate performance implies greater demand for Japanese exports in the future, weakening the Yen and improving prospects of a global economic recovery.
Even though Japan’s trade balance was shy of expectations, we’re pretty encouraged by the swift recovery over the past two releases from recession lows. The data reveals export prospects are picking up as stimulus packages ultimately prop up demand for Japanese exports. Employment markets in the developed economies are improving along with consumption, bringing life back to the Japanese manufacturing sector.

Gold failed to participate in the S&P’s surge yesterday, opting to sink towards our 2nd tier uptrend line on climbing volume. Thursday’s movement in gold shows us the precious metal is more positively correlated with the Dollar than U. S. equities, aiding investors in further correlative deviations between the greenback and equities.

The S&P futures made the confirmation we were looking for on Thursday, propelling from our 2nd tier uptrend line well beyond the psychological 950 level. The futures are leveling off today as investors take some profits amid disappointing earnings from the likes of MSFT, AXP, and AMZN. The markets have also received some disconcerting results from WFC and MS this, week along with fast food giant MCD.

Crude futures had no problem participating in yesterday’s strong rally in U. S. equities. Crude finally left the psychological $65/bbl level behind on climbing volume, stepping over our 2nd tier downtrend line in the process. The futures are presently walking along our 3rd tier uptrend line as they creep back into the June trading range while setting its sights on the psychological $70/bbl level. Crude futures may have a little more gas in the tank even though the S&P futures are waning after negative earnings from AMZN, AXP, and MSFT.

The pair did make a move higher yesterday above a prior swing high, and just fell short of the 95.40.

95.40-95.50 is a major resistance area. A break above indicates a swing higher. 96.00 and 96.40 are the targets (not necessarily today).

Support is at 94.90, 94.60 and 94.30. A sustained break back below of 94.60 would indicate short-term weakness.

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The range continues.

Resistance is at 1.4300 and 1.4335-1.4350. There is little resistance beyond that and rates could surge if that level is surpassed.

Support is at 1.4220, 1.4200, 1.4175, 1.4120 and 1.4100.

Support is likely to be seen by the 1.4165 level, with 1.4120 and 1.4100 likely to provide support beyond.

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The pair traded in a very tight range on Friday, which will likely result in a pop out of that tight range today. Since the range is so narrow (95.03-94.59=43 pips approx.) it is likely we will see a move on both sides of the range. In early trading this week, action has stayed within this tight range.

A break above 95.10 is likely to target 95.50. 95.70 is the resistance beyond.

A break below 94.55 will target 94.15. Support beyond this is at 93.85.

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We are still in a range which started last Monday, and we have seen two false breakouts in that time.

A push above 1.4265 will likely test the highs in the 1.4290 area. A break of 1.4300 will signify an upswing with a target of 1.4460 (not necessarily today). Some intermittent resistance is likely in the 1.4350 area.

Support is likely to be seen by the 1.4165 level, with 1.4120 and 1.4100 likely to provide support beyond.

Forex Analysis by Dr. Sivaraman at ForexPros. com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check Forexpros. com

The S&P futures are on the cusp of a large near-term breakout should they decide to topple our 2nd tier uptrend line, the psychological 950 level, and 2009 highs. However, the futures are shedding earlier gains in consolidation amid psychological hesitation. Regardless, the S&P’s correlations are taking the lead with gold and the EUR/USD busting out from our previous downtrend lines on aggressive movements to the upside. Meanwhile, the 30 Year T-Bond futures continue their slide lower from their near-term uptrend line. Hence, it appears investors are gaining more confidence in the economic recovery, willing to put more money into higher-risk investment vehicles.

The EUR/USD has hit a wall and is consolidating with a downward slope after the Euro Zone’s industrial new orders data showed slight contraction while analysts were expecting a swing to growth (-0.2% vs. 1.9%). The Euro is also digesting the fact that French consumer spending came in higher than expected. However, we believe the EZ INO number is more prevalent since we’ve seen French CS flutter between growth and contraction. Hence, the EU continues to display a theme of disappointing data. Over the past week and a half investors have received discouraging data concerning EU economic sentiment, pricing, and now manufacturing. The economic data shows that although the peak of the crisis may be behind us, the economic return to growth could be a long, steep road.

The Cable is climbing back above our 2nd tier uptrend line despite disappointing CBI industrial new orders data. Today’s CBI data is a bit disconcerting because it counters the gradual improvement since March. In fact, today’s reading of -59 is worse than March’s -58. Present stabilization counters a pullback resulting from a bleak report from the IMF concerning the state of Britain’s budget balance amid spiraling injections of liquidity. Investors are also reacting positively to the BOE minutes released earlier showing the central bank currently has no intention of adding onto its $125 Billion QE program. Hence, the BOE could be thinking about the future by reigning in spending.

The USD/JPY failed in its recent attempt to build positive momentum from our 1st tier uptrend line. The currency pair has since fallen back to our 1st tier downtrend line on declining volume. Though the currency pair is trading comfortably above July lows, investors are hesitant in making a larger, necessary commitment to the upside. Japan will release its trade balance late Wednesday and the data will monitored closely by investors. Analysts are expecting further improvement (0.51 trillion) from last month’s surprising 0.22 trillion surplus.

Gold has popped back above $950/oz to our 1st tier downtrend line as the precious metal builds a new psychological base. However, we do notice some rising action to the downside for a couple hours yesterday, so investors should monitor volume over the next couple sessions to see where interest lies.

The S&P futures have peaked through previous 2009 highs in a key technical development. Meanwhile, volume is climbing to the upside, and the futures are flirting with the idea of making a confirmation move. Today would be key timing for a confirmation, or the bulls may be discouraged with near-term downward sloping consolidation ensuing. Investors are showing moderate hesitation after Morgan Stanley and Wells Fargo cast a shadow of doubt over the impressive 2nd quarter earnings season. Additionally, Britain and the EU each released disappointing industrial new orders data.

Crude futures are stepping up from our 2nd tier uptrend line on a boost of buy-side volume despite weekly inventories coming in 100k barrels heavier than analyst expectations. Regardless of missing analyst predictions, crude inventories continue to decline. As we stated in our previous analysis, crude has been neglected for the most part during the S&P’s huge rally coupled with a broad depreciation of the Dollar. Hence, investors could be making up for lost time with the S&P futures trading just below their fresh 2009 highs.

The pair continues to range (so far) within in a 120 pip range over the last couple of days. A breakout will eventually occur, with the bias being higher overall.

Resistance is at 1.4260 with a break to test 1.4280. A push above 1.4300 would confirm a breakout with the target being 1.4400. Intermittent resistance is at 1.4350.

Support is at 1.4200, 1.4180 and 1.4155. A break below this level is less likely than a break higher, but it could still happen. Further support is at 1.4140 and 1.4100.

Forex Analysis by Dr. Sivaraman at ForexPros. com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check Forexpros. com

The pair jumped in early trading, and is trying to test the 94.40 level. This is an important intra-day level.

A rise above 94.50 indicates a move to test a former swing high at94.80. A rise beyond is not highly likely today, but 95.00 is the resistance beyond.

Support is at 93.80, 93.40 and 93.20.

Forex Analysis by Dr. Sivaraman at ForexPros. com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check Forexpros. com