FX Trading — LaidTrades

The Decade of the Philippine Peso?

A lot of people are asking, will the Philippine peso continue to strengthen against the US dollar? Based on its monthly chart, I’d say that there’s a good chance that it will especially if the USDPHP pair breaks the 43.668 support. If and when it does, the next obvious support would not be at 42.00 as some financial analyst predict but at 40.00. Say the peso buying in tandem with the dollar selling continues and the 40.00 marker gets breached as well, then the pair’s next downside stage would be at 37.50. Actually, I do not want to alarm those who are highly leverage in the greenback. Notice, however, the huge head and shoulders pattern that could be forming already. If this pattern gets validated by a break below 40.00 then it is quite possible that the peso could recover its former glory back in its hay day and trade near the 26.00 versus the USD once again.

The question is, will the Banko Sentral ng Pilipinas (Central Bank of the Philippines) allow the Philippine Peso to appreciate that much? Well, the BSP is not a rookie in protecting the peso. It already defended the peso’s increase in valuation in the past to protect the country’s export industry, foreign direct investments, and the money that the Overseas Filipino Workers (OFWs) are sending back. Hence, it is possible for the BSP to do the same. If it does, then the greenback could rally back towards 46.00 or even 48.00 versus the peso. Still, the global market has the bigger influence regarding the peso. So, continued increase in remittances, which by the way takes up a good chunk of the country’s total income, plus the broad-based weakness in the USD (this was explained in my recent post, please see it here) would benefit the PHP. Companies all over the world are expected continue to lessen their operating costs, thus, supporting the Philippines’ BPO industry and its FDIs in general. Such would also reflect positively in the peso.

Would a higher peso valuation benefit the Philippines? The Philippines is not really an export-based country so even if the country’s export sector gets negatively affected, it would not reflect badly on its overall output. For the longest time, majority of the country GDP is from domestic consumption. Hence, an increase in the peso’s valuation would even encourage more consumption as imports would then be cheaper. Cheaper imports of course would allow local companies to better access and purchase technology that were once scarce, making the processes of the local industries more efficient. Such could also allow local companies to develop their technology which would mark the country’s move from a ‘third world’ country to at least second. Now, will that scenario happen within the next decade? Only time will tell but I’m optimistic that it will.

EURO To Rise By A Whopping 1,250 Pips Against the US Dollar?

Hiyo FX peeps! Did I get your attention? Yes. I believe that its very likely that the EURUSD pair could gain by about 1,250 pips. Now that’s a lot! As you can see from its daily chart, the fiber has recently broken out from a very nice cup and handle formation. At present, the pair is trading just above the neckline of the pattern. With the stochastics in the overbought territory, it could exchange in a range-bound fashion for awhile before moving north. Now, a move past the 1.3500 resistance could send it on the way towards its minimum upside target (computed by projecting the height of the pattern from the point of breakout at 1.4750. If all go well, it could achieve this target in about 6 months which is also the time that it took to form the pattern.

Despite the recent dip in Europe’s Purchasing Managers’ Indices (PMIs), the business climate in Germany as measured in the German Ifo Business Climate Index surprisingly jumped to its highest score in more than three years this month. The index came in at 106.8 which is over the market’s 106.3 estimate. This rise indicates that German companies can withstand the weaker international demand. On the other side of the globe, in the US, the Fed’s inclination to place another set of stimulus programs to support the slowing growth in the US’s economy has of course weakened the greenback to the benefit of the other non-dollar currencies like the EUR. This plus the rally in the US equities markets have also urged investors to move away from the USD in exchange of the higher yielding assets and anti-dollars like the euro.

Just now, the US’s core durable orders for the month of August have grown by 2.0%, which is almost twice of the 0.9% forecast. The previous month’s change was also positively revised to -2.8% from -3.8%. These numbers signify that the chances of the earlier threat of a double dip recession in the US economy have gotten lesser and lesser.

For next week, the CB Consumer Confidence in September is seen to fall to 52.5 from 53.5. But given the strong rally in the global equities markets for the past two weeks which show the manifestation of consumer confidence in the markets, it is therefore possible for the index to have a better-than-expected result. A better-than-projected mark, as we know, could spur some risk taking and EUR buying.

Swiss Franc, Pausing Before Making Another Move North?

Hiyo FX friends! Here’s my short and sweet technical view on the CHFJPY pair. As you can see from its daily chart, the pair has broken out from a rare inverted head and shoulders continuation pattern. You see, an inverted head and shoulders pattern is generally a bullish reversal pattern although it can occur as a continuation from time to time as in this case. In any case, the upside target for the pair, judging by the height of the pattern and projecting it from the point of breakout, would be somewhere below 88.00. Sustained buying interest could push it over to that marker. At present, though, the pair’s move up north could take a halt given its overbought condition. Given this, it is possible for the pair to range or even retrace for awhile. If ever it weakens, the neckline of the previous formation should keep it afloat. Still, I could more or less say that things are looking up for the Swiss franc in the near term. Long Swiss franc anyone?

Australian Dollar To Rise By 10% Against the Yen?

It’s another manic week Forex friends! In today’s FX feature I present to you the daily chart of AUDJPY. As you can see, the pair has recently broken out (upside) from a nice symmetrical triangle formation. This breakout could swing the pair towards its previous high near the 88.00 marker. Projecting the base of the triangle from the point of breakout, the resulting upside target would be at 88.00 as well. The Aussie’s run, however, may be tempered for awhile because conditions are already overbought. The pair could range or retrace shortly before heading north again. And given it’s recent spike, it could potentially form a flag or a pennant pattern. At present, the AUDJPY pair is trading just above 80.00. Therefore, if it reaches 88.00, that would be a sweet 10% gain (1:1 margin).

The recent rally in the global equities market and gold’s rush towards fresh all-time high (see my recent post here) have helped the commodity dollars like the AUD. For this week, no high impact economic reports are due from Australia. The major releases, though, from the US, Canada, and New Zealand would more likely sway the Aussie’s short term movement. The US Fed, of course, will have its monetary policy decision on September 21. Building permits, new and existing home sales plus durable goods orders are due as well from the US. In Canada, the country’s CPI and retail sales accounts are on deck on September 21 and 22. New Zealand, Australia’s neighbor, will likewise publish its second quarter GDP growth. Risk appetite, resulting from one or all the these accounts could benefit the non-dollar currencies like the Aussie. The opposite, however, would weigh on it. Watch out for these reports!

Is the Euro Back on the Bullish Track?

Well, well, well. The EURUSD pair or the fiber as what traders call it in the streets appears to have broken out from a rectangle or consolidation. You see, the had been trending up from a low of 1.1876 last June 7 to a high of 1.3334 in August before correcting. All along I thought that the pair would already reverse but it did not. What it did was it only corrected to its 50% Fibonacci retracement level. It then continued to range or trade sideways until yesterday where it broke out to the upside when it finally breached the 1.2900 hurdle. However, the pair seems to be meeting some temporary resistance at 1.3000. If and when it moves past this number, chances are it would once again revisit its previous high just above 1.3300. Given the upside breakout, I can say that there is now a higher probability that the euro will move higher against the US dollar in the near term.

Germany’s September Zew economic sentiment index came in sour, unexpectedly falling to -4.7 (vs. 10.7) from from 14.0. The same sentiment index for the entire euro zone also slipped to 4.4 from 15.8. The slide in confidence can be attributed to the wide budget cuts done by the governments that make up the economic zone. Remember that the zone was being plagued with a credit crisis. One way to plug the countries’ deficit holes would be to drastically slash their spending. A cut in spending would obviously limit the business activity in the region but given Europe’s present fiscal situation, such move is really warranted.

Despite this, the euro still managed to outmaneuver the greenback thanks to the better than expected US core retail sales. Core retail sales in August grew by 0.6% which is twice of the market’s 0.3% consensus.

No high impact economic reports are due from the euro zone for the rest of this week. The euro, however, could take its cue from the releases from the United States. Today, the Us will publish its Empire State manufacturing index and its August industrial production. The former is seen to have reached 8.7 from 7.1 while the latter is expected to have increased again by 0.3%. The expected improvement in the Philadelphia Fed manufacturing index (from -7.7 to 0.9) which will be due tomorrow and the projected jump in the Prelim UoM Consumer Sentiment (from 68.9 to 70.3) could also induce some risk taking. Watch out for these reports.

Swiss Franc Flirting With All-time High Against the Greenback

Welcome to another day of FX trading! In today’s fx feature is the weekly chart of the USDCHF. As you can see, the pair has been losing a lot ground for several weeks now. After hitting a high of 1.1731 last May 31, it has slid since then. In fact, it had already touched the parity level early today. Still, previous supports around the 1.0000 psychological level have kept the price from falling any further. If if the 1.0000 marker gets breached, the pair could revisit its 1-year low at 0.9916. A break of this low could send it towards the pair’s all time low at 0.9635. But with investors protecting the price at 1.0000 and an oversold condition, the pair could, however, stage a rally.

Renewed confidence in the global markets have weakened the dollar’s valuation against its peers as of late. Both the DJIA and the broader S&P 500 have again logged in some beautiful gains yesterday, rising by 0.78% and 1.11%, respectively. Yesterday’s jump in confidence which was reflected in the rise in the equities markets was because of the Basel III agreement that was concluded yesterday. The Basel III is an international regulatory code that requires banks to raise their common equity to 4.5% from 2.0%. This equity will be used by the banks as buffer in case they encounter liquidity problems from say investor withdrawals and the like. In the East, China’s handsome industrial production (13.9%) and retail sales (18.2%) growth further supported the market’s optimism.

The highlight of this week for Switzerland is the Swiss National Bank’s monetary policy decision on Thursday (September 16). The SNB is expected to keep its interest rate unchanged at 0.25%. The bank, though, is very notorious in intervening in the fx market to prevent the Swissy appreciation. They do so because a higher Swissy negatively impacts their export industry. With the Swissy trading at an all-time high against the euro and flirting with historical highs versus the Us dollar, the SNB could indeed meddle in the market. If it does, then a sudden spike against the Swiss franc could occur. Nonetheless, even if the SNB intervenes, its effect would just be temporary. Market sentiment is still stronger and as long as optimism remains, the Swissy could strengthen still.

The Aussie’s Due For a Retracement

Happy weekend FX people! On today’s FX feature is an update of the AUDUSD pair which I posted last September 5 (please see it here). As you can see, the pair has continued to rise within an ascending channel. And as I’ve suggested, the pair indeed rose to mark its fifth wave (wave 5). If the Elliot Wave Principle holds true and if my wave counting is correct then as the theory suggests, the pair should be due for a retracement. Remember that the EWP predicts a correction in the prices after the completion of the fifth wave, starting with wave A and ending with wave C. And given the obvious technical resistances ahead and an overbought condition as indicated in the stochastics, the pair could indeed dip or at least move sideways. If the Aussie weakens against the US dollar, the peak of the third wave around the 0.9200 level and the channel’s support should keep it from falling further.

The Aussie along with the non-dollar currencies rose this Friday due to the better-than-expected July wholesale inventories report in the US. Wholesale inventories has risen by 1.3% as compared to the 0.4% market forecast. China’s better-than-projected industrial production (13.9% vs. 13.1%) , retail sales (18.4% vs. 18.0%), new loans (545 billion vs. 500 billion), M2 money supply (19.2% vs. 17.5%), and the slower PPI (4.3% vs. 4.6%), have also helped the Aussie. Remember that Australia is one of the biggest supplier of raw materials to China. Hence, an increasing business activity means more business for Australia. A weaker PPI, in the same way, benefits the Aussie since a monetary tightening by the Chinese government would be postponed which would allow for business to go on without additional restrictions as of the moment.

For the coming week, no market moving events are scheduled in Australia. Given the lack of economic reports from the country, investors could take this as a chance to pocket some of their profits from their long Aussie positions.

Canadian Dollar Remains Weak Versus the Yen Despite BOC Rate Hike

Good day FX peeps! To cap the week I present to you an update of the CADJPY. You see, the pair has consolidated within a small symmetrical triangle after it broke down from a bigger descending triangle formation. As of the moment, the pair is already nearing the apex of symmetrical triangle. This suggests that a break out whether to the upside or to the downside is imminent. But given the pair’s general trend (downtrend) and its recent break down from a descending triangle formation, I can say that it has a higher chance of moving south than north. Even it breaks the resistance of the small triangle, a solid resistance is still present at the 82.00 marker which incidentally is also the former support of the previous descending triangle to push back down. In any case, a move below the support of the present triangle could send it back to the previous low at 78.41. A move above the 82.00 level, on the other hand, could change the pair’s course to at least sideways.

In my post last September 6 (please see it here), I mentioned that it’s possible for the Bank of Canada (BOC) to hold its interest rate unchanged rather than hiking it. However, I was proven wrong when the central bank actually raised its benchmark interest rate as expected by the market by 0.25% to 1.00% from 0.75%, making the interest rate differential between the Canadian dollar and the Japanese yen wider. This decision, though, was not enough for the CADJPY to break key resistances at its long term downtrend line and at 82.00 as it only increased from an opening of 79.93 to close at 80.96. Yesterday’s weaker-than-projected housing starts number (183k vs. 185k) and the worsening of Canada’s trade balance figure to -C$2.7 billion from -C$1.8 billion did not help as well.

Canada’s employment change and unemployment rate for the month of August are on deck today at 11:00 am GMT. Canadian firms are seen to have added about 30,800 jobs in August after laying about 9,300 during the previous month. The country’s jobless rate, though, is still projected to remain the same at 8.0%. Generally, an improvement in Canada’s labor market is bullish for the economy and the Loonie. But is the expected increase in employment or better enough for investors to push the CADJPY above 82.00? Let us see.

Singapore Dollar Trading At An All-Time High Versus the US Dollar!

Good day Forex friends! In today’s FX special, I present to you the monthly chart of the US Dollar versus the Singapore Dollar (USDSGD). As you can see, the USDSGD pair has been sloping downwards for quite some time now. Last Friday, however, it was able to cross below the psychological 1.3500 support, marking a new all-time high for the Singapore dollar. With an oversold condition (as indicated in the stochastics), the pair could still rally. Though the long term downtrend line should keep it from rising further. A potential descending triangle could be forming if that scenario occurs. In any case, a clear break below the 1.3500 support could send the USDSGD pair lower by about 4,000 pips! Long SGD anyone?

Last week’s better-than-expected employment and housing figures in the US have sparked some risk taking among investors, causing them to leave the safety of the greenback for the like of the SGD. Singapore is actually a highly developed economy in Asia despite its size which makes it a prime place of investment. Everyone knows about the double digit growth in China but Singapore is actually the fastest growing economy in the world, expanding by 17.9% for the first half of 2010! In any case, some analyst say that the Monetary Authority of Singapore (MAS) would intervene in the market to prevent the SGD’s rapid appreciation in order to protect the country’s export industry which is its main source of revenue. But if risk taking persists, a higher valuation of the Singapore dollar could be very well tolerated.

Australian Dollar’s Silent Rise

Good day to you my fellow FX men and women! Today I present to you the daily chart of the AUDUSD. As you can see, the pair has been trading within an ascending channel since the middle of May 2010. Of course, the pair would more like trend higher as long as the channel’s support does not buckle. The Aussie, however, could meet some resistance at the pair’s previous high near the 0.9200 level. With the stochastics in the overbought area, it could rest for a while before making another move to the north. A move past the 0.9200 level could push it towards 0.9300. The Elliot Wave Principle (EWP) also seems to confirm this potential price action. If my wave counting is correct, the AUDUSD could already be in its fifth wave. This then suggests that the next short term up-move would more likely surpass the peak at 0.9200.

Recent economic data in Australia goes to support the positive sentiment towards the Aussie. For one, the corporate profits of Australian firms for the second quarter of the year have unexpectedly soared by 18.9% compared to the market’s 5.9% growth forecast. The firms’ 1Q scores were also positively revised to 4.3% from 3.9%. The country’s building approvals have also expanded for the first time in 5 months. The account surprisingly rose 2.3% in July after dipping by 3.4% during the previous month. Retail sales for the same period have also shown some good figures, expanding by 0.7% in July and 0.4% in June. More importantly, the country’s second quarter gross domestic product (GDP), has surpassed the market’s 0.9% forecast with a 1.2% growth. the first quarter’s overall output expansion was also revised upwards to 0.7% from 0.5%.

On Tuesday (September 7), the Reserve Bank of Australia will have its monetary policy decision. While the bank is still expected to hold its benchmark interest rates at 4.5%, the bank’s tone would more likely lie towards the hawkish end of the spectrum given the improvements economy. Any positive outlook regarding the country would of course be bullish on the Australian dollar as well.

The Aussie Bears’ Return – August 25, 2010

It’s a bad day for the Aussie bulls since it seems that the bears have just taken over the trading driver seat. As you can see from the AUDUSD’s 4-hour chart, the pair appears to have broken down from a head and shoulders pattern. Remember that the Australian dollar had risen to as much as 0.9200 over the greenback early this month after touching a low of just above 0.8100 in June. though, by the looks of it, it’s luck has already turned. Yesterday’s movement pushed the prices below the pattern’s neckline and also under the previous resistance-turned-support. Given this, the price could head all the way down to 0.8500 though the previous support at 0.8600 could possibly halt its descent. In any case, things still look bearish for the AUD unless it is able to move back up above the neckline.

Due tomorrow (August 26) at 00:00 GMT and at 1:30 am GMT are Australia’s Conference Board leading index for the month of June and the country’s second quarter private capital expenditure. The CB leading index had risen by 0.3% in May though it could print a lower gain or even a contraction given Australia’s weak home loans figure and the country’s high unemployment rate. In case you do not know, home loans have fallen by 3.9% in June after posting a jump of 3.0% during the other month. Unemployment rate has also jumped to 5.3% from 5.1%. The country’s private capital investments for the 2Q, on the other hand, is projected to have expanded by 2.3% after dipping by 0.2%. Capital investments take up about 28.54 of Australia’s overall GDP or output. Hence, an increase in this number could push the Aussie higher in the near term. Though in my opinion, a hike of 2.3% or lower is not enough to push the Aussie back on the bullish track unless of course the figure prints a much stronger score. Watch out for the report tomorrow!

EURO Breaks Out! But to the Downside! – August 24, 2010

Good day FX friends! Here’s an update on the EURUSD which I posted last August 17 (please see my previous blog here). In that post, I mentioned the possibility of the euro breaking out to the upside. It turns out that I was wrong as the EUR, instead of moving north, slid and broke down. As you can see from its chart, it appears that the euro’s recent rally over the greenback is over. After breaking out from an inverted head and shoulders pattern, the fiber or the EURUSD pair managed to achieve its minimum target and more. It then continued to rise and it even marked a new 3-month high at 1.3334 before dipping again. After its drastic slide from its 3-month high I though that it would reverse and turn up as suggested by what appeared to be another inverted head and shoulders. However, a break out from this pattern did not materialize. Its price then formed a head and shoulders (bearish and not to be mistaken with the inverted version) pattern. Its price action during the first days of this week proved costly as it pierced through and below its uptrend line and the formation’s neckline. Given this, the pair could now fall all the way to the 1.2150 area. Even if it rallies, the head and shoulders neckline at 1.2750 would prevent it from rising any further.

The euro lost its appeal on fears over Europe’s economy. The services PMI of France, manufacturing PMI of Germany, and the euro zone’s overall manufacturing purchasing manager index all failed to meet the market’s consensus. The French services PMI fell to 59.9 (versus 60.7) from 61.1. Germany’s manufacturing index also weakened to 58.2 from 61.2 which resulted into a broader fall in the euro zone’s number to 55.0 from 56.7. Note that the index can be used to gauge the business activity of the respective sectors in the economy. Why? Well, purchasing managers hold perhaps the most current and relevant insight into company’s view of the economy. For example, if the company is starting to pile up their invetory then perhaps it is expecting a uptick in its business in the near future. In any case, a drop in these figures suggests that the recovery in the euro zone’s economy could have slowed down.

On tap on August 25 and 26, respectively, are the German Ifo business climate index and the GfK German consumer climate index. Ifo’s account is seen to have retreated to 105.8 from 106.2 while the GfK index is projected to have increased to 4.1 from 3.9. But given the weaker-than-expected PMIs in the euro zone and the recent tentativeness in the global markets, business climate in Germany and the euro zone could have dipped as well.Such could very well reflect in the upcoming business and consumer climate surveys. If this is the case then the euro could once again take another hit.

US Dollar Index Breaks Out! – August 23, 2010

Welcome to another week of FX trading! In today’s fx feature is an update of the US dollar index. In my last post, I took specific note of the inverted head and shoulders pattern that was brewing at [Read more...]

US Dollar to Make a Comeback? – August 19, 2010

Hiyo forex peeps! In today’s FX feature is an update on the US dollar index (please see my my previous post here). As you can see from its daily chart, the index appears to be poised for a break to the upside. Why? Well, [Read more...]

Short Term Bullish Reversal Seen on the Euro? – August 17, 2010

Good day forex peeps! Here’s an update on the EURUSD pair or the fiber. Last August 12 (please see my last blog here), I noted the pair’s disastrous month when it fell by more than 450 pips after reaching a new 3-month high of 1.3334 on August 6. It’s a good thing that the previous support at 1.2750 and the uptrend line. Since August 11, the pair, however, has been consolidating into what appears to be an inverted head and shoulders formation. Are we about to see a bullish reversal in the euro’s valuation? Maybe. Anyway, if the pair breaks above the neckline of the formation then it could go all the way back to 1.3300. A fall below the uptrend line, on the flip side, could push it back to 1.2750. But since the uptrend line is still intact, the pair has a higher chance of moving north.

Earlier today, Germany’s and the euro zone’s Zew economic sentiment indices for the month of August came in mixed. Germany’s index unexpectedly slipped 14.0 (versus 20.9) from 21.2, registering a new 6-month low. The broader sentiment index for the euro zone, on the other hand, surprisingly jumped to 15.8 from 10.7 (vis-a-vis 10.6). Mixed data from these two accounts caused the euro to just trade flat. And with no more data coming out of the euro zone in the horizon, the EUR could just trade in a range bound fashion for the mean time. Still, the top tier economic reports in the UK and US tomorrow could cause some volatility on the euro’s short term valuation. UK is seen to have posted another 0.4% gain in its retail sales on top of its 0.7% hike in the previous month. Initial jobless claims in the US, on the other side, for the recent week is seen to have tapered to 479,000 from 484,000. Also the US’s Philadelphia Fed manufacturing index likely reached 7.2 in August from 5.1. Watch out for these reports on August 19 at 8:30 am and 12:30 pm, respectively! Upbeat tallies from any of these accounts could bolster the demand for the non-dollar currencies like the EUR.

Are the Pound Bulls About To Strike Back? – August 16, 2010

Welcome to another week of forex trading! In today’s FX feature is an update of the GBPUSD pair which I posted back on August 4 (please see my previous blog here). As you can see from its 4-hour chart, the GBPUSD or the Cable has retraced downwards after reaching a 6-month high of 1.5998 on August 4. But despite its recent weakness, I am still bullish on the British pound. At present, the pair is trading just about just above 1.5500. The previous high at 1.5500 plus the uptrend line should be able to prevent the pair from falling further. A bounce off these supports could push the pair back up to 1.5900. A break below 1.5500, on the flip side, could send it down to 1.5100. But with an oversold condition, as indicated in the stochastics, and an intact uptrend line, the pound, in my opinion, has a higher chance of moving north at least in the short term.

On the economic front, the UK’s inflation and retail sales figures are scheduled to be released on August 17 and 19, respectively. Month-over-month CPI in July is seen to be at -0.2% due to weaker consumer spending. Because of this, the year-over-year count is projected to have slowed to 3.1% from 3.2%. July retail sales is also anticipated to have tapered to 0.4% from 0.7%. And according to the data that was published by the British Retail Consortium (BRC), sales in the retail level have indeed weakened as fears over a probable slash in government spending caused the consumers to only spend for their essential needs.

Since a dip in the UK’s inflation and retail sales accounts is already expected, the market has likely priced this. Given this, the pound can just trade in a range-bound fashion unless a worse-than-projected tallies are printed. A surprise upticks in the accounts, on the other hand, can push the pound higher.

USD and Its Last Wall of Defense Against the Swissy – June 29, 2010

Good day forex peeps! Here’s an update on the USDCHF which I published back on June 21 (kindly check my previous post here). As you can see from its chart, the pair has continued to drop and has even slipped past the 61.8% Fibonacci retracement level that I drew. Now, the only obvious support that is preventing it from declining further is the neckline of the former inverted head and shoulders pattern. With the stochastics in the oversold region, the US dollar could soon again take the driver seat away from the Swiss franc. Though, it is also possible that the pair would trade sideways for awhile before moving higher. Once it does, it could aim for its recent high at 1.1731. On the negative side, if and when the 1.0800 support and the former neckline give way, the Swissy could further trump the greenback and the pair could fall and revisit its previous low at 1.0435.

On the fundamental side, the Swissy’s gain was mostly due when the Swiss National Bank stated that the risk of deflation in the country is fading away. The bank’s statements then sparked some speculations that it would refrain from meddling in the market to purposely weaken the CHF.

For this week, though, the market will focus on the release of the grand daddy of economic reports, the US’s NFP report. For the month of June, US firms are sen to have slashed about 103,000. This marks the first job decline in the Us four months. Such drop would reflect to an uptick in the country’s unemployment rate to 9.8% from 9.7%. Now, consumption takes up about 70% of the US total output. With declining jobs, naturally, the people’s aggregate spending would dip as well because of their lesser total income. This scenario could then fuel some risk aversion in the markets, which could consequently lead to an increase in the safer assets like the USD.

Is the Euro-Yen Poised for Another Drop? – June 25, 2010

Hello peeps! I haven’t much about the EURJPY as of late so here it is now. On its daily canvas, you can see that it has failed to move past the resistance around 113.40 for the last couple of weeks. Interestingly, this mark happens to fall in line almost perfectly with the 38.2% Fibonacci retracement level that I drew. Presently, the pair is trading around 110.00. In my view, it is on track to meet its 2010 low again. A presence of a bearish divergence, where the price registers lower highs and the stochsastics go higher and higher, also suggest a likely down-move. Judging by the height of its present range, it could fall by another 400 pips if it manages to break the 108.00 support. On the positive note, a break above the 38.2% Fib could send it a bit higher towards to 50% level.

The general prices of equities and currencies generally have been stuck within a range this week due to the mixed results from the economic data that came out of the US. US home sales were and durable goods were actually unexpectedly weaker than anticipated which added some concerns that the present global recovery is not that strong as initially thought. In any case, no other major economic reports are on deck today as the US leaders already managed to agree on their plan to overhaul the country’s financial system. The US’s final GDP for the 1Q is set to be released to no changes on the previous tally are expected. If, however, the account surprises us on the downside, the safer currencies like the yen and the USD would likely get some favor from the traders. If not, most major pairs would more likely just trade in a range until they sway in either direction in the coming week.

Is the Green Back? – June 24, 2010

Hi there my avid readers! On this blog is an update of the USDX chart which I presented last June 15. Back then, the US dollar index has weakened after reaching a new high of 88.708. At present, the index is trading just below [Read more...]

The Loonie to Trump the Euro Once Again – June 24, 2010

Hello Forex peeps! Here’s an update of the EURCAD that I posted last June 10. As you can see, the pair continued to slide along a nice descending channel which began November of 2009. As I have mentioned in my previous post, the pair indeed rallied a bit after marking a new 2010 low of 1.2447. At that time, conditions were already overbought and those who had shorted the euro may have covered at least part of their positions to pocket some profits.

At present, the pair is trading around the 1.2750 area. In my view, it still has room to move up since the stochastics is not yet in the overbought area. Though, if it rises, it would likely meet some selling pressure right at the resistance of the descending channel. The presence of a bearish divergence, where the price registers lower highs and the stochs marks lower lows, likewise indicates a possible turnaround soon. If and when it slides and weakens, it could revisit its 2010 low yet again. So as long as the channel remains in tact, the pair would likely continue its journey down south.

Fundamentally, both equities and the higher yielding currencies retreated yesterday when the US Federal Reserve cautioned the market that the recovery in the US economy is “uneven” due to the developments oversees, implying the debt crisis in Europe. The US’s latest housing figures proved to be weak which prompted the central hold their accommodative monetary policy. Today, the higher yielding currencies like the Canadian dollar could once again weaken if the US’s durable goods orders and unemployment claims figures fail to impress. The core durable goods orders for the month of May is seen to have grown by 1.1%, though, its headline number is projected to have wilted by 1.2%. Its initial jobless claims for the week ending June 19, on the other hand, will likely post a 461k tally.