Forex News Today

Technical Analysis for Major Currencies

2007-09-27T11:06:00.000+01:00

EURO

The European currency saw the tendency to move towards the downside hitting the key support at 1.4100, then it managed an upside move until the levels of 1.4130s. Nevertheless, the upside potential is still possible and the Euro just consolidated at the top to gather some strength to move in a bullish trend again.

The trading range for today might be between the key resistance level at 1.4220 and the key support level at 1.4060.

The general trend is up as far as 1. 3270 remains intact targets now at 1.4050 and 1.4220.

Support: 1.4100, 1.4078, 1.4044, 1.4000, 1.3985
Resistance: 1.4140, 1.4162, 1.4187, 1.4200, 1.4217

Recommendation: We expect buying Euro above 1.4110 with a target at 1.4180 stop loss below 1.4075.

GBP

The British pound consolidated at the critical level of 2.0150s. Meanwhile, the pound is still has the upside potential as long as it stays above the major level at 2.0070s.

The trading range for today might be between the key resistance level at 2.0260 and the key support level at 2.0040.

The general trend is up as far as 1.9700 remains intact targets now at 2.0635 and 2.0740.

Support: 2.0100, 2.0080, 2.0048, 2.0025, 2.0000
Resistance: 2.0125, 2.0155, 2.0180, 2.0200, 2.0230

Recommendation: We expect buying sterling above 2.0120 with a target at 2.0220 stop loss below 2.0070

JPY

The dollar against the Japanese yen yesterday moved in a bullish pattern ignoring the strength of the major resistance level at 115.15, so it managed to drive through the upside channel to hit the upper resistance level at 115.70s. The pair today is expected to progress towards the upside as long as it has high levels of volume.

The trading range for today will be between the key resistance at 116.70 and the key support at 114.00.

The general trend is down as far as 124.60 remains intact, targets at 112.40 and 111.20.

Support: 115.05, 114.87, 114.67, 114.48, 114.26
Resistance: 115.25, 115.55, 115.78, 116.00, 116.20

Recommendation: We expect selling USD/JPY below 116.20 with a target at 115.50, stop loss above 116.65

CHF

The dollar against the SWISS Frank yesterday fluctuated in a bullish pattern showing the tendency towards the upside since it couldn't progress towards the downside due to the strong support level at 1.1650s creating a bullish wave until the levels of 1.1790s. Hence, we expect the pair to progress towards the upside today.

The trading range for today will be between the key resistances at 1.1800 the key support at 1.1600.

The general trend is down as far as 1.2540 remains intact, targets at 1.1665and 1.1445.

Support: 1.1677, 1.1650, 1.1626, 1.1605, 1.1580
Resistance: 1.1709, 1.1720, 1.1738, 1.1756, 1.1780

CAD

The dollar against the Canadian Dollar remained so quiet as it traded in very narrow ranges. Thereby, it formed a rounding bottom since it couldn't pass the major support level at 0.9930s.

The trading range for today will be between the key resistance at 1.0150 and the key support at 1.0000.

The general trend is down as far as 1.0850 remains intact, targets will be at 1.0000 and 0.9700.

Support: 1.0045, 1.0025, 0.9985, 0.9950, 0.9930
Resistance: 1.0065, 1.0080, 1.0100, 1.0123, 1.0150

Daily Forex Report

2007-09-27T10:56:00.000+01:00

Yen Lower on Increasing Risk Appetite, Sterling Boosted by House Prices

Markets' renewed risk appetite continues to increase as global stock markets surge. Yen is sent lower across the board which also pushed most currencies higher against dollar. Germany unemployment and Eurozone M3 money supply will be the main focus in the European session today. Unemployment rate is expected to drop further to 8.9% in Sep while money supply growth is expected to remain extremely strong at 11.7% yoy. Such data will reinforce the tightening bias of ECB and provide the fuel for further rally in EUR/USD and EUR/JPY.

On the other hand, Sterling is boosted across the board by higher than expected reading in Nationwide house prices index which should 0.7% mom, 9.0% yoy growth comparing to consensus of 0.3% mom, 8.7% yoy. This suggest that housing demand remains strong and is reducing odds for a near term rate cut from BoE even though the bank should remain on hold for a while.

In the US session, main focus will likely be on new home sales data which is expected to drop further by -4.6% in Aug to 0.83m annualized rate. Jobless claims and final print of Q2 GDP data will be featured too. Bernanke and Mishkin are both scheduled to speak in the late US session.

EUR/USD

Daily Pivots: (S1) 1.4105; (P) 1.4133; (R1) 1.4155; More

EUR/USD edges higher to new record high of 1.4165. At this point, outlook remains unchanged. Upside momentum continues to diminish as seen in mild bearish divergence condition in 4 hours MACD and RSI. A short term top could be around the corner. But nonetheless, further rally is still mildly in favor as long as 1.4058 support holds. Sustained trading above 61.8% projection of 1.3360 to 1.3719 from 1.3550 at 1.4131 will encourage further rise towards 200% projection at 1.4268 first.

However, below 1.4058 will indicate that a short term top is formed and bring pull back to inner channel support (now at 1.4022). But downside should be contained by support zone of 1.3828 and 1.3926 and bring another rise.

In the bigger picture, medium term trend line resistance that limited EUR/USD's rally at 1.3364, 1.3681 and 1.3851 before was taken out. Also, daily MACD has broken its own trend line resistance too. Such development confirmed medium term bullishness is still in play. The up trend from 1.1639 is still in progress for 1.4523 (95 high). However, break of 1.3282 cluster support will suggest that rise from 1.3360 has completed and another deep correction should be seen before resuming the rally.

GBP/USD

Daily Pivots: (S1) 2.0102; (P) 2.0159; (R1) 2.0214; More

Cable strengthens sharply to 2.0245 into European session today. But after all, short term outlook remains unchanged. Rebound from 1.9879 was limited by falling trend line resistance (now at 2.0279). With 2.0365 high remains intact, the rise from 1.9652 is still treated as a correction to fall from 2.0652 only and is regarded as completed at 2.0365. Further downside should be seen towards 1.9951 support and break will confirm that short term bias is turned back to the downside for 1.9879 low and then 1.9652.

However, above 2.0365 high will revive the case that price actions from 2.0652 is probably developing into sideway consolidation only. In such case, further rally should be seen to retest of 2.0652 high. But still, 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 remains a key resistance. Decisive break of this resistance is needed to confirm rally from 1.7047 has resumed for 100% projection of 1.3680 to 1.9554 from 1.7047 at 2.2901. Otherwise, another fall could still be seen before completing the consolidation.

In the bigger picture, with cable staying above 1.9621 support as well as 55 weeks EMA (now at 1.9624), there is no confirmation of long term reversal yet. But still, a medium term top is in place at 2.0652 with bearish divergence condition and daily and weekly MACD. Break of 1.9652 low will confirm that correction from 2.0652 has resumed for 1.9365/71 cluster support (100% projection of 2.0652 to 1.9652 from 2.0365 at 1.9365, 50% retracement of 1.8090 to 2.0652 at 1.9371). Also, sustained trading below 1.9621 support will add more weight to the case that whole rally from 1.7047 has indeed completed after failing 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 and bring deeper decline to next support zone of 1.9183 and 38.2% retracement of 1.7047 to 2.0652 at 1.9275 first.

USD/CHF

Daily Pivots: (S1) 1.1659; (P) 1.1689; (R1) 1.1734; More.

USD/CHF continues to consolidate above 1.1638 today. As discussed before, downside momentum is seen diminishing as indicated by mild bullish convergence conditions in 4 hours MACD and RSI. A short term bottom could be around the corner if not already in place at 1.1638. But nonetheless, further downside is still mildly in favor as long as 1.1745 resistance holds. Next downside target will be 100% projection of 1.2467 to 1.1816 from 1.2214 at 1.1590.

However, above 1.1745 will indicate that a short term bottom is formed and bring stronger recovery towards 1.1800 support turned resistance or above. But upside should be limited below 1.1922 resistance and bring another fall.

In the bigger picture, sustained trading below the lower trend line support (1.1919, 1.1878, 1.1816) confirm medium term bearishness. Current fall from 1.2214 is treated as resumption of decline from 1.2467 and is expected to head towards mentioned 1.1590 projection target first. Also, this will be tentatively treated as resumption of medium term down trend that started at 1.3283 which could extend further to retest 1.1288 (04 low).

On the upside, even though stronger rebound could be seen in case of a break of 1.1922 resistance, break of 1.2214 resistance is still needed to confirm a medium term bottom is formed. Otherwise, further decline is still in favor, just after lengthier consolidation.

USD/JPY

Daily Pivots: (S1) 114.80; (P) 115.26; (R1) 116.00; More.

USD/JPY remains firm today but after all, it's still bounded inside established range of 111.59 and 117.11 as consolidation continues. Short term outlook remains neutral and price actions inside such consolidation will continue to be choppy. Though, on the upside, above 116.36 will suggest rebound from 111.59 has resumed for 100% projection of 111.59 to 117.11 from 112.58 at 118.10 before completing such corrective rise. On the downside, break of 112.58 support will be the first alert that consolidation has possibly completed and encourage a retest of 111.59 low.

In the bigger picture, as discussed before, daily MACD's stay above signal line suggests that the whole decline from 124.12 could have already completed at 111.59. Hence, further break of this low is needed to confirm that sharp fall from 124.13 has resumed. Otherwise, USD/JPY could still develop into lengthier consolidation.

Prior break of long term rising trend line (101.65, 108.99) indicates the the whole up trend from 101.65 could also have completed at 124.13 already, with bearish divergence condition in weekly MACD and RSI.. Break of 111.59 will indicate fall from 124.13 has resumed for support zone between 108.99 and 61.8% retracement of 101.65 to 124.13 at 110.23.

EUR/JPY

Daily Pivots: (S1) 162.41; (P) 162.91; (R1) 163.74; More

EUR/JPY's rally extends further to as high as 163.71 today. At this point, further rally is still expected as long as 160.94 support holds. Next upside target will be165.39 cluster resistance (100% projection of 149.27 to 159.67 from 155.15 at 165.55). On the downside, however, below 160.94 will indicate that rise from 155.15 has possibly completed and turn focus to 158.76 support first. But still, below 155.15 support is needed to confirm rebound from 149.27 has completed. Otherwise, another rise is still expected after pull back.

In the bigger picture, firstly the break of trend line support (137.16, 150.75) confirmed that rally from 130.60 has already completed at 168.93, with bearish divergence condition in weekly RSI. Hence, an important medium term top is in place at 168.93 already. However, secondly, since EUR/JPY is still supported within the rising channel shown in the monthly chart. the whole up trend from 88.9 could still be in force and price actions from 168.93 is probably just developing into consolidation to this long term up trend. Also, the three wave structure of the fall from 168.93 to 149.27 suggests that it's probably developing into sideway consolidation instead of deeper correction.

So, further rise to retest 168.93 high cannot be ruled out. But firm break of 168.93 is needed to confirm long term up trend has resumed, otherwise, another fall could still be seen before completing the consolidation that started from 168.93. On the downside, a firm break of 149.27 low will have the long term channel support taken out too. This will add much favor to the case that up trend from 88.9 has indeed completed and bring much deeper decline.

US Durable Goods Orders worse than expected; dollar unchanged

2007-09-27T10:42:00.000+01:00

News and Events:

US Durable Goods Orders for August fell by 4.9% versus an expected drop of 3.5% and a 5.9% increase in July. Durables excluding transportation fell by 1.8% versus an expected drop of 0.8% and an increase of 3.7% in July. The US equity market however opened strong following news of General Motors and the United Auto Workers union reaching an agreement to end the worker strike. The US dollar resisted the weaker news, finishing unchanged against the Euro and slightly stronger against the Pound. On the flip side, investors remain tentative as worries persist of a recession in the US and higher probabilities of further rate cuts from the FOMC.

The British Pound has been under pressure as the Bank of England released its credit conditions survey yesterday which pointed towards tightening in the corporate sector credit markets in the near term.

Swedish manufacturing numbers and consumer confidence came out weaker than expected, which mirrors sentiment during the market's turmoil in recent weeks. Investors have lowered their GDP estimates in line with slower economic growth to come.

Today's Key Issues (time in GMT):

07:55 GE Unemployment Change (000's) SEP -20K vs -15K
07:55 GE Unemployment Rate (s.a) SEP 8.90% vs 9.00%

08:00 EC Euro-Zone M3 s.a. (YoY) AUG 11.70% vs 11.70%
08:00 EC Bloomberg Eurozone Retail PMI SEP
08:00 GE Bloomberg Germany Retail PMI SEP
08:00 IT Trade Balance Non-Eu (Euros) AUG
08:00 IT Bloomberg Italy Retail PMI SEP
08:00 FR Bloomberg France Retail PMI SEP
08:00 EC Euro-Zone M3 s.a. 3 mth ave. AUG 11.50% vs 11.10%
08:30 UK Index of Services (3mth/3mth) JUL 0.80% vs 0.80%
08:30 UK BBA Loans for House Purchase AUG

10:00 UK U.K. CBI September Distributive Trades Report

12:30 US GDP Annualized 2Q F 3.90% vs 4.00%
12:30 US Personal Consumption 2Q F 1.40% vs 1.40%
12:30 US GDP Price Index 2Q F 2.70% vs 2.70%
12:30 US Core PCE QoQ 2Q F 1.30% vs 1.30%
12:30 US Initial Jobless Claims Sep-22 317K vs 311K
12:30 US Continuing Claims Sep-15 2555K vs 2544K

14:00 US New Home Sales AUG 828K vs 870K
14:00 US New Home Sales MoM AUG -4.90% vs 2.80%
14:00 US Help Wanted Index AUG 24 vs 25

17:00 FR Unemployment Rate AUG 8.00% vs 8.00%
17:00 FR Unemployment Change (000s) AUG -10K vs 0K

The Risk Today:

EurUsd up trend holding strong after hitting 1.4163 earlier today. The trend remains intact above 1.4043, which holds as the first (minor) support down to 1.4000.

GbpUsd still in a short term range between 1.9873 and 2.0373. First support holds at 2.0081, while a break out of 2.0321 up to 2.0373 will open the door back to 2.0654.

UsdJpy key levels to focus on are support at 113.99 and resistance at 116.38. Follow the breakout.

UsdChf downtrend still intact as ADX(14) continues to rise on a daily look. Initial resistance holding at 1.1772 and support at 1.1638.

Resistance and Support:

Daily Technical Analysis

2007-09-27T10:41:00.000+01:00

Spotlight: EURUSD & GBPUSD

EURUSD

The momentum on EurUsd has clearly slowed down, the pair is trading around the same levels for two days now, although it moved a couple of points above the 1.4160 high and now we have the 1.4163 level as the highest point on our charts. There is still time for the pair to reach the 1.4200 level this week, a level which at the moment is both a significant bullish target and the closest resistance we can spot on the charts. As far as possible support level are concerned, closest one is yesterday's low at 1.4060, if the pair enters into a consolidation period that is the level to watch, if we stay above it the bullish trend is still safe; the next support level is the 1.3930 followed by the 1.3850 area, both of them are viable targets for a bigger retracement or even a trend reversal at this point.

Resistance Levels

* 1.4200- round number

Support Levels

* 1.3930- September 13th high
* 1.3850- July 24th High
* 1.3680- April 27th High
* 1.3550- June 5th High
* 1.3365- December 3rd High
* 1.3260- June 13th Low

EURUSD Daily Chart

GBPUSD

After amove down in yesterday's early trading hours the pair has started to move up in the second part of the day and has continued to do so today, it moved above the 2.0200 level and we just have to see if it has enough strength to stay above that or perhaps move even further north. In order for us to reconsider our position and start talking about a trend forming cable needs to push higher and aim at first at the 2.0365 resistance level, once there if there is enough momentum to break above the next bullish target is the 2.0460 double top from early August. Conversely a failure to maintain above 2.0200 will shift focus towards the 2.0100 mid range level and if it manages to break even lower one could expect the move to continue at least to the 2.0000 round number if not lower towards the 1.9900 area which is last weeks low and also a strong support zone.

Resistance Levels

* 2.0650- July 24th High
* 2.0460- August 3rd High
* 2.0365- September 12th High
* 2.0200- Round number

Support Levels

* 2.0000- Round number
* 1.9670- May 21st low
* 1.9550- previously tested support

GBPUSD Daily Chart

Is Euro's rally against the Dollar close to an end?

2007-09-26T10:17:00.000+01:00

News and Events:

The Dollar hit a new record low against the euro on Tuesday as a surprise plunge in US consumer confidence to nearly two-year lows raised expectations of another Federal Reserve interest rate cut next month. This was the fourth straight session that the Dollar tested all-time lows against the Euro, which has gained on signs of weaker US growth and the view that lower US rates will continue to erode the Dollar's yield advantage. That view gained more traction on another report on Tuesday showing sales of existing US homes slipped by 4.3% in August, a sign of yet more weakness in the housing market.

The Fed's half point cut in its benchmark overnight lending rate last week left the Dollar on the defensive, and interest rate futures are pricing in a 95% chance of a quarter point cut in October, up from 72% on Monday. The fed funds rate is at 4.75%, while the euro-zone refinancing rate stands at 4%.

The EurUsd last traded at 1.4147 up 0.52% and just below an all-time high of $1.4162 hit earlier. The Dollar also fell against the Yen, trading at 114.62, down 0.19% after having hit 114.02 low on the day. The Dollar rose against Sterling, however, after a report in a British newspaper sparked worries over troubles in the UK financial sector arising from the credit crisis. GbpUsd traded at 2.0182, down 0.1%, after touching 2.0085 low on the day.

The US Conference Board's index of consumer sentiment fell to 99.8 in September, the lowest since November 2005 and down from 105.6 in August. Economists expected a more modest slip to 104.0. Earlier, the Euro was unfazed by a report showing German Ifo business confidence survey surprised on the weaker side. Analysts said the Ifo survey was yet another sign of a softening in the euro zone economy, a situation that hinted at steady interest rates there for the rest of 2007 and possible monetary easing early next year. Some analysts say the prospect of a future euro-zone rate cut or a nearer-term technical rebound mean the Euro's rally against the Dollar may be close to an end. On Monday, the government of French President Nicolas Sarkozy repeated its complaints that the Euro's strength was eroding the competitiveness and productivity of firms.

Also on Tuesday, the Bank of International Settlements released a report showing daily Global Forex turnover rose to $3.2 trillion per day in 2007 from $1.9 trillion in 2004. The report also showed that the number of transactions involving the US dollar fell to 86% this year from 89% three years ago.

Today's Key Issues (time in GMT):

08.30 UK 2Q Growth Domestic Product final 0.8% vs 0.8% (QoQ)
08.30 UK 2Q Growth Domestic Product final 3% vs 3% (YoY)
08.30 UK 2Q Current Account -£11.3B vs -£12.2B

09.30 CHF September KOF indicator 2.01 vs 2.06

11.00 US Sept 21st MBA Mortgage market change

12.30 US Aug Durable Goods Orders -3.1% vs 6%
12.30 US Aug Durable Goods Orders ex-trans -1% vs 3.8%

Full Moon holiday in Hong Kong today.

The Risk Today:

EurUsd trend remains positive. Yesterday 1.4162 marks initial resistance before a new extension to 1.4291. Initial support holds 1.4000 former resistance. Nearby support cuts at 1.3927 where a lower development would threaten the up-trend, but it would need a return below 1.3719 to confirm trend change.

GbpUsd conditions remain neutral in Monday/Tuesday 2.0319 / 2.0085 range. Sterling hit yesterday 2.0085 low before recovering up to 2.0182 at close. Resistance holds 2.0366 high from September 12. A move further this would open the way to 2.0398 early August high. Former 2.0200 support failed and let the way open toward 2.0000 psychological level. Beyond that point, 1.9821 marks strong support (76.4% retracement of 1.9652 to 2.0366 advance).

UsdJpy The downtrend remains intact below 117.13 major resistance. Confirmation over this level is needed to relieve the negative tone and open the way for an extend toward 119.36 (61.8% retracement of 124.15 to 111.60 decline). On the downside, a return below 113.39 (Sept. 11 low) would open the way toward 112.61 and a possible retest of 111.60 (August 17 low).

UsdChf remains negative in recent downtrend after having broken 1.1816 former key support and moreover yesterday break of 1.1741 support. Further weakness will open the way down to 1.1500 psychological support and possibly 1.1484 (2005 March 14 low). However, on the uptrend, a recovery beyond 1.1923 and 1.1962 is needed to relieve the actual bear threat.

Daily Forex Analysis

2007-09-26T09:46:00.000+01:00

EUR/USD

EUR -exactly opposite as CHF- continues moving above the beautiful outer support uptrend line, completing ABCD Upswings shown in the smaller timeframe, lately inside A = 1.3933 B = 1.4129, where the bull team found a retrace resistance at 1.4055/.382 and up move signals have been created in order to imply that the market has a good probability of moving north and keep on going with the overall move and scoring new historic higher highs. Once again traders that have been able to get into short positions can consider to place their targets at the B low support area located at 1.14130 and eventually at 1.18 and 1.27 D extensions at lower levels by using our cancel and replace rules. As the saying goes: "Trade with the trend, the trend is your friend until it bends".

GBP/USD

GBP has had what may be one of the most interesting sessions through the day, when it all began last night as the pound held off the C = 2.0279/.86 retrace resistance of the latest AB Downswing A = 2.0345 B = 1.9871 level with the bear team building a nice mid term timeframe pattern that currently tries to make the market dip and eventually create an even stronger formation in the Daily chart. The fun continued when the GBP found support at the counter retrace support trend line, where bulls are waking up and telling traders that they have not given up their control yet. This is why the mixed up environment cannot be taken for granted by traders, as their limits must be placed at conservative levels, meaning that short traders must lock in around the 2.0080 support and long traders should do the same at the 2.0225 high. Having that said, our focus will give preference to take profits from positions opened and will now stand aside.

USD/CHF

CHF continues moving below the beautiful outer resistance downtrend line, completing ABCD Downswings shown in the smaller timeframe, lately inside A = 1.1860 B = 1.1690, where the bear team found a retrace resistance at 1.1763/.382 and down move signals have been created in order to imply that the market has a good probability of moving south and keep on going with the overall move. Traders that have been able to get into short positions can consider to place their targets at the B low support area located at 1.1690 and eventually at 1.18 and 1.27 D extensions at lower levels by using our cancel and replace rules. As the saying goes: "Trade with the trend, the trend is your friend until it bends".

USD/JPY

JPY concludes the week creating a retrace move after the dip seen in yesterday's session where the bear team scored two points in the mid term timeframe, to break the support counter trend level. Bears have now decided to take a rest and the bull team takes control of the smaller timeframe, driving the yen above a new and recently developed support level as it probably aims for a test of either the backside of the broken countertrend or the outer resistance downtrend line level once again. Traders can now stand aside from the JPY waiting to for the result of the upcoming battle that may take place in the market early, not today, but on Sunday's opening and Monday's session: the main subject will be, if we will see a new bounce at the resistance or if bulls will charge and create a new up move. A great way to begin next week! But for now, it is time to enjoy the profits obtained during the week as we wish you all a great weekend!

Technical Analysis for Major Currencies

2007-09-26T09:43:00.000+01:00

EURO

The European currency obviously managed an upside move with high volume which was considered the continuation towards the upside as the Euro built a base above the key level at 1.4050s; the Euro is expected to move towards the upside today.

The trading range for today might be between the key resistance level at 1.4250 and the key support level at 1.4050.

The general trend is up as far as 1.3600 remains intact targets now at 1.4500 and 1.4885.

Support: 1.4150, 1.4125, 1.4099, 1.4068, 1.4033
Resistance: 1.4185, 1.4200, 1.4225, 1.4250, 1.4270

Recommendation: We expect buying Euro above 1.4125 with a target at 1.4185, stop loss below 1.4090.

GBP

The British pound moved in a fake bearish pattern as it failed to breach the strong support at 2.0080s; therefore, we expect a bullish move today as long as the pound keeps the base today at 2.0120 major support level.

The trading range for today might be between the key resistance level at 2.0290 and the key support level at 2.0100.

The general trend is up as far as 1.9650 remains intact targets now at 2.0635 and 2.0740.

Support: 2.0165, 2.0120, 2.0060, 2.0035, 2.0000
Resistance: 2.0188, 2.0220, 2.0250, 2.0270, 2.0320

Recommendation: We expect buying sterling above 2.0160 with a target at 2.0280, stop loss below 2.0110.

JPY

The dollar against the Japanese yen yesterday tended to move towards the downside to hit the key level at 114.00; however, it arranged to reverse back towards the upside by the end of the day, the technical indicators show the downside potential for today.

The trading range for today will be between the key resistance at 115.40 and the key support at 113.60.

The general trend is down as far as 124.60 remains intact, targets at 112.60 and 111.30.

Support: 114.50, 114.30, 114.00, 113.70, 113.50
Resistance: 114.85, 115.15, 115.35, 115.50, 115.75

Recommendation: We expect selling USD/JPY below 114.90 with a target at 114.00, stop loss above 115.40.

CHF

As the dollar against the SWISS Frank yesterday couldn't breach the strong resistance level at 1.1750s to drop down in a strong move towards the key support 1.1640s, today we expect the pair to progress towards the downside as well.

The trading range for today will be between the key resistance at 1.1700 and the key support at 1.1540.

The general trend is down as far as 1.2540 remains intact, targets at 1.1575 and 1.1265.

Support: 1.1660, 1.1635, 1.1609, 1.1580, 1.1555
Resistance: 1.1685, 1.1702, 1.1725, 1.1742, 1.1785

Recommendation: We expect buying USD/CHF above 1.1680 with a target at 1.1600, stop loss below 1.1720.

CAD

The dollar against the Canadian Dollar yesterday moved in a balanced move in a narrow range at the bottom of the long bearish wave; nevertheless we expect today the currency to drop down again setting some new records.

The trading range for today will be between the key resistance at 1.0100 and the key support at 0.9930.

The general trend is down as far as 1.0540 remains intact, targets will be at 0.9800 and 0.9650.

Support: 0.9990, 0.9965, 0.9938, 0.9915, 0.9885
Resistance: 1.0028, 1.0056, 1.0080, 1.0105, 1.0122

Technical Analysis for Major Currencies

2007-09-25T12:51:00.000+01:00

EURO

The European currency started to depreciate yesterday, after it hit the all time high at 1.4130s resistance level, until the levels of 1.4060s. In the meantime, the currency is expected to move down today as well in order to make some correction.

The trading range for today might be between the key resistance level at 1.4150 and the key support level at 1.3970.

The general trend is up as far as 1.3600 remains intact targets now at 1.4500 and 1.4885.

Support: 1.4068, 1.4033, 1.4000, 1.3975, 1.3945
Resistance: 1.4099, 1.4125, 1.4150, 1.4175, 1.4200

Recommendation: We expect selling Euro below 1.4100 with a target at 1.4035, stop loss above 1.4040.

GBP

The British pound was unable to keep the bullish step yesterday after it hit the resistance level at 2.0320s to close at the levels of 2.0200 support. Today, we expect a drop towards the main at 2.0080s.

The trading range for today might be between the key resistance level at 2.0260 and the key support level at 2.0060.

The general trend is up as far as 1.9650 remains intact targets now at 2.0635 and 2.0740.

Support: 2.0120, 2.0060, 2.0035, 2.0000, 1.9980
Resistance: 2.0165, 2.0188, 2.0220, 2.0250, 2.0270

Recommendation: We expect selling sterling below 2.0160 with a target at 2.0080, stop loss above 2.0200.

JPY

The dollar against the Japanese yen found the tendency yesterday to drop down from the 115.30s level. As the downside channel has extended, today the pair is expected to progress towards the downside until the strong support at 114.00.

The trading range for today will be between the key resistance at 115.40 and the key support at 113.60.

The general trend is down as far as 124.60 remains intact, targets at 112.60 and 111.30.

Support: 114.50, 114.30, 114.00, 113.70, 113.50
Resistance: 114.85, 115.15, 115.35, 115.50, 115.75

Recommendation: We expect selling USD/JPY below 114.85 with a target at 114.00, stop loss above 115.40.

CHF

The dollar against the SWISS Frank yesterday moved towards the upside in a fake movement. In other words, the pair couldn’t breach the major support level at 1.1680s to close in a bullish pattern at 1.1730s. Today we expect the currency to move towards the upside in order to make some correction pattern.

The trading range for today will be between the key resistance at 1.1800 and the key support at 1.1670.

The general trend is down as far as 1.2540 remains intact, targets at 1.1575 and 1.1265.

Support: 1.1702, 1.1685, 1.1660, 1.1635, 1.1609
Resistance: 1.1725, 1.1742, 1.1785, 1.1809, 1.1832

Recommendation: We expect buying USD/CHF above 1.1715 with a target at 1.1800, stop loss below 1.1670.

CAD

The dollar against the Canadian Dollar just formed the rounded bottom yesterday and therefore, the currency today is expected to progress towards the upside.

The trading range for today will be between the key resistance at 1.0140 and the key support at 0.9970.

The general trend is down as far as 1.0540 remains intact, targets will be at 0.9800 and 0.9650

Support: 0.9990, 0.9965, 0.9938, 0.9915, 0.9885
Resistance: 1.0028, 1.0056, 1.0080, 1.0105, 1.0122

Recommendation: We expect buying USD/CAD above 1.0015 with a target at 1.0120, stop loss below 0.9970.

Daily Forex Analysis

2007-09-25T12:42:00.000+01:00

Headlines

The USD Uncertainty Continues.

Market Trend

Economic News

USD

Yesterday the greenback continued on its bearish path against most of the majors and it slipped to another new record low versus the EUR. The fears that the subprime crisis will spill over into the broader economy and actually begin to slowdown growth rekindled expectations that the Fed will further slash its 4.75 % key benchmark rate. An additional rate cut by the Fed could have a significant negative impact on the greenback as it will reduce the dollars appeal against the high yielding currencies and therefore it will lower the level of foreign investment coming into the US. In the last few weeks the greenback weakened the most against the EUR and this is mainly due to the widening growth differential and the shrinking interest rate differential between the US and the European economy. The current market expectation is that will we see another rate cut by the Fed in the near future and this is putting the dollar under major pressure. However a weak dollar combined with rising oil prices will push up inflation and this could restrict the Fed's decision with regards to future monetary policy.

There were significant news releases from the US yesterday and Fed Chairman Bernanke remained discrete during his speech before the Chamber of Commerce Summit. Looking ahead to today the most significant news to be released from the US will be Existing Home Sales and Consumer Confidence. Both these figures are expected to release weaker than last month and with the sustained problems in the housing sector it is very likely that these figures may spring a downward surprise. If this is the case then we could see some volatility that will push the dollar downward. The main reason for this is because the weak data will raise the markets expectation of another rate cut by the Fed which will put pressure on the greenback.

EUR

Yesterday the EUR traded relatively uneventfully all across the board but it continued to sky rocket against the USD reaching a new all time high for a third consecutive day. The EUR touched the record mark of $1.4030 on the back of increased market expectation that the Fed will once again cut rates in the near future. Even the recent string of weak European data, including yesterdays Industrial New Orders which released below expectations at -4.0 %, have been unable to put the brakes on the EUR's bullish rampage versus the greenback. However the weak data is further indication that the strong EUR is beginning to negatively impact the European economy and if we see more bad news from the Eurozone over the next few weeks it could cause the EUR to reverse. So traders will be paying close attention to today's German Ifo figures to spot any further cracks developing in the European economy. If these figures release weaker than expected then the EUR should lose some slight ground all across the board and it could signify the peak of the EUR's rally against the greenback.

JPY

Yesterday the JPY gained ground against the USD and the EUR, reaching the 114.99 and 162.21 levels respectively. The JPY strength was mainly being driven by the problems in the UK banking sector which have resulted from the spreading global credit crisis. These problems created a feeling of risk aversion among investors causing carry trades to unwind. In carry trades, investors transfer funds from a country with low borrowing costs and invest in one with greater yields and hence they earn the difference between the borrowing and lending rate. The risk involved in undertaking this investment strategy is that the currency moves erase those profits. Therefore if there is a feeling of risk aversion among investors then carry trades will unwind and the JPY will strengthen as was seen yesterday. Looking ahead to today the direction of the JPY may depend on the performance equity markets and their impact on carry trades, also key US and European data release may cause some slight movement in the Japanese currency.

Technical News

EUR/USD

Today, the 4 Hour chart implies on a possible recovery of the USD when both RSI (78) and Slow Stochastic (crossed at 82) are clearly in overbought territory. The 4 Doji bars imply on an upcoming move and it appears that going long might be preferable.

GBP/USD

The 4 hour chart notes that a tight bearish channel is forming and traders should seek the breakout to get into the market at a good entry point for a long position. However the daily chart indicates a breakout of the bullish channel, supporting the fact that the GBP depreciation would be maintained in the short term.

USD/JPY

The pair is in a bearish formation and the daily studies are strengthening the notion that the pair's direction is down. The hourly confirm the bearish notion as the 4 Hour RSI has failed to cut the 80 level from the bottom section. It appears that the USD/JPY is heading towards 114.00.

USD/CHF

The pair is heading down and is now at 1.1738. The next key level is 1.1700 which would the lowest it has been since May 2005. If a breach through that level will occur we might see a much bigger move. If the pair will be shy of a breach it may constitute a great entry point for a long position.

The Wild Card

GOLD

Gold broke the 724.50 support level. Gold is in a downtrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands have tightened. Today, we expect to see a bearish configuration. 1H, 4H Elliott pattern imply that the Gold should to gather momentum today. The target is 722.00. This provides Forex traders with a great opportunity to go short on a very healthy downtrend.

Indicators

Sterling sell off on concern UK growing credit crunch

2007-09-25T12:35:00.000+01:00

News and Events:

The Dollar hit a record low against the Euro for the third straight session on Monday amid fears that a deepening housing slump could pressure on economic growth and trigger more cuts in US interest rates.

Trading was light as attention shifted to existing-home sales and consumer confidence data due today.

Investors are worried that weak economic reports will push the Federal Reserve to follow last week's half-percentage-point rate cut with more policy easing, further eroding the dollar's yield advantage over other currencies, particularly the Euro. Several Wall Street firms have downgraded their outlook on US Gross Domestic Product over the next several quarters.
The EurUsd closed at 1.4074 after earlier hitting a record high 1.4131. The UsdJpy traded at to 114.84, down 0.54%, below its level late on Friday as investors remained wary of piling back into carry trades, which involve using cheaply borrowed Yen to buy higher-yielding currencies and assets.

Analysts say the recent sharp declines in the dollar may provide some investors a short-term buying opportunity. But on a longer term, the focus will remain on interest rates and the dollar's dwindling yield advantage.

Interest rate futures are pricing in a roughly 66 percent chance of a 25bp Fed rate cut in October, down from 72 percent at Friday's close. At least one more quarter-point cut has been factored in by year-end on top of any move at the Fed's next meeting in October.
Investors overlooked criticism of the European Central Bank from a French presidential aide who said euro strength was eroding European competitiveness and business productivity. ECB President Jean-Claude Trichet also brushed off the remarks, saying the central bank's main task was to ensure price stability.

The Dollar rose against Sterling on Tuesday as a report in a British newspaper stirred concerns over deepening problems in the UK's financial sector due to the credit crunch. The Independent reported this morning that Britain's deposit protection scheme holds only £4.4 million ($8.9 million) to protect the country's bank deposits, far smaller than the $49 billion fund at the U.S. Federal Deposit Insurance Corporation. The news raised worries over the stability of the British financial system after depositors had rushed to withdraw savings from troubled mortgage bank Northern Rock.

Today's Key Issues (time in GMT):

08.30 UK 2Q Total Business Investment 0.8% vs 0.8% (QoQ)
08.30 UK 2Q Total Business Investment 7.4% vs 7.4% (YoY)

14.00 US Sept Richmond Fed Manufacture Index 5 vs 7
14.00 US Sept Consumer Confidence 104.4 vs 105
14.00 US Aug Existing Home Sales 5.30M vs 5.75M
14.00 US Aug Existing Home Sales -4.6% vs 0.2% (MoM)

20.10 CAD Bank of Canada governor Dodge speaks, Vancouver

21.30 US Fed's Plosser speaks on the economy, New Jersey

Full Moon holiday in South Korea and Taiwan today, also Hong Kong tomorrow.

The Risk Today:

EurUsd recent trend is still bullish. Last week break through 1.4000 psychological resistance should pave the way for an extension to .14108 and 1.4291. Initial resistance holds 1.4000 former resistance. Nearby support cuts at 1.3927 where a lower development would threaten the up-trend, but it would need a return below 1.3719 to confirm trend change.

GbpUsd conditions remain neutral. Sterling hit Monday 2.0314 high before retracing down to 2.0203 at close. Resistance holds 2.0366 high from September 12. A move further this would open the way to 2.3098 early August high. Former 2.0202 support failed and let the way open toward 2.0000 psychological level. Beyond that point, 1.9821 marks strong support (76.4% retracement of 1.9652 to 2.0366 advance).

UsdJpy The downtrend remains intact below 117.13 major resistance. Confirmation over this level is needed to relieve the negative tone and open the way for an extend toward 119.36 (61.8% retracement of 124.15 to 111.60 decline). On the downside, a return below 113.39 (Sept. 11 low) would open the way toward 112.61 and a possible retest of 111.60 (August 17 low).

UsdChf remains with recent downtrend after having broken 1.1816 former key support. However, on the uptrend, a recovery beyond 1.1923 and 1.1962 is needed to relieve the actual bear threat. On the downtrend, further slippage below 1.1741 would open the way through 1.1500 psychological support and possibly 1.1484 (2005 March 14 low).

Daily Currency Report - GBP/USD

2007-09-21T08:36:00.000+01:00

GBP/USD

Weekly Trend direction: Bearish

Weekly trend reversal level: 2.0350

Key G7 Resistance levels: 2.0220

Counter-trend opportunities: None

Strategy: Whilst below the weekly trend reversal level, sell rallies to resistance levels after an entry signal.

Today's trade suggestion: Range trading between 2.0200 and 1.9900, the pound has not done nearly as well as the euro and is still in a weekly bearish mode. Continue to look to sell into rallies whilst below 2.0200, with tight stops and a target of 1.9900.

Summary: BUY 1.9990, for another move up to 2.0200. Sell near 2.0200 for another test of 2.000 and then on to 1.9600.

GBP/USD Hourly chart:

GBP/USD Weekly chart:

Technical Analysis for Major Currencies

2007-09-21T08:27:00.000+01:00

EURO

Obviously the European currency managed to hit new records yesterday in the absence of the US dollar strength, the slope's steep angle to the upside wave shows the strength of this move which is expected to push the Euro up until the 1.4140s strong resistance level.

The trading range for today might be between the key resistance level at 1.4150 and the key support level at 1.3950.

The general trend is up as far as 1.3600 remains intact targets now at 1.4500 and 1.4885.

Support: 1.4033, 1.4000, 1.3975, 1.3945, 1.3898
Resistance: 1.4068, 1.4099, 1.4125, 1.4150, 1.4175

Recommendation: We expect buying Euro above1.4040 with a target at 1.4140, stop loss below 1.3985.

GBP

The British pound managed to move towards the upside in a bullish pattern after it built the base above the major support level yesterday at 1.9970 to hit the key resistance level at 2.0140s, today we expect the pound to continue towards the upside as long as it stays above 2 dollar barrier.

The trading range for today might be between the key resistance level at 2.0235 and the key support level at 1.9970.

The general trend is up as far as 1.9650 remains intact targets now at 2.0635 and 2.0740.

Support: 2.0065, 2.0020, 1.9960, 1.9930, 1.9913
Resistance: 2.0088, 2.0120, 2.0150, 2.0170, 2.0220

Recommendation: We expect buying sterling above 2.0075 with a target at 2.0210, stop loss below 2.0020.

JPY

The dollar against the Japanese yen arranged a strong drop with high levels of volume and high volatility, due to that the pair hit the unexpected low at 114.00; therefore today the pair seems to continue towards the major support at 113.30s.

The trading range for today will be between the key resistance at 115.40 and the key support at 113.00.

The general trend is down as far as 124.60 remains intact, targets at 112.60 and 111.30.

Support: 114.50, 114.30, 114.00, 113.70, 113.50
Resistance: 114.85, 115.15, 115.35, 115.50, 115.75

Recommendation: We expect selling USD/JPY below 114.80 with a target at 113.50, stop loss above 115.40.

CHF

The dollar against the SWISS Frank yesterday found the tendency to move in a bearish pattern hitting the major support level at 1.1680s, this move affected the technical indicators to make some adjustments to show the downside motion in the upcoming days.

The trading range for today will be between the key resistance at 1.1850 and the key support at 1.1570.

The general trend is down as far as 1.2540 remains intact, targets at 1.1675 and 1.1465.

Support: 1.1725, 1.1702, 1.1685, 1.1660, 1.1635
Resistance: 1.1742, 1.1785, 1.1809, 1.1832, 1.1850

CAD

The dollar against the Canadian Dollar managed to move in a bearish channel yesterday using the US dollar's setting new records in this year, the trend analysis shows the strength of the downside move that in role might lead the pair to again new records high.

The trading range for today will be between the key resistance at 1.0100 and the key support at 0.985.

The general trend is down as far as 1.0540 remains intact, targets will be at 0.9800 and 0.9650.

Support: 1.0020, 0.9990, 0.9965, 0.9938, 0.9915
Resistance: 1.0056, 1.0080, 1.0105, 1.0122, 1.0145

Recommendation: We expect selling USD/CAD below 1.0040 with a target at 0.9950, stop loss above 1.0080

Historic All Time High For The EUR/USD - 1.4000

2007-09-20T10:49:00.000+01:00

Daily Forex Analysis

Market Trend

Economic News

USD

Yesterday, the USD fell to an all-time low against the EUR, however grazed back slightly due to data showing a decline in U.S. consumer prices. The Greenback also fell against the GPB taking it to 2.0173 before declining back to 2.0025.

Yesterday, data coming from the US showed some concerns about the country's economic outlook data such as: CPI, Housing Starts index, and the Building Permits index; the consumer price index surprisingly decreased and pushed lower by 0.1% from the previous month and new home construction strike a 12-year low. The Home Construction Index decreased by 2.6% last month to its lowest in more than 12 years, while building permit activity, a sign of future construction plans, also dropped to a low which has not been seen since mid-1995, Building permits fell 5.9% to an annual rate of 1.307 million.

As it seems at the moment the housing recession may deepen, causing more damage on an already slowing economy, after borrowing costs rose and lenders shut off access to credit, and of course still dealing with the delicate issue of the mortgage defaults which will probably delay the recovery from the worst homebuilding recession in 16 years. The U.S. Federal Reserve announced on Wednesday that it added $9.75 billion of impermanent reserves to the banking system in the course of overnight repurchase agreements and today, the Federal Open Market Committee (FOMC) cut its fed funds target rate by 50 basis points; the first cut in that rate in four years.

EUR

Yesterday's trading day for the 13 nations currency was defined as a quite dramatic day. The EUR climbed up during the early morning hours in Europe to 1.3987 which was a new time high, before it has strengthen back to 1.3956. The EUR is trading at a very important point against the USD. The historic break through the 1.4000 level today might generate some concerns from the ECB, as it rises it can lower exports, mainly to the United States, where the prices for anything from automobiles to steel to consumer goods are more expensive to American buyers, and the ECB would try to avoid this situation. US Federal Reserve Chairman Ben Bernanke and ECB President Jean Claude Trichet are scheduled to speak today regarding those important issues.

The most considerable "ray of light" regarding yesterday's Euro-zone economic data was the German PPI which raised to 0.1%, The rest of the economic data which will be release this week are not very market moving since we only have the Philly Fed survey and leading indicators left on the calendar, and most of the moves will be only technical ones.

JPY

JPY Yesterday, The USD strengthened against the JPY rising to 116.09 from 115.74 after the BOJ, as expected, kept its benchmark interest rate stable at 0.5% and kept its estimations of the national economy unchanged. As it seems for the near future, the BOJ will cooperate with US and European central banks by holding its benchmark interest rate, as it would find it hard to raise rates at the time when U.S. central bank is cutting them.

Currently traders treat the USD/JPY as a less attractive alternative for future investments especially after the US Fed interest rate cut, however tending to the GBP or to other commodities currencies (AUS,NZD) as a substitute may also be considered as a riskier move since those pairs are characterized as extremely volatile compared to the USD/JPY.

Technical News

EUR/USD

The pair breached through the 1.4000 level and is now trading at all time high levels near 1.4040. The hourly studies are showing strong bullish momentum after the physiological barrier, and will probably continue to go up intraday. The daily charts are showing a bearish cross forming, which indicates that on the longer run a correction might be in place.

GBP/USD

The cable is trading in a very unstable and choppy manner in the past few days. The daily studies show a slight bullish momentum and the hourlies show mixed signals with a moderate bearish tendency. It would be preferable to stay out of the cable trading until the smoke clears.

USD/JPY

The pair is in the midst of a very accurate upwards channel, and is now testing the bottom barrier. The oscillators show that a negative breach is quite unlikely, and the daily chart is showing bullish momentum. A preferable strategy might be to go long on dips.

USD/CHF

A very strong breach through the 1.1800 has occurred, and the pair is now trading around 1.1770. The breach indicates that the bearish move has been validated and that the next target price is 1.1740. On the daily chart a bullish cross is starting to form which might indicate that a correction up could be imminent if the cross will validate.

The Wild Card

Crude Oil

The upward channel is showing that the move is nowhere near the end, and is showing a very accurate technical behavior. The Oil is floating at the lower barrier of the channel which provides Forex traders with a great opportunity to establish a great entry point and continue the bullish ride.

Indicators

Euro hits 1.4065; Focus on Saudi Arabia

2007-09-20T10:39:00.000+01:00

News and Events:

Saudi Arabia has decided to not cut interest rates, breaking tradition and not mirroring the Fed’s action on Tuesday because it is concerned with domestic inflation due to record high oil prices. Furthermore, there have been reports that the Saudis would no longer peg their currency to the greenback. The dollar again fell this morning to a new low against the Euro to 1.4065.

Core CPI came in rising by 0.2%, unchanged from July and as expected in August. Housing starts fell 2.6% in August versus a drop of 6.9% in July, suggesting slight improvements in the credit crunch. For the Fed, the 50 basis point was well-timed and matches their current concern for credit instead of inflation.

The Bank of Japan voted 8 to 1 to keep rates on hold at 0.5%. The reasons come as Japan economic indicators have recently turned for the worse, a contracting GDP and weak capital expenditure. The USDJPY trades at 115.46.

Today's Key Issues (time in GMT):

08:30 UK Retail Sales (MoM) AUG 0.00% vs. 0.70%
08:30 UK Retail Sales (YoY) AUG 4.00% vs. 4.40%
08:30 UK BSA Mortgage Approvals SA AUG
08:30 UK Public Finances (PSNCR) AUG 3.5B vs. -13.1B
08:30 UK Public Sector Net Borrowing AUG 6.5B vs. -6.5B
08:30 UK M4 Money Supply (MoM) AUG P 0.80% vs. 1.00%
08:30 UK M4 Money Supply (YoY) AUG P 12.90% vs. 13.00%
08:30 UK M4 Sterling Lending (BP) AUG P 15.1B vs. 24.6B

09:00 EC Construction Output SA MoM JUL
09:00 EC Construction Output WDA YoY JUL

10:00 UK U.K. CBI September Industrial Trends

12:30 CA Wholesale Sales MoM JUL 0.50% vs. 0.20%
12:30 US Initial Jobless Claims Sep-15 321K vs. 319K
12:30 US Continuing Claims Sep-08 2575K vs. 2585K

14:00 US Leading Indicators AUG -0.40% vs. 0.40%

16:00 US Philadelphia Fed. SEP

The Risk Today:

EurUsd: with 1.4100 in sight, 1.4000 holds as the primary support level.

GbpUsd support at 2.0025 with 2.0200 as a target. The pair finding resistance at the 2.0100 handle.

UsdJpy is still in a range, with initial support at 114.75 and resistance up to 117.00. Anything below 112.60 is very bearish.

UsdChf has broken 1.1742 with a vengeance and is now very bearish. The pair will target 1.1629, a strong support. A recovery to 1.1900 would be bullish again.

Resistance and Support:

Daily Forex Analysis (19.09.2007)

2007-09-19T12:54:00.000+01:00

Economic News

USD

Despite yesterday's sharp interest rate cut by the Fed the market anticipated the move. Stocks jumped on the news that the Federal Reserve decided to cut its key interest rate by a 0.5% to 4.75% and the dollar crashed to its historic lowest level against the EUR. The Fed slashed interest rates in order to protect the U.S. economy from sinking into a recession; sparked by the turmoil in the credit and housing markets. During the FOMC meeting, Fed chief Ben Bernanke stressed that the central bank will continue to act as needed to promise price stability and sustainable economic growth.

According to Fed's chief Bernanke's latest move, we can understand that he is more concerned by the sign's of a possible recession which are caused by the tumble in the housing market, jobs market, and the significant reduction in retail sales.

Along with an Interest Rate decision, although somewhat overshadowed by it, other U.S economy news continued to flow yesterday prior to the interest rate news, further exacerbating the currently limping U.S economy. The USD PPI index released at -1.4%, down from last month's figure of 0.6% and well below the forecasted figure of -0.2%. Housing Market Index released inline with expectations at the level of 20, yet down from the previous month's figure of 22. The U.S CPI index is on tap today along with the Housing Starts and Building Permits. All of the latest are expected to come out quite negative.

EUR

Traders drove the EUR to a record high against the USD yesterday after the Fed cut its target rate for overnight loans between banks by 0.5% as rising defaults on subprime mortgages rippled through global credit markets. In total, the European currency has gained 5.5% this year versus the USD as traders bet the Fed would cut rates as the U.S. economy slowed. The EUR traded as high as $1.3987 against the USD although exporters/importers may weigh in on any attempt by the market to surpass the psychologically critical 1.40 level.

Yesterday, there was no significant news released from the EUR zone, apart from the German ZEW Economic Sentiment, which came in weaker than expected at -18.1. However this soft data did not manage to slowdown the European currency from extending its gains across the board after a significant Interest Rate cut by the Fed.

Today is also expected to be devoid of data so we should see the EUR continue range trading on it's heights and will heavily depend on the volatility of the equity markets.

JPY

Yesterday, the Japanese currency dropped against all 16 major currencies after the Fed rate cut fueled a rally in U.S. stocks, spurring investors to buy riskier assets funded by borrowed yen.

The dollar pared some of its early gains against the yen to trade at 115.90 yens per one USD.

Some traders are moving back into risky positions, buying the high-yielder's and selling the yen, so-called carry trade bets, investors buy high-yielding currencies with funds borrowed in Japan, where the benchmark interest rate is 0.5%.

The yen traded as weak as 115.98 per dollar after the Fed interest rate cut, down 3.9% since it appreciated to 111.61 per dollar on Aug. 17, the strongest since June 2006, as investors exited carry trades.

BOJ kept its benchmark rate at 0.5%, the lowest among industrialized nations and we expect the greenback to continue its recovery against the JPY despite the interest rate differential moving towards JPY favorability.

Technical News

EUR/USD

There is a flag formation appearing on the 4 H chart, although not a classical case of a flag formation it is still strong enough to indicate that we will see some sharp movement in the future. Bollinger bands are tightened and volatility is down. However the positive momentum and RSI both indicate that this pair will still go up further before making a reversal which is now almost imminent.

GBP/USD

The hourlies and the dailies are both bearish. However both momentum and RSI indicate that this pair is in oversold territory. So the preferred strategy today may be to buy on dips and sell on highs for intra-day trading, but as a daily position there is still room for further downward movement.

USD/JPY

There is a bearish cross forming on the 4 Hour chart, which could indicate that a small correction move might occur before the bullish trend continues. The daily charts are bullish, with more room to run. A preferable strategy for position traders might be to go long, as for day traders it might be to go short

USD/CHF

The USD/CHF is in a bearish configuration. The volatility decreases as the pair moves without a trend and swings around exponential moving average (EMA 50 and 100).the Bollinger bands are tightened and the 1H, 4H Elliott pattern implies a continuation of the bearish pressure. The target price should be around 1.1810.
The Wild Card

Gold

Gold broke the 716.50 resistance level and is in an uptrend supported by 1H exponential moving averages. The volatility is low and the Bollinger bands are tightened. We should expect to see a bullish configuration. 1H, 4H Elliott pattern implies that the Gold should gather momentum today, which provides Forex traders with a great opportunity to go long. The target is expected at around 718.40.

Today News (19.09.2007)

2007-09-19T12:29:00.000+01:00

Fed cuts rates 50 basis points to 4.75%; Dollar falls.

News and Events:

Euro at 1.4000 is the answer. The Euro hit 1.3988 in late trading yesterday as the wider interest rate differential sent the Euro, the British Pound, the Australian and New Zealand dollars upward. The FOMC’s statement clearly stated that the Fed was very concerned about the effects of the credit crunch on the broader economy and felt that a an unusual solution was needed to boost confidence and preempt further adverse effects on the economy by opting to break tradition and cut 0.5% instead of an incremental 0.25%. The decision to cut 50bp was unanimous. The Fed further stated that inflation figures have been kept in check but implied that the credit markets could affect the housing market. Traders point out that the markets do not yet reflect a greater appetite for risk. Only time will tell.

The Canadian dollar continued its rise as the weakening US dollar and (record high) crude oil prices hit $82 a barrel. With the state of the commodity markets, investors target parity to the US dollar.

Today's Key Issues (time in GMT):

08:00 IT Industrial Orders s.a. (MoM) JUL
08:00 IT Industrial Orders n.s.a. (YoY) JUL
08:00 IT Industrial Sales s.a. (MoM) JUL
08:00 IT Industrial Sales n.s.a. (YoY) JUL

08:30 UK Bank of England Minutes

11:00 US MBA Mortgage Applications Sep-14
11:00 CA Consumer Price Index MoM AUG 0.10% vs vs 0.10%
11:00 CA Consumer Price Index YoY AUG 2.10% 2.20%
11:00 CA Bank Canada CPI Core MoM AUG 0.20% vs 0.10%
11:00 CA Bank Canada CPI Core YoY AUG 2.30% vs 2.30%

12:30 CA Leading Indicators MoM AUG 0.30% vs 0.40%
12:30 US Consumer Price Index (MoM) AUG 0.00% vs 0.10%
12:30 US CPI Ex Food & Energy (MoM) AUG 0.20% vs 0.20%
12:30 US Consumer Price Index (YoY) AUG 2.10% vs 2.40%
12:30 US CPI Ex Food & Energy (YoY) AUG 2.20% vs 2.20%
12:30 US CPI Core Index SA AUG
12:30 US Consumer Price Index NSA AUG
12:30 US Housing Starts AUG 1350K vs 1381K
12:30 US Building Permits AUG 1345K vs 1373K

The Risk Today:

EurUsd: targeting 1.4000 with heavy support down to 1.3850.

GbpUsd moved and closed back in the upward channel. Look for resistance at 2.0200, but a break opens the door back to 2.0360. Downside risk still high with support seen initially at 2.0000, down to 1.9880.

UsdJpy broke the strong resistance (mentioned yesterday) at 115.66, and closed above at 115.75. This has opened the door back up to 117.60. On the downside, taking out yesterday’s low of 114.80 is bearish.

UsdChf hovering at 1.1810 where the pair finds strong support and finds itself at the bottom trend line of the long term triangle formation. Technically, this is a buy zone for a target back to 1.2000. Anything below 1.1742 would be very bearish.

Forex Technical Analysis (17.09.2007)

2007-09-17T11:06:00.000+01:00

EUR/USD

Current level-1.3872

The currency pair is in an uptrend unfolding from the 1.2484 bottom and probably ahead of a significant reversal on weekly basis. The technical indicators are neutral and the trading is situated above the 50-day and the 200-day SMA, currently projected at 1.3638 and 1.3361. On the Elliott Wave count we are probably finalizing C of (B)-(intermediate) and a development of (C)-(intermediate) lies ahead.

With the recent 1.3927 the pair has entered a larger corrective phase, which should test the support at 1.3720 in the next few days. For today allow a rise to 1.3903, followed by a slide towards 1.3777.

USD/JPY

Current level-114.95

The uptrend from 115.16 has been completed at 124.14 and a downtrend is unfolding since. The technical indicators are falling on daily basis and trading is situated below the 50- and 200-day SMA, currently projected at 122.09 and 119.60.

The pair swings without a direction between 114.39 support and 115.51 resistance, so only a break through the mentioned levels will put on stage 112.60 or 117.18.

GBP/USD

Current level-2.0007

A local top is set at 2.0652 where the pair hit a new high for the past 26 years. The technical indicators are flat after reversing at 1.9649.

Obviously a downtrend is on the run after thursday's spike-high to 2.0346, so the current target is set at 1.9943-60.

US data still weak; Pound falls sharply on Northern Rock trouble

2007-09-17T10:27:00.000+01:00

US economic data on Friday came out weaker than expected, keeping pressure on the greenback. US Retail Sales rose 0.3% in August, below an expected 0.4%. Core Retail Sales fell 0.4% versus 0.2% expected growth. US import prices dropped 0.3% in August, blamed primarily on rising crude oil prices, and export prices rose 0.2%, in line with expectations. Business inventories were up by 0.5%, and the University of Michigan consumer sentiment index almost unchanged at 83.8. However, US Treasury Secretary Henry Paulson did say in an interview on Friday that the credit markets showed signs of a recovery and that a stronger dollar is in US economic interest. Paulson’s comments disallowed the Euro to make new record highs, closing at 1.3876, unchanged for the day.

The U.K.’s fourth largest mortgage lender, Northern Rock, received emergency funding from the Bank of England to offset an unspecified amount of losses from the recent subprime woes in the United States. The worry that the credit crunch in the US may hit the Kingdom sent the Pound in free fall to 2.0056. Today, the Pound furthered it’s slide to 2.0000 in early trading.

The market expects a rate cut of 25 basis points from the Fed this week, to curb the affect on the broader economy. Investors should know, however, that inflation still remains a medium-term threat.

Today's Key Issues (time in GMT):

06:50 USD U.S.'s Paulson, France's Lagarde talk to Reporters in Paris

09:00 EUR Euro-Zone Trade Balance (JUL) 7.0B vs 7.8B
09:00 EUR Euro-Zone Trade Balance, sa (JUL) 4.0B vs 5.2B

11:00 EUR ECB Council Member Liikanen Speaks in Turku, Finland

12:30 CAD International Securities Transactions (JUL)
12:30 USD Empire Manufacturing (SEP) 20.0 vs 25.1

16:45 USD U.S.'s Paulson, U.K.'s Darling Talk to Reporters in London

The Risk Today:

EurUsd: Downside risk remains high through to 1.3765, although Friday’s low was well away from it at 1.3844. On the upside, anything above 1.3920 is very bullish.

GbpUsd has for the second time broken down through its long term trend line on Friday AND closed below, at 2.0077. Today, the pair continues to trade below down to 1.9999, which is confortably bearish. The upside risk remains getting back into its channel. Anything above 2.0093 is, again, bullish.

UsdJpy is approaching a strong resistance at 115.66, which, if broken, will open the door back to 117.60. Downside remains fairly well supported to 112.60.

UsdChf remains with key support found at 1.1816, however still bearish under 1.1962.

Dollar unchanged even after better than expected Jobless claims

2007-09-14T09:05:00.000+01:00

The dollar remained unchanged today even though weekly jobless claims came out better than expected, at 319k versus an expected 325k. With market sentiment in favor of the Euro, traders expecting a Fed rate cut next week and a long string of weak economic data from the U.S., the dollar remains at record lows. Last week's Non-farm payrolls indicated that the credit troubles in the U.S. have began to take a considerable toll on the broader economy.

Today we look to a final barrage of economic data, namely Current Account Balance, Retail Sales, and U.S. Import and Export prices. Estimates remain on the downside, with 0.2% growth expected from retail sales, down from 0.4% last month. Many traders eye 1.4000 for the Euro ahead of an expected Fed rate cut.

Today's Key Issues (time in GMT):

09:00 EC Euro-Zone CPI (MoM) AUG 0.10% vs -0.20%
09:00 EC Euro-Zone CPI (YoY) AUG 1.80% vs 1.80%
09:00 EC Euro-Zone CPI - Core (YoY) AUG 1.90% vs 1.90%

12:30 CA Manufacturing Shipments MoM JUL 1.00% vs -1.80%
12:30 CA Labor Productivity QoQ 2Q 0.40%vs 0.70%
12:30 US Current Account Balance 2Q -$190.0B vs -$192.6B
12:30 US Import Price Index (MoM) AUG 0.20% vs 1.50%
12:30 US Import Price Index (YoY) AUG
12:30 US Advance Retail Sales AUG 0.50% vs 0.30%
12:30 US Retail Sales Less Autos AUG 0.20% vs 0.40%

13:15 US Industrial Production AUG 0.30% vs 0.30%
13:15 US Capacity Utilization AUG 82.00% vs 81.90%

14:00 US U. of Michigan Confidence SEP P 83.5 vs 83.4
14:00 US Business Inventories JUL 0.30% vs 0.40%

15:15 IT Current Account (mlns euro) JUL

The Risk Today:

EurUsd: finding strong resistance at 1.3968 ahead of 1.4000. Downside risk remains high through to 1.3765.

GbpUsd has changed tide for the short-term. With 2.0398 as target a resistance, yet the pair slammed down through its support at 2.0235, opening the door to 2.0153 and 2.0070.

UsdJpy focuses on 112.61 and 111.61 and remains below the resistance of 115.66.

UsdChf Key support found at 1.1816, however entirely bearish under 1.1962.

FOREX-Dollar drifts up vs yen

2007-09-13T09:30:00.000+01:00

LONDON, Sept 13 - The dollar strengthened against the yen on Thursday, as investors took a breather from selling the U.S. currency and waited to see how deeply the Federal Reserve might cut interest rates next week.

The Fed is widely seen lowering rates by 25 or 50 basis points from 5.25 percent at next Tuesday's meeting to help stem an economic slowdown arising from problems in the U.S. housing market and subprime mortgage sector.

The dollar has slid below the closely-watched 80 level on the trade-weighted index against six major currencies as investors have shunned the U.S. currency, driving the euro to an all-time peak above $1.39 and the Canadian dollar near a 30-year high.

"The dollar has slightly come back up. But I would hesitate to call it a recovery," said Nick Parsons, chief currency strategist at National Australia Bank in London.

"For four days now, the dollar has consistently traded below below 80 in the dollar index ... and this has encouraged people to trade the dollar on the short side. So today's slight uptick in the dollar is just part of normal price action," he added.

By 0746 GMT, the dollar was up 0.3 percent against the yen at 114.44 yen , recovering from a 14-month low of 111.60 yen struck last month.

The dollar index edged up slightly to 79.475 (.DXY: Quote, Profile, Research) after having slid to 79.319 on Wednesday, near its all-time low of 78.19 hit in 1992. The 80.00 zone has historically provided chart support for the index.

The euro was flat from late U.S. trade at $1.3903 after climbing as far as $1.3915 the previous day, according to trading platform EBS -- the highest since its launch at the start of 1999.

The euro has risen broadly this week, as recent comments from European Central Bank officials have seemed to leave open the possibility of future euro-zone rate hikes, even as the Fed is expected to start lowering interest rates.

Analysts said there is unlikely to be any immediate respite for the dollar, even if the market becomes heavily underweight on the currency.

"Should upcoming data, in particular (U.S.) retail sales data come in ahead of expectations we could see a short-term squeeze, but for now at least it seems the market is likely intent on testing towards the next big psychological level, namely $1.40," in the euro, said Rabobank in a research note.

With some markets, such as stocks, showing signs of returning to normalcy from the upheaval of the past few months, the focus has shifted back to the U.S. economy's housing-led deterioration.

"The real problem is the U.S. economy," said Luke Waddington, head of forex trading at Royal Bank of Scotland in Tokyo. "Overall there's some excitement in the price in terms of dollar weakness."

In Japan, meanwhile, Prime Minister Shinzo Abe's shock announcement on Wednesday that he will step down had little sustained impact on the yen as the country's ruling party scrambled to find a new leader and avoid a policy vacuum. [nT115429]

And the high-yielding Australian and New Zealand dollars both slipped on Thursday, partly after data showed retail sales in New Zealand were flat in July from a month earlier compared with forecasts for a 0.2 percent gain.

The report followed the Reserve Bank of New Zealand's decision to keep rates on hold at 8.25 percent, the highest among developed economies, with the central bank acknowledging signs of slowing demand but saying inflation remained a worry. [nWEL211551].

The New Zealand dollar was flat at US$0.7122 , while the Australian dollar lost about 0.1 percent to US$0.8416.

Solid industrial data from Europe sends Euro to all-time high

2007-09-13T09:18:00.000+01:00

European industrial production figures came out stronger than expected at 0.6%m/m in July, an increase from a steady June. The data, coupled with the European Central Bank's optimism on economic outlook sent the Euro to an all-time tradable high of 1.3915 in late trading yesterday. Market participants however indicate to increasing downside risk as investors may not share the same amount of positive sentiment as the ECB. Nevertheless, traders eye the 1.4000 level for the Euro in the short-term.

Although general US dollar weakness has helped the Canadian dollar, the pair approached its 30-year high as the market saw another wave of buying based on the Fed cutting rates next week, making the Canadian currency more attractive on rate differentials. The currency also rose as crude oil hit record levels at US$80 a barrel.

Gold held steady at $711/oz as general dollar weakness and market instability drove prices to new highs. With gold pulling back yesterday and this morning, it is still too early to tell whether a correction will begin, before aiming for $730, a return to the high of May 12th, 2006.

Today's Key Issues (time in GMT):

08:00 EC ECB Publishes Sep. Monthly Report
08:00 IT CPI (NIC incl. tobacco) (MoM) AUG
08:00 IT CPI (NIC incl. tobacco) (YoY) AUG
08:00 IT CPI - EU Harmonized (MoM) AUG F
08:00 IT CPI - EU Harmonized (YoY) AUG F

09:00 EC Eurozone Employment (QoQ) 2Q
09:00 EC Eurozone Employment (YoY) 2Q

12:30 CA Capacity Utilization Rate 2Q
12:30 US Initial Jobless Claims Sep-08
12:30 US Continuing Claims Sep-01

18:00 US Monthly Budget Statement AUG

The Risk Today:

EurUsd: last resistance found at 1.3968 before reaching 1.4000. Downside risk increases to 1.3765.

GbpUsd still remains firmly in its uptrend with 2.0398 as target a resistance. Support holds strong at 2.0235.

UsdJpy focuses on 112.61 and 111.61 and remains below the resistance of 115.66.

UsdChf Key support found at 1.1816, however entirely bearish under 1.1962.

Euro hits all-time record high

2007-09-12T10:19:00.000+01:00

Trade balance figures yesterday coming out of the U.S. were weaker than expected at a deficit of $59.2billion. The slump in the US economy is being felt around the world despite the recent decline in global dependence on US growth. Patterns resulting in higher long-term interest rates in the US at such a critical stage are not in the interest of economies heavily exposed to US consumption. However, in the short term, growth concerns are having a negative impact on dollar sentiment.

European Central Bank President Trichet reiterated that no financial economy is in danger of collapsing. Furthermore, the ECB remains concerned about inflation. Trichet also said that the ECB's main role is price stability, not financial stability. In early trading this morning, the Euro hit an all-time tradable high of 1.3678 against the US dollar.

Today there is limited data with mortgage applications index due at 11h GMT.

Today's Key Issues (time in GMT):

08:30 UK Claimant Count Rate AUG
08:30 UK Jobless Claims Change AUG
08.30 UK Avg Earnings inc bonus 3M/YoY JUL
08:30 UK Avg Earnings ex bonus 3M/YoY JUL
08:30 UK ILO Unemployment Rate (3mths) JUL
08:30 UK Manu.Unit Wage Cost (3Ms/YoY) JUL

09:00 EC Euro-Zone Labour Costs (YoY) 2Q
09:00 EC Euro-Zone Ind. Prod. sa (MoM) JUL
09:00 EC Euro-Zone Ind. Prod. wda (YoY) JUL

11:00 US MBA Mortgage Applications Sep-07

The Risk Today:

EurUsd: finally reached the 100% fibonnacci level at 1.3842 and slammed right through reaching 1.3878 in early trading this morning. This has opened the door for a move to the psychological 1.40 handle. Look for major support at 1.3765.

GbpUsd is reaching for a target of 2.0398 without major obstacles. This pair will be the biggest mover of the majors. Support is found at 2.0235.

UsdJpy has clearly eyed it's previous low of 111.58 for a few days now. There continues to be heavy resistance at 115.66.

UsdChf still bearish below 1.1962, a resistance, however a key support level is 1.1816.

Japanese stocks fall on Abe resignation

2007-09-12T09:06:00.000+01:00

TOKYO - Japanese stocks fell Wednesday after Prime Minister Shinzo Abe announced plans to resign after a string of damaging scandals and a humiliating electoral defeat.

The benchmark Nikkei 225 index dipped 80.07 points, or 0.50 percent, to close at 15,797.60 points on the Tokyo Stock Exchange. The index added 0.72 percent to finish at 15,877.67 on Tuesday.

The broader Topix index, which includes all shares on the exchange's first section, shed 4.12 points, or 0.27 percent, to 1,528.27 points.

Tokyo stocks initially rallied after the first media reports that Abe intended to step down came early in afternoon trade, but soon retreated.

"Abe's resignation would mean that policy decisions regarding such matters as the budget deficit and the possibility of a consumption tax hike will be up in the air for a while," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Securities. "This is absolutely negative to the stock market," he said.

Others said Abe's exit could prove positive in the longer term, if it clears the air and allows the ruling Liberal Democratic Party to stabilize after a series of political missteps.

For the near term, traders said, uncertainty is likely to weigh on Japan's financial markets, compounding ongoing concerns over the U.S. credit crisis.

"Tokyo shares will probably have to go through a double whammy of the resignation news and the U.S. subprime woes for a while," said Hiroaki Kuramochi, head of cash equities department at Bear Stearns in Tokyo.

Banks were the main losers on the day; Mizuho Financial Group fell 2.4 percent to $5,687.

Other decliners included Shin-Etsu Chemical Co., down 3.51 percent to $67; Sony Corp., off 0.37 percent to $47; and trading company Marubeni Corp., down 2.35 percent to $7.64.

Real estate companies were among the winners, with Sumitomo Realty & Development Co. adding 1.82 percent to $29.40. Toyota Motor Corp. edged up 0.31 percent to $56.61, and Mitsubishi Electric Corp. added 3.57 percent to $12.19.

Secondhand comic book store operator Mandarake Inc. soared 12.95 percent on speculation that Taro Aso, the comic-book loving secretary-general of the ruling Liberal Democratic Party, may become the new prime minister.

In currencies, the dollar was trading at 113.94 yen at 2:50 p.m. Wednesday, down from 114.30 yen late Tuesday in New York. The euro rose to $1.3868 from $1.3832.

Greenback under pressure as overall sentiment on US economy deteriorates

2007-09-11T11:13:00.000+01:00

The US dollar extended its decline as overall sentiment on the broader US economy deteriorated due to expectation that the Fed will cut rates after weak Labor department figures on Friday. Several Federal Reserve members reiterated that the US faces both inflation concerns coupled with downside growth risk. Traders await retail sales data this Friday, eyeing any indication that consumer-spending could cause demand falling beneath supply.

Rising oil and gold prices boosted the Canadian dollar as investors believe Canada's economic growth will benefit, as the two commodities account for roughly 50% of the nation's exports. The USDCAD pair hit a low of 1.0506 in yesterday's trading.

The Euro fell late last night to 1.3782 as hedge funds sold off to take short-term profits. Traders however insist that the bullish trend is intact ahead of another week of possible disappointing US economic data releases.

Today's Key Issues (time in GMT):

06:00 GE Wholesale Price Index (MoM) AUG
06:00 GE Wholesale price Index (YoY) AUG

06:45 FR Trade Balance (Euros) JUL

08:00 IT Istat Labour Cost in industry and services 2Q

08:30 UK Visible Trade Balance GBP/Mn JUL
08:30 UK Trade Balance Non EU GBP/Mn JUL
08:30 UK Total Trade Balance (GBP/Mln) JUL

12:15 CA Housing Starts AUG

12:30 CA New Housing Price Index MoM JUL
12:30 CA Int'l Merchandise Trade JUL
12:30 US Trade Balance JUL

14:00 US IBD/TIPP Economic Optimism SEP

14:30 UK Leading Indicator Index (MoM) JUL
14:30 UK Coincident Indicator Indx(MoM) JUL

The Risk Today:

EurUsd: Continue to look for a 100% retracement to 1.3842, the all-time high with an eye for the psychological 1.40 handle. On the downside, there are no obstacles back down to 1.3666 and then 1.3608, the former 50% retracement level.

GbpUsd: Still holding steady at the 61.8% retracement level of 2.0273 with strong upside potential. Should it's behavior mimic that of the Euro, we eye a short-term target of 2.0465, a strong resistance. On the downside, 2.0156 holds as the first support with strong support down to the lower trend-line at 2.0070.

UsdJpy has clearly eyed it's previous low of 111.58. Look for either a bounce back to 114.57 which will open the door back to 115.50, or, a slam down through 111.58, after which 109.00 will be the major target to hit, the May 17th, 2006 low.

UsdChf still hovering between upper and lower trend-lines of the triangle, this pair will break out with a vengeance very soon. Look either for a break down through 1.1800 to be short, or 1.2145 to be long.

BOE and ECB leave rates unchanged

2007-09-07T10:56:00.000+01:00

BOE and ECB leave rates unchanged; Euro rallies on Trichet speech

The Bank of England and European Central Bank left interest rates unchanged at 5.75% and 4.00% respectively. The euro rallied after ECB President Trichet reiterated that price control remains the primary concern, especially during less stable economic times. The Bank of England left rates unchanged because, according to some, it was still too early to tell for how long market instability would continue and how much it would hamper the economy.

Investors await US labor figures, primarily the August unemployment rate and non-farm payrolls, expected to be at 4.6% and 110k (vs 92k) respectively.

Yesterday, we wrote: (In Gold) "there are two scenarios to observe very carefully:

i. Gold hitting a short-term double top between $688 and $695.
ii. The break-out of the major triangle formation, and confirmed by a break through $695 will causing Gold shooting upwards toward $730 for a long term double top."

We have achieved scenario number one, with spot Gold hitting a high of $698 and closing for the day at $695! Look for a small correction back to the top trend-line, after which scenario number two may kick-in. Happy are those who were long Gold yesterday.

Today's Key Issues (time in GMT):

10:00 EC Euro-Zone OECD Leading Ind. JUL
10:00 GE Industrial Prod. YoY (nsa wda) JUL
10:00 GE Industrial Production MoM (sa) JUL

11:00 CA Unemployment Rate AUG
11:00 CA Net Change in Employment AUG

12:30 US Change in Nonfarm Payrolls AUG
12:30 US Unemployment Rate AUG
12:30 US Change in Manufact. Payrolls AUG
12:30 US Average Hourly Earnings MoM AUG
12:30 US Average Hourly Earnings YoY AUG
12:30 US Average Weekly Hours AUG
14:00 US Wholesale Inventories JUL

The Risk Today:

EurUsd remains in a range for the past ten days. We are near the resistance level of 1.3720; a daily close above that would signal-in the bulls with an eye for 1.3840. On the downside, 1.3631 is a minor support, which if broken, bears eye the lower support of 1.3550.

GbpUsd formed a wedge pattern but has not broken out to the downside, yet. On the downside, 2.0077 will have to fail as a strong support for the start of a second bearish leg. On the upside, any close above 2.0285 will open the door for another move up to 2.0462.

UsdJpy very much stuck in a range between 113.92 and 116.52 as investors decide whether to take on or reduce risk. A break of 113.92 will eye the lower low of 111.60.

UsdChf finds strong support and 1.1960. The pair had bounced off the lower trend line on August 6th at 1.1819. We eye a break of 1.2160 to return to the upper trend line at 1.2330.

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2007-08-31T10:40:00.000+01:00

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