FOREXYARD: Forex News Blog

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• EUR Weathers Storm, Continues Gaining
• US Economy adds only 179K Jobs, According to ADP
• British Pound Expecting Downturn from Bearish Data
• FX Technical Analysis – EUR/USD Bullish Flag Trade
• US Economic Data Highlights Today’s FX Trading
• Silver Plunges Creating Buying Opportunity

EUR Weathers Storm, Continues Gaining Posted: 04 May 2011 08:38 AM PDT The euro has surprisingly held its ground lately, despite the sell-off during this morning's Asian trading sessions, which saw a downturn in commodity-linked currencies like the Aussie (AUD), Kiwi (NZD) and Loonie (CAD). The rapid sell-off was triggered by an aggressive move against silver by billionaire George Soros, according to the Wall Street Journal. The dip in precious metals prices has pulled down heavily on risk sentiment in Asia, but the EUR appears to have quickly pared its losses at the outset of the European trading session. As traders prepare themselves for tomorrow's interest rate decisions out of Britain and the euro zone, the question turns to whether President Trichet and his European Central Bank (ECB) will continue to hold rates steady, as hinted at in late-April, or will another rate hike be expected considering the pace of regional inflation? Friday's Non-Farm Payroll data out of the United States also becomes a factor as traders begin to speculate and price-in what impact they are expecting from the American employment sector after today's less than stellar ADP release. The ECB is expected to leave its rates unchanged tomorrow, but traders will be listening closely to Trichet’s words to gauge the direction of future monetary policy in the euro zone. Last month's dovish sentiment put a damper on EUR growth by mid-April, but traders have so far found reasons to continue buying up the 17-nation single currency.

US Economy adds only 179K Jobs, According to ADP Posted: 04 May 2011 08:34 AM PDT Automatic Data Processing Inc. (ADP) published its non-farm employment change estimate today, showing an expectation of approximately 179,000 new jobs being added to the American private sector in April. The news stunted the US dollar's mild gains in today's trading, though results appear mixed. The EUR/USD halted its recent bearish tick with a flattening out in value near the 1.4800 resistance line. The pair may continue bullish in the near future, though some are hesitant given the disparity in economic data from both sides of the Atlantic. The greenback was able to make some strides against the Japanese yen today, however, with the pair rebounding back up towards 81.20 from yesterday's low of 80.75. With the US housing market bullish, and expecting further growth in May, the combination of increased retail sales, consumer confidence and now the buoying jobs market, investors in the US economy are finding more reasons to agree with Fed Chairman Ben Bernanke's assessment that recovery is well underway. The news may not help the buck fight against the dollar bears pushing against the currency due to interest rate differentials, but it should gradually bring the US economy back into the good graces of global investors over the next several quarters.

British Pound Expecting Downturn from Bearish Data Posted: 04 May 2011 08:30 AM PDT Britain experienced another bearish trading session today following a series of reports which failed to meet expectations. The British economy has been struggling in the manufacturing and industrial sectors, which now appears to be spilling over into other aspects of economic well being. Published today were several interconnected data sets. The first was the Nationwide House Price Index (HPI) which showed the housing market experiencing a pricing downturn of about 0.2% this past month. The news had pulled down on the pound sterling (GBP) initially but not heavily. Shortly after the HPI data release, Britain published its Construction PMI which concurred with the notion expressed in the HPI figures; mainly that the housing market was in a slump. Falling far short of expectations, the HPI and PMI figures have so far pulled down moderately on the value of the British pound. But the bad news didn't end there. Many investors keeping an eye on Britain were expecting today's net lending report to show modest growth in private loans. The actual figure published today, however, came well below expectations. If you couple this information with the sluggish growth in the M4 money supply, it appears possible to add the housing and financial systems to the list of economic sectors faltering in the British economy. This spells bearishness for the GBP.

FX Technical Analysis – EUR/USD Bullish Flag Trade Posted: 04 May 2011 02:44 AM PDT The EUR/USD has consolidated its gains over the past week, creating a bullish flag pattern on the daily chart. Given the Momentum-14 indicator is moving higher, a breakout to the upside is expected. The bullish flag pattern has been formed between the prices of 1.4750 and 1.4900. Before entering long on a breakout of the bullish flag pattern, traders should wait for confirmation of the breakout. A move above 1.4910 should suffice. A protective stop should be placed inside the chart patter below 1.4840. Judging from the chart pattern, a move following a breakout should take the pair roughly 400 pips to 1.5300. A take profit level can be placed near this level below the May and June 2008 lows.

US Economic Data Highlights Today’s FX Trading Posted: 04 May 2011 12:05 AM PDT A news heavy day follows yesterday's FX trading that had the USD appreciating while gold and silver prices were pulling back sharply and US equities falling. Highlights include UK construction data and the ADP Unemployment Change. Today's Economic Data Releases GBP – Construction PMI – 08:30 GMT Expectations: 55.6. Previous: 56.4. Yesterday's disappointing UK Manufacturing PMI sent Sterling sharply lower versus both the dollar and the euro. The weak economic data also sent short Sterling futures lower, indicating the market has pushed back expectations for a BOE rate hike, putting further pressure on the pound. GBP/USD support is found at 1.6430 and 1.6170. USD – ADP Non-Farm Employment Change – 12:15 GMT Expectations: 200K. Previous: 201K. Often considered a preview to the all-important jobs report due out on Friday, the ADP non-farm report does not always have a correlation with the report from the US Department of Labor. However, if today's release shows further improvement in the unemployment sector the report should feed into dollar selling. EUR/USD resistance is found at 1.4900 followed by a target at the 2009 high of 1.5140. USD – ISM Non-Manufacturing PMI – 14:00 GMT Expectations: 57.9. Previous: 57.3. The services sector PMI is indicative of the flat 1.8% GDP growth the US released the previous week. An increase in this month's reading would help to increase future GDP expectations. USD/CAD support is found at the recent low of 0.9444 with support coming in at 0.9575 and the 50-day moving average at 0.9655. Oil – Crude Oil Inventories – 14:30 Expectations: 1.9M. Previous: 6.2M. Yesterday crude oil prices slid 2% on reduced risk sentiment, a decline in US equities and a general bearishness in commodities with gold and silver prices falling. Lower than expected crude oil inventories should help to boost crude oil prices towards this week's high of $114.80. Support is found at $105.20.

Silver Plunges Creating Buying Opportunity Posted: 03 May 2011 12:45 PM PDT In a volatile New York trading session the EUR/USD tested the 1.4900 level and the USD/CHF fell to a new all-time low. Spot silver plunged lower but may have created a buying opportunity. Tomorrow US unemployment data will be released The EUR/USD rallied to a high of 1.4888 after better than expected US factory orders of 3.0% on forecasts of 1.9% which fed into euro buying before the pair fell back to 1.4818. A decline in equity markets spurred the selling of the euro with the S&P 500 trading lower by -0.62%. The GBP/USD looks to close near its low at 1.64462 from 1.6616 after disappointing manufacturing data. The USD/CHF hit a new all-time low as the USD continues to be sold. The pair traded as low as 0.8595 before climbing to 0.8613. Crude oil prices dropped as low as $110.29 to end the day near $110.90. Silver prices plunged today by more than 8% to a low of $40.57 before trading back near $41.50. The drop is largely considered a technical correction and the low of the day coincides with a rising trend line off of the January low. Traders may find this an opportunity to buy into the uptrend on a bounce from the trend line. A protective stop should be placed underneath the rising trend line to protect against any further downside move in the commodity. Tomorrow during European trade, markets will be focusing in on UK housing numbers and a UK construction PMI. A positive output from these indicators may help Sterling rebound from today's lows after disappointing manufacturing data. During the New York trading, the ADP Non-Farm Employment Change and manufacturing PMI numbers will be out. Positive readings should feed into further USD selling.

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