FOREXYARD: Forex News Blog | |
- Euro Zone Inflation on Target
- Australia’s Housing and Automotive Sectors Show Decline
- Core Machinery Orders in Japan Sky-Rocket 2.9%
- Major Currencies Stable as Markets Await Further Developments.
- FX Technical Analysis – GBP/USD – Two Merging Trend Lines
- European Inflation Data to Underscore Current Tightening Cycle
| Posted: 16 May 2011 05:59 AM PDT
Today's consumer price index (CPI) out of the euro zone affirmed the stable growth in prices among the members of the European Monetary Union (EMU). Regional CPI was on target with 2.8% growth, year-on-year, and its core counterpart was partially above forecasts with a 1.6% growth reading. Traders have been pulling away from the EUR these two weeks after remarks by the European Central Bank (ECB) left many speculators uncertain about the timing of the next interest rate hike. The result of this uncertainty has been for the EUR/USD to push back towards 1.40 in today's early trading. Steady inflationary figures, with growth mildly above expectations, is one means of pressuring the ECB to consider lifting rates and thereby tightening its monetary policy. Traders involved in the forex market appear to have been hesitant to push the EUR outside of its bullish channel against several currencies, but this week's early movements may prove to be a breaking point for the 17-nation common currency. The euro will be strangely absent from the economic calendar this week, but Friday will see the publication of Germany's producer price index (PPI). This figure will reveal another aspect of the inflationary levels in the region, but so far this week the EUR remains bearish. Read more forex trading news on our forex blog. |
| Australia’s Housing and Automotive Sectors Show Decline Posted: 16 May 2011 05:50 AM PDT
The Australian dollar's (AUD) meteoric rise over the past several years is something to be desired by other countries. However, not every nation is isolated from market turmoil and this morning's reports showed how even Australia is subject to cyclical market contractions. Two reports were released by the Australian Bureau of Statistics this morning at 2:30 GMT. One was a significant report which measured the percent-change in home loans for the month of April. This figure was expected to show solid growth of 2.3%, month-on-month, for the Australian housing sector but instead revealed a 1.5% contraction since March. The previous month's 4.7% decline looks worse by comparison, but highlights the fragile nature of the housing market in Australia. The second report was a less significant data release regarding new motor vehicle sales. It was a figure which measured the change in number of vehicles purchased since the previous month. It acts as a leading indicator of consumer optimism since the purchase of physical assets tends to represent a brighter outlook for personal income and spending levels. It also correlates to bank loans and consumers' application for financial assistance from banking institutions. The new vehicle sales report, like the housing data, also revealed a contraction, but by a stark 3.5%. The downturn from both indicators signals a substantial decline in consumer confidence in the Australian economy. With fewer individuals applying for home loans and fewer Aussies purchasing vehicles, it appears more are opting to save their income as opposed to investing in physical assets. The AUD so far appears a bit shaken and could see some bearishness this week if other data doesn't grant it some support. Read more forex trading news on our forex blog. |
| Core Machinery Orders in Japan Sky-Rocket 2.9% Posted: 16 May 2011 05:45 AM PDT
The Japanese economy has been wrought with severe downswings over the past several weeks following the disastrous earthquake and tsunami which struck the island on March 13. Industrial production figures, consumer spending and consumer confidence have all plummeted since the event and many have been speculatively short on Japan as a result, but today's news may have helped Japan turn a corner. Today's early morning release of core machinery orders by the Japanese Cabinet Office revealed a rather shocking figure. Given the stark industrial data published out of the Japanese economy over the past month, expectations for this morning's machinery orders was for a 9.7% decline, down from last month's 1.9% decline. Interestingly enough, the core machinery orders figure came out well above expectations and actually revealed expansion instead of contraction. The report came in at 2.9% for the month of April and was further supported by the Bank of Japan's (BOJ) corporate goods price index (CGPI) which also showed a 2.5% growth, year-on-year, for inflation of corporate goods. The data signals a possible turnaround point for the Japanese economy and shows that the island nation is well into a recovery from its March 13 disaster, despite speculation to the contrary. The Japanese yen continues to show mixed results, however, with growth seen against higher yielding currencies like the euro (EUR) and British pound (GBP), and minor losses versus the US dollar (USD) and Swiss franc (CHF). Read more forex trading news on our forex blog. |
| Major Currencies Stable as Markets Await Further Developments. Posted: 16 May 2011 04:42 AM PDT
The euro came off its overnight lows but failed to move above a previous resistance/support level. Traders this afternoon will be looking for a spark in US manufacturing data after a quiet European trading session has kept the majors in tight ranges and equities in the red. The EUR/USD is currently being traded at 1.4115 from an opening day price of 1.4086. Market sentiment continues to go against the euro as future aid to Greece, Portugal, and Ireland will be debated by European Union finance ministers today. Earlier today EU y/y inflation was released in-line with expectations, rising by 2.8%. The report modestly increased traders' appetite for euros but was not substantial enough to turn market sentiment. A break below the 1.4020 for the EUR/USD could spur further selling to the 50% retracement of the January to May move at 1.3900. EUR/GBP is firmer at 0.8720 from 0.8706 on sterling weakness. Support is found at 0.8670, a level that coincides with the 100-day moving average. Cable is trading just below its opening day price as Friday's low of 1.6150 appears to have held as short term support. The GBP/USD continues to decline for the fourth straight session as traders wait for tomorrow's CPI data. Market players may be hesitant to short sterling ahead of the major data release. A move below the support may find support at the apex of two trend lines at 1.6050. The yen is stronger versus both the dollar and the euro after stronger than expected machine orders climbed 2.9% on expectations of a contraction of -9.7%. The sharp difference between market forecasts and the data release may be explained by the time the data was collected. As such, the move in the yen may be due to further safe haven buying as portfolio managers take a bit of risk off the board given the downturn in equities. Equity markets continue to trade in the red on European debt woes. The Nikkei is lower by almost -1.0% while the German DAX is down by -1.34%. The FTSE is off by -0.89%. Approaching the New York open the Empire State Manufacturing Index is forecasted to decline to 20.7 from 21.7. A worse than expected output may feed into USD selling and a stronger reading would benefit equities and slumping commodity prices. Read more forex trading news on our forex blog. |
| FX Technical Analysis – GBP/USD – Two Merging Trend Lines Posted: 16 May 2011 01:42 AM PDT
The decline in the GBP/USD is approaching a level where two trend lines merge and could provide a technical level for a bounce higher. Currently cable trades at 1.6200 but following the decline over the past two weeks momentum has shifted to the downside as shown by the falling weekly stochastics. One area on the chart stands out as the GBP/USD has two merging trend lines near the 1.6050 level. The first trend line rises off of the May and December 2010 lows while the second trend line falls off of the November 2007 and July 2008 highs. The cable bounced higher from later trend line which turned into a support level as previous trend lines often do. Below this apex further support rests at the March low at 1.5935 followed by the late December low at 1.5340. To the upside, should the bullish trend continue the GBP/USD would look to rise to this year's high at 1.6750. A breach here and traders could expect the pair to rise to the August 2009 high at 1.7040.
Read more forex trading news on our forex blog. |
| European Inflation Data to Underscore Current Tightening Cycle Posted: 15 May 2011 11:24 PM PDT
Today's release of European inflation data is expected to show continued price pressures in the EU and may force the ECB to raise interest rates in the July meeting. While this may be a positive for the euro, technical signals have shifted against the currency following the 9 cent decline versus the dollar in less than 2-weeks. Today's Key Economic Data Releases EUR – CPI y/y – 09:00 GMT A breach of the rising trend line from January and falling weekly stochastics hint at further declines in the EUR/USD. Support is found at 1.4020. A break here would open the door for increased selling of the pair to the 50% retracement of the January to May move at 1.3900. Resistance is found at Friday's high of 1.4340. CAD – Manufacturing Sales m/m – 12:30 GMT USD – TIC Long-Term Purchases – 13:00 GMT |
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