Forex Forecast – Voltrex FX

China Tightens Monetary Policy

Sterling Firms against Dollar & Euro

All eyes on US FED Beige Book This evening

Wall street lower as earnings come up short

Forex Forexcast – US Dollar:

We saw yesterday’s USD gains versus GBP disappear in early morning trading and push through the 1.62 for the first time this year on the back of unexpected positive data from the UK and also comments from a spokesman at the Chinese Wealth Fund. An Official stated that the dollar had hit rock bottom and that China and the US were likely to raise interest rates but after a while it was realised the comments came from an non senior internal source and positions were reversed. The attention switches to this evenings release of the Fed’s Beige Book, the report forming the basis for the discussion at the end of Jans FOMC meeting.

Data – Beige Book

Forex Forecast – Sterling:

Sterling has firmed versus the dollar and Euro yesterday pushing over 1.12 and 1.62 against Dollar and euro. This is on the back of yesterdays better than expected UK external trade report for November, as well as upbeat December retail sales from the BRC. The data has lifted optimism that the UK moved out of recession. Today sees the release of the NIESR GDP estimate for the last three months.

DATA : NIESR GCP

Forex Forecast – Euro:

This mornings traders will be eyeing the release of 2009 German GDP data., as well as Novembers  industrial production figures for Italy. The German GDP data in particular will be watched for direction in terms of Q4 returns from the Eurozones Largest economy.

DATA : French CPI & Italian Production

General:

London equities continue to fall on back of Soc Gen Profit warming

Nikkei drops as china tightens policy.

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Forex Trading – US Dollar

For those of you who have an exposure to US dollars, we have seen a strong correlation to the movement in stock markets over the summer months to where GBP/USD has been trading which just for now, still seems to be the guiding light to follow. We have also seen a huge injection of funds into the economies in the form of QE not only in the UK but the US as well which has also had a huge effect on the value of currencies. How long will this last? An interesting article was seen in the Telegraph over the weekend by Ambrose Evans-Pritchard which gives a view from the ever growing influence which  comes in the shape of the Chinese state:

It stated the US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and force China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy. Beijing is said to be dismayed by the Fed’s recourse to ‘credit easing’ former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”. “We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como. “If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

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Forex Forecast News – Voltrex FX

Sterling little changed from Fridays prices against major rivals

Dollar and euro see some support after heavy buying in Asian

UK markets play catch up with Monday’s global losses after Bank holiday

Aussie dollar supported against majors after interest rates left on hold

G20 meeting in London this week

US Dollar:

The dollar weakened off slightly yesterday but did post a fight back in Asian trading hours after hedge funds and major Japanese banks bought the dollar after the currency hit multi month lows in Tokyo Monday, and hovered at similar levels throughout European and US trading hours. This morning there has been a small pull back against the dollar in favour of the battered pound as the buck weakened for GBP/USD to break back through the $1.6350 level. Overall there has been little change since the extended weekend but the US unit may have more room to climb in the near term if upcoming US economic data shows improvement and raises expectations for a stronger global economic recovery. Impending figures include the Institute for Supply Management manufacturing index for August at 15.00 and the labour departments monthly employment report on Friday. Economists surveyed by Dow Jones Newswires expect the ISM index to rise to 50.9 from July’s 48.9.

Sterling:

After the sterling kicked its legs up yesterday and enjoyed the extended weekend, there was not to much damage put on sterling considering what has been unleashed on the battered currency of late. Overall, we are trading at similar levels against both the euro and dollar from late last week. Looking at cable, although sterling remains bearish, its is making back some of last week’s losses this morning and thus eyes minor resistance at $1.6332, Monday’s high. The next higher target comes in around $1.6391, the August 24th low. Against the euro there was some weakness shown yesterday and in Asian trading this morning, after investors bought the unit to strengthen the single currency. After UK markets opened this morning, there was a small fight back for the pound as it tried to play catch up after the Bank holiday weekend. We are still seeing pressure on the pound from the commodity currencies as the South African Rand, New Zealand and Aussie dollar continue to trade higher against their UK counterpart. The Aussie dollar had reason to push on this morning after the RBA left interest rates unchanged, with GBP/AUD trading at AUD$1.9452.

Euro:

Some support was seen this morning in early Asian trading hours for the single currency as hedge funds and major Japanese banks bought the single currency. This pushed EUR/USD upwards and dragged the euro from Friday’s close of $1.4274 to trade at $1.4356. There was also support for the euro against sterling as the single unit took full advantage of an under fire pound and the extra day’s holiday with was seen in the UK. There has been a slight pull back in European trading this morning for sterling and EUR/GBP has now fallen back slightly to 0.8774.

General:

The Reserve bank of Australia has kept interest rates on hold at 3%, giving householders more time to pay bills before an expected rise cycle begins. The cash rate remains at 3% where the RBA moved it in April in an effort to kick start the economy in the face of a global downturn.

Players will watch for any indication of exit strategies from quantitative easing measures by central banks ahead of the September 4-5 meeting in London of Group of 20 finance ministers.

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Currency Exchange Market News – 1^st September

U.S. Dollar Trading (USD) strengthening in Asia as China stocks slipped further into the red before reversing in the US session to end on a weak note. USD/JPY has continued to weigh on the dollar as the two currencies fight for preferred safe haven and funding status. August Chicago PMI was strong at 50 vs. 43 previously. Crude Oil slumped $2.78 to $69.86 on demand concerns. In US share markets, S&P ended -8 points (-0.81%) at 1020, NASDAQ ended -19 points (-0.97%) at 2009 and DOW JONES ended -47 points (-0.50%) at 9496. Looking ahead, July Pending Home sales forecast at 2% vs. 3.6% previously. Also released August Manufacturing PMI forecast at 50.5 vs. 48.9 previously.

The Euro (EUR) was very strong with the market shrugging off the fall in china to rally into the 1.4300’s. EUR/JPY selling weighed in Asia but the low 132 level held and market bounced above 133 Yen. US data help lift but very weak Oil also acted as a stabilizing force. Overall the EUR/USD traded with a low of 1.4256 and a high of 1.4368 before closing at 1.4340. Looking ahead, July German Retail Sales forecast at 0.6% vs. -1.8% previously. Also released EU July Unemployment forecast at 9.5% vs. 9.4% previously.

The Japanese Yen (JPY) broke resistance on the downside on firstly the change of government bringing speculation of Yen strength and secondly the sharp fall in China stocks leading to safe haven demand. USD/JPY slipped below 93.20 supports but regained some of the losses in the US session. July Retail Sales at -2.55 vs. -3.6% forecast y/y. Also released July Industrial output at 1.9% vs. 1.4% previously. Overall the USDJPY traded with a low of 92.55 and a high of 93.45 before closing the day around 93.00 in the New York session.

The Sterling (GBP) broke 1.6200 going into Europe before finding support and bouncing above 1.6300 in the US session. The Pair is finding a solid range in recent days with the market waiting for major events later this week for a catalyst on either side. Overall the GBP/USD traded with a low of 1.6184 and a high of 1.6330 before closing the day at 1.6285 in the New York session. Looking ahead, August PMI manufacturing forecast at 51.5 vs. 50.8.

The Australian Dollar (AUD) fell with China stocks before rumors of a more bullish sentiment from the RBA meeting today help the pair bounce. The Aussie rallied from 0.8340 to test 0.8460 outpacing other commodity currencies which came under pressure from very weak Oil and sluggish gold. Overall the AUD/USD traded with a low of 0.8340 and a high of 0.8458 before closing the US session at 0.8430. Looking ahead, RBA meet forecast to remain at 3.0%. Also released, July Building Permits previously at 9.3%.

Gold (XAU) fell in sympathy with Oil although the precious metal was able to reclaim and close above the key $950 level. Overall trading with a low of USD$943 and high of USD$960 before ending the New York session at USD$951 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4330

Initial support at 1.4201 (AUG 20 low) followed by 1.4046 (AUG 17 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace 1.6038 – 1.2330)

Yen – 93.05

Initial support is located at 93.10 (July 22 low) followed by 92.72 (July 14 low). Initial resistance is now at 95.29 (August 18 high) followed by 96.73 (Aug 12 high).

Pound – 1.6275

Initial support at 1.6154 (Aug 27 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6444 (AUG 25 high) followed by 1.6546 (AUG 24 high).

Australian Dollar – 0.8430

Initial support at 0.8216 (AUG 21 low) followed by the 0.8126 (July 29 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).

Gold – 951

Initial support at 939 (Aug 17 low) followed by 930 (July 29 low). Initial resistance is now at 971 (August 6 high) followed by 990 (Jun 3 high).

Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Currency Exchange Round Up – China Curbing Over Investment

U.S. Dollar Trading (USD) strong US data failed to inspire fresh stock gains. News of China curbing investment sent commodities and risk currencies lower. New Homes sales rose 9% as expected and Durable Goods rose 4.9% vs. 3% forecast. One Dampener was core Durable goods that came in at 0.8% vs. 0.9% forecast. USD strength on the back of strong US data is new phenomenon starting to be digested by the markets. Crude Oil Closed down $0.62 at $71.43. In US share markets, S&P ended +0.1 points (0.01%) at 1028, NASDAQ ended +0.2 points (0.01%) at 2024 and DOW JONES ended +4 points (+0.04%) at 9543. Looking ahead, Q2 Preliminary GDP is forecast at -1.5%.

The Euro (EUR) German IFO (90.5 vs. 87.3 previously) was strong as expected and helped the Euro touch day highs at 1.4350 before sellers returned and slammed the pair lower on stalling stocks and fresh USD strength. Positive sentiment is failing to produce the desired results for the bulls who are becoming frustrated with the lack of progress. Overall the EUR/USD traded with a low of 1.4207 and a high of 1.4349 before closing at 1.4250. Looking ahead, German GFK forecast at 3.7 vs. 3.5 previously.

The Japanese Yen (JPY) waxed and waned with investor sentiment but was generally strong after positive Asian stocks failed to inspire substantial fresh cross buying. USD/JPY remains attracted to the 94 Yen level and could retest last week lows at 93.40 if china stocks continue to gyrate lower. GBP/JPY was particularly heavy yesterday. Overall the USDJPY traded with a low of 93.90 and a high of 94.59 before closing the day around 94.20 in the New York session. Looking ahead, July CPI forecast at -2.2% vs. -1.7%. Also released, July Unemployment forecast at 5.5% vs. 5.4% previously.

The Sterling (GBP) continued the slump on the above China news breaking support at 1.6300 to test 6 week lows below 1.6200. GBP/JPY was weak and EUR/GBP tested 0.8800. The outlook is beginning to turn very bearish as momentum develops on the downside. Overall the GBP/USD traded with a low of 1.6160 and a high of 1.6354 before closing the day at 1.6240 in the New York session. Looking ahead, August CBI distributive trades forecast at -13 vs. -15 previously.

The Australian Dollar (AUD) bounced in Asia although never looked like testing 0.8400 as the market turned bearish with the release of the China investment curb story. Commodities came under pressure and pair fell as the Aussie was sold aggressively to 0.8250 supports. AUD/JPY support have been limited this week with Japanese investors waiting for the weekend’s election. Overall the AUD/USD traded with a low of 0.8253 and a high of 0.8388 before closing the US session at 0.8280.

Gold (XAU) kept to the now familiar range of $940 to $950 with the market tracking the fall in Oil and Fresh USD strength. Overall trading with a low of USD$940 and high of USD$950 before ending the New York session at USD$945 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4240

Initial support at 1.4201 (AUG 20 low) followed by 1.4046 (AUG 17 low). Initial resistance is now located at 1.4376 (Aug high) followed by 1.4621 (61.8% retrace 1.6038 -1.2330)

Yen – 93.85

Initial support is located at 93.10 (July 22 low) followed by 92.72 (July 14 low). Initial resistance is now at 95.29 (August 18 high) followed by 96.73 (Aug 12 high).

Pound – 1.6230

Initial support at 1.6034 (Aug 20 low) followed by 1.5985 (Jul 8 low). Initial resistance is now at 1.6546 (AUG 1 high) followed by 1.6719 (AUG 10 high).

Australian Dollar – 0.8260

Initial support at 0.8216 (AUG 21 low) followed by the 0.8126 (July 29 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).

Gold – 945

Initial support at 930 (Aug 17 low) followed by 925 (July 29 low). Initial resistance is now at 960 (August 13 high) followed by 971 (Aug 6 high).

Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Currency Exchange Market  – 18th August (00:30GMT)

U.S. Dollar Trading (USD) enjoyed the continued pullback in global markets, higher against all currencies except the Yen. June TICS flows jumped 90bn vs 17bn forecast as foreign investors poured into US Treasury Bonds. Commodities continued to slide tracking the general mood in the market although a bounce into the US session kept prices well off lows. Crude Oil Closed down $0.76 at $66.75. In US share markets, S&P ended -24.36 points (-2.43%) at 979, NASDAQ ended -54 points (-2.75%) at 1930 and DOW JONES ended -186 points (-2.00%) at 9135. Looking ahead, July Build Permits forecast at 0.58m vs. 0.57m and Housing starts forecast at 0.6m vs. 0.582m previously. Also released July PPI Forecast at -0.3% vs. 1.8% m/m. July Core PPI forecast at 0.1% vs 0.5% m/m.

The Euro (EUR) started falling from the open and accelerated into Europe after breaking through 1.4100. The Market found itself short going into New York and stabilized through a rally in EUR/JPY. The market now is poised for a test of the big 1.4000 level if the downside momentum continues over the next 24 hours. June Trade Balance 1.0Bn vs. 1.4bn forecast. Overall the EUR/USD traded with a low of 1.4046 and a high of 1.4203 before closing at 1.4080 Looking ahead, August ZEW Current Conditions forecast at -85 vs. -89 previously.

The Japanese Yen (JPY) was the strongest currency as the safe haven of choice was bought when stocks extended losses. The USD/JPY held up very well with large buying below 94.50 discouraging aggressive attempts lower citing sharpy reversals in recent weeks in the back of trader minds. Triple daily lows at 93.20 and 91.60 are natural downside targets and supports. Q2 GDP disappointed slightly at 0.9% vs. 1.1% forecast. Overall the USDJPY traded with a low of 94.21 and a high of 94.89 before closing the day around 94.55 in the New York session.

The Sterling (GBP) started falling and made fresh month lows into Europe as support at 1.6400 gave way and the pair slipped to below 1.6300. Rightmove HPI -2.2% in August added to selling pressure. The Pound joined an Oil, EURO and Aussie bounce to finish well above 1.6300 going into a heavy data release Tuesday. Overall the GBP/USD traded with a low of 1.6276 and a high of 1.6483 before closing the day at 1.6350 in the New York session. July Core CPI forecast at -0.3% vs. 0.3% previously.

The Australian Dollar (AUD) led the way down in Asia slipping nearly 2% on the back of heavy China stock losses and a slide in risk appetite. Strong fundamentals of the Australian economy and hawkish rates outlook are colliding with the usual market correlation of sell the AUD when stocks fall. Overall the AUD/USD traded with a low of 0.8156 and a high of 0.8326 before closing the US session at 0.8215. Looking ahead, RBA minutes from the August Meeting released.

Gold (XAU) fell heavily on USD strength to 930 supports. Overall trading with a low of USD$930 and high of USD$948 before ending the New York session at USD$934 an ounce.

TECHNICAL COMMENTARY

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Euro – 1.4080

Initial support at 1.4008 (July 29 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace of 1.6038 -1.2330)

Yen – 94.45

Initial support is located at 94.02 (July 29 low) followed by 93.10 (July 22 low). Initial resistance is now at 95.49 (August 14 high) followed by 96.73 (Aug 12 high).

Pound – 1.6345

Initial support at 1.6266 (July 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6719 (AUG 10 high) followed by 1.6831 (AUG 7 high).

Australian Dollar – 0.8215

Initial support at 0.8126 (July 29 low) followed by the 0.7925 (July 15 low). Initial resistance is now at 0.8519 (Sept 22 high) followed by 0.8694 (Aug 28 high).

Gold – 934

Initial support at 925 (July 29 low) followed by 918 (July 14 low). Initial resistance is now at 960 (August 13 high) followed by 971 (Aug 6 high).

Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Currency Exchnage Summary News

U.S. Dollar Trading (USD) was on the back foot as global equity markets continued to rally. News that China is looking for Global Reserve Currencies to be on the Agenda at the next G8 meeting added to the downside pressure. Data was mixed with ADP Private Unemployment falling -473K in June vs. -393K forecast. May Pending Home sales at 0.1% vs. 0.0% forecast. June ISM Manufacturing climbed to 44.8 vs. 42.8 previously. Crude Oil closes down $0.58 to close the day at $69.31. In US share markets, the Nasdaq was up 10 points or 0.58% and the Dow Jones was up 57 points or 0.68%. Looking ahead, June Non Farm Payrolls forecast at -363K vs. -345K previously. The Unemployment Rate is forecast to rise to 9.6% vs. 9.4% previously.

The Euro (EUR) rallied off the 1.4000 support reportedly from large bids from Asian Central Banks. The market rally continued with better manufacturing data from the US and China during the day and USD reserve concerns. German Retail Sales at 0.4% vs. -0.1% forecast in May. Overall the EUR/USD traded with a low of 1.4000 and a high of 1.4202 before closing at 1.4040. Looking ahead, ECB Rate Announcement and Speech from President Trichet. Also May Unemployment forecast to rise to 9.3 vs. 9.2%.

The Japanese Yen (JPY) broke above resistance at 96.50 to ally towards 97 as risk appetite grew and crosses continued to rally. EUR/JPY was especially buoyant with Global investors continued to diversify there exposure to the USD. Q2 Tankan showed improvement but less than expected at -48 vs. -43 expected. Overall the USDJPY traded with a low of 96.15 and a high of 97.01 before closing the day around 96.60 in the New York session.

The Sterling (GBP) found support under 1.6400 in Early Europe but the bearish sentiment from Tuesday overflowed. USD weakness and GBP/JPY buying help the GBP to rally but EUR/GBP buying kept gains limited. UK Factory PMI jumped to 47 vs. 46.4 previously. Overall the GBP/USD traded with a low of 1.6382 and a high of 1.6548 before closing the day at 1.6480 in the New York session.

The Australian Dollar (AUD) found support in the low 0.80’s but found trading above 0.8100 difficult as traders remained on the sidelines ahead of the Non farm payrolls. Oil weakness dragged but Copper and Gold demand help support. May Retail Sales Jumped 1.0% vs. 0.5% previously. Overall the AUD/USD traded with a low of 0.8021 and a high of 0.8111 before closing the US session at 0.8080. Looking ahead, Trade Balance forecast at -125M vs. -91M previously.

Gold (XAU) Gold rallied hard on the back of USD weakness and investors swooping on prices under $930. Overall trading with a low of USD$927 and high of USD$947 before ending the New York session at USD$940 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4135

Initial support at 1.3983 (Jun 29 low) followed by 1.3827 (Jun 22 low). Initial resistance is now located at 1.4201 (July 1 high) followed by 1.4267 (Jun 5 high)

Yen – 96.50

Initial support is located at 94.45 (Jun 1 low) followed by 93.86 (May 22 low). Initial resistance is now at 97.19 (Jun 19 high) followed by 97.89 (Jun 16 high).

Pound – 1.6480

Initial support at 1.6189 (Jun 18) followed by 1.6041 (Resistance Nov 6). Initial resistance is now at 1.6745 (Jul 1 Level) followed by 1.6830 (Fibo Level).

Australian Dollar – 0.8080

Initial support at 0.7918 (Jun 24 low) followed by the 0.7790 (Jun 23 low). Initial resistance is now at 0.8155 (Jun 30 high) followed by 0.8263 (Jun 3 high).

Gold – 940

Initial support at 912 (Fibo level low) followed by 906 (May 8 low). Initial resistance is now at 948 (Jun 26 high) followed by 965 (June 10 high).

Forex trading involves substantial risk of loss, and may not be suitable for everyone.