Calendar

Tue
Jan 29
12:30am AUD NAB Business Confidence
2:00am USD President Bush Speaks
7:15am CHF Trade Balance
9:00am EUR Current Account
9:00am CHF Consumption Indicator
11:00am GBP CBI Distributive Trades Realized
1:30pm USD Durable Goods Orders m/m
1:30pm USD Core Durable Goods Orders m/m
1:30pm CAD Business Conditions Orders
2:00pm USD National HPI Composite-20 y/y
3:00pm USD Consumer Confidence
9:45pm NZD Building Consents m/m
11:50pm JPY Industrial Production m/m

EUR USD

Short term (Intraday)
1,4760. EUR USD is in a consolidation after the last bullish movement. EUR USD is in a range between 1,4660 and 1,4800. The volatility is low. Bollinger bands are flat. ForexTrend 1H (Mataf Trend Indicator) is in a bullish configuration. 4H ForexSto (Modified Stochastic) indicate a bullish pressure on EUR USD. The consolidation should continue. We won't take a position. The risk/reward ratio is too high to take a position..

Resistances
1,4800 - 1,4900
Supports
1,4750 - 1,4670

Major Market Makers

Durables orders on fire...

The U.S. department of commerce shocked the markets today by announcing a surprising huge incline in durable goods' orders for the month of December, beating November's reading and analysts expectations, giving markets the right treat for hectic speculation in the FOMC's call.
Durable goods order skyrocketed in the month December, recording an increase of 5.2% after a revised 0.5% increase in November, mainly due to aircraft sales, but at the same time durable goods orders excluding transportations also climbed by 2.6%, following a decline of 0.7% in November, and beating analysts' expectations of a loss of 0.1%, the numbers gave the stock market and the U.S. currency some strength as preparing for the FOMC rate decision tomorrow.

Transportation orders increased alone by 11.3%, while the incline in the orders that excludes transportation was mainly due to extreme demand on computers, communications and defense equipments that jumped 81% in December, the markets saw durable goods inline as a relief especially that on a certain level it contributes to the country's GDP which is scheduled to be released tomorrow for the 4th quarter 2007.

The dollar is very vulnerable nowadays to any report or any adjustment in the interest rate outlook as a result of good or bad news from the economy, that’s why we see a great deal of ups and downs in the exchange rates so far this week, all hoping that by the end of the week this cloud to pass, while the horizon and the future is more clear for traders and investors.

The conference board and in a separate report declared that consumer confidence did actually fall in January to 87.9 from a revised reading of 90.6 in December, showing that confidence started to drop with the new year especially with the end of the holiday season in the markets, yet last month's revision gave the dollar new pricing as a correction to the false pricing it had from December.

That’s all for today dear reader, the data for today mixed it up a little bit a head of the GDP data and the FOMC decision tomorrow, and instability is the best word to describe markets nowadays, wait until tomorrow and see, what the important number are going to tell you about the state of the world's largest economy...

Technical Analysis

EUR/USD - Euro Dollar
Short term (Intraday)
1,4676. EUR USD is in a consolidation after the last bullish movement. The volatility decreases. Bollinger bands are tightened. Oscillators are neutral. The consolidation should continue. The price should continue to move in 1,4650 / 1,4800 range. If the support is broken then the target will be 1,4550.

Resistances
1,4705 - 1,4780
Supports
1,4650 - 1,4550

Major Market Movers

HI , today is mondey the beginning of the week , so lets see what Major Market Mover say today !!!!!

Before the Storm…
The week has come to an end, a week that was supposed to be calm from the beginning till the very end, but Mr. Bernanke and his pals had another idea, turning the markets up and down by cutting rates in an unusual meeting, while now we are trying to be ready for next week...
Today might be just the calm before the storm, it’s the perfect end for a week that lacked major economical fundamentals, and the perfect staging area before we get into a very busy week, the long waited week, where we have GDP reading for the fourth quarter 2007, the FOMC rate decision, and the jobs report at the end of the week, not mentioning some important inflation indices like the PCE and all spending data, the ISM indices and the ADP employment report. Next week will be an important determinant for market directions and will set the path for the U.S. dollar once and for all.

Today we are gonna have to wait and see, today is the day for preparation and holding breaths, it's the day for building theories and ideas, all arming with all weapons to fight in the great battle next week, so you might as well dear reader get prepared and fully armed.

Currencies Update

And…Once Again!

(25-01-2008 12:30 GMT) Headlines in the market are again the rebound in world equities and the coming back of risk appetite this fundamental quiet day, investors took the advantage to move the market as there are still no influencing data, and their incentive was driven by the drafted out fiscal stimulus that will help the US economy abide recession.

The euro is trying to build up its solid base above $1.47s to then be able to head once more to its upside set targets breaching by that the long awaited $1.50 levels, now the weak American eagle has helped set the path the one left is European fundamentals; the euro lost some of its upside vigor keeping the high intact at 1.4777 in the Asian session to set the low at 1.4697 and now trading around 1.4720s.

The royal currency has bounced from very low levels seen at around 1.9330s after entering oversold areas; the pound started the day trading above $1.97 the pound fetched a high of $1.9846 and a low of $1.9743. The pound was supported by the stance seen from the BoE as it dismissed any chance in the market of substantial easing as elevated inflationary levels will confine their ability to mitigate economic slowdown as they now must start drafting their contingent plan.

The Japanese yen was driven to weaken today on wake of carry trades comeback as investors took the advantage ahead of key US data next week that they fear might confirm a recession. The pair traded within the upside channel to set the high at 107.88 while the lowest was set at 106.84.

The day is still not over as the US markets join the flow in a few and then the scenario might differ as well to squaring positions ahead of the weekend so stay tuned the week has yet come to an end…

Major Market Movers

Before the Storm…

The week has come to an end, a week that was supposed to be calm from the beginning till the very end, but Mr. Bernanke and his pals had another idea, turning the markets up and down by cutting rates in an unusual meeting, while now we are trying to be ready for next week...
Today might be just the calm before the storm, it’s the perfect end for a week that lacked major economical fundamentals, and the perfect staging area before we get into a very busy week, the long waited week, where we have GDP reading for the fourth quarter 2007, the FOMC rate decision, and the jobs report at the end of the week, not mentioning some important inflation indices like the PCE and all spending data, the ISM indices and the ADP employment report. Next week will be an important determinant for market directions and will set the path for the U.S. dollar once and for all.

Today we are gonna have to wait and see, today is the day for preparation and holding breaths, it's the day for building theories and ideas, all arming with all weapons to fight in the great battle next week, so you might as well dear reader get prepared and fully armed.

Currencies Updates

A Breeze Of Hope

(12:15 GMT – 24/01/08)
While the aggressive action taken by the Feds provided a slight boost to investors confident, it was no magic switch as the underlying problems in the US economy are still at president and there are still considerable downside risks to global growth. The slash in rates helped calm the stock market but is still weighting on the dollar.

The European currency climbed slightly against the US dollar as markets continued to worry about a possible US recession. The EUR/USD rebounded after better than expected IFO numbers boosted investors confidence pushing the pair to record a high of 1.4666 and a low of 1.4590. In this case the result had influence the notion of a near term rate as for the time mean the economy continues to expand at a moderate pace allowing the ECB officials to maintain their hawkish stance.

Over in the UK, the mortgage data provide further evidence that the housing market activity is now being considerably undermined by tightening lending practices, adding to the speculation that a rate cut from the Bank of England next month is likely. According to the market, the Sterling Pound looks like its gaining momentum against the US dollar as a result of a weak dollar hence driving the pair to the upside to record at this hour a high of 1.9635 and a low of 1.9501.

Elsewhere, the yen stumbled as Asian stock markets fought back from a drastic sell off after the Feds surprisingly cut interest rates increasing investors risk appetite to sell the Yen and hold on risky positions. At this hour the dollar is gaining gradually dragging the USD/JPY pair along with to record a high of 106.92 and a low of 105.96

Despite Tuesday's rate cut, a looming recession remains a major concern occupying the minds of market participants with some traders stating that the Feds move may not ease the US economy which in hand could keep the dollar struggling. If things remain the same in the upcoming days then the markets may be fully priced for a further cut in rates at the policy meeting ending on Jan 30.

Some traders' believe that a further significant cut of 50bp could smooth worries about the US economy hence could make the dollar appear more tempting while pressuring the Yen. However let's don’t disregard the importance of the US data today as the economy will furnish data on Initial Jobless Claims and Existing Home Sales

Major Technical Analysis

euro

The European currency moved in the upside direction in the first session to hit the critical resistance level at 1.4680s. Then and due to the sell-off, the currency reversed back to the downside in a bearish pattern to close below the opening level but still remaining above the major resistance at 1.4550s after it tested the support level at 1.4510. Therefore we expect the euro today to move in a bullish pattern again.
The trading range for today might be between the key resistance level at 1.4800 and the key support level at 1.4400.
The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230.
We expect buying euro above 1.4545 with a target at 1.4680, stop loss below 1.4500.

gbp

The British pound headed higher in the first session to hit the key resistance level at 1.9640s to create a major bearish move towards the critical support level at 1.9460s. Today, we see the pound lacking suitable momentum from the upside correction to drop down again.
The trading range for today might be between the key resistance level at 1.9700 and the key support level at 1.9360.
The general trend is down as far as 2.0200 remains intact targets now at 1.9230 and 1.8700.
We expect selling sterling below 1.9570 with a target at 1.9400 stop loss above 1.9640.

jpy

The dollar against the Japanese yen yesterday started with a strong bearish move as it failed to pass the major resistance level at 107.30s. The pair then hit the low at the 104.90 support area and therefore we expect the pair to progress towards the downside today after it confirmed some bearish signals.
The trading range for today will be between the key resistance at 108.50 and the key support at 104.80.
The general trend is down as far as 121.30 remains intact, targets at 104.80 and 101.00.
We expect selling USD/JPY below 106.30 with a target at 105.00, stop loss above 107.00.

Currency Updates

Unchanged Scenario

Yesterday the Feds surprisingly lowered the interest rates by 75bp to 3.5%. The cut was an attempt to prevent the economy from slipping into a possible recession. As for today the greenback showed mixed signals against major currencies.

Meanwhile, fears that the current collapse of the US economy may influence the neighboring markets, affected the globe as a whole. Markets anticipate the ECB which is fighting inflation pressure above 2% to maintain interest rates at 4% for some time despite high inflation. However, analysts expect a future cut in rates as to mitigate the European Economy. The pair is trading towards the downside to fetch a low of 1.4543 after recording a high of 1.4649.

Separately, the Pound gained at the start of today's secession against the US dollar, however, not long after that the royal pound dropped after comments by the BOE which added to the expectations of the February rate cut corroding the currency's yield appeal. The pair is hence at the downside recording at this hour a low of 1.9523 after fetching a high of 1.9615.

The Yen regained its footing against the dollar as worries about the financial market turmoil remained unchanged despite an emergency benchmark interest rate cut by the Feds, pushing the pair to the downside to record a low of 105.81 after recording a high of 107.37.

Major Market Movers

Markets After The Cut...

The fed took markets by surprise yesterday, cutting both the benchmark rates and the discount rate by 75 basis points, trying to fight recession and turbulences in the financial markets, in a try to contain the credit crisis and the housing slump spillover.
Financial markets reacted immediately to the fed's decision, as the U.S. stock markets skyrocketed, reflecting some happiness from investors that the fed eventually started to take serious actions to handle the crisis, yet after that they started to look at the other side of the flipped coin, and they thought that the cut is still not sufficient enough to support market liquidity, especially with some very bad earnings reported by the Bank of America, and now they are looking for more cuts in the fed's next meeting next week.

Analysts now do expected that the fed, following their decision to act in a firm and timely manner to mitigate the turbulences they will probably lower rates again next week maybe by a half point, in another trial to stimulate economic growth and try to find the bottom for the housing market. The next cut now started to get actually priced in the dollar exchange value against some major currencies.

From the other hand, the good news traveled to all countries around the globe, while Japanese markets rebounded heavily today, confirming that the Japanese investors definitely think that the fed has done a good job cutting rates like that, while maybe it’s a good push for the BoJ to start thinking more seriously about stimulating economic growth, and go for a rate cut again.

Moving to Europe, where the ECB represented by Mr. Trichet are still holding on a hawkish stand when it comes to monetary policy, despite comments from one member in the ECB that hinted for some worries on growth levels. But with the U.S. surprise cut, analysts are now discussing that Mr. Trichet will have to turn dovish, and to start cutting rates to go along with the current global trend, in our opinion and from our experience with the ECB policy over the years since it's inception, we beg to differ, as we see that they are going to be still more focused on the inside circumstances, not caring about whatever happens outside the European boarders, maybe they will eventually if the problem actually started to get to their economy, but if not…I don’t think so.

Eventually, the BoE might find themselves now in a position to lower rates maybe more than a 25bp, maybe it was wrong for them to leave rates steady at 5.25% in the last meeting, maybe they have to move forward and catch up now, but today's 4th quarter advanced GDP readings, might carry some answers for us, we can see how much the country's total production was affected by the international crisis.

Between here and there, the fed's cut yesterday was quite a good move, and effect might take some time to be actually seen in the markets, and in the economy as well, but it's definitely a good move, now let's wait for their next week's meeting to see if the fed will be bold and decisive again, and how markets will react then.

Major Market Movers

Breath markets…Breath
Tired, sick and exhausted, those are the best words to describe the state of financial markets today, the U.S. economy, the Japanese economy, and even the European economy just drove financial markets in all direction with extraordinary volumes, yet we're still lost in the maze.

The U.S. economy showed that in December the economic activity has slowed down massively, signaling for a great contraction in growth levels, and giving no signs for any improvement whatsoever in the near future, especially with the ever declining housing sector that is just keeps getting worse and worse, leaking to all parts of the economy, and damaging the financial sector as we've seen in the latest earnings.

While comments from the ECB members irritated the winter sabbatical for the 15 countries currency, counting it as one other confusing currencies which are A LOT nowadays, with some dovish signs from the council members the Euro couldn’t handle it but to inch slightly lower against majors, after it was skyrocketing against all majors as the most steady and the only supported by a hawkish stand.

Japan also reported some mixed up data during the week that also kept the yen with no direction waiting for more economic confirmation to either get weaker or stronger, or define a certain direction and a new wave outside the tight range it's wondering around it in a while.

Today, light economical news from America is going to have the final word for the week, while consumer sentiment is expected to drop in the first month of 2008 to 89.7 from 91 in December 2007, while leading indicators are expected to drop 0.1% in December after dropping 0.4% in November, those are not going to be very important, yet they will be the door to profit taking a head of the weekend.

Breath markets…Breath, you've been tried and exhausted for too long, today you have some time to rest and just breath, and get ready for the next battle.

Major Technical Analysis

euro

The European currency fell down yesterday in a major move with high levels of volume to reflect the strength of the move but within the same consolidation area that the Euro formed before a couple of days; nevertheless the Euro is expected to reverse back to the upside as the technical indicators show some upside potential.
The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4550.
The general trend is up as far as 1. 4060 remains intact targets now at 1.5000 and 1.5360.
We expect buying Euro above 1.4615 with a target at 1.4720 stop loss below 1.4570

gbp

The British pound yesterday fluctuated in a bullish manner within the correction area due to some restrictions ending with a slight bearish form. On the other hand the pound by that has formed some bullish signals to clarify the upside direction for today.
The trading range for today might be between the key resistance level at 1.9850 and the key support level at 1.9550.
The general trend is up as far as 1.9450 remains intact targets now at 2.1170 and 2.1420.
We expect buying sterling above 1.9690 with a target at 1.9800 stop loss below 1.9650

jpy

The dollar against the Japanese yen rallied in the downside channel in the morning session yesterday as it couldn't get over the major resistance level at 112.40s. Yet the pair extended the downside wave after it confirmed some bearish signals.
The trading range for today will be between the key resistance at 108.50 and the key support at 105.50.
The general trend is down as far as 121.30 remains intact, targets at 103.40 and 101.00.

Daily Calendar

Wed
Jan 16
12:01am GBP RICS House Price Balance
12:30am AUD Home Loans m/m
6:00am JPY Machine Tool Orders
7:00am EUR German CPI m/m (r)
9:30am GBP Average Earnings Index +Bonus
9:30am GBP Claimant Count Change
9:30am GBP Unemployment Rate
10:00am EUR CPI y/y (r)
1:30pm USD CPI m/m
1:30pm USD Core CPI m/m
2:00pm USD TIC Net Long-Term Transactions
2:15pm USD Industrial Production m/m
2:15pm USD Capacity Utilization Rate
3:30pm USD Crude Oil Inventories
6:00pm USD NAHB Housing Market Index
6:55pm EUR ECB President Trichet Speaks
7:00pm USD Beige Book
9:45pm NZD CPI q/q 1
9:45pm NZD FPI m/m

Major Market Movers

The Good, the Bad…

After all the wait, the U.S. economy started to reveal December's readings, with inflation being just where the fed wants it to be, representing the good side of the formula, other sectors in the economy are screaming for help, manufacturing seems to be the bad of the economy.


CPI data were uncovered in the U.S. economy today showing almost inline with expectations readings, especially on the core level, the actual readings paralleled economists' expectations, those numbers are considered as good ones on the fed's policy making parameters, as the Mr.Bernankeh quoted that inflation levels are reasonably anchored, this seems to be the case, giving them the green light for further policy easing.

On the other hand, and as we got from yesterday's and today's industrial and manufacturing figures, we are definitely seeing a considerable decline in that sector, worth mentioning the humble earnings reported by industrial companies in the last couple of days, suggesting that a recession in the U.S. economy is knocking the doors with a hammer, waiting for the fed either to welcome it with a paper door, or to counter it with a gate of steel.

Industrial production and capacity utilization gave the hints today; though it came out slightly higher than economists' expectations, but still it reflected a poor industrial condition in December as compared to the previous months, that is just the start of the leak from the housing sector into the economy, and that was the original sin of the U.S. economy.

From the other hand, the net foreign cash flows to the U.S. assets are improving, leaving no worries from the trade gap and its effect on the liquidity from the Federal Reserve Bank, another good and relieving aspect that gives a green light for the feds for further easing.

The dollar took the news rather neutral, as it was improving against the Japanese yen and the Euro, it lost some ground against the British pound, the main event is still growth in the 4th quarter, and that’s what the markets are waiting to move currencies up and down to their extremes.

Major Technical Analysis

euro

The European currency moved in the upside direction at the beginning of trading yesterday, to hit the critical resistance level at 1.4920s, and due to the sell-off pressuring the pair, the currency reversed back to the downside in a bearish pattern to close below the opening level. Thereby this move might lead the currency down today.
The trading range for today might be between the key resistance level at 1.4950 and the key support level at 1.4700.
The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230.
We expect selling euro below 1.4865 with a target at 1.4780, stop loss above 1.4920.

gbp

The British pound rallied yesterday in an upside direction at the beginning of the session yesterday to hit the strong resistance level at 1.9740s; the pound faced solid resistance which enforced it to drop down to close with a bullish move. The pound today is trying to form a kind of base to progress in a correctional move towards the upside.
The trading range for today might be between the key resistance level at 1.9800 and the key support level at 1.9500.
The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450.
We expect buying sterling above 1.9580 with a target at 1.9700 stop loss below 1.9540

jpy

Yesterday, the dollar against the Japanese yen started with a strong bearish move, as it failed to get over the major resistance level at 108.20; then the pair was seen hit the low at 106.60 support area. Therefore, we expect the pair to progress towards the downside today after it confirmed the bearish signals.
The trading range for today will be between the key resistance at 108.50 and the key support at 104.80.
The general trend is down as far as 121.30 remains intact, targets at 104.80 and 101.00.
We expect selling USD/JPY below 109.65 with a target at 108.60, stop loss above 110.25.

Crosses Technical Analysis

GBP/JPY

The Pound continued its downside wave against the Yen breaching the major support at 211.80s yesterday, the technical indicators are showing a downside potential even if the pair resides in an oversold area, the upside wave will be confirmed if the pair manages to breach the 211.80s, but until it does the downside movement is more likely to be seen, the point at 208.82 offers a major support for the pair.

EUR/JPY

The Euro declined slightly against the Yen, yet it's still holding up against it, the short term technical indicators are showing a downside potential on intraday basis, but the general trend remains well to the upside, and the point at 158.66 offers strong demand for the pair.

EUR/GBP

The Euro continued its upside wave against the Pound as the pair reached the first target at 0.7600 and the next targets are set to be at 0.7620s and 0.7640s as the general trend remains to the upside, but the short term indicators started showing a correction might be on the way and it could take the pair to the 0.7565 which offers good demand for the pair.

Major Technical Analysis

euro

The European currency yesterday moved in a very strong bullish move towards the major resistance level at 1.4920s, this move caused significant adjustment to the technical pattern to confirm the strength of the Euro against the US dollar to set the target now at 1.5000 on the short-term.
The trading range for today might be between the key resistance level at 1.5000 and the key support level at 1.4750.
The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370.We expect buying Euro above 1.4870 with a target at 1.4960, stop loss below 1.4815.

gbp

The British pound yesterday traded in the downside channel with high levels of volume reflecting key weakness in the pound which will probably change the general direction for the pound; however, today the pound might move up as a correction for the bearish week until the levels of 1.9650s.
The trading range for today might be between the key resistance level at 1.9700 and the key support level at 1.9400.
The general trend is up as far as 1.9460 remains intact targets now at 2.1150 and 2.1400.We expect buying sterling above 1.9550 with a target at 1.9650 stop loss below 1.9490.

jpy

The dollar against the Japanese yen progressed towards the downside yesterday with high levels of volatility to confirming downside signals, which in role will lead the pair down again today until the major support area around 107.00.
The trading range for today will be between the key resistance at 109.30 and the key support at 106.50
The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.70. We expect selling USD/JPY below 108.00 with a target at 107.00, stop loss above 108.50.

Major Market Movers

4 Economies...1 Throne!
Words by Fed Chairman Mr. Ben Bernanke might be the only hope for the economy as it is now sinking into a recession after the release of some poor data. The world's largest economy is on stake now and it would be reasonable for any other economy to fight to capture the throne…


A speech made by Mr. Bernanke yesterday showed how extremely dovish he was and how they stand firm on acting in a timely manner and are ready to take substantive action to help pick up the growth and performance of the U.S. economy. Now that expectations for growth in 2008 have dampened, the chairman gave signals that allowed markets to place a 50 basis point cut in interest rates in their next meeting which was a bad signal for the number one world traded currency.

What made things worse also was the US Trade Balance for the month of November showed a widening deficit to $63.1 billion worse than the forecasted and prior deficit of $59.5 billion and $57.8 billion. This was the largest deficit since September 2006 as the gap widened 9.3%.

Exports rose 0.4% to $142.3 billion and imports inclined 3% to $205.4 billion but the actual gain was not to due to the amount of exports or imports but simply it was a result of higher prices.

Now that the gap had widened more than expected, analysts now had altered their projections for the fourth quarter growth as they see it had declined more than the 1.2% annual reading they had previously forecasted.

According to the Commerce Department, the problem highlighted in the trade report was the soaring energy prices. For quite some time this was the reason why people thought that the deficit has widened. However, this isn’t true because despite the fact that oil prices have inclined, the real trade gap widened 3% in November excluding petroleum.

The continuing weakening of the U.S. dollar has helped boost exports for the economy as local manufacturers and producers benefited from the higher prices and weaker currency since it is now cheaper for investors using foreign currencies to purchase U.S. goods. However, it was a slap to the imports since it became more expensive to buy goods from abroad and that fact that the economy is losing track in the United States raised some eyebrows.

In seasonally adjusted terms, trade with Canada, Europe and Mexico have declined in November. However, it could start to pick up pace once again after prices of goods from Canada rose 0.6% in December compared to the 5.9% jump in November. And as for goods from Europe, prices inclined 0.6% in December and remained unchanged from November.

In a different report, the US Import Price index for the month of December came in flat slightly lower than the expected reading of 0.1% and worse than the previous reading of 2.7% in which it was revised to the upside to 3.3%. As for the yearly reading, a 10.9% was documented lower both the expected and previous readings of 10.5% and 11.4% respectively. The gain witnessed in November was the most it has gained in 17 years.

The price of imported petroleum declined for the first time since August by 0.6%. Prices of imported capital goods were flat in December after inclining 0.2% in November.

For the meantime, export prices inclined by 0.4% in December after it had previously gained 0.9%. Natural Gas prices also rose 2.8% compared to the jump it witnessed in November by 16%.

Daily Calendar

Thu
Jan 10
12:30am AUD Trade Balance
5:00am JPY Leading Index m/m
7:45am EUR French Industrial Production m/m
7:45am EUR French Government BudgetBalance
9:30am GBP Trade Balance
11:00am GBP Chancellor Darling Speaks
12:00pm GBP Interest Rate Statement
12:45pm EUR Interest Rate Announcement
1:30pm EUR ECB President Trichet Speaks
1:30pm USD Unemployment Claims
1:30pm CAD Building Permits
1:30pm CAD New Housing Price Index m/m
3:00pm USD Wholesale Inventories m/m
6:00pm USD Fed Chairman Bernanke Speaks
6:00pm USD Kansas City Fed President Hoenig Speaks
11:50pm JPY M2+CD Money Supply y/y

Major Technical Analysis

euro

The European currency rallied to the downside with high level of volume to show key weakness for the euro in the upcoming days as it opened the chance again to reach the levels of 1.4580s support area. This occurred after the euro breached the upside minor trend line on the bullish wave.
The trading range for today might be between the key resistance level at 1.4800 and the key support level at 1.4500.
The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230
We expect selling euro below 1.4690 with a target at 1.4600, stop loss above 1.4750.

gbp

The British pound rallied in the downside direction in a very strong bearish pattern to reach one of the most critical supports level at 1.9550s give the pound the opportunity reverse its main direction if it closes below the mentioned level. Nevertheless, today we see the pound can move in the upside direction to recover some of its losses.
The trading range for today might be between the key resistance level at 1.9700 and the key support level at 1.9460.
The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450
We expect buying sterling above 1.9550 with a target at 1.9660 stop loss below 1.9500.

jpy

The dollar against the Japanese yen jumped in the upside direction after it couldn't drop below the major support at 108.80s to create a bullish wave to hitting a high at 109.70s. The pair today is expected to progress towards the upside direction as the technical indicators showed yesterday.
The trading range for today will be between the key resistance at 111.00 and the key support at 106.80.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.

Daily Calendar

Date Wed Jan 9
5:54pm (GMT)
12:01am GBP Consumer Confidence Index
12:30am AUD Retail Sales m/m
2:00am NZD ANZ Commodity Price Index
7:00am EUR German Trade Balance
7:00am EUR German Retail Sales m/m
7:45am EUR French Trade Balance
10:00am EUR GDP q/q (r)
10:30am GBP BRC Shop Price Index y/y
11:00am EUR German Industrial Production m/m
12:30pm CAD Chief Economists Speak
1:15pm CAD Housing Starts
2:30pm USD St. Louis Fed President Poole Speaks
3:30pm GBP Leading Index m/m
3:30pm USD Crude Oil Inventories

Major Technical Analysis

euro

The European currency progressed to the upside to confirm the upside potential, yet the technical indicators didn't reflect any bearish movements; taking the currency towards the upside resistance as high as 1.4740s. Today we might see another bullish day for the Euro.
The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4630.
The general trend is up as far as 1. 4060 remains intact targets now at 1.5000 and 1.5370.
We expect buying Euro above 1.4690 with a target at 1.4750, stop loss below 1.4655.

gbp

The British pound yesterday rose in a powerful move passing the major resistance levels at 1.9730, to hit the high at the levels of 1.9830. The technical trend studies, beside the technical oscillators, still show the upside targets so we expect a bullish movement for the pound today.
The trading range for today might be between the key resistance level at 1.9900 and the key support level at 1.9600.
The general trend is up as far as 1.9450 remains intact targets now at 2.1150 and 2.1400.
We expect buying sterling above 1.9690 with a target at 1.9800 stop loss below 1.9650

jpy

The dollar against the Japanese yen fluctuated in both directions with tendency to the upside as the technical parameters indicated that the horizontal support line played a significant role to limit the downside push yesterday. However, the other elements are still applying pressure to the downside so we expect the pair today to remained neutral.
The trading range for today will be between the key resistance at 110.80 and the key support at 118.00
The general trend is down as far as 121.30 remains intact, targets at 109.00 and 107.70.

Crosses Technical Analysis

GBP/JPY

The Pound gained back against the Yen yesterday and continued to incline since early this morning, the short term indicators are showing an upside potential for the par today, the general trend is still to the upside as long the 111 level remains intact, and the point at 215.07 seems to offer good demand for the pair.

EUR/JPY

The Euro also inclined against the Yen yesterday and continued its upside move since early this morning, the short term technical indicators are showing an upside potential, as the general trend for the pair remains well to the upside, the next target is set to be at the 161.40s level, and the point at 160.50 seems to offer good demand for the pair.

EUR/GBP

The Euro declined against the Pound in a correctional move that took the pair to the downside, though the general trend is still to the upside, but the pair might continue its downside correctional move, and the point at 0.7425 seems to offer good demand for the pair.

Major Technical Analysis

euro
The European currency failed to move in the upside direction as it faced a solid resistance level at 1.4750s to take the euro down until the levels of 1.4660s support area. In the meantime, the technical oscillators have adjusted to show the downside direction today as it formed some bearish signals which opened a channel until the major support level at 1.4550s.

The trading range for today might be between the key resistance level at 1.4800 and the key support level at 1.4500.

The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230.

gbp
The British pound yesterday fluctuated in the downside direction to hit the low at the strong support area near the 1.9650s. Nevertheless, the pound tried to gather bullish momentum as it remained trading above the important area at 1.9700; hence we expect the pound today to move in the upside direction as the technical directional indicated.

The trading range for today might be between the key resistance level at 1.9900 and the key support level at 1.9500.


The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450.
We expect buying sterling above 1.9675 with a target at 1.9800 stop loss below 1.9620.

jpy

The dollar against the Japanese yen last time rallied in the upside direction with high levels of volume to hit the major resistance 109.70s. However, it declined in the last session consolidating around the 109.00 levels due to lower volume. Today the pair is expected to move in the bullish side slightly.

The trading range for today will be between the key resistance at 111.00 and the key support at 106.80.

The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.

Daily Calendar

Fri
Jan 4
1:45am CHF CPI m/m
3:55am EUR German Services PMI
4:00am EUR Services PMI (r)
4:30am GBP Services PMI
4:30am GBP Net Lending to Individuals m/m
4:30am GBP Mortgage Approvals
5:00am EUR CPI y/y (p)
5:00am EUR Italian CPI m/m
8:30am USD Nonfarm Employment Change
8:30am USD Unemployment Rate
8:30am USD Average Hourly Earnings m/m
8:30am CAD IPPI m/m
8:30am CAD RMPI m/m

Currencies Update

Ahead Jobs Report...

(04/01/1/2008 - 11:00 GMT)Markets are still calm as the data to be released by the U.S. economy concerning the labor market is still due later today. The weakness of the dollar is still what is on investor's minds as dollar-backed assets rushed to record all time highs and the fact remains the Fed's will cut rates further in their next meeting.

The Euro was able to rise once again to fluctuate around the 1.4700s after it had dipped during the session to record a low of 1.4694. The high for today remains unchanged at 1.4753 which was recorded earlier today. Germany released its PMI Services for the month of December coming in at 51.2 lower than the projected reading of 52.4 and prior reading of 53.1. The Euro Zone released its PMI Services for the month of December revised down to 53.1 from the flash estimate of 53.2. The PMI Composite final reading for the month of December was unrevised and remained steady from the flash estimate of 53.3. As for the CPI Flash Estimate annual reading, it came inline with the expected reading of 3.1% but slightly higher than the prior reading of 3.0%.


After the release of strong U.K. data, the royal currency was able to regain some of its strength to soar against the dollar and take the pair up to record a new high for the day at 1.9799 and drag the EUR/GBP down from the new record low it had recorded against the Euro at 0.7485. The UK released its M4 Money Supply final reading for the month November was revised upwards to 0.5% from the preliminary reading of 0.1%. The PMI Services were released coming in at 52.4 higher than the projected reading of 51.6 and previous reading of 51.9.

The USD/JPY pair is trading within very narrow ranges at the 109.30s level. The high recorded for today was 109.58 while the low was 108.77.

Still to come is data being released from the U.S. known as the Jobs report well it might either confirm the fact that the U.S. is heading into a recession or was it just an illusion. So hang on tight and keep a close lookout on the Non-farm payrolls figure to see whether the dollar might rebound or continue it dreadful pattern.

Major Market Movers

07' Eco. Panorama

A trading year has passed us, as we stayed through the gains and losses, the hikes and cuts, growing and slowing economies, and more over we shared the anxiety and tranquility.

It was just one of those years with diversity in performance highlighting the major happenings and events that glided and swung us throughout the year.

The bullets fired this year were all across the globe, yet the nuclear explosion was on US grounds where its after-shocks hit THE WORLD… The blinds were uncovered and the bright light of truth rays blinded all, as the US housing slump spread into a catastrophic financial crisis as subprime loses mounted, massive write-down's to all mortgage backed securities hit financial institutions leading to a global sell-off.

Reappraisal of risk has taken investors by surprise as all were incapable of assessing their amounts of holdings correlated to the US housing sector. We saw new records set this year across the board and mainly they were US dollar lows; economies and world financial markets entered a new era of high voltage volatility that made futuristic dream figures just steps away, new levels were created along side a new GLOBAL ECONOMIC STORY…

Economies adjusted to the new scenario and were affected mainly by what was referred to as the "Credit Squeeze"; we saw Interbank Offered Rates soar as the lack of liquidity and faith among banks made them reluctant to lend each other, while currency fluctuation were very revealing to insecure sentiment as Carry Trades and their reversals making the Japanese Yen the gossip of the season.

The deterioration on US grounds empowered the Feds to indulge in a number of cuts on their Benchmark interest rates, followed by the Bank of England, and Canada as well; all were part of the ripple effect to the spread of the housing slump in the US and the world's financial system.

Attempts by world banks to provide liquidity exceeding lowering interest rates yet they created by conjoined efforts the Term Facility Auctions a move yet to prove its level of efficiency in calming tensed liquid thirst markets.

The dilemma was further complicated as economies started to witness signs of softness on their grounds, while new historical levels that were created in the markets agitated the situation. Record Oil prices near a three digit figure, Gold near all time high, and finally the 13 nation currency's appreciation to all time high and the complications it sprinkled to the vigilant ECB, while the extreme fluctuations for the Japanese Yen just further might weaken their economy.

As we said this year was just one of those to go on record, and still we fear 08 is to unbutton further surprises, we need to know where we're standing to be the pioneers and not fall again victims to poor risk assessment. Further materialization to losses might still be seen and the US economy needs to reflect signs of stability to exit the danger zone of recession!

All combined will affect the headings of the global economy this year, and to see ahead you must be aware of the dark past, and to that we present to you our 2007 Panorama where each major economy this year was highlighted in lines. Read thoroughly and analyze for we say to you the financial rollercoaster is about to go wild this year…

The United States

Now that 2007 had come to an end, let's go back in time to examine the major highlights of the year, as it's expected to see the outcomes of last year in the New Year, and the outlook doesn't seem pretty from where we are standing at the moment for the world's largest economy…

The U.S economy grew by 0.7 percent in the first quarter of 07, while the economy grew by an impressive 3.8% and 4.9% in the second and third quarters respectively, and is expected to drop to as low as 1.0% in the forth quarter of 07. Inflation rates entered the Fed's comfortable zone though the year making the job far easier for the Feds and giving them more cushion to focus more on downside risks to growth, yet the situation didn't persist as inflation started to hike again on increasing energy prices and impressive growth rates through out the 2nd and 3rd quarters.

The U.S Dollar depreciated against major currencies through out the year, dropping almost 12% against the Euro as the Euro was around $1.28 at the start of this year and ended trading around the $1.46 levels, while the Dollar dropped 8% against the Yen this year as investors reduced their Carry Trades heavily through 2007 in which they borrow in low yielding currencies such as the Yen and invest in higher yielding assets.

As for the U.S Futures Indexes' performance through out this year, the NASDAQ 100 was the most impressive one gaining 14.9%, the DJIA inclined 5.4% over the year, while the more diversified S&P 500 gained 2.6%. U.S Indices survived through out this year and the blue chips sector outperformed other sectors, while the energy sector also was one of the outperforming sectors in the economy.

Energy prices increased dramatically this year, edging up from as low as the $50 levels to its all time high at $99.26 in November, increasing energy prices contributed into hiking inflation rates in the last quarter of 2007, and other downside effects is seen on consumer spending as Americans now spend more off their pockets on gasoline rather than other products. Gold Prices on the other hand inclined heavily through out this year, from $650 per ounce back in January, edging up heavily to around the $840 per ounce gaining almost 20% through out 2007.

The Housing sector started to show its severe effects on the economy especially in the second half of 2007, subtracting as much as 1 percent from the third quarter's GDP estimate, and is seen to continue dragging the economy down through 2008.

The Manufacturing sector continued to show more weakness and even the depreciating Dollar which helped Exports couldn't make up for the slowing sector and the Services sector remained one of the few sectors that was still holding up.

The Trade deficit widened through 2007 on rising deficit with China and increasing energy prices, as the American Senates are still trying to push China into letting the Yuan float freely, the Average of Deficit through 2007 was 58.7 billion, edging as high as 62.7 billion in March and hitting as low as 56.9 billion in August, the Exports remained one of the main reasons contributing to substantial growth levels on the back of a depreciating dollar, but increasing concerns over the Chinese influence on the American economy is yet to have a solution. The Net Long TIC fluctuated heavily during 2007, the Feds use this indicator to cover up the trade deficit and the most noticeable thing about it was Net Sales through August by $150.7 billion and September's Net Sales of $32.8 billion.

The Labor market also was holding up thorough 2007, the Unemployment rate dropped to 4.4% thorough out the year and remained below 5.0% and those rates are considered historically low and healthy to prevent the economy undergoing recession, those healthy rates gave personal Income the momentum to remain strong and helped eliminating some of the negative effects of other underperforming sectors in the economy. Surprises were seen through out the year, but the biggest surprise was the 4000 decline which was reported in the Non-farm Payrolls back in August which at the time highlighted recession but a revision in September eased expectations of a recession in the world's largest economy though downside risks to growth and upside risks to inflation now threatens the economy with Stagflation.

The Feds announced in September their first cut on their benchmark interest rates, a 50 basis points cut took the rates from as high as 5.25% to 4.75% the Feds applied two more cuts taking the rates to as low as 4.25% and financial markets expect rates to decline by a further quarter basis point to 4.00% in their next January 30th meeting, along with that the Feds also applied a series of cuts to their Discount rates taking them from as hig

Major Technical Analysis

euro

The European currency continued in the upside direction yesterday due to the signals it had previously formed to take the euro up until 1.4780s resistance area. The technical oscillators indicated the upside potential; hence, the euro might cause a significant move if it passes the major resistance area around 1.4800.
The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4670.
The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230
We expect buying Euro above 1.4720 with a target at 1.4820 stop loss below 1.4670.

gbp

The British pound yesterday dropped in a strong bearish move as it couldn't breach the major resistance level located around 1.9840s area. The pound fell sharply to hit the strong support at 1.9700s, and is seen to remain weak therefore the pound is expected to progress in the downside direction.
The trading range for today might be between the key resistance level at 1.9870 and the key support level at 1.9500.
The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450

jpy

The dollar against the Japanese yen yesterday declined in a major move to hit the important support level at 108.20s and failed to progress due to the support's strength so the pair reversed back to the upside direction in the last trading sessions to close with tendency to the upside. Today the pair is expected to move in a bullish pattern.
The trading range for today will be between the key resistance at 111.00 and the key support at 107.80.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.

Currencies Update

Enigma Reveals

The US dollar extended losses against the Euro as speculation persists that the Feds will lower interest rates again this quarter amid worries over the credit markets and the US economic outlook.

There is a lot of uncertainty in the markets at the moment with concerns building that the credit market will continue to perform abnormally and not to mention the concerns that the US economy might tip into a recession. Yet a slight pick up in the US existing home sales in November did little to boost the sentiment on Monday, with analysts warning sales could weaken in the future.

The outlook for the UK economy is soft for the year and it's likely to be affected by a slowdown in the US economy more than the euro zone and this has been seen as the royal pound weakened against the euro. Investors anticipate soft UK economic data and hence leading to lower interest rates. Against the Dollar, the pound is fluctuating within narrow ranges to record a high of 1.9897 and a low of 1.9786.

Meanwhile the euro is gaining new ground as a global reserve currency. However dilemma surrounds the outlook of the euro. Some think that the Euro's triumph is however an irony wrapped in a riddle. Outside the Euro Zone the currency is on a good run giving the weakening dollar. However inside the Euro Zone from Italy to Germany, believe that it is behind the increase in the rate of inflation. The euro continues to gain against the greenback pushing the pair to the upside to record a high of 1.4699 and a low of 1.4596

As for now, the yen advanced against the British Pound in early transactions today however it slightly slipped against the US dollar pushing the pair to trade within narrow ranges to record a high of 111.98 and a low of 111.32.

Analysts suggest the economic news out from the US is likely to keep the markets attention on the growth outlook though inflationary concerns remain at a time of sky-high oil prices.

Crosses Technical Analysis

GBP/JPY

The Pound ended 2007 loosing heavily against the Yen and continued loosing ground with the start of today's trading, as investors bought the Yen back in a reversal move for carry trades, the general trend for the pair remains to the upside as far as 211.80 remains intact, but the short term technical indicators are showing the pair resides in an oversold area, and the level at 221.06 offers a strong demand point for the pair.

EUR/JPY

The Euro gained against the Yen unlike the Pound, but the pair still resides in an oversold area as indicated by the short term technical parameters, an upside potential is forming but is yet to be confirmed, but the general trend remains well to the upside for the pair, and the point at 163.07 seems to offer good demand for the pair.

EUR/GBP

The Euro continued to gain against the Pound, as the pair reached the upside targets we talked about earlier and the new target is set to be at the 0.7420s level, the general trend for the pair remains well to the upside and the short term technical indicators are still showing an upside potential even if the pair is entering an overbought area, and the point at 0.7370 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency dropped last time massively as it passed the key support area at 1.4670s dragging the currency further down to hit the major support level at 1.4560s. This was due to the huge sell off as 2007 came to an end. Today we expect the euro to bounce back to cover some of its losses.
The trading range for today might be between the key resistance level at 1.4740 and the key support level at 1.4370.
The general trend is up as far as 1. 3860 remains intact targets now at 1.4760 and 1.4930

gbp

The British pound last time was trading with high levels of volume in the downside direction due to the huge sell off which in role allowed the pound to breach many significant support areas as 1.9970. Nevertheless, today we expect the pound to move towards the upside direction again at the start of the new year to cover some of its previous losses.
The trading range for today might be between the key resistance level at 2.0000 and the key support level at 1.9700.
The general trend is up as far as 1.9800 remains intact targets now at 2.0940 and 2.1050
We expect buying sterling above 1.9840 with a target at 1.9920 stop loss below 1.9800

jpy

The dollar against the Japanese yen last time went to the downside target at the important support level at 113.50s. However it further declined in a strong move towards the key support area at 111.20s during the morning session, before reversing later to the upside direction but still showing the tendency in the downside direction.
The trading range for today will be between the key resistance at 112.50 and the key support at 110. 00.
The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.
We expect selling USD/JPY below 111.85 with a target at 110.80, stop loss above 112.40