'Forex Technical and Fundamental Analysis for August 26, 2011

EUR/USD Technical Analysis for August 19, 2011

 

 

Thursday saw a selloff in the EUR/USD again. The 1.45 area seems to be an area that sellers are willing to step in and get involved, and this past time has been no different. The biggest problem with trading this pair at the moment is that it has formed a bullish flag, a downtrend channel, and a consolidation area all at the same time. This chart is a mess.

However, if you think about it – you should expect this. The pair involves two currencies that presently have a ton of bad economic factors behind them. The Philly Fed number came out at a negative 30.7 on Thursday, when it was expected to be 4! The slowdown in manufacturing is somewhat staggering, and could lead us into recession. The Euro zone’s problems, well…..they are too many to list at this point.

We see this as a scalper’s market until we can close on a daily candle above 1.45, or below the 1.40 area. Until then, we are not willing to put on any positions of significant size.

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EUR/USD Daily Fundamental Analysis for August 19, 2011

The EUR/USD continued to fluctuate heavily on Thursday with the evident jitters over the outlook for the recovery.

The euro continues to trade bearishly with the weak risk appetite in the market supporting haven currencies over the debt-laden euro and keeping the bias with the dollar.

Higher than expected inflation from the United States also worked its way to increase jitters over the outlook, as inflation will prevent the Fed from acting to support waning growth with QE3 which also kept the negative sentiment evident.

On Friday, the focus will be also on the sentiment with the lack of major fundamentals from the euro area and the United States. The decline in the risk appetite is still predominant yet we expect heavy fluctuations with the end of the week trading and position squaring.

Germany will release the Producer Prices for July which are expected to hold at 0.1% on the month and on the year to ease to 5.3% from 5.6%.

AUD/USD Technical Analysis for August 19, 2011

 

 

The AUD/USD pair fell hard on Thursday as traders got bad news out of the US, and the European debt fears continue to take centre stage. The massive losses in the European stock indices didn’t do much to help the trader sentiment, and when traders are becoming risk-adverse, they leave commodity related currencies hand over fist. The Aussie is no exception.

The 1.03 area is minor resistance, and we may see it hold. If it gives way however, we will see this pair test 1.01 and then parity before the move ends. Any bad news in a market like this can sell this pair off. We don’t sell yet – but we certainly don’t buy for the next 24 hours.

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AUD/USD Daily Fundamental Analysis for August 19, 2011

The Australian currency, nicknamed Aussie, dropped from the highest level in more than two weeks against the dollar after the Asian equities slumped, increasing investors’ fears about the global recovery, and curbing demand for higher yielding currencies.

On the other hand, the Australian dollar depreciated against the yen after oil and copper dropped.

Moreover, Aussie declined versus its major counterparts after the RBA minutes noted that the Bank won’t increase the interest rates until the end of the year to continue supporting the economic recovery amid the European debt crisis that is threatening the global economic recovery.

The Australian and U.S. economies aren’t going to release any fundamentals on Friday.

EUR/CHF Technical Analysis for August 19, 2011

 

 

One has to wonder where this pair would be if the Swiss National Bank wasn’t involved in stemming the rise of the Franc. Presently, we saw another flat but volatile day on Thursday in this pair and the 1.15 area seems to be where the market is most comfortable with it.

The pair looks like it is a little tired, but few traders are brave enough to test the SNB at the moment, and this could continue to keep this pair up in this area for a while. The 1.10 below should be supportive as well, and the 1.18 above has been support and resistance in the past as well, and could affect price as well when and if we get there. Either way, we feel the real signal will be based off of the weekly chart in the form of a large candle. At this point, we can only guess as to the direction as the market is being artificially propped up at the moment.

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EUR/CHF Daily Fundamental Analysis for August 19, 2011

The mixed trading continues to be evident for the EUR/CHF amid the risk aversion and fear over the worsening outlook for the global recovery and debt crisis.

The franc remains mixed amid rising haven demand and SNB moves to counter the franc gains. The pair fluctuated with this mixed sentiment especially after comments from Swiss finance minister yesterday that the government supports the SNB in the measures to contain the currency’s rally.

In the early session on Thursday the franc weakened on expectations the SNB was intervening in the forwards market to weaken the franc. This sentiment will continue to be focused on the market sentiment and the fear of the next step by the SNB on Friday.

With the end of the week trading and the lack of major news choppy trading will prevail on Friday as the pessimism remains the dominant pressure.

Germany will release the Producer Prices for July which are expected to hold at 0.1% on the month and on the year to ease to 5.3% from 5.6%.

NZD/USD Technical Analysis for August 19, 2011

 

The NZD/USD pair fell rapidly during the Thursday session as traders shunned anything risk-related in the markets. The slowdown that seems to be indicated by the Philly Fed numbers out of the US doesn’t bode well for commodities as it showed manufacturing slowing down. Less manufacturing, less commodities used – it’s that simple. Being a commodity currency, the Kiwi dollar suffered as a result.

Technically, the pair looks like it is entering a minor support area in the 0.82 range, and could bounce from this area. However, the fall was significant, and these moves almost never happen in a vacuum. The 0.8000 level will be vital to the future direction of this pair. We are willing to let this pair do whatever it wants over the next couple of sessions as the readiness to fall certainly has us doubting the bullishness of the buyers. Look for a bounce from 0.80, or at least a calming of the pair in order to buy. If we close on the daily chart below 0.80 – this could change many things about our analysis and none of them to the bullish side of the argument.

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NZD/USD Daily Fundamental Analysis for August 19, 2011

The NZD/USD pair dropped early Thursday , where the greenback gained momentum against other major currencies, as risk aversion controlled the market sentiment sending the lower-yielding currencies to the upside.

Standard and Poor’s released Wednesday a report that reduced the U.S., economy outlook through 2013 due to the current financial market situation.

More signs have been added to the gloomy picture of the U.S. economy outlook, since the U.S. credit rating downgraded by S&P fuelled more concerns over the outlook for the global recovery.

The New Zealand economy is on track, as the economy runs with good performance amid the global conditions, where higher consumer spending and employment add to evidence the nation’s economy grew modestly in the first quarter, buoyed by record-low interest rates and a surge in commodity prices. Continued growth in domestic demand this year may prompt central bank Governor Alan Bollard to raise interest rates as early as the fourth quarter.

On Friday, the New Zealand economy will end the week by releasing its credit card spending at 03:00 GMT after it jumped 0.40% in June, and the annual index increased to 4.5%.

USD/JPY Technical Analysis for August 19, 2011

 

 

The USD/JPY continues its slow march south as the trading world tentatively tests the patience of the Bank of Japan. The central bank intervened just two weeks ago, and at levels just above where we presently sit. Because of this, it is almost a given that they will get involved again, and as such we don’t sell this pair. We know the chart looks poor, but the truth is that you do not want to be on the other side of a central bank intervention. It can go against you 300 pips in a blink of the eye.

We are waiting for a buy signal as it goes with the CB’s wishes. The biggest problem – we haven’t seen one, and don’t expect to anytime soon.

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USD/JPY Daily Fundamental Analysis for August 19, 2011

The USD/JPY pair is still trading in a limited range despite the bearish bias , as the weakening US and Japanese data fuelled the risk aversion in the financial market. Where the safe-haven currencies like US dollar, Japanese yen and Swiss franc are still the biggest winners.

The Japanese economy released some disappointing data regarding the exports during July, where exports slumped by 3.3% due to the strong currency and the slowdown in the U.S. and China.

The drop in Japan’s exports negatively affected the Japanese outlook, as the world’s third-largest economy is depending on the exports to lead the Japanese recovery.

The slowing U.S. economy and the disappointing Japanese data increased concerns over the global economy recovery, which in turn drove investors to abandon the higher-yielding currencies and focus on the safe haven investments.

The USD/JPY pair remained aggressively bearish as the pair traded near the post-war lows, where the Japanese yen had the strongest performance against the majority of its major counterparts on concerns over the global economy outlook.

On Friday, the Japanese economy will release the all industry activity index for June at 04:30 GMT, where it had a previous reading of 1.9% and expected at 2.0%.

GBP/USD Technical Analysis for August 19, 2011

 

 

GBP/USD fell as the world got spooked by fears coming out of Europe involving the debt crisis, and the Philly Fed numbers came in very poor. The reality is that the world could be slipping into recession, and if that is the case – the USD normally gains as a safe haven play. The GBP has been strong recently, and the bounce later in the day shows that it might remain so.

The technical signal is simple: If we break the highs of Thursday, (and the highs of Wednesday for good measure) we should see a run to 1.68 before it is all over. If we break below the bottom of the hammer from Thursday, it would be a confirmed hanging man formation – a very bearish signal indeed. If we break below that, it looks like 1.61 could be our initial target.

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GBP/USD Daily Fundamental Analysis for August 19, 2011

On Thursday, the pound fell against the dollar after the release of downbeat report which added to concerns as it followed a parade of grim reports showing the economy is slowing down.

Retail sales with auto fuel retreated to 0.2% compared with the revised 0.8% in June, while the annual reading came flat compared with the prior 0.4% rise.

The report moved in line with the BoE latest cut to growth and inflation outlook to theU.K., where policy makers Dale and Weale halted their call for an interest rate and decided to join the majority in August, according to August’s minutes amid discussions from policy makers to expand the APF further.

The week ends with the release of public finance and public sector net borrowing for July at 08:30 GMT; PSNB excluding interventions is predicted to show that the deficit narrowed to 1.0 billon pounds compared with the prior 12.0 billon pounds deficit, while theU.S.lacks fundamentals.

The data is predicted to have an effect on the pair’s movements as with undergoing slowdown in growth, the BoE will probably be under pressure and more criticism after adopting severe austerity measures that aim to eliminate the budget deficit by the year 2015, thus investors will follow the progress in budget deficit slash.

USD/CAD Technical Analysis for August 19, 2011

 

 

The USD/CAD pair rose on Thursday as the oil markets sold off in a violent manner. The weak Philly Fed numbers out of the US only stoked the fires that were burning after a massive sell off in European equity markets. With oil falling, there is much less demand for the Canadian dollar.

The pair is still in a downtrend technically, and is far from changing that. However, the oil markets seem to be the most important indicator that you can use in order to determine the likely move in this pair. If we can break below the 0.98 on a daily level – this pair continues the fall. If we break above the 1.0000 level – we could get a massive pop in this pair. However, the most important numbers – $80 as support in the CL contract. (Light Sweet Crude) If that gives, this pair will skyrocket. If CL can break $90, this pair falls hard.

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USD/CAD Daily Fundamental Analysis for August 19, 2011

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USD/CHF Technical Analysis for August 19, 2011

 

The USD/CHF pair remains somewhat stagnant as the trading community currently fears whatever means the Swiss National Bank are willing to take in order to keep the value of the Franc down. The pair has risen quite a bit recently, and as such could be taking a bit of a rest before the next big move, but the 0.8000 level seems to be a massive barrier. Because of this, we see this mark as vital and will be watching it for further hints of direction. The trend is certainly down, and we have to keep that in mind.

The next couple of weeks could be very important for the future of this pair, but we feel that the markets will be very quiet for a while, until that one big move that will be very obvious. With the SNB involved, we aren’t as sure as we once were about the direction, and can only wait for that obvious and massive candle that will certainly appear sooner or later.

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USD/CHF Daily Fundamental Analysis for August 19, 2011

On Thursday, the dollar advanced against the franc , on expectations the SNB will adopt all measures to halt the franc’s rally.

There are talks that the bank is selling franc in forward markets, rather than spot markets, to reduce its appeal more. The SNB said on Wednesday it would raise sight deposits to 200 billion francs from 120 billion francs, repurchase outstanding SNB bills and adopt foreign exchange swaps, and it revealed that may take further measures if needed.

Swiss Finance Minister Eveline Widmer-Schlumpf said any decision regarding a target for pegging to the euro is up to the central bank, not ruling out the possibility of seeing one of the two aforesaid options.

On the other hand, the dollar continued to benefit as a safe haven amid the worries spreading in markets, where it was not much affected by theU.S.data which showed that inflation rose higher than expected in July and initial jobless claims surged above forecasts in the week ended August 13.

On Friday, the week ends with the release no data from both economies, thus the pair is predicted to follow the general sentiment in the market.

With the ongoing interventions by the SNB and the dollar’s advance as a refuge, the pair is expected to continue its upside direction.

 

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