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  1. #11

    Forex Major Currencies Outlook (February 21, 2013)

    USD: Bullish

    The minutes of the latest FOMC meeting caused quite a ruckus in the currency market as policymakers showed signs of hawkishness for the U.S. economy. In fact, some policymakers even suggested that they might overlook the previously mentioned inflation and employment targets, as they considered withdrawing asset purchases sooner. The U.S. unemployment rate still stands at 7.9% and is miles away from the specified 6.5% target yet Fed officials remarked that they might at least slowly reduce or taper off their quantitative easing moves as the economy shows signs of a rebound. Additionally, some policymakers warned against the dangers of easing too much, especially since the U.S. government is nearing its spending cuts deadline. While President Obama keeps reassuring markets that the U.S. economy won’t crash during the first of March, which is the sequestration deadline, this still poses a threat to the ongoing recovery. Nevertheless, interest rate expectations continue to drive markets and the recent turnaround in the FOMC’s rhetoric could provide support for the dollar in the near term.

    EUR: Neutral

    The euro lost a lot of ground to the U.S. dollar during yesterday’s trading as the change in the FOMC’s rhetoric sparked strong demand for the latter. EUR/USD is still hovering around the 1.3250 to 1.3300 support zone and trend line though, which suggests that traders are on the fence when it comes to this pair. Last week, the region printed weak GDP reports and slumped deeper into recession but recent economic surveys seem to be hinting at a good rebound. German and euro zone ZEW both came in stronger than expected for February and the upbeat sentiment could trickle to strong business spending and hiring. Euro zone PMIs are on tap today and this could set the tone for euro trading for the rest of the week.

    GBP: Bearish

    Perhaps the most divergent of interest rate expectations are those from the BOE and the Fed. While the former has expressed its willingness to implement further stimulus, the latter just hinted that a withdrawal of easing measures could be imminent. This explains why GBP/USD just broke below the major support area around 1.5300 to 1.5350. Not even the stronger than expected claimant count change was able to provide support for this pair as the MPC meeting minutes showed that the number of dovish members increased. The 10-year bond auction and CBI industrial order expectations are on tap today and weak outcomes could push GBP/USD even lower.

    CHF: Neutral

    Switzerland just released stronger than expected trade balance, which showed that the surplus widened from 0.90 billion CHF to 2.13 billion CHF for January. This was spurred by an increase in exports while imports dipped by 0.5%, according to their Federal Customs Office. However, the franc could continue to sell off against the dollar and the euro, which are both enjoying improved interest rate expectations.

    JPY: Neutral

    USD/JPY has been trading sideways for a while as markets await Abe’s appointment of the next BOJ head. The 94.00 handle has held as strong resistance since the pair made several failed attempts to break beyond that level. The consolidation has been getting tighter, suggesting a potential breakout either back to 92.00 support or until the 95.00 resistance.



    Commodity Currencies (AUD, CAD, and NZD): Bearish

    Shaky fundamentals of the commodity currencies’ economies have been weighing on these higher-yielding ones so far. Traders are cautious of buying the Kiwi, which was said to be overvalued, according to RBNZ head Graeme Wheeler. Traders are also uneasy about buying the Aussie, as the RBA could implement a rate cut in their next policy decision during the first week of March. Meanwhile, the Loonie has been selling off as BOC head Carney, who has been one of the most hawkish central bank officials, is set to exit soon.

    By Kate Curtis from [Only registered and activated users can see links. ]

  2. #12

    Forex Major Currencies Outlook (February 22, 2013)

    USD: Bullish

    While some traders booked profits after the FOMC sparked a strong dollar selloff, it seems that most of the anti-dollar rallies that took place yesterday were mere retracements. For instance, GBP/USD managed to pull back to the 1.5250 area not because of strong data but most likely because of profit taking at 1.5150. This could be a chance to catch the ongoing downtrend at a much better price as the Fed stays committed to its idea of withdrawing asset purchases soon. There are no major reports due from the United States today so the FOMC’s sudden turnaround in monetary policy could continue to lift the Greenback. Take note that Fed official and FOMC voting member Powell is set to give a speech today and, if he confirms the Fed’s change in bias, we could see more dollar rallies towards the end of the week.

    EUR: Bearish

    Weaker than expected euro zone PMI figures triggered a fresh round of euro selling during yesterday’s trading. The French manufacturing PMI came in at 43.6, lower than the 43.9 estimate, while the services PMI landed at 42.7 instead of climbing to 44.5. Germany’s manufacturing PMI rose from 49.8 to 50.1, but fell short of the consensus at 50.4. Their services PMI slipped from 55.7 to 54.1, way below the estimate at 55.5. Overall, the region’s manufacturing PMI dipped to 47.8 from 47.9 while the services PMI slumped from 48.6 to 47.3 instead of rising to 49.2. This pushed EUR/USD to a new monthly low as traders speculated that the contraction in both manufacturing and services sectors of euro zone’s largest economies could translate to a deeper economic slowdown. The German Ifo business climate figure is set for release today and this could provide a clearer assessment of the business conditions in euro zone’s top economy. Another weak figure, or one that is lower than the estimated 104.9 reading, could trigger a stronger euro selloff.

    GBP: Bearish

    While the pound seemed to be able to recover against the U.S. dollar during yesterday’s trading, this may have been simply a result of profit-taking at the 1.5150 area. Fundamentals remain weak in the U.K. as the BOE is still committed to increase asset purchase if necessary, even at the expense of stronger inflationary pressures. There are no reports due from the U.K. today, which suggests that pound pairs could resume their downtrend if traders view the retracement as a chance to hop in at better prices.

    CHF: Neutral

    Bleak European sentiment seems to be weighing on the Swiss franc so far as euro zone and the U.K. have been showing signs of a slowdown. This seems pleasing to the SNB as they have expressed their commitment to keep the franc’s value down. However, as other countries in Europe are slowing down, the Swiss franc could once again emerge as the safe-haven currency in the region.

    JPY: Bearish

    USD/JPY is nearing the bottom of its range from 92.00 to 94.00 as the pair is currently trading close to 92.50. This could inspire a fresh round of yen-selling as traders might want to close off their long yen positions while waiting for Abe to appoint the next BOJ head. If the next central bank governor shows an inclination for further asset purchases or actual intervention in the currency market, the yen could rally back up to the 94.00 mark and beyond. No reports are due from Japan today.

    Commodity Currencies (AUD, CAD, NZD): Bearish

    While commodity currencies struggled to hold ground against the U.S. dollar, the sentiment for these higher-yielders is still bearish as their central banks seem to favor loose monetary policy. Australia suffered a bout of weak economic data lately and traders could keep pricing in expectations of an RBA rate cut for the first week of March. Meanwhile, RBNZ head Wheeler talked about the damaging effects of the Kiwi’s strength on New Zealand’s export-driven economy. Lastly, BOC Governor Carney retracted most of his hawkish remarks during the previous BOC rate decision. In addition, his upcoming exit could leave the BOC with one less hawk, possibly tipping the scale to a more bearish BOC rhetoric.

    By Kate Curtis from [Only registered and activated users can see links. ]

  3. #13

    Forex Major Currencies Outlook (February 25, 2013)

    USD: Neutral

    There are a few major U.S. economic releases due this week, such as the CB consumer confidence data and the ISM manufacturing PMI, and these could either confirm or reverse the pro-dollar bias that the FOMC meeting minutes resulted in last week. Recall that the monetary policy committee members suggested overlooking the previously set inflation and unemployment targets and considered a gradual withdrawal or tapering off of their asset purchase program. Federal Reserve Governor Ben Bernanke is also set to give a speech towards the middle of the week and, since this is a semi-annual testimony, it could have a huge impact on price action. Indications that the Fed will soon start to reduce their asset purchases could continue to fuel the dollar rally while retractions or opposite signals from economic data could force the Greenback to return its recent gains.

    EUR: Bearish

    Italian elections are still going on in the euro zone and it seems that the odds are tilted towards a less favorable outlook. If early polls show increased chances of a political stalemate, the resulting uncertainty and unstable leadership could keep weighing on the euro. Additionally, ECB Governor Draghi has a speech later this week and he could comment on the recent weaknesses in the euro zone. The other week, the region printed weaker than expected GDP then suffered a bout of poor PMI figures last week. The European Commission also remarked on the possibility of worse than expected economic performance in the region for the entire year. EU officials believe that the economy will shrink by 0.3% in 2013 and that unemployment will keep going up.

    GBP: Bearish

    The U.K. just received a debt rating downgrade from credit rating agency Moody’s on Friday. As a result GBP/USD gapped down over the weekend as Asian session and London session traders will start to incorporate their reactions today. According to the statement from Moody’s, the U.K. is likely to face weaker growth in the near term and that the BOE might need to expand their asset purchases just to keep the economy afloat. BOE Governor King already expressed the central bank’s willingness to do so, which has already been weighing on the pound for the past trading weeks.

    JPY: Bearish

    Yen pairs have been moving more cautiously these days as traders await Prime Minister Abe’s appointment of the next central bank head. If he appoints one that favors a weak currency in the country’s battle against deflation, the yen could resume its selloff against its counterparts. Among the three candidates touted to take the BOJ helm is Muto, who is expected to be the most bearish for the yen.

    CHF: Neutral

    There are several medium-tier data due from Switzerland this week. With the euro and the pound suffering sharp selloffs as their central banks favor loose monetary policy, the franc has been emerging as the safer currency in Europe. However, SNB head Jordan already talked about keeping the franc down, which explains why traders are still hesitant to park their money in the Swissy.

    Commodity Currencies (AUD, CAD, NZD): Neutral

    There are no major economic reports due from Australia, Canada, or New Zealand this week, which suggests that these currencies could trade sideways against the dollar, unless there are market-moving data from the U.S.

    By Kate Curtis from Trader's Way

  4. #14

    Forex Major Currencies Outlook (February 26, 2013)

    USD: Bullish

    Federal Reserve Chairman Ben Bernanke will deliver his semi-annual testimony in Congress during today’s US session and possibly talk about the previously released FOMC meeting minutes, wherein the policymakers showed an inclination for an early tapering off of asset purchases. At that time, they considered overlooking inflation and unemployment rate targets, but Bernanke could have more to say on the issue. If he confirms the Fed’s change in monetary policy bias, the dollar could be in for further gains. But if he decides to manage market expectations and downplay the potential withdrawal of asset purchases, the dollar could retreat against its counterparts and resume trading mostly on economic data. The CB consumer confidence and new home sales data are due today and both are expecting improvements.

    JPY: Neutral

    Yen traders are still waiting for Japanese Prime Minister Abe’s appointment of the next central bank head. It looks like Kuroda is being touted most likely to get the position and his aggressive ideas for combatting deflation could be very negative for the Japanese yen. Japanese retail sales are due at the end of the New York session and a huge decline is expected, which might trigger a quick yen selloff. The pair tumbled sharply yesterday after gapping over the weekend as a number of large hedge funds decided to liquidate their positions prior to the actual BOJ head appointment.

    EUR: Bearish

    Early exit polls in the Italian elections aren’t looking too good as some are showing mixed winners for the Lower House and Senate. Other polls are hinting at the possibility of Berlusconi grabbing majority of the seats in parliament, which will be definitely negative for the euro. After all, Berlusconi is known for his political and sex scandals, which ushered in government instability for Italy. In addition, if different parties win majority of the seats, it could result force the lawmakers to make a political coalition, which would also be messy in terms of policy and political direction.

    GBP: Bearish

    Bank of England Governor King is giving a speech today. He just voted in favor of further easing, according to the minutes of the latest monetary policy meeting. The last few times that happened in the past five years, the central bank actually implemented further asset purchases in their next interest rate decision or within the next three months. Also, the impact of Moody’s credit rating downgrade is still weighing on the pair as it led market participants to worry about rising debt costs in a country that’s already dealing with a problematic budget.

    CHF: Bullish

    With all that’s going on in the euro zone and the UK, the Swiss franc seems to be the safer European currency to buy. However, the SNB’s stance of keeping the franc down and defending their peg with utmost determination is keeping traders from buying the Swissy. The employment report for Q4 2012 is due today and is expected to show a decrease from 4.12 million to 4.11 million in the number of employed people.

    Commodity Currencies (AUD, NZD, CAD): Bearish

    Sentiment for the commodity currencies is still bearish, although AUD/USD, USD/CAD, and NZD/USD all seem to be approaching significant inflection points. AUD/USD looks ready to move towards 1.0200 support while NZD/USD is inching close to .8300. USD/CAD seems to be stalling close to 1.0300, which could cap off the pair’s recent rallies. Chinese HSBC PMI came in below consensus yesterday, although it did point at an expansion. No major releases are due from Australia, Canada, and New Zealand today so the downbeat monetary policy expectations from their respective central banks could keep rallies at bay.

    By Kate Curtis from [Only registered and activated users can see links. ]

  5. #15

    Forex Major Currencies Outlook (February 27, 2013)

    USD: Bearish

    Based on the tone of Ben Bernanke’s semi-annual testimony in front of the U.S. Congress yesterday, the Federal Reserve is in no rush to withdraw stimulus. He mentioned that they’d like to see some improvements in economic data, particularly in the employment sector, before considering reducing their asset purchases. According to him, the benefits of monetary policy stimulus outweigh the risks for now, which suggests that the expected tapering off of bond purchases won’t take place anytime this year. This statement had a muted effect on most dollar pairs but it was enough to keep further rallies at bay, hinting that traders could be changing their minds about buying up the dollar. Bernanke has another speech during today’s New York session, along with the release of U.S. durable goods orders data and pending home sales figures.

    JPY: Neutral

    For now, yen pairs are still on neutral ground as traders await Abe’s nomination of the next central bank head. USD/JPY has been moving sideways around the 91.50 region and consolidating even more tightly. If Abe decides to nominate Kuroda, who is a known yen bear, we could see USD/JPY break to the upside. Otherwise, the yen could resume its rally and break below 91.00. Japan is set to release manufacturing production and industrial production during the latter half of the U.S. session.

    EUR: Bearish

    There is still no clear indication of who the Italian election winners are but it seems that markets are pricing in the idea of a Berlusconi-Bersani coalition. This could be bearish for the euro in the longer run as political stalemates like these tend to lead to tension and uncertainty, making it more difficult to implement fiscal reforms. As a result, European stocks sold off reflecting investors’ uneasiness about the potential outcome of the Italian elections. Only medium-tier reports are due from the euro zone today, including the German GfK consumer confidence figure, which aren’t expected to have a huge impact on euro pairs’ movement. Keep an eye out for any updates on the Italian elections to figure out whether EUR/USD could break below 1.3050 or bounce back up to 1.3300.

    GBP: Bearish

    There is a long-term bearish sentiment for the pound as the BOE has already expressed its willingness to implement further quantitative easing. However, it seems that traders have already closed off some of their positions and booked profits around the 1.5100 mark. The second estimate for the UK Q4 2012 GDP is set for release today and, although most analysts aren’t expecting any revisions from the 0.3% contraction reported, a downside surprise could put pound pairs back on their downtrend. Business investment data and a speech from monetary policy committee member Bean are also on tap for today.

    CHF: Neutral

    Switzerland’s employment level managed to hold steady at 4.12 million for Q4 2012, higher than the estimated dip to 4.11 million. This caused a slight rally for their yesterday but it appears traders are still cautious about buying up the franc. The UBS consumption indicator and KOF economic barometer are due today and strong figures could usher in further demand for the franc.

    Commodity Currencies (AUD, CAD, NZD): Bullish

    AUD/USD, USD/CAD, and NZD/USD are trading right on significant inflection points and are showing signs of a potential reversal since the selloff among commodity currencies might be already overdone. AUD/USD is finding support at the 1.0200 major psychological level with a bullish divergence and oversold stochastic on the daily time frame while USD/CAD formed a doji also on the daily time frame. NZD/USD, on the other hand, has already broken below the 0.8300 handle but appears prime for a retracement.

    By Kate Curtis from [Only registered and activated users can see links. ]

  6. #16

    Forex Major Currencies Outlook (February 28, 2013)

    USD: Bullish

    The U.S. dollar may have lost some ground against most of its major counterparts during yesterday’s trading but this was mostly a result of a rebound in risk and profit-taking at key levels. U.S. data came in mixed with durable goods orders showing a 5.2% decline, worse than the estimated 4.8% drop, while the previous month’s figure was revised down from 4.6% to 4.3%. Core durable goods, on the other hand, chalked up a 1.9% increase. This was much better than the estimated 0.3% uptick and the previous month’s 1.0% growth. Pending home sales also came in stronger than consensus as the report printed a 4.5% jump, outpacing the predicted 1.7% increase. For today, economic data could drive dollar pairs as the U.S. has the preliminary GDP reading and weekly jobless claims on tap. The U.S. economy is expecting to see an upward revision from -0.1% to 0.5% in its Q4 2012 GDP reading and, if that happens, demand for the U.S. dollar could rise as this could bring the Fed closer to tapering off its asset purchases.

    EUR: Bearish

    The Italian bond auction surprisingly turned out better than many expected, although most market participants were actually expecting the worst. Yields didn’t spike as sharply as the 10-year Italian bond yield landed at 4.83% from 4.10%, still below the 5.00% threshold. However, political uncertainty still lingers in Italy as Bersani refuses to form a coalition with Grillio or Berlusconi, upping the odds for another election in the country. Another factor that could weigh on the euro is ECB head Draghi’s comments on the central bank being far from thinking about a withdrawal of monetary policy stimulus.

    GBP: Bearish

    The pound managed to escape a strong selloff during yesterday’s trading as their GDP figure didn’t undergo any negative revisions from the initially estimated 0.3% contraction. However, the quarterly business investment report revealed that investors aren’t looking to park their money in the U.K. as the figure came in at 1.2%. This was way worse than the estimated 2.2% uptick for the period and the previous quarter’s 0.5% uptick. There are no major reports due from the U.K. today as pound pairs could trade sideways, awaiting further catalysts. Sentiment for this currency remains bearish though as the BOE has committed to loose monetary policy.

    JPY: Neutral

    Yen traders continue to sit tight awaiting the nomination of the next BOJ head, but it seems that Japanese economic data has been leading to a few moves here and there. The Japanese manufacturing PMI posted a slight improvement from 47.7 to 48.5, still in the contractionary zone. Preliminary industrial production came in weak at 1.0%, lower than the consensus at 1.6% and the previous 2.5% increase. Earlier today, Japan reported a 5.0% annual increase in housing starts, lower than the estimated 8.9% growth and the previous 10.0% reading. However, Japanese officials claim that the economy is bottoming out but that it will be a long road to recovery. Japanese inflation reports are on tap for later today and weaker than expected figures could be bearish for the yen as it would imply the BOJ has to step up its game when it comes to warding off deflation.

    CHF: Neutral

    There haven’t been any major reports from Switzerland lately, leaving most franc pairs moving sideways. Although the franc emerged as the safer European currency compared to the euro and pound, the SNB’s commitment to keeping the franc’s value down is preventing traders from buying up this currency.

    Commodity Currencies (AUD, CAD, NZD): Bearish

    Commodity currencies have broken through key inflection points but seem to show signs of retracing at the moment. AUD/USD dipped below the 1.0200 major psychological support and may be on its way to the 1.0150 mark as Australia printed weaker than expected private capital expenditure and private sector credit data earlier today. Meanwhile, the New Zealand dollar was able to benefit from an improvement in ANZ business confidence data, as the reading climbed from 22.7 to 39.4. As for the Canadian dollar, the selloff seems overdone as USD/CAD has retreated from its recent highs, but Canadian current account data could push it back up.

    By Kate Curtis from [Only registered and activated users can see links. ]

  7. #17

    Nice insight

    I just started following your thread and I must say that I do appreciate it
    such good insight into the probable direction for the day. One can trade using technical analysis with these insights in mind. Any way thanks again

  8. #18

    Forex Major Currencies Outlook (March 4, 2013)

    USD: Bullish

    Although the sequestration in the U.S. which started last week will likely have long-term negative effects on the economy, this event rendered price action dependent on risk sentiment once again. This means that the U.S. dollar could still be able to outpace most major currency counterparts because of its low yield and safe-haven status. Ben Bernanke already mentioned that the Fed will carry on with its asset purchase program, which means that the central bank shares a dovish stance just like everyone else. However, central bank decisions from other major economies this week could reveal which ones are much more dovish and the U.S. dollar still stands to benefit if further easing efforts are implemented elsewhere.

    EUR: Bearish

    Sentiment for the euro remains bearish this week as the ECB will make its monetary policy statement later on. There are no interest rate changes expected as there seems to be very little room for further cuts, but the central bank could decide to offer more LTROs for banks who are struggling with lending and liquidity. In last week’s speech, ECB head Mario Draghi expressed his openness for further easing as part of the central bank’s commitment to shift euro zone’s focus away from financial problems and back to economic growth. So far, there has been no clear resolution in Italy’s politics but Bersani did shun the possibility of forming a coalition government.

    GBP: Bearish

    The Bank of England is set to make its monetary policy decision also within the week and traders are starting to price in further asset purchases from the central bank. Minutes of the previous monetary policy decision showed that BOE head Mervyn King moved over to the bears’ side, which suggests that looser monetary policy is in the cards possibly within the next three months. No monetary policy changes from the British central bank this week would increase the odds of further easing in their next statement so the overall bias for pound pairs is still bearish.

    JPY: Neutral

    Kuroda has already been appointed by Prime Minister Abe as the next Bank of Japan Governor but incumbent leader Shirakawa will still head the BOJ rate decision for this week. No major changes are expected, as Shirakawa would probably make the transition as smooth as possible. Besides, Japan’s CPI figures came in line with expectations so far, although they still reflected the prevailing effects of deflation on the economy.

    CHF: Neutral

    Only the foreign currency reserves and a speech by Swiss National Bank head Thomas Jordan is scheduled for this week, and these aren’t due until the latter half. For now, the Swiss franc might stay at its current levels against the euro and the dollar, awaiting market catalysts. EUR/CHF and USD/CHF could react more to euro zone and U.S. data in the meantime.

    Commodity Currencies (AUD, CAD, and NZD): Bearish

    AUD/USD just broke below the key support zone at 1.0150-1.0200 as traders are anticipating a 0.25-0.50% rate cut from the RBA tomorrow. However, RBA Governor Glenn Stevens dismissed this possibility in an earlier speech as he talked about how the previous easing efforts are starting to kick in and that the current level of stimulus is appropriate for now. No rate cut could trigger a bounce back above 1.0200 for AUD/USD while an actual rate cut could push it closer to parity. The BOC is also scheduled to make its monetary policy statement this week and, even though no policy changes are expected, outgoing BOC Governor Carney could be less hawkish and not discuss rate hikes this time around. No reports are due from New Zealand, which means that the Kiwi could follow the Aussie’s behavior for the most part.

    By Kate Curtis from [Only registered and activated users can see links. ]

  9. #19

    Forex Major Currencies Outlook (March 5, 2013)

    USD: Bullish

    The U.S. dollar is currently benefiting from risk flows as most central banks are about to take a dovish monetary policy stance. At the end of the day, the U.S. dollar is still king due to its lower yield and safe-haven status, even though the Fed's Bernanke previously stressed that there was no need to withdraw asset purchases yet. So far this week, there were no major economic events from the U.S., except for some speeches from FOMC members who mentioned the challenges to the Fed’s monetary policy. Today, the U.S. will print its non-manufacturing PMI figure for February and possibly report a dip from 55.2 to 55.0. A stronger than expected figure could boost the U.S. dollar during the New York session.

    JPY: Neutral

    Yen pairs are trading cautiously of late, waiting for further clues on monetary policy and the exchange rate mechanism. Newly appointed BOJ head Haruhiko Kuroda hasn’t mentioned anything regarding these issues yet, and isn’t likely to do so during the BOJ monetary policy decision this week. Note that this is Shirakawa’s last monetary policy statement as BOJ head; he isn’t likely to make any drastic announcements before passing the baton to Kuroda. For now, the Japanese yen might act as a lower-yielding counterpart, which could rally if risk aversion sets in.

    EUR: Neutral

    The EUR/USD staged a meager recovery on Monday’s trading as it found support around the 1.3000 handle. Spanish employment figures came in stronger than expected. The unemployment change figure showed a 59.4K decrease in jobs instead of the 77.5K consensus, and lower than the previous figure of a 132.1K drop in hiring. Still, this indicates another month in job losses which doesn’t bode well for one of euro zone’s largest economies. Spanish and Italian services PMI are on tap for today, and both reports are expected to sink down from their previous readings. Eurozone retail sales are due later as well, but these reports aren’t likely to cause huge moves in euro pairs as traders are sitting on their hands prior to the ECB statement later this week.

    GBP: Bearish

    U.K. construction PMI fell below expectations for February, as the figure dipped from 48.7 to 46.8 – its lowest level since October 2009. Analysts were expecting a slight rebound to 49.2. This led to a test of the crucial 1.5000 level for GBP/USD but the pair seems to have bounced back up to the 1.5100 area again. The U.K. will today print its services PMI figure for February, and possibly show a drop from 51.5 to 51.1 for the month. A weaker than expected figure, especially one that is below the 50.0 mark, could push the GBP/USD to break below the 1.5000 major psychological level.

    CHF: Bearish

    The USD/CHF pair has been on a tear lately as the pair rallied to the .9400 major psychological resistance, which seems to be holding for now. Scrolling back further, or looking at a longer-term time frame would reveal that a double bottom pattern has formed, indicating further rallies. There are no major reports from Switzerland lately and none are due today.

    Commodity Currencies (AUD, CAD, NZD): Bullish

    As expected, the Reserve Bank of Australia kept rates on hold at 3.00% instead of cutting by 0.25-0.50% basis points. In his latest speech, RBA Governor Stevens did mention that the recent easing efforts of the central bank are just starting to take effect in the economy, which is a hint that no further stimulus is needed for now. Reversal signals have formed right on the 1.0150 support level on the AUD/USD, signaling that the pair’s selloff could be over. Retail sales also came in higher than consensus at 0.9% earlier today while the current account posted a smaller than expected deficit. There are no major reports due from New Zealand for this week, as the Kiwi could take its cue from the Aussie, which is enjoying a rally from the RBA’s decision to keep interest rates unchanged at 3.00%. As for the Canadian dollar, USD/CAD seems to have found a top around the 1.0300 handle, but is continuing to trade according to U.S. reports.

    By Kate Curtis from [Only registered and activated users can see links. ]

  10. #20

    Forex Major Currencies Outlook (March 7, 2013)

    USD: Bullish

    It seems that a midweek reversal is gaining traction as the U.S. dollar gained against most of its higher-yielding counterparts during yesterday’s trading. Weak data from most major economies, such as Canada and the euro zone, dampened demand for riskier currencies. At the same time, strong U.S. data in the form of the ADP non-farm employment change report and factory orders figures boosted demand for the U.S. dollar. Only the trade balance and initial jobless claims reports are due from the U.S. today and these aren’t likely to alter risk sentiment as traders would focus on the central bank decisions on tap.

    EUR: Bearish

    The political stalemate in Italy continued to weigh on the euro for yet another trading day. Euro traders are also starting to price in downbeat expectations for today’s ECB rate decision where Draghi is slated to address the region’s economic weaknesses. Bear in mind that the euro zone just entered its third consecutive quarter in recession as the largest regions all posted a contraction for the last quarter of 2012. Although the central bank is likely to keep rates unchanged, watch out for a potential increase in LTRO loans or hints that the ECB is mulling alternative forms of easing.

    GBP: Bearish

    Pound pairs are consolidating for the day as traders sit tight ahead of the Bank of England rate decision. While the bank is expected to keep rates unchanged, many are pricing in an increase in asset purchases. Recall that BOE Governor King voted to increase easing during their last rate statement but the central bank was unable to do so since majority still voted to keep monetary policy unchanged. In the last six years, whenever BOE Governor King sided with the doves, additional QE is usually implemented within the next three months. However, he’s scheduled to step down from office soon and traders might pay more attention to what incoming Governor Mark Carney has planned for the BOE and the British economy.

    Commodity Currencies (AUD, NZD, CAD): Neutral

    AUD/USD retreated from its recent highs around 1.0300 and appears poised to test the 1.0200 support once more. Australian trade balance came in weaker than expected and this has been weighing down both the Aussie and Kiwi. As for the Canadian dollar, a downbeat BOC rate decision and a weaker than expected Ivey PMI triggered a break above 1.0300 for USD/CAD. There are no major reports due form the comdoll economies today as these currencies could trade purely on risk sentiment.

    By Kate Curtis from [Only registered and activated users can see links. ]

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