Forex daily analysis 4th December 2013

The Euro was initially able to hold steady in Europe on Tuesday, bolstered by the ability to hold important

support levels the previous day. The Euro also secured a boost from a better than expected Spanish

unemployment report and managed to push above the 1.3550 level during the European session. There

were still concerns surrounding the inflation profile with a weaker than expected reading for producer

prices keeping underlying downward pressure on inflation.

Forex daily analysis 28th November 2013

The Euro took advantage of dollar selling against Sterling during the European session on Wednesday and broke above the 1.3600 level, briefly triggering fresh gains on stop-loss Euro buying. 

There was further speculation surrounding the ECB with reports that it could consider a fresh LTRO with conditions attached, but the Euro remained resilient into the New York open. 

A coalition deal between the CDU and SPD to form a coalition government provided some underlying Euro support and there was a firm reading for German consumer confidence.

The headline US durable goods data was marginally weaker than expected with a 2.0% monthly decline,

but other data points were better than expected. Jobless claims fell to 316,000 in the latest week from a

revised 326,000 previously, offering some reassurance over labor-market trends, while there was an

upward revision to the University of Michigan consumer confidence index. 

The Chicago PMI index also held comfortably above 60.0 for November at 63.0, maintaining the run of favorable surveys.

Forex daily analysis 22nd November 2013

The Euro was unsettled initially by much weaker than expected flash PMI data from France. Further currency damage was avoided by a stronger than expected reading for Germany with a four-month peak, but underlying concerns persisted with important vulnerability outside Germany.

ECB President Draghi also remained very cautious surrounding the Euro-zone outlook in a speech on Thursday. There were, however, also comments from Draghi that markets should not try to infer negative deposit rates and that there had been no further developments since the latest council meeting.

Forex daily analysis 22nd October 2013

The Euro held steady during Monday with no move to attack resistance in the 1.37 area against the

dollar, but there was also solid buying support on any significant retreats. The Euro was still gaining some

degree of support from global safe-haven demands as the currency’s correlation with emerging currencies

dipped to 10-year lows on defensive inflows.

There will be further speculation that the ECB will eventually have to act to loosen policy given underlying

monetary developments which will tend to deter longer-term Euro support. The ECB will also be

increasingly uneasy surrounding the deflationary risks and there will be strong pressure to combat any

further Euro gains given the threat to economic growth.

Forex daily analysis 18th October 2013

The dollar was subjected to heavy selling pressure on Thursday, especially against European currencies.

The US currency continued to be undermined by the fact that congress only put together a short-term budget and debt deal which will ensure further political tensions over the next three months Capital account trends remained an important focus with additional speculation over inflows into Europe.

European stocks pushed to six-week highs and the latest survey of investor sentiment suggested that

funds were not over-weight on US equities for the first time since January.

Forex daily analysis 10th October 2013

Technical positioning remained important on Wednesday as the Euro remained vulnerable to a correction 

following the second failure to break resistance in the 1.36 region and a drop below 1.3550 triggered 

fresh selling with the pair moving to the 1.3500 area. There were longer-term expectations that the ECB 

would provide additional liquidity through another LTRO. 

There were some hopes that the US would be able to move very tentatively towards a deal over the 

government shutdown and debt ceiling even if it is a stop-gap measure. Underlying uncertainty remained 

high with the volatility seen the short end of the US bond market leading to some speculation over a 

developing dollar shortage and defensive demand for the US currency. 

Fundamental trading opportunity/event risk over the next 24 hours 

There looks to be very little chance of a change in 

rates or quantitative easing at this month’s meeting. 

There is a small chance that there could be a 

statement to reinforce forward guidance.

Market and analysis overview

The US government shutdown remained a key market focus and continued to have an important impact

in curbing activity. The lack of political progress and deadlock on Congress increased fears that the US

would push closer to the potential default deadline of October 17th which would inevitably trigger a more substantial fraying of market nerves.

Euro - Market and analysis overview - Forex daily analysis 7th October 2013

The Euro dipped weaker with the US currency looking for some relief after five days of net losses on a 

trade-weighted basis. The Euro was hampered to some extent by fears that the ECB would move to take 

a more aggressive tone against tighter money-market conditions and could also start to verbally 

intervene against Euro strength, especially if the Euro moves to the 1.40 area against the dollar. In this 

environment, the Euro dipped lower and briefly tested support below 1.3550.

Forex daily analysis 1st October 2013

There was no compromise deal ahead of the US budget deadline and a partial shutdown will now take

place. The immediate market reaction was measured, but concerns will tend to increase if there is 

evidence of a prolonged closure as it would increase the risk of failure to raise the debt ceiling which 

would pose a much bigger market threat. There will be reduced speculation of any Fed tapering of bond 

purchases in October which will tend to curb dollar support. The Euro pushed back to the 1.3550 area 

with Euro-zone concerns making it difficult to extend gains.

There was a weaker than expected flash Euro-zone inflation figure of 1.1% for September from 1.3% 

previously which maintained expectations of a dovish ECB press conference on Wednesday following the 

monthly meeting and an overall accommodative policy stance by the ECB.

[INTRODUCTION] Forex financial market

Forex – the foreign exchange market – is the World's most interesting financial market. It is one of the 

few markets whose sheer size makes it almost impossible for any one person, institution or government 

to control. Unlike other Financial Security markets, Forex has no centralized market. 

There is no single location where transactions are placed.  

Forex is the largest financial market in the world. The market is open 24 hours a day from Monday to 

Friday and it records trading volumes of more than $3.5 trillion per day. 

The massive trade volume in the Forex market – three times greater than the sum of all US financial markets combined - makes the Forex market the most liquid market in the World. 

Your trades will always be carried out immediately.

In the Forex market, the transactions that are undertaken are necessary because large institutions, 

governments, businesses and individuals need foreign currency to buy and sell goods and service. 

The foreign exchange market allows fund managers, banks, companies and individuals to buy and sell 

foreign exchange globally.

The market was previously an Inter Bank market. It was generally conducted between large financial 

corporations, brokers and even governments. The market has now moved to such a state that anyone 

can participate. However, the market still gets its prices from the largest participants in the market, 

based in financial centers such as London and New York.

Market and analysis overview / Forex daily analysis 26th September 2013

Despite dovish ECB rhetoric, actual monetary policy conditions are still tightening within the Euro area as 

excess liquidity is withdrawn which is preventing any significant Euro selling for now.
The dollar’s vulnerabilities were generally perceived as the greater market threat during Wednesday.
The situation will, however, need to be watched very closely as the Euro-zone economy will be vulnerable to fresh deterioration as policy tightens.
In this context, there will also be the risk of growing political tensions. 

The ECB will need to take this threat very seriously and overall risk premiums are liable to increase.

Forex daily analysis 23rd September 2013

Friday’s main focus was on Federal Reserve speakers, especially with no significant Forex data releases. 

Regional President Bullard continued to press his case for the Forex  Fed to be on alert for inflation being too low and he stated that he would vote for additional quantitative easing if the inflation rate fell to below 1%.

EUR

The euro (sign: €; code: EUR) is the currency used by the Institutions of the European Union and is the official currency of the euro zone, 

which consists of 17 of the 28 member states of the European Union : 

Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The currency is also used in a further five European countries and consequently used daily by some 332 million Europeans.

Additionally, more than 175 million people worldwide—including 150 million people in Africa—use currencies pegged to the euro.

USD

The United States dollar (sign: $; code: USD; also abbreviated US$), is referred to as the U.S. dollar or American dollar. 

It is the official currency of the United States and its overseas territories. 

It is divided into 100 smaller units called cents. The U.S. dollar is the currency most used in international transactions and is one of the world's most dominant reserve currencies.

Several countries use it as their official currency, and in many others it is the de facto currency. 

It is also used as the sole currency in two British Overseas Territories: The British Virgin Islands and the Turks and Caicos islands.

Forex Foreign Exchange market

Which fits the word  " Foreign Exchange market " in the English language.

And speculative by buying and selling major currencies which holds the share of basic operations in the Forex market is ;

U.S. dollar (USD)

Euro (EUR) 

Pound sterling (GBP) 

Swiss franc (CHF) 

Japanese yen (JPY).

Forex daily analysis 20th September 2013 / Market and analysis overview

As far as the Euro-zone is concerned, the main focus was on politics rather than economics. There was a

further raft of opinion polls ahead of the German Federal election on Sunday. The CDU/CSU held a

comfortable lead in polls, but there was uncertainty surrounding both the FDP and anti-Euro AfP party

with both hovering around the 5% threshold needed to gain seats in parliament which could force a grand

coalition.

Forex daily analysis 9th September 2013

Markets were generally optimistic surrounding the US employment release following a run of strong data

over the previous few days. In the event, there was a weaker than expected report with a headline nonfarm

employment increase of 169,000 for August compared with an expected 180,000. The damage from

the headline could have been contained, but there was also a substantial downward revision to July’s

figure at 104,000 from 162,000 previously. There was a decline in the unemployment rate to 7.3% from

7.4% which provided only limited relief as workers had left the labour force.

Forex daily analysis 6th September 2013

As expected, the ECB left interest rates on hold at 0.50% following the latest policy meeting, ensuring

that the main focus would be on President Draghi’s press conference. He remained generally cautious

surrounding the economic outlook as he reinforced the message that recovery would come only very

slowly while inflation would remain low.

Forex daily analysis 4th September 2013

The US data was stronger than expected with the ISM manufacturing index rising to 55.7 for August from 55.4 previously and contrary to expectations of a modest retreat. 

This was the strongest reading since May 2011 and the second successive outcome above expectations. 

The components were also broadly favourable with a strong rise in new orders and a solid employment reading.

Forex daily analysis 2nd September 2013

The US personal income and spending releases were marginally weaker than expected on Friday which did not have a major impact while there was a subdued reading for the core PCE defoliator. 

There was a small gain in the Chicago PMI index to 53.0 from 53.3 previously and an upward revision to the final University of Michigan consumer confidence index which had some positive dollar impact. Expectations of at least a measured tapering were important in sustaining US currency yield support.

Short-term strategy highlights

Sterling can maintain a firm tone initially with higher bond yields, but overall valuations are unattractive at current levels

Medium-term strategy highlights

The dollar should be able to maintain a solid overall tone given expectations of a solid payroll release at the end of this week.

Forex daily analysis 30th August 2013

Market and analysis overview

The dollar was able to gain support on Thursday as EUR/USD dipped to lows just above the 1.32 level.

There is a US market holiday on Monday which will curb liquidity on Friday and will also increase the

potential for erratic trading conditions as month-end positioning will be compounded by the long US

weekend. With important underlying stresses surrounding emerging markets, there is a high risk of very

choppy trading conditions during Friday.

Short-term strategy highlights

Short-term strategy highlights

Erratic trading conditions will be a big threat on Friday with month-end positioning, US holiday and stresses within emerging markets.

Medium-term strategy highlights

The dollar should be able to maintain a solid underlying tone given a flow of funds away from emerging markets, but with little shortterm headway against the Euro.

increase in US yields as 10-year

There will be an important lack of liquidity over the second half of August with the peak holiday season

acting to dampen trade volumes. There will also be an important mood of cautions ahead of key political

and economic events during September which will potentially shape events for the rest of 2013. 

There will, therefore, be major caution and the potential for even more erratic market moves in the short term. The latest US labour-market data was again stronger than expected with a decline in initial jobless claims to 320,000 in the latest reporting week from a revised 335,000 previously and this put claims at the

lowest level since late 2007 and there was also a solid reading for the New York Empire index. 

There was  an increase in US yields as 10-year bond yields spiked higher following the data and the 30-year yield

moved to the highest level since the fourth quarter of 2011 at just above 3.80%.

As far as inflation is concerned, headline and core consumer prices both rose 0.2% for July which was in

line with expectations. Regional Fed President Bullard stated that there had been an improvement in the

labour market. He was still concerned that growth rates were disappointing while low inflation could also

still be a problem. In this context, he was undecided whether to back a tapering of quantitative easing at

the September FOMC meeting. The Philly Fed index was slightly weaker than expected which dampened

optimism to some extent and the industrial output data was weaker.

The Euro positioning shift and yield factors

The Euro was again confined to narrow ranges during Friday with resistance close to 1.34 and it edged lower during the US session. Technical considerations had an important influence during the day as the Euro traded close to key resistance levels just above the 1.34 level, including the 200-week moving average. The currency was over-bought on a short-term perspective following strong gains and this combination made it even more difficult to attack resistance levels.

There was further speculation that the Federal Reserve would move to a September tapering of bond purchases and there was some reluctance to sell the dollar aggressively as the Euro dipped to test support below 1.3350 later in the US session. 

The latest betting odds have increased the probability of a September Fed tapering which provided some net dollar support and comments from Fed officials will be watched very closely during this week.

The latest CFTC positioning data recorded a net long speculative Euro position against the dollar for the first time since mid June which will substantially lessen the risk of a further covering of short positions.

The overall positioning was still long dollars which will hamper the US currency even though positions declined for the third successive week. 

The Euro edged lower on Monday while holding above 1.33.

The Euro positioning shift and yield factors, allied with underlying US fundamental trends, will provide dollar support. 

A solid base for the US currency against the Euro should be in place particularly given net global reserve flows which will strongly favour the US dollar. It will still be tough going for the US currency to regain much ground in the short term given that a September Fed tapering has effectively been priced in.

This will be another important week for Sterling with the latest inflation and unemployment data due for release. Following the Bank of England forward guidance released last week, the data will be very important. Any increase in the inflation rate would increase speculation that the MPC will need to raise rates earlier than they would like to while higher unemployment would have the reverse effect. Overall, Sterling will find it difficult to make much headway in the short term.

The US jobless claims data

The US jobless claims data was better than expected with a decline to 329,000 in the latest week from a

revised 345,000 previously and this was the lowest reading for over five years. The ISM non manufacturing

release was also robust with a rise to 55.4 for July which was the highest reading since March 2011. 

There was a strong increase in orders and the employment component was also firm which

increased optimism surrounding Friday’s crucial payroll report. Any increase in the 200,000 region would

increase expectations that the Fed will taper bond purchases at the September FOMC meeting.

As expected, the ECB made no changes to interest rates at the latest council meeting with the repo rate

left at 0.50%, maintaining the focus on President Draghi’s press conference. The comments were broadly

in line with last month’s meeting with confidence showing some recovery from very low levels. 

Economic risks, however, were still described as biased to the downside. The bank remained committed to forward guidance without adopting any specific numerical thresholds. 

Draghi did comment that the rise in money market rates was not justified and that monetary policy would remain very accommodative.

The Euro briefly dipped to below the 1.32 level on the combination of better US data and the ECB pledge

for low interest rates as there was a significant recovery in US yield support to a three-week high.

After brief gains on Thursday, the dollar was subjected to renewed selling pressure

The headline US durable goods orders data was stronger than expected with a 4.2% gain

for June from a revised 3.7% advance previously. 

Elsewhere, initial jobless claims rose slightly to 343,000 from 336,000 previously. The dollar failed to sustain an initial advance following the US data even with an increase in US Treasury yields.

Federal Reserve would keep policy on hold at next week’s policy meeting. 

comments will increase uncertainty surrounding Fed tapering in September, although the fact that the Fed is trying to focus on the fact that interest rates will stay very low suggests that the Fed is determined ,

The latest Euro-zone monetary data was weaker than expected with a slowdown in money supply growth strong pressure for the ECB to sanction a more expansionary monetary policy.

consensus expectations. 

stronger release and Sterling was vulnerable to significant profit taking following the release. help sustain stronger growth in the medium term. surrounding the UK outlook which will provide some Sterling protection.

will remain vulnerable to some further selling if there is no net reduction in short positions.

forex fx blog

hi all

market overview

The latest US jobless claims data was better than expected with a decline to 334,000 in the latest week from a revised 358,000 previously which maintained underlying confidence in steady employment growth. There was an overall reluctance to sell the US currency aggressively with most players looking to buy on dips given a bullish longer-term outlook on US fundamentals. Similarly, the latest Philadelphia Fed index much stronger than expected with an increase to 19.8 for July from 12.5, the highest reading for two years. A Moody’s move to putting the US AAA rating back to a stable outlook from negative not having a significant impact. Following Fed Chairman Bernanke’s testimony, the consensus was still that the Federal Reserve would look to taper bond purchases later in 2013 and look to complete the programme during 2014. There was no great conviction, however, given that the Fed is continuing to insist that developments will be datadependent. The most likely outcome is that the FOMC will look to taper bond purchases, potentially in September, but if the data is disappointing there will be only a very limited scaling back of quantitative easing which would limit potential dollar support given the amount of tightening priced in. The Euro found support above 1.3050 as markets were again unable to break narrow ranges with technical support levels holding and it pushed back towards 1.3150 during Friday. There will be further underlying stresses surrounding the Euro-zone peripheral economies. The holiday season in Europe will dampen activity and may make it less likely that market conditions will deteriorate in the short term. The German government will also have a strong incentive to help dampen any turbulence ahead of September elections. Nevertheless, there are still extremely important risks surrounding peripheral economies and the banking sector. There is still a serious risk that these tensions will explode during the next few weeks. The Chinese economy will be watched extremely closely in the short term amid growing fears over a sharp slowdown as credit conditions deteriorate. These concerns will tend to keep the Australian dollar under pressure and will also curb overall demand for Asian currencies. In this environment, there wi