Forex Market Updates & Commentary

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• University of Michigan Sentiment comes in weaker
• August 14, 2009 Forex Market Update
• USDJPY looks at 94.75 level as key intraday level now
• GBPUSD tries the downside overnight but cannot sustain the downside pressure
• US CPI comes in as expected. Canada Manufacturing Sales comes in much better than expected
• USDJPY back below the 200 day MA, but finds Fibo and moving average support
• US CPI due for release at 8:30 AM
• Eurozone CPI worse than expected
• Spainish Q2 GDP slightly worse
• 8-14 Economic Calendar
• RBA Govenor Stevens speaks
• JPY Tertiary Industry Activity m/m came out better then expected at 0.1%
• NZD Retail Sales
• August 13 2009 Evening Report
• EURUSD has no follow through selling…holds 200 bar MA

University of Michigan Sentiment comes in weaker Posted: 14 Aug 2009 06:56 AM PDT Comes in at 63.2 versus 69.0 Expectation.  This is a bad number and indcative of a consumer who is not believing the story as home values and jobs are a worry.  USDJPY breaks lower on the news

August 14, 2009 Forex Market Update Posted: 14 Aug 2009 06:43 AM PDT Click here to view the embedded video. Special note: Greg will be speaking in San Fran at the World Money Show, next Saturday from 11:30 to 12:30pm. Email him if you want to go. Shawn Powell will be on Vacation until next week. Enjoy your weekend traders, you’ve earned it. Watch the video today for some great insight into the markets.

USDJPY looks at 94.75 level as key intraday level now Posted: 14 Aug 2009 06:35 AM PDT The USDJPY did break the 94.75 level cited in an earlier post (see post by clicking here). However, the price rebounded after scooting to a low of 94.59.  The rebound took the price back above the 94.75 level. Now the price is movng back through this key intraday level. This should lead to another test of the intraday lows.  If the price momentum is not maintained and the price rebounds back above the 94.75 level, a move back toward the 200 day MA and other resistance levels should ensue. However, until the 96.03-08 level is broken, the bias remains to the downside for the USDJPY.

GBPUSD tries the downside overnight but cannot sustain the downside pressure Posted: 14 Aug 2009 05:57 AM PDT The GBPUSD moved below the 100 hour moving average at the 1.6522 level last night and triggered a downside move to the low at the 1.6485.  However, the move below was not sustainable and the pair moved back higher (see 5 minute chart below).  The pair is back higher toward the 1.6589 to 1.6600 resistance level.  Look for sellers up at this level, with intraday support coming in at the 1.6567 level where the 200 bar MA on the 5 minute chart is located.

US CPI comes in as expected. Canada Manufacturing Sales comes in much better than expected Posted: 14 Aug 2009 05:34 AM PDT CPI Headline comes in at 0.0% MoM as expected EX Food and Energy +0.1% also as expected. CPI YoY comes in at -2.1%  vs -1.9% expected CPI Core comes in a  +1.5% vs +1.6% expected Canada Manufacturing Sales much stronger than expected as it comes in at +1.9%, the highest since statistics began in 1992.  The increase is being attributed to a jump in aerospace sales and higher oil and coil prices.  In Real inflation adjusted terms, the gain would have been +1.1%.  The Aerospace sales are likely not to be repeated. Ex Aerospace the number would have been +0.4% according to the Statistics Canada.  Regardless the number is still better than the -0.2% expected and has led to a decline in the USDCAD toward the 200 hour MA.  The current 200 hour MA comes in at the 1.0830 level and should lead to further declines on a move below the key level. The low yesterday came in at the 1.0791.  There is 61.8% retracement support at the 1.0800 level.  These will be key levels on the downside today.  Moves below these levels further confirm the downside for the USDCAD today.  Canada New Motor Vehicle Sales came in a -0.6% vs expectation of -1.0%.

USDJPY back below the 200 day MA, but finds Fibo and moving average support Posted: 14 Aug 2009 05:26 AM PDT A week ago the USDJPY was surging higher away from the 200 day MA at the 95.10 level on its way to a high of 97.77.  Today, the price has moved back below the key MA.  The 200 day MA comes in today at the  95.03 level and this level will be used as the fulcrum for trading today.  A move above the level will likely lead to further upside moves, while staying below will keep a bearish tone.  On the downside the 50% correction level comes in at the 94.75 level.  The 200 bar moving average (green line) on the 4 hour chart comes in at the 94.85 level currently.  The low today has come in so far at the 94.77.  So clearly, the lines are drawn from a technical basis - stay below 95.03 and it is a bearish bias with further confirmation on a move below 94.75.  A move above 95.03-08 area, should attract buying.

US CPI due for release at 8:30 AM Posted: 14 Aug 2009 04:56 AM PDT The July CPI is to be released today in the US. The expectation is for the an unchanged reading vs a gain of 0.7% last month.   The ex food and energy is expected to show a gain of +0.1% vs +0.2% last month.  On a year on year basis the expectation is for a decline to -1.9% from -1.4%.  The ex food and energy or core CPI is expected to fall to +1.6% from +1.7%.   The inflation surge of 2008 peaked in July 2008 with a MoM gain of +0.7%. Over the next 5 months starting in August 2008, the MoM gains were +0.0%, +0.0%, -0.8%, -1.7% and -0.8%.  What does this mean going forward?  It means that the YoY inflation rate will start to go back up unless prices fall by an equal month each month.  So for example, in October 2009, if the MoM CPI comes in at +0.1%, a modest increase, the YoY inflation will show a jump of around 0.9% since in October 2008 the -0.8% reading will drop out of the YoY calculation.  All things being equal, if MoM inflation is shows no gain in the next 5 months, the YoY inflation measure will incrase roughly by the amount of the 5 months that will drop out from 2008.  That amount comes to a change of +3.3% (+0.0%, +0.0%, -0.8%, -1.7% and -0.8% = +3.3%). With YoY expected to come in at -1.9%, the YoY will rise to +1.4% by December (see chart below).      The move in coming months may cause fear that inflation is returning and will likely get broadcast news comments to that effect.  However, in reality it is simply the unwinding of the oil and commodity induced gain of 2008.  The resulitng headline inflation rate will likely move closer to the +2.0% target that most central banks like to target.  Is this still too high given the slack economy?   That will be a point of discusssion in the markets through year end (and at FOMC meetings) and may make CPI the focus once again, wrestling control from the growth focus that has dominated the market over the last 9 or so months.

Eurozone CPI worse than expected Posted: 14 Aug 2009 02:02 AM PDT Eurozone CPI y/y came in at -0.7%, weaker than the -0.6% expected. Core CPI y/y camer in at 1.3%, weaker than the 1.4% expected. This is the lowest annual reading on record. Eur/Usd remains traidng around 1.4280.

Spainish Q2 GDP slightly worse Posted: 14 Aug 2009 12:04 AM PDT Spainish Q@ GDP q/q came in at -1.0% , slightly worse than the -0.9% expected. Y/y came in at -4.1%, slightly worse than the -4.0% expected. No reaction to numbers as it has been an extremely quiet session thus far. Eur/Usd currently trading at 1.4270.

8-14 Economic Calendar Posted: 13 Aug 2009 08:18 PM PDT

RBA Govenor Stevens speaks Posted: 13 Aug 2009 05:14 PM PDT Reserve Bank of Australia Governor Glenn Stevens appeared before the House of Representatives Standing Committee in Sydney for his semi-annual testimony to Parliament. He made the following comments: RBA sees cash deficit of A$1.715B. Australia has sound financial system. Rate cuts and fiscal stimulus are driving demand. Global economy looks better. International markets are improving. Extreme risk aversion has abated. Capital markets are continuing to thaw. U.S. and European banks have had better earnings. Australia’s largest GDP contractions are behind them. Global economy has a long way to go. Economic improvement is most marked in China. There are signs that Japanese economy has started to grow. Australian economy is resilient. Exports remarkably strong. GDP appears to have grown in Q2. Domestic demand is strong. Some of economic strenghth may be temporary. Low rates will support demand. Banks remain profitable. Business investment is weak, but improving. Mining sector is back to full tilt for China. Rise in unemployment is smaller than feared. Employers are cutting hours instead of jobs. Australian recession was shallow. Inflation will not fall as far as originally thought. Forecasters lifting Outlook for GDP. China policymakers are determined to grow GDP. Debt will weigh on global demand. Uncertainty surrounds RBA forecasts. It will be appropriate to raise rates in future. Contraction is possible in next two quarters. Household spending may weaken. GDP growth will pick up through 2010 Rates will be raised in a timely fashion. Australia could raise rates before others. Households have coped well with debt. Australian economy is in good shape. Households are capable of handling higher rates. Australian rates are unusually low, not tightening rates right now. Aiming for balanced growth rate. Emergency rate setting now appropriate.

JPY Tertiary Industry Activity m/m came out better then expected at 0.1% Posted: 13 Aug 2009 04:59 PM PDT JPY Tertiary Industry Activity m/m  came out better then expected at 0.1% from -0.3% which was forecasted. BOJ: Monetary Policy Meeting Minutes Financial conditions still tight in July BOJ lending stabilized term instruments CP purchases worked as safety valve Some said extension of special programs likely, may extend fund support if markets dont improve enough Most members saw financial conditions still tight Firms not optimistic on future fundraising All Members agreed markets still anxious about dollar funding Some members said size of output gap may be overstimated

NZD Retail Sales Posted: 13 Aug 2009 03:53 PM PDT The New Zealand Retail Sales number (MoM) came in at 0.1%; better than its forecast of -0.3%, but worse that its prior release of 0.8%. The Retail Sales excluding auto sales (MoM) and inflation (QoQ) was released as follows: Retail Sales Ex-Auto - Survey: -0.5%   Actual: -0.4%   Prior: 1.6% Retail Sales Ex-Inflation - Survey: 0.2%   Actual: 0.4%   Prior: -2.9% The Kiwi made a slight move against the US dollar, but continues to trade mid range for the session at .6787.

August 13 2009 Evening Report Posted: 13 Aug 2009 01:35 PM PDT Click here to view the embedded video. Greg Michalowski will be speaking in San Fran at the World Money Show, Sat August 22 at 11:30am.

EURUSD has no follow through selling…holds 200 bar MA Posted: 13 Aug 2009 12:20 PM PDT The EURUSD held the 200 bar MA at 1.4162 and this proved to be too powerful for the weak handed shorts and they covered.  The push higher propeled the EURUSD back above the 1.4283 level reversing the bias.  Needless to say, the theme of the NY day continues -  like the market.  Don’t love it.

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