Forex Market Updates & Commentary

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• ECB Stark on the newswires
• ISM Non Manufacturing comes in at 48.4 Higher than expected
• Trichets comments takes the wind out of the EURUSD overnight gains
• GBPUSD tests its support level at 1.6340
• Sept 3 2009 Forex Market Update
• EURUSD moves lower after Trichet says recovery will be uneven
• Trichet comments on the newswires
• GBPUSD moves steadily higher after breaking back above key MAs
• Jobless Claims due out at 8:30 AM. ISM Non Manufacturing due at 10:00 AM
• ECB Rate Decision due at 7:45 AM. No change expected.
• OECD positive commnets on world economy
• Eurozone retail sales
• UK PMI Services
• Eurozone PMI
• 8-3 Economic Calendar

ECB Stark on the newswires Posted: 03 Sep 2009 07:16 AM PDT  EXPECTS ECONOMIC RECOVERY NEXT YEAR  QUARTERLY GDP RATES TO REMAIN AROUND ZERO ONE SHOULDN’T OVER-INTERPRETE MONTHLY DATA BUMPY ROAD AHEAD FOR ECONOMY FREE FALL OF ECONOMIC ACTIVITY HAS STOPPED LATEST DATA SEEM TO SHOW WORST IS OVER

ISM Non Manufacturing comes in at 48.4 Higher than expected Posted: 03 Sep 2009 07:02 AM PDT BACKLOGS INDEX 41.0 AFTER 42.0 PRICES INDEX 63.1 AFTER 41.3 INVENTORY INDEX 43.0 AFTER 47.0 EMPLOYMENT INDEX 43.5 AFTER 41.5 ORDERS INDEX 49.9 AFTER 48.1 BUSINESS ACTIVITY AT 51.3 VS 46.1 Higher prices led the gain higher.  Backlog order down to 41 from 42.  Employment moves a touch higher to 43.5 from 41.5.

Trichets comments takes the wind out of the EURUSD overnight gains Posted: 03 Sep 2009 06:55 AM PDT ALthough what Trichet said was par for the course, perhaps he was a bit more sanguine about the prospects for the economy.  Perhaps he was more concerned about the level of the EURO which has been a bit more supported of late  (against the dollar at least).  In any case, the EURUSD took Trichets words as being more Euro bearish and the market reversed lower after testing trendline resistance (from Aug 27th high on hourly chart). The pair has now moved back below the 100 and 200 hour MA currently at the 1.4288 and 1.4292 levels respectively  (green and blue lines in the chart above). The break led to a move down to the 1.4275 low for the day.  The close from yesterday comes in at the 1.4264 level this is also where the midpoint of the last move higher comes in today.  This is the next downside target. On the upside,  there is now resistance at the 1.4313/18 level.  We are at a point of transition currently as the market waffles around the moving averages we watch (100 and 200 hour MA).   The trading becomes buy above and sell below. Confirmation of the direction will come on moves above 1.4313/18 or on a move below 1.4264 close from yesterday.  Be aware.

GBPUSD tests its support level at 1.6340 Posted: 03 Sep 2009 06:37 AM PDT The GBPUSD is down testing support at the 1.6340 to 1.6343 level where the 100 bar MA on the 5 minute chart (see blue line above) and the 38.2% retracement level of the days range are both found.  SO far the support has held. I would look for buyers with stops on a move below. A break should lead to  a move toward 1.6303.  The markets are volatile as Trichet comments reversed the EURUSD and has dragged the GBPUSD down with it.   Watch the key level.

Sept 3 2009 Forex Market Update Posted: 03 Sep 2009 06:30 AM PDT Click here to view the embedded video. A volatile day in the Forex for certain. Watch the video today to make some sense of it.

EURUSD moves lower after Trichet says recovery will be uneven Posted: 03 Sep 2009 05:39 AM PDT The pair is testing support at the 100 bar MA on the 5 minute chart.  The level comes in at the 1.4297 (blue line in the chart above).  Additional support comes in at 1.4283 where the 200 bar MA (green line) and 38.2% retracement support are both found. Watch these levels.  A move back above the 1.4313/18 level (see prior post for chart) will confirm the downside move is complete.  Expect to see sellers against the level initally however.

Trichet comments on the newswires Posted: 03 Sep 2009 05:36 AM PDT  ECB RATES ARE APPROPRIATE  INFLATION EXPECTED TO REMAIN SUBDUED  NO SPREAD TO BE APPLIED TO SEPT 12-MONTH REFI NEXT 12-MONTH REFI WILL HAVE BENCHMARK RATE ECB RATES ARE APPROPRIATE  INFLATION EXPECTATIONS FIRMLY ANCHORED  ECONOMY WILL SHOW PERIOD OF STABILIZATION  SLOW INFLATION TO SUPPORT PURCHASING POWER  INVENTORY CYCLE WILL CONTRIBUTE IN POSITIVE  UNCERTAINTY REMAINS HIGH, CAUTION WARRANTED  ECONOMY WILL BENEFIT FROM STIMULUS MEASURES  RECOVERY MAY BE UNEVEN

GBPUSD moves steadily higher after breaking back above key MAs Posted: 03 Sep 2009 05:29 AM PDT The GPBUSD continued its upward momentum started from yesterday’s trade. Initially, the GBPUSD sold off and then started a sharp rebound to the upside.  The pair fell below the 100 hour MA at the 1.6346 level. The move below the MA led to a new  low at the 1.6236. However, the pair rebounded off that low as downside momentum could not be maintained, and the hourly bar closed back above the moving average - signalling buying support.   From there, the price started the move to the upside.   Once the 200 hour MA was broken (green line in chart above), the momentum to the upside intensified.    The next target level to the upside comes in at the 1.6442 level which was the high price last Tuesday. The  high from last week reached 1.6543.  This will also be a target to the upside. On the downside, the pair will find support against the 38.2% retracement support at the 1.6345 level.

Jobless Claims due out at 8:30 AM. ISM Non Manufacturing due at 10:00 AM Posted: 03 Sep 2009 04:58 AM PDT Expectation is for a slight fall to 564K from 570K. Continuing Claims expected to come out at 6130K vs 6133K. At 10AM the US Non Manufacturing Index is expected to show a rise to 48.0 vs 46.4 last month.  The index has been below 50 since September 2008.  The low was in November at 37.4.  The high since the low was 47 in June 2009.  If interest is that Manufacturing PMI is leading the Service PMI.  The Manufacturing PMI rose to 52.9 announced on September 1st.  This is likely due to the nature of the manufacturing economy.  The inventories have gotten so lean they have to replenish - especially post the Cash for Clunkers program.  However, the service sector which is more hinged on discretionary purchases, may not have the same trajectory due to balance sheet devastation.  Neverthe less, both are on the rebound as the economies decline stabilizes.

ECB Rate Decision due at 7:45 AM. No change expected. Posted: 03 Sep 2009 04:42 AM PDT The ECB Rate decision at 7:45 AM.  No rate change is expected. Of note willof course be the comments from ECB Trichet at 8:30.  In the Eurozone today, the Servive PMI came in at 49.9  expectation of 49.5.  The Retail Sales Report came in at -0.2% MoM (vs +0.1% exp) and -1.8% YoY (vs. -2.2% exp). The prior month was revised higher to 0.0% from -0.2% and -2.0% vs -2.4% YoY.  From a technical perspective, the EURUSD is up with the weakness in the dollar. There is rumblings in the market that the gold increase yesterday may be a program out of China to diversify out of the dollar. Gold continues to be bought today and this will likely keep that story alive.  The pair has resistance against the trendline at the 1.4352 level.  Above that is another trendline at 1.4392.  The high for 2009 comes in at 1.4447.   On the downside, the pair moved back above the 100 and 200 hour MA along with the 50% retracment level at the 1.4291 area. The market will ultimately need to stay above these levels today.  Before that level is the 1.4313 to 1.4318 level where highs and the 61.8% retracements levels are located.

OECD positive commnets on world economy Posted: 03 Sep 2009 02:10 AM PDT The OECD has come out with a positive outlook on global economies. They see stabilization in the fall global trade. Also see a smaller decline for G7 economies GDP in 2009 than initially expected. They see growth in Q3 and Q4 for G7 nations including Eurozone and US. Off of these comments Usd/Jpy has made a new high now trading at 92.55.

Eurozone retail sales Posted: 03 Sep 2009 02:04 AM PDT Eurozone retail sales m/m came in at -0.2%, weaker than the 0.1% expected. Y/y came in at -1.8%, stronger than the -2.2% expected. Eur/Usd trading at 1.4308, 5 pips from earlier high.

UK PMI Services Posted: 03 Sep 2009 01:30 AM PDT UK PMI Services came in at 54.1, slightly stronger than the 54.0 expected. This is the highest reading since September 2007. Sterling has gotten a boost from the positive data as Gbp/Usd makes new high at 1.6345.

Eurozone PMI Posted: 03 Sep 2009 01:01 AM PDT Eurozone Final Services PMI came in at 49.9, stronger than the 49.5 expected. PMI composite came in at 50.4, stronger than the 50.0 expected. This is highest reading since May 2008. Should be a positive number for Euro as we continue to trade not far off the highs of the session, currently 1.4293 vs. Usd.

8-3 Economic Calendar Posted: 02 Sep 2009 08:47 PM PDT

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