Forex Market Updates & Commentary

EURCHF also breaks higher. 1.2400 is a key target above
US Economic Optimism Rises
USDCHF makes a break to the upside. Double bottom helps
US Economic Optimism Expected Slightly Lower
EURUSD tests highs for the day and stalls. Eyeing support at 1.4650-54 below
EU comments on newswires
Fed’s Fisher tells it like it is
Fisher: Energy prices, higher commodity prices caused recent slowdown
Fed’s Fisher on the Wires
Feds Fisher expects 3-4% growth in 2H of 2011
The NY Opening Forex Commentary for June 7th
German factory orders (April) 2.8% cs. 2.0% expected.
Eurozone retail sales (April) 0.9% vs. 0.3% expected.
China FX official says USD will continue to weaken against other major currencies.
Swiss CPI

EURCHF also breaks higher. 1.2400 is a key target above

Posted: 07 Jun 2011 07:08 AM PDT

The USDCHF is showing some signs of life today and so is the EURCHF. This pair bottomed on June 1st and has wandered higher. Today the price moved convincingly above the downward sloping channel trendline at the 1.2209 level along with both the 100 and 200 hour MAs (blue and green line in the chart above) . The next target is the 1.2316 area where lows and highs were made on May 23rd, May 26th, May 31st and June 1st.

Taking a look at the daily chart, the price has room- to- roam with the low from March at 1.2400 a key level to target (if the bias can remain positive in the short term). That level corresponds with lows from December 2010 and March 2011. The other positive in this chart is the ability to hold the channel trendline after moving outside the channel on its way to new all time lows last week. This is indicative of a rejection of that move.

Risk on the downside comes in at the 1.2257 level now. This is the high from yesterday and near a low from a high in the last hour of trading. A correction to 1.2243 is not out of the question which is the 38.2% of the move up today. I would not like to see the break higher today, rotate below this level. It would take steam out of the sails for the dip buyers.

US Economic Optimism Rises

Posted: 07 Jun 2011 07:05 AM PDT

USDCHF makes a break to the upside. Double bottom helps

Posted: 07 Jun 2011 06:31 AM PDT

The USDCHF has broken to the upside and targets what will be key resistance at the 0.8385/89 area. This area corresponds with the low from June 1 and the resistance area from yesterday’s trade. At the 0.8389 level the 100 hour MA is found. The price has been above the 100 hour MA since May24th. A move above this key level would be a clue for future increases.

The burden of proof remains on the bulls to continue to push the pair higher. A step has been made with a break above the trendline in the hourly chart above. Reaching targets and getting through those targets (like the 100 hour MA) will be key going forward. On the downside a move below the 0.8354 level be eyed. This is currently the 38.2% of the move up from the double bottom today at the 0.8325 level.

US Economic Optimism Expected Slightly Lower

Posted: 07 Jun 2011 06:30 AM PDT

EURUSD tests highs for the day and stalls. Eyeing support at 1.4650-54 below

Posted: 07 Jun 2011 06:10 AM PDT

The EURUSD tested the 100 bar MA on the 5 minute chart and rotated back higher. The price is testing the highs for the day at the 1.46816 level. The 100 bar MA comes in below at the 1.4650 and moving higher. This is just below key support at the 1.4654 area.

A move above the high will next target the 1.4696-1.4700 area where the original top trendline going back to the May24th high. Above that is the top trendline at the 1.4731 (see dashed line in the chart below).

On the downside, the 1.4654 level will continue to be eyed as a key level. This level was a key level going back to the last time the price was at these levels for the EURUSD and was a high ceiling in yesterdays trading. Resistance is now support. Staying above the 1.4654 level (and the 100 bar MA on the 5 minute chart) in NY morning trading will keep the bulls in charge.

EU comments on newswires

Posted: 07 Jun 2011 06:03 AM PDT

Urgent need for fiscal consolidation
Further steps needed to ensure Eurozone fiscal sustainability
EU commision sees 2011 Spain at 0.8%. Must control regional govt budgets
Urges Italy to use windfall revenue for more deficit cuts
Urges UK to ensure no slippage on spending cuts
EU Commission says more financial market support in Germany cannot be ruled out
German policies strengthening productivity, potential output growth
Debt brake still not fully implemented at German state level.
EU Rehn says no concern France AAA rating under threat

Fed’s Fisher tells it like it is

Posted: 07 Jun 2011 05:52 AM PDT

The comments from Fed’s Fisher were along his hawkish lines. He has not been a supporter of QE2 but resigned to the fact that he lost that vote. He is pleased that QE 2 is ending and does not see a need for further stimulus. He feels it would not do anything as there is enough stimulus in the system already.

He characterized American businesses as being lean and mean with plenty of capital and wonders what the trigger will be to put that liquidity to use.

He warns against politicizing the Fed by taking independence away from the Fed. He feels the Fed will be more clear about policy going forward. Apart from stopping QE, he feels the next step for him would be to stop the reinvestment of maturing debt.

He expects the 2H to have growth of 3-4% but realizes there are risks to that projection. Consumers and businesses were shocked by the recent run up in gas and commodity prices and they pulled back. However if prices come down, he would expect that shock to disappear.

He will be watching whether corporations pass on the increased input prices to the consumer and how the consumer reacts.

He tells it like it is and seems content with arguing his point – which would be more hawkish – but has respect for the majority (which is less hawkish). As a result there is little chance for any major move in rates in the US.

Fisher: Energy prices, higher commodity prices caused recent slowdown

Posted: 07 Jun 2011 05:33 AM PDT

People are shocked.
Price increases are more balanced
Pressure to raise price from businesses.
We must be watchful on price increases
The next step would be to stop reinvesting the roll offs
Goal is to get back to normal
Deliberate on getting back to normal
Cannot envision more QE. There is enough stimulation in the system
Make policy on what they expect.
They are all aware of the numbers. The question is what would more liquidity do. It is all there sitting on the sidelines
We are lean and mean from a business standpoint.
Does not want to see the Fed politicized
Great virtue of the Fed system is to speak the truth as a regional Fed president

Fed’s Fisher on the Wires

Posted: 07 Jun 2011 05:17 AM PDT

Says:

His district is ‘highly entrepenurial’
Money, people, production moving to Texas
Fiscal policy, regulation affect capital
‘You cannot argue that we havent done enough’
Liquidity is not the issue right now’
U.S. needs rules, regulations that attract capital
U.S. businesses are as lean as imaginable
U.S. needs ‘lifting of the fog’ on regulations
‘In my opinion there is no need for QE3′
QE2 ‘is over in june’
U.S. needs to lift that fog’
‘The unfunded liabli

Feds Fisher expects 3-4% growth in 2H of 2011

Posted: 07 Jun 2011 05:14 AM PDT

No need for QE3
Fisccal policy, regulation affect capital
Fed has done enough
Liquidity is not the issue now
US needs rules, regulation that attract capital
US businesses are as lean as imaginable
US needs lifting of the fog on regulations
Unfounding liabilities are massive
Clarity is important for businesses to hire and commit capital
There is monetary wherewithal. The question is what will it take to put it to work
What would induce businesses to hire workers in the US?
Fisher thinks the Fed will be more clear on Fed policy in the next few months
Fed has to stand back and let the economy heal itself
US driven by consumption
Rebalancing with more saving/less spending
Rebalancing will take time
Fisher felt QE2 would feed speculative activity. Did not see cost/benefit from QE2
QE2 will end in June
Consumers come out of shock and see gas and food go up, it causes the pull back
Expects 3% plus GDP growth in the 2H of 2011 w/out creating inflation