Forex Market Updates & Commentary

Oil prices/Commodities fall. USDCAD reverses higher
NIESR GDP Estimate for May 0.4%
EURUSD tests the 38.2% target at the 1.4417 level.
ECB Stark reiterates the ECB is ready to adjust monetary policy
FXDDAuto Webinar with Expert Ophir Schultz from Tradency – Wednesday June 15 2011
EUR/USD Third Consecutive Bearish Day
GBPUSD back below last Friday’s low to 1.6285
Spains Gomez on the Wires
Feds Dudley says must keep inflation expectations in check
Gold tests trendline support after falling sharply
EURUSD keeps bearish bias in early NY trade
Canada Labor Productivity Weaker
ECB Stark says very high chance for interest rate increase in July
US Import Price Index Improves
S&P says French downgrade by 2020 without reforms

Oil prices/Commodities fall. USDCAD reverses higher

Posted: 10 Jun 2011 07:06 AM PDT

The better Employment report today for Canada has been trumped by lower oil prices and commodity prices. This has led to a dollar buying and the USDCAD is no exception (especiall with Crude Oil down $2.86 currently). The price is now back above the 200 hour MA (green line in the chart above) which contained the topside for most of the day. The level comes in at the 0.9759 level currently. The 200 hour MA has been moving sideways for 6 or so days now – indicative of a non trending market. The 100 hour (blue line above) is moving toward the 200 hour MA. A move one way or the other seems to be brewing in the next few days of trading perhaps.

ON the daily chart below, the 100 day MA at the .09739 level is the topside clue. A move back above this level should increase bullish momentum and lead for another test of the 0.9815-20 area. On the downside, the 38.2% retracement at the 0.9696 level is the downside clue. A move below this level should lead to further selling liquidation.

NIESR GDP Estimate for May 0.4%

Posted: 10 Jun 2011 07:00 AM PDT

This is the quarterly growth % per quarter and is higher than the 0.1% reported in April (this was revised lower from 0.3% orginally reported)

EURUSD tests the 38.2% target at the 1.4417 level.

Posted: 10 Jun 2011 06:50 AM PDT

As per the prior post, the target below for the EURUSD is the 1.4417 level where the 38.2% of the move up from the May low to the June high is found. Look for profit taking buyers against the level with stops on a break.

ECB Stark reiterates the ECB is ready to adjust monetary policy

Posted: 10 Jun 2011 06:34 AM PDT

Euro area economic recovery more self sustaining
Upside inflation risks call for strong vigilance
To further rule out non standard tools in timely manner
There are risks to leaving rates too low
Aware of risks around current pace of growth
ECB has no pre-defined rate tightening sequence
ECB “two pillar” approach shows need to adjust policy

Despite the calls for higher rates, the market is unphased and the EURUSD makes new lows.

FXDDAuto Webinar with Expert Ophir Schultz from Tradency – Wednesday June 15 2011

Posted: 10 Jun 2011 06:31 AM PDT

First call for the FXDD Auto/ Automated trading strategies webinar with trader Ophir Schultz from Tradency. We will show you step by step how to use FXDDAuto. This event takes place online Wednesday June 15th 2011 at 1pm. Register now to save your seat. The last event was completely full. https://www1.gotomeeting.com/register/585065232

EUR/USD Third Consecutive Bearish Day

Posted: 10 Jun 2011 06:28 AM PDT

EUR/USD (daily chart) as of Friday (6/10/2011) has continued its bearish stance of the last two days after attempting but failing to break 1.4700 to the upside earlier in the week. This continued bearishness now constitutes a bonafide breakdown of the steep uptrend that has been in place since late May. A key downside support target on this breakdown resides around the 1.4250 price region, which is not only an important prior support/resistance level, but also the 61.8% Fibonacci retracement level of the two-week bullish run from the lows around 1.4000 to the highs around 1.4700. In the event of continued bearish momentum that further breaks down below the noted 1.4250 support, the key downside target to watch is clearly around the 1.4000 psychological level, which has served as an exceptionally strong support/resistance level and price target in the recent past.

(Please click on the chart to enlarge. Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta and purple.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

GBPUSD back below last Friday’s low to 1.6285

Posted: 10 Jun 2011 06:04 AM PDT

Through Thursday the GBPUSD was threatening to post the lowest week Low to High trading range since the June 10th, 2007 week (SEE POST FROM YESTERDAY). The 4 year record was not meant to be broken this week and in the Far East session the price had extended the range. The price was given an additional push lower on the back of weak Manufacturing data this morning, making a BOE rate hike less likely.

The pair did have a correction off the lows that has seen the pair extend to the 38.2% retracement at the 1.6311 level. The level found sellers and the price is now back below the low from last Friday at 1.6284. This will now be eyed as intraday resistance (in addition to the 1.6311 level above).

On the downside, the 100 day MA comes in at the 1.6238 level today (see blue line in the chart below). Below that is the 38.2% of the move up from the December 30th low at the 1.6209. Earlier today on the sharp move lower, the GBPUSD fell to 1.6213 -4 pips short of the key 38.2% retracement level. Profit takers entered and forced the market to the retracement level above.

Needless to say a move below the 38.2% retracement at the 1.6209 level will be needed to push prices even lower. The next support level below the 1.6209 level would be the trendline off the Jan, March and May lows at the 1.6095 area. The focus to downside was helped by the bearish fundamental news. Next week the CPI is expected to come out. The BOE has already said that inflation of 5% is possible in 2011. The CPI is expecte to increase by 0.2% and the YoY is expected to remain at 4.5% (core is expected to dip to 3.5% from 3.7%). With growth numbers lower, a low inflation reading (or bearable one) could undermine the GBPUSD going forward. Watch technical levels for clues, however. Staying below the 1.6284 and 1.6311 level keeps the bias to the downside.

Spains Gomez on the Wires

Posted: 10 Jun 2011 06:04 AM PDT

Says:

Spain needs wage moderation
Wages rose less than inflation last year
Cant fix salaries by law
Approves extension to troops’ presence in Libya
Spain to maintain maximum of 500 troops in Libya
Government comments in emailed statement
Has support in parliament for wage law

Feds Dudley says must keep inflation expectations in check

Posted: 10 Jun 2011 06:01 AM PDT

Fed has a long way to go to meet dual mandate
Economic growth in 2011 has been disappointing
Economic growth in 2Q may also be subpar
Moderate economic recovery to be sustained
Downside risk to economy has increased
Economic growth should pick up in 2H of 2011

Gold tests trendline support after falling sharply

Posted: 10 Jun 2011 05:51 AM PDT

Gold has followed a nicely defined trendline since the start of the trading year. Except for a brief move below in May, the integrity of the line has held. The price is moving toward this level now and if history repeats itself, there should be support buyers against the level. If, however, the line is breached (it comes in around 1524), then it could be a clue of some selling pressure as we head toward the weekend.

Resistance is now at 1537 where the markets decline accelerated (on the break of a couple trendlines-see hourly chart above). The 38.2% of the move up from the May low comes in at the 1522 area.

EURUSD keeps bearish bias in early NY trade

Posted: 10 Jun 2011 05:37 AM PDT

The correction off the double bottom extended up to the 38.2% of the days range and trendline resistance (see chart above) and stalled. The price is back below this level and the 100 bar MA on the 5 minute chart (at the 1.4475 level), and looks toward the day and week low at 1.4442. A move below this level is needed to keep the bears in play and motivated.

The key target on the downside for today is the 38.2% of the move up from the May low to the high reached earlier this week at 1.4695. That level comes in at the 1.44177 level (see chart below). I would expect buyers against the level should the price dip that low.