Forex Market Updates & Commentary

Senate Republican leader McConnell says as long as Obama in office, a real solution is unattainable
IMF raises Germany growth for 2011 but all calls long term growth prospects “poor”
Pimco El Arian says 2Q GDP likely to be cut to 1.7% from 1.9%
USDJPY takes out June low but rebounds
Rumor of a possible downgrade of France. THIS IS UNCONFIRMED
EURUSD corrects higher but comes off peaks
Geithner says the trade debt limit will be raised
Trade deficit the highest since October 2008 (and other facts)
US Trade Balances Rises & Canada Trade Figure Stays the Same
NY Morning Forex Commentary for July 12th 2011
EU leaders to hold special summit on Eurozone debt crisis on Friday
US & Canada Trade Balance Data Due at 8:30AM
UK CB leading index (m/m) 0.6% vs. 0.4% prior reading.
Greek finance official says there is a lack of interest in the planned Greek asset sales.

Senate Republican leader McConnell says as long as Obama in office, a real solution is unattainable

Posted: 12 Jul 2011 07:19 AM PDT

He adds that the WH is not interested in a meaningful and lasting solution to national debt and that they are more concerned with big government than compromise.

He does say, however, that he will ensure that the government does not default on its obligations.

The Republican and Democratic leaders to meet with the President later today.

The comments from the leader is not encouraging for something worthwhile out of Washington. Focus moves toward Washington. The EURUSD has moved back to 1.4000

IMF raises Germany growth for 2011 but all calls long term growth prospects “poor”

Posted: 12 Jul 2011 07:01 AM PDT

3.2 % for 2011 and 2% for 2012

Medium to long term growth are “poor” at 1.25%. Theyadd that Germany must improve structural defects to improve medium term growth prospects

Pimco El Arian says 2Q GDP likely to be cut to 1.7% from 1.9%

Posted: 12 Jul 2011 06:38 AM PDT

This is as a result of the weaker trade data today.

USDJPY takes out June low but rebounds

Posted: 12 Jul 2011 06:27 AM PDT

The USDJPY started a move yesterday falling below the 80.41 channel trendline level and continued in the evening falling below the 80.00 level and then the low from June at the 79.82 and the low from May at the 79.56 level. The low extended all the way to the 79.16 level before seeing a rebound.

The price rebound has taken the price up toward the 100 bar MA on the 5 minute chart (see below). That level comes in at the 79.76 level which is also the 50% of the move down from the high to the low. This level will be eyed for bullish and bearish bias. Look for extensions. If the price moves above the 70.76 level, then take out the high correction price of 79.83, and the move toward the 80.00 level can continue. If the price stays below the 79.76 level, a price break below 79.62 (38.2% in the chart below) and then the 79.56 level should confirm the directional bias to the downside.

EURJPY

Meanwhile the EURJPY is back in the channel on the hourly chart after failing on a move below the lower channel earlier. The move back within the channel led to a further squeeze toward the upper trendline. That level currently comes in at the 111.87 area currently (and coming down). The high for the day has come in at the 111.89 level. Stay below and the bears remain in charge.

Rumor of a possible downgrade of France. THIS IS UNCONFIRMED

Posted: 12 Jul 2011 06:17 AM PDT

This would seem unlikely as not much talk about it from the rating agencies. Banks might be downgraded as a result of exposure to Greece/Portugal within their portfolio.

EURUSD corrects higher but comes off peaks

Posted: 12 Jul 2011 05:57 AM PDT

Talk of bond purchases from EU central banks a better technical picture (less bearish) has given the EURUSD a lift in NY trading . The price moved above the trendline resistance on the hourly chart at the 1.3952 level and has extended to a high price of 1.4022. The next key target off the hourly chart comes in at the 1.4042 level. This is the 38.2% of the move down from the July 7th high price (see chart below). Staying above the channel trendline keeps the consolidation/correction story in tact.

The price has come off the high and trades around the 1.3990 level currently. Looking at the 5 minute chart for trading clues shows the 200 bar MA at the 1.3970 level. This moving average was tested once since breaking . I will be eyeing that level to see the level of interest on a dip toward it. The other level to eye is higher at 1.3985. This is the 38.2% of the weeks trading range (see chart below). If a trader is intraday bullish (and the market is that way today), holding these levels could provide clues to the “markets” intentions.

Geithner says the trade debt limit will be raised

Posted: 12 Jul 2011 05:48 AM PDT

…and the President wants the most cuts possible.

The same old story.

Trade deficit the highest since October 2008 (and other facts)

Posted: 12 Jul 2011 05:34 AM PDT

Exports decreased by 0.5%
Imports increased by 2.6% on surge in oil. The price of oil imports was the higher since August 2008
Even without the effects of petroleum, the deficit increased to 19.8 billion from 17.5 billion

THe price adjusted deficit also soared to 47.8 billion from 43.9 billion. This is what is used for GDP and this would lower the estimates for 2nd quarter US GDP using the current data. Versus the 1st quarter the trade data is still a contributor to 2nd quarter GDP quarter on quarter as the deficit has narrowed to 47.8 billion from 49.655 billion. Nevertheless, it was much better looking last month and therefore will lead to a reduction in 2nd quarter GDP by economists

What does the report show me?

The US imports too much oil and is dependent on the price of oil.
Although exports have increased from 152 billion a year ago to the currenty 174.8 billion, that the dollar decline benefits are still not being felt in the deficit as a result of reliance on imports.
Going into the 3rd quarter with oil prices down there should be a benefit that could increase GDP. The price used for a barrel of crude oil was $108.70, up from $93.76 in the March report and versus $76.95 one year ago. To put it in dollars and cents, the price increase over the last year has increased the value of imports from $21.665 billion a year ago to $29.919 billion. Reliance on Oil matters

US Trade Balances Rises & Canada Trade Figure Stays the Same

Posted: 12 Jul 2011 05:33 AM PDT

US Trade Balance: Survey: -$44.1B Actual: -$50.2B Prior: -$43.7B Revised: $43.6B

Canada Merchandise Trade: Survey: -0.8B Actual: -0.8B Prior: -0.9B

NY Morning Forex Commentary for July 12th 2011

Posted: 12 Jul 2011 05:20 AM PDT

EU leaders to hold special summit on Eurozone debt crisis on Friday

Posted: 12 Jul 2011 04:50 AM PDT

This is according to an EU diplomat.

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