Forex Market Updates & Commentary

USDJPY back below the 100 hour MA
USDCHF bounces off the 38.2% days retracement level
GBPJPY tests 200 hour MA and 38.2% retracement
USDCHF takes another step higher
Talking Technicals with James Chen:12:30 PM EST
USDCHF/EURCHF moves higher. Buoyed by fear of SNB cap on the CHF vs the Euro
USDJPY moves back higher on better US Manufacturing data/Fitch but action limited
Fitch affirms US AAA. Status stable
Capacity Utilization highest since August 2008. Industrial Production also stronger
GBPUSD remains in upward channel today. Two way action dominates in NY trade.
EURUSD moves to NY highs. 38.2% retracements bookend the pair
Bobbys Corner-Open Market-Aug.16.2011
Canada Manufacturing weaker at -1.5%. US Housing dat mixed vs expectations
USDCAD tests 100 hour MA at the 0.9871 level
Industrial Production and Capacity Utilization due at 9:15 AM EST

Posted: 16 Aug 2011 08:13 AM PDT

The USDJPY has moved back below the 100 hour MA after failing to get above the trendline (point 3 in chart above). The price is also below the trendline at the 76.71 level.

As outlined in an earlier post, the pair is at the lows for the pair, but for the price to go higher, dip buyers need some satisfaction. Failing to break above the trendline, was a clue to get out of longs. Traders will try another day.

Now with the price below the 76.75 100 hour MA level (blue line in the chart above), the bulls need to push the price above this level to start the upside attempt again. Failure to do so, will likely lead to more selling.

If buyers get no satisfaction, there is no reason to hold longs.

USDCHF bounces off the 38.2% days retracement level

Posted: 16 Aug 2011 08:03 AM PDT

The USDCHF has move sharply higher in two separate legs higher today. The second leg fell below its 38.2% retracement of the move higher at the 0.7905 level (see chart above). This led to a sharp selling which took the pair down to the 38.2% of the entire move higher from the low at 0.7771 and the high at 0.79368. That level came in at 0.7873 and this is where buyers reemerged.

The topside resistance now comes in at the 0.7912 to 0.7922 level which led to a gap higher yesterday and later was topside resistance on a correction (see the chart below).

The pair remains supported on the idea that the SNB may impose a ceiling for the currency. Plus the stronger currency may also be starting to have an effect on the Swiss economy. This may take some of the safe haven characteristic from the pair.

GBPJPY tests 200 hour MA and 38.2% retracement

Posted: 16 Aug 2011 07:45 AM PDT

The GBPJPY is pushing against the 200 hour MA and the 38.2% of the move down from the August 4th high to the low reached on August 10th. This is a key level for the pair. A move above the target resistance next targets the trendline resistance at the 1.2655 area.

USDCHF takes another step higher

Posted: 16 Aug 2011 07:34 AM PDT

The USDCHF has taken another step higher. Support should now come in at the 0.7905 area which is the 38.2% of the last led to the upside. Next upside target is the 0.7956 level.

The pair has now moved from a low of 0.7776 in the NY session to the high at 0.7937.

Talking Technicals with James Chen:12:30 PM EST

Posted: 16 Aug 2011 07:29 AM PDT

Please join us today (Tuesday, Aug 16) at 12:30 PM U.S. ET for FXDD’s Talking Technicals with James Chen. This free webinar will feature a high-probability technical approach to trading in the Forex market.

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USDCHF/EURCHF moves higher. Buoyed by fear of SNB cap on the CHF vs the Euro

Posted: 16 Aug 2011 06:52 AM PDT

There is a fear in the market that the SNB will impose a cap on the CHF versus the EURO and this has the USDCHF and the EURCHF moving higher.

The USDCHF has moved back above the high for the day at the 0.7859 level and this will now be support. For the EURCHF, the price decline from the Monday high corrected to the 38.2% of the last leg higher in the pair. The holding of that level and subsequennt move higher targets yesterday afternoons high at 1.1375

Look for support in the EURCHF at the 1.1306 level. This is the 38.2% retracement of the last surge higher that took the price above the 200 bar MA on the 5 minute chart (see chart below). If the market traders are supportive of this surge, there should be buying interest at the area. We will see.

USDJPY moves back higher on better US Manufacturing data/Fitch but action limited

Posted: 16 Aug 2011 06:39 AM PDT

The USDJPY has been moving above and below the 100 hour MA over the first two trading days of the week. The 100 hour MA (blue line) comes in at the 76.74 level. The market will now use this level as support. On the topside the advances are like pulling teeth. The next level to push through is the trendline connecting the tops from August 9th and yesterday. That level comes in at the 76.90 level. This is the high for the day. Above that level the 76.99-77.02 area has been a high/low area over the last week or so of trading. The highs over the same period at 77.08, 77.15 and 77.20 are next targets that keep the pair contained.

Taking a broader view of the USDJPY the pair remains near the bottoms. The expectation of global weakness – despite the data today – has traders untrusting. Intervention worries keeps the downside contained. Traders have been burnt recently from intervention, however I would not expect as strong of a reaction should the BOJ come back in. The pattern is a sharp move higher, followed by the rotation back lower. Traders and users of the currency pairs have gotten used to selling rallies. As a result, if the market rallies, target levels. If the price can get through, that is a step in the right direction. It will be the “steps by steps” that will give longs confidence. If the targets are not overcome, the traders who buy dips are likely to simply sell the positions out.

The next hurdle. 76.90.

Fitch affirms US AAA. Status stable

Posted: 16 Aug 2011 06:18 AM PDT

Better data and affirmation will likely lead a better stock market. The USDJPY and USDCHF has moved a bit higher as a result.

Capacity Utilization highest since August 2008. Industrial Production also stronger

Posted: 16 Aug 2011 06:15 AM PDT

The Industrial Production rose by 0.9% vs a revised 0.4% increase from 0.2% last month. The expectation was for a rise of 0.5%.

Utilities rose by 2.8% for the month. The high temperatures in July likely increased this output. Mining increased by 1.1%.

GBPUSD remains in upward channel today. Two way action dominates in NY trade.

Posted: 16 Aug 2011 06:11 AM PDT

In the UK today, higher CPI moved the GBPUSD higher on expectations any thought of additional easing is now out of the question. Nevertheless, BOE’s Mervyn King commented in his inflation letter to the Chancelor of the Exchequer Osborne that there is a risk of severe stress and dislocation in the financial markets. He also commented that if that dislocation would occur it would have a significant impact on the economy.

From a technical perspective, the high from yesterday at the 1.6403 level and the high from August 9th at 1.6408 are the targets for the pair. The high for the month came in at 1.6474 on August 5th (the first trading day after the S&P downgrade of the US debt).

On the downside, the close support intraday comes in at the 1.6365 level where the 200 bar MA and the 38.2% of the move up from the low today is found on the 5 minute chart. Earlier in the NY session, the price fell quickly through this level, but quickly rebounded. Below that the 1.6332 level is trendline support on the hourly chart (see above)

EURUSD moves to NY highs. 38.2% retracements bookend the pair

Posted: 16 Aug 2011 05:45 AM PDT

The EURUSD tested the 38.2% of the move up from the Friday low to the high reach yesterday at the 1.4352 level. It has now tested the 38.2% of the move down from today’s high atthe 1.4392 level.

The combination has the pair of retracements has the pair cornered. Expect to see two way flows in the pair as the market traders battle Euro weakness with Dollar weakness.

Of note as well is the key 100 day MA at the 1.4352 level today. Yesterday on the surge higher the pair got a lift on the break of the 100 day MA. Today, the market sellers took profit against the level.

The Dow Futures are down 100 points. The Nasdaq is showing a 25 point decline. Oil prices are down in early trade the S&P is down 15 points. Later at 9:15 AM, the US Industrial Production and Capacity Utilization will be released. German Chancellor Merkel and France’s Sarkozy will also be eyed for Eurobond clues.

Bobbys Corner-Open Market-Aug.16.2011

Posted: 16 Aug 2011 05:42 AM PDT

Good Morning:

The EuroZone’s economic growth can at best be called anemic-as Q2 GDP rose a meager .2%, compared to .8% for Q1.
Economists expected a small rise-but not as small as was reported. Concerns that economic growth in the 2nd half of 2011 will be stagnate, are causing fears of a renewed recession the EZ.
German Chancellor Merkel, and French President Sarkozy will meet today in an unusual August meeting to discuss the economic crisis overwhelming the region.
Rumors of a common Euro-bond, along with other economic initiatives will be on today’s docket between the leaders of the 2 largest economies in the EZ.
This disappointing data caused the Euro to lose steam against most of it’s majoer counterparts.
Commodity currencies like the Aussie and Loonie have taken a bit of a hit as the price of oil retreats again.

On the US political front-President Obama is busy campaigning on a bus trip through the Midwest to visit residents and discuss national economic policy, while still blaming the Congress for the debt ceiling debacle at the end of July/beginning of August.
On the other hand the Republicans seem to be busy fighting between themselves as to whom will be the best candidate to take on the re- election of President Obama.
With the US economy failing to show any signs of real growth, lacklusterjob growth, and no clear direction from either the Democrats or Republicans, the US population is desperately seeking their leadership to lead-not just give them lip service.

HAVE A GREAT DAY & GOOD LUCK

Canada Manufacturing weaker at -1.5%. US Housing dat mixed vs expectations

Posted: 16 Aug 2011 05:31 AM PDT

Housing Starts came in at 604k vs a revised lower 613K (was 629K). Building Permits fell to 597k from 617k last month. THe expectations were for 605K. Import prices rose by 0.3% vs -0.1% expectations. The YoY came in at 14% vs 13.4%.

In Canada the Manufacturing sales were weaker at -1.5%. The Ex Autos showed a -1.7% decline. New orders increased by 1.6%. Unfilled orders also increased by 3.6%. Sales fell for 3 consecutive months now.

Durable goods -1.9%
Non Durable Goods fell 1.2%

15 of 21 industries showed declines.

Despite the weaker Canada number, the CAD has moved slightly higher as the EURUSD moves higher.

USDCAD tests 100 hour MA at the 0.9871 level

Posted: 16 Aug 2011 05:30 AM PDT