Forex Market Updates & Commentary

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• August 17th Morning Forex Report
• Net Long Term TIC Flows much better than expected. Led by a surge of purchases from the UK
• EURJPY moves below 100 day MA. Key level on the close today.
• EURUSD moves back above 61.8% retracement after better Empire data
• Empire Manufacturing increases to +12.1. Better than expectation
• GBPUSD falls hard overnight. Opens below 100 hour MA and moves away from the key MA
• Bobbys Corner-Open Market-Aug.17.2009
• Risk Aversion is the theme overnight. Stocks suffer. More banks fail.
• Eurozone trade balance
• Swiss retails sales shows improvement
• 8-17 Economic Calendar
• JPY GDP (QoQ)
• GBP Rightmove HPI m/m

August 17th Morning Forex Report Posted: 17 Aug 2009 07:01 AM PDT Video Pending

Net Long Term TIC Flows much better than expected. Led by a surge of purchases from the UK Posted: 17 Aug 2009 06:09 AM PDT The 90.7 Billion increase is an impressive rebound from the last two months which showed a combined decline of -8 billion.  The increaase was the highest since April 2008.  It seems in June the flow of funds back into the dollar resumed after some saber rattling and moves out in prior months. Of note within the data, however,  is China’s demand actual fell by 25 billion to $776.4 billion from $801.5 billion.  Also, Russia demand fell by -4.6 billion to 119.9 billion from $124.5 billion.   If you recall from a few months ago, both China and Russia were talking about moving into “other” currencies other than the US dollar.  Flow into the US were made by Japan +34 billion and the UK by a whooping +51 billion to $214 billion from $163.8 billion.  So although the bounce back is impressive, the mix may not be sustained and may be influenced by more friendly US allies who supported the US auctions while the countries who were critical of the US - in particular China and Russia - stayed away.

EURJPY moves below 100 day MA. Key level on the close today. Posted: 17 Aug 2009 05:59 AM PDT The EURJPY 100 day MA comes in at the 133.14 level. This will be a key level on the close today.  The market has moved above the level off the better than expected Empire Manufacturing index, but it is the close that is important.  Nevertheless, the market will be using the level as support/resistance during the day. A move above followed by a move above the 100 bar MA on the 5 minute chart will confirm the low may be in place today. The 100 bar MA level comes in at the 133.38 level currently.  On the downside a move below the 132.86 should confirm further downside pressure. This level represents the 50% retracement of the move up from the July 2009 low of 127.02 to the August 2009 high of 138.70

EURUSD moves back above 61.8% retracement after better Empire data Posted: 17 Aug 2009 05:49 AM PDT The better than expected Empire Manufacturing Index has moved the EURUSD back above the 1.4068 level.  This level represents the 61.8% retracement level of the move up from the low set in July (at 1.3833) to the high reached in August (at 1.4447).  This level will be watched this morning.   A move back below is likely to target a test of the 1.4007 level where the July 29th to July 30th lows are located. If the price is able to hold above the 1.4068 level, a move back toward the 1.4104 area where the 38.2% retracement of the days range and the 100 bar MA on the 5 minute chart are located.

Empire Manufacturing increases to +12.1. Better than expectation Posted: 17 Aug 2009 05:33 AM PDT This  is better than expected and will test the market which is more focused on the sustainablility of the growth and the Demand side of the economic equation today (i.e. will the consumer come back and buy).  The dollar is a bit lower after the data. Prices Paid                          13.83 vs.  10.42 last month Prices Received               -12.77  vs -8.33  last month New Orders                          13.43  vs  5.89 last month Shipments                             14.11  vs 10.97 last month Delivery Time                   -10.64 vs  -14.58 last month Inventories                        -22.34 s -36.46 last month Unfilled Orders                 -9.57 vs -12.50 last month Number of Employees   -7.45 vs -20.83 last month

GBPUSD falls hard overnight. Opens below 100 hour MA and moves away from the key MA Posted: 17 Aug 2009 05:18 AM PDT The GBPUSD opened below the 100 hour MA at the 1.6508 level, traded to a high of 1.6518 briefly when the 100 hour MA was at 1.6515 and then moved lower. The move below last weeks low at 1.6482 with a price bar that was larger than normal, indicated a desire to extend the downside, and down it went. The move lower has now extended below the 1.6317 level which was a key low closing level during most of the June/July consolidation period (see daily chart below showing closing levels).  The upside during the June/July period used the 1.6589 as the ceiling. The low level was defined by the 1.6317 level (see chart below) - with brief moves that extended the downside and upside.  Watch this level this morning.   The level should attract some selling, with intraday corrective buys on a move above.    A move above could extend up toward the 100 bar MA on the 5 minute chart at 1.6361 currently (blue line in the 5 minute chart above).  ,

Bobbys Corner-Open Market-Aug.17.2009 Posted: 17 Aug 2009 05:13 AM PDT Good Morning: The JPY showed strength overnight.  US regulators closed 5  lending institutions over the weekend-thus boosting demand for the Yen as a refuge. Japanese GDP printed lower than expected as speculation that a recovery is not taking hold as originally thought.  The dollar is also higher as it took advantage of a weak global equity markets overnight . GBP showed the largest decline overnight as UK housing data dissapointed the marketplace. World wide equity markets, Oil, Gold and other commodities are all lower this morning.  US Futures are down over 190 pts pointing to a sharp drop on the opening this morning. Oil:$65.91                        Gold:$937.50    Today’s data: Empire Mfg:                     exp: 2.0          prior: -.55 HAVE A GREAT DAY & GOOD LUCK

Risk Aversion is the theme overnight. Stocks suffer. More banks fail. Posted: 17 Aug 2009 04:38 AM PDT The USD dollar rose on the risk aversion trade.  Dow Futures are down 193.  S & P is down 23 points. Nasdaq Futures are down 34 points.  Spot Crude Oil is losing groung due to the higher dollar as it is down $1.64.  The risk aversion ball got rolling when the Hang Seng Index fell by 3.62% (755.68 decline), the Shanghai Index fell by -5.79%, and 5 new US Bank failures over the weekend bring banking issues back to the front pages as the cost to the FDIC mount and raise concerns about what might further be ahead.  So the dollar is once again the beneficiary as the risk trades get hit, and the commodity trades like AUDUSD, NZDUSD also suffer as a result.  Today the US Empire Manufacturing index is due at 8:30 AM.  The expectation is for a gain of 3.0% vs a prior reading of -0.55%.  This would be the first gain in the index since April 2008.  These regional indices have been rebounding as the manaufacturing bottoms due to a depletion of inventories.   Note, however, the indices are designed to gauge activity from one month to the next.  Asking a manufacturer if activity is better than the previous months which were at record low levels can be misleading.  Getting a pulse is good but it does not necessarily mean robust growth.  Capacity Utilization may give a better reading of Manufacturing Activity.  Last week, the Cap Utilization was up to to 68.5% but this is only up from 68.1% a record low level going back to 1967.  A reading of 0.0 on the index might not be the same as 0.0 reading back in April 2008 (or any other 0.0 reading) when economic activity was likely better.  The market seems to be accepting that the economy of the world will grow in the 3rd quarter as inventories are replenished.  The question is how long will it last and where will the flow of funds go.  The world today is flowing back to the USA.  Later at 9:00 AM the Net Long Term TIC Flows for June will be released. This indicator is a measure of the flow of net capital flows into the US.  In May there was a net outflow of -19.8 billion. This month there is expected to be a gain of 17.5 billion.  A negative reading is indicative of lack of foreign interest in US assets (in the US as a whole).

Eurozone trade balance Posted: 17 Aug 2009 02:03 AM PDT Eurozone trade balance came in at 1.0B, less than the 1.4B expected but better than the prior reading of 0.8B. Eur/Usd trading just of its low at 1.4118.

Swiss retails sales shows improvement Posted: 17 Aug 2009 12:19 AM PDT Swiss reatail sales came in at 0.9% ,better than the 0.8% forecast and an improvement over the prior reading of -1.4%. No impact on the CHF as Usd/Chf tradesa t1.0780 and Eur/Chf at 1.5235.

8-17 Economic Calendar Posted: 16 Aug 2009 08:45 PM PDT

JPY GDP (QoQ) Posted: 16 Aug 2009 04:57 PM PDT Japan’s Gross Domestic Product (QoQ) did not reach its forecast of 1.0% with a quarterly release of 0.9%, but was significantly better than its previous release of -3.8%. Japan also made the following additional releases: GDP Annualized - Survey: 3.9%   Actual: 3.7   Prior: -14.2% Nominal GDP (QoQ) - Survey: 0.1%   Actual: -0.2%   Prior: -2.7% GDP Deflator (YoY) - Survey: 1.8%   Actual: 0.5%   Prior: 0.9%

GBP Rightmove HPI m/m Posted: 16 Aug 2009 04:04 PM PDT The Rightmove Housing Price Index, which measures the asking price of homes for sale, has a month over month release of -2.2%; much worse than its previous release of 0.6%. The GBP had a minor downside reaction to the release and is currently trading at 1.6506

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