Thursday, September 3, 2009

Forex Crunch

Forex Crunch

Forex Daily Outlook - September 3rd 2009

Posted: 02 Sep 2009 09:58 PM PDT

An interest rate decision in Europe and American Unemployment Claims are the highlights of this very busy day. Will the currencies break out of the ranges?

I’m focusing on the Australian dollar, which is stuck in a perfect range. But also the world’s most popular pair, EUR/USD is in a range.  Casey Stubbs elaborates on the EUR/USD range.

Australian Trade Balance starts the day, with a disappointing  increase in the deficit. Despite having a strong and export based economy, Australia slipped into a deficit, standing at 440 million last month. The deficit grew wider than expected to 1.56 billion - double the expectations.

For more on the AUD/USD, read the Aussie Outlook.

In Britain, there is no rate decision today, but there’s an important release: Services PMI is expected to take one step further and advance from 53.2 to 53.9. After the Manufacturing PMI disappointed, there could be a bad surprise also here.

For more on the British Pound, read the GBP/USD Outlook.

In Europe, Final Services PMI is expected to confirm the initial read of 49.5. This will be possibly shrugged off. An hour later, European Retail Sales are published. After falling last month by 0.2%, they’re expected to rise in the same scale this time.

The big event in Europe is the rate decision at 11:45 GMT: The ECB is expected to leave the interest rate at 1%. The ongoing deflation in Europe doesn’t allow for any chance of a rate hike soon. So, the focus will move the ECB Press Conference 45 minutes later. Will Trichet elaborate on the very limited Quantitative Easing scheme? More on the Euro: EUR/USD Outlook.

During the time of the press conference, at 12:30 GMT,  American Unemployment Claims are published. They’re expected to squeeze from 570K to 563K jobless claims, giving us a last hint about the Non-Farm Payrolls tomorrow. These are very volatile moments for EUR/USD. Apart from shaking, will it escape the range?

An hour and a half later, ISM Non-Manufacturing PMI will be released. After the ISM Manufacturing PMI recorded an excellent rise on Tuesday, will this figure “compensate” for yesterday’s disappointing numbers?

And just before midnight, Japanese Capital Spending is released in Japan, with an expected fall of 22.9% between the second quarter and the same quarter last year.

Happy forex trading!

AUD/USD Trading in a Perfect Range

Posted: 02 Sep 2009 08:43 AM PDT

The Aussie is trading in quite a fix range. Too conflicting forces keep it between the technical barriers. Taking a midweek view, AUD/USD  continues to be a very predictable pair.

The Aussie

The Australian economy never dipped into recession. It had only one quarter of contraction in a very bad period for the world. Today’s GDP for the second quarter not only confirmed this status, but also showed the strength of the economy. Australian GDP for the second quarter rose by 0.6% - this was twice as much as early expectations.

This week’s rate decision also confirmed Australia’s title of having the highest interest rate in the West. The Cash Rate of 3% was kept and the outlook by the RBA continued to be positive.

The Gross Domestic Product and the interest rate are the most important indicators, Only employment figures compete with them. So, we should have seen the AUD/USD rise and shine. But the Aussie isn’t alone in the pair.

The Greenback

The US dollar is making nice gains this week. It enjoys strength against the Euro, Pound, Canadian dollar and other currencies. Only the Yen does better, still riding on the results of the Japanese elections.

One of the reasons for the climb is a bad stock market. The dollar and the stock market moves are usually correlated. When the stock markets slump, the dollar rises.

September is historically one of the worst months in the stock markets. Last year featured an extremely bad September, with the collapse of Lehman Brothers. Also this September didn’t start well in the stock markets.

AUD/USD Range

The Aussie wants to rise, and does it successfully against most currencies. AUD/NZD is moving significantly higher. But also the US dollar is also on the rise. So, the pair trades in an almost perfect range.

As mentioned in AUD/USD Outlook, 0.8230 is a major support line, and 0.85 is a major resistance line for the AUD/USD. And how is the pair trading this week: the peak was at 0.8457 and the bottom was at 0.8240. Very impressive!

Will this range trading continue? There are still some major releases this week, with the king of forex - Non-Farm payrolls at the end of the week. So, anything can happen.

But up to now, AUD/USD earns to be No. 1 in the list of Most Predictable Currency Pairs.
Posted by at 5:58 AM

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