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GBP/USD Daily Technical Reports

Spot Price: 1.9895

Technical Analysis

The descending daily studies got confirmation today from ADX which finally began to rebound. But prices failed to test or break the Apr 27 low at 1.9865 or the 50% Fibo at 1.9860, largely because o/s intraday studies supported prices. Hourlies have bounced from o/s. 1.9940 next rsst. Looking to sell rallies. 1.9980 a prime failure sell

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USD/CHF Daily Technical Reports

Spot Price: 1.2135

Technical Analysis

Long profits booked on the Apr 13 high at 1.2190. New long taken in line with the prevailing daily uptrend which still appears to have plenty of maneuvering room to the upside. Previously o/b hourlies are now nearer to o/s and 38.2% of the recent 1.2010/1.2190 advance has been completed at 1.2120. Key support is at 1.2100-05, the prior spate of daily highs. Stop is below.



Finotec Group Inc

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UK CIPS April services PMI 57.2, down from 57.6 in March - sources

Thu, May 3 2007, 08:56 GMT
http://www.afxnews.com

LONDON (Thomson Financial) - The UK's services sector, which accounts for nearly three quarters of the whole economy, continued to expand at a brisk pace during April despite a modest decline in the rate of growth, sources said of a key survey.

They said the April business activity purchasing managers' index from the Chartered Institute of Purchasing and Supply dipped to a seven month low of 57.2 from 57.6 in March.

Though that was below analysts' expectations for a more modest decline to 57.5 it still shows the sector expanding strongly. A reading above 50 indicates expansion.

A more detailed look at the survey shows that the employment sub-index fell to 52.5 from 53.6, but that the incoming new business index rose to 57.0 from 56.8. Meanwhile, business expectations held up, rising to 75.3 from 74.6.

On the inflation front, the survey found the prices charged component falling to 53.9 from 55.3, while the input prices sub-index declined to 58.6 from 59.3.

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pp/pp/ro


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Divergence in CAD Strength Despite "Puzzling" Oil Weakness

Futures strategist Alan Plaugmann says gasoline stocks are "far too low" ahead of peak US driving season. Still, short-term selloff in oil has failed to muffle strength in the oil-correlated CAD.

Head of market strategist David Karsbøl remarks on an interesting bit of divergence in the commodity currencies, with the heavily oil-correlated CAD bounding stronger - defying a selloff in crude that would otherwise be CAD-bearish, owing to Canada rate-bullish comments by Bank of Canada Governor David Dodge. The move stronger in CAD comes despite jags lower in NZD and AUD, which tend to move in tact with commodity markets and follow CAD's lead. Karsbøl notes that NZD moved lower on comments overnight from New Zealand Finance Minister Michael Cullen, who said that the ongoing strength kiwi currency was pressuring the country's exporters and that the phase would continue as long as RBNZ continues to hike. "The Aussie dollar weakened in a kind of ‘sympathy move' with its kiwi peer, but we note that Australian CPI figures recently were not that impressive despite AUD strength across the board," says Karsbøl, adding that both his technical and fundamental models have yielded signals to enter short exposure in AUD vs. both EUR, GBP, CHF and JPY on the outlook for secular AUD weakness in the short term.

Karsbøl also favors the technical and fundamental outlook

Equity strategist Torben Krogh Nielsen says 1500 is the level to watch in the S&P today and tomorrow, following Tuesday's rally, says he still likes US financials, and will use short-term weakness in the energy markets to scoop up names in the integrated and oil service sectors. Specifically, he points Apache and Helmerich Payne in the oil services space, and to Marathon Oil and Hess in the integrated space.

Futures strategist Alan Plaugmann is a short-term buyer of June WTI crude today, despite "mixed and murky" signals in the wake of yesterday's baffling selloff in the June crude. "The odds of a major direction move in crude oil are split more or less 50/50 in either direction," says Plaugmann. "The break below support levels yesterday is an indication that the market has shrugged off slightly bullish inventory data. Obviously, sellers from some quarter are driving this market down, but odds are decent that we will turn tail and rally from here. We are buyers at $62 for longer-term strategies."

This week's crude inventories were out at 1169k vs 1500k expected; Gasoline came out at -1115k versus -1300k expected; Distillates were -198k vs 250k and Refinery Utilization 0.48% vs 0.88%. "We are still of the opinion that gasoline stocks are far too low, ahead of the peak US driving season and cyclical averages. There is very little solace in a slight decline in demand and an increase in imports to support the physical market," says Plaugmann

Plaugmann is a buyer of June gold at $674 today in what is broadly expected to be a short-term, rangebound market ahead of tomorrow's NFP numbers out of the US. Precious metals will come under pressure in the event of renewed dollar strength.

Rebecca K. Engmann

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Personal Income, Manufacturing ISM, Productivity, Nonfarm Payroll

by Marcial Nava
BBVA Bancomer



Personal Income & Spending

Forecast: 0.5, 0.5% Consensus: 0.5, 0.5% Prior: 0.6, 0.6%

We expect personal spending to post a 0.5% gain influenced by solid employment and income gains, but also by higher gasoline prices. Prices at the pump probably inflated PCE prices by 0.5% in March. Excluding energy, PCE inflation could have moderated to 0.1% from 0.3% in February. This is equivalent to a 2.2% year-over-year inflation from 2.4% in February. As the latest Inflation Observatory indicated, 12-month core inflation is beginning to ease steadily because rental components –the biggest source of pressure- appears to be moderating and will continue doing so as housing affordability improves and consumers shift back from renting to buying. Pressures would also diminish as economic growth moderates and creates some slack in the labor market.


Manufacturing ISM

Forecast: 51.5 Consensus: 51.0 Prior: 50.9

We expect the ISM Index to increase slightly in April favored by a modest contribution of new orders and production sub-indexes, which would be partially offset by a negative contribution from employment. Inventories will subtract less to the overall index. Recently, the inventories sub-index appears to be recovering after falling for several months. The ISM index has been moving downwards in tandem with the observed deceleration in manufacturing activity.



Productivity & Unit Labor Costs Q1

Forecast: 0.8, 4.2% Consensus: 1.1, 3.9% Prior: 1.5, 6.6%

Output per hour eased driven by lower economic expansion in Q107. We expect productivity growth to stand at 0.8% from 1.5% in Q406. This is equivalent to a 0.8% year-over-year increase, which is well below the long-term average of 2-2.5%. Labor compensations could have moderated in Q107. According to the Establishments Survey, average hourly earnings rose 4.1% in the quarter, the same rate as in Q406. The growth of Unit Labor Costs would moderate from 6.6% in Q406 to 4.2% in Q107, 2.2% higher than the level of a year earlier. Labor costs are likely to ease in coming quarters boosted by a decelerating economy.


Nonfarm Payroll & Urate



Forecast: 125K, 4.5% Consensus: 100K, 4.5% Prior: 180K, 4.4%

Employment creation would moderate in April as suggested by high frequency data. The four-week moving average of unemployment insurance claims increased for three consecutive weeks, standing at 332,000 in the week ending April 19, the highest reading in six weeks. We expect total non-farm payroll to expand by 125,000 new jobs in April, 55,000 jobs less that in the previous month. Construction is likely to add jobs for the second straight month in face of the springbuying season. The unemployment rate would rise to 4.5% from 4.4% in March, still reflecting tightness in the labor market

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Dollar Momentum Requires Strong Services ISM

FX market activity gets up to a slow start after subdued trading in Asia due to Japanese markets' closing on Thursday and Friday. European officials' reiterations of their indifference with the strength of the euro continue to support the single currency. Today's services ISM report from the US may place a dent in the single currency in the event of a strong upside surprise, especially if equity market optimism is further prolonged on the basis of a soft US landing that requires no change in interest rates.

The preliminary forecast for US Q1 productivity (8:30 am) is expected to show a rise of 1.3-1.4% after 1.6% in Q4, translating to a y/y rate of 1.0-1.1% following 1.4%. Weaker productivity is in line with the marked slowdown in US Q1 GDP growth, housing and factory output.

US jobless claims (8.30 am EST) expected to have edged up to 330K from 321K, lifting the 4-week average to 334K from 332K.

The key report of the day is the 10 am release of the US services ISM , expected to have edged up to 53 last month from 52.4 in March. Both the employment and new orders components will be closely watched as the former slowed to 50.8 from 52.2 and the latter slowed to 53.8 from 54.8. A rebound in the employment index is likely to trigger a positive reaction in the dollar, especially if the headline ISM index comes in at least at 53.0.

The slowdown in the ADP report's forecast to 64K jobs in April from a downwardly revised 98K in March is fuelling speculation of a weaker than consensus payrolls report in Friday. ADP's forecasts have had a good track record in predicting the direction of payrolls. Payrolls could be expected to have slowed to as low as 70K in April from 180K in March. Consensus estimates range from 90k-100K.

Euro vulnerable to ISM strength

We will issue a detailed analysis note on the euro (after this one) outlining the risks to the single currency ahead of Sunday's final round of the French presidential race. A victory of Socialist candidate Segolene Royal over center right candidate Nicolas Sarkozy may not be a friendly development for the euro.

Sterling capped at 1.9980, shaky support at 1.9860s
USDJPY lacks follow through, downside risks loom



Ashraf Laidi
CMC Markets Plc

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Daily Analysis

Dollar rises on ISM data

by Sarah Vladimirsky
Finotec Group Inc



Main news

• Yen weaken on stuck market rally
• Gold regain strength

Forex Outlook

The dollar rose to the strongest in more than a week against the euro and touched a two-month high versus the yen as a private report showed U.S. services industries hit the expectations. The data reduced the likelihood of a rate cut by the Federal Reserve. The services report 'is bad news for dollar bears,' said Richard Franulovich, a senior currency strategist in New York at Westpac Banking Corp. 'The data is destroying the argument that U.S. growth is weak but, People are waiting for the payroll number tomorrow, and we are expecting a soft number.' The dollar rose 0.18 percent to $1.3568 per euro at 12:42 p.m. in New York, and reached $1.3550, the highest since April 24. It has rebounded from a record low of $1.3681 per euro set April 27. The U.S. currency advanced 0.15 percent to 120.33 yen after touching 120.43, the strongest since Feb. 27, when stocks tumbled in a global rout. The labor department will release the payroll data today at 12:30 (GMT) witch tend to be bearish for the U.S dollar, 'The market is bearish on the dollar,' said Boris Schlossberg, senior currency strategist in New York at DailyFX.com in New York. 'There is evidence that the jobs data will be weak.'
A rally in Asian stocks encourage the carry traders to act and weakened the yen earlier to a record low against the Euro. Carry trader investors buy higher- yielding assets funded by loans in Japan.. 'It's about risk appetite and investors wanting to put carry trades back on,' said Michael Metcalfe, head of macro strategy in London at State Street Global Markets. Markets in Japan and China are closed today and tomorrow for holidays.
Gold: rebounded from a one-month low due to speculation the dollar will continue to drop against Euro. Gold is sold in dollars, and five of the past six bear markets in the U.S. currency have led to a higher gold price. 'There is a belief that this bull market is not done yet, and further gains are expected,' said Paul McLeod, vice president of the precious-metals department of Commerzbank Securities in New York. 'The expectation is that the dollar will still weaken. Gold is looking for a foundation for the next rally.' Gold futures for June delivery rose $2.60, or 0.4 percent, to $677.70 an ounce at 8:58 a.m. on the Comex division of the New York Mercantile Exchange.
Crude Oil: the black gold fell after speculations that U.S inventories are sufficient to meet demand from refineries that are increasing gasoline output. . Prices for the motor fuel fell earlier after Belgian refiners announced that workers agreed to a new proposal to resolve a labor dispute and avert a strike. 'Crude is not the issue that has us concerned, gasoline is,' said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant. 'Gasoline stocks should be rebounding as refiners increase output but that's not happened yet. The increase in refining rates hasn't been big enough.' Crude oil for June delivery fell 45 cents, or 0.7 percent, to $63.23 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices touched $62.74 a barrel, the lowest since April 20.






EUR/USD Daily Technical Reports

Spot Price: 1.3565

Technical Analysis:

The per touched the bulli lower band and heading for an attempt to cross the MA line.
Morning attempt to clear the 10-day MA got only 10 pips beyond and the failure sent prices tumbling again. Page left flat and prices then probed the uptrend line off the Mar 9 low, today at 1.3550. Dailies remain bearish. Hourlies nearing o/s. the RSI is pointing down the bearish trend get support at 1.3555.
USD/JPY Daily Technical Reports

Spot Price: 120.40

Technical Analysis:

The MACD is after a bearish cross falowed by highly o/b in the RSI.
Short trade from Wed was stopped out and reversed as prices cleared the upper Bolli band at 120.25 and hit new trend highs. Daily studies are a shade overbought, but the general drift in prices has been up since the Apr 19 low and no clear indication of a top exists. Using a tight stop below support near 120.00. 120.55 is 1st strong resistance

GBP/USD Daily Technical Reports

Spot Price: 1.9895

Technical Analysis:

The descending daily studies got confirmation today from ADX which finally began to rebound. But prices failed to test or break the Apr 27 low at 1.9865 or the 50% Fibo at 1.9860, largely because o/s intraday studies supported prices. Hourlies have bounced from o/s. 1.9940 next rsst. Looking to sell rallies. 1.9980 a prime failure sell.

USD/CHF Daily Technical Reports

Spot Price: 1.2160

Technical Analysis:

A failure to break the MA line renewed the bullish trend.
Perfect pullback today to the hourly support, now at 1.2100, and close to the 10-day MA at 1.2090, sent prices higher again, but the high 1.2160 held on the rebound, so we took profits. Almost all daily studies are pointed up and none are in danger of being overbought, so we will buy dips which are shallow so far
The MACD is after a bullish cross.
RSI is pointing up.

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The Overbought Euro/Dollar Challenged Support and May Reverse Short Term

By Cornelius Luca, Currencies Analyst, GFT

TradingMarkets.com

The dollar rallied versus the majors on Wednesday, and particularly versus the yen. The US data showed another bit of positive information, and this supported the currency. Factory goods orders rose a more-than-expected 3.1 percent in March from February’s revised 1.4 percent gain, pointing that the US economy is dragging along. The dollar should struggle higher today.

Euro/dollar

The overbought euro/dollar challenged the support at 1.3585 on its way to an over one-week low but reduced losses into the close. It should encounter more weakness today but it must close below this sticky 1.3585 level to signal that the big correction has started.
A break below this level of this consolidation would signal an initial slide to 1.3540 and 1.3525. Further support is pegged at 1.3470 and 1.3420.
If 1.3585 holds, then the pair would challenge the resistance at 1.3683. A break above this level means the euro/dollar will march higher, but I really don’t know why would that happen. Above 1.3735, resistance comes at 1.3805.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen rallied to its highest level since February 27 and should attempt to advance further on the day.
Initial resistance is at 120.60. Distant resistance now comes at 121.05 from another 50-point pivot, which targets 120.55 and 121.55.
Immediate support remains at 119.65 from another 50-point pivot that targets 119.15 and 120.15. Below 118.85, strong support is still seen at 118.25 from a 50-point pivot that targets 117.75 and 118.75.
Oscillators are rising.
NEAR-TERM: Mixed to slightly higher
MEDIUM-TERM: Bullish
LONG-TERM: Bullish


Sterling/dollar

Sterling/dollar remained below the $2 mark and broke the support of a rising trendline. Lower trading is expected – provided that a nearby support level gives way.
Immediate support is at 1.9865. A close below this level would signal a further decline to 1.9800. It would then challenge the 1.9720 area.
Initial resistance is at 1.9915. A break above 1.9950 would suggest a recovery to 2.0005. Above 2.0070, resistance remains between 2.0131 and 2.0151, but except for a very weak non-farm payrolls report on Friday, these numbers won’t be seen for a long time.
Oscillators are falling.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish


Dollar/Swiss franc

Dollar/Swiss franc rallied further on Wednesday, briefly breaking above the declining trendline. It then closed virtually unchanged. The medium-term selling pressure r is in jeopardy.
Initial resistance is at 1.2180. A break above this level would signal a more sustained recovery. The next level is 1.2200. Strong resistance is at 1.2275.
Immediate support is at 1.2110. The next levels are at 1.2035 and 1.2015. Below 1.1996 there is a key level at 1.1945.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly higher
MEDIUM-TERM: Slightly bearish
LONG-TERM: Slightly bearish

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Forex Mid-Day Technical Report

Dollar Rally Resumes after Solid ISM Services and Jobless Claims

Dollar's rally resumes in early US session on solid data. ISM Services rose more than expected to 56 . Apr, well above consensus of 53.0 and is the strongest reading since Jan this year. The price paid component edged further higher to 63.5, which is highest level since last Aug. The Employment component also came in slightly higher at 51.9. After all, today's ISM Services report tells the same story as the ISM Manufacturing report released earlier this week. Businesses are likely regaining momentum in the US while pipeline inflation pressure is climbing.


US Nonfarm business productivity growth in Q1 came in at 1.7%, far above consensus of 1.0%. Though it's still below the 2.1% rate in Q4, it's nevertheless a pleasant surprise for the economy. Unit labor cost growth was a weak 0.6%, down from 6.2% from Q4. The tame labor cost growth tells another story comparing to the ISM reports and suggests reduced wage pressure and is inflation with moderation in core inflation data. US initial jobless claims fell more than expected by 21k to 305k which is the largest one-week decline in two months and left the total at its lowest level since the second week of Jan.

Technically speaking, dollar should have finished a brief short term consolidation and rally has likely resumed. Further upside should be seen, in particular against the weak Japanese yen. But with NFP in sight tomorrow upside may be limited today as traders will be cautious

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EUR/USD

Daily Pivots: (S1) 1.3563; (P) 1.3587; (R1) 1.3614;

EUR/USD's recovery was limited by mentioned 1.3621 resistance and fall from 1.3681 resumes by breaking through 1.3560 support. At this point, further decline is expected to follow to test short term rising channel support (now at 1.3535). As discussed before, firm break of this channel support will warn that whole rally from 1.2856 has already completed at 1.3681 and deeper decline should be seen to 1.3406/10 support first.

On the upside, above 1.3621 will suggest that the fall from 1.3601 have completed already and retest of this high could be seen. Note that a short term top should be in place in 1.3681 with bearish divergence condition in 4 hours MACD and RSI. Firm break above 1.3681 high is needed to confirm rally from 1.2865 has resumed. Otherwise, further consolidation is still in favor with risk of another fall remains.

In the bigger picture, now, with 1.3668 target met, risk of medium term reversal is also increasing. As discussed before, medium term up trend from 1.1639 is treated is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 is treated as resumption of the whole up trend from 1.1639. With such interpretation we'd expect risk of medium term reversal to increase significantly as EUR/USD enter into resistance zone between 1.3668 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. Hence, focus will then be on reversal signal.

However, sustained break of the short term channel support is needed to be the first warning of the completion of whole rally from 1.2865. Otherwise, EUR/USD's rise could continue to extend further to medium term rising channel resistance (now at 1.3816) and mentioned 1.3822 projection target. On the downside, break of the short term rising channel support will indicate the rise from 1.2865 has likely completed. Break of 1.3406/10 support will confirm such case and deeper decline should then be seen to 55 days EMA (now at 1.3380). More importantly, this will be the first warning that the rise rally from 1.2483 has completed, and thus, so is the whole up trend from 1.1639. Focus will then be back to medium term rising channel support now at 1.2977

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GBP/USD

Daily Pivots: (S1) 1.9844; (P) 1.9920; (R1) 1.9974;

Cable's recovery was limited by short term channel support turned resistance (now at 1.9550) and edges lower in early US session. As discussed below, with 4 hours MACD staying below signal line and negative, as well as short term rising channel support out, short term outlook remains mildly bearish. Break of 1.9864 support will confirm rise from 1.9183 has already completed at 2.0132. In such case, deeper decline should be seen to 1.9723/26 support first. On the upside, firm break of 2.0073 resistance will indicate the correction from 2.0132 has already completed and rally from 1.9183 has possibly resumed with retest of this high first.

In the bigger picture, we'd like maintain that risk of medium term reversal remains high and is increasing. Firstly, the whole up trend from 1.7047 is not clearly impulsive. One interpretation is that rally from 1.7047 ended with three waves up to 1.9024. Subsequent correction ended at 1.8090. Rally from 1.8090 has already met mentioned target of 100% projection of 1.7047 to 1.9024 from 1.8090 at 2.0067. Secondly, regardless of the larger trend, rise from 1.8090 can be interpreted as being a five wave sequence with first wave ended at 1.9142, second at 1.8517, third at 1.9913 and fourth at 1.9183. The channeling property supports this interpretation too. In such case, the fifth wave rally from 1.9183 has also met target of 61.8% projection of 1.8517 to 1.9913 from 1.9183 at 2.0046 too. With bearish divergence condition remains in weekly RSI and Daily MACD and key 2.0106 resistance (92 high) not decisively taken out, cable could be forming a top at the current price level.

On the downside, break of 1.9723/26 support will indicate that the rise from 1.9183 has completed and put rising channel support (now at 1.9494) back into focus. Firm break of the channel support will indicate that the whole rally from 1.8090 has completed and add much credence to the case that an important medium term top is already formed and put focus to 1.9183 low. However, sustained trading above mentioned 2.0106 resistance will dampen the above interpretation and indicates that underlying bullishness in cable is much stronger then we thought. Further medium term rally should then be seen towards 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677.

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USD/CHF

Daily Pivots: (S1) 1.2103; (P) 1.2145; (R1) 1.2176;

USD/CHF's retreat from 1.2188 was supported by 4 hours 55 EMA (now at 1.2087) and rebounds in early US session. As discussed before, since a short term bottom should be in place at 1.1993 with bullish divergence conditions in 4 hours MACD and RSI, further rally is still in favor and break of 1.2188 again will bring another rise towards 1.2282 cluster resistance (50% retracement of 1.2571 to 1.1993 at 1.2282). However, below 1.2092 again will indicate lengthier consolidation will come in first before another rise.

In the bigger picture, note that bullish convergence condition is also being displayed at in daily MACD and RSI, suggesting that the whole fall from 1.2571 has completed too, after meeting 78.6% retracement of 1.1878 to 1.2571 at 1.2026. Break of 55 days EMA (now at 1.2179) will add more credence to this case and bring further rally towards 1.2282 cluster resistance. However, note that weekly MACD remains below signal line which USD/CHF is still trading comfortably below 55 weeks EMA (now at 1.2358), medium term risk remains on the downside and the current rebound from 1.1993 could merely be part of a sideway consolidation to the whole fall from 1.2571.

Hence, focus will be on 1.2282 cluster resistance level. The original case is still in favor as long as this cluster resistance holds. That is the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Break of 1.1993 low will add more credence to this case and bring further decline to 1.1878 low.

However, strong break of 1.2282 cluster resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

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USD/JPY

Daily Pivots: (S1) 119.68; (P) 119.98; (R1) 120.44;

USD/JPY's rally continues further today by reaching as high as 120.37 so far. At this point, intraday bias remains on the upside as long as USD/JPY stays above 119.97 support. Further rally is expected to follow towards 122.17 high. Meanwhile, touching of 119.97 will turn intraday outlook consolidation and risk retreat towards 4 hours 55 EMA (now at 119.46).

In the bigger picture, note that firm break of falling trend line resistance (now at 119.30) and sustained trading above 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) indicates that a stronger rebound is underway. Also, price actions from 122.17 is probably developing into sideway consolidation to rise from 108.99 only, instead of as the third leg of the large scale consolidation that started at 121.38. In such case, a rest of 122.17 high could then be seen. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.

On the downside, a firm break below 117.60 support is needed to confirm that rebound from 115.13 has completed. This will save the case that rebound from 115.13 is merely a correction of the fall from 122.17, which should have then completed. In such case, deeper decline should be seen to retest 115.13 low.

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EUR/JPY

Daily Pivots: (S1) 162.74; (P) 163.05; (R1) 163.62;

EUR/JPY retreats mildly after making new record high of 163.59 earlier today. At this point, outlook remains unchanged. As discussed before, even though upside momentum is seen diminishing, further rally is still in favor as long as EUR/JPY stays within short term rising channel (support at 162.31). Next upside target will be 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64.

However, risk of short term reversal remains high as bearish divergence conditions remains in 4 hours MACD and RSI. Risk of short term reversal remains high. Sustained break of the short term rising channel support will warn that the whole rise from 150.75 has completed and bring deeper correction 159.60 support first.

In the bigger picture, EUR/JPY's strong close above medium term rising channel resistance (now at 162.05 suggests that strength of the current rise from 150.75 could be much stronger than we thought. But still, with the interpretation of the rise from 130.60 remains unchanged with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure, targeting 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 and could terminate there.

On the downside, break of the short term channel support will indicate that rise from 150.75 has completed and deeper correction should then be seen towards 55 days EMA (now at 159.15). Also, this will give a serious warning signal that the whole rise rise from 130.60 has ended. EUR/JPY should set to channel the medium channel support (now at 153.28) in case this EMA is taken out decisively.

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Main Economic Indicators of the world

Description on economic indicators


Balance of Payments

Definition: The balance of payments is a simple measure of the payments in financial capital that flow from one nation to another. Ifmore money flows in than out, one has a positive balance of payments -if more flows out than in, one has then a negative balance. The money flowing over the border is like other money paying for goods,commodities, real estate, services, securities. It's usually separated into:

• Current Account.
• Goods and services.
• Financial Account.Financial assets. (Stocks, Bonds, Foreign Direct Investments
• Capital Account.
• Non-financial assets

Balance of Trade

Definition: Balance of trade figures are the sum of the money gained by a given economy by selling exports, minus the cost of buying imports. They form part of the balance of payments, which also includes other transactions such as international investment. The figures are usually split into visible and invisible balance figures. The visible balance represents the physical goods, and invisible represents otherforms of trade, e.g. the service economy. A positive balance of trade is known as a trade surplus and consists of exporting more (in financial capital terms) than one imports. A negative balance of trade is known as a trade deficit and consists of importing more than one exports. Neither is necessarily dangerous in modern economies, although large trade surpluses or trade deficits may sometimes be a sign ofother economic problems. If the balance of trade is positive, then the economy has received more money than it has spent. This may appear tobe a good thing but may not always be so.



Beige Book Fed Survey

Definition: Officially known as the Survey on Current Economic Conditions, the Beige Book, is published eight times per year by a Federal Reserve Bank, containing anecdotal information on current economic and business conditions in its District through reports from Bank and Branch directors, and interviews with key business contacts, economists, market experts, and other sources. The Beige Book highlights the activity information by District and sector. The survey normally covers a period of about 4-weeks in duration, and is released two weeks prior to each FOMC meeting, which is also held eight timesper year. While being deemed by some as a lagging report, the BeigeBook has usually served as a helpful indicator to FOMC policy decisions on monetary policy.


Business Inventories and Sales

Definition: Business inventories consist of items produced and held for future sale.



Capacity Utilization

Definition: Capacity utilization consists of total industrial output divided by total production capability. The term refers to the maximum level of output a plant can generate under normal business conditions. A normal figure for a steady economy is 81.5 percent. If the figure reads 85 percent or more, the data suggests that the industrial production is overheating, that the economy is close to full capacity. High capacity utilization rates precede inflation, and expectation in the foreign exchange market is that the central bank will raise interest rates in order to avoid or fight inflation.



Capital Account

Definition: Balance of international transactions in financialcapital. The capital account is associated with the relationship between import and export capital, direct investment and loans, and also deals with securities investments such as repayment of principals of foreign debts, overseas investments, and by investments made by foreign enterprises.


Construction Spending


Definition: Measures the total amount of spending in the U.S. on all types of construction. The residential construction component is useful for predicting future national new homes sales and mortgage origination volume.

Consumer confidence


Definition: The Consumer Confidence index attempts to gaugeconsumers' feelings about the current condition of the economy and their expectations about the economy's future direction

Consumer Price Index

Definition: The consumer price index (CPI) gauges the averagechange in retail prices for a fixed market basket of goods andservices. The CPI data is compiled from a sample of prices for food, shelter, clothing, fuel, transportation and medical services that people purchase on daily basis.

Current Account


Definition: Balance of trade plus NET investment income & transfers. The difference between what the country earns and spends overseas. The current account more specifically deals with the daily recurring transactions in the ordinary course of business. It involves international receipts & payments including trading receipts & payments, service receipts & payments and unilateral transfers such as payment of royalties, repatriation of after-taxprofits & dividends, remittance of after-tax wages & other income by foreign employees and any payment of interest on foreign debts.

Durable Goods Orders

Definition: Durable goods orders consist of products with a life span of more than three years. Examples of durable goods are: autos,appliances, furniture, jewelry and toys.

This data is fairly important to foreign exchange markets because it gives a good indication of consumer confidence. Because durable goods cost more than non-durables, a high number in this indicator shows consumer's propensity to spend. Therefore , a good figure is generally bullish for the domestic currency.

Employment Cost Index

Definition: The Employment Cost Index measures wages and inflation and provides the most comprehensive analysis of worker compensation,including wages, salaries and fringe benefits. The ECI is one of the Fed's favorite quarterly economic statistics.

Employment Report - Labor Report



Definition: In the US, the employment report, also known as the labor report, is regarded as the most important among all economic indicators. The report provides the first comprehensive look at the economy, covering nine economic categories. Here are the three main components of the report:

Payroll Employment: Measures the change in number of workers in a given month and measures the number of jobs in more than 500 industries(ex-farming) in all states and 255 metropolitan areas. The employment estimates are based on a survey of larger businesses and counts the number of paid employees working part-time or fulltime in the nation's business and government establishments. This release is the mostc losely watched indicator because of its timeliness, accuracy and its comprehensiveness. It is important to compare this figure to a monthly moving average (6 or 9 months) to capture a true perspective of the trend in labor market strength. Equally important are the frequent revisions for the prior months, which are often significant.

Unemployment Rate: The percentage of the civilian labor force actively looking for employment but unable to find jobs. Although it is a highly proclaimed figure (due to simplicity of the number and its political implications), the unemployment rate gets relatively less importance in the markets because it is known to be a lagging indicator -- it usuallyfalls behind economic turns.

Average Hourly Earnings Growth: The growthrate between one month's average hourly rate and another's sheds light on wage growth and, hence, assesses the potential of wage-pushinflation. The year-on-year rate is also important in capturing the longer-term trend.

The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state and future direction of the economy. They also provide insight on wage trends and wage inflation. Fed chairman Alan Greenspan frequently talks about this data. By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, usually interest rates will rise, and bond and stock prices will fall. One weakness in this indicator is it is subject to significant revisions and large seasonal distortions

Existing Home Sales

Definition: Existing Home Sales is a measure of the selling rate of pre-owned single family homes, collected by the National Association of Realtors from 650 realtor associations.

Factory Orders

Definition: Factory orders refer to the total of durable and nondurable good orders.

FOMC Meeting

Definition: The Federal Open Market Committee is a twelve-member committee made up of the seven members of the Board of Governors and five Federal Reserve Bank presidents. It meets eight times per year to determine the near-term direction of monetary policy, such as setting guidelines for the purchase and sale of government securities and setting policy relating to System operations in the foreign exchange markets. These changes in monetary policy are now announced immediately after FOMC meetings. Most importantly, the Fed determines interest rate policy at FOMC meetings. Market participants speculate about the possibility of an interest rate change at these meetings, and if the outcome is different from expectations, the impact on the markets can be dramatic and far-reaching. The interest rate set by the Fed the federal funds rate serves as a benchmark for all other rates. A changein the fed funds rate, the lending rate banks charge each other for theuse of overnight funds, translates directly through to all othe rinterest rates from Treasury bonds to mortgage loans. It also changes the dynamics of competition for investor dollars: when bonds yield 10percent, they will attract more money away from stocks then when they only yield 5 percent. The level of interest rates affects the economy higher rates tend to slow activity; lower rates stimulate activity, a ripple effect that expands into all sectors of the economy

Gross Domestic Product

Definition: Gross Domestic Product (GDP) is the total value offinal goods and services produced within a country's borders in a year. It is one of the measures of national income and output. It may be used as one indicator of the standard of living in a country, but there maybe limitations with this view.

Housing Starts/Building Permits


Definition: An estimate of the number of housing units on which construction was started. Starting construction is defined as excavation for the footings or foundation, or the first shovel of dirt to break ground. (In response to natural disasters such as Hurricane Andrew in August of 1992, that definition has been expanded to a housing unit built on an existing foundation after the previous structure had been completely destroyed.) Housing starts are divided into single-family and multifamily (2+) units.

Beginning construction on a 100 unit apartment building, for example, is counted as 100 starts.

IFO

Definition: The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterise their situation as: good, satisfactorily or poor and their business expectations for the next six months as: more favourable, unchanged or more unfavourable. The balance value of the current business situation is the difference of the percentages of the responses: good and poor, the balance value of the expectations is the difference of the percentages of the responses more favourable and more unfavourable. The business climate is a transformed mean of the balances of the business situation and the expectations. For calculating the index values the transformed balances are all normalized to the average of the year 2000.

Implicit Deflator


Definition: The implicit deflator is calculated by dividing thecurrent dollar GDP figure by the constant dollar GDP figure. GDP implicit deflator is released quarterly with the respective GDP figure.

Index of Leading Economic Indicators

Definition: The Index of Leading Indicators consist of the following economic indicators:

• Average workweek of production workersin manufacturing.
• Average weekly claims for state unemployment.
• Neworders for consumer goods and materials
• Vendor performance (companies receiving slower deliveries from suppliers)
• Contracts and orders forplant and equipment
• New building permits issued
• Change inmanufacturers: unfilled orders, durable goods
• Change in sensitivematerials prices - Index of stock prices
• Money supply - Index ofconsumer expectations

This index is designed to offer a 6 to 9 monthfuture outlook of economic perfomance.

Industrial Production

Definition: Industrial production consists of the total output of a nation's plants, utilities, and mines. From a fundamental point of view, it is an important economic indicator that reflects the strength of the economy, and by extrapolation, the strength of a specific currency.

Institute for Supply Management (ISM) Index


Definition: The Institute for Supply Management (ISM) Index is acomposite diffusion index of national manufacturing conditions. Readings above 50 percent indicate an expanding factory sector. The index is calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 400 manufacturing firmsrepresenting 20 industries and all 50 states. The survey queries purchasing managers about the general direction of production, orders, inventories, employment, vendor deliveries and prices.

ISM Index: Manufacturing

Definition: A national manufacturing index based on a survey ofpurchasing executives at roughly 300 industrial companies. Signals expansion when the PMI is above 50 and contraction when below.



ISM Services Index


Definition: Also known as Non-Manufacturing ISM. This index is based on a survey of about 370 purchasing executives in industries offinance, insurance, real estate, communications, and utilities. It reports business activity in the service sector.

Jobless Claims

Definition: New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility.

Machine orders-Japan

Definition: Machine Orders Data (also known as Machine Tool OrderData) is a figure issued by Japan Machine Tool Builders Association(JMTBA) every month. It serves as one indicator of the Japanes eeconomy. In the forex market, the release of such data is often followed by sharp change in currency exchange rate.

Monetary Base -Japan

Definition: The monetary base is the "Currency Supplied by the Bankof Japan" and is defined as follows. Monetary base = Bank notes in Circulation + Coins in Circulation + Current Account Balances (Current Account Deposits in the Bank of Japan)

Monetary Policy



Definition: An attempt to influence the economy by operating on such monetary variables as the quantity of money and the rate of interest. The nation's central bank is usually involved with monetary policy.

Money Supply

Definition: The money supply is basically defined as the quantity of money (money stock) held by money holders general corporations,individuals and local governments

M1

Definition: A category of the money supply that includes all coins,currency and demand deposits (that is, checking accounts and NOW accounts).

M2

Definition: A category of the money supply that includes M1 in addition to all time deposits, savings deposits and non institutional money-market funds.

M3

Definition: A category of the money supply that includes M2 in addition to all large time deposits, institutional money-market funds, short-term repurchase agreements and certain other large liquid assets.

National Association of Purchasing Managers-NAPM CHICAGO




Definition: The Chicago PMI (officially known as the BusinessBarometer) is a monthly composite index based on opinion surveys ofmore than 200 Chicago purchasing managers regarding the manufacturing industry. The survey responses are limited to three options: slower, faster and same. As such, the index will not capture if a component is growing but at a much slower rate or vice versa. The index is a composite of seven similarly constructed indexes including: new orders, production, supplier delivery times, backlogs, inventories, prices paid, and employment. New orders and orders backlog indices indicate future production activity. It signals factory-sector expansion when it is above 50 and contraction when below it. The index is seasonally adjusted for the effects of variations within the year, differences due to holidays and institutional changes. Because it is an opinion survey, it is often influenced by respondents' perception of current events, as opposed to actual hard data. Also, it does not capture technological and production changes, which make it possible for production to expand, while employment contracts. Because the Chicago PMI is released the day before the ISM, it is watched in order to predict the more important ISM report, which is in itself a good leading indicator of overall economic activity. It frequently moves markets.

New Home Sales


Definition: The New Home Sales report shows the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends, and economic momentum signaling consumer purchases of furniture and appliances. Simply, the volume of sales indicates housing demand. Also, the monthly supply of homes serves as an input into the level of housing pressure.

However, when analyzing sales trends, one must remember to take into account unusual weather and seasonal effects

NY Empire State Index


Definition: The New York Fed conducts this monthly survey of manufacturers in New York State. Participants from across the state represent a variety of industries. On the first of each month, the same pool of roughly 175 manufacturing executives (usually the CEO or the president) is sent a questionnaire to report the change in an assortment of indicators from the previous month. Respondents also give their views about the likely direction of these same indicators six months ahead. This index is seasonally adjusted using the Philadelphia Fed's seasonal factors because its own history is not long enough with data only going back a couple of years.

Personal Income

Definition: Personal income is simply the income received by individuals, non-profit institutions, and private trust funds. This indicator is vital for the sales sector. Without an adequate personal income and a propensity to purchase, consumer purchases of durable and nondurable goods are limited.

Philadelphia Fed Survey


Definition: A composite diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey is widely followed as an indicator of manufacturing sector trends since it is correlated with the NAPM survey and the index of industrial production.

Producer Price Index

Definition: The PPI gauges the average changes in prices receivedby domestic producers for their output at all stages of processing. The PPI data is compiled from most sectors of the economy, such as manufacturing, mining and agriculture.

Productivity

Definition: The economic measure of efficiency summarizing the value of outputs relative to the value of inputs

Purchasing Managers Index-PMI

Definition: The Index is widely used by industrialized economies toassess business confidence. Germany, Japan and the UK use PMI surveys for both manufacturing and services industries. The numbers are arrived at through a series of questions regarding Business activity, NewBusiness, Employment, Input Prices, Prices Charged and Business Expectations. In addition to the headline figures, the prices paid components is highly scrutinized by the markets for evaluating pricing power and inflationary risks.

Retail Sales

Definition: The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences.Retail sales include durable and nondurable merchandise sold, andservices and excise taxes incidental to the sale of merchandise.Excluded are sales taxes collected directly from the customer. It also excludes spending for services, a large component of consumer expenditures. Retail sales is a the first picture of consumer spending for a given month. Retail sales are often viewed ex-autos, as autosales can move sharply from month-to-month. Also, gas and food component changes are often a result of price changes rather than shifting consumer demand. Retail sales can be quite volatile and theadvance reports are subject to large revisions.

Tankan Survey

Definition: An economic survey of Japanese business issued by the central Bank of Japan, the survey is conducted to provide an accurate picture of business trends of enterprises in Japan, there byc ontributing to the appropriate implementation of monetary policy . The report is released four times a year in April, July, October and mid-December.

Tertiary Industry Index-Japan

Definition: The tertiary index measures activity in six industries: utilities, transport and telecommunications, wholesale and retail, finance and insurance, realestate and services.

Treasury International Capital -TIC

Definition: These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.

Unemployment Rate

Definition: The percentage of the people classified as unemployed as compared to the total labor force

Wholesale Trade

Definition: Wholesale Trade is the dollar value of sales made and of inventories held by merchant wholesalers. It is one of the components of business inventories. Statistics include sales, inventories, and stock/sale ratios, collected via mail-out/mail backsurvey of about 7,100 selected wholesale firms

ZEW


Definition: The ZEW works in the field of user-related empiricale conomic research. In this context it particularly distinguished its elfnationally and internationally by analysing internationally comparative issues in the European context and by compiling scientifically important data bases. The ZEW's duty is to carry out economic research,economic counseling and knowledge transfer. The institute focuses on decision-makers in politics, economics, and administration, scientists in the national and international arena as well as the interested public. Regular interviews on the situation on the financial markets and business-related service providers as well as large-scale annual studies on technological competitiveness of and innovation activities in the economy are representative of the different types of top icalinformation provided by the ZEW. The ZEW is subdivided into the following five research fields: International Finance and Financial Management; Labour Economics, Human Resources, and Social Policy; Industrial Economics and International Management; Corporate Tax ationand Public Business Finance; Environmental and Resource Economics, Ecomanagement.