Forex Analysis Part 1

Today’s biggest event in the Forex market in our opinion is that the USD is going into a slight slump, with the Initial Jobless Claims decreasing today by 11.000, which is a good development for investors looking for a more bullish change in the USD. However, if we take into account that the Durable Goods Orders, with and without Transportation have both shown a decrease in the market, this could lead to a weaker dollar. Furthermore, coupled with Pending Home Sales, this makes us believe that, currently, it is better for investors to expect a bearish US dollar and act accordingly by selling off their USD before these changes in the market take effect. It would be especially beneficial to USD investors to sell before tomorrow, as the price index and the annualized Gross Domestic Product analyses both show that this trend of decreased value will continue tomorrow as well.

If we look at the yen, however, things look much better for market buyers. Now, although current indicators show that goods and services, the unemployment rate and the overall jobs to applicants ratio will remain more or less the same, we see a positive trend when we look at both Manager Over Managers industrial production and Year Over Year overall household spending in Japan, which, based on our experience, will lead to a positive increase in the worth of the JPY. Our advice is to buy yen for a tidy increase in profits by the closing of markets tomorrow.

Moving on to the pound sterling, we have seen a slight bearish trend in the market, as the Year Over Year GDP fell a bit short, while the Quarter On Quarter GDP made a slight increase. These two indicators, coupled with the GfK Group Consumer Confidence Index, which will see less consumer confidence, falling from a 2 to 1.0, indicates that it would be wise to sell as much pound sterling as possible, as no significant indicators show any signs of increase in its value.

A slight bullish trend can be seen when it comes to the euro, as well as the Canadian dollar. The retail sales trends in Germany are balancing themselves out, with a 0.3% increase in Year Over Year sales, but a 0.3% decrease in Manager Of Managers sales. This stalemate is broken, however, with the YoY Consumer Price Index of the Eurozone, which gives a modest boost to the euro’s value. The CAD, on the other hand, gets a nice increase based on the MoM GDP of Canada. We would advise a long position on the CAD and EUR for today and tomorrow.

Lastly, let us look at the Australian dollar and the Swiss franc. The CHF has seen a negligible bearish trend, as the KOF Leading Indicator shows a more pessimistic turn in its survey. This should not leave anyone worrying over this fluctuation, as the value should remain around the same level. The AUD has seen a rise this last week and it too should remain around the same value. We would advise a more watchful look at the CHF and AUD, as their trends could change somewhat, but not in any significant direction.

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Author: Ben Prescott
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