Forex Yellow Pages

British Pound (BPM8):

The BP opened higher at 1.9805 against a weaker Dollar, higher oil prices and inflation concerns that should keep rates ‘unchanged’ at the June 4-5 MPC meeting. A less than expected decline in Retail Sales helped prices bounce to 1.9820, before a DX bounce on the better than expected Jobless Claims sent the BP lower. Prices slid to a morning Lo of 1.9748, before bouncing into the afternoon session. As the DX rose, the BP retraced to a daily Lo of 1.9744, before closing the session at 1.9749, up 100 tics. The s/t trend remains ‘positive’ w/ firm momentum indicators. Traders will key off the DX reaction to Existing Home Sales, before leaving for the Holiday weekend. Longs should tighten ‘stops’ or buy ‘puts’ to reduce exposure. A higher open should find Resistance at 1.9828 and 1.9908, while an open below 1.9739 may find Support at 1.9659 and 1.9570. Read more…

by Scott Owens

FX Engines

The “well-chosen example� of the perfect trade as shown on a chart is too often the basis for system building. When that system inevitably breaks down, the trader returns to the charts desperately searching for a picture that tells a compelling story. Instead of repeating this damaging cycle, traders must realize that system building is a methodical process with clear steps, most of which occur without the distortion created by charts.

Content

ANALYSIS

• Understand why chart-based systems fail.
• Learn the steps essential to system building.

ACTION

• Use charts as an aid, not the foundation, of system building.
• Create a wide array of systems and observe their performance.
• Use multiplied historical tests to find hidden enhancements for existing systems. Read more…

Dollar Index (DXM8):

The DX opened higher at 73.58 and rose to a morning Hi of 73.66 ahead of the CPI report. A lower than expected drop in the ‘core’ rate to +0.1% m/m, and +2.3% y/y suggested that inflation may be easing and rate increases may not have to be implemented as soon as origninally thought. Prices slid to a morning Lo of 73.39 and bounced into the afternoon session and climbing towards the close of 73.565, up 13 tics. The s/t trend remains ‘positive’ w/ firm momentum indicators. Will slowing inflation take the need of a rate increase off the table? Odds of keeping rates ‘unchanged’ at 2.00% at the June 25th FOMC meeting increased to 90%. Higher equity prices in Japan may entice carry-traders to seek higher yields, which could weigh on the DX ahead of a number of economic reports, most notable would be Jobless Claims. A lower open may find Support at 73.30 and 73.04, while an open above 73.65 should find Resistance at 73.91 and 74.25.

Canadian Dollar (CDM8):

The CD opened higher at 1.0022 and rose to a morning Hi of 1.0033, Read more…

Written by Terri Belkas and David Song, DailyFX.com

The US dollar swayed as investors continued to feed their risk appetite, leading the higher-yielding commodity currencies higher. As a result, the low yielding Yen took the biggest loss against the greenback, with the Swiss franc following behind as the pair rose to trade in the 1.044 range. Against the European currencies, the US dollar continued to lose its footing as mounting inflationary concerns in Europe took hold of investors. As a result, both the Euro and British pound advanced against the US dollar as the pairs rose to 1.553 and 1.957, respectively.

A speech by Chicago Fed President Evans lowered the growth prospects for the US economy as he highlighted the growing weakness in household spending, and stated economic growth to remain sluggish throughout 2008. However, Fed President Evans did go on to say that he expects economic growth to recover by 2009, and expects inflation to fall within 1.5 to 2 percent by 2010. On the economic front, the US Budget Surplus fell to $159.3B from $177.7B as the government continued to dish out more money for military and governmental agendas, with corporate tax receipts falling more than expected as it dipped 15 percent this year. Read more…

Less than an hour after the European Central Bank announced the benchmark rate would be held at 4.00 percent, President Jean Claude Trichet delivered his usual commentary to an attentive public. Over the past few weeks, speculation that the policy authority would take a more dovish approach to its rate decisions had grown after a number of leading indicators have shown a stunting in the region’s strong pace of economic growth and data that suggests inflation trends are finally pulling back to tolerable levels.

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Written by Terri Belkas, Currency Analyst

Following a week of major US economic indicators, the only significant release pertinent for the US Dollar specifically this week will be ISM Services, which could be surprisingly strong. Meanwhile, employment data out of Australia and Canada could shake up the commodity dollars, while rate decisions from the Bank of England and European Central Bank may not be as market-moving as usual.

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Written by Kathy Lien, Chief Strategist of DailyFX.com

This week, economic data has had zero impact on the British pound.

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