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Who Wins the Least Ugly Contest? A Tour Of the Factors Affecting the Majors

This past month has upset the dynamics in the currency market as we have moved away from the sell USD, buy higher yielders/commodity currencies trade and instead view all of the majors with some suspicion as there are problems to be seen in each of them. In this new dynamic traders are pitting the majors in an “who is least ugly contest.” We run down the factors affecting each currency and who is in the lead for the prize.

This chart shows stocks have more downside risk

It looks like the correction that started in commodities is now spreading to the stock market. Take a look at the weekly chart of the S&P 500 below. It also shows the RSI, a momentum indicator, at the bottom. It does look like stocks are losing momentum.

Weak Economy May be Good for the Dollar

In the recent days we’ve seen a lot of economic data that indicates the U.S. economy is slowing down. Not too long ago, bad economic data was bad for the dollar and good for commodities. Traders assumed the Fed would just keep printing money if the economy started to slow down.

Forex Notes 5.20.2011 – Explosion of Swissie Strength on a Friday?

The Swiss Franc has been very strong, and as a “funding” currency, it has done better than the USD and JPY. It has been stronger than both, with relatively less volatility. There was some flattening in May across the board, but it seems like the market for CHF is starting this Friday strong. Did the bears just fled? Let’s take a look at the USD/CHF, EUR/CHF, GBP/CHF, and CHF/JPY…

JPY Weaker on GDP, EUR Sideways on Spain Auction, GBP Climbs Post Retail Sales

The Yen was weaker overnight as its economy was confirmed to have fallen into a recession in the 1st quarter following its release of GDP data. In Europe, the Euro traded sideways, with the main event being a mixed Spain debt auction. In the UK, strong retail sales gave the GBP a bounce after weakening yesterday amid slightly dovish BOE minutes.

This Stock Indicates Commodity Weakness Ahead

Everyone knows that stocks are leading indicators. In other words, they tend to antecipate future events. Right now, there’s one stock that’s saying commodities still have more downside risk.

JPN Down on M&A Speculation, GBP Jumps on Knee-Jerk Reaction to CPI, EUR Sideways

In overnight trading, a major theme was Japanese Yen weakness as traders speculation that Japanese companies were getting ready to buy foreign rivals which would mean they need to sell Yen. In the UK, higher than expected inflation caused the GBP to rally. In Europe, concerns about Greece continue and we await the end of the finance ministers meeting, but debt auctions from Spain, Greece and Belgium helped to calm some nerves keeping the EUR mainly sideways.

USD/JPY Bucks Recent Downtrend as Yields Move in Favor of USD

When looking at the USD/JPY its important to have one eye constantly on Treasury yields, and the spread between US and Japanese government bonds. In today’s session we saw a swing in favor the yield widening as US yields went up and Japanese yields went down, making US assets more attractive for Japanese investors. This will be an important story to monitor going forward after the FOMC announcement.

Forex Notes on CHF-Strength in EUR/CHF, GBP/CHF, USD/CHF, and CHF/JPY

The EUR/CHF maintains it bearish momentum in a medium term range. The GBP/CHF was in a bullish breakout from a narrow range, but is now threatening to break out of the opposite side. The USD/CHF continues to make fresh lows as this is pair consists of an anemic greenback, and strong Swissie. Finally The CHF/JPY is consolidating and showing intent of continuing a prevailing trend…

GBP/CHF in a Range Breakout Targeting 1.48

The GBP/CHF has been in a range roughly between 1.4630 and 1.4540, although the support extended lower, and the range shaped into an expanding triangle or wedge. There was a bit of squeeze seen since last week, although it was not long enough to be technically considered a volatility squeeze. We have a break above 1.4630 in the European session, but there is a throwback heading into the US session…

Looking Ahead to Tomorrow’s Global Session: NFP, Manufacturing from China, US, UK, & ECB and Irish Banks

The end of the week will be a busy one as we get manufacturing data from China, the US, UK and Japan. In Europe we continue to have these battling dynamics between higher inflation and the anticipation for the start of the ECB rate tightening campaign, while at the same time Ireland has just concluded its banking sector stress tests showing more money is needed for Irish banks. In the US, we await March’s NFP as well as a speech by Fed Pres. Plosser and the ISM manufacturing index.

Strong Equity Gains, Feds Move Towards Normalization Further Weakens JPY vs USD

As global equities climbed higher today, the upbeat market sentiment helped spur gains in commodity currencies like the AUD and CAD, while the prospect of the Fed normalizing its monetary policy post QE2 has continued to push the USD higher against the Yen.

Yen Comes Under Pressure vs USD on Interest Rate Differentials

The USD/JPY rallied higher today, climbing to 82.20 in early NY trading, as we see yields in the US climbing higher, widening the spread between US and Japan, helping to widen interest rate differentials. As the Yen weakens, it could mean the post earthquake low near 76.20, was a true bottom for the USD/JPY pair. If the theme of normalization in the US starts picking up steam then the bullish move in the pair should accelerate.

GBP/CHF Targets 1.44 and 1.4150 After Bearish Breakout

The GBP/CHF is broke below the 1.49 support, which was also the 61.8% retracement level. The 4H chart shows a extension of 161.8% of the 2/27 rally. We might pause here a little, and see a pullback. So far it has been a very week pullback. Let’s see if the support at 1.4690 holds for a pullback towards 1.49, or maybe the 3/11 low at 1.4850…

GBP/CHF Starting a Bearish Impulse Wave

The Swissie strengthened across the board today. We are seeing the GBP/CHF develop a bearish impulse wave, like to be in wave 5. The RSI shows bearish momentum breakout. The market also broke below an important 200SMA and the 1.5500 support area. In the short and intermediate term, we are bearish…

Forex Video Technical Update 2/14/2011 – There’s no Love for the Euro on this Valentines Day

Cupid was absent in the Euro currency markets. Euro-crosses such as EUR/USD, EUR/JPY, and EUR/CHF and EUR/GBP all fell sharply. Against the commodity currencies, the decline was sharpest in the EUR/CAD, but also seen int he EUR/AUD, and EUR/NZD. Let’s give the Euro charts some love and see if it has a chance to rally tomorrow…

Forex Video Technical Update 2/8/2011 – Is the Euro in a Pullback or a Bullish Continuation?

The Euro showed strength today after sliding to end last week and to start this week. We have correctly anticipated a rally in the EUR/USD that is treated as a corrective rally from 1.35. The EUR/GBP is also rallying sharply in the near-term after cracking 0.84. Let’s also take a look at the EUR/JPY, EUR/CHF, EUR/CAD, EUR/AUD, EUR/NZD…