Forex Analysis

  AUD/NZD fell hard on Tuesday, but managed a bounce towards the end of the day as traders came into the market to support it. The truth is that the 1.25 level has been defended, and we might see a bounce from here. This will only be a chance to sell this pair again unless we find ourselves back above the 1.32 at some point. Until that area is broken to the upside, we like selling rallies.

The USD/CAD pair fell on Tuesday, as optimism spread through financial markets on better than expected housing data from the United States, moreover, strong earnings from several U.S. companies boosted demand for higher yielding assets, which pushed crude oil prices to rise, and accordingly providing the CAD with momentum to push the USD/CAD pair lower. Meanwhile, the Bank of Canada on Tuesday announced it left the benchmark interest rates unchanged at 1.00%, nonetheless, the BOC signaled that interest rates must be raised in the future in order to control rising inflation risks, although the BOC signaled that weak growth in the United States and the ongoing European debt crisis have been the main reasons behind the BOC’s decision to keep rates unchanged. The BOC will release its monetary policy report on Wednesday, which should help shed more light over the recent developments, while the U.S. will release the existing home sales index, and accordingly, we should expect fluctuations to continue to dominate...

The USD/CAD pair fell on Tuesday, as optimism spread through financial markets on better than expected housing data from the United States, moreover, strong earnings from several U.S. companies boosted demand for higher yielding assets, which pushed crude oil prices to rise, and accordingly providing the CAD with momentum to push the USD/CAD pair lower. Meanwhile, the Bank of Canada on Tuesday announced it left the benchmark interest rates unchanged at 1.00%, nonetheless, the BOC signaled that interest rates must be raised in the future in order to control rising inflation risks, although the BOC signaled that weak growth in the United States and the ongoing European debt crisis have been the main reasons behind the BOC’s decision to keep rates unchanged. The BOC will release its monetary policy report on Wednesday, which should help shed more light over the recent developments, while the U.S. will release the existing home sales index, and accordingly, we should expect fluctuations to continue to dominate...

On Tuesday, the pound showed advance against the dollar as hopes that EU leaders will be able to put a plan to avoid Greek default boosted demand on higher-yielding currencies. The British economy lacked fundamentals therefore the pair followed the general sentiment in the market as the dollar showed decline against a basket of major currencies despite the rise in U.S. housing starts to 629,000 in June from 549,000 in May, according to data released on Tuesday. On Wednesday, at 08:30 GMT, attention will be toward BoE minutes release which is expected to show another split among policy makers which is expected to be the same as the previous months.  The minutes for June's rate decision pushed the sterling to the downside as it showed more consensus among BoE policy makers regard keeping lose monetary policy. In July, the same voting is expected to take place with 7-2 for interest rate and 8-1 for APF.   In the US, eyes will be on MBA...

On Tuesday trading, the dollar slipped against a basket of major currencies yet it advanced against the Swiss franc as hopes that European leaders will reach an agreement regarding the Greek second bailout damped demand on safe havens, specifically the franc which has been the most favorable safe haven recently especially due to panics resulting from euro area debt crisis as a result of the proximity of Switzerland from euro zone economies. Bond selling by Greek and Spanish governments boosted some confidence in markets before European leaders meeting this week.  On Wednesday, eyes will be on MBA mortgage applications for July 15 at 11:00 GMT while will be followed by existing home sales at 14:00 GMT. Existing home sales report is predicted to advance 2.6% from the prior 3.8% drop. The main focus this week is on housing data from the US, where housing starts rose to 629,000 in June from 549,000 in May, according to data released on Tuesday.   The dollar is expected...

The EUR/USD moved higher on Tuesday with the easing jitters in the market and the battered dollar on the back of the debt ceiling debate. Tuesday was a good day for the euro as the currency managed to unwind some losses on eased jitters and optimism that the leaders might be close to resolving the crisis and helping Greece to stem the contagion risk. The sentiment in the market was also supported by positive US housing data and unexpected in German ZEW current situation index for July, which eased fears on growth. The main support though for the sentiment was upbeat earnings that lifted stocks and eased the fears. On Wednesday, the focus will remain on the debt developments in the United States and the euro area as the summit nears in Brussels and the deadline for Congress approaches. Germany will start the data at 06:00 GMT with the June Producer Price Index which is expected flat on the month in line with May...

The European periphery continues to come under pressure with yields of Italian and Spanish debt trading at stressed levels while threats of a US rating downgrade has prevented the US dollar from making substantial gains. The Canadian dollar looks set for further gains given market positioning and increased inflationary pressures. Today’s Key Economic Data Events: EUR – German ZEW Economic Sentiment – 09:00 GMT Expectations: -11.8. Previous: -9.0. Today’s German ZEW survey is expected to show declining economic forecasts as the European debt crisis weighs on future sentiment of analysts and investors. The euro is susceptible to events surrounding the debt crisis and public comments by European leaders as Thursday’s European summit approaches. ECB President Jean-Claude Trichet was firm in his opposition to any selective default by Greece. Initial resistance for the EUR/USD comes in at the 100-day moving average at 1.4290. Support is found at last week’s low of 1.3835. USD – Building Permits – 12:30 GMT Expectations: 0.61M. Previous: 0.61M. US Housing numbers are forecasted...

The Euro rebounded today, as equities in Europe rallied on the back of strong profits from Novartis, and we had positive results from IBM helping US futures as well as commodities, bringing some risk appetite to the market. The AUD, GBP as well as the EUR were stronger versus our safe haven currencies. Here’s a quick round-up of the important stories as they pertain to the EUR. 1. Spain Debt Auction Spain sold 4.4 billion euro ($6.2 billion) of 12- and 18-month T-bills, which was close to the top of its range of 3.5 billion to 4.5 billion euro, with demand higher for the longer dated paper. While borrowing costs at the auction shot up compared to the last time Spain offered similar dated maturities, it was still a relief for the market as it shows demand is still there for Euro-zone periphery debt. The Treasury sold 3.8 billion euros of the 12-month T-bill, paying an average yield of 3.702 percent compared with 2.695 percent at...

The USD/JPY pair traded in a narrow range early Tuesday near its highest level in four months, where the Japanese currency had enough momentum during the last two months to keep its gains against the dollar. The European sovereign debt crisis still has its negative effect on financial markets, where investors keep focusing on safe haven investments including the Japanese yen and greenback. Furthermore, the USD/JPY pair has been trading in a dangerous area, where investors are worried from another intervention from the BOJ in the currency market to prevent the yen from further strength against the dollar and other major rivals. The upcoming period could witness more volatility in the financial market, as the outlook for the U.S. economy become gloomier with the deterioration of the labor sector and the threat from a possible downgrade as Congressional leaders still debate the debt-ceiling. The Japanese economy will start Wednesday at 05:00 GMT to with the final reading of Coincident Index for May, where the...

The New Zealand dollar continues its upside movement after the strong CPI increased expectations that the RBNZ is to rise the interest rate during the third quarter to tame inflation. The Kiwi has moved opposite the bearish movement across the market which grabbed the market's attention, where investors increased their demand for the New Zealand dollar on higher rates expectations. We can see that the Kiwi moves in a narrow range as the fears still dominate the sentiment because of the European debt crisis, where all eyes focus on the actions to ease the crisis by euro area leaders when they meet on Thursday. The NZD/USD pair will move in a narrow range until the next Euro-Zone meeting this week that to discuss the financial stability of the Euro area as a whole and stem the worsening crisis and the contagion risk. On Wednesday, the U.S. economy will take the lead at 14:00 GMT with the existing home sales for June, where the prior...