In the US, the Annualized number of new single-family homes that were sold during the previous month increased by 17K. It’s a leading indicator of economic health with a wide-reaching ripple effect.

In Australia, Producer Price Index (PPI), monthly report that measures the change in the price of finished goods and services sold by producers increased by 0.5%. It’s a leading indicator of consumer inflation – when producers charge more for goods and services the higher costs are usually passed on to the consumer.

For more on the Aussie, read the AUD/USD forecast.

In Japan, Adjusted Merchandise Trade Balance increased by 0.12T, the monthly report that measures the difference in value between imported and exported goods during the reported month. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers.

More in Japan, Corporate Services Price Index (CSPI) deceits by 0.1%  monthly report that measures the change in the price of services purchased by corporations. It’s a leading indicator of consumer inflation – when corporations pay more for services the higher costs are usually passed on to the consumer.

That’s it for today. Happy forex trading!

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Key inflation figures will rock the Aussie in the upcoming week. Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD.

AUD/USD chart with support and resistance lines on it. Click to enlarge:

In a rather calm week, the Aussie rose, enjoying the basic advantages of the economy, with the great employment situation shining. This week, the focus will be on the next rate decision:

1. PPI: Published on Monday at 1:30 GMT. Producer prices, like consumer prices, are released only once per quarter in Australia, making it a very important release. In the first quarter, prices surprised with a jump of 1%, significantly higher than expected. The recent rise in commodity prices will probably trigger a rise of 1.5% in producer prices this quarter.
2. CB Leading Index: Published on Tuesday at 1:00 GMT. The Conference Board creates this index out of 7 economic indicators with many of them already released. Nevertheless, the release still impacts the Aussie, especially as it’s released as the week begins. After two months of small rises (0.3% and 0.1%), it’s now expected to remain unchanged.
3. CPI: Published on Wednesday at 1:30 GMT. This major event will set the tone for the next rate decision, and will rock the Aussie. Q1 saw consumer prices rise by 0.9%, exactly as expected. This triggered the recent pauses in rate hikes. This time, inflation is expected to be similar, with a rise of 1%. A surprising jump will force a rate hike in the near future. Also note the Trimmed Mean CPI (Core CPI in other countries), which is expected to rise by 0.8%, similar to other countries.
4. Private Sector Credit: Published on Monday at 1:30 GMT. More credit in the private sector means more economic activity. Credit has been expanding in the past 7 months, with a strong 0.5% rise last month. Another expansion is expected this time, but it will probably be more modest – 0.4%.

AUD/USD Technical Analysis

EUR/USD now trades at 1.2875 after rising from the area of 1.2740. These three indicator sent the dollar down:

1. Empire State Manufacturing Index: This second tier indicator score around 20 points each month, showing stable production. It even reached 31.9 points at one point. Today, it was expected to slide from 19.6 to 18.3 points. Instead, it made a plunge to 5.1 points, the lowest score in 7 months, and quite close to a negative score, meaning worsening economic conditions.
2. PPI: Producer prices were released at the same time. Being a key factor for inflation and a future rise in interest rates, PPI fell by 0.5%, much more than expected. With prices dropping, interest rates will remain low, and this weakens the dollar.
3. Philly Fed Manufacturing Index: This manufacturing indicator is more important than the first one, and it was published at 14:00 GMT. It fell last month to 8 points and hurt the dollar badly. It was now expected to rise to 10, but it score only half – 5.1 points – the same weak score as the Empire State index.

The dollar could cling to one positive figure – weekly jobless claims finally made a significant drop below 430K. But the figure, 429K, was dismissed by the markets due to one time changes in hiring temporary workers at factories. The seasonal adjustments went wrong, and economists said that number will “get back to normal” only in a few weeks time.

Dollar Drops Across the Board

The dollar lost ground across the board. The risk factor didn’t play a role – we saw the “safe haven” Japanese yen gain together with the more vulnerable,more risky European currencies, as well as the commodity currencies.

The Euro took a breather after making nice rises, and now it got a new boost.

At the vicinity of 1.2880, EUR/USD is now at a resistance line marked by a support line that was set back in 2009. If this line is broken, the next level of resistance is the round number of 1.30.

The next line of resistance is more important: 1.3110 was a strong support line back in May. When the European debt issues accelerated, this line was broken and a recovery of the Euro met resistance at that point. So, this is an important line. Even higher, 1.3267 serves as the next line of resistance.

Looking down, a drop of the pair will find support at 1.2670, followed by 12520 and 1.2460. The Euro enjoys American weakness and not its own strength. The problems in Europe are far from over, with Portugal receiving a fresh credit downgrade.

The big test for the Euro is next Friday, July 23rd, when the bank stress tests will be released. This is a key event in the never ending debt issues that hurt the common currency.

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In the US, American Federal Reserve nomination vote will focus on the appointment of 3 FOMC members. The US Senate will vote on Sarah Bloom Raskin, Peter Diamond and Janet Yellen, in a vote that will shape future decisions for quite a while. If they aren’t approved, or if many questions are raised, the dollar could be hurt.

Later in the US, The producer price index in May fell 0.3 percent after dipping 0.1 percent in April. A drop of 0.2 percent is expected now. But at the core level, the PPI gained 0.2 percent in May, matching the rate in April. Another gain of 0.1% is expected now.

More in the US, Unemployment Claims forecasted another small drop to 453K after a surprising decrease to 454K last week. Further improvement below 430K will give a serious boost to the job market.

Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities is forecasted to slow down with industrial output flattening at 0.0% in June, compared with the 1.3% increase in May.

Empire State Manufacturing Index surveying 200 manufacturers is forecasted to reach 18.9 points following the drop from 31.9 to the level of 19 points in April and May however this is still a positive reading.
Capacity Utilization Rate measuring percentage of available resources being utilized by manufacturers, mines, and utilities expected to rise 0.1% to 74.2%.

Finally in the US, Philly Fed Manufacturing Index expected to rise to 11.4 points following a steep drop from 21.4 to 8 points in May.

In Canada, Manufacturing Sales predicted to advance 0.4% from 0.2% in May. Manufacturing sales have risen in 9 of the past 10 months and have been trending upward since the low reached in May 2009.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, European Central Bank Monthly Bulletin reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision, and provides detailed analysis of current and future economic conditions from the bank’s viewpoint.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Great Britain, David Miles an external member of the monetary policy committee of the bank of England speaks at the Business Forum in Bristol could determine a rise in interest rates.

Read more about the Pound in the GBP/USD forecast.

In Switzerland, The Swiss ZEW Expectations Survey came in significantly lower, with a 17.5 reading in June on May’s 40.5 reading. Expectations of economic contraction on the back of Euronation austerity measures are cited as cause. A further drop is expected.

In Australia, MI Inflation Expectations fell to 3.4% in the previous quarter from 3.6%. A drop under 3% will weaken the Aussie and New Motor Vehicle Sales predicted a small rise following the sharp drop from 9.0% to -3.0% in May.

For more on the Aussie, read the AUD/USD forecast.

In New Zealand, Consumer Price Index forecasted 0.5% rise in the second quarter following a disappointing 0.4% rise in Q1 when 0.6% was expected.

In Japan, Tertiary Industry Activity measuring change in the total value of services purchased by businesses is foreseen a 0.7% drop following the 2.1% rise in April.

That’s it for today. Happy forex trading!

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In the US, The trade deficit in the U.S. widened in April to $40.3 billion the highest in more than a year as exports and imports both declined. A drop to 39.4B is expected now.

More in the US, Federal Budget Balance expected to decrease deficit by 54.3B to -81.6B due to massive policy measures undertaken.

Finally in the US, IBD/TIPP Economic Optimism index predicted to rise to 47.9 points after an unexpected 46.2 point drop in May.

In Canada, Trade surplus expected to continue its growth to 0.4B from 0.2B in May.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, German ZEW Economic Sentiment Index could provide further evidence of an economic slowdown in the largest economy in the Euro-zone with a reading of 25.2 compared with 28.7 in the previous month. The ZEW index is poorly correlated to economic growth but is often seen as an important indicator of turning points in market sentiment.

More in Europe, French CPI expected to remain 0.1% and German Wholesale Price Index predicted to rise to 0.4% from 0.3% in May.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Great Britain, Consumer Price Index, Inflation is expected to pull back to 3.2% y/y from 3.4% y/y in May, but still stubbornly remaining above the Bank of England’s 3.0% ceiling as well as Core CPI expected to drop to 2.7% from 2.9% in May.

More in Great Britain, Dr Andrew Sentance an external member of the monetary policy committee of the bank of England speaks at the Thames Valley Chamber of Commerce, in Reading. His comments may determine a short-term positive or negative trend.

Later in Great Britain, Nationwide’s consumer confidence index fell to 65 points in May, the lowest reading since June last year, from an upwardly revised reading of 75 in April. A further drop to 64 points is expected now.

Finally in Great Britain, Department for Communities and Local Government House Price Index measuring change in the selling price of homes expected to rise to 10.3% – 0.2% more than in May. Retail Price Index predicted to drop to 4.9% from 5.1% and CB Leading Index is likely to remain 0.6%.

Read more about the Pound in the GBP/USD forecast.

In Switzerland, producer price index, which measures the change in price of goods and raw materials purchased by manufacturers, rose 0.3% during May despite economists’ expectations for a flat index. A small drop to 0.2% is expected now.

Australia’s NAB business confidence survey fell to a reading of 5 in May from 13 in April, with the decline attributed to global financial market instability and sharp declines in the AUD and equity prices.  A further drop is expected now.

For more on the Aussie, read the AUD/USD forecast.

In New Zealand, Retail Sales,  Following a three month disappointment, a Rise of 0.6% is now foreseen and Retail sales also predicted to gain 0.6% after 0.2% dip in the previous month.

In Japan, Revised Industrial Production a leading indicator of economic health expected to remain -0.1%. Household Confidence predicted to drop to 42.4 points, 0.4 points less than in the previous month.

That’s it for today. Happy forex trading!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

EUR/USD extended its gains in the past week, edging up to new levels. But is this sustainable? The pair cannot rally solely on weak US data. We have a major German survey this week. Let’s start:

That’s it for the major events this week. Stay tuned for coverages on specific currencies.

Further reading:

• For EUR/USD, check out  the Euro/Dollar Forecast.
• For GBP/USD  (cable), look into the British Pound forecast.
• For the Australian dollar (Aussie), check out the AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the NZD/USD forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.

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Last Friday, GBP/USD enjoyed the weak Non-Farm Payrolls in the US to rise to new levels. Since then, it has traded in an almost perfect range – from 1.5080 to 1.5240. This 160 pip range saw three tops and three bottom throughout the week, without breaking out. But the situation doesn’t look good for the Pound:

Recent economic data is mostly negative. British Services PMI disappointed with a drop to 54.4 points, worse than expected. Halifax HPI, which shows the change in house prices, fell by 0.6% instead of rising by the same scale. Manufacturing Production fell short of expectations as it rose by only 0.3%, and last month’s drop was revised – 0.8% instead of 0.8% – double.

But the biggest disappointment came from interest rate issues. First, the Bank of England didn’t raise the rates. While this was the consensus, this came after we saw that one member voted to raise the rates last month – Andrew Sentance’s vote came on rising inflation that missed the government’s target month by month.

The decision not to raise the rates was later backed with the PPI figures – producer prices dropped last month by 0.2% when expectations stood on a rise of 0.1%. So, maybe the inflationary pressures aren’t too strong?

Similar to the Euro, it seems that the British Pound mostly enjoyed the US dollar’s weakness rather than its own strength. A drop will find immediate support at 1.5050, followed by 1.4870 and 1.4780. A breakout to the upside will meet resistance at 1.5350, followed by 1.5530 and 1.5833.

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In the US, Non-Farm Payrolls: The number one event in forex was worrying last month. A big jump was recorded – 432K, but this came almost only from the public sector the government’s hiring for the decennial census. Private sector growth was weak. One point of light was seen though – the unemployment rate unexpectedly dropped to 9.7%. Without government aid, Non-Farm Payrolls are now expected to correct and drop by 103K. The unemployment rate is expected to rise to 9.8%.

More in the US, Average Hourly Earnings a leading indicator of consumer inflation gained 0.3% in May.  A lower increase of 0.1% is expected now.

Finally in the US, following an eight consecutive month rise, Factory Orders expected to drop by 0.5% indicating deceleration in the US market.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, The unemployment rate across the 16 countries that share the euro hit a record 10.1 per cent in April, with almost 16 million people out of work a similar figure is expected now. Italian Monthly Unemployment Rate anticipated 8.9%, 0.2% higher than in May.

More in Europe, Producer Price Index expected to drop from 0.9% to 0.3%. The Producer Price Index released by the Eurostat is an index that measures the change in prices received by domestic producers of commodities in all stages of processing (crude materials, intermediate materials, and finished goods). A high reading is seen positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Great Britain, Halifax HPI reached -0.4% in May, weaker than the 0.35 expected and -0.1% prior reading a similar figure is expected now.

More in Great Britain, Construction PMI: an index based on surveyed purchasing managers in the construction industry expected to reach 58.6 points – 0.1 higher than the previous month reflecting favorably on the market.

Read more about the Pound in the GBP/USD forecast.

That’s it for today. Happy forex trading!

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The troubled Euro expects inflation and employment figures in the upcoming week. Here’s an outlook for the events that will move the Euro, and an updated technical analysis for EUR/USD.

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

In the past week, the Euro got a positive indicator from the German Ifo Business Climate, but the impact was very limited. This week has more significant indicators. Let’s begin:

1. German CPI: Published on Monday. After showing some signs of picking up, inflation returned to normal in the past two months, rising by 0.1% last month, after a drop in the same small scale beforehand. The initial version of the CPI is collected from the various German states throughout the day. A small rise is expected this time.
2. M3 Money Supply: Published on Monday at 8:00 GMT. The amount of money in circulation usually rises, but the drop seen in the past 3 months is another evidence of less economic activity and an upcoming double-dip recession. Another drop of 0.1% is expected this time.
3. German Unemployment Change: Published on Wednesday at 7:55 GMT. This important figure shows that Germany continues to be the locomotive of the Euro-zone. The number of unemployed people squeezed by 45,000 people, for a third month in a row. Another small drop is expected now. Note that the actual figure was usually better than early forecasts.
4. CPI Flash Estimate: Published on Wednesday at 9:00 GMT. Following Germany’s first release for the inflation figures, the figure for the whole continent is also published. The annualized level of inflation rose to 1.6% last month – still under control. Only a jump above 2% could be significant for the Euro, and this isn’t expected now.
5. Unemployment Rate: Published on Friday at 9:00 GMT. The all-European unemployment rate is very problematic – 10.1%. The area of 10% has been with us for the past 7 months and this isn’t about to change. Any rise will be a burden on the Euro, and only a fall to a single digit figure will boost the common currency.

EUR/USD Technical Analysis

More links will be added when available.

In the US, Building Permits expected to rise this month by 20,000 units following the unpredicted drop to 0.61M in the previous month while Housing Starts anticipated to drop by 20,000 reaching 0.65M.

Later in the US, Producer Price Index predicted to decrease from -0.1% to -0.5% and Core PPI also expected to drop from 0.2% to 0.1% ensuring low inflation rates.

More in the US, Federal Reserve Chairman Ben Bernanke speaks about “Financial Reform” at the Conference on the “The Squam Lake Report: Fixing the Financial System,” in New York. This can affect the currency.

Finally in the US, Capacity Utilization Rate expected to continue its consistent growth reaching 74.6% which may affect inflation rates in case of additional increase, Industrial Production is also expected to climb to 0.9% following the positive rise from previous month and Crude Oil Inventories predicted to increase by 0.3M from -1.8M in May.

In Canada, BOC Governor Mark Carney speaks at the Area Chamber of Commerce, in Charlottetown.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, Consumer Price Index is expected to remain 1.6% as in May and the Core CPI is also anticipated to maintain 0.8%.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Great Britain, BOE Governor Mervyn King speaks at the Mansion House, in London and may affect the currency.

More in Great Britain, Claimant Count Change measuring the change in the number of people claiming unemployment-related benefits during the previous month is expected to drop -23.2K which is 3,900 higher than the previous month.

Later in Great Britain, Average Earnings Index representing 3-month moving average expected to rise by 0.4% since May 4.0% indicating a rise in consumer inflation.

Read more about the Pound in the GBP/USD forecast.

In Switzerland, ZEW Economic Expectations a survey rating relative 6-month economic outlook for Switzerland is expected to remain around 40.5 points.

In Australia, MI Leading Index is hoped to maintain the rating of 0.9% as in the previous month.

For more on the Aussie, read the AUD/USD forecast.

In Japan, Bank of Japan Monthly Report is issued may affect interest rates and provide information regarding future monetary policy.

That’s it for today. Happy forex trading!

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