Mar 14, 2010

Forex Crunch Impact of Clock Shift On Forex

Forex Crunch Impact of Clock Shift On Forex

Impact of Clock Shift On Forex

Posted: 14 Mar 2010 03:08 AM PDT


In the US and Canada it’s already summer – at least according to their clocks – they’ve just moved to daylight saving time. European countries make this shift only in two weeks from now. This difference has an impact on forex trading. Let’s see how.

The London and New York sessions are the most intensive and usually the most volatile in the forex market. Both cities are major global financial centers. The London session is between 8:00 to 17:00 GMT and the New York session is between 13:00 to 22:00 GMT.

During four hours, between 13:00 to 17:00 GMT, the sessions overlap. The European afternoon / American morning is the busiest time. During these four hours, major figures are released in the US: most of them at 13:30 and 15:00 GMT.

After the shift of the clock in the US and Canada, as seen in Forex Factory’s calendar, the overlapping period is increased from 4 to 5 hours – from 12:00 to 17:00 GMT. This means that the major action will start earlier for Europeans / will end later for Americans. This extra hour of high volume and high volatility is of high importance for day traders. More action.

Special impact

This two week period of high volatility will probably have a stronger impact on one specific pair: GBP/USD. Most British economic indicators are released at 9:30 GMT. The DST shift makes the British releases significantly closer to the American ones, leaving less time for traders and analysts to digest and react to British news before American ones come in. This will probably lead to more volatility in GBP/USD.

European releases are scattered throughout the European morning, but there are cases in which important figures are released at 10:00 GMT, making them closer to American releases. The best example is this Tuesday, when the ZEW economic sentiment and European CPI are released at 10:00 GMT, and American Housing Starts and Building Permits are released at 12:30 GMT. This smaller gap between the releases, all of them of high importance, will provide more action than usual to EUR/USD.

Another currency to note in this context is the Canadian dollar. Also Canada’s clock was moved. In Canada, some publications are made earlier than in the US: at 12:00 GMT. Now it becomes 11:00 GMT. This Friday, Canadian CPI will be released at this time, close to European and British events, making the Canadian crosses more volatile.

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EUR/USD Outlook – March 15-19

Posted: 13 Mar 2010 10:35 AM PST


EUR/USD made some gains, enjoying greenback weakness. The upcoming week contains 7 events that will move the Euro. Here’s an outlook for these events and an updated technical analysis for EUR/USD.

EUR/USD chart with support and resistance lines marked. Click to enlarge:

EUR USD forecast

In the middle of the week, I wrote about bullish signs for the Euro within the range. Indeed, EUR/USD closed higher, but didn’t break any major levels. Will it stay in the range? Break? Let’s start the review. The technical analysis will follow:

  1. Employment Change: Published on Monday at 10:00 GMT. This is a very late figure – released almost a quarter after the the quarter ends. It still has some impact on the Euro. 5 consecutive quarters of job losses will probably be followed by a sixth one.
  2. ZEW Economic Sentiment: Published on Tuesday at 10:00 GMT. This major economic indicator deteriorate rapidly in the past 5 months, hurting the Euro each time. The German version of this survey has a stronger impact. It’s expected to drop once again, from 45.1 to 43.3 points. The all-European number is expected to remain almost unchanged at 40.1 points.
  3. CPI: Published on Tuesday at 10:00 GMT and overshadowed by ZEW. Prices are very stable in Europe, and this doesn’t assist the Euro at all. According to the initial, flash release, year-over-year consumer prices stand at 0.9%. Core CPI stands at 0.8%. Both numbers will probably be confirmed. The release of the ZEW survey and the CPI at the same time means a volatile markets.
  4. Axel Weber talks: Begins talking on Wednesday at 10:10 GMT. Weber is the leading candidate to replace Jean-Claude Trichet as the president of the ECB. The German media already began a campaign for him. So, his words become increasingly important. Hi speech in Bonn will probably shake the Euro.
  5. Current Account: Published on Thursday at 9:00 GMT. Europe’s current account provides a point of light – in the past two months Europe enjoys a surplus in the overall difference between exports and imports of services, incomes and goods. The surplus is expected to rise from 1.9 to 2.9 billion. The figure relates to February.
  6. Trade Balance: Published on Thursday at 10:00 GMT. The trade balance is the goods share in the current account. This release refers to January, so it’s a late figure – less impact. Europe’s surplus is expected to drop from 7 to 5 billion.
  7. German PPI: Published on Friday at 7:00 GMT. After a strong and surprising rise of 0.8% last month (double the expectations), Germany’s producer prices are expected to rise by only 0.1% this time. This is the last inflation indicator for this week.

EUR/USD Technical Analysis

The Euro began the week by reaching down to the 1.3530 support line, but soon made a move upwards, breaking through 1.3680 and temporarily breaking 1.3780 before closing at 1.3768.

Some of the lines were added on last week’s outlook. The current range is between 1.3680 to 1.3780. Note that these are minor lines. Also 1.3530 is a minor support line.

The Euro is bound between two major lines – 1.3423 which was a bottom many months ago and just tested recently and on the upside. A break of these lines will indicate a long term trend for the pair.

Above 1.3850, 1.40 and 1.42 are additional resistance lines. Below, 1.3080 is a support line in the distance.

I am now neutral on EUR/USD.

It seems that the Greek crisis, although still not resolved, is fading away from the eyes of forex traders. Also the technical indicate stability – 1.3423 wasn’t broken. We’ll probably see more range trading.

This pair receives many interesting articles on the web. Here are my favorites:

  • Larry Greenberg examines the pause in the dollar’s moves and looks at the big picture.
  • Casey Stubbs describes the narrow range with his 4 hour charts.
  • Dan Cook at TheLFB looks at the technicals.
  • The Geek Knows reviews the week and looks forward.

Further reading:

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USD/CAD Outlook – March 15-19

Posted: 13 Mar 2010 09:50 AM PST


The Canadian dollar made a significant move at the end of the week, and approaches parity with the US dollar. 6 events will shape the direction of the loonie, with the most important ones kept for Friday. Here’s an outlook and an updated technical analysis for USD/CAD, now on lower ground.

USD/CAD chart with support and resistance lines marked. Click to enlarge:

Canadian dollar

Canada’s unemployment rate fell again, surprising analysts. Although it wasn’t too far from early expectations, this gave the loonie the necessary push. Inflation and retail sales promise another action-full Friday for the Canadian dollar. Let’s start:

  1. Labor Productivity: Published on Tuesday at 12:30 GMT. This is a quarterly release, hence its importance. In the previous quarter, productivity fell – this means that workers got more for their work – pushing prices higher. A small rise in productivity is predicted this time. A lower figure is better for the loonie.
  2. Manufacturing Sales: Published on Tuesday at 12:30 GMT, and overshadowed by the previous release. Sales have risen in the past 4 months, but last time they rose in a smaller scale than expected. This figure provides a good reflection of the Canadian economy – steady growth. It’s expected to rise modestly this time.
  3. Wholesale Sales: Published on Wednesday at 12:30 GMT. Zooming out to the wholesaler level, we’ve seen a similar picture: 4 months of small rises. Last month’s 0.7% growth is predicted to be followed by a similar rise this time, supporting the loonie.
  4. Foreign Securities Purchases: Published on Thursday at 12:30 GMT. In the past two months, foreigners have shown growing confidence in the Canadian economy: a net purchase of over 10 billion was reported. This time, the net figure is expected to be under 10 billion.
  5. CPI: Published on Friday at 11:00 GMT. This is a key figure for raising the rates. Without prices pressure, there’s no urge to raise the rates. Three months ago, prices picked up in Canada, but they dropped afterwards, returning to stability. A rise of 0.4% is expected in consumer prices, and a rise of 0.3% in Core CPI, which is closely watched by the central bank.
  6. Retail Sales: Published on Friday at 12:30 GMT. Just 90 minutes after the CPI release, another important indicator is due. Retail sales are expected to rise by 0.6% after the 0.4% rise last time, and core retail sales are predicted to rise by 0.5%. Consumer confidence, seen in sales volume, is important for pushing the Canadian dollar higher.

USD/CAD Technical Analysis

After breaking below 1.04 almost two weeks ago, USD/CAD continued south, very slowly, and on Friday managed to break the stubborn 1.02 line. Lower lines have been added on last week’s outlook.

USD/CAD is now bound between 1.02 and and parity – 1.0000. Looking up, 1.04 is the next line of resistance, serving as both a support and a resistance line many times in the past.

Above, 1.0780 is the border of the range that characterized the loonie for a long time. Even higher, 1.0850 is the next line of resistance.

Looking down, parity is the ultimate round number. It also was a technical barrier in the past. USD/CAD will probably struggle with this line.

Over the cliff, the next line below is 0.98, which was a support line back in the summer of 2007. Even lower, 0.97 is the next line of support.

I remain bearish on USD/CAD.

As seen in the last employment figures, the Canadian economy is in the right direction, and supports a stronger currency. Reaching parity with the greenback is a big challenge though.

Further reading:

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AUD/USD Outlook – March 15-19

Posted: 13 Mar 2010 09:02 AM PST


The Aussie reached higher ground this week. The upcoming week consists of the meeting minutes of the last rate decision and a few more events. Here’s an outlook for Australian events, and an updated technical analysis for AUD/USD.

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

AUD USD forecast

This time, employment figures weren’t outstanding, only OK, generally within expectations, after four months of surprises. The Aussie dipped only temporarily, and didn’t lose the important levels it secured earlier in the week. OK, let’s start the review. The technical analysis will follow:

  1. Malcolm Edey talks: Starts speaking on Sunday at 22:00 GMT, in a conference in Sydney. As RBA Assistant Governor, Dr. Malcolm Edey has a significant influence on the decisions that are made by Australia’s active central bank. It isn’t clear whether there will be a pause in rate hikes, and this is the first opportunity to get hints this week about where the wind is blowing.
  2. Monetary Policy Meeting Minutes: Published on Tuesday at 00:30 GMT. The last rate decision was expected - a rise of 0.25% in the interest rate. As aforementioned, the next moves aren’t clear. By seeing the different members’ opinions in the last decision, we might get more hints. This release will surely shake AUD/USD.
  3. Housing Starts: Published on Wednesday at 00:30 GMT. Although being a late release, coming after the Building Permits figure is released, this quarterly number still has an impact on the markets. Last quarter saw a leap of 9.4% in starts. This time, a more moderate rise of 6.7% is predicted.
  4. MI Leading Index: Published on Wednesday at 23:30 GMT. The Melbourne Institute provides an “umbrella indicator” for the economy. Seven straight rises will probably be followed by an eighth one, as the Australian economy is doing well.
  5. Guy Debelle talks: Starts talking on Thursday at midnight GMT. The last hint about future policy and rate hikes comes from another RBA Assistant Governor – Dr. Guy Debelle. He’ll speak in a conference in Melbourne and might provide more action.

AUD/USD Technical Analysis

The Aussie began the week with a break above 0.9090 and kept to its gains during the week, and was bound by 0.92. Range trading in a new range.

Note that some of the lines were modified since last week’s outlook. Above 0.92, the next line of resistance is 0.9327. This is a very strong line that sent the Aussie down many times. The only breach of this line was at the beginning of November, when AUD/USD reached 0.94 – this is the next resistance line.

Below 0.9090, 0.8980 is a minor support line, being followed by 0.8735, which was the Aussie’s low in December.

Even lower, 0.8567 was a support line before AUD/USD went to the current highs, and also February’s low.

I remain bullish on the AUD/USD.

The Australian economy continues to be strong, as seen in the employment figures. There’s room for more rises.

Further reading:

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GBP/USD Outlook – March 15-19

Posted: 13 Mar 2010 08:35 AM PST


The Pound enjoyed the dollar’s weakness to rise this week, but still under important resistance levels. The upcoming week consists of important employment figures among other events. Here’s an outlook for British events and an updated technical analysis for GBP/USD.

GBP/USD chart with support and resistance lines marked. Click to enlarge:

British Pound forecast

Mervyn King didn’t make public appearances this week. This could explain the Pound’s strength. We’ll get to hear him this week through the meeting minutes and through his colleagues. Let’s start the review. The technical analysis will follow:

  1. Rightmove HPI: Published on Monday at midnight GMT. This is Britain’s first house price indicator, and it’s also released early in the week. After falling for a few months, this index showed an acceleration in prices, rising by 3.2% last month. A more modest rise is expected this time.
  2. CB Leading Index: Published on Tuesday at 10:00 GMT. Most of this indicators components have already been released. Nevertheless, it can still move the Pound. The leading index slowed down last month, rising by only 0.4%. An insignificant rise is expected this time.
  3. Employment data: Published on Wednesday at 9:30 GMT. After two months of drops in the number of unemployed people, we had a big rise last time – 23,500. This time, the Claimant Count Change is predicted to rise by 8,700 people, weighing on the Pound. This figure relates to February. At the same time, the Unemployment Rate for January will be released. Despite being a late figure, it’s highly quoted by the media and also shakes the Pound. A rise from 7.8% to 7.9% is expected.
  4. MPC Meeting Minutes: Published on Wednesday at 9:30 GMT, together with employment figures. The last rate decision didn’t include any surprises – the interest rate and the Quantitative Easing program remained unchanged. Since Mervyn King didn’t rule out further money pumping  through the QE program, we’ll search for hints about this in the meeting minutes. In addition, hints for future policy will also be echoed in this release.
  5. Public Sector Net Borrowing: Published on Thursday at 9:30 GMT. The British government borrows lots of money from the public. Last month, a drop in borrowing was expected, but it didn’t happen. This hurt the Pound. Also Fitch and the central bank voiced concerns about the debt. Borrowing is expected to rise from 4.3 to 14.5 billion this time, weighing on the Pound.
  6. CBI Industrial Order Expectations: Published on Thursday at 11:00 GMT. The Confederation of British Industry surveys 550 manufacturers and has shown a curb in pessimism. The score is expected to rise from -36 to -34, still in the negative zone, reflecting expectations for lower sales volume.
  7. Andrew Sentance talks: Starts talking on Thursday at 16:45 GMT, in a conference in London. Sentance is an external BOE MPC member. His past speeches had a significant impact on the Pound, and this will probably happen again.
  8. Paul Tucker talks: He starts speaking on Friday at 10:35 GMT in a conference in Brussels. As deputy governor, Tucker is an influential person that accompanies Mervyn King in parliament appearances. Speaking on Friday, Tucker will probably move the Pound.

GBP/USD Technical Analysis

The Pound began the week with a small rise, reaching 1.52 before dipping down to 1.4870, a line that it dipped to last week as well. A slow recovery followed, and it touched 1.5220 before closing at 1.5202.

I’ve added the past week’s boundaries as new lines. They weren’t there last week. So, the current range is 1.4870 to 1.5220. The outer limits are stronger.

1.5350 is a strong resistance line. A break of this line two weeks ago signaled the Pound’s collapse. Looking down, 1.4780 is a strong line of support, serving as such in the collapse and also serving as such way back in the past.

Looking lower, 1.44 was a support line in May 2009, and is now the next significant support line after 1.4780.

Above, a break above 1.5350 will set 1.5833 as the next resistance line. There are many more above this line, but they are too far now.

I am bearish on GBP/USD.

The long term outlook continues to be negative. The British exit of recession is mostly due to a revision of Q3 data, and not real, convincing growth. The UK has yet to show economic strength before the Pound rises.

Further reading:

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