6- FOREX TRADING AS A BUSINESS OPPORTUNITY | ForexGen

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Dollar Rally Relentless as Euro Drops | ForexGen

Another night of pain for dollar bears as the greenback once again reaffirmed its status as the current king of the hill in the FX markets gaining strongly across the board buoyed by continued declines in oil and gold prices. Gold dropped below800 pressuring the Australian dollar which was also affected negatively by lower than expected GDP results which came in 2.7% versus 2.9% projected. The Aussie fell to 8235 in overnight trade losing another 100 points to the buck before recovering by North American open.

However it was the pound that continued to feel the full brunt of the dollar rally hitting a 2 ½ year low as it plunged below the 1.7700 at one point in early London trade. Ironically enough the economic data from UK was actually surprisingly positive with consumer sentiment rebounding to 52 from 49 expected while services PMI reading was considerably better rising to 49.2 from 47 forecast. Nevertheless on balance the UK data continues to reflect serious deterioration in the country's economy and trades anticipate lower rates from the BoE in the near future.
The key question going forward is will the BoE accede to political pressures and lower rates at tomorrow's MPC meeting? For now the market consensus calls for no change with rates remaining at 5.00%.

ForexGen | Majors Continue Fall

The dollar extends gains in the markets rising on the back of weak nations while currently the U.S. is the most stable economy out of the major economies. Investors are now focusing on the rising greenback as they have the most confidence on this currency since it is the only that is not betting for a future rate cut like major currencies.

The EU Zone released its retail sales for the month of July coming in at -0.4% lower than the expected reading of 0.1% yet higher than the prior reading of -0.6%, this data deteriorated the euro further as their GDP annual second quarter preliminary reading was released showing that it was revised lower to 1.4% from 1.5%. The EUR/USD is currently trading at 1.4394 while recording a high of 1.4517 and a low of 14387. We see the support for the pair at 1.4370 with a resistance at 1.4450.

The UK released its PMI services for the month of August coming in at 49.2 higher than both the prior reading of 47.4 and the expected reading of 47.0. The release of this data did not help the cable much as it remains weak in the market as the state of the UK economy is further weighing down the currency. The GBP/USD is currently trading at 1.7718 between the support of 1.7640 and the resistance of 1.7810. The pair recorded a high of 1.7831 and a low of 1.7666.
Investors are risk averse as they fear the falling UK and EU economy as they sell the high yielding currencies like the pound and the euro and buy the low yielding currency like the yen, in which we call unwinding of carry trades against crosses. The yen is still slipping versus the U.S. dollar. The USD/JPY is currently traded at 108.66 while recording a high of 109.08 and a low of 108.43. For the pair we see an intra day support at 108.40 and a resistance at 108.80.

Euro-Area Retail Sales | ForexGen

Euro-area Retail Sales Actual , Expected 0.0%, Previous -0.9% (revised from -0.6%)
Release Explanation: Measures the value of sales at the retail level. A currency will be impacted by this report over time as it reveals the strength of the public in their ability, or desire, to spend.

Trade Desk Thoughts: The volume of retail trade was down by 0.4% in July, lower than analyst expectations, while sales were down by 2.8% from last year. Last month’s number of -0.6% was revised lower to -0.9%. The largest decrease was seen in the food, drinks and tobacco sub-index, which declined 0.9% from last month and by 3.4% from one year earlier.

Forex Technical Reaction: The two releases helped the euro extend its losses seen during the overnight session. The pair has fallen more than 130 pips and is now testing TheLFB S2.

Cable Lowest In 2 1/2 years | ForexGen

The pound fell to its lowest level in 12 years against the currencies of the UK's major trading partners as the UK released more pessimistic economic data. A report showed that British consumer confidence fell to its weakest level in more than 4 years. Sterling also fell to a record low against the euro on bets the Bank of England will resist cutting interest rates tomorrow, delaying an economic recovery. On Wednesday the Nationwide building society said its index of consumer confidence held steady last month. However, the sentiment of those surveyed was that it was a bad time to make large purchases. Cable was trading at 1.7703 at 8.37am GMT
The dollar leapt to an 11 month high against a number of leading currencies on Wednesday as investor's unwound positions in higher yielding currencies like the Euro and the Aussie. There was more upside for the greenback as crude dipped below $110 a barrel. As oil dropped, investors have unwound bets favouring currencies with higher interest rates.

Meanwhile the Euro dropped to its lowest level in more than 7 months against the dollar on speculation the European Central Bank, and its President Trichet, will express concern regarding the Euro zone economy this week. With Wednesday's retail sales figures coming out below expectation, this is another bad sign for the Euro Zone.

'The outlook for European economies has deteriorated a lot in a very short time span. It's only natural to speculate about when officials will have to lower rates,' said deputy general manager of foreign exchange in Tokyo at Nomura Trust. The euro declined to $1.4412, the lowest since Jan. 22, before trading at $1.4430 as of 8:21 a.m. in London