InformedTrades

The FOREX Market
- July 10 2008. Email - Info@globalfxradio.com

The USD was mixed today falling relative to the AUD after strong employment data came out last night. The AUD is strong across the board. The JPY was weaker even as Corporate Goods price data was higher than expected as well as Current Account figures that were much better. Given the strength of the Dow the JPY lost ground throughout the US session. The USD was stronger though against the GBP as the economic data continues to deteriorate in the UK as house price data came in much weaker than expected. The MPC left rates unchanged. Rates are clearly on hold in our opinion and will most likely look to fall towards the end of the year if and only if, inflation abates! French industrial production was also weaker but the EUR was the winner today rising against most majors except the CAD which continues to strengthen as well.

The bigger story today in the US at least was Fannie Mae, Freddie Mac, Lehman Brothers and Bernanke/Paulson testifying before congress. Bill Poole former St. Louis Federal Reserve President said in an interview that Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules. The fair value of Fannie Mae assets fell 66 percent to $12.2 billion, data provided by the Washington- based company show, and may be negative next quarter, Poole said. ``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in the interview yesterday. This certainly isn't good. There was other comments regarding the Banking industry in the US that was positive. Incredible as it seems Mr. Lewis of the Bank Of America indicated BAC is well capitalized and won't need to raise additional capital. In addition he said the dividend was safe. What a joke! As we have said many oh times, ITS NOT OVER! To say the US Mortgage industry has bottomed out is completely negligent. Foreclosures rose 53% in June, come on! Treasury Secretary Paulson did say FNM and FRE capital levels were adequate though. Shares of FNM, FRE and LEH were down huge in the early US session but managed a nice comeback throughout the day.

Bottom Line to the Forex markets? We continue to range trade as some currencies were stronger against the Greenback and others weaker. This should continue in our opinion as data and news takes center stage. GE's earnings tomorrow should be an MME to the equity markets, the Carry trade and the USD. In our opinion the number will come out inline with estimates, their number won't be too good but also not be too bad. the only interesting thing we can note is that they announced a spin off the day before earnings. Something smells!

Regarding Dr. Bernanke and Paulson testimonies. From listening to hours of it one came away feeling like they don't want to say it and don't want to predict it BUT another failure is coming. Basically Bernanke was caught off guard regarding the Bear Stearns meltdown and had to bail them out but is should not happen again. Maybe thats another reason Lehman fell hard today. It's not over! Should the USD meltdown from this news? Absolutely not, the only new news was the FNM and FRE insolvency. Other than that they said nothing new. They called for more regulation and a way for banks and investment houses to go under without a systemic risk to the financial system.

There was some good news from the US today as weekly jobless claims came in better than expected at 346k. Hard to imagine the jobs situation getting better, this was a blip on the way to 7.5% Unemployment in our opinion.

There is some decent MME's in the next 24 hours that should lead to more USD indecision. CAD in particular could see continued strength should the employment report tomorrow come in better than expected.




Commodity, Equity and Bond Markets

Oil looks like it may have bottomed today. Looking for Oil to make a push back to old highs. Will change our Bias should Oil close below 134. Look out below on that day!

Gold continued to rally after holding key support at 920. A close below 919 and we would have to change our bias but given that the EUR, CHF, AUD and CAD were strong today and near their recent highs we look for this to be a pullback in an uptrend. Looking for Gold to see 975 near term should 955 be given.

Bond yields bounced a bit today but the trend is lower in Yields in our opinion as the US will not be raising rates anytime soon. This weekly Jobs report being an anomaly is key. Michigan sentiment could be a Bond and JPY MME.


Equity prices were higher today as Rohm and Haas got bought out by Dow Chemical. Banks were firmer even in the aftermath of the FNM and FRE news, they may have bottomed for now as well. Just a bounce in a summer long downtrend in our opinion. Equity prices may bounce from here but not much. GE earnings the key to tomorrows equity action.

Economic Numbers Next 24 Hours-
JPY -
12:30am JPY Industrial Production m/m (r) 2.9% 2.9%. MME
1:00am JPY Household Confidence 31.5 34.1

AUD - Nada

NZD - Nada

GBP - Nada

EUR - Trichet speaks in Asian Hours, watch for any news of rates.
2:00am EUR German WPI m/m 1.0%. MME if way off estimate.

CHF - Nada

USD - 8:30am USD Trade Balance -62.5B -60.9B. Looking for better number after Oil taken out.
8:30am USD Import Price Index m/m 2.0% 2.3%
9:55am USD Prelim UoM Consumer Sentiment 55.5 56.4. Should be a worse number as Oil made new highs.

CAD -
7:00am CAD Employment Change 10.0K 8.4K. MME's. Could be better than estimate.
7:00am CAD Unemployment Rate 6.1% 6.1%
8:30am CAD Trade Balance 5.2B 5.1B
8:30am CAD New Housing Price Index m/m 0.1% 0.0%

Geo-Politics
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Charting - Daily Candle Analysis
EUR/USD - Nice 5 day break out today. Looking for EUR to grind higher with a close below 156.40 to change our bias. BIAS - NORTH
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

USD/JPY - Pair can't seem to break out above 107.80 and hold. GE's earnings are key for Dow Jones and this pair tomorrow. Numbers due out tonight could be MME as well. BIAS - SOUTH
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

USD/CHF - 103.50 Now becoming huge resistance. A breach of 1.0230 could see a retest of 1.0140. BIAS - SOUTH
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

GBP/USD. - Holding its own as USD sells off. 1.9710 a key spot to hold. BIAS - Neutral as EUR/GBP breaking higher.
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

AUD/USD - Pair coming back nicely on great economic data. Close above 9650 and could see a close on week at new highs.. BIAS -NORTH
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

NZD/USD - Looks good unless we breach .7520. A close above .7620 and could see .7700 near term. BIAS NORTH
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

USD/CAD - Nice follow through form yesterday's sell off. Tomorrow's data key along with 1.0050. Could see .9950 easy if good report tomorrow. TRADE IDEAS FOR OTHER CAD PAIRS AS WELL. Bias - SOUTH
TRADE IDEA FOR THIS PAIR FOR PREMIUM SUBSCRIBERS ONLY!

DXY or USD Index - Close below .7260 not looking very good for this index. Not sure of a meltdown yet but not looking good. GE earnings could be key. BIAS - SOUTH

CHART OF THE DAY - GBP/CAD. not a good close at all. broke uptrend channel line from May lows. A good Jobs report looking for pair to break 1.9865 and then 1.9700. Weak UK numbers and strong EUR/GBP help the pair as well. EMA's crossing. Over 2.0010 would have to change Bias. SOUTH



broke channel uptrend line

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