U.S. GDP Report Likely to Move Forex Markets

Today’s U.S. Second Quarter GDP Report should move the markets today. Most economists are calling for a contraction of 1.5%. A report showing a deeper contraction than the estimate could pressure stocks.

Today’s U.S. Second Quarter GDP Report should move the markets today. Most economists are calling for a contraction of 1.5%. A report showing a deeper contraction than the estimate could pressure stocks.

Initial claims are expected to fall for the first time in three weeks. This report shouldn’t carry that much weight ahead of next week’s all important U.S. Non-Farms Payroll Report.

Japanese investors have been repatriating funds invested in China on speculation that the Chinese financial officials will attempt to curb reckless lending practices in the country. Funds are being moved out of China for safety reasons as investors feel new Chinese practices will slowdown the pace of growth. With their investments at risk, Japanese investors are seeking the safety of the Japanese Yen.

The trend is up in the Euro on the daily chart, but the upside pace is slowing after a strong surge late last week. Traders have been reluctant to drive this market higher since European Central Bank President Trichet threw water on the rally when he stated over the weekend that the road to recovery would be bumpy.

The USD CAD is trading steady to lower this morning following a steep two-day rally. The chart pattern suggests that a double-bottom has formed in this market which could lead to an even further rally once it is confirmed.

The fundamentals still support weakness in the GBP USD but short-term oversold conditions could trigger a short-covering rally. The bigger picture suggests much lower markets to follow. Traders believe the British economy will lag both the U.S. and Euro Zone during the economic recovery.

The return of risk aversion is likely to pressure the AUD USD and NZD USD. Lower commodity prices and weakening equity markets could trigger a substantial decline in these two currency pairs. Speculation that China will implement economic changes to curb over capacity and reckless lending is expected to hurt growth that will spill over to the Australian and New Zealand economies.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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