Case-Shiller decline steep

Actual -15.8 yoy Last -15.2 yoy Housing prices continue to be a concern – along with banking – consumer spending – loan growth

Forex News Preview: US Consumer Confidence due out at 10:00 AM EDT

The US Conference Boards Consumer Confidence for July is expected to decline to 50.0 from 50.4 last month.  The index has been falling sharply and has not been this low since February 1992.  Lower stock prices, higher inflation, tighter credit, declining stock market are all contributing to the negative sentiment.  This index is derived from the average responses to questions regarding the current business conditions, the business conditions in 6 months, the current employment conditions and the expected employment conditions in 6 months time. 

Despite the recent negativity, the University of Michigan Consumer Confidence Indicator rebounded on Friday to 61.2 from the preliminary estimate of 56.4.   It may be too early to declare the worst is behind in the US.  However, there has been small bounces from low levels in a number of US economic indicators.  As a result, the risk might be for a better than expected reading this month.

Forex News Preview: S&P/Case Schiller Home Price Index Composite due out at 9:00 AM

The S&P/Case Schiller Home Price Index for the 20 largest US cities will be released at 9:00 AM EDT.  Last month the index showed a decline of 15.3%.  This was the largest year on year decline the index has shown in its 7 year history.  Foreclosures and tighter credit standards are leading to an oversupply of homes on the market.  Last week the US Existing Home sales data showed an 11.1 month supply of homes on the market – well above the 5 to 6 month supply that is considered a healthy market .

This month the expectation is for another decline to -16.1%.  Expectations are for the supply to keep pressure on prices for the time being.

Forex Trading News GBPUSD Holding Two Channels

The GBPUSD is holding form to two channels as seen below.  The larger, ascending channel created 6/13 has had a few head-fakes at its support as it traded outside briefly.  The newer descending channel, created 7/15 hit its resistance today.  However due to weak economic data out of the UK today, specifically a very weak CBI Distributive Trades Realized number, the GBP quickly came off that resistance.  We are coming to an interesting technical point for the GBPUSD as we see that one of these channels will be penetrated soon…

Forex Trading – Revisiting the GBP/USD Channel

Referring back to the Cable channel we were noting last week, the channel has continued to hold both to the topside as well as the bottom during this short-term measure. The cable has sold off sharply during today’s trading session, currently trading at the lows. This sell off can be attributed to a weak UK CBI Distributive Trade Report, which in addition to extremely low Order Volumes, reported a Retail Sales Balance at its lowest level since 1983.

Forex Trading News UK CBI Distributive Trades Realized Released Much Lower Than Expected

The CBI Distributive Trades Realized comes out at -36 from the previous -9. A drop (indicating that executives experienced a decrease in sales in their firms) was forecast to -15.  This was the weakest release since this survey began in 1983.

As this number came out much lower than forecast, the GBP was dragged down significantly across the board.

Forex Trading – EUR/USD Trading Between 50 & 200 Day Moving Averages

The EUR/USD pair has straddled the daily pivot during the last few trading sessions, seemingly waiting for some direction from the market. In the chart below you can notice the pair trading between the narrowing spread of the 50 and 200 day moving averages. It will be interesting to observe the price action as the market awaits more meaningful economic data toward the end of the trading week.

Forex Trading – Kiwi Falling Off Toward 0%

The New Zealand and US Dollar chart featured below displays a sharp decline in the valuation of Kiwi versus the US Dollar, beginning before the July 23rd rate decision and continuing with a sharp decline after the rate reduction (8.25% > 8%). The Fibonaci retracement below was created using the 7/15 highs following the news of the potential default of Freddie Mac and Fannie Mae, to the lows made after the rate reduction. The Kiwi is currently holding support at the 0.0% retracement level.