This coming week will be a shortened trading week in the US due to the celebration of Independence Day on Friday. Quite a number of key economic releases and data will be packed into these 4 days, so there won’t be rest for traders at least till late Thursday. The currency market will turn its attention to the rate announcement by the European Central Bank on Thursday whereby the central bank is almost guaranteed to raise the main refinancing rate from the current 4% to 4.25%.

So far this expectation has served as a bouncy mattress for the Euro in forex trading last week, and could be positive for the currency going into the ECB policy meeting. Complacency is not a luxury that can be afforded to traders, so while Euro has got some bullish steam on its tail, keep a lookout for any break of important technical levels since much has already been factored into the EUR/USD exchange rate, and Euro bulls may take profits ahead of the meeting or after.

Eurozone’s fundamentals have deteriorated based on recent data, in particular the German IFO survey, and last week we saw that the French consumer confidence fell to a record low in June. If we get any indication from Trichet on Thursday that this rate hike is a solo one and not to be followed by more, that could weigh on the Euro and cause EUR/USD to retreat.

Don’t tie yourself to a single opinion.

It’s Time To Learn Shorting

If you have been trading the stock markets, you’d be glad for the upcoming long weekend. People who buy stocks for long-term investment have been cut deeply by the growing decline of US stocks (stocks in Europe and Asia too). More pain comes in when oil’s relentless surge doesn’t reverse.

Crude oil closed above $140/barrel ($140.21 to be exact) for the first time in history, and the Dow is now down 20.1% from its record intraday peak formed last October. The Dow is quite “officially” in a bear market now. Stock investors or traders might want to learn about shorting stocks or hop over to the currency markets (spot forex or forex options) if they want to stay profitable.

Think financial stocks are attractive buys as they fall? Only if you find blood on falling knives attractive. Investment banks stocks are hurt by downgrades by one another. Merrill Lynch [[mer]] is expected to write down $5.4 billion for its second quarter, due to recent credit downgrades of giant insurers MBIA [[mbi]] and Ambac [[abk]].

For people who choose to see the positive, Nasdaq isn’t “officially” in the bear zone as it is so far down 19% from its 2007 high, not past the 20% mark. Same goes for S&P 500, which is down 18.3% from its record close in October.

Economic Calendar for Monday:

Italian PPI 0800 GMT

UK mortgage approvals 0830 GMT

Eurozone CPI estimate 0900 GMT

Canada GDP 1230 GMT

US Chicago PMI 1345 GMT

Japan Tankan survey 2350 GMT

Posted in Categories: Canada, Eurozone, Forex, Japan, Stocks, USA.

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