FINANCE LATEST NEWS

Intraday Market Outlook for Day Traders

2010-09-06T03:25:00.000-07:00

EUR/USD
The pair is still consolidating its higher levels in the European morning, currently trading quietly back a little at 1.2890. We do not expect much trading activity today but see a selling tone coming up, leading to market levels around 1.2820.

GBP/USD
A sudden sell off in the present European morning brought cable to levels 100 pips lower to now 1.5385. We reckon with a consolidation phase now, with not much more downside risk, and see a trading band between 1.5360 and 1.5420.

USD/CHF
Acting only a little stronger against the Swiss franc, the dollar is currently priced at 1.0147. We do not expect much action in this market today and cannot see any specific direction for now.

USD/JPY
Again the dollar was weaker against the yen at the start of the week in Asian trading today and is now about to find a support near 84.00 in the European morning hours. Currently at 84.20, we anticipate some recovery for today, but not above 84.45.

Energy and agricultural goes their separate ways

2010-09-06T03:24:00.001-07:00

A deteriorating outlook for world growth following US and Chinese data sent commodities back on the slide. Agflation is still a risk following the surge in the price of grains and soft commodities.

The major catalyst for the market last week was the US Federal reserve lowering their economic outlook and Chinese industrial output slowing down at a time where inflation is rising. In addition the US saw its trade deficit widening as imports from China jumped leading to renewed worries about tensions between the two big economies.

Investors continued to reduce risk with the main beneficiaries being secure government bonds with the yield on two year US government notes dropping below 0.5 percent. Not all bond news was supportive as the indebtedness of some European states where highlighted as spreads over secure German bonds began to rise again.

On currency markets the dollar regained its footing versus the Euro rising by 4.5 percent to 1.2750. Strongest of them all however was the Japanese Yen which rose to a fifteen year high of Y 84.72 versus the dollar.
Corporate Japan is operating on the assumption of a USDJPY above 90 for the next six month so the current levels hurts and some kind of verbal or actual intervention from the Bank of Japan can be expected should this strength continue.

The risk aversion lead to the usual reaction in commodities with the energy and industrial metals losing support while gold got the catalyst to move back to the top of the recent range. The Reuters Jefferies CRB index finished the week 2.2 percent lower on the week with the major movers seen above.

Crude oil crashed back into its 70 to 80 dollar range having failed to gain any upside momentum from the positive break out the previous week. With the two largest consumers of oil both slowing at the same time the upside seems limited and both OPEC and the International Energy Agency have been voicing their concerns about global oil demand growth.

Although they both forecast a growth in demand for 2010 between 1 million and 1.8 million barrels per day the market paid most attention to the statement that concerns about a slowdown in global activity in the second half posed ”a significant downward risk to the forecast”.

WTI Crude oil for September delivery lost more than seven percent on the week with near-term support showing at 73.40 followed by 71.50. Resistance can be found at 80 before 83.40.

Global wheat markets continued to gyrate with the ongoing drought problem in Russian which has now affected an area the size of Portugal and has lead to an export ban lasting until December. The USDA estimates that Russia will produce 25 to 30 percent less this year and the outlook for 2010 is still very uncertain as farmers will sow only 12 million hectares of winter grains compared to 18.5 million in the previous two years.

US farmers will reap the benefit from the Russian export ban and reduced production as export is already surging expecting to reach 33 million tons this crop year from 24 million the previous. Adding to this export surge is the catastrophic flooding in Pakistan, the second largest grower in South Asia, which may have damaged 500,000 tons of wheat and disrupting the winter crop planting which is due to begin in October.

The speculative long position of wheat on CBOT rose to 27,000 lots as of last Tuesday almost equaling the levels seen during the most recent surge in 2008 where the price of wheat reached 13.3 dollar per bushel compared to the current price of just 7.5. It shows how much of the initial rally was caused by short covering after hedge funds and others had been holding a short position during the past 18 months.

Speculative net position in lots on CBOT:

Even more pronounced is the rise of interest in buying corn with many seeing it outperforming wheat during the months ahead.

Gold once again benefitted from “risk off” breaking back above the July high at 1,218 as investors returned to the metal following the recent correction. Investors in gold ETFs held their nerve during the correction with only a small reduction in the total invested.

Continued stock market weakness is required in order to see a new attempt in reaching the record high at 1,265 as the dollar recovery will drag the price in the opposite direction. Technically a move back above 1,224.5, being tested at the time of writing, should open up for an attempt on 1,265 followed by 1,276 while support comes in at 1,190 followed by 1,157.

Weekly Commodity Update

2010-09-06T03:22:00.000-07:00

The overall sentiment for this week led most commodities into positive territory. The rally in equities, and selloff in government bonds, helped breathe a sigh of relief for markets in general, which appeared to be over stretched and instilled with some fear. The market appears to have factored in the positive Non-farm payrolls out of the US, however also seems to continuing the positive momentum based on the positive data.

All in all, commodities have been very receptive to the positive data, posting gains in Crude Oil and the grains.
However, the previous negative sentiment has put some pressure on gold prices and has led to some profit taking. The long term daily trend, set back from July, will become significant at the 1.232 USD price level. As uncertainty leaves the market and we enter into a risk-on type scenario, it is not inconceivable that gold could come under some pressure, albeit it stemmed from positive fundamental data.

Crude oil fought off the weekly lows on the longer term trend to post a positive week. This comes on the back of yet another build in the weekly inventory data. The stock levels can typically prove to be poor short term indicators for price direction, which can only be confirmed by this week’s price action. The long term remains intact, with the positive equities markets and economic sentiment once again fueling expected future demand.
The unfortunate new fire at a platform in the Gulf of Mexico also provided support for oil prices, adding to the uncertainty to drilling and production practices being safe enough to handle high levels of capacity utilization.

The move away from the lows beneath USD 71.00 is a sign of inherent strength for Crude Oil. And it would appear that the next level for resistance should be when the market tests the longer term trend indication using the 50 day moving average, which comes into play at USD 76.90. A break of this resistance level set up for a move towards USD 79.20 in the short to medium term. USD 71.00 remains to be major support.

Much attention has been diverted from the popular gold and oil commodities, with stories developing around a global food shortage. The Russian export ban on wheat over the next year, has put a positive spin to an already bullish market.

The ban on wheat export has increased the ton-mile demand for Panamax dry bulk vessels (mostly used for grains and coal) contributing to the hike in the average daily rate from its recent low below 16000 in mid-July to above 25.000 today. The price is still expected to rise with the fourth quarter futures contract currently trading around 28.000.

Especially corn prices have shot into the air, breaking through key resistance levels at 414.00. From here it appears to have been one-way traffic, whilst the rest of the world appears to be adjusting to where there future purchases will be coming from.

USD/CAD. Ranging from 1.00 to 1.10

2010-09-04T22:20:00.000-07:00

USD/CAD (1.0550) is up overnight and appears to have taken up residence in a broad 1.00 to 1.10 range.

Technicals:

Trend: Daily lower; weekly lower.
Overbought/Oversold (stochastics): Daily overbought; weekly neutral.
Support/Resistance Levels: Resistance lies at 1.0673 (Aug31 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0108 (Aug5 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

The risk reversal (3m, 25delta) rose overnight along with spot. It looks as if it might be bottoming in the bottom half of the six-month range, which would be consistent with a bottoming in spot.
Implied Vol (3m) rose overnight and is continuing the uptrend in place throughout Aug.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

AUD/USD. Consolidating Wednesday’s rally

2010-09-03T22:21:00.001-07:00

AUD/USD (0.9100) is down modestly overnight, consolidating Wednesday’s rally. Something of a wedge formation forming as spot has traded higher lows since May but lower highs since April.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily neutral; Weekly neutral.
Support/Resistance: Technical support lies at 0.8771 (Aug25 low), 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.9117 (Sep 1&2 high), 0.9222 (Aug6 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

The risk reversal (3m, 25delta) rose overnight despite the correction in spot. The reversal lies in the middle of the six-month range, providing little information as to future price action.
Implied Vol (3m) rose overnight, and it continues to consolidate in the lower 1/3 of its six-month range.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and the DXY (negative.)

USD/JPY. Sitting on 84

2010-09-03T22:20:00.000-07:00

USD/JPY (84.46) is down overnight and consolidating just above the low of August.

Technicals:

Trend: Daily higher; Weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.
Support/Resistance Levels: Support lies at 83.60 (Aug24 low) and 79.75 (Apr 1995 low). Resistance lies at 88.12 (Jul28), 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

The risk reversal (3m, 25delta) ticked lower overnight. The skew is still in favor of USD/JPY downside, but is consolidating in neutral territory relative to its range the past six months, thus providing little guidance as to the direction of spot.
Implied vol (3m): fell overnight but is trending higher from deep in the lower half of its 6-month range.

Cross-asset valuation: The correlations of USD/JPY with the US 10yr yield (positive) the US-JGB 10yr spread (positive) and the S&P500 (positive) are significant.

USD/CHF. Consolidating

2010-09-03T22:19:00.003-07:00

USD/CHF (1.0147) is up slightly overnight on positive general market sentiment.

Technicals:

Trend: daily lower; weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.
Support/Resistance levels: Resistance lies at 1.0641 (Jul27 high), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.0065 (Sep1 low) and 0.9918 (Dec low).

Positioning:

The risk reversal (3m, 25delta) bounced overnight with the rise in spot. The skew is extreme, suggesting potential for a rally in spot.
Implied Vol (3mo) slipped overnight from a high since Jun. Vol remains in the middle of its six-month range.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

GBP/USD. Sitting below 1.55

2010-09-03T22:19:00.001-07:00

Cable (1.5408) rose slightly overnight, with traders unwilling to make bets ahead of non-farms.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily oversold; Weekly overbought.
Support/Resistance Levels: Resistance lies at 1.5999 (Aug6 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.5327 (Aug31 low), 1.50 (psychological), 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

The risk reversal (3m, 25delta) ticked higher overnight with the move in spot. The recent retreat from the upper end of its six-month range is consistent with recent decline in GBP/USD.
Implied Vol (3mo) fell overnight, and it is consolidating in the lower third of its six-month range

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative) and EUR/USD (positive).

EUR/USD. Uncertainty ahead of non-farms

2010-09-03T22:18:00.001-07:00

EUR/USD (1.2838) is up slightly overnight and consolidating the sharp rally Wednesday. There is caution ahead of the non-farm payrolls report.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.
Support / Resistance Levels: Support for EUR/USD lies at 1.2588 (Aug24 low), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.2856 (Sep1 high), 1.3334 (Aug 6 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

The risk reversal (3m, 25delta) rose overnight with the rise in spot. The reversal is in the middle of its six-month range, and it appears to be trading an uptrending channel, providing some support for the move higher in spot.
Implied Vol (3m) fell overnight, and it is falling into the bottom-third of its six-month range.

Cross-asset valuation: The only significant correlation that EUR/USD has exhibited during the past 60 days is with the SPX (positive).

Political and Economic Developments

2010-09-03T22:17:00.000-07:00

The European Central Bank extended its ‘emergency support’ operation to banks, rates at 1.00% for another year, the 17th consecutive month as global unemployment is estimated to have increased by 30 million since 2007. How long is an emergency and what about ‘new normal’? Looming government spending cuts in the UK, banks and building societies have had to write off 70% more consumer debt in Q2 compared to the previous one; credit cards £2.1B out of a total £3.47B, both new records. Not surprising then that lending criteria have tightened, net unsecured loans £173M in July versus closer to £2B in 2003-2005’s boom, 48% of credit card applications turned down last year. Net mortgage lending £86M in July, as low as it got in 2009 and well below 2007’s peak at £10.5B. Note that outstanding household debt at £1,456B, or £23,100 per person, is the highest among G7 countries. Lending to companies shrank again in July, the eleventh month in a row, as non-financial corporations paid back £2.0B cutting net debt by 3.1% Y/Y; some may be resorting to the capital markets and the lucky are hoarding cash. Irish PM Cowen says the immediate windup of Anglo Irish Bank could cost €70B.
Revised data show US households are saving a greater part of their disposable income, on average close to 6%, as they try to repair balance sheets, prospects uncertain as unemployment remains at 9.6%; record low mortgage rates are helping, 30-year fixed rate a record low 4.32%.

Euro Suffers the Ire of the Financial Media as Investors Ferret Out Global Troubles

2010-08-28T21:44:00.000-07:00

Aside from those pairings that pit it against distinct safe havens, the euro would ease lower into the final trading day of the week. Once again, the shared currency’s unique connection to the US dollar has put its fate in the hands of tomorrow’s US-based event risk. At the same time, the euro’s sensitivity to risk aversion contributed to its weak performance Thursday.
With investors concerned over the financial future of the European Union, we have seen media attention intensify surrounding the region’s short-comings. On the headlines today, was a Eurobarometer report that Europeans were the least confident in the EU in six years; German Finance Minister Schuaeble warned the market to moderate its expectation for German growth; and Spain could owe taxpayers anywhere between hundreds of millions to 5 billion euros. With the focus on ‘bad news’ the modestly lower yields on Irish sovereign bond auctions and uptick in German consumer confidence doesn’t look so encouraging.

Dollar Traders Will have to Determine Currency’s Safe Haven Role with Friday’s GDP Revisions, Bernanke Commentary

2010-08-28T21:43:00.000-07:00

The economic docket was relatively light for the US dollar; but that wouldn’t prevent the currency from drifting off its fundamental mooring. The favored reserve fiat would put in for its second consecutive decline. Looking at the trade-weighted Dollar Index, the current pattern for price action looks very similar to the development from last week. Not surprisingly, the underlying market conditions that contributed to the brief retracement and general congestion back then are present now. It is first important to establish that the 48 hour decline from the greenback is not yet a bear trend. Rather, this move is more appropriately labeled as a correction that falls within a range that has developed through the week. The intraweek swings the currency has put in for this past week were short-term reactions to fundamental catalysts; but it has been a tangible struggle to gain a footing on a clear trend. We can trace this hesitancy back to underlying investor sentiment itself. Today, we see the Dow Jones Industrial Average slip below the 10,000 mark while keeping within the previous session’s coverage; and US-based crude oil reversed for a second day. In conjunction with the stalled EURUSD, this lax correlation between markets suggests risk appetite has tempered.

From today’s fundamental offerings, the lack of volatility (much less a trend) should not come as a surprise. On the docket, the initial jobless claims figures for the week through August 21st eased more than expected to a 473,000-annual clip. The positive implications this data may have had were summarily offset by the report that 310,000 filings were added to continuing claims owing to extended benefits – a poor reflection of the recovery effort by employment. The same questionable outcome is afforded to the MBA’s mortgage foreclosure reading for the second quarter which slipped from 4.63 to 4.57 percent; and yet it is still just off its record high. This data could easily be construed to support a bearish outlook; but the fundamental gravity heading into the end of the week is too great for this second tier data to significant alter traders’ expectations. Instead, the ranks are waiting to absorb and interpret tomorrow’s top event risk. On the docket, we have the revision of the second quarter GDP reading. Normally, the market’s interest stops with the first reading; but the magnitude of the expected revision and intensified speculation of a stalled recovery in the second half of the year has made this second reading perhaps more influential than the first. Given the disappointing housing, manufacturing and inventory developments over the past weeks; it shouldn’t surprise that there is talk of a 1.0 percent reading or lower. The other major event for the day is the Jackson Hole Symposium. A meeting of mind on monetary policy, this forum has been used to delivery forecasts in the past. There is fringe speculation that Bernanke may lower his growth outlook or event announce new stimulus.

For dollar traders, the outcome of this collective event risk is actually much more complicatedthan establishing whether it is good or bad for the economy. Normally, the impact this wave has on risk appetite would impact the dollar as a safe haven. Yet we have seen this role diminish somewhat recently as greenback has deviated from other capital markets. That said, the more panicked the crowd; the more they need shelter.

Forecast on Spot Gold (Spot Gold, NZDUSD, USDSGD)

2010-08-28T21:42:00.000-07:00

Spot Gold

SPOT GOLD closed @ 12355 which was BELOW the open and was within prior day's trading range. The High was PRECISELY at Precise Trader's Res Zone 1 and the Low was PRECISELY at Precise Trader's Sup Tgt 1. The Hourly Oscillators are Bearish and the Price is Within the MA, so the Bulls have to be Sidelined. Hourly Trend is Turning Down while 12495 holds and Daily Trend is Limited Up while 12105 holds, so expect the price to Turn Down Soon, so the Bulls may stay Sidelined and the Bears get ready to pull the Trigger. The Daily Trend breached the Prior Day's High but the Bears gained towards the Close which signifies the high may have been seen. The Hourly Trend has been in a Range Trading with a Downside Bias,12410-445 are the Critical levels to watch to maintain the Bearish Outlook .On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session with a potential to Turn Down Soon. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 12335 12205 12105 BEARS: 12415 12475 12525

Today's Strategies: Trade @ the Bears Levels Only.

NZDUSD

NZDUSD closed @ 7030 which was ABOVE the open and was within prior day's trading range. The High was 5 pips from Precise Trader's Res Zone 5 (U Turn Zone) and the Low was 5 pips from Precise Trader's Sup Zone 1. The Hourly Oscillators are Bullish but Weak and the Price is Within the MA, so CAUTIOUS approach is needed for the Bulls. Hourly Trend is Sideways while 6970 holds and Daily Trend is also Sideways while 7195 holds, so expect the price to be Choppy until Breakout. The Daily Trend breached the Prior Day's High marginally but the Bulls gave up partially towards the Close which signifies a Choppy Session with some Weakness in the First half of the Day. The Hourly Trend has been in a Range Trading with no Clear Direction, 6990-70 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Horizontal Channel and expect a Choppy Session until the break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 7020 6980 6930 BEARS: 7075 7125 7185

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

USDSGD

USDSGD closed @ 13555 which was BELOW the open and breached the previous day's low. The High was 15 pips from Precise Trader's Res Zone 1 and the Low was PRECISELY at Precise Trader's Sup Zone 1. The Hourly Oscillators are MIXED and the Price is Within the MA, so CAUTIOUS approach is needed. Hourly Trend is Sideways while 13625 holds and Daily Trend is Limited Down while 13725 holds, so expect the price to be Choppy until Breakout. The Daily Trend was within the Prior Day's Range but the Bears gained towards the Close which signifies Choppy Session a Head. The Hourly Trend has been in a Range Trading , 13610-25 are the Critical levels to watch to maintain the Bearish Outlook . On the 5 min is along the Horizontal Channel and expect a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 13525 13460 13400 BEARS: 13585 13640 13705

Weekly Market View

2010-08-28T21:38:00.000-07:00

Overview

The rush into top-rated Treasury paper continues, new record low yields set for Swiss ten-year Conf (1.05%), Bund (2.09%), German 30-year (2.58%) and US ones (3.46%%), though Brazilian, Mexican and Russian benchmark yields are up from last week’s record lows. Equity indices are lower, many for a third consecutive week, the Nikkei 225 hitting a low at 8,807 and a weekly close just below key long term support at 9000. Only the Shanghai B share index bucked the trend with its biggest daily rally since November on speculation that it will be merged with the much larger domestic A-share market. Kuala Lumpur inched to its best level since February 2008 (just under the record high 1,521 of January 2008) and Jakarta set a new record at 3,150. The yen and Swiss franc gained against all currencies, another feature of the flight to safety, hitting 85.68 and 1.0220 per US dollar, EUR/CHF a new record low 1.2971. Commodities generally sidelined though 3-month LME Tin at $21,750 is at its most expensive in a year and Nymex Natural Gas at $3.825 per MMBtu cheapest since March and close to its lowest levels this decade.

Political and Economic Developments

A series of downbeat economic statistics from the US have reinforced the new reality many are staring at, which some call gloom. July Existing Home Sales dropped 27.2% M/M taking the annualised number of sales to a record low 3.83 million (from a peak of 7.25 million in 2005). Likewise New Home Sales dropped 12.4% M/M to an annual 276K, the lowest on record in a series going back to 1963. Admittedly the ending of government purchase incentives will have skewed sales, just as cash-for-clunkers brought forward car sales, so that many are now talking of further price falls; note that the average US home is worth $204K, the lowest since 2003 – seven years of depreciation to be written off. The Mortgage Bankers Association reported a small rise to 3.51% for mortgages 30 days past due, seriously delinquent (90 days overdue) 9.85%, and foreclosures 4.57% of all loans. Though Weekly Jobless Claims dipped to 473K from 504K (highest since November 2009) the prior week, obviously a rise here will have an effect on the ability to repay loans. There are suggestions that banks are being lenient, increasingly willing to modify and reclassify debt, because very low interest rates make this the easier option, something many have already done with commercial real estate – keep it as a performing loan for an annual cost of next to nothing rather than write-downs and repossessions.

Underlying Themes

Standard and Poors downgraded Irish sovereign debt one notch to AA- adding a negative outlook on worries that bank bailouts would require even more taxpayers’ money. Interestingly the Irish National Treasury Management Agency disagreed with their methodology. NAMA, the ‘bad’ bank created to offload dodgy debt from financial institutions to create ‘good’ banks refuses to disclose what assets it holds but rather worryingly the Irish Nationwide Building Society says it sold them €591 million with a 72% haircut. Ouch! Generally spreads over ten-year Bund yields have widened to new records, Greece 950 basis points, Ireland 371, Italy 168, Portugal 340 and Spain a not quite record 190.

What to watch for next week

Monday 30th August UK Bank Holiday though the UK’s Hometrack August Housing Survey is out, Eurozone Confidence, US July Personal Income and Spending, plus Core PCE. Tuesday Japan July Industrial and Vehicle Production, Retail Trade, Labour Cash Earnings, Housing Starts and Construction Orders, plus August Small Business Confidence. UK July Money Supply and Consumer Credit, August GFK Consumer Confidence, German Unemployment, EZ16 CPI and July Unemployment, US June CaseShiller House Prices, August Chicago Purchasing Managers, Consumer Confidence and Minutes of the FOMC meeting. Wednesday 1st September, Japanese August Vehicle Sales, Manufacturing PMI’s for various European countries, UK Halifax House Prices, US Challenger Job Cuts, ADP Employment Change, Manufacturing ISM, Vehicle Sales and July Construction Spending; Sweden’s Riksbank starts a two-day rate-setting meeting (some expect a 25 basis point rise to 0.75%). Thursday UK August Nationwide House Prices, Construction PMI, EZ16 Q2 GDP, July PPI, the ECB decides on rates (unanimously expected unchanged at 1.00%), US Q2 Unit Labour Costs, July Factory Orders and Pending Home Sales. Friday Japan Q2 Capital Spending, UK August Services PMI, EZ16 July Retail Sales, US August Non-Farm Payrolls and Unemployment, then Non-Manufacturing ISM. Monday 6th September Labour Day holidays in Canada and the US.

Positioning and Technical Analysis

Summer will be over by the 7th of September and the feel is very much back to school and back to work. And what are we facing? Much the same mess as we did at this time in 2008. Banks are a varied lot, some producing results suggesting they are in rude health, most looking like the walking wounded and some, zombies that even the most creative accountant cannot help. Not surprisingly interbank trust remains at zero, cash parked overnight at central banks, top-ranked paper yielding record low rates. Next, who needs yet more money and where will it come from? Who can cut or is so desperate they must cut spending?

Growth fears weigh on euro

2010-08-18T03:13:00.000-07:00

Currency markets can be moody. Immediately after the release of the weak US labour market report last Friday, EUR-USD rose by 1.5 cents to over 1.33. But after the Open Market Committee decided that, given the disappointing economic recovery, the proceeds from maturing agency bonds and mortgage-backed securities held by the Fed should be used to purchase additional Treasury bonds, the euro began to lose ground.
On Thursday, EUR-USD dropped below 1.28, and was around this level towards the end of the week. USD-JPY fell to a 15-year low of 84.73 initially, but then recovered to just under 86.

The movement in the currency market shows a return to the familiar pattern seen during the financial crisis: once again, bad news from the US prompted a widespread flight from risky assets (equities, commodities, credit products) back into safe havens. Government bonds and gold are much in demand. In the forex market, the dollar and the yen benefit particularly from crisis fears.

Oddly enough, it was the FOMC meeting and not the labour market data, that sparked these market reactions, even though, after the release of the US labour market report, it had been widely expected that the Fed would take action.

The measure taken by the US central bank is not at all aggressive, quite the contrary in fact. The Fed is only using principal payments to purchase 2 to 10-year US Treasuries, thus keeping the balance sheet at $2054bn. Monetary policy is not becoming more expansionary, but remains as expansionary as it was before. Real concern about a double dip or a deflationary scenario would have prompted a different reaction.

Furthermore, the amounts concerned are relatively modest: in spring, the New York Fed had estimated the total volume of bonds due to mature by the end of 2011, or already paid back prior to maturity, at “at least $200bn”. For the first month (mid-August to mid-September) the central bank is envisaging reinvesting $18bn. In relation to the Fed’s balance sheet and public net borrowing, which are set to reach well over $1000bn in 2010 and 2011 respectively, the reinvestments seem almost puny.

The hefty market reaction might have been triggered by the rather pessimistic outlook of the Bank of England in its latest inflation report and slightly worse-than-expected economic data from China, suggesting that the growth outlook for Europe (and the rest of the world) might not be as rosy as originally predicted. This, combined with heightening fears of deflation in the US, probably tipped sentiment in the markets. In view of the previous gains of the euro and other European currencies against the dollar and on equity markets, market participants decided to take profits.

In our view, the growth concerns are still exaggerated. Although economic momentum in the US is now slacker than in earlier recovery phases, the economy is still expanding. Current consensus estimates are forecasting growth rates of just under 3% for 2010/11, the Fed’s forecasts were significantly higher in July. Final domestic sales rose markedly in Q2 for the first time, both ISM indices are still showing an increase in economic activity, and, according to the quarterly reports, most companies see their business outlook as positive. We therefore see no reason to throw in the towel.

The European data give no cause whatsoever for undue scepticism. The Q2 growth figures, which have just been released, show that GDP in the eurozone rose by 1.0% quarter-on-quarter.
Growth was largely driven by Germany, where, according to preliminary figures, GDP grew by a stupendous 2.2% compared to the previous quarter. This, together with solid figures from France, the Netherlands and Belgium, more than compensated for the weak results in the southern eurozone countries, where growth was curbed by fiscal austerity measures. Thus overall, there has been an improvement in production capacity utilisation. And the leading indicators as well as anecdotal evidence from companies do not suggest a setback.

Against this backdrop, we are inclined to regard the euro’s current weakness against the dollar as a correction. In the longer term, we still see the euro above 1.30. Market participants should keep a close watch on US economic data in particular.
They should also bear in mind that money market rates in the eurozone will probably continue to rise in the coming months and that a strong dollar is hardly in the interests of the US economy.

US labour market report sends dollar to new lows

2010-08-16T03:36:00.001-07:00

Market participants’ assessment of the economic outlook, and of course the direction of monetary policy (the Open Market Committee is holding its next meeting on Tuesday) will probably be influenced by the US labour market figures, which were published today. Beforehand, markets had been bracing themselves for a disappointment. They were particularly worried that the increase in private sector jobs, which had only been moderate as it was, might have ground to a halt, forcing the Fed to resort to more quantitative easing.

Thus the dollar’s slide continued this week: the ICE US Dollar Index Futures fell below its 200- day moving average. By mid-day on Friday, the euro had gained almost 2 cents against the dollar, rising to just under 1.32, and rose to over 1.33 after the release of the US employment data. The dollar also fell against the yen, which climbed to an 8-month high of 85.15. Only the Swiss franc was as weak as the dollar this week. EUR-CHF rose from 1.35 at the end of last week to over 1.38 – despite signs that the SNB was selling some of its bloated foreign currency reserves.

The July US labour market data were indeed disappointing: employment declined by a total of 131,000. Although new jobs in the private sector rose by 71,000, this pales to insignificance compared with the 252,000 job cuts in the public sector, which far outnumbered the Census-related job losses (143,000). The significant downward revision of the June figures by almost 100,000 to –221,000 also had a negative effect. Here the additional job cuts were divided evenly between the public and the private sector.

Nevertheless, we are still not expecting the FOMC to send out any new monetary policy signals on Tuesday. The Fed is likely to maintain its expectations of a moderate recovery with a gradually improving labour market, but is likely to emphasise the risks and uncertainties a bit more than in June. Otherwise, the committee will probably merely reiterate its intention of maintaining its exceptionally expansionary monetary policy for an extended period.

On the whole, we are not expecting the other economic data due to be released next week to bring any unpleasant surprises. The US trade balance deficit will probably have widened again in June, but this information is actually already contained in the Q2 GDP figures. Eurozone Q2 GDP data, released next Friday, could have a positive impact on the euro. Here expectations are quite high, however. And furthermore, not even the ECB’s more hawkish comments have been able to boost the euro much recently.

Growth fears weigh on euro

2010-08-16T03:35:00.001-07:00

EURUSD Trading Strategy

2010-08-13T03:11:00.000-07:00

Trading strategy: small short at 1.3030, stop at 1.3090 (0.5% risk), objective at 1.2930

The euro found support at 1.2800 after the free fall from 1.3300 but the ongoing recovery is not convincing. Former support at 1.3000 will probably provide resistance if the euro continues to climb from here, and a daily close above 1.3000 should be a decent confirmation of uptrend resumption on short-term basis. Technically the uptrend is intact, despite the 500 points decline. Today’s most notable events in the economic calendar are the German GDP which came at 2.20% vs 1.30% expected, followed by the U.S. Retail Sales and CPI later today. Current quote is 1.2892 @06:07 GMT

Support: 1.2800/30, 1.2730, 1.2600 and 1.2500
Resistance: 1.2900, 1.3000, 1.3100 and 1.3250
Market sentiment: long term – bearish, medium term – slightly bullish, short term – slightly bearish, intra-day – slightly bullish

Index Recommended Levels

2010-08-13T03:09:00.000-07:00

Dow Jones :
Resistance(daily close) : 9382.12, 9744.26, 10 091.30, 10 935.23, 11 164.57, 344.92 and 11 520.30. Then 11 749.22, 11 970.00, 12 152.82, 12 600.24, 12 982.20, 13 162.50 and 13 320.00. Break of the latter will lead to 13 567.60, 13 668.74 and 13 792.53 (published on October 21, 2008).
Support (daily close): 9630.33 and 9358.35(main), 9090.00, 8912.62 (published on November 10, 2009).

Today’s support: - 10246.54(main), where a delay and correction may happen. Break of the latter will give 10214.70, where correction also can be. Then follows 10172.18. Be there a strong impulse, we shall see 10148.50. Continuation will bring 10110.75.
Today’s resistance: - 10360.25, 10400.63 and 10451.40(main), where a delay and correction may happen. Break would bring 10533.11, where a correction may happen. Then follows 10586.22, where a delay and correction could also be. Be there a strong impulse, we’d see 10631.20. Continuation would bring 10707.38 .

S&P500

Support: - 1074.38( main). Break will give 1070.75 where correction could be. Then follows 1063.13, where correction could also be. Be there a strong impulse, we would see 1058.68. Continuation will lead to 1050.85.
Resistance: - 1091.27, 1102.50, 1115.62 and 1128.23(main), where a correction may happen. Break would result in 1138.08, where correction may also be. Then 1147.46. Be there a strong impulse, we would see 1153.12. Continuation will lead to 1157.47.

NASDAQ

Support : - 2160.00(main). Break will give 2150.90, where correction could be. Then 2144.56, where correction could also be. Be there a strong impulse, we would see 2137.44. Continuation will lead to 2128.32.
Resistance : - 2205.15 and 2216.30(main), where the correction could be. Break will bring 2228.53, where the correction may also happen. Then 2240.80. Be there a strong impulse, we would see 2252.40. Continuation will lead to 2261.27.

GOLD

Support: - 1203.72, 1192.50, 1187.41 and 1180.22(main). Break of the latter will give 1167.30, where a correction is possible. Then 1158.80, where a correction is also possible. Be there a strong impulse, we would see 1152.12. Continuation will bring 1144.46.
Resistance: - 1220.35(main), where a correction may happen. Break would bring 1226.24, where a correction may also happen. Then follows 1232.20. Be there a strong impulse, we’d see 1237.46. Continuation would bring 1241.58.

SILVER

Support: - 17.73(main).where correction is possible. Break of the latter would give 17.55, where correction may happen. Then goes 17.30, where correction can also be. If a strong impulse, we would see 17.19. Continuation would give 17.08.
Resistance : - 18.18, 18.44, 18.63 and 18.71(main), where correction is possible. Break will lead 18.81, where again may be a correction. Then follows 18.97. If a strong impulse, we would have 19.16. Continuation would give 19.35.

USD Sees Gains Against Most Majors

2010-08-11T03:19:00.001-07:00

USD Dollar (USD) – The Dollar gained against most of the majors before the FOMC statement and trimmed part of the profits after the Interest Rate Decision which came out unchanged at 0.25% as expected. The FED said that the pace of economic recovery is slower than expected. The Stock Markets in the U.S. finished negative with the Dow Jones losing 0.51% and the NASDAQ tumbling by -1.24%. Crude Oil fell by 1.5% to $80.20 a barrel. Gold (XAU) closed with a small gain after falling to $1190 zone but recovered and closed at $1203 an ounce. Today, the Trade Balance is expected at -42.5B vs. -42.3B previously. The Federal Budget Balance (Treasury Budget) is expected at -167.6B vs. -68.4B previously.

EURO (EUR) – The Euro weakened against the dollar in Forex Trading, breaking the 1.31 zone but jumped back to 1.32 zones after the FED in U.S announced a continuation of measures to stop the economic slowdown. As the Asian markets opened it dragged back the Euro to 1.31 areas. The German CPI came out 0.3% better than the expected 0.25%. Trading below the support level of 1.3130 keeps the momentum negative for the pair. Overall, EUR/USD traded with a low of 1.3073 and with a high of 1.3232. No economic data is expected today. EUR/USD – Last: 1.3122

British Pound (GBP) – The Pound lost gains to the dollar reaching the 1.57 zone but jumped back to 1.59 zones after the FED interest rate decision. As the Asian markets opened, it dragged back the Sterling to 1.58 areas. The Trade Balance came out -7.4B better than the expected -7.7B. Nationwide Consumer Confidence came out at 56, worse than the expected 60. Trading below the support level of 1.5830 keeps the momentum negative for the pair. Overall, GBP/USD traded with a low of 1.5708 and with a high of 1.5906. Today, the Claimant Count Change is expected at -17.4k vs. -20.8k previously and later BoE Gov King will speak regarding the Inflation Report. GBP/USD - Last: 1.5811

Japanese Yen (JPY) – The Yen gained versus the dollar and back to 85 zones. The global recovery slowing boosted demand for the safety of Japan’s currency. The Interest Rate Decision came out as expected at 0.1%. Breaking the support level of 85.30 turns the momentum to negative for the pair. Overall, USD/JPY traded with a low of 85.16 and with a high of 86.24. Today, Monthly Report of Recent Economic and Financial Developments will be updated. USD/JPY-Last: 85.33

Canadian dollar (CAD) – The US Dollar gained versus the Canadian dollar as the Federal Reserve said it will take new measures for economic growth in the U.S. The Housing Starts came out 189k better than the expected 185k. Holding above the support level of 1.03 keeps the momentum positive for the pair. Overall, USD/CAD traded with a low of 1.0265 and with a high of 1.0387. Today, the Trade Balance is expected 0.4B vs. -0.5B previously. USD/CAD - Last: 1.0319

Daily Analysis

2010-08-11T03:17:00.000-07:00

AUDUSD - Bears slided below support, at the moment look for selling options while candlesticks stay at current level.

EURUSD - Bears did manage to plunge under support barrier, despite the current neutral situation look for selling possibilities.

EURGBP - Bears trying to overtake bulls strength by declining the price below support level. However, neutral situation stays active.

NZDUSD - Support barrier is still strong enough to hold bearish movement. Waiting action holds for now.

USDCAD - Bulls trying to recover after bearish strength, if bulls can manage to breakout at resistance, look for buying options and positive trend.

Stock Up on Absorbent Socks For Safety

2010-08-11T03:11:00.000-07:00

If there's even a chance that harmful substances could leak or spill at your business, stocking up on absorbent socks is a smart idea. These specially designed socks are filled with absorbent materials that can clean up liquid spills fast, even if they're oily or contain potentially hazardous materials.

Small spills or minor leaks in a mechanic's shop, at a factory, on a farm or at a medical facility may be handled with absorbent pads. Yet when fast clean up is a must to prevent damage or the spread of harmful substances, a spill sock is the right tool to use.

To make the most of the opportunity socks present for easy, efficient and effective clean up, it's important to choose the right type. If you're primarily concerned about potential spills containing hazardous materials, choose a specially designed hazmat sock.

Hazardous material spills can endanger people and the environment, contaminate or destroy property and result in fines by OSHA or the EPA if they're not managed properly. Stocking up on hazmat socks is the responsible solution to the problem of potential hazardous spills or leaks.

If you're primarily concerned about cleaning up oil as in the case of a large mechanic's or machine shop, you should have absorbent socks designed for petroleum based liquid clean up on hand. You can choose a sock that will absorb only oil if you're concerned about potential spills occurring in water. This means the oil will be absorbed for removal from water.

General, all purpose spill socks are the type most commonly required for commercial or residential clean up. These socks will absorb a variety of types of liquids, including contaminated or regular water. If you're concerned about what a potential water leak could do in terms of property destruction, this is the sock you should have at hand. These socks can also be used to help clean up excess water that's been used in fire control or during flooding.

Spill socks can help ensure your workplace or your home stays safe from the damage liquid spills can cause. When spills happen, socks can minimize damage by containing and stopping the spread of liquid. They're an affordable solution for oil leaks, minor flooding and containment of even hazardous liquids.

You can find and buy quality absorbent socks easily online for fast delivery. You can also easily restock your supply as needed so they're always available to handle spills.

Overnight News

2010-08-09T05:22:00.001-07:00

European bourses are trading higher playing catch up with the recovery late Friday on Wall Street
News of a potential higher inflation forecast in BOE’s upcoming inflation report saw an early test of barriers at 1.6000 in GBP/USD
Markets look forward to the FOMC rate decision tomorrow with further alarms sounded for QE2

ASIA

JGBs gained overnight, with futures rising towards a seven-year peak, after US Treasuries surged on weakerthan- expected US jobs data that stoked expectations of monetary easing by the Federal Reserve. Nikkei fell 0.7% in very thin trade after jobs data signalled the US economic recovery was flagging and fanned talk that the Federal Reserve may consider further policy easing at a meeting this week. Strength in the JPY weighed on exporters after the USD approached a 15-year low against the JPY on Friday following the payrolls data, according to market players. (RTRS)

In other news, China extended a record buying spree of Japanese debt in June as sovereign debt concerns buffeted the EUR, purchasing a net USD 5.9bln of short-term bills although it was a net seller of longer dated notes. (RTRS)

Elsewhere, the introduction of additional stimulus measures in China would cause over capacity, asset bubbles and drive speculation and price surges in the property market, according to deputy head of the financial institute of the State Council’s Development Research Centre. In other news, China’s economy will enjoy a strong, stable second half, putting it on course for full year growth of about 10%-11%, according to the head of the Development Research Centre, Zhang Yutai. Also, former Chinese central bank deputy governor Wu Xiaoling said the nation shouldn’t introduce additional stimulus measures. (People’s Daily/ Shanghai Securities News)

The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery. Faced with weak economic data and rising fears of a double-dip recession, the Federal Open Market Committee is likely to ensure its policy is not constraining growth and to use its statement to signal greater concern about the economy. It is, however, unlikely to agree big new steps to boost growth. Smaller measures to help the economy could initially take the form of a decision to reinvest proceeds from maturing mortgage-backed securities held by the US central bank, thereby preventing the Fed’s balance sheet from shrinking naturally. (FT FrontPage)

In other news, the US economy will improve slowly and another round of fiscal stimulus wouldn’t be effective, according to former Treasury secretaries Paul O’Neill and Robert Rubin. (Sources)

Elsewhere, Goldman Sachs revises US growth forecast and sees US real GDP growth to average 1.5% at an annual rate in H2. Co. previously forecasted growth to rise from 2.5% in Q1 to 3.5% by H2. Co. says they now look for a more gradual pickup-from 1.5% in Q1 to 3% in Q4. The 2.5% Q4/Q4 average is about 0.9% points below the previous forecast. Says annual average basis of their forecast for growth in 2011 drops to 1.9% from 2.4% and says expects jobless rate to rise to 10% by early 2011 and remain there for the rest of the year.
Elsewhere, Barclays revises GDP outlook for Q3 to 2.5% from 4%. (CNBC)

Also, new US whistleblowing incentives within the Dodd-Frank financial reform act – that could net informants multimillion dollar pay-outs – are likely to generate a surge in allegations against US-listed companies and Wall Street banks, lawyers say. (FT)

Currencies Trading Strategy

2010-08-09T05:19:00.000-07:00

EUR/USD. Rally Intact

EUR/USD (1.3263) is down slightly overnight, but after showing signs of stalling last week, the uptrend appears intact after Friday’s strong rally.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support / Resistance Levels: Support for EUR/USD lies at 1.30 (psychological), 1.2733 (Jul 21 low), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.3334 (Aug 6 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

The CFTC net long, non-commercial position rose to -13.6K last week, consistent with the ongoing rally in spot. The position is at the top of its six-month average, suggesting a potential top in price action.
The risk reversal (3m, 25delta) rose overnight along with spot. The reversal is still heavily skewed for EUR downside, but it has rallied sharply towards the top of its six-month range – suggesting the rally is increasingly at risk of stalling or failing.
Implied Vol (3m) rose overnight, but it remains in the bottom-third of its six-month range.

Cross-asset valuation: The significant correlations that EUR/USD has exhibited during the past 60 days are the US10yr yield (positive) and the SPX (positive).

GBP/USD. Stalling at 1.60 - still

Cable (1.5956) is up overnight, but it remains stalled at 1.60, where it has been stuck since early last week.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly overbought.
Support/Resistance Levels: Resistance lies at 1.5999 (Aug9 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.50 (psychological), 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

The CFTC net long, non-commercial position rose to -8.4K last week, consistent with the rise in spot. The net position is trending higher and lies near the top of the 6-month range, suggesting a potential top in price action.
The risk reversal (3m, 25delta) rose overnight along with spot, and it remains near the high since Feb. While it remains skewed for GBP losses, it is also in the upper end of its six-month range, which suggests an overbought condition.
Implied Vol (3mo) rose overnight but remains near the low since Sep 2008.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative) and EUR/USD (positive).

USD/CHF. Channeling a downtrend

USD/CHF (1.0399) is up overnight but continues to trade a modestly downtrending channel formation in place since early-Jul.

Technicals:

Trend: daily lower; weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.
Support/Resistance levels: Resistance lies at 1.0641 (Jul27 high), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.0332 (Aug6 low) and 1.0131 (Jan low).

Positioning:

The CFTC net long, non-commercial position rose to 15.1K, a new high since 2009. Such an extreme position suggests a potential bottom in USD/CHF.
The risk reversal (3m, 25delta) fell overnight despite the rise in spot. This market segment has abandoned its bullish USD/CHF call, but the skew is extreme, suggesting potential for a rally in spot.
Implied Vol (3mo) is up overnight, above multi-year lows.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

USD/CAD. Rebound is testing downtrend

USD/CAD (1.0288) is up overnight, holding near the highs of Friday’s sharp, post employment rally. Price action is now testing the downtrend in place since early-Jul.

Technicals:

Trend: Daily lower; weekly lower.
Overbought/Oversold (stochastics): Daily oversold; weekly neutral.
Support/Resistance Levels: Resistance lies at 1.0307 (Aug 9 high), 1.0584 (Jul16 high), 1.0677 (Jul5,6 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0108 (Aug5 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

The CFTC net long, non-commercial position rose to 33.3K last week. The move is from the bottom half of the six month range, and could suggest that spot will rebound from here.
The risk reversal (3m, 25delta) rose overnight along with spot. It is trending lower deep into the bottom half of the six-month range, consistent with the move lower in spot but also warning of a potential reversal.
Implied Vol (3m) rose slightly overnight and looks to be testing the downtrend in place since May.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

USD/JPY. Pinned near lows

USD/JPY (85.57) is up overnight, rebounding slightly from the new low since Nov’09 established Fri. However, the downtrend continues. Further weakness is likely to provoke a policy response from Japanese officials, but the case for a rally is also weak.

Technicals:

Trend: Daily lower; Weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.
Support/Resistance Levels: Support lies at 85.02 (Aug6 low) and 84.83 (Nov27 low). Resistance lies at 88.12 (Jul28), 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

The risk reversal (3m, 25delta) remained relatively steady overnight. The skew is still in favor of USD/JPY downside, but lies in neutral territory relative to its range the past six months.
Implied vol (3m): rose overnight but remains deep into the lower half of its 6-month range.

Cross-asset valuation: The correlations of USD/JPY with the US 10yr yield (positive) and the S&P500 (positive) are significant.

AUD/USD. Uptrend continues

AUD/USD (0.9188) inched higher overnight. It remains within the uptrend in place since early-Jun.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support/Resistance: Technical support lies at 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.9222 (Aug6 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

The CFTC net long, non-commercial position rose to 49.1K. It is trending up and lies in the middle of the six-month range, suggesting no impediment to further strength.
The risk reversal (3m, 25delta) rose overnight. It continues to trend higher in the middle of its 6-month range.
Implied Vol (3m) fell overnight and continues to trend lower below the middle of its range for 2010.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and the DXY (negative.)

NZD/USD. Wedging against July high

NZD/USD (0.7299) is down overnight. It continues to trade higher lows, but the daily highs remain stalled below 0.74.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly overbought.
Support/Resistance: Resistance lies at 0.7397 (Jul27 high), 0.7442 (Jan14 high), 0.75247 (Nov high), and 0.7635 (Oct21 high). Support lies at 0.72 (psychological), 0.7030 (Jul19 low), 0.6795 (Jul1 low) and 0.6561 (May25 low).

Positioning:

The CFTC net long, non-commercial position rose to 15.0K last week. It is now in the upper reaches of its six-month range, suggesting an elevated chance that the rally since Jun is over.
The risk reversal (3m, 25delta) slipped overnight, but it is trending higher above the middle of its six-month range.
Implied Vol (3m) fell overnight. It is stabilizing in the bottom third of its six-month range.

Cross-asset valuations: The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P500, positive), the DXY (negative) and commodities (CRB index, positive).

Intraday Market Outlook for Day Traders

2010-08-09T05:18:00.000-07:00

EUR/USD
Starting the week in very low volatility during all of Asian trading hours today, the pair continues to consolidate its higher levels in the European morning and is currently at 1.3265. We do not expect much activity today but a slight bidding tone, bringing the market up to levels around 1.3325.

GBP/USD
Cable is trading right now at the lower end of its trading band in the European morning, at 1.5950. We see the downside risk limited at 1.5925 for today, from where some recovery moves could set in, up to 1.5985.

USD/CHF
The slighty stronger dollar this European morning is currently trading at 1.0402 against the Swiss franc. We see this market losing some minor ground today, to the 1.0345 mark.

USD/JPY
The dollar gained a little territory against the yen in thin Asian market hours today, priced right now at 85.60 in early European trading. We expect down moves, to levels around 85.30.

Intraday Market Outlook for Day Traders

2010-08-06T22:45:00.000-07:00

EUR/USD
In low volatility this European morning, the pair is moving directionless, currently at 1.3165. We do not expect any significant change for today in the market's behavior and project a sideways trend with a slight selling tone, between levels of 1.3190 and 1.3155.

GBP/USD
Some selling has put cable down to 1.5857 right now in early European trading. While we see no aspect for much further downside risk (1.5825 at the most), we expect the upside to be limited as well, at 1.5875.

USD/CHF
A quiet summer market has put the dollar to sleep in the European morning, priced at this moment at 1.0486 against the Swiss franc. We expect this level to be defended more or less today, in a bandwidth between 1.0490 and 1.0455.

USD/JPY
After a short upswing against the yen in late Asian trading, the dollar is currently trading slightly downwards again, at 86.05 now in the European morning. We expect more of the downmove to come today, to levels around 85.75.

Overnight News

2010-08-06T22:44:00.001-07:00

ASIA

JGBs dipped overnight, with futures handing back earlier gains, amid jitterish trade ahead of closely watched US jobs data later in the day that is expected to set the direction for a market that has scaled steep peaks this week. Nikkei edged down 0.1%, after an unexpected rise in weekly US jobless claims underscored the economy’s weakening and sent Wall Street lower a day before the monthly US payrolls report. (RTRS)

In other news, Japanese Prime Minister Kan said he is closely watching the economy’s performance to see if fresh stimulus is needed, as worries that the world’s second largest economy is losing steam. (RTRS)

Christine Romer, one of President Obama’s top economic advisers, is stepping down, an exit that comes as the White House struggles to keep the recovery on track with Congressional elections looming in November. (RTRS)

In other news, foreign central bank’s ownership of US Treasuries rose by USD 6.456bln to USD 2.326trl in the week ended August 4. Also, the US Federal Reserve’s balance sheet increased slightly USD 2.309trl on August 4 compared with USD 2.308trl on July 28, according to the Fed. (RTRS)

The march to lower yields continues

2010-08-06T22:42:00.000-07:00

Overview

The march to lower yields continues, now coupled with the weakening of the US dollar. Excessive buying of the greenback in the six weeks to mid-June have now been unwound, the Euro hitting a high at $1.3334, dollar/yen a new low for this year at 85.07, the Singapore dollar almost matching its record low at 1.3440, and this weeks best performer the South Korean won at 1160. Benchmark US two-year TNotes’ yield dipped to a new record low 0.513%, UK five-year likewise at 1.97%, foreign currency Brazilian and Russian bonds at new record lows of 2.56% (USD 2014) and 4.65% (EUR 30-year). Five-year maturities are outperforming, flattening that part of the curve while long-dated paper remains out of favour steepening the back end; ten-year JGB’s touched 1.00% their lowest since 2003. US Treasury Inflation Protected Securities (TIPS) out to 2015 now have negative yields of up to 49 basis points; 2.5% 2016 Index-Linked Gilts yield just 7 basis points. Note that US CPI is currently running at +1.1% Y/Y, Japanese prices excluding fresh food –1.0%, so that US Treasury real rates are mostly negative while Japanese ones are some of the few yielding a real 2.00%. Stock indices rallied on average by 2.00% this week, Germany, Helsinki, Mumbai, Singapore and Sweden inching to new highs for this year, easing from here this afternoon. Commodities generally rallied, a combination of dollar weakness and weather related (see below).

Political and Economic Developments

Eagerly anticipated US employment figures out today showing joblessness remained at 9.5% but as census workers were laid off a total of 131K jobs were lost, June’s losses revised up by 96K to a loss of 221K jobs. Weekly Unemployment claims hinted as such, edging up to 479K, just under the 490K that has capped since November 13th and well above July’s 427K floor. A total 14.6 million Americans are now unemployed, 44% for over six months. Flat June earnings and consumer spending unusually remained steady as Americans save rather than shop. From a rate of roughly 2% to 4% since 1999, and 0% to 2% between 2005 and 2008, they are now saving 6.4% as they did in the late eighties. Deleveraging de rigueur.
The Bank of England, ECB and Reserve Bank of Australia left rates unchanged at 0.50%, 1.00%, 4.50% respectively.

Underlying Themes

Nature, and more specifically the weather, has unleashed just some of her infinite powers on the world this year, reminding us how fragile life is. From earthquakes, volcanoes and oil spills, now heat waves and floods. Summer temperatures in the North East of the USA and across Europe have been unusually high, Moscow hitting a record 39 degrees Celsius and triggering forest fires which have blanketed the city in thick smoke. Wheat exports have been cancelled, Ukraine and Kazakhstan hard hit too, traders declaring force majeure and front month futures on the CBOT hitting 841 cents per bushel (almost double June’s level), dragging Oats (297) and Corn (425) in its wake. One weather station in Ireland recorded its wettest summer since measuring began in 1950 and the heaviest monsoon rains in eighty years flooded vast areas of Pakistan killing 1,600, rendering four million homeless. Since mid-July the worst rainstorms in a decade batter southern China, 1,100 dead or missing and 3M evacuations.

What to watch for next week

Monday Japan June Current Account, July Money Supply and Bank Lending, Bankruptcies, Economy Watchers’ Survey, German Trade Balance and Eurozone August Sentix Investor Confidence. Tuesday UK July RICS House Price Balance, DCLG June House Prices and Trade Balance, the Bank of Japan sets rates (expected unchanged at 0.10%) as July Machine Tool Orders are released, then US Small Business Optimism, June Wholesale Inventories, Q2 Unit Labour Costs and Non-Farm Productivity as the Fed decides on monetary policy (rates expected unchanged at 0.25% but watch for possible Quantative Easing steps). Wednesday Japan June Machine Orders, July Domestic CGPI, UK Nationwide Consumer Confidence, Unemployment, June Average Earnings and ILO Unemployed, the Bank of England’s Quarterly Inflation Report, US June Trade Balance and July Monthly Budget Statement. Thursday Japan July Consumer Confidence, US Import Price Index and EZ16 June Industrial Production. Friday the 13th German and Eurozone Q2 GDP, EZ16 June Trade Balance, US Business Inventories, July CPI, Retail Sales and August University of Michigan Confidence Survey.

Positioning and Technical Analysis

We continue to feel that rather than a quiet month August will see trends develop and more chaotic conditions predominate. Many top-rated bonds should see yields tumble to new record lows, those of dubious quality likely to suffer another hit as holders are forced out. The increasingly glaring spread between the two will become the domain of specialist firms only as credit committees relegate these to speculative status. The move to generalised US dollar weakness should continue and possibly gather pace as those returning from holiday are forced to take remedial action. Stock markets will probably be subject to increasingly violent intra-day swings.

Fundamental Perspective

2010-08-06T03:10:00.000-07:00

The market expects that a U.S. report will reveal today, that the number of U.S. lost jobs increased for a second month. Yesterday, a report showed that initial jobless claims rose 19,000 to 479,000 in the week ended in the past month, which is the most since April. This could set the Federal Reserve under pressure to take extra steps to keep borrowing costs low. On top of that Nobel Prize-winning economist Joseph Stiglitz criticized that the U.S. economic recovery is “anemic” and demanded for a “better-designed” stimulus package. As a result of that the USD is close to a weekly decrease versus 15 of its 16 most-traded counterparts. The JPY traded near to an eight-month high against the USD and was at 85.85. Economists prognosticated that a German report will indicate industrial production rose for a fourth month. Even European Central Bank President Trichet is astonished about the fast recovery in Europe. Trichet said that the interest rate is appropriate and will therefore stay at a record low at 1 percent. Based on that the EUR was close to a three month high against the USD and traded at 1.3182. The EUR/USD already gained 11 percent after it had reached a 4 year low in June.

Australia’s currency was close to a three month high versus the USD. The AUD/USD climbed 1.2 percent this week and traded at 0.9150. The Reserve Bank of Australia will release today its quarterly statement on monetary policy whereat the economists do not expect any changes in central bank’s growth and inflation prognoses. New Zealand’s currency is close to a second weekly los versus the JPY. The NZD/JPY was at 62.66 and the NZD/USD traded at 0.7299.

Based on speculations that a report today will show that jobs were added in July for a seventh straight month, Canada’s currency strengthened to a two-month high versus the USD. The USD/CAD already fell 2.6 percent since July 20th and traded at 1.0108.

Index Recommended Levels

2010-08-06T03:09:00.001-07:00

Dow Jones :
Resistance(daily close) : 9382.12, 9744.26, 10 091.30, 10 935.23, 11 164.57, 344.92 and 11 520.30. Then 11 749.22, 11 970.00, 12 152.82, 12 600.24, 12 982.20, 13 162.50 and 13 320.00. Break of the latter will lead to 13 567.60, 13 668.74 and 13 792.53 (published on October 21, 2008).
Support (daily close): 9630.33 and 9358.35(main), 9090.00, 8912.62 (published on November 10, 2009).

Today’s support: - 10620.18, 10608.14 and 10573.32(main), where a delay and correction may happen. Break of the latter will give 10528.37, where correction also can be. Then follows 10485.00. Be there a strong impulse, we shall see 10445.63. Continuation will bring 10417.50 and 10378.13.
Today’s resistance: - 10682.86 and 10707.38(main), where a delay and correction may happen. Break would bring 10726.87, where a correction may happen. Then follows 10753.22, where a delay and correction could also be. Be there a strong impulse, we’d see 10787.76. Continuation would bring 10802.82.

S&P500

Support: - 1113.63 and 1102.50( main). Break will give 1093.64, where correction could be. Then follows 1080.00, where correction could also be. Be there a strong impulse, we would see 1063.13. Continuation will lead to 1058.68.
Resistance: - 1128.23(main), where a correction may happen. Break would result in 1138.08, where correction may also be. Then 1147.46. Be there a strong impulse, we would see 1153.12. Continuation will lead to 1157.47.

NASDAQ

Support : - 2280.10 and 2271.50(main). Break will give 2263.33, where correction could be. Then 2238.80, where correction could also be. Be there a strong impulse, we would see 2226.50. Continuation will lead to 2217.30.
Resistance : - 2300.52(main), where the correction could be. Break will bring 2314.68, where the correction may also happen. Then 2325.45. Be there a strong impulse, we would see 2340.09. Continuation will lead to 2354.14.

GOLD

Support: - 1187.41 and 1180.22(main). Break of the latter will give 1167.30, where a correction is possible. Then 1158.80, where a correction is also possible. Be there a strong impulse, we would see 1152.12. Continuation will bring 1144.46.
Resistance: - 11203.80(main), where a correction may happen. Break would bring 1209.20, where a correction may also happen. Then follows 1215.00. Be there a strong impulse, we’d see 1220.35. Continuation would bring 1226.24.

SILVER

Support: - 18.17 and 17.96(main).where correction is possible. Break of the latter would give 17.82, where correction may happen. Then goes 17.73, where correction can also be. If a strong impulse, we would see 17.55. Continuation would give 17.30 and 17.19.
Resistance : - 18.40, 18.63 and 18.71(main), where correction is possible. Break will lead 18.81, where again may be a correction. Then follows 18.97. If a strong impulse, we would have 19.16. Continuation would give 19.35.

Daily Outlook

2010-08-06T03:07:00.000-07:00

I was always a little nervous of the bullish call with the expectation for a general reversal high in the U.S. Dollar. Yesterday's failure to extend gains and slip lower through what appears to be a support line from the 0.8904 is threatening a deeper reversal lower. A break of yesterday's 0.9115 low would increase that pressure and below the 0.9094 low then confirm follow-through to 0.9053-70. Take care as this could cause a reaction but overall I feel the downside should then extend to the 0.8966-89 area at least. Expect a correction there before the next leg lower to retest the 0.8904 low...

If instead this manages to break back above the 0.9182 high then I'll have to rethink the situation. Assuming this comes with general U.S. Dollar losses it would tend to resurrect the bullish structure for a rally through 0.9233 and to 0.9270 minimum - more likely the 0.9301-27 resistance before a correction. After that is over we should well see a test of the 0.9390-16 area - where the weekly corrective highs rest...

Medium Term Outlook

6th August:

Much depends on today I think - if this does break lower as I am now beginning to suspect then the 0.8966-89 and 0.8904 areas are the next major supports with the lower level quite likely to cause a correction. There's also support at the 0.8850 pivot area.

If the 0.9182 high breaks it will swing things back in favor of the rally for 0.9270 & 0.9301-27 en route the 0.9390-16 area which should pause the move.

EUR/USD upside capped at 1.3200 area

2010-08-06T03:06:00.000-07:00

Euro bullish attempt witnessed at European session opening time has been short lived, and after reaching session high at 1.3205, the pair has reversed to levels right below 1.3175 session low, yet trading half way through the weekly range, from 1.3120 and 1.3260.

Below 1.3175, the pair might find support at 1.3120/35 (Aug 4/5 lows) and 1.3100/05 (Jul 29 high). On the upside, resistance levels lie at 1.3195/05 (session highs) and above here, 1.3235/40 (Aug 4/5 high) and 1.3260 (Aug 3 high).

Index Recommended Levels

2010-08-03T03:12:00.000-07:00

Dow Jones :
Resistance(daily close) : 9382.12, 9744.26, 10 091.30, 10 935.23, 11 164.57, 344.92 and 11 520.30. Then 11 749.22, 11 970.00, 12 152.82, 12 600.24, 12 982.20, 13 162.50 and 13 320.00. Break of the latter will lead to 13 567.60, 13 668.74 and 13 792.53 (published on October 21, 2008).
Support (daily close): 9630.33 and 9358.35(main), 9090.00, 8912.62 (published on November 10, 2009).

Today’s support: - 10608.14 and 10573.32(main), where a delay and correction may happen. Break of the latter will give 10528.37, where correction also can be. Then follows 10485.00. Be there a strong impulse, we shall see 10445.63. Continuation will bring 10417.50 and 10378.13.
Today’s resistance: - 10682.86 and 10707.38(main), where a delay and correction may happen. Break would bring 10726.87, where a correction may happen. Then follows 10753.22, where a delay and correction could also be. Be there a strong impulse, we’d see 10787.76. Continuation would bring 10802.82.

S&P500

Support: - 1102.50, 1093.64, 1080.00 and 1063.13( main). Break will give 1058.68, where correction could be. Then follows 1051.90, where correction could also be. Be there a strong impulse, we would see 1047.22. Continuation will lead to 1038.63.
Resistance: - 1128.23(main), where a correction may happen. Break would result in 1138.08, where correction may also be. Then 1147.46. Be there a strong impulse, we would see 1153.12. Continuation will lead to 1157.47.

NASDAQ

Support : - 2271.50, 2263.33, 2238.80 and 2226.50(main). Break will give 2217.30, where correction could be. Then 2210.62, where correction could also be. Be there a strong impulse, we would see 2205.18. Continuation will lead to 2194.36.
Resistance : - 2295.00(main), where the correction could be. Break will bring 2314.68, where the correction may also happen. Then 2325.45. Be there a strong impulse, we would see 2340.09. Continuation will lead to 2354.14.

GOLD

Support: - 1167.30, 1558.80 and 1152.12(main). Break of the latter will give 1144.46, where a correction is possible. Then 1137.25, where a correction is also possible. Be there a strong impulse, we would see 1131.70. Continuation will bring 1126.41.
Resistance: - 1192.50(main), where a correction may happen. Break would bring 1198.13, where a correction may also happen. Then follows 1203.80. Be there a strong impulse, we’d see 1215.00. Continuation would bring 122263.

SILVER

Support: - 18.17 and 17.96(main).where correction is possible. Break of the latter would give 17.82, where correction may happen. Then goes 17.73, where correction can also be. If a strong impulse, we would see 17.55. Continuation would give 17.30 and 17.19.
Resistance : - 18.54 and 18.63(main), where correction is possible. Break will lead 18.81, where again may be a correction. Then follows 18.97. If a strong impulse, we would have 19.16. Continuation would give 19.35.

Forex: EUR/GBP rebound from 0.8266 stretches above 0.8300

2010-08-03T03:11:00.001-07:00

The British currency was denied to move further down, after investors started to show more support towards the Hegemonic currency in the European trading session. The pair has presently recovered over 40 pips to the upside, jumping above 0.8300.

Earlier on, EUR/GBP was propelled to the downside, reaching an intra-day low at 0.8266, but far from reaching a fresh 1-month low at 0.8247 first touched on Monday. Over the last 2 hours, the course drifted north, driving the pair to 0.8310, as the Euro pared yesterday's losses.

Resistance is likely to be found at the following levels “0.8350/60~ * congestion, mid range, 0.8325 2 Aug high ahead of 0.8300 current 3 Aug high. Support may be taken at 0.8252 2 Aug low, 0.8242 * 61.8% Jul rally ahead of 0.8217 2 Jul low” commented the 4CAST analysis team.

Gold bulls reduce their exposure

2010-08-03T03:10:00.000-07:00

With global stock markets heading for the best monthly performance since last July, gold has found it increasingly difficult to hold onto recent gains.

The MSCI World index which monitors stocks from around the world rose more than eight percent during July as better economic and corporate data helped sentiment. Consumer confidence readings are still on the low side which continues to indicate a bumpy recovery ahead. Robert Schiller, a well known professor at Yale University, sees the risk of a US double dip recession as being above 50 percent.

The positive sentiment from stocks, where more than 77 percent of companies in the S&P 500 Index reported earnings above expectations, helped drive the yield on corporate bonds to a six year low. This according to Bloomberg triggered a record USD 85.7 billion issuance of debt in July with investors snapping up the relative high yield compared to governments bonds.

The Reuters Jefferies CRB index rose 1 percent on the week and returned 4 percent in July, the best monthly performance since May 2009. Gains were recorded across different sectors. The best performing markets were sugar, coffee, wheat, natural gas and palladium with losses in other energies and gold pulling in the opposite direction.

The price of gold dropped below the May low and has come close to the important 200 day moving average support at 1,150. This is the level that many long term investors view as the level that needs to hold. The speculative long position on Comex has been reduced by 27 percent over the past three weeks and another reduction is expected this week. Meanwhile Gold held in Exchange Traded Funds also saw a reduction albeit only by one million ounces, a mere 1.5 percent of total known holdings.

The next couple of weeks will be very important as to the near term direction of gold. The worry is that a move below 1,150 could trigger a much larger correction than the 100 dollars seen so far. Supportive news this week was a pick-up in physical demand with jewelers taking advantage of the recent drop in the price of both gold and the dollar. The strength of the global recovery is still debatable as the Yen, often viewed as a safe haven, strengthen against the dollar and the euro.

Technically 1,150 on spot gold should provide strong support followed by 1,124 while resistance levels are 1,176 and 1,185.

During this recent sell off silver has managed to outperform gold which is unusual during a correction phase as silver tends to get hurt more due to lower liquidity. Meanwhile platinum is still finding support both outright and on a relative basis to gold with the ratio indicating further support near term.

Investors’ love affair with Palladium continues having rallied ten percent during July and despite the violent sell off in May shows a year to date return of 19 percent. Spot palladium has now recovered more than 50 percent of the May sell off trading at 490 dollars per oz. and as such should find resistance towards 505 where either profit taking or a switch into platinum could be viewed as reasonable suggestion.

Crude oil continues to trade sideways having failed to find any traction recently. A weaker dollar and higher equity market has been offset by worries that that the global recovery will not be strong enough to boost demand. The weekly US crude inventory data showed another surprise increase, this time by 7.3 million barrels versus an expected drop of 1.7 million.

One of the reasons behind this surge in inventory was triggered by record imports into the Gulf of Mexico region as crude came onshore from floating storage. Profits from storing crude oil for future delivery has almost disappeared as forward prices have dropped. Last year up towards 100 million barrels was kept on floating storage but this has now dropped to around 10 million. Since April the spread or Contango between the two nearest futures contracts has dropped from 4.58 dollars down to 45 cents today removing the profitability of this strategy.

Technically WTI crude oil for September delivery is stuck in a wide 72.60 to 81.00 range with the latter being 50% retracement of the May sell off. Inside this range further resistance can be found at 79.70 and support at 75.90.

Talk of another global food crisis has begun to emerge on the back of the heat wave that has hit Russia, Kazakhstan and Ukraine this past month. Temperatures have reached highs that have not been seen since record began 130 years ago and so far the damaged crop area covers some 103,000 square kilometer or 25.5 million acres. In Chicago wheat futures have had the biggest monthly gain since 1973 while European milling wheat have rocketed by 40 percent this month reaching a high of 194.50 Euro per metric tons.

Analysts fear prices could rise further in the coming weeks as the region continues to cut its estimated wheat crop production. Being the third largest exporter globally any news of a reduced crop will increase prices from other regions as fewer countries will compete for export tenders. The International Grains council has revised global stockpiles down by 2.5 percent to 192 million metric tons by June 2011 reversing a forecast for higher inventories just last month.

While this uncertainty persists technical levels have little use as momentum and fear more than anything drives prices. September wheat on CBOT trades close to the November 2009 high at 639.75 but whether that will provide any resistance remains to be seen. Weather forecast from Europe, Russia and even Canada, where they are struggling with too much rain, will be watched closely as any signs of change should remove some of the recent support.

The price of the high quality Arabica coffee future rose more than six percent on the week, reaching a 12 year high at 178.75 dollars per pound due to a tight supply situation stemming from a step drop in Columbian production. Tightness in the spot market could persist until an expected record Brazilian crop hits the market in a few months time.

Forecast on Spot Gold , NZD/USD, USD/SGD

2010-08-01T01:45:00.000-07:00

Spot Gold

SPOT GOLD closed @ 11685 which was ABOVE the open and breached the previous day's high. The High was 1.5 Dollars from Precise Trader's Res Zone 1 and the Low was 0.5 Dollars from Precise Trader's Sup Tgt 1. The Hourly Oscillators are MIXED and the Price is Below the MA, so CAUTIOUS approach is needed. Hourly Trend is Limited Down while 11775 holds and Daily Trend is also Limited Down while 12085 holds, so expect the price to have a Minimum Downside and the Bears have to be Cautious. The Daily Trend was within the Prior Day's Range and the Bulls gained mildly towards the Close . The Hourly Trend has been in a Range Trading with a Limited Downside Bias,11735-775 are the Critical levels to watch to maintain the Bearish Outlook .On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session with a potential to Turn Up Soon. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 11580 11450 11360 BEARS: 11715 11805 11865

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

NZDUSD

NZDUSD closed @ 7240 which was BELOW the open and breached the previous day's low. The High was PRECISELY at Precise Trader's Res Zone 1 and the Low was 10 pips from Precise Trader's Sup Tgt 2. The Hourly Oscillators are Bearish but Weak and the Price is Below the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Limited Down while 7295 holds and Daily Trend is Limited Up while 7105 holds, so expect the price to have a Minimum Downside and the Bears have to be Cautious. The Daily Trend breached the Prior Day's Low and the Bears gave up mildly towards the Close . The Hourly Trend has been in a Range Trading with a Limited Downside Bias, 7280-95 are the Critical levels to watch to maintain the Bearish Outlook . On the 5 min is along the Steep Down Channel and the Patterns are suggesting a Choppy Session until there is a Clear Break . The Opening Price Principles suggests that NZD is Weak against most Crosses but should be Limited so Cautious approach is needed.

BULLS: 7190 7135 7085 BEARS: 7265 7325 7365

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

USDSGD

USDSGD closed @ 13635 which was BELOW the open and was within prior day's trading range. The High was 30 pips from Precise Trader's Res Zone 1 and the Low was 10 pips from Precise Trader's Sup Tgt 1. The Hourly Oscillators are Bearish but Weak and the Price is Within the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Limited Down while 13725 holds and Daily Trend is also Limited Down while 13805 holds, so expect the price to have a Minimum Downside and the Bears have to be Cautious. The Daily Trend was within the Prior Day's Range but the Bears gained towards the Close . The Hourly Trend has been in a Range Trading with a Limited Upside Bias, 13690-13725 are the Critical levels to watch to maintain the Bearish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 13590 13540 13480 BEARS: 13665 13705 13765

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

The Brief Daily Forecaster

2010-08-01T01:44:00.000-07:00

This pair has the knack of doing what is least expected when in a consolidation phase. Therefore, until the 1.0394 high is broken I would prefer to remain neutral. However, to retain a bullish outlook I do feel the 1.0330-43 area is important. While it holds there remains the risk that we could see direct follow-through above 1.0394 which would extend gains to the1.0441-61 area followed by a correction and final move to the 1.0494-02 resistance. Also note 1.0527 and the 1.0585 high.

If this actually breaks below 1.0330 it will raise the risk of follow-through lower again. However, I'd still prefer a break of the 1.0298 low that would provide the catalyst for a decline to the 1.0255 low and probably beyond to the 1.0200-20 area for a correction before the final move to the 1.0134-43 target.

Medium Term Outlook

29th July:

The erratic and whippy price development continues. Either we'll see a move down to the 1.0138 area before a recovery or the rally will resume directly above 1.0394 to 1.0470-90 initially but then to 1.0585-06 en route the 1.0851 high. Both are forms of triangle, the first symmetrical and the second ascending...

Below 1.0130 would target the 0.9929 low... above 1.0851 is required to break the weekly consolidation.

Dollar Struggles Ahead of 2Q GDP – Fed Maintains Dovish Outlook

2010-07-31T02:40:00.001-07:00

U.S. Dollar weakness carried into the North American trade, with the EUR/USD breaking above 1.3100 for the first time since May, and the bearish sentiment surrounding the greenback may linger going into the end of the week as the economic docket for Friday is anticipated to show the world’s largest economy expanding at a slower pace in the second-quarter. At the same, the reserve currency failed to react to the shift in market sentiment, while the Japanese Yen and Swiss Franc strengthened against its major counterparts following the rise in risk aversion, and the correlation between the greenback and risk appears to be breaking down as the recovery in the U.S. lags behind the rest of the industrialized countries.

St. Louis Fed President James Bullard held a dovish outlook for inflation and said the U.S. faces a similar scenario to Japan as price growth falters, and argued that the FOMC should “expand the quantitative program through the purchase of Treasury securities” in an effort to mitigate the risks for deflation. Although, Mr. Bullard said he expects the downside risks for inflation to subside once the recovery comes into full swing, and warned that keeping the benchmark interest rate at the record-low for too long could be counterproductive and may “encourage a permanent, low nominal interest rate outcome.” In addition, Dallas Fed President Richard Fisher noted further easing in monetary policy could have limited impact on the real economy as households and businesses “are beset by unmanageable uncertainty,” and sees a risk for the economy to be “sailing forward at suboptimal speed, despite the fact that the cost of borrowing is low, equity markets have shown resilience, and liquidity is plentiful.” The comments from the heads of the district central banks suggests the Fed may opt to expand monetary policy further over the coming months in an effort to strengthen the recovery, and may see scope to hold borrowing costs close to zero going into 2011 to counter the substantial amount of slack within the real economy.

Nevertheless, as the world’s largest economy is projected to expand at an annualized pace of 2.5% in the second-quarter, with personal consumption forecasted to increase 2.4% following the 3.0% rise during the first-three months of the year, the slower pace of growth could weigh on market sentiment as policy makers anticipate to see a moderate recovery going forward. At the same time, the final reading for the U. of Michigan confidence survey is expected to come in at 67.0 for July from an initial forecast of 66.5, but the market may neglect the upward revision as households continue to face tightening credit conditions along with the ongoing weakness in the labor market.

Euro Rallies as Economic Confidence Tops forecast, German Unemployment Declines
After a lackluster performance yesterday, the euro rallied to its highest level since May 10th as the 16 member euro area economic confidence exceeded economists’ forecasts. Figures jumped to 101.3 in July from an upward revision of 99.0 the previous month amid expectations of 99.1. At the same time, consumer and business confidence pushed higher during the month. Today’s readings come on the back of an improved near-term outlook for the euro zone economy. However, due to the size of the increase paired with the weak labor market, and tough austerity measures by governments, we will likely see confidence slip lower in the fourth quarter. Meanwhile, Germany’s unemployment rate fell to its lowest level since November 2008 as widely expected. However, Germany’s labor market may stabilize at 7.5 percent for the rest of the year and into the first quarter of 2011 as the regions exports will likely be weighed by slow growth in its neighbors, which will in turn cut profit margins and ultimately staff levels.

British Pound Continues to Trend Higher Ahead of GfK Consumer Confidence Survey
The British pound has extended its five day advance and looks poised to test 1.580 over the medium term as policy makers are slowly shifting to the side of Andrew Sentence, and recently stating that the increase in the value added tax in 2011 will put upward pressure on consumer prices. Thus, we may see inflation remain above the central bank’s target longer than expected. Market participants will shift their focus to the GfK consumer survey report. As of late, economists are forecasting the reading to fall to -20 from -19.

Australian Dollar Regains Footing as Swan Talks Down Recent Inflation Report
The Australian dollar pared yesterday’s decline as Australian Treasurer Wayne Swan talked down the recent disappointing inflation report. Mr. Swan stated that interests rates are “back to normal,” and went onto add that inflation was “moderating.” Going forward, we may see increased volatility in the AUDUSD on Friday as traders await the TD securities for inflation which will be released on Monday, followed by the interest rate decision on Wednesday. Indeed market participants are pricing in a zero percent chance that the RBA will increase rates twenty basis points at its rate decision on August 3rd.

Japanese Yen Rallies Extends Yesterday’s Advance On the Back of Risk Aversion
The Yen rallied across the board today amid speculation that a slow growth in the world’s largest economy paired with European debt woes will spur demand for safer assets. The USD/JPY reached the lowest level in a week and may trend lower as Fed chairman Ben Bernanke warned of “unusual uncertainty” in the economic outlook. Traders should caution further declines in the pair as rumors circulated recently that the BoJ may intervene in the FX markets as the strengthening yen negatively impacts its exporters.

T−Bonds and Gold Signal Impending Stock Market Break

2010-07-31T02:39:00.001-07:00

Treasury futures rallied in flight-to-safety buying as yields in the 30-Year Bonds and 10-Year Notes plunged. Expectations are the Fed is likely to keep interest rates down for a prolonged period of time. Despite the early recovery in the equity markets, the Treasurys held their ground, suggesting that there is real concern about the condition of the economy. The fact that Fed officials are backing the call for a weaker economy is the key driving force behind the move in the Treasury instruments. Traders have decided that the Fed is likely to keep pressure on interest rates until the economy can turn around.

Something has to give in either the equity or fixed income markets. The T-Bonds and T-Notes seem to be the best indicator of the state of the economy. This means that the pressure should be on the equities.

The fact that December Gold rallied on Friday is a strong sign that money is leaving the paper assets (stocks) and being reinvested in the hard assets (gold). Although gold could not post a weekly closing price reversal bottom, the pattern looks positive for the start of a retracement rally. All it needs right now to trigger a rally is a weaker Euro and stock market.

U.S. stock indices traded lower following the release of a weaker than expected U.S. Second-Quarter GDP report, but quickly turned positive after value-seekers stepped up to buy at cheaper prices. After the initial surge, the markets stalled, setting up the possibility of a lower trade into the close. Trading conditions continue to remain volatile as traders jockey for position into the end-of-the-month close.

Technically the September E-mini S&P 500 closed lower for the week, setting up the possibility of a weekly closing price reversal. A confirmation of this pattern suggests the start of a 2 to 3 week correction back to 1060.75 to 1047.00. This morning’s rally stopped short at last week’s close at 1100.50, indicating that the Bears are defending this price level.

This week the September Euro penetrated the 1.31 price level for the first time since May. The primary driving forces behind this move were the better outlook for the Euro Zone economy and the weak outlook for the U.S. economy. The data out of Europe may have brought the European Central Bank closer to a rate hike than the Fed.

The September British Pound closed near the high for the week after piercing a major 50% price level. The strong close put the market over 50% of the 1.7042 (July 2009 Top) to the 1.4229 (May 2010 Bottom) range at 1.5635.

Weak U.S. economic data and a better outlook for the U.K. economy are the reasons for the strength in the Sterling. While the U.S. is still on a spending spree, the U.K. has been busy implementing austerity measures while reading for tax hikes. Bullish traders seem optimistic that these two factors are good for the economy but some traders remain skeptical that spending cuts and tax increases will curtail the economic recover.

Comments from the Bank of England this week seem to suggest that it remains cautious about the economy and is willing to continue to provide stimuli if and when necessary. Recently it was reported that the U.K. GDP rose more than expected. This provided some lift to the market but poor housing numbers seem to indicate that the central bank is still far from hiking rates.

The Australian Dollar finished near its high for the week after a two-day setback. Demand for higher risk assets was the driving force behind the rally. Earlier in the week, the Aussie weakened because CPI data suggested the economy had cooled off. This meant that the Reserve Bank of Australia would most likely refrain from hiking interest rates at its next meeting on August 3rd. Friday’s rally suggests that speculators are driving up the market because of the weak U.S. economy and the likelihood that U.S. interest rates will remain at historically low levels for a prolonged period of time.

The New Zealand Dollar closed higher on Friday after a closing price reversal top earlier in the week triggered a 3 day, 50% correction. This move is typical during a rally. The main problem, however, which suggests lower markets to follow, is the weekly closing price reversal top.

Fundamentally, the Reserve Bank of New Zealand hiked its benchmark interest rate by a quarter-point to 3.00%. The RBNZ, however, said it would most likely refrain from another rate hike because of expectations of slower growth. This news triggered the sell-off in the Kiwi. Technically, the reversal top could be a bearish sign if confirmed. The chart suggests a possible correction to .6980 over the next 2 to 3 weeks.

The U.S. Dollar traded mostly higher against most major currencies overnight but gave up some of its earlier gains early in the New York session, turning negative against the British Pound, Australian Dollar, Canadian Dollar and New Zealand Dollar while only giving up ground to the Euro and Swiss Franc. The Dollar traded weaker versus the Japanese Yen all trading session.

This morning the U.S. GDP Report showed the economy grew at 2.4% in the second quarter. This growth was at a pace somewhat slower than pre-report estimates of 2.5% to 2.7%. A first quarter revision higher may have been the reason for the limited reaction to the downside in the equity markets and the reason why the rally stalled in the Dollar.

The biggest concern at this time amongst investors is the uncertainty of future growth. Continuing to lose growth at the current pace suggests the U.S. GDP may fall below 2% during the third quarter. This uncertainty is one of the main reasons why employers may be curtailing hiring, thereby exasperating the employment situation in this country.

In other reports, the Michigan confidence index was revised to 67.8 in July and manufacturing activity in Chicago rose more than expected. The Dollar was able to hold its ground following the release of both reports.

The overnight strength in the Dollar against the majors except the Japanese Yen was triggered by weak Japanese economic news. Overnight it was reported that Japanese core consumer prices fell 1% from a year ago. May industrial production and employment were also negatives.

The Dollar strengthened further after Fed voting member Bullard said the U.S. “is closer to a Japanese-style outcome today than at any time in recent history”. He also said the best remedy for this developing problem will be another round of Treasury purchases by the Fed.

Stocks were expected to trade lower today, but a quick rally following the opening, triggered by value-seeking bottom pickers helped drive the equity indices higher. This forced short-covering rallies in both the New Zealand Dollar and Australian Dollar.

Asia Session

2010-07-31T02:38:00.001-07:00

The yen strength continued into Asian trading today with the USD/JPY dropping to an eight month low at 86.25 as the dollar weakened. Earlier comments in New York from Federal Reserve St. Louis President Bullard spooked markets with his unusually dovish tone as he commented that, “the US is closer to a Japanese-style (deflationary) outcome today than any other time in recent history…” He added that although the need for further easing is unlikely, the FOMC must be prepared to face such a scenario. The comments spurned further concern that the US economy is slipping off of the rocky road to recovery, adding to the woes of the US currency. The USD/JPY slide began at 88.10 a little over 24 hours ago and culminated as mentioned at 86.25, eliciting comments from Japanese Finance Minister Noda who stated that he was watching the FX markets closely.

Yen crosses were all lower for the day with the dampened risk climate and falling equities across Asia. EUR/JPY slid a big figure to just under 112.70 as did the GBP/JPY pair, which was dumped to lows near 134.80. AUD/JPY saw lows under the 77.50 level, and NZD/JPY visited lows at the 62.05 neighborhood. The EUR/USD action was lackluster to end the week, with the pair touching 1.3050 after early session high nearer to 1.3075. GBP/USD was choppy between 1.5595 and 1.5625, and the AUD/USD took a hit from weak data once again, pulling it to 0.8975 lows. Australian private sector credit came in at +0.2% versus a forecast of +0.4%, thus helping to validate the probability that the RBA will not hike rates in August.

US GDP will be the key event before the weekend with the data released at 8:30Am (EST) with a forecast of 0.1%. Have a nice weekend.

Intraday Market Outlook for Day Traders

2010-07-31T02:32:00.000-07:00

EUR/USD
In a quiet summer market this European morning, the pair just broke below important support at 1.3000 to the current 1.2995. We expect a move today to the 1.2950 next support and then see a sideways trend between 1.2950 and 1.3000.

GBP/USD
The pound broke below the 1.5600 handle against the dollar and is trading currently at 1.5581. We do not expect any significant upmove today but instead range trading between 1.5540 and 1.5600.

USD/CHF
Consolidating at higher levels from yesterday's trading in the early European market, the dollar against the Swiss franc is priced right now at 1.0432. There is not much more downside risk today in our view, rather a continuation upwards to the 1.0455 resistance.

USD/JPY
In an intact downtrend against the yen, the dollar is currently trading at 86.30. We expect that downtrend to fade out today and reckon with recovery moves up 86.65.

A fairly narrow range overnight

2010-07-28T03:16:00.000-07:00

EUR/USD. Stonewalled at 1.30

EUR/USD (1.3003) is up overnight and continuing to press upwards for a breach of 1.30. However, 1.30 continues to prove stubborn resistance, leaving the currency to languish in a sub-1.30 consolidation.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support / Resistance Levels: Support for EUR/USD lies at 1.25 (psychological), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.3029 (Jul20 high), 1.3094 (May10 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

The CFTC, EUR, non-commercial, net position (-26K) moderated slightly, consistent with the continued test higher to above 1.30 in EUR/USD up to Tuesday.
The risk reversal (3m, 25delta) rose along with the rally in spot. The reversal is still heavily skewed for EUR downside, but it lies in the middle of its six month range – suggesting two way price action.
Implied Vol (3m) fell overnight. It has dropped into the bottom-third of its six-month range but is not yet extreme.

Cross-asset valuation: The significant correlations that EUR/USD has during the past 60 days are the 10yr yield spread (positive), the US10yr yield (positive) and the SPX (positive).

GBP/USD. In upchannel, breaching 1.55

Cable (1.5528) rose overnight and looks to be accomplishing a breach of 1.55 resistance.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support/Resistance Levels: Resistance lies at 1.5535 (Jul27 high), 1.5816 (Feb17 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.50 (psychological), 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

The CFTC, GBP, non-commercial, net-position position moderated further to -28K, consistent with the rally in cable to a test of 1.55 up through Tuesday.
The risk reversal (3m, 25delta) slipped overnight and is starting to trend lower. However, it remains near the highs since Feb. While it remains skewed for GBP losses, it is also in the upper end of its six-month range, which suggests an overbought condition.
Implied Vol (3mo) ticked higher overnight but remains near the low since Jan.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive), and S&P500 (positive).

USD/CHF. Nascent rally from 1.05 support

USD/CHF (1.0587) is up overnight and posting a higher since early in the month, suggesting the potential for a rally from 1.05.

Technicals:

Trend: daily higher; weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.
Support/Resistance levels: Resistance lies at 1.05 (psychological), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.05 (psychological), 1.0395 (Jul22 low) and 1.0131 (Jan low).

Positioning:

The CFTC non-commercial net position inched higher into positive territory (+14K) as USD/CHF continued to consolidate at 1.05. The position is significantly positive for CHF relative to the past six months and could suggest a potential turn higher in USD/CHF, especially with spot stalled around 1.04 support.
The risk reversal (3m, 25delta) fell overnight despite the rise in spot. It remains near its low since Oct’09. This market segment has abandoned its bullish USD/CHF call, but the skew is very close to a six-month low, suggesting potential for a rally in spot.
Implied Vol (3mo) is down overnight and cannot seem to rally from multi-year lows.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

USD/CAD. Wedging within 1.02-1.08 range

USD/CAD (1.0296) is down overnight, testing lower within the increasingly tight range it has plied since late-May.

Technicals:

Trend: Daily lower; weekly lower.
Overbought/Oversold (stochastics): Daily neutral; weekly neutral.
Support/Resistance Levels: Resistance lies at 1.0584 (Jul16 high), 1.0677 (Jul5,6 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0277 (Jul13 low), 1.02 (psychological), 1.0139 (Jun21 low), 1.0110 (May13 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

The CFTC, non-commercial, net slipped to 18K, keeping the uptrending channel for this times series since early-2009 intact.
The risk reversal (3m, 25delta) ticked lower overnight with the decline in spot. It remains roughly in the middle of its six-month range, providing little direction for the trend in spot.
Implied Vol (3m) is down slightly, and it lies just below the middle of it’s range so far in 2010.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

USD/JPY. Consolidating lows since Dec

USD/JPY (87.42) is down overnight and near the Jul lows. The market remains wary of BoJ intervention after testing to a low since Dec earlier this month.

Technicals:

Trend: Daily higher; Weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.
Support/Resistance Levels: Support lies at 86.27 (Jul16 low) and 84.83 (Nov27 low). Resistance lies at 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

The CFTC, non-commercial net position fell to 40K as spot stalled at lows since Dec. The position is among the most bullish JPY readings and suggesting limited downside for USD/JPY.
The risk reversal (3m, 25delta) rose overnight with spot. The skew is still in favor of USD/JPY downside, but lies in neutral territory relative to its range the past six months.
Implied vol (3m): fell overnight and remains deep into the lower half of its 6-month range.

Cross-asset valuation: The correlations of USD/JPY with the US 10yr yield (positive), the US-JP 10yr (positive) spread, the S&P500 (positive), CRB (positive) and crude oil (positive) are significant.

AUD/USD. Marching higher to new highs since May

AUD/USD (0.9053) rose overnight, trading a new high since May and decisively breaching resistance at 0.90.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support/Resistance: Technical support lies at 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.9066 (Jul27 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

The CFTC, non-commercial net position rose to 32K, consistent with the rally in spot towards 0.90 and a high since May.
The risk reversal (3m, 25delta) fell overnight despite the rise in spot, but it is trending higher in the middle of its 6-month range.
Implied Vol (3m) fell overnight down below the middle of its range for 2010.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and USD/JPY (positive.)

NZD/USD. New high since Jan

NZD/USD (0.7369) is up overnight. Spot has breached resistance from the highs of Jul and Apr and posted a high since Jan.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support/Resistance: Resistance lies at 0.7375 (Jul27 high), 0.7442 (Jan14 high), 0.75247 (Nov high), and 0.7635 (Oct21 high). Support lies at 0.7030 (Jul19 low), 0.6795 (Jul1 low) and 0.6561 (May25 low).

Positioning:

The CFTC non-commercial, net position rose to 8K, still a neutral reading and in no way a deterrent to additional Kiwi strength.
The risk reversal (3m, 25delta) slipped overnight despite the rally in spot. It lies just above the middle of its six-month range.
Implied Vol (3m) rose overnight but still managed to trade a new low since May, suggesting the potential for spot to trade higher.

Cross-asset valuations: The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P500, positive) and commodities (CRB index, positive).

A week spent speculating which banks might fail their ‘stress tests'

2010-07-25T01:08:00.001-07:00

Overview

A week spent speculating which banks might fail their ‘stress tests’, and whether these were worth doing at all, indices alternating between fairly large up and down days to end the week in positive territory. Jakarta, Mumbai and Thailand set new highs for 2010. The Japanese stock market closed near the lowest levels in two years, pressured by a strong yen (86.27) and dragged down by the banks index. The US dollar has lost ground against all major currencies this week, the Australian dollar leading at $0.8972 (a ten-week high) and the Swiss franc at 1.0400, best this year. The Hungarian forint weakened to 292.00 per Euro because of new PM Viktor Orban’s refusal to implement IMF-suggested austerity measures. Top-quality Treasuries remain well bid, those of weaker Eurozone countries still all too close to their records over Bunds. US asset-backed securities the first casualty of new financial regulation, so the SEC has had to allow a 6-month grace period for implementation. [Rating agencies can now be sued for fraud and reckless behaviour so they are not allowing their ratings to be published in prospectuses]. ICE Sugar rallied to 18.66 cents per pound, its most expensive since March though a fraction of February’s unsustainable 30.40 peak. Most Baltic Freight rates are at their lowest in a year or more.

Political and Economic Developments

The Bank of Canada raised it key rate by 25 basis points to 0.75%; Brazil raised its Selic rate 50 basis points to 10.75%, slightly less than expected on negative inflation in June. UK Q2 GDP came in a better than expected +1.1% Q/Q taking Y/Y growth to +1.6%, helped in part by June Retail Sales which rose by 1.0% M/M and +3.1% Y/Y excluding auto-fuel. No doubt the football World Cup had an effect, but this keeps it at the average of the last decade. With June Core CPI also running at +3.1% Y/Y (RPI +5.0% Y/Y and among the highest in two decades) yet Gilts maturing within 9 years yielding under 3.00%, real interest rates are decidedly negative. Pity then that National Savings and Investments was forced to withdraw its index-linked securities (RPI +1.00% per annum) to all new investors, the first time in their 35-year history, because of huge inflows. Hometrack has annual house prices rising by under 3.00% or shrinking since December 2007, Rightmove suggests +3.7% Y/Y, though the Halifax and Nationwide calculate 6.3% and 8.7% respectively. Gains on main homes tax free. German and Eurozone Purchasing Managers’ Indices, IFO and Consumer Confidence Surveys all upbeat versus June’s.

Underlying Themes

For several weeks now politicians and central bankers have been suggesting we shouldn’t be so gloomy, that in fact the economy was growing and banks were sound, many giving lengthy TV interviews on these subjects. Mercifully chairman Bernanke in his semi-annual testimony to the Senate Banking Committee spared us the usual drivel. Saying the number one concern for small businesses was a lack of demand not access to credit and that funding was not a constraint on large firms, that state and local governments were under fiscal stress, plus the worrisome structural problems of high unemployment, were all drags on economic recovery; above all the ‘economic outlook remains unusually uncertain’. Perhaps they have at last grasped the enormity of the problem; perhaps they now know there are no more tools in the box; perhaps they now understand that deleveraging and rebuilding overstretched balance sheets takes a very long time. Perhaps the Bank of England’s MPC is also adopting a more realistic approach. After predicting UK CPI would be back at target by the end of this year (their usual mañana mentality) chief economist Spencer Dale suggested this might now not happen until the end of 2011, and that the country would not get back to normal ‘for an awfully long time’.

What to watch for next week

Monday Japan June Trade Balance, German Import Prices due from this day, US New Home Sales and UK July Hometrack Survey. Tuesday Japan June Corporate Service Prices, EZ16 M3 Money Supply, UK CBI July Distributive Trades, US Consumer Confidence, German August GfK Consumer Confidence and US May CaseShiller House Prices. Wednesday Japan July Small Business Confidence, ECB Bank Lending Survey, July CPI for the various German states due and US June Durable Goods Orders. Thursday Japan June Retail Trade, Large Retailers’ Sales, UK Net Consumer Credit, Mortgage Approvals, German July Business Confidence, Unemployment, EZ16 Business Climate and Confidence and the Fed’s Beige Book. Friday Japan June Unemployment, Household Spending, CPI, Industrial and Vehicle Production, Housing Starts, Construction Orders and Tokyo July CPI. Then EZ16 June Unemployment, CPI, US Q2 GDP, July Chicago Purchasing Managers and final University of Michigan Confidence Survey. Monday 2nd August holidays in Canada and Iceland.

Positioning and Technical Analysis

The last week of another thin summer month and many markets are tottering at fairly pivotal levels. August will probably see trends develop and more chaotic conditions predominate. Watch FX weekly closes for important breaks; another round of generalised US dollar selling is due, something which should prop up commodity prices. Top-notch Treasuries and Corporate bonds should remain well bid maintaining the pressure on credit spreads. Stock markets will probably be subject to increasingly violent intra-day swings.

Forex Analysis

2010-07-22T03:21:00.000-07:00

Currencies: CAD and JPY outperformed overnight, while the EUR underperformed the pack. JPY strength and EUR weakness both emanated from ongoing concerns about the European bank stress tests due this week. CAD strengthened in both Asian and European trading.

EUR/USD. Failing at 1.30

EUR/USD (1.2801) is down overnight, again mostly in European trading, and spot didn’t even both to test 1.30 after runs at the level in the three prior sessions. The EUR is being weighed by concerns about the coming bank stress tests.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly oversold.
Support / Resistance Levels: Support for EUR/USD lies at 1.25 (psychological), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.3029 (Jul20 high), 1.3094 (May10 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

The CFTC, EUR, non-commercial, net position (-28K) moderated sharply, in keeping with the EUR/USD rally through last Tuesday.
The risk reversal (3m, 25delta) ticked lower with spot. The reversal is still heavily skewed for EUR downside, but it lies in the middle of its six month range – suggesting two way price action.
Implied Vol (3m) rose overnight. It remains in the middle-third of its six-month range – plenty of two-way risk here.

Cross-asset valuation: The significant correlations that EUR/USD has during the past 60 days are the 10yr yield spread (positive), the US10yr yield (positive) and the SPX (positive).

GBP/USD. Upchannel intact

Cable (1.5267) is up overnight, continuing within the uptrending channel since May. GBP was supported by the BoE minutes, which evidenced concern regarding inflation in 2011.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support/Resistance Levels: Resistance lies at 1.5472 (Jul15 high), 1.5524 (Apr15 high), 1.5816 (Feb17 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.50 (psychological), 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

The CFTC, GBP, non-commercial, net-position moderated to -35K, and it has consolidated the past three weeks, consistent with the consolidation of spot just above 1.50 up through Tuesday.
The risk reversal (3m, 25delta) rose overnight and remains near the highs since Feb. While it remains skewed for GBP losses, it is also in the upper end of its six-month range, which suggests an overbought condition.
Implied Vol (3mo) ticked higher overnight but remains near the low since Jan.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive), and S&P500 (positive).

USD/CHF. Holding 1.05

USD/CHF (1.0510) is down slightly overnight and has traded both sides of 1.05 each of the past five sessions.

Technicals:

Trend: daily higher; weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.
Support/Resistance levels: Resistance lies at 1.05 (psychological), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.05 (psychological), 1.0400 (Jul16 low) and 1.0131 (Jan low).

Positioning:

The CFTC non-commercial net position jumped into positive territory (+13K) for the first time since Jan. This is significantly positive for CHF relative to the past six months and could suggest a potential turn higher in USD/CHF, especially with spot stalled around 1.04 support.
The risk reversal (3m, 25delta) rose overnight despite the slip in spot. It remains near its low since Oct’09. This market segment has abandoned its bullish USD/CHF call, but the skew is very close to a six-month low, suggesting potential for a rally in spot.
Implied Vol (3mo) is up slightly overnight and is showing some signs of rallying from multi-year lows.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

USD/CAD. Correcting from 1.06 down below 1.04

USD/CAD (1.0372) is down significantly overnight with downward momentum continuing after yesterday’s sharp losses that developed after the BoC rate decision.

Technicals:

Trend: Daily higher; weekly lower.
Overbought/Oversold (stochastics): Daily neutral; weekly neutral.
Support/Resistance Levels: Resistance lies at 1.0584 (Jul16 high), 1.0677 (Jul5,6 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0277 (Jul13 low), 1.02 (psychological), 1.0139 (Jun21 low), 1.0110 (May13 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

The CFTC, non-commercial, net position rose moderately to 22K, keeping the uptrending channel for this times series since early-2009 intact.
The risk reversal (3m, 25delta) fell overnight along with the decline in spot. It remains roughly in the middle of its six-month range, providing little direction for the trend in spot.
Implied Vol (3m) is down slightly, and it lies just below the middle of it’s range so far in 2010.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

USD/JPY. Consolidating lows since Dec

USD/JPY (86.99) is down overnight. The market remains wary of BoJ intervention after testing to a low since Dec last week.

Technicals:

Trend: Daily lower; Weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.
Support/Resistance Levels: Support lies at 86.27 (Jul16 low) and 84.83 (Nov27 low). Resistance lies at 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

The CFTC, non-commercial net position rose to 47K, among the most bullish JPY readings and suggesting limited downside for USD/JPY.

The risk reversal (3m, 25delta) rose overnight despite the rally in spot. The skew is still in favor of USD/JPY downside, but lies in neutral territory relative to its range the past six months.

Implied vol (3m): fell overnight and remains deep into the lower half of its 6-month range.

AUD/USD. Consolidating near Jul high

AUD/USD (0.8841) rose overnight, and it is holding in near the high established in Jul.

Technicals:

Trend: Daily lower; Weekly higher.

Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.

Support/Resistance: Technical support lies at 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.8871 (Jul14 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

The CFTC, non-commercial net position rose to 23K, consistent with the rally in spot up through last Tuesday.

The risk reversal (3m, 25delta) rose overnight along with spot, and it is trending higher in the middle of its 6-month range.

Implied Vol (3m) is down overnight, just below the middle of its range for 2010.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and USD/JPY (positive.)

NZD/USD. Rebound after two-day collapse from high since May

NZD/USD (0.7177) is up overnight, continuing to rebound from the sharp losses Friday and Monday, but facing resistance at 0.7200.

Technicals:

Trend: Daily lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.
Support/Resistance: Resistance lies at 0.7200 (psychological), 0.7303 (Jul15 high), 0.7326 (Apr30 high), 0.7442 (Jan14 high), 0.75247 (Nov high), and 0.7635 (Oct21 high). Support lies at 0.7030 (Jul19 low), 0.6795 (Jul1 low) and 0.6561 (May25 low).

Positioning:

The CFTC non-commercial, net position rose to 5K, still a very low reading and still supportive in a contrarian sense of additional Kiwi strength.

The risk reversal (3m, 25delta) rose overnight, and lies just above the middle of its six-month range.

Implied Vol (3m) fell overnight and looks to be consolidating in the middle of the 2010 range.

Cross-asset valuations: The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P500, positive) and commodities (CRB index, positive).

Daily technical outlook

2010-07-13T03:22:00.000-07:00

EURUSD

Trading strategy: standing aside

Yesterday’s trading sessions have been rather quiet after the slide to as low as 1.2550 against the dollar. First intra-day resistance is currently limiting gains around 1.2615 but the short-term studies remain bullish as long as the euro doesn’t return below the 1.2300 handle. However, the 4 hrs charts are showing signs of trend exhaustion and a break above 1.2650 is needed to regain strength and confirm that the drop to 1.2550 was corrective. Today’s economic calendar contains some important data releases such as the German Zew at 10:00 GMT and the US Trade Balance at 13:30 GMT. Keep an eye on the 1.2650 region in case euro rebounds – breakout should provide an earlier buying opportunity – 1.2715 being a more important barrier. On the lower side – 1.2550 is where to look for shorting opportunities. Current quote is 1.2589 @06:00 GMT

Support: 1.2550, 1.2500/20, 1.2465, 1.2400 and 1.2300
Resistance: 1.2615, 1.2650, 1.2700/10, 1.2750 and 1.2800
Market sentiment: long term – bearish, medium term – bearish, short term – bullish, intra-day – bearish

GBPUSD

Trading strategy: small short at 1.5100, stop at 1.5170 (0.5% risk), 1st objective at 1.5050, 2nd objective at 1.4900

Resistance was found around 1.5080 – into former support zone provided by the rising trend line connecting previous weekly lows. The bounce came after the sell-off to 1.4950. Whole downside action is not convincing and the decline to 1.4950 was short-lived, thus we shouldn’t hurry to consider the trend line break a sign of trend reversal. Short-term sentiment remains bullish but the intra-day studies are favoring selling while the pound doesn’t reconquer 1.5100. Current quote is 1.5011 @06:00 GMT

Support: 1.5000, 1.4950 and 1.4850/80
Resistance: 1.5100, 1.5200/25, 1.5250/70 and 1.5300
Market sentiment: long term – bearish, medium term – bearish, short term – bullish, intra-day – bearish

Why the Fundamentals Never Stand a Chance

2010-07-10T07:04:00.001-07:00

With another interesting month of trading activity behind us, toasts to success and open wounds of defeat are just some of the scenarios faced by the growing population of speculators across the world. It's been a turbulent time for all, no matter what your toolkit contains, and anyone who says otherwise is a braver man than me! Uncertainty and indecision are the flavors of the times and never has there been a greater need to filter through the noise and keep things as simple as possible.

Whether you are schooled in the approach of either Technical or Fundamental Analysis, or possibly both, there have still been challenges within the current market environment, with a series of volatile big swings and from time-to-time, periods of choppy consolidation. Conditions like these are always a challenge for even the most seasoned trader, and sometimes it can be a good idea to just sit on the sidelines as an observer and wait for things to calm down. However, after teaching a variety of students over the years, I know full well that it can be hard for even the most seasoned of traders to do nothing, let alone the impulsive novice. It can be tempting for an independent speculator to dip their toes in the waters of the market in an effort to capture a slice of the parabolic profits the market has to offer. If you find yourself in this group, then please let me offer some key points of advice.

Firstly, be patient and wait for only the most objective low risk and high probability opportunities to present themselves to you. Jumping into a fast moving market can always be an impulsive and reckless endeavor if not planned methodically in advance. Secondly, keep the stops as tight as possible and be prepared to lock in or take a decent profit when the market puts it on the table. Strong moves can lead to greed for more, but remember that the quicker prices move in one direction can often lead to just as violent a reversal in the blink of an eye. The third piece of advice would be to remove all bias from your analysis. This is by far easier for the technical trader as opposed to the fundamental trader and is one of the many reasons why I personally look to the charts for my clues. Let me explain.

If we take the following chart of the AUDUSD currency as our example, we can see just how dangerous and misleading the market can be if one chooses to follow news instead of price:

On the Sunday Forex market open on June 21st, we saw a strong gap up in price on the AUDUSD currency pair. For two weeks prior to this move, the Aussie had been enjoying a healthy upside recovery since putting in yearly lows around the 0.8100 area. That very weekend prior to the open, news was released that China was intending to loosen the Yuan's peg valuation against the US Dollar.
From a fundamental perspective, this was interpreted as a boost for the Australian Dollar for two reasons; one, that China's intended action would allow it to eventually strengthen against the Greenback, hence allowing the Aussie buck to appreciate against the US Dollar; second, that the news suggested that China would be likely to enjoy further economic growth, thus creating a demand for Australian Commodities, and so a demand for Australian Dollars as a result. Considering that the AUDUSD had also been rising prior to the news and with the "trend being our friend," many fundamental traders took this as a good enough reason to invest more hard-earned cash into the Aussie Dollar. However, as many of us already know, things are rarely this plain-cut in the world of Forex.

You see, no matter how well anyone attempts to read between the lines of the fundamentals, the result is always going to be the very same: Analysis of this type is always based on opinion rather than price. Even if the market decides to share the analyst's opinion, they are still left without an entry and an exit price. With this predicament in mind, it becomes highly challenging for any fundamental trader to secure a level of consistency. In fact, one of the key dilemmas is the fact that the fundamentalist is continually faced with a barrage of news releases which can hamper and contradict positions taken previously. Like in the below example:

Following on from the previous example of AUDUSD, shortly after the gap up and positive news from China, we saw a complete reversal in price from the highs of 0.8850 down to as low as 0.8315 at the time of writing this article. And the reason from a fundamental point of view? News was released later that week which implied that China's economic health was not quite as stable as first thought, and leaked reports were emerging about Chinese workers striking in retaliation to low pay, resulting in a continued downwards trend in the currency pair.

So how does the fundamental trader cope? Well, simply put, they need to respect price and combine this with other types of analysis. Entry prices, exit points and a disciplined trade plan are all vital essentials in the speculative process, along with the fundamentals, if you choose to use them. As I have said many times before, news creates opinions whereas price is fact. Something to think about.

Currencies View of week

2010-07-10T07:02:00.000-07:00

Currencies: CAD outperformed due to a very strong labor report. CHF fell the most. US Treasury reported late yesterday that no country manipulates currency, but did opine that the yuan appeared undervalued.

EUR/USD. Down within uptrend

EUR/USD (1.2670) is down overnight but remains within the recent uptrend from 1.25. It is testing downtrend resistance from Dec’09.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly oversold.
Support / Resistance Levels: Support for EUR/USD lies at 1.25 (psychological), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.2718 (downtrend from Dec’09 high), 1.2722 (Jul9 high), 1.3094 (May10 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

The CFTC, EUR, non-commercial, net position (-66K) deteriorated slightly, in keeping with the price action through last Tuesday.
The risk reversal (3m, 25delta) ticked higher with spot’s overnight high. The reversal is still heavily skewed for EUR downside, but it lies in the middle of its six month range – suggesting two way price action.
Implied Vol (3m) fell lower overnight on the rise in spot.

Cross-asset valuation: The significant correlations that EUR/USD has during the past 60 days are the 5yr yield spread (positive), the 10yr yield spread (positive), the US10yr yield (positive) and the SPX (positive).

GBP/USD. Uptrend stalling

Cable (1.5168) is down very slightly overnight, and spot appears to have stalled in the 1.51-1.52 region.

Technicals:

Trend: Daily crossing lower; Weekly higher.
Overbought/Oversold (stochastics): Daily overbought; Weekly oversold.
Support/Resistance Levels: Resistance lies at 1.5241 (Jul8 high), 1.5524 (Apr15 high), 1.5816 (Feb17 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.4347 (Jun8 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

The CFTC, GBP, non-commercial, net-position moderated to -34K, continuing its rise from a record low in May as spot rebounds.
The risk reversal (3m, 25delta) is up overnight, continuing to trend higher despite the stall in spot. While it remains skewed for GBP losses, it is also in the upper end of its six month range, which suggests an overbought condition.
Implied Vol (3mo) is down overnight to a new low since Jan.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive), S&P500 (positive) and crude oil (positive).

USD/CHF. Holding 1.05

USD/CHF (1.0530) rose overnight, with 1.05 continuing to hold as support. On a daily basis, the trend of lower intraday highs is compressing the price action down on 1.05.

Technicals:

Trend: daily higher; weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly overbought.
Support/Resistance levels: Resistance lies at 1.1742 (Apr’09 high), while support lies at 1.0482 (Jul8 low) and 1.0435 (Apr1 low).

Positioning:

The CFTC non-commercial net position slipped to -12K, and it remains among the lowest readings since 2007 and suggestive of USD/CHF weakness.
The risk reversal (3m, 25delta) fell overnight and remains near its low since Oct’09. This market segment has abandoned its bullish USD/CHF call, but the skew is very close to a six month low, suggesting potential for a rally in spot.
Implied Vol (3mo) is down overnight and cannot seem to escape the vicinity of multi-year lows.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative), the USD index (positive) and the US 10yr yield (negative)

USD/CAD. Crashing lower on strong employment

USD/CAD (1.0350) is down sharply overnight, mostly since the 7am labor report, which showed the economy gained a whopping 93K jobs (consensus 20K) in Jun.

Technicals:

Trend: Daily higher; weekly ;lower.
Overbought/Oversold (stochastics): Daily overbought; weekly neutral.
Support/Resistance Levels: Resistance lies at 1.0677 (Jul5,6 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0321 (Jun28 low), 1.02 (psychological), 1.0139 (Jun21 low), 1.0110 (May13 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

The CFTC, non-commercial, net position fell to 19K, the bottom of the uptrending channel it has traced out in recent months.
The risk reversal (3m, 25delta) ticked higher overnight despite the decline in spot.
Implied Vol (3m) is down slightly, and it lies near the middle of it’s range so far in 2010.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), DXY (positive), CRB (negative), crude oil (negative), and the 2yr spread (negative).

USD/JPY. Rebound!

USD/JPY (88.58) is up overnight and appears to be rebounding from a test of the Jul1 low yesterday as well as the sharp downtrend in place since late-Jun.

Technicals:

Trend: Daily higher; Weekly lower.
Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.
Support/Resistance Levels: Support lies at 86.97 (Jul1 low) and 84.83 (Nov27 low). Resistance lies at 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

The CFTC, non-commercial net position rose to 29K, above the middle of the 6-month range as speculators took profit on the move lower in spot.
The risk reversal (3m, 25delta) rose overnight, consistent with the move in spot. The skew is still in favor of USD/JPY downside, but lies in neutral territory relative to its range the past six months.
Implied vol (3m): fell overnight into the lower half of it’s 6-month range.

AUD/USD. Looking to retest Jun high

AUD/USD (0.8775) is up slightly overnight, boosted by the strong Canadian labor report.

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily neutral; Weekly neutral.
Support/Resistance: Technical support lies at 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.8859 (Jun21 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

The CFTC, non-commercial net position rose modestly to 13K as spot consolidated last week.
The risk reversal (3m, 25delta) is up overnight along with spot.
Implied Vol (3m) is down overnight, just below the middle of its range for 2010.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and USD/JPY (positive.)

NZD/USD. Looking to retest Jun high

NZD/USD (0.7067) is up overnight, making gains to recoup the late-Jun losses

Technicals:

Trend: Daily higher; Weekly higher.
Overbought/Oversold (stochastics): Daily neutral; Weekly neutral.
Support/Resistance: Resistance lies at 0.7160 (Jun23 high), 0.7326 (Apr30 high), 0.7442 (Jan14 high), 0.75247 (Nov high), and 0.7635 (Oct21 high). Support lies at 0.6795 (Jul1 low) and 0.6561 (May25 low).

Positioning:

The CFTC non-commercial, net position rebounded to 2K, but remains below the average reading for the past six months.
The risk reversal (3m, 25delta) rose overnight, and lies just above the middle of it’s six-month range.
Implied Vol (3m) fell overnight and is trending lower through the middle of the 2010 range.

Cross-asset valuations: The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P500, positive) and commodities (CRB index, positive).

Forecast on JPY Crosses (EURJPY, GBPJPY, AUDJPY)

2010-07-02T03:15:00.000-07:00

EURJPY

EURJPY closed @ 10975 which was ABOVE the open and breached the previous day's high. The High was PRECISELY at Precise Trader's Res Tgt 2 and the Low was PRECISELY at Precise Trader's Sup Tgt 1. The Hourly Oscillators are Bullish and the Price is Above the MA, so the Bears have to be Sidelined. Hourly Trend is Sideways Up while 10910 holds and Daily Trend is Limited Down while 11335 holds, so expect the Price to be Choppy with a potential to Break Higher. The Daily Trend was within the Prior two Day's Range but the Bulls gained aggressively towards the Close. The Hourly Trend has been in a Range Trading with an Upside Bias,10925-10 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Steep Up Channel and the Patterns are suggesting Higher Highs are expected . The Opening Price Principles suggests that EUR is Flat with a Strong Bias and JPY is Weak , so both the Cross may drag the EURJPY Higher , so the Bears may have to be Sidelined until 10870-10790 levels are regained.

BULLS: 10985 10915 10835 BEARS: 11060 11140 11225

Today's Strategies: LONG near 10950 10910 with a tight stop with a 50 pips price target.

GBPJPY

GBPJPY closed @ 13295 which was ABOVE the open and was within prior day's trading range. The High was PRECISELY at Precise Trader's Hrly Level and the Low was 10 pips from Precise Trader's Sup Tgt 2. The Hourly Oscillators are Bullish and the Price is Within the MA, so the Bears have to be Sidelined. Hourly Trend is Sideways Up while 13190 holds and Daily Trend is Sideways while 13625 holds, so expect the Price to be Choppy with a potential to Break Higher. The Daily Trend breached the Prior Day's Low but the Bulls gained aggressively towards the Close. The Hourly Trend has been in a Range Trading with an Upside Bias,13260-13190 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Steep Up Channel and the Patterns are suggesting Higher Highs are expected . The Opening Price Principles suggests that GBP is Flat with a Strong Bias and JPY is Weak , so both the Cross may drag the GBPJPY Higher , so the Bears may have to be Sidelined until 13260-13190 levels are regained.

BULLS: 13260 13190 13120 BEARS: 13425 13515 13615

Today's Strategies: LONG near 13320 13260 with a tight stop with a 50 pips price target.

AUDJPY

AUDJPY closed @ 7390 which was BELOW the open and breached the previous day's low. The High was PRECISELY at Precise Trader's Res Zone 1 and the Low was 25 pips from Precise Trader's Sup Tgt 2. The Hourly Oscillators are Turning Bullish and the Price is Below the MA, so the Bears have to be CAUTIOUS. Hourly Trend is Sideways Up while 7360 holds and Daily Trend is Sideways Down while 7815 holds, so expect the Price to be Choppy with a potential to Break Higher. The Daily Trend breached the Prior Day's Low but the Bears gave up most of their gains towards the Close. The Hourly Trend has been in a Range Trading with an Upside Bias, 7375-60 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Steep Up Channel and the Patterns are suggesting Higher Highs are expected . The Opening Price Principles suggests that AUD is Strong and JPY is Weak , so both the Cross may drag the AUDJPY Higher , so the Bears may have to be Sidelined until 7410-7350 levels are regained.

BULLS: 7410 7350 7295 BEARS: 7535 7575 7630

Today's Strategies: LONG near 7410 7350 with a tight stop with a 50 pips price target.

USDCAD more upswings are expected

2010-07-02T03:14:00.000-07:00

AUDUSD - Bulls have formed positive channel between support and resistance barriers, despite this action, bears are controlling the situation while resistance barrier is active.

EURUSD - Bulls initiated strong positive rally after a breakout at resistance level, at the moment waiting action holds. Positive trend is initiated.

EURGBP - Low narrow trading range is formed near resistance, a rebound back to support is expected for now.

NZDUSD - Bulls have reached resistance barrier, however, negative trend is valid. Look for short term downswings towards support level.

USDCAD - Bulls trying to gain more strength, another breakout at resistance can bring this pair to new highs. Waiting action holds to confirm a breakout at resistance.

GBPUSD: The 1.4768 Level To Provide Support On Pullbacks

2010-06-25T21:50:00.000-07:00

GBPUSD: The 1.4768 Level To Provide Support On Pullbacks.

GBPUSD: While the pair may be hesitating after halting its nearer term rally on Thursday, we expect its Jun 02’10 high at 1.4768 to provide support on pullbacks. This should turn the pair back up and push it towards the 1.5000/52 levels. That zone is crucial to the continuation of its recovery as a break will open the door for further gains towards the 1.5308 level, its May’10 high. However, we expect that zone to provide a strong resistance on initial test and turn it lower if tested. The daily studies are bullish and pointing higher suggesting further up move. On the contrary, a decisive clearance of the 1.4569 and the 1.4344 levels must occur for its present strength to halt and open risk towards the 1.4257/26 levels. Below there will reverse its corrective recovery and create scope for the resumption of its broader weakness from the 1.7041 level towards its March’2009 low at 1.4112 and then its big psycho level at 1.4000.All in all, with its nearer term recovery remaining intact, a decisive break above the 1.4935 level will open the door for more strength.

Gold futures on Friday ended tantalizingly close to a fresh record

2010-06-25T21:48:00.000-07:00

Gold for August delivery added $10.30, or 0.8%, to settle at $1,256.20 an ounce on the Comex division of the New York Mercantile Exchange.
The contract hit an intraday record of $1,259.50 an ounce, giving investors hope gold was on track to surpass last Friday's record close of $1,258.30 an ounce.

It was not to be. Gold lost steam in the last minutes of trading, ending the week at a 0.2% loss after four consecutive weekly gains.

Bullion's run, however, pushed silver 2% higher and copper to a 3% gain.

"Every sell-off for gold has been bought, every support level has held," said Adam Klopfenstein, a senior market strategist with Lind-Waldock in Chicago. "We're still gravitating towards safe-haven" buying, he added.

Investors have grappled with the week's rising costs to insure Greek debt and uncertainty ahead of the weekend Group of 20 nations' meeting in Canada, when leaders could announce austerity measures of stimulus packages to address concerns about the pace of the global recovery.

Gold ended Thursday up $11.10 at $1,245.90 an ounce, the highest finish for gold since last week's record.

Gold's road to the record "was a slow, steady advance, which is much better than" fear-fueled sudden highs, said Frank Lesh, a broker with FuturePath Trading in Chicago. "We still expect $1,300" in the near term, he added. All the elements that brought gold to a record -- concerns about the economic recovery and Europe's financial health -- are still in place, he said.

Bullion retained its gains after data showed that U.S. real gross domestic product for the first quarter was revised down to an increase of 2.7% annualized from the earlier estimate of a 3.0% rise. Read more about the GDP report.

The change resulted largely from weaker consumer spending and a ballooning trade deficit. In contrast, economists polled by MarketWatch expected no revision to first-quarter growth.

Gold is typically seen as a safe-haven investment, or an asset that preserves its value during times of economic and financial turbulence.

Also on the Nymex, July silver futures added 37 cents to settle at $19.11 an ounce. July copper advanced 9 cents to end at $3.09 a pound.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 85.31, -0.42, -0.49%) , which compares the greenback to a basket of six currencies, was 0.4% lower at 85.34, providing gold with extra oomph on the day.

The SPDR Gold Trust /quotes/comstock/13*!gld/quotes/nls/gld (GLD 123.03, +0.27, +0.22%) , the largest exchange-traded fund backed by gold, posted a fresh holdings record on Thursday, the last day for which statistics are available.

Forex: GBP/USD bias has shifted to neutral/positive - Commerzbank

2010-06-24T03:20:00.001-07:00

The Pound has shrugged off weakness seen at the week opening, and, after bottoming at 1.4685, the pair has bounced up, to reach 1.5000 high on Wednesday's Asian session , which according to Karen Jones, technical analyst at Commerzbank, has changed bias to neutral-positive.

The Pound has broken above resistances at 55 day ma and 6 month downtrend, which, according to Jones, has shifted the pair's bias: "GBP/USD has eroded the 55 day ma and 6 month downtrend. This has shifted our bias to neutral to positive while above the 20 day ma at 1.4674."

On the upside, Jones observes key resistance areas at 1.5240/50 and 1.5445: "We will have to allow for a move to the double Fibonacci retracement at 1.5240/50, there is scope for the top of the 7-month channel (see weekly chart on next slide) at 1.5445. If tested, we would expect the market to fail here."

Forecast on Spot Gold (Spot Gold, NZDUSD, USDSGD)

2010-06-24T03:19:00.001-07:00

Spot Gold

SPOT GOLD closed @ 12360 which was BELOW the open and was within prior day's trading range. The High was 1 Dollars from Precise Trader's Hrly Level and the Low was 0.5 Dollars from Precise Trader's Sup Zone 5 (U Turn Zone). The Hourly Oscillators are Bearish and the Price is Within the MA, so the Bulls have to be Sidelined. Hourly Trend is Limited Down while 12475 holds and Daily Trend is Sideways Up while 12152 holds, so expect the price to have a Minimum Downside and the Bears have to be Cautious. The Daily Trend was within the Prior Day's Range but the Bears gained marginally towards the Close . The Hourly Trend has been in a Range Trading with a Limited Downside Bias , 12415-485 are the Critical levels to watch to maintain the Bearish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 12265 12185 12105 BEARS: 12415 12485 12565

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

NZDUSD

NZDUSD closed @ 7135 which was ABOVE the open and breached the previous day's high. The High was 10 pips from Precise Trader's Res Zone 1 and the Low was 5 pips from Precise Trader's Sup Zone 1. The Hourly Oscillators are Bullish but Weak and the Price is Above the MA, so CAUTIOUS approach is needed for the Bulls. Hourly Trend is Limited Up while 7065 holds and Daily Trend is also Limited Up while 6970 holds, so expect the price to have a Minimum Upside and the Bulls have to be Cautious. The Daily Trend was within the Prior two Day's Range but the Bulls gained aggressively towards the Close . The Hourly Trend has been in a Range Trading with a Limited Upside Bias, 7095-65 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 7090 7025 6955 BEARS: 7165 7230 7285

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

USDSGD

USDSGD closed @ 13875 which was ABOVE the open and breached the previous day's high. The High was 25 pips from Precise Trader's Hrly Level and the Low was 20 pips from Precise Trader's Sup Zone 1. The Hourly Oscillators are Bullish but Weak and the Price is Within the MA, so CAUTIOUS approach is needed for the Bulls. Hourly Trend is Limited Up while 13795 holds and Daily Trend is Sideways while 14030 holds, so expect the price to have a Minimum Upside and the Bulls have to be Cautious. The Daily Trend breached the Prior Day's High but the Bulls gave up most of their gains towards the Close . The Hourly Trend has been in a Range Trading with a Limited Downside, 13820-13795 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 13840 13795 13735 BEARS: 13915 13975 14035

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

Trading British Pound with UK Trade Balance

2010-06-18T22:43:00.000-07:00

Each month the Office of National Statistics (ONS) reports the UK trade balance. This is a very important economic indicator in London. Essentially the UK trade balance measures the difference between the value of exports and imports in the UK, and is shown in billions of Pounds.

This economic figure compares the UK trade activity with the rest of the world, and evaluates it in three categories: Goods only, Services only, and Goods and Services.


United Kingdom – Main Exports	United Kingdom – Main Export Partners
Manufactured Goods	US – 13.9%
Fuels	Germany - 10.9%
Chemicals	France – 10.4%
Foods	Ireland


United Kingdom – Main Imports	United Kingdom – Main Import Partners
Manufactured Goods	Germany – 13.9%
Machinery	US – 8.9%
Fuels	France – 6.9%
Food Stuffs	Netherlands – 6.6%

How to trade this economic indicator:

Due to the fact that this indicator is a direct input to the balance of payments, it is heavily used when speculating upon the price movement of the Sterling. Over the past ten years, the UK has realized a deficit on average. To trade off of this figure, Forex traders should focus on the monthly percentage change in the deficit. If the deficit were to grow, or widen, traders could expect a slide in the price of the Pound. On the other hand, a shrinking deficit would likely lead to a rally in the Pound.

'Charts are there to make us money, you shouldn't need a doctorate to understand them' − Carol Harmer

2010-06-18T22:40:00.001-07:00

“Most the newer technical analysts today who base their analysis on algorithmic or mathematical models have never traded on a market,” says Carol Harmer, founder of Charmercharts. “I am sure they would not be able to trade in today's markets using the tools we had when T/A first became popular…”

With a career spanning 29 years and ranging from trading in the pits of the London Futures Exchange, to helping set up the technical analysis operation on the dealing room floor for Midland bank, to heading the Nomura Technical Analysis Trading desk, Carol has undoubtedly become one of the most respected and established technical analysts in the UK.

She was one of the first Bank T/A traders to join the Society of Technical Analysis back in the mid 80’s when Technical Analysis was still “a new budding flower in the City's bank dealing rooms,” says Carol. She has since created her own website in answer to widespread demand for her forecasts.

"Even to this day, when I look at a chart,” says Carol, “In my mind's eye I still see those bond pit traders all bellowing and shoving each other in their struggle to get out of the wrong way positions."

The Charmer opened up to FXstreet.com for an exclusive interview on her insights market movements, trader behaviors, being a woman in the banking culture, and the charts behind them all.

You started trading on the London International Financial Futures Exchange (LIFFE) one year before it opened. How do you find the job and what was it like to be a part of LIFFE at that moment?

I saw a situations vacant advert in the Evening Standard news paper about recruiting staff for a brand new market opening in September 1982. They wanted VDU/Computer Operators with a minimum of 5 years experience. I was newly separated with 2 very young children and needed to work full time... I applied, got an interview and got the job on the spot!

That first year was just a whirl of activity and fun. We really had no idea what was in store for us. My first responsibility was to don a hard hat, skintight white jeans and show prospective clients/traders around the building site which was eventually to become the home of LIFFE.

The training trading sessions were amazing. No one really had a clue what to do and most who attended only had to attend three sessions which was enough to give them a silver trading badge...after all, LIFFE could hardly open with no traders.

We were helped by some amazing American traders who were brought in from Chicago to show us Londoners "how it was done." We just all had a ball! Every stage of completion was cause for a celebration in the Mithras Wine bar around the corner from the Royal Exchange, and there were more than a few celebrations. I joked around with the traders-to-be; I gave back as good as I got but everything was said in fun, and never once did I get offended.

You made a name for yourself at LIFFE, but not for your hard hat tours, I'm sure. What really piqued your interest about the work?

Well finally, after 18 months of planning, building, testing, training we went live, and on that first day when the bell went off, our lives changed forever. I was hooked. I can't describe that feeling!

I was approached 3 months after we went live to become a trainee trader. It was half my salary for longer working hours, but I grabbed the chance. I became a yellow jacket and then a red jacket within 3 months. I felt I'd arrived, but I wanted to learn more; LIFFE was a stepping stone for me.

How did it feel to be a woman working with ostensibly mostly men in what was one of the largest open outcry trading pits in existence?

"I just never experienced the problems that I heard in stories about other women traders. I was basically one of the boys (although prettier, ha!)"

To be fair, I never really thought about it. I'd already worked there for 18 months by the time the pit opened; I had time to become familiar with the guys and to what life at LIFFE was all about. It wasn't like I turned up for work to be met by this mass of sweaty men eager to flex their muscles and mouth off at me; that might have been daunting.

I was treated with the utmost respect by the guys, and it was because I was not a shrinking violet type. I just never experienced the problems that I heard in stories about other women traders. I was basically one of the boys (although prettier, ha!)

I do have one claim to fame though on the floor. They had a dress code for men, but not women traders. I used to toddle into the trading pit in pink jeans, pink high heels and a tight t-shirt. LIFFE then had to come up with a dress code for women because of my Joan Collins-type style. My shoulder pads just didn't fit into the red jackets!

Was that how you got the Charmer name that you've used for your chart forecasts since 1996?

Well, as a young red jacket back in 1983, your badge had your company name on it (in my case, MID for Midland bank) and just above it was your name (C.Harmer). Thus was born the Charmer nickname that stuck with me most of my time on the LIFFE floor and beyond.

I left LIFFE 5 years later to work for the banks, but after 10 years in major bank dealing rooms, I realized the banking world was not for me. I hated the politics and the bureaucracy of the banks. Traders were bogged down with reports. I was becoming a paper churner. I decided to return to my first love, the LIFFE floor, which had since left the Royal Exchange and grown 10 fold at Cannon Bridge. But while the building moved, I realized the LIFFE traders had not. Most of the traders did not use any chart points and levels at all, and had little idea how these charts could really help the day trader on the floor. Banks had moved forward by that time, and there were Technical Analysis desks in most of the major city banks.

There had been an explosion of LIFFE locals who knew nothing about charts, levels, supports/resistances, so I did a few charts for friends, and before I knew it I was under siege at the opening bell for levels and pearls of wisdom. I was busier than I'd ever been at the banks. Thus, CharmerCharts was born.

How did technical analysis enter your life? Tell us about your first big win, your "ah-ha!" moment.

As a junior Treasury Bond trader, I would sit with the other T. Bond traders in the coffee lounge before the market open and listen to all these clever, intelligent men discussing things that completely went over my head. Yet, every bloody day, like clockwork, the market rallied while all my otherwise brilliant colleagues spent day after day selling into the market and scrambling just before the close to buy bonds back at a loss. I could not get my head round that. I did mention this to my boss one day, and was told in no uncertain terms Bonds were going down.

"The man offered me a look at a T Bond chart and it was like a million lightbulbs flashed before my eyes. I felt I'd found the holy grail."

One Thursday, when I stayed behind on the floor whilst my boss went home (bemoaning his losses on another day of bond rallies), I wandered behind the booths and saw a man looking at a screen of charts. I'd never seen or heard of charts before. This man offered me a look at a T Bond chart and it was like a million lightbulbs flashed before my eyes. I felt I'd found the holy grail. I swear I could have cried. I must have stayed by that screen for 3 hours.

The bond market had in fact been in a downtrend since 1977. Bonds then went sideways for years, and, in the past few months, had broken their base formation and were on their way higher, possibly back to the 1977 high which was 10524 (I will never forget that level). I was amazed…The problem was our new young traders had only ever traded Bonds from the sell side of view. It had worked for 5 years, but the trend had changed, and they had not yet spotted that…. another million lightbulbs went off in my head.

When did you decide to act on your new-found knowledge?

The very next day! I gathered up my support and resistance levels, worked out my daily pivots, waltzed into the pit, and started buying bonds to the (friendly) boos and hisses of my fellow traders. It closed 30 points higher.

Sadly this did not help my boss, whose tendency to sell bonds in the 100's of lots had lost the company a great deal of money, and within 3 weeks we were all made redundant. I had already secured a job at Midland Bank, which had the biggest presence and most volume on our trading floor. I loved every minute, and was soon on the phones advising clients of chart points, Fibonacci retracements and everything to do with charts. I did not just read books on the subject, but spent hours,days, months with screens, working out these levels for myself.

I also started making money trading bonds, something the Midland Treasury department noticed. They invited me to help start up a technical (T/A) trading desk. It was a wrench leaving LIFFE after 5 years, but I knew that bigger and better things awaited me.

What aspects of Technical Analysis are the most appealing to you? Is it the visual aspect of price patterns or the crowd behavior behind it?

Well, price patterns reflect crowd behavior and the best lesson was seeing it in the flesh on the floor. You knew by looking at the scuffle and behavior of the pit traders whether the market just moved 10 pips. To me, it was something obvious which has stayed with me for all these years. Even to this day, when I look at a chart, in my mind's eye I still see those bond pit traders all bellowing and shoving each other in their struggle to get out of the wrong way positions.

Can you tell us when and how you came to have students/followers? Can you recall a particular one who really impressed you?

In my early days of trading and helping set up technical analysis desks in banks, I remember my boss pointing me to a young, be-speckled lad who had not done well on the Forex trading desk. I was told my group were his last hope of staying in the dealing room.

I spent many hours, weeks, months with this young lad before he finally got it and, I have to say, he progressed to become head of research at a major bank. Every time I see him on CNBC I feel a burst of pride at how far he's come from that young shy awkward boy all those years ago.

But I have worked with and trained a lot of the most fantastic technical analysis of today. I am proud of every one of them and I feel I contributed to at least a part of their love of charts.

How do you feel forecasting currency movements as opposed to the kind of price movements in futures contracts that you used to begin your career?

A chart is a chart is a chart, as far as I am concerned. Every market has its own little ways, but I am as happy charting currencies as I am oil futures.

What are your favorite technical indicators? Have you kept the same favorites throughout your career or have they changed over time?

Obviously in my business there are different flavors of the month... every other month. I have always kept abreast of all the T/A theories, new and old. I learned Candlestick charts at Nomura bank in 1987, then later Elliot Wave, Dow Theory, Market Profile, you name it. I have always returned to my favorite theory - KISS, Keep it Simple and Stupid. Charts are there to make us money, you shouldn't need a doctorate to understand them.

Markets retrace from significant points, so Fibonacci levels are a must. Markets go from bullish to bearish in a short time so stochastics are useful. And moving averages, just because I like them. Those are the 3 I use. I have discarded everything else over the 29 years I have been doing my job.

Nothing else I have learned over the years gives me as much insight to what the price is going to do the next day as a daily and/or 60 min bar chart, Fibonachi levels and stochastics. Most recent technical analysts in banks who use these new-fangled systems don't actually trade and, frankly, I am not sure that they would know how to. Trading is most likely not part of their job anyway these days.

I have found my trading background was an incredible asset to my ability to produce T/A reports. I know how traders feel. I am one at heart, and this is why I base Charmercharts from the eyes of a trader who uses charts to make profitable trading decisions.

Did you ever need to face the stereotype of women being more risk adverse than men? Do you agree with it?

To be fair, because I have been doing this so long the female stereotypes never really applied to me. I was never the aggressive type because I never needed to be. I was in this market from the beginning. Have come up against being stereotyped by men? No. By women, yes...

Some women over the years have been a disgrace and I am ashamed of them. I'm referring to those who claim to want to work in this wonderful business and then scream sexual harassment because a trader has farted. I say fart back or smile knowingly. I have never been insulted by male colleagues. Even though I have held some senior rank in the Banks. If I heard some comment aimed at me on the floor or in the dealing room, I always fired back a quick retort. It was all taken in fun however, even on the most stressful times in the market. I have never found the need to burn my bra.

"If I needed to recruit a trader I would definitely go for a woman rather than a man."

So you believe women can do their way through this man's world...

The genders are not so skewed in the big banks anymore, but (in the retail market) I believe very few women actually trade their own money in comparison to men. This should change as women make great traders if given the opportunity.

What I will say is that in my 29 years of experience on the LIFFE floor and with various major bank dealing rooms, women were then and are now by far the better trader when given the opportunity, and if I needed to recruit a trader I would definitely go for a women rather than a man.

I must admit that women traders are better than men because they do not have egos. They can change their minds quickly if they are wrong, and are patient if they are right.

Men have egos. A position becomes their position and they guard it jealously, sometimes to the detriment of the position. Once they have taken a view, they do not like to lose face and reverse a wrong position. “It will come eventually” is a phrase I have heard over and over again. Sadly, sometimes a position does not pan out and has to be closed.

Women are different. They tend to go into a trade with a profit and a stop order in mind. They clearly define that they have entered a trade at a good level, and if that level is wrong, they quickly reverse their trade and do not hold onto a losing position. They have no egos, the trade is not personal to them. They know when they are wrong.

Patience is a virtue has always been my other favorite saying.

'Understanding ourselves helps us understand our trading decisions'

2010-06-18T22:38:00.000-07:00

“Though it has been difficult at times (there’s no harder reality check than a depleting account), I’ve enjoyed the process of self discovery. I’ve learned a lot about myself through learning to trade currencies.” says Triffany Hammond, professional currencies trader and coach. Triffany quit her last job as a PC Technician for the City of Boulder (Colorado) in 1999 to support her husband’s growing business and raise her son, who was born in the summer of that same year, until she discovered Forex in 2002. Since then she worked from home and has found in trading the perfect way to realize herself.

In this exclusive interview given in the context of our series on “Women in Forex”, Triffany Hammond discusses her career, her perceptions of Forex Trading and being a woman in the business.

Triffany does not feel very comfortable stereotyping differences between women and men in regard to trading skills. She thinks there may be something very specific to the neurology of the brains of each gender, but in the end “we need to know our own propensities and tendencies in order to trade around (or with) them. Is the overconfident trader any better or worse than the fearful one? No. We just have to find a way for them to trade well.”
Being a mother and trader at the same time has been a challenge, but she managed it with success: “Just like I lay down those boundaries for my kids, I lay down boundaries for myself.” Her advice to other retail traders? “If you love trading, keep at it. If you don’t, then find something else.”

What feeling do you get when you trade Forex?

I used to feel anxious and excited when I had a trade on. That’s a dangerous combination, but I think it is an unavoidable part of everyone’s learning curve. Now, I find it satisfying. I view my dollars-at-risk as my little employees out there working for me. As long as I’ve taken a well planned-out trade it feels right to have my capital at work.
In the larger scheme of things, I’ve learned a lot about myself through learning to trade currencies. Though it has been difficult at times (there’s no harder reality check than a depleting account) I’ve enjoyed that process of self discovery. I still enjoy it…I’m always learning.

So learning is one of the things that attracted you in Forex...

I had been studying the equities markets for years. At first it was kind of a personal challenge. I wasn’t raised in a household that spoke an economic language yet I was fascinated by the marketplace as the underpinnings of our government. Because I had become more and more involved in political issues that mattered to me, I found the Capitalistic Democracy model absolutely fascinating. I was at a fresh crossroads in my life when my kids were growing from toddlers to preschoolers and I realized that I had the chance to refocus my energy on learning something that would broaden me as they headed into longer and longer school days. As it often happens in life, that is about the same time that Forex became available to the retail trader. I was immediately hooked.

Indeed, from the mid-90's, internet opened the Forex market to many more people, including women, by making trading from home possible...

Definitely! I'm one of those women! I knew, when I decided to have children, that I wanted to be at home for them as long as it was possible. I quickly realized, however, that a lot of my self was getting lost in being their Mom. I needed something that was wholly mine and would still help the family. I also wanted something that was going to financially aid other passions I have in my life. Odd school schedules and the need to be available during the day hindered my options. I was really grateful to find trading. It was difficult at first and there were times I wondered if I was just wasting my time. Thank goodness my husband is so supportive and patient because it would have been a lot easier to go get a ‘real job’ that had an immediate, albeit capped, paycheck. I’m very happy I stuck with trading.

"Trading doesn’t build anything. It doesn’t contribute in and of itself."

Now, I get the best of both worlds – I love my work AND I get to watch my kids grow up, first hand. I’m extremely lucky.

How do you keep these two worlds separate?

Just like I lay down those boundaries for my kids, I lay down boundaries for myself. I’ve made an agreement that the evenings and weekends belong to me and my family. I don’t open the charts on Sunday. I wait until my work hours on Monday. When I can, I even have my watchlist done on Friday night, after the close of the NY session so I can leave the job behind and focus on my ‘real’ life. During the week, my trades are my trades. I don’t keep checking on them in the evenings to see if I should stack in or take profit – I have a plan and I let the market do what it’s going to do.

Why have you decided to dedicate yourself to educating other traders?

Trading doesn’t build anything. It doesn’t contribute in and of itself. I’m able to be a better wife and Mother as a result, but that is still a contribution to the small bubble around me. I make a difference in lives all around the world as a teacher. My students are some of the most wonderful people I’ve ever had the honor of knowing. To think what they may do with their trading profits someday – build a school, start a business, aid their community – and I had the privilege of helping them get there?! That’s amazing.

"I didn’t have an economic or trading background so I didn’t go into it with all kinds of assumptions – I was willing to be wrong and learn from my mistakes."

And you've never considered working for a bank or broker?

I’ve actually received similar offers and I’m really not interested. I think if I had other people’s money at risk I’d revert back to the anxious/excited trader that still had a lot to learn. I’m in a comfort zone now.

How do you think you trade/analyze the Forex Market differently from men?

I don’t know. I’d say that on the surface, analysis is analysis. But I do think there is a big difference between the way that I approach the process of learning to trade/analyze the Forex market. I knew that I didn’t have an economic or trading background so I didn’t go into it with all kinds of assumptions – I was willing to be wrong and learn from my mistakes. It seems, at least in the U.S., that there is an assumption that a good business man should just know economics and that does show through when a man doesn’t want to face the things that are hurting his trading…the biggest thing is usually himself, but it hurts him to admit it. It didn’t hurt me to admit I was my own biggest obstacle because I didn’t expect to just know anything in the first place.

The only financial business still alive (and profitable!) in Iceland after the country's economy collapsed was its only female-run bank. People began quoting it as an example of how more female traders would be better for the economy because they are more risk averse. What do you think?

I think it is oversimplifying to say that women are better because they’re more risk averse. I think that we do tend to be much more cautious when it comes to our livelihood, but I think the real caution comes from a different starting point. It seems that men are assumed to be good at this sort of thing and women aren’t (or aren’t really thought of at all). Women are still working hard to overcome old stereotypes about what we can and cannot do. That makes us much more cautious when we approach industries where people expect a man to show up.

The CEO of a retail forex trading training course says his women have three qualities which make them better traders than men. Do you agree?

"Men’s fight or flight instinct is also much stronger than ours. That makes trade planning harder for men because they’re fighting their nature, to some degree."

i) women's stronger sense of risk aversion
ii) women's increased patience, which lets them follow through on trading plans better than men
iii) women's tendency to really learn thoroughly before trading, while men tend to learn something partially and immediately

I’ve heard it said many times that women make better traders. If that’s true, I think there may be something very specific to the neurology that differs between mens’ brains and womens’ brains. Men can be very good at many things… just not many things at once. They’re single-focused and if you throw too many things at them at one time it paralyzes their ability to process information.
Women, on the other hand, have more neuro-pathways in their brain and, as a result, we are natural multi-taskers. That innate ability to juggle allows us to process a whole spectrum of information at once and that goes a long way toward our decision making in any facet of life, but especially in trading.
Men’s fight or flight instinct is also much stronger than ours. That makes trade planning harder for men because they’re fighting their nature, to some degree. Where women have had the luxury of being methodical and patient so we come pre-programmed, to a degree, to be able to wait for the right trade setup.

How do you feel about these differences?

I find the differences interesting and that’s about it. I feel it is important to recognize those differences because understanding ourselves is the biggest component to understanding our trading decisions. We need to know our own propensities and tendencies in order to trade around (or with) them. But I approach it the same way I approach each student. Is the overconfident trader any better or worse than the fearful one? No. We just have to find a way for them to trade well. The solution will be different for each trader, but that’s ok, there is still a solution.

What would be your advice for a private female trader to find success in Forex and at the same time a good quality of life?

My main piece of advice would be: if you love trading, keep at it. If you don’t, then find something else. Don’t stick with trading just because it is something that you can do from home and seems like it should be convenient.
Make no mistake, trading is a JOB. It is a very difficult and time-consuming job. My busiest hours are the overlap of Euro-NY sessions (right when I’m trying to get my kids off to school) and the beginning of Asian session (right when my kids are coming home from school) I’m not even going to talk about the complexities of their summer break. That can make the juggle extremely difficult. But I love trading and my family knows it. We’ve got an agreement that this is what I do for a living and it should be respected just like Daddy’s job or their schoolwork. But if I didn’t love trading I would’ve lost a lot of money and a lot of time that I could’ve used finding something that I did love.

In that sense you recommend to all your students to “Be good to themselves”...

Yes. I believe that when we act in our own highest good we act in THE highest good. So many times people make decisions in their life based on what they think other people want or believe. Breaking out of that is very difficult to do, but it is SO important.
Sometimes we don’t even know, at first, what “be good to yourselves” would mean. We don’t stop to consider, “What could I do today that is good for me?” For one person it may mean that they spend some time with a friend and refill themselves energetically. For someone else it may mean that they leave a toxic work situation therefore giving them an opportunity to find a healthy one (possibly even trading). Yet even another person might decide that being good to themselves means finally putting together their trading goals.
When someone takes the time to do something that is good for them, they’re better equipped to do good in general. When we’re doing good in general (and no longer at the expense of ourselves) everything improves… even our trading.

European markets advance on relief after Spanish debt auction; Euro surges

2010-06-17T03:51:00.002-07:00

European markets are going through gains on Thursday with investors confidence boosted by strong demand for on Spanish bonds, which dissipated fears about the country having to seek assistance by the EU. The Euro soared to 3-week highs.

Eurostoxx 50 Index adds 0.75% while the German DAX Index rises 0.6% and the French CAC index advances 0.9% by midday in Europe. In tehe UK, the FTSE Index adds 0.8%.

Spanish Treasury has found demand to sell EUR3.479 billion in long-term government bonds, at 4.9%, below the 5% maximum level the IMF and the EU had set to activate the assistance program planed to aid debt troubled member countries. The successful auction has eased doubts about Spanish debt and restored confidence on the Euro.

Euro rallies to 3-week high

EUR/USD pullback from yesterday's high at 1.2355 has found support at 1.2245 low ahead of the European session, and the pair has soared about 150 pips higher, to hit 3-weeks high at 1.2390 are,a boosted bu Spanish debt auction.

GBP/USD rally from 1.4505 low on Friday was capped yesterday at 1.4855, and the pair declined to 1.4645 low at European opening times, to rise 150 pips higher, on increased risk appetite to reach 1.4800 area at the time of writing.

The CHF has gone through a strong performance after the SNB affirmed that Swiss economy can cope with a strong Swiss Franc, and omitted comments about interventions to avoid excessive CHF strengthening. USD/CHF lost 200 pips to hit 5-week low at 1.1125, while the GBP/JPY lost about 230 pips to 4-week low at 1.6430, and the EUR/CHF dropped below 1.3800 to 1.3755 low, 20 pips short of all time low at 1.3734.

Forex: Swiss Franc surges after SNB statement

2010-06-17T03:51:00.001-07:00

Swiss Franc has advanced against its major rivals reaching multi-week highs against Dollar and Pound after the SNB affirmed that Swiss economy is strong enough to cope with a strong Swiss Franc.

USD/CHF decline from 1.1545 high on Friday has extended 160 pips lower to a fresh 4-week low at 1.1170 so far, while the EUR/CHF decline from 1.4040 high on Tuesday has dropped 120 pips lower to 1.3755, approaching all time low at 1.3734. GBP/CHF decline from 1.6922 high on Tuesday has plunged 185 pips to 4-week low at 1.6435 so far.

The SNB has affirmed that Swiss economy continues growing despite the strength of the Swissy against the Euro, which according to the Bank is damaging Swiss export activity while omitting, for the first time, comments about movement to prevent excessive strengthening of the Swiss currency.

GBP/USD pares Friday's losses, testing 1.4760 high

2010-06-14T03:25:00.002-07:00

Rejection from 1.4760 high on Friday, found support at at 1.4505 low and the pair picked up on Asia, to accelerate on European session after breaking above the daily pivot -around 1.4645- rocketing to levels right below Friday's high, at 1.4760, under bullish pressure at the moment.

Above 1.4760/70 (Jun 10/2 high), the pair might find resistance at 1.4815 (intra-day level) and 1.4845. On the downside, support levels lie at 1.4555/65 (intra-day level/ Jun 7 high), and below here, 1.4505 (Jun 10/11 lows) and 1.4450/60 (intra-day levels).

On intra-day levels, the pair is biased to the upside, says, Stoyan Mihaylov, technical analyst at Deltastock.com, targeting 1.4760 and 1.5050: "The sell-off from 1.4759 bottomed above 1.4490 support and we believe, that it was the third part of the consolidation pattern below 1.4780. The intraday bias is positive for 1.4780, en route to 1.5050 resistance area. Crucial on the downside is 1.4620 support."

European markets extend rally as investor's sentiment improves; Euro and Pound pointing up

2010-06-14T03:25:00.001-07:00

European markets have opened the week on a bid tone, extending the positive trend seen at the end of last week, following gains on Wall Street and Asian markets. On FX markets, Euro and Pound are trading higher against Dollar and Yen.

Eurostoxx 50 Index advances 1.20% while German DAX Index rallies 1.3% and the French CAC Index adds 1.4% on the first two hours of trading. In the UK, the FTSE Index adds 0.65%.

Shares of basic resources and insurance companies are leading gains in Europe on Monday, with investor's optimism at higher levels as concerns about the sovereign debt ebbed, at least momentarily, and in absence of key macroeconomic data in the region.

On the negative side, BP shares are trading 2.7% lower on the FTSE 100, with the company's Chairman facing a crucial meeting with Barack Obama later this week, to address issues related with the oil spill in the Gulf of Mexico.

Euro and Pond higher on demand for risk

EUR/USD continues trading higher as investors' confidence picks up, and rebound from 1.1875 low on Jun 7 has extended above 1.2150, acting as support now and the pair trades at session highs testing resistance at 1.2230 at the moment of writing.

GBP/USD retreat from 1.4760 found support at 1.4505 low and the pair 's rebound has accelerated on European session with the pair extending above 1.4700 to reach session high at 1.4725 so far, with Friday's high, at short distance.

USD/JPY remains trading on a slightly upward trend from 90.85 low last week which extended so far to resistance area at 92.10, which is being tested at the moment.

Few Fundamentals from the U.S. Confirmed Recovery is Undergoing, While Markets Fluctuate Heavily on Concerns over Global Growth

2010-06-12T21:54:00.000-07:00

The U.S. economy had little to reveal over the course of this past week, nevertheless, the data released signaled that the economy is still walking down the path of recovery, as economic activity seems to be stabilizing from the worst recession since WWII, however financial markets were rather hectic, where investors were still focused on Europe’s debt problems, which continues to threaten the outlook for global recovery.

The start was with the consumer credit index, which signaled that purchases on credit increased in April after falling in March, which represents yet another sign that spending levels are improving, though the improvement remains restricted by elevated unemployment and tightened credit conditions.

Meanwhile, the wholesale inventories index released for the month of April, the index also signaled an ongoing improvement in inventory levels, where it seems that producers are starting to build their inventory levels amid the recent improvement in economic conditions, and that is providing further support to economic growth.

Also the Federal Reserve Bank released its Beige Book, where the Feds signaled that economic conditions improved in most districts, as the Feds believe that the economy will continue to expand over a modest rate, since elevated unemployment levels continue to weigh down on economic activity, while inflationary pressures were still subdued, and accordingly, the Feds still believe that promoting economic growth is the main priority.

Moreover, the U.S. Commerce Department signaled that the trade deficit widened in April, where the rising value of the dollar weighed down on exports, as the U.S. dollar has been gaining against most of its major counterparts over the past period, and that indeed affected American exports, while weak demand levels inside the United States continue to weigh down on imports as well.

As for the weekly jobless claims data, the initial jobless claims index declined slightly, while the continuing claims index continued to signal improvement, however, conditions in the labor market are still rather challenging, where unemployment is now standing near its highest level in more than 25 years at 9.7%, while the Feds expect unemployment to range between 9.1% and 9.5% by the end of this year, which is still relatively high, as it will continue to hammer economic activity through limiting income growth and accordingly spending levels, and since spending accounts for nearly two thirds of economic activity in the United States, we should expect growth to remain under pressure over the course of this year.

Another alarming issue is the budget deficit, where the U.S. government committed huge amounts of liquidity in order to support economic activity, where the budget deficit narrowed in the month of May to $135.9 billion from the prior reported deficit of $189.7 billion. The U.S. budget deficit represents another source of danger for the economy, as it could weigh down heavily on the U.S. dollar as well as push long term interest rates higher, and that will further restrain economic activity.

This was further demonstrated in the retail sales figures that were released on Friday, where the retail sales dropped opposite to expectations, as this might indeed signal that the economy will still struggle over the upcoming period, as it seems that the economy won’t be able to sustain the substantial growth levels reported over the past period.

The retail sales accounts for more than 50% of consumer spending and accordingly we should expect spending to contribute by a slower pace to economic growth over the upcoming period, since spending remains under pressure from elevated unemployment and tightened credit conditions.

Finally, the University of Michigan released its preliminary estimate for consumer confidence in the month of June, where consumer confidence continued to improve to reflect the improvement seen recently, especially in the labor market, as unemployment dropped to 9.7% from 9.9%, as employers added more than 400,000 jobs in May.

Meanwhile, stock and currency markets fluctuated heavily over the course of this past week, where investors were still worried over the outlook for global growth amid the European debt crisis, however, data from Asian supported confidence among investors, and that led the stock markets to fluctuate heavily, where the Dow Jones Industrial Average dropped below 10,000 for the first time since February, however the DJIA was still able to rise above the 10,000 mark, as this level has proven to be pivotal, since so long as trading remains above this level, we don’t expect a bearish wave to prevail for the time being.

Moreover, the U.S. dollar also fluctuated against major currencies over the course of the week, where the dollar received a huge boost earlier in the week amid the spread pessimism, however, the dollar weakened as confidence among investors improved, and that prompted the Euro to rise above the $1.20 levels, yet we generally believe that the U.S. dollar will be able to build on its gains over the upcoming period. Gold on the other hand rose to set a new record high above $1250 an ounce, while oil prices also rose back to trade near the $75 a barrel levels.

Jobs report comes in second to rising sovereign debt fears

2010-06-12T21:53:00.000-07:00

An extremely sharp move in the dollar ahead of the May employment report seems now to be rooted in heightened fears over sovereign risk. A Hungarian spokesman for its Prime Minister accused the former government of lying about the state of the nation’s finance and the economy’s health. The event raised the specter of sovereign risk sending bonds flying high alongside the dollar.

Eurodollar futures – In the event the jobs report showed a 22,000 downward revision to the pace of job creation for April and a suspiciously soft May reading of 431,000, which appears to be lacking in private jobs growth and heavy on government jobs possibly related to census hiring.

The yield curve faces conflicting forces today. Probably the strongest is the ongoing worry over sovereign debt around the world as the Hungarian news hits the air. Meanwhile several Fed speakers have aired view that would typically weigh on treasury prices and boost yields. The dissenting voice at the FOMC, Thomas Hoenig of the Kansas City Fed said that the central bank should raise the fed funds rate to 1% on account of a sustainable economic recovery. His Dallas counterpart Richard Fisher said that while the central bank was not yet ready to pull the trigger on monetary policy they may be “getting closer.”

Ahead of the employment report the Eurodollar strip was slightly lower in expectation of a sizeable job creation report, while the September treasury note was a half point higher with the yield at 3.33%. After the data treasuries soared, doubling gains and sending the yield down to 3.26%. Eurodollar prices built on gains with back-months now up 13 basis points.

Canadian bills – The Canadian employment report bond was more bullish than the later U.S. version. The economy created 24,700 additional jobs were added in May and the reading was almost twice the expected pace. However, the elevated reading in the risk barometer stole from the story today. Already the Bank of Canada has qualified further monetary tightening on developments in Europe. As such government bond prices were dragged higher across the curve with the September 10-year bond up 50 ticks at 121.27 after U.S. data. The 90-day bill strip isn’t facing the losses that would have occurred if the data was driving the story. Instead futures prices are gaining and yields continue to drop.

Australian bills – Even though Australian fixed income had finished ahead of the breaking news from Hungary, short-dated bill prices rose sending implied yields lower.

European bond markets – An earlier report indicated a marginal improvement in first quarter GDP across the Eurozone, but dealers remain cautious about the prospect of sovereign default rather than rapidly antiquating data. Peripheral European government bond yields continue higher while core bonds remain bid. Even the French-German spread widened as the disparate demand left French yields higher while those in Frankfurt moved lower.
The September German bund contract is fast-approaching a contract high at 129.10 today – a price achieved on the last round of panic on May 25. Shorter-dated Euribor contracts continue to display caution over liquidity at the front end but indicate a flatter curve at the back end where gains of five basis points are evident.

British gilt – The same flattening of the British yield curve was the order of the day. Short sterling futures faced a minor loss probably on liquidity fears in the months ahead, while gilt prices jumped. The September gilt future surged in line with bunds and treasuries after the employment reports.

Japanese bonds – The appointment of Naoto Kan as Japanese Prime Minster did nothing for the yen nor yield curve, both of which remain slave to unfolding international developments. Earlier in the week the yen suffered as dealers anticipate Mr. Kan will favor a weaker yen and be faster to limit debt issuance. The fear bid to fixed income today reversed the attitude towards the yen, which rises during crises, and helped peel a pip off the 10-year JGB.

Investors await U.S. economic update from Bernanke

2010-06-12T21:51:00.000-07:00

Monetary policy has been cut to the bone. Governments can’t sustain easier fiscal policy because they failed to sock-away enough for rainy days like this when the times were good. Quantitative easing ultimately needs investors to follow the potentially costly lead of central banks and governments as they tried to pull the horse by its nose out of the swamp. Each of these measures for helping fight the recession and counter subdued recovery has limited potential looking ahead. That was today’s warning from the IMF as its Deputy Managing Director served up a stark warning as to why now is a good time to leave the planet and move to another solar system. Failing that, we can rely on demand for Chinese exports and stretch the difficult years a little longer.

Eurodollar futures – Global yields are higher on Wednesday. Risk aversion seems to have run out of steam despite the dour words delivered in Singapore by Mr. Naoyuki Shinohara of the IMF. The focus ahead appears to be testimony to be delivered by Fed Chairman Bernanke as he reports to Congress with his assessment of the health of the economy. Later on Wednesday investors will hear from all 12 Fed districts as to the localized state of regional markets in the Beige book. As noted yesterday, nobody seems to be listening to the increasing number of red flags from FOMC members who collectively raise the distinct possibility that rates will have to be raised at some point.

Eurodollar futures continue to allow for a steeper curve with yields falling at the front and rising at deferred contracts. The September 10-year note future is weaker by half a point this morning boosting the yield to 3.22%.

European bond markets – There are no expectations that the ECB will announce any policy changes on Thursday when it concludes the June monetary policy meeting. The press conference promises as always to be entertaining. Euribor futures mirror the path of U.S. counterparts with a minor steepening of the curve in evidence. The yield on the 10-year German bund fell to a record low in Tuesday’s trading while today the September futures contract has declined by 52 ticks to 129.27 where the implied yield has risen to 2.54%.

British gilt – The next big event for the U.K. will be the budget in two weeks time in which the government will detail plans to cut spending in an effort to reduce the debt burden already equivalent to 11.2% of GDP. Already the markets have warmed to the Conservative party’s approach who appear to understand the gravity of the situation. The gilt market pared gains made earlier in the week and yields backed up on Wednesday to 3.50% as investors watched a modest rebound in risk appetite, which included a surge in the value of the pound as euro-related pressure subsided.

Japanese bonds – The Nikkei fell over 1% in midweek trading and investors remained on the defensive boosting the bid for bonds. The June 10-year JGB future rose to 141.15 sending yields down by three pips to 1.19%.

Canadian bills – What’s good for the local dollar is possibly bad for Canada’s government bonds, which slid 42 ticks to 121.20 in Montreal. If a Reuters report suggesting a surge in Chinese exports is right, then commodity demand is alive and kicking. Moreover, so is global demand. That thought provoked a rally in the loonie today and saw dealers sell 90-day bills down by five basis points as the yield curve made a parallel upwards shift. The U.S. to Canada spread remains at its recent high of around 12 pips.

Australian bills – The Aussie bond market possibly reacted more to the news from Singapore from Mr. Shinohara than it did to a later story from Reuters suggesting a 50% surge in Chinese exports during May. Aussie yields possibly fell as further evidence emerged suggesting weakening business confidence while mortgage lending data also cooled suggesting that monetary policy was biting. The 10-year government bond slipped by three basis points to 5.29%.

What is Medical Bankruptcy?

2010-06-10T03:12:00.001-07:00

In today's economy, it seems like more people are filing for bankruptcy than ever before. There are many causes of bankruptcy, including loss of employment and financial debt due to business. One of the most common reasons for filing for bankruptcy in the United States is medical debt.

Medical bankruptcy is not a legal term; rather, it is a general term that refers to filing for bankruptcy due to medical related debt. This is a major problem in the U.S. that has only increased during the recent recession. Many people mistakenly believe that they will never fall victim to medical bankruptcy because they have health insurance. This is false: in fact, more than half of all bankruptcies filed due to medical debt involve people who had health insurance at the time that they began incurring the medical debt. Thus, it is clear that having health insurance provide a false sense of security for many people.

There are other common misconceptions regarding medical bankruptcy claims. For instance, most people who file for bankruptcy due to medical debt owe less than $5000 in medical bills. The reason that they still choose to file for bankruptcy is that health insurance companies have become more aggressive in recent years about collecting their money. Many people become overwhelmed and are not clear about what their options may be. As a result, they file for medical bankruptcy instead of working out another payment plan.

On the other hand, filing for bankruptcy might be the right option in certain cases. For example, families who owe massive amount of medical debt may not have another choice. However, anyone who is thinking about filing for Chapter 11 bankruptcy must carefully weigh the pros and cons first before making their final decision. Filing for bankruptcy can have long-lasting consequences. It is best to consult a lawyer who specializes in medical bankruptcy in order to make the right choice.

Medical Bankruptcy - A Blessing in Disguise?

2010-06-10T03:11:00.000-07:00

BANKRUPTCY - the word itself can make grown men cower...or worse. The negative connotations are enormous, but in today's world this word is becoming much more commonplace. The fact is that more than half of all bankruptcies filed in the U.S. are the result of medical bills that cannot be paid. Unlike their behavior in the past, doctors, hospitals, clinics, labs and EMS services are actively pursuing lawsuits against people who are unable to pay their bills on time, even if people are attempting to make some sort of payment. It seems that being sick, and as a result, unable to pay your medical bills when THEY want it, has become a crime with the victim being the patient, in both cases. It is clear that until some sort of guidelines are passed in the way of laws, this trend will continue.

So, your options are Chapter 7, Chapter 11 or Chapter 13 relief. Chapter 11 is more frequently utilized by corporate entities, so we won't even talk about that, but one of the other two options are sometimes unavoidable, though a last resort.

Chapter 7 bankruptcies will forgive completely most debts that the average American has. School loans are one example of something that bankruptcy in any form cannot forgive. Chapter 7, even if filed solely due to medical bills, will stay on your credit report for a full 10 years. The up side to this is that often when seeking credit, a letter of explanation will suffice when explaining to a prospective lender the situation surrounding the bankruptcy. Depending upon the lender, less weight may be applied to someone who filed bankruptcy due to medical reasons, though lenders are being much stricter in their lending practices and this is changing as the economy continues to decline. Reaffirming with all of your debtors except the medical entities will go a long ways towards convincing a prospective lender of your viability as a credit risk.

Chapter 13, on the other hand, allows for repayment of a debtor's debts with the protection of the court when it comes to lawsuits and loss of their assets due to the financial situation they find themselves in. Medical bills are able to be repaid through Chapter 13, but as the court gets involved, these bills can be somewhat less than what the original amount was that was owed. Though some may think that ANY bankruptcy is catamount to having leprosy, Chapter 13 only stays on your credit report for 7 years, so is just a little easier to swallow than filing Chapter 7.

If you find yourself struggling with medical bills and the victim of medical agencies or their collection agents who are constantly harassing you and are not willing to make payment arrangements, then you could do much worse than to consider filing bankruptcy.

Many people find that being partially or completely relieved of their debts takes a big load off their shoulders. Once the initial shock wears off, you may find that as the nasty phone calls cease and you are able to afford the necessary prescriptions and not worry about how to rob Simon to pay Paul, filing medical bankruptcy may have been a big blessing in disguise.

The JPY weakened versus all of its most−traded counterparts

2010-06-09T03:27:00.001-07:00

Market Review – Fundamental Perspective

The JPY weakened versus all of its most-traded counterparts as political wrangling over the fate of Japan’s Prime Minister Yukio Hatoyama damped the allure of the JPY as a safe-haven. The Prime Minister met late with Ichiro Ozawa yesterday, the party’s No. 2 official and architect of its 2009 election victory, to discuss his future. The GBP rose to the strongest level in 18 months versus the EUR after reports showed that U.K.’s house prices had their biggest annual gain in more than 2 ½ years in April and manufacturing stayed at the strongest level in more than 15 years last month. Also the GBP/USD climbed yesterday on bets that Prudential Plc.’s $35.5 bln takeover of American International Group Inc.’s main Asian unit may fail, easing concern the accord will prompt outflows of the GBP. The U.S. ISM manufacturing index grew in May at a faster pace than forecasted as factories added workers to meet the greatest export demand in two decades as well as a revival in domestic orders. The EUR/USD fell to 1.2111 yesterday to its lowest level from 1.2306 at its opening. It was the lowest level since more than four years.

The Bank of Canada raised its target rate for overnight loans between banks by 25bps to 0.50, the first Group of Seven country which increased rates since last year’s global recession. Nevertheless the CAD declined on June 1st against 13 of its 16 most-traded counterparts as the central bank said after its rate decision that the move today will be “weighed carefully” against growth in Canada and elsewhere, sowing uncertainty over the pace of further raises.

The AUD/NZD fell to the lowest level in a week as traders bet New Zealand’s central bank will increase the benchmark rate from a record low this month. The AUD/USD recovered after three days of decline on concern that a report may show that the nation’s economy expanded in the first quarter of 2010.

Market Review Fundamental Perspective

2010-06-09T03:26:00.000-07:00

The JPY fell versus all of its major currencies as Asian equities ended two days of losses, boosting demand for higher-yielding currencies. The USD climbed against the JPY after Federal Reserve Chairman Ben S. Bernanke said the U.S. recovery is moving at a “moderate” pace and he sees consumers in the world’s largest economy “coming back.” The Fed will raise its benchmark interest rate from a record low before the U.S. economy returns to full employment or inflation surges, Bernanke added during a question-and-answer session. The EUR rose after yesterday touching a four-year low versus the USD and its weakest level in more than eight years against the JPY on expectation Europe’s common currency has fallen too rapidly.

The EUR dropped 2.5 percent last week against the USD as credit-default swaps on France, Austria, Belgium and Germany also climbed, sending the Markit iTraxx SovX Western Europe Index of contracts on 15 governments to a record. The cost of insuring against losses on Hungarian sovereign debt surged after comments from government official’s sparked concern Europe’s sovereign debt crisis may be spreading to Eastern Europe. The European currency reached record lows after officials in Hungary’s government last week compared the country to Greece while claiming the previous administration lied about public finances.

Today, the EUR/USD pulled a bit back after starting the week with record losses. The most traded pair pulled back from a record low of 1.1876 and trades currently around 1.1962. The EUR/JPY pulled a bit back as most Asian stocks gained, helping the MSCI Asia Pacific Index gained 0.5 percent. The EUR/JPY gained back to 109.64 after it reached a low of 108.04 yesterday, which was the lowest level since the end of 2001.

The Best Ways to Manage Massive Credit Card Debts

2010-06-02T03:27:00.001-07:00

For reasons beyond your control, you may have become a victim of excessive credit card debts. Bankruptcy is one solution for credit card debt that you can use whenever you want. However, this is a solution that punishes you for having excessive unsecured debts even if you are not to blame.
A person who files for bankruptcy because he or she spent the credit card purchasing consumer electronic and other luxury items and a person who was forced to use the credit card to overcome a financial emergency are treated in the same way and are punished in the same manner with a negative credit score.
Further, when you were enjoying extra cash in your hands with the help of the stimulus package, why should you go in for such a negative solution for credit card debt? It makes sense to utilize other debt relief options.
If you are confident of enjoying a high income in the future, you can simply rough it out and wait for your income to increase so that you can repay the credit card debts on time. This is one option that requires a lot of discipline and commitment.
Further, you should be completely confident of your increase in income. If you postpone your lenders for three months and if you still end up with very less money in your hand, they may file for legal action and you may end up facing the court.
If you have a high credit score and if you are confident that you can use credit repair to improve your credit score in a span of a few months, you can go in for a consolidation loan as a solution for massive credit card debt.
However, these solutions for credit card debts work only in traditional scenarios. The problem is that the current problem or debt complication is completely unprecedented. The smart option is to go in for debt settlement deal.
Amongst the various options to overcome your credit card debt problems, a debt settlement deal is the smartest option because you enjoy a 50% to 70% discount on the total amount owed and also enjoy generous credit facilities to repay the balance amount over a span of 15-18 months.
As if this is not sufficient, you will enjoy credit repair options if you choose the right service provider. Just make use of the World Wide Web to identify the right debt settlement service provider and enjoy fantastic relief.

If you are over $10,000 in unsecured debt it would be wise to contact a debt settlement company while conditions are so favorable. A legitimate debt settlement company will be able to eliminate 60% of your unsecured debt on average. There are now online services that will compare debt settlement companies for consumers and provide a top performing company in their area. To locate a top performing debt settlement company in your area check out the link below.

Debt Relief Programs - How to Locate Debt Relief Programs Online

2010-06-02T03:26:00.000-07:00

Today's market place is crowded with credit card debt relief programs who promise attractive debt reductions. The common notion regarding debt relief program is that professional debt relief programs are hard to find. It is because of this reason that many people with held using these programs as a way out for debt relief. Thus there is no gain saying the fact that it is a tough task to find best debt settlement program, thus one needs to be extra careful and vigilant to select the best out of all the available relief schedules.
Therefore one' s search for a professional relief program have to be of limited scope and defined logical boundaries. Here are few tips to help you locate best debt relief programs online.
1. When you search for relief programs in the internet you need to be precise and straight forward. The result that you would ultimately receive depends on the words that you use in your searching engine.
2. The ranking of the results shown on your search engine do not based on their credibility. There is a separate system to prioritize the search results. Thus you need explore sites listed in the entire search list with out just exploring the sites listed in the first page.
3. Additionally you can get the help of a financial advisor to understand the list and in this way you can avoid half of the sites in the list which are not up to the standard you require.
4. Search for communities, forums and discussion threads which will help you with advice and opinions regarding these programs. These sites will allow you to post your question and then to collect answers.
5. Further more read articles published on the internet regarding relief programs which will allow you to get clear idea on how the process works
6. When you are settled with some relief plans keenly analyze their conditions and do not deceived by mesmerizing terms and attractive but unattainable promises.
7. Compare and contrast relief programs with each other to identify the most profitable and credible ones
8. Finally before you conclude the survey have a look on the customer feedback based on success and failure rates in their prior experiences.
Hope you could get an overall idea on how to select a best debt relief program from all those which are available online. Go ahead in searching for a good debt settlement company using these secret tips! Good Luck!

Summary of HIRE and Foreign Account Tax Compliance

2010-06-01T03:23:00.001-07:00

On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment ("HIRE") Act (P.L. 111-147) (The "Act") which included the Foreign Account Tax Compliance Act containing new foreign account tax compliance rules.
Under the Act, new reporting and disclosure requirements for foreign assets will be phased in between 2010 - 2013:
1. Foreign Institutional Reporting: Foreign Institutions have new reporting and withholding obligations for accounts held by U.S. Persons (generally effective after 12/31/12, commencing 1/1/13).
2. Foreign Financial Assets ($50,000): Individuals with an interest in a "Foreign Financial Asset" have new disclosure requirements. If foreign financial assets are valued in excess of $50,000, the U.S. Taxpayer must attach certain information to their income tax returns for tax years beginning after March 18, 2010. (U.S. Taxpayers are not required to disclose interests that are held in a custodial account with a U.S. financial institution).
The penalty is substantial ($10,000, plus additional amounts for continued failures, up to a maximum of $50,000 for each applicable tax period). The penalty may be waived if the individual can establish that the failure was due to reasonable cause and not willful neglect.
3. 40% Penalty: A 40% accuracy-related penalty is imposed for underpayment of tax that is attributable to an undisclosed foreign financial asset understatement. Applicable assets are those subject to mandatory information reporting when the disclosure requirements were not met. The penalties are effective for tax years beginning after March 18, 2010.
4. 6 Year Statute of Limitations: Statute of limitations re: omission of income in connection with foreign assets: The statute of limitations for assessments of tax is extended to six (6) years if there is an omission of gross income in excess of $5,000 attributable to the foreign financial asset. The six year statute of limitations is effective for tax returns filed after March 18, 2010, as well as for any other tax return for which the assessment period has not yet expired as of March 18, 2010.
5. Passive Foreign Investment Companies: The Act imposes an information disclosure requirement on U.S. Persons who are PFIC shareholders.
A PFIC is any foreign corporation if:
a. 75% or more of the gross income of the corporation for the taxable year is passive income; or
b. The average percentage of assets held by such corporation during a taxable year which produce passive income or which are held for the production of passive income are at least 50%.
6. Foreign Trusts with U.S. Beneficiaries: The Act clarifies if a foreign trust is treated as having a U.S. Beneficiary, an amount accumulated is treated as accumulated for the U.S. Person's benefit even if that Person's trust interest is contingent. The Act clarifies that the discretion to identify beneficiaries may cause the trust to be treated as having a U.S. Beneficiary. This provision is effective after March 18, 2010.
7. Rebuttable Presumption/Foreign Trust - U.S. Beneficiary: The Act creates a rebuttable presumption that a foreign trust has a U.S. Beneficiary if a U.S. Person directly or indirectly transfers property to a foreign trust (unless the transferor provides satisfactory information to the contrary to the IRS). This provision is effective for property transfers after March 18, 2010.
8. Uncompensated Use of the Foreign Trust Property: The Act provides that the uncompensated use of the foreign trust property by a U.S. Grantor, a U.S. Beneficiary (or a U.S. Person, related to either of them), is treated as a distribution by the trust.
The use of the trust property is treated as a distribution to the extent of the fair market value of the property's use to the U.S. Grantor/U.S. Beneficiary, unless the fair market value of that use is paid to the trust.
The loan of cash or marketable securities by a foreign trust, or the use of any other property of the trust, to or by any U.S. Person is also treated as paid or accumulated for the benefit of the U.S. Person. This provision applies to loans made and uses of property after March 18, 2010.
9. Reporting Requirements, U.S. Owners of Foreign Trusts: This provision requires any U.S. Person treated as the owner of any portion of a foreign trust to submit IRS-required information and insure that the trust files a return on its activities and provides such information to its owners and distributees.
This new requirement imposed on U.S. Persons treated as owners is in addition to the current requirement that such U.S. Persons are responsible for insuring that the foreign trust complies with its own reporting obligations. This provision is effective for taxable years beginning after March 18, 2010.
10. Minimum Penalty re: Failure to Report Certain Foreign Trusts: This provision increases the minimum penalty for failure to provide timely and complete disclosure on foreign trusts to the greater of $10,000 or 35% of the amount that should have been reported.
In the case of failure to properly disclose by the U.S. Owner of a foreign trust of the year-end value, the minimum penalty would be the greater of $10,000 or 5% of the amount that should have been reported.
This provision is effective for notices and returns required to be filed after December 31, 2009.

Gary S. Wolfe, Esq. International Tax Practice offers the following legal expertise: IRS Tax Audits, International Asset Protection & International Litigation. Please see http://gswlaw.com for more info.
Gary S. Wolfe, A PROFESSIONAL LAW CORPORATION
9100 Wilshire Blvd., Suite 505 East, Beverly Hills, CA, 90212
(310) 274-3116

Why You Need to Avoid Finance Planners on the Internet

2010-05-29T22:45:00.000-07:00

The majority of us are quite eager to maintain a strict level of control over our personal finances, however not all of us are able to achieve this lofty aspiration and sadly many of us will simply fall at the first hurdle. However, this does not mean to say that you are perpetually doomed to failure: rather, you just need a little help to get you there.
The internet is full of articles, support communities and tutorials all of which are designed to help assist you with any financial issues that may arise. However, it is crucial that you take these with a grain of salt and be wary about relying too heavily on any person who professes to be some sort of financial advisory genius or expert. You have means of verifying such bold claims and if you are foolish enough to accept this without question, you leave yourself dangerously exposed.
One of the major problems with these experts on the internet is that they typically churn out a standard template answer which is then applied to everyone, irrespective of the nature of their debt, or the reasons as to why they are in debt. This means that people run the risk of relying on erroneous information, which will not and cannot help them. Ideally, you should be drafting a financial plan by yourself, for yourself. Only you will be truly aware of what your current financial situation is like, and only you can truly know the current bills you owe.
Don't be foolish when it comes to dealing with debt. Make sure you follow your head whenever you are in doubt. Remember, common sense really is the best answer.

Maintaining your personal finance can be one of the toughest tasks that you will have to face in life. Make use of the personal finance tools to manage your personal finance effectively.

How a Chapter 7 Bankruptcy Attorney Can Help You

2010-05-29T22:43:00.000-07:00

Filing for bankruptcy can have a bittersweet appeal. It is a final solution to your financial problems, but it can also be a nerve wracking decision because of its finality. Because of the ambiguity of this immense process, a Chapter 7 bankruptcy attorney can prove to a be a helpful addition to your proactive stance against personal debt. The lawyer can even save your home from a foreclosure.
The assistance offered by many legal services can help provide tremendous relief at the very onset of this process. This can include immediate debt relieve and collection intervention, free information on debt consolidation as well as the implementation of a solid plan for credit restoration. They can also provide advice in getting wage garnishment stopped and eliminating embarrassing credit collection calls at your place of business.
This can make the process seem less overwhelming. What can make it a positive process however is the implementation of financial training that will help you avoid having a recurrent financial mess on your hands. A good bankruptcy lawyer typically belongs to a legal team that expresses concern for the future of your finances and in various ways works to ensure that you will get on and stay on the road to financial health.
You want to make certain to choose a seasoned bankruptcy attorney that is familiar to many aspects of bankruptcy laws. This insures you greater protection for the assets that you have. The advice that you get at this stage in the game is crucial and should assure your future security.
Many legal teams offer pro bono or free informational services. This can be online or physical access to numerous documents and programs that assist in credit correction. Your bankruptcy will help you get a handle on the present mess, while the useful educational services of your bankruptcy legal team will assist you in making better future financial decision.
Your consumer debt should not require you to suffer a lifetime of embarrassment and stress. In fact, this can only further enhance the proclivity to make bad financial decisions. Filing for bankruptcy is not necessarily the end of the road; rather it is the beginning of a new financial frame of mind.
Having a Chapter 7 bankruptcy attorney on your team ensures that you will get expert legal advice and instruction. This means that the best plans and methods for dealing with your present circumstances will be used. It also means that you will get the relief of trained caring assistance that can help alleviate the stress of collections and wage garnishments.

Papandreou asks for rescue plan to be activated

2010-05-24T03:19:00.001-07:00

Greece requests aid

The Greek debt crisis and fears of increasing sovereign debt problems in other eurozone countries weighed on the euro again this week. EURUSD in particular slipped temporarily to 1.32, the lower end of the trading range of the last two and a half months. At the end of the week, however, after surprisingly upbeat economic data, and the announcement that the Greek government had officially requested aid, EUR-USD is around 1.33 again, still about 1.7% below last week’s level.

Eurostat has revised Greece’s budget deficit for 2009 from 12.7% to at least 13.6% of GDP.
Moreover, Moody’s has downgraded Greece’s rating from A2 to A3. The even greater budget gap makes Greece’s stability programme, which is aiming to cut the deficit to 8.5% this year, appear even more ambitious. Implementing additional austerity measures would probably prove difficult: the measures unveiled so far have already prompted strike action. Furthermore, an even tighter fiscal policy could exacerbate the recession, which would not help to cut the deficit.

Greece’s dilemma has been deepening because of the surge in interest rates. Prices of bonds with shorter maturities plummeted dramatically this week. This reflects investors’ fears of an impending default or debt restructuring, even though the Greek finance minister George Papaconstantinou has shrugged off this possibility as being absurd.
On Thursday, yields on 2-year bonds were over 10%, compared with 6.75% at the end of last week. 10-year yields jumped to 8.8% at times; thus spreads between 10-year Greek bonds and the equivalent German Bunds hit a new record of over 560 basis points. There is growing concern about contagion from Greece spreading to other eurozone countries: yield spreads between 10- year German and Portuguese government bonds, for example, climbed to a 13-month high.

Due to the sharp increase in the cost of financing on financial markets, the Greek prime minister George Papandreou officially requested aid from European governments and the International Monetary Fund (IMF) at midday on Friday.
There is no time to be lost: Greece must find €11bn for maturing bonds by the middle of May.

The fact that Greece is now asking for the rescue plan to be activated is allaying fears of the debt crisis spreading to other eurozone countries and the monetary union breaking up, and is thus easing pressure on the euro. Before the rescue plan takes effect, however, governments of the member states must decide on bilateral loans. The French government has already drawn up a draft bill and earmarked €3.9bn, over 60% of France’s maximum contribution. If all member states provided about 60% of their respective maximum contributions, the total for the whole of the eurozone would be about €18.5bn. Together with the IMF loan, which the German minister of economics Rainer Brüderle estimates at €12bn, this would more or less cover the amount needed by Greece for 2010. However, it is still unclear whether this will in fact suffice. The rescue plan agreed at the end of March envisages bilateral loans of up to €30bn for this year and additional IMF loans of €15bn. The extent of potential financial aid necessary in the following years is not yet known.

In Germany, the legal procedure for bilateral loans has not yet been agreed. But the government will now hardly be able to postpone voting on the unpopular aid until after the election in the state of North Rhine Westphalia on 9 May. According to finance minister Wolfgang Schäuble, voluntary aid would conform with the Constitution, as the no-bailout clause in the Lisbon Treaty only prohibits member states from being liable for the commitment of other states. He said it was in Germany’s interests to stop the Greek debt crisis from escalating.

If loans, on which interest rates of about 5% would be charged, were not granted, Greece would probably become insolvent. This is not an option: if its debts were restructured, German credit institutions, which hold Greek government bonds to the tune of around €40bn in their portfolios, would have to take massive write-downs.
This would cause capital base constraints, which would tighten lending further, and the banking crisis could flare up again.

This would jeopardize the German recovery, which just seems to be gathering pace in the second quarter. This week, for instance, the ZEW expectations rose by 8.5 points, and are now almost twice as high as their historical average.

The Ifo business climate leapt from 98.2 to 101.6, mainly because current assessment had risen sharply. Expectations continued to improve too and are nearing their all-time high. Other climate indicators in the euro area were also quite upbeat. Nevertheless, according to the latest IMF World Economic Outlook, disparity between the US and the eurozone is widening: for the eurozone, the IMF is still predicting growth of 1% in 2010, and it has reduced its forecast for 2011 marginally to 1.5%. However, the US forecast for 2010 has been lifted by 0.4 points to 3.1% and for 2011 by 0.2 points to 2.6%.

Despite the brighter US economic outlook, the FOMC is not likely to signal that it will abandon its zero interest rate policy in the foreseeable future. In the minutes of the last meeting, some committee members had already warned against raising interest rates prematurely, particularly because of the risk that core inflation could drop more sharply than was desired. Therefore, the phrase “extraordinarily low rates for an extended period” is likely to be maintained.

Nevertheless, the dollar could remain well supported next week, and not just because of the ongoing problems in the eurozone: US GDP data for Q1 will show that this time the main driver of growth in the US was not inventories but private consumption.

Eurozone economic data surprisingly robust, recovery gathering pace

2010-05-24T03:18:00.000-07:00

Aid package for Greece eases pressure on euro

EUR-USD plunged to a fresh 1-year low of 1.3114 this week as the debt crisis intensified.
The European single currency could have bottomed out, however. In our view, the euro is unlikely to fall further, for the following reasons:

1. The escalation of the Greek debt crisis after S&P cut Greece’s rating by three notches to BB+ (i.e. junk status) had little impact on the forex market. Although the market for Greek government bonds had virtually collapsed and the panic – additionally fuelled by the downgrading of Portugal and Spain – increasingly spread to the government bonds of other “shaky candidates” in the eurozone, causing risk premiums on their sovereign debt to rocket, the euro fell less than one cent below last Friday’s trough. Apparently, at around 1.31/32, there is substantial demand, from Asian central banks for example, according to rumours.2. All official bodies, which are involved in the negotiations with Greece, have stated quite clearly that a Greek debt restructuring is not an option at the moment. Furthermore, their comments suggest that the financial support from the eurozone and the IMF should cover Greece’s funding requirements for the next three years, reputed to be around €100 to 120bn.

The negotiations with Greece are likely to be concluded this weekend, so markets will then have additional information about the rescue package. The political procedure will take a few days longer, however. The German Bundestag (the lower house) is due to decide early next week, and the Bundesrat (the upper house) next Friday. Apparently, an extraordinary Eurogroup meeting is planned for 10 May, at which member states are to give their final approval to the aid package. At this stage, there could still be the odd uncertainty here and there; in our view, however, policymakers are now well aware that the situation is serious. On the whole, we see a good possibility of things calming down a bit now.

3. In the last few months, economic data in the eurozone have been remarkably robust. Like the Ifo business climate, the European Commission’s survey results are now also indicating that the economic recovery is gathering steam in the second quarter. The comprehensive Economic Sentiment Indicator is now above the long-term average again; Germany’s economy is particularly buoyant, but the recovery is taking hold across the board. We are expecting growth to have been very modest in the first quarter due to the harsh weather, but to make up for this in the second quarter.

The ECB Council is holding its regular monthly meeting next Thursday. Here too, the focus will presumably be on Greece, both at the meeting and at the press conference. But as the eurozone governments are responsible for the aid package, the ECB will probably try to build up confidence. It will be interesting to see whether Jean-Claude Trichet reiterates the ECB’s willingness to implement unconventional measures if necessary to safeguard financial stability in the euro area: as a last resort, the central bank can purchase government bonds, in the same way as it buys, or has bought, covered bonds.

As far as the economic risks are concerned, given the improvement in the economic environment, the assessment could gradually become more positive. A few days ago, Bundesbank president Axel Weber stated that, while the medium-term outlook for inflation is still low, he now sees the upside risks as being somewhat higher than in the last projections in March. That also ties in with the slight increase in money market rates in the euro area. In the last few days, the three-month Euribor has risen by 2 bp to over 0.66. However, in view of the debt crisis, the markets are probably not expecting the ECB to adopt a more restrictive stance for the time being.

Conclusion

Against a backdrop of aid for Greece materialising, the pressure on the euro is likely to ease. The economic environment in the eurozone is becoming remarkably favourable, but because of the debt crisis, the ECB will presumably exercise caution with regard to tightening monetary policy. In the short term, the euro could be somewhat volatile until the Greek rescue package is all cut and dried. Furthermore, apart from today’s GDP figures for Q1, a number of important US data will be released next week. The ISM purchasing managers index and the labour market report next Friday are set to underline the upbeat picture of the US economy, thus limiting the euro’s scope to rise.

Euro in free fall

2010-05-24T03:17:00.000-07:00

The euro came under heavy pressure this week.
EUR-USD actually fell below 1.26 for a short time, but strengthened again to almost 1.28 at the end of the week. The single currency’s weakness was noticeable against almost all currencies. The chain reaction triggered by the Greek debt crisis spread rapidly this week. Bond and credit spreads of the peripheral countries soared and equity markets posted steep losses across the board. The ECB council meeting disappointed investors who had been hoping that the ECB would ease the pressure by buying debt-stricken countries’ bonds. The ECB dashed these hopes, however: according to Jean-Claude Trichet, the council did not even discuss this option.

With the renewed escalation of the crisis, attempts to calm down worries about the Greek debt crisis have failed once again. Only last weekend, the Greek government had agreed with the IMF, the EU Commission and the ECB on an ambitious multi-year fiscal consolidation package, thus creating the necessary prerequisites for financial aid for three years offered by eurozone member states to be made available. Hopes that the €110 billion bail-out package would suffice to cover Greece’s funding requirements faded all too soon, however. Furthermore, given the vehement protests, markets are still doubtful whether the Greek government will in fact be able to implement the austerity measures.

Thus bond and credit spreads in the debt-stricken countries shot up to new record highs, while investors continued to rush into quality. Yields on 2-year German government bonds are now only around 0.5%; 10-year Bund yields fell to fresh lows too, and US Treasuries were also in demand. The losses in the peripheral countries are putting the European banking system under increasing pressure. Asset swap spreads have widened sharply in the last few days. As banks’ balance sheets contain numerous bonds of debtstricken countries, risks for banks in Europe are estimated to have grown significantly again.

Up to now it is not clear how and whether the chain reaction can be stopped. Risk aversion is heightening every day, which in turn is increasing the risk of further member states losing access to capital markets. Admittedly, Spain successfully launched a 5-year bond yesterday, albeit with much higher interest rates. Ultimately, EU government leaders and the ECB will have to decide how to react if investors were to boycott buying bonds issued by the peripheral nations. In the short term, the ECB would then hardly be able to avoid purchasing government bonds on a larger scale. One permanent solution might be for the eurozone to issue joint bonds, which would prevent speculation against one particular country. However, comments by central bankers and policymakers suggest that they are not yet prepared to take such a step.

Economic development has become almost irrelevant – despite extremely upbeat data again; industrial new orders and production in Germany soared in March, thus confirming the very positive sentiment indicators. Everything is indicating that growth in the eurozone will rebound significantly in the second quarter. It remains to be seen to what extent the debt crisis will dampen the upswing again in the subsequent quarters.

Forex GBP/USD capped below 1.4400/05 area

2010-05-20T03:47:00.001-07:00

Pound's recovery from 144-month low at 1.4235 has been halted at 1.4465 high on Asian session, and the pair dropped to 1.4315 at European opening, to pick up, favoured by improved market sentiment, although Sterling remains capped below 1.4400/05 resistance area.

On the upside, above 1.4400/05, (intra-day resistance), the pair might find resistance at 1.4465 (May 19 high) and 1.4525 (May 18 high). On the downside, support levels lie at 1.4320 (session low), and below here, 1.4275, and then 14-month low 1.4235 (May 19 low).

The pair is going through short-term consolidation, says by Slobodan Drvenica, technical analyst at Windsor Brokers Ltd, who foresees a return to 1.4517/47: "Undergoes short-term consolidation just above 1.4235, yearly low. While 1.4273 holds, return towards 1.4517/47 area is not ruled out, however, medium-term bias remains firmly to the downside following a push through key 1.4475 support on 17 May."

AUD/NZD drops to 6-month low 1.2230

2010-05-20T03:46:00.000-07:00

The Aussie has been depreciating across the board, weighed by a mix of risk aversion and concerns about a "hung parliament" in Australia, pushing the AUD/NZD to a fresh 6-month low at 1.2230, before picking up to 1.2300 area at the moment of writing.

The pair has accelerated downtrend after breaking below Fib support at 1.2440 area and long-term support at 1.2340, according to the Varengold Bank Research Team: "After breaking the Fibonacci support level of 38.2%, the AUD/NZD crossed the horizontal support line around 1.2340. It reached its lowest level since the end of October 2009. This break might be a signal for further falls towards the Fibonacci support lines below."

Next support levels, according to the Varengold Bank Research Team, lie at 1.2230 and 1.1925. On the downside, support levels lie at 1.2422, 1.2577, 1.2730.

US treasuries gain on euro zone uncertainty

2010-05-14T04:27:00.002-07:00

US long-term treasuries are on the rise this morning as investors look to hedge their exposure to equity markets amid ongoing euro zone concerns. The benchmark 10-year note is up 12/32 dropping the yield to 3.493. The 30-year note is up 18/32 reducing the yield to 4.391. Bond prices and yields move in opposite directions.

Investors are flocking to the safety of US treasuries as uncertainty over the long-run impact of the EU/IMF bailout package including grueling austerity plans for periphery economies is once again the focus of the marketplace. Equity markets are substantially lower in the European session as the banking sector suffers from exposure to government debt. Moreover, Portugal recently announced bipartisan agreement on new austerity measures which will use tax hikes and wage cuts to cut the budget deficit to a proposed 4.6% in 2010.

Gold moving towards a new all-time high above $1250

2010-05-14T04:27:00.001-07:00

The gold contract for June delivery recently spiked reaching $1247.20, just below the all-time high set in the previous session. Gold is threatening to push above the $1250 level as it continues its bull rally amid concerns over euro zone public debt.

The bullion is once more gaining on safe-haven appeal as investors are still spooked about euro zone sovereign debt and the long-term impact of the EU/IMF bailout package. With new austerity measures already announced in Spain and Portugal this week along with similar measures in the UK on the horizon, investors fear overall growth is in danger of stalling. Moreover as the euro and pound continue to weaken, investors are placing more wealth in the yellow metal sparking the current record demand.

Oil N’ Gold places the next resistance levels just above the current price at $1249.67 and $1255.63. On the downside, support levels are listed at $1239.43 (a previous resistance) and later $1233.47

Most important events today will be the press conference of the ECB

2010-05-06T03:54:00.001-07:00

Today’s Comment

One of the most important events today will be the press conference of the ECB. We do not expect any changes in the interest rate or new signals about coming changes in the interest rate, but the reason why it is nevertheless worth keeping an eye on the press conference is, of course, that in no way has the crisis in Greece and the euro zone become less severe since the ECB’s April meeting. On the contrary, the crisis has escalated, and that has questioned the role of the ECB and its possibilities of taking action to put a damper on the turmoil. One of the options available to the ECB is reintroducing long-term repo auctions at fixed rates in order to ensure sufficient liquidity in the system. This may not, however, suffice really to do away with the uncertainty in the markets. Most likely purchases of government bonds in the market will have a stronger impact. Such a solution may be a bitter pill to swallow for several ECB members, and we do not expect this option to come into play at the ECB meeting today. If the turmoil in the markets escalate further (if, for instance, we see further pressure on Spanish government bonds), it may become the case.

Another event that the market will follow over the coming days is the election in the UK, and it has been a long time since a general election in the UK has been as thrilling as now. We expect initially that pound sterling will weaken for a short term if the election result in a hung parliament. If the government formation turns out to be fairly smooth, and the new parliament quickly begins to deal with the economic challenges, we assess there will be no marked movement. In our view, the most important threat to GBP is a development where the government formation is long in coming or if we have to have a second ballot. We do not think a second ballot is particularly likely but if such a scenario materialises, pound sterling may come under pressure. For the time being, we maintain our 1-month forecast at 87 for EUR/GBP to reflect the risk associated with the election. We still think that in the long term pound sterling offers potential that has not yet benefited from the economic improvement that we have seen after all.

EUR/CHF plunges from 1.4320 to 1.4205

2010-05-06T03:53:00.000-07:00

The Euro has collapsed more than 100 pips in a matter of minutes, dropping from 1.4320 area to a fresh one-month low at 1.4205, after the SNB abandoned its policy against a strong Swiss Franc, according to market sources.

As usual, the Swiss National bank has not given any details about its activities in currency markets.

The Greek Tragedy: EU/IMF approves €110 billion package

2010-05-03T03:26:00.001-07:00

Gathering in an emergency session over the weekend, European finance ministers announced on Sunday an unprecedented, record €110 billion EU/IMF bailout package for Greece - and the Euro actually fell further.

Greece conceded to draconian austerity measures, the Eurozone members to €80 billion of loans (at a mere 5% interest), and the IMF to an additional €30 million (at 3%), all with the assurance that Greece's first €8.5 billion in financing needs for May 19 will be met. The total of €110 billion was in fact almost 4 times the initially imagined €30 billion amount, and EU leaders stressed that the sum is beyond what Greece will likely require. The size of the package was to serve as a silver bullet, a death knell to the calls of country default.

Yet, the announcement instead manifested itself in market consciousness as a series of further questions: Will the EU member states - namely, Germany - now be able to pass this final package through their individual Parliaments? Will Greece be able to keep its austerity promises without flooding its streets further with protesters? Will this whole ordeal repeat when Portugal or Spain's number is up?

Part of market hesitation originates in the stringency of Greece's promised austerity measures - a prerequisite Germany had placed in order for the debt-laden European country to secure a bailout. Greece has promised increases in VAT, raising retirement ages for public sector workers, new levys on businesses, and other steps to secure an additional €30 billion in fiscal savings through 2013. Budget cuts should slash Greece's deficit from 13.6% in 2009 to 8.1% in 2010. Unions have threatened further strikes to oppose the deal. Already, rioters in Athens have been throwing Molotov cocktails at police, protesting the "giant injustice" by the "European junta."

Greece had been forced to scurry for help this past Friday after Standard & Poor's downgraded its credit rating to "junk" status. Moody's also recently slashed its valuation of Greek debt and warned that further hits were on the way if Athens did not take more deficit reduction measures. Standard & Poor's has been on a rampage versus the larger part of the southern periphery of the European Monetary Union. The agency knocked Spain's credit rating down by one notch to AA from AA+ on Wednesday and stated its outlook was negative on the Iberian nation due to concerns over its budget deficit. This hit on Spain came just one day after the S&P slashed Greece's rating by three points as well as cut Portugal's rating by two levels.

Spain is announcing cuts in government administration with the hope of appeasing the markets and the rating agencies, and it seems a day doesn't pass without a Portuguese official publicly highlighting the differences between Greece's precarious situation and its own.

Now the passage of the package - and possibly the viability of the Euro - lies in the hands of the individual country leaders, who must put the bailout measure through their Parliaments. All eyes are on German Chancellor Angela Merkel, who, after everything from a pleading visit to Berlin by European Central Bank President Jean Claude Trichet to a personal phone call from Barak Obama this past Friday, will now need to gather her resolve to push through Germany's lion's share commitment of €22.3 billion of the bailout loans in the face of a crucial regional elections on May 9th.

AUD/USD recovery from 0.9210, capped at 0.9275

2010-05-03T03:25:00.000-07:00

Australian Dollar's retreat from Friday0's high at 0.9325 found support at 0.9210 low on early Asian session, and the pair has picked up to halt 0.9275 on European session, and ease towards 0.9250 area at the time of writing.

On a wider perspective, the FastBrokers Research Team observes the pair capped by intra-day resistance s around 0.9300 area: "Aussie faces technical barriers in the form of intraday, 4/30, 4/26, 4/21, 4/15 and 4/12 highs. Additionally, the psychological .93 and .94 levels could continue to serve technical obstacles over the near-term."

On the downside, the FastBrokers Research Team sees the pair supported by uptrend lines: "As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday and 4/28 lows.

Europe: The Titanic is SINKING

2010-04-29T04:16:00.002-07:00

This is a special Outside the Box. I got this letter from my good friend Greg Weldon last night and got permission to pass it on to you. I think it illustrates the problems that the world is facing from the sovereign debt crisis that is building in Europe.

There are no good solutions here, only very difficult ones. In order to get financing, Greece must willingly put itself into a multi-year depression. And borrowing more money when it cannot afford to pay back what it has will not solve the problem. 61% of Greeks now favor leaving the euro. How has Greece responded? By banning short selling on its stock market for the next two months. That should make things better. Greeks are responding by rioting and going on strike. But you truly know when a country is dysfunctional when its AIR FORCE goes on strike. Yesterday Reuters reported that hundreds of Greek pilots called in sick in protest.
The response from government? The Minister of Defense said he was "profoundly disappointed." Now that had to make the pilots feel bad.

Money is flying from Greek banks, which makes sense, as how can a bankrupt Greek government guarantee Greek bank deposits? I know that Greek bankers may have a different view, but Greek depositors are voting with their feet. And Greg shows us it is not just Greece. It is fast becoming Portugal. And Spain is not far behind in my opinion.

I can well imagine there are private meetings among Greek government officials, banks and other leaders as to what must now be done. Those meetings I am sure can be tense. These things matter, as European banks hold a lot of Greek debt, as well as Portuguese and Spanish debt. European banks have not come close to dealing with their problems and are seriously over-leveraged. There is the potential for yet another banking and credit crisis stemming from European banks. Will world banks see their trust for each other (and especially European banks with large amounts of Club Med bonds) devolve as it did on August of 2008? It is something we must think about. It is possible, in my opinion. I sincerely hope it does not happen, but we must think about it. (Note, this is not something that will happen for awhile, but we should be aware of the problem.)

I want to thank Greg for letting me send this on to you. His website is www.weldononline.com. This letter is typical of his work – thorough and detailed and full of charts. He is the best slicer and dicer of data that I know.

The Greek Tragedy: S&P strikes southern Europe

2010-04-29T04:16:00.001-07:00

The rating agency Standard & Poor's has gone on a rampage versus the larger part of the southtern periphery of the Europan Monetary Union, and the euro has been pushed a fresh twelve-month low as a result.

S&P knocked Spain's credit rating down by one notch to AA from AA+ on Wednesday and stated its outlook was negative on the Iberian nation due to its budget deficit. The Euro-Zone's common currency immediately felt the impact, falling to trade at 1.3114 versus the dollar, its lowest mark since April 2009.

The euro was able to pull back to over 1.3200 against the Greenback after the US Federal Reserve revived the market's appetite for risk with a positive forecast for the US economy.

This hit on Spain came just one day after the S&P slashed Greece's rating by three points to the status of junk as well as cut Portugal's rating by two levels.

As far as Greece's ongoing problems, International Monetary Fund chief Dominique Strauss-Kahn and European Central Bank President Jean-Claude Trichet met with German Chancellor Angela Merkel in Berlin on Wednesday.

While no specific timetable or payment details were announced, the three leaders assured that negotiations on how and when to implement the €45 billion euro loan package for Greece were under way and should be brought to a close in a speedy manner. Afterward, Strauss-Kahn told the press that "the future the Europe is at stake", underscoring the importance of the moment.

Merkel added that negotiations with Greeece need to be accelerated and that she expects talks to conclude in a few days. CNBC reported that the German parliament could sign off on the deal by the end of next week.

German Finance Minister Wolfgang Schaeuble was quoted by a German newspaper before the meeting saying that Greece would "not be let down" in one of the clearest signs of support from Berlin in recent weeks that Berlin would indeed make good on its prior promises to help out the Mediterranean nation.

The clock is ticking away with a critical May 19 deadline approaching. Athens will then have to come up with €10 billion euros in order to meet its commitments or else.

European stocks fall lower amid continuing Greece woes

2010-04-27T04:27:00.001-07:00

Continuing uncertainty surrounding the Greek crisis has investors nervous today, taking European shares lower. All major Euro indices are down with the French CAC 40 off the most, posting a loss of 1.79%. The FTSE 100 and DAX follow right behind at 1.30% and 1.01% less on the day.

European indices posted gains yesterday with mining and industrial leading the charge. However renewed concerns over the timing of the joint EU/IMF aid package as well as risks of contagion to other weak Eurozone members has left market sentiment shaky at best.

EUR/USD drops below 1.3345 to 1.3310 session low

2010-04-27T04:25:00.000-07:00

Euro is suffering on uncertainty about the outcome of Greece's debt issue and , and after failure at 1.3410 high on Asian session, the pair extended its pullback below 1.3345 support to reach fresh session lows at 1.3315 so far.

On the downside, initial support level lies at 1.3290 (Apr 26 low) and below here, 1.3255/65 (intra-day support) and 1.3230 (intra-day support). On the upside, resistance levels lie at 1.3400/10 (Apr 26/session high), and then 1.3445 (Apr 21 high) and 1.3500 (Apr 9 high/intra-day resistance).

According to Stoyan Mihaylov, technical analyst at Deltastock.com, the pair remains in consolidation above 1.3201, with intra-day bias pointing lower: "Still in the consolidation pattern above 1.3201 and the pair already tested 1.3421 minor resistance.The intraday outlook is negative for 1.3292, where a reversal for one more upward test in the 1.3450 are can be expected. The overall bias on the 4 h. chart remains bearish. "

Germany's sputtering recovery

2010-04-23T23:29:00.000-07:00

Standstill. When the GDP numbers are published in mid-May, it should become apparent that the German economy stagnated in the last six months. Following the zero growth in the fourth quarter, real GDP should even have contracted slightly at the beginning of this year. In the process, the risks are still skewed to the downside (pages 4-7).
Causes. The main drag on growth was the weather-related slump in construction output. But private consumption and net exports also played a role. Had it not been for the positive contribution from the inventory cycle, the GDP number would have been much deeper in the red.
Question marks. Above all, the poor export numbers were a source of irritation. At the beginning of the year, real exports were probably down substantially qoq. Germany should in fact have profited structurally from the global economic recovery. Nor does the development of foreign trade gel with the upturn in German foreign industry sales.
Spurt. That argues for a statistical reaction in spring. If the usual rapid recovery of construction output after a harsh winter is added to the equation (cf. chart), the current quarter should bring strong GDP growth of almost 1%. Thereafter, however, the pace of growth should normalize again and settle at 0.3%-0.4% qoq.
Recovery. Evidence that – beyond the statistical distortions – the German and therefore also the EMU economy is still staging a (moderate) recovery is also provided by the improved monetary and fiscal environment. Our respective MCI & FCI indicators point clearly north (pages 8-9).
Further topics:

– Weekly Comment: Greece – third time lucky? (page 2).

– Oil price continues to trend higher (page 10).

– Data outlook: Consolidation of German business climate indicators; tax-related spurt in US home sales (page 12).

– Market outlook: Investors not convinced by EU rescue plan (p. 17).

Before talking about those other countries and their respective currencies, what is your forecast for the euro?

2010-04-17T21:41:00.001-07:00

We believe there is a wonderful buying opportunity for the euro. One reason is because the Euro-Zone counties are at least trying to reduce their costs, if you look at the US, whenever there is a problem they just spend more money. The Euro-Zone as a whole is running a deficit of about 6% of GDP which is about half of what the US is running. Sure, economic growth in the Euro-Zone may be lagging while governments are not spending money, but that may well strengthen the currency.

EUR/USD: Upside bias will remain while above 1.3480

2010-04-16T05:06:00.000-07:00

Euro reversal from 1.3680/90 area, tested on Wednesday, extended on Asian session to test week lows at 1.3520 area although, according to Karen Jones, technical analyst at Commerzbank, the pair remains biased to the upside, in the near term.

The Euro maintains its upside bias, while 1.3480 support is intact, says Jones: "our view remains unchanged, while above 1.3480 a near term upside bias will remain. The market has recently broken above the 5 month down channel, and this currently offers additional support at 1.3425."

The upside target for the pair, lies around 1.3820/40 affirms Jones: "We would allow for gains short term to the 1.3820/40 peaks charted in February and March. There is a base pattern complete below the market between 1.3590-1.3265 and this targets 1.3915."

USD/CHF declines from 1.0640 resistance

2010-04-05T04:18:00.001-07:00

The Dollar's advance against the Swiss Franc that take the pair from 1.0585, intra-day low, to test Fridat high at 1.0460 has been capped at this level, with the USD/CHF retreating to levels close to 1.0620, just below 200 hours moving average at 1.0630.

USD/CHF rises 0.17% so far today from opening price action at 1.0610 to the current 1.0630.

"The Daily Trend was within the Prior Day's Range and the Bulls gave up mildly towards the Close . The Hourly Trend has been in a Range Trading with no Clear Direction, 10570-30 are the Critical levels to watch to maintain the Bullish Outlook." Says Rajoo C, analyst at Precise Trader, "On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session until the break. The Opening Price Principles are Mixed so Cautious approach is needed until the break out of the Zone 1 level." Rajoo concludes.

What Happened to the Commercial Real Estate Collapse Everyone Expected?

2010-04-03T22:59:00.000-07:00

Posted Apr 01, 2010 03:30pm EDT by Heesun Wee in Investing, Recession, Banking, Housing

There's a growing suspicion among investors that the gulf between the soaring stock market and sideways action in housing can't go on much longer. Housing expert, notably Robert Shiller of Yale University, a Tech Ticker guest, is warning about the possibility of a double-dip in housing.

But another potential real-estate crisis is looming -- this time in the commercial sector. About half of all commercial mortgages will be underwater by the end of 2010, posing a "very serious problem" for the economy over the next three years, Elizabeth Warren, chairwoman of the TARP Congressional Oversight Panel, told CNBC this week.

So why hasn't commercial real estate collapsed yet?

In part the sector has been able to access the unsecured bond markets, says our guest Jeung Hyun, portfolio manager for Adelante Capital, which has over $2 billion of domestic REITs under management. "Clearly there's lending still available for these companies that's allowed them to survive," Hyun tells Aaron and Henry in the accompanying clip.

Another trend that's helping commercial real estate -- few, new office space buildings. "To a certain extent people are assuming that the recovery is going to be sharper than normal" because of the lower inventory, Hyun says.

Are banks extending credit & pretending?

Hold on. Clearly there are whispers and anecdotes of excess inventory and even "shadow" inventory. In other words, banks that are extending credit and hoping all will be OK by the time the loans come due.

Hyun argues there's clarity in details. More stand-alone retailers have been built than regional malls. And without a doubt, there's concern about the wave of secured mortgages coming due. Plus, the Fed this week ended its program of buying mortgage-backed and agency securities. Can housing stand on its own two feet?

But Hyun argues not all mortgages will be problematic. Some were inked -- well before the height of the housing bubble in 2007-08 -- when underwriting standards were still high.

Biggest job gain in 3 yrs pushes up interest rates

2010-04-03T22:58:00.000-07:00

NEW YORK (AP) -- The biggest increase in jobs in three years pushed interest rates to their highest level since before the worst days of the credit crisis in 2008.

With the stock market closed for Good Friday, investors had a shortened day of trading in the bond market to react to the Labor Department's report that employers added the most jobs in March since before the recession began in December 2007.

Treasury prices fell after the report, sending their yields higher. Bond prices tend to fall as investors' confidence grows and demand for safe-haven investments wanes.

The yield on the 10-year Treasury note rose to 3.94 percent from 3.87 percent late Thursday, its highest level since last June and the latest sign of confidence that the U.S. economy is recovering. The yield on the 10-year note is tied to many kinds of consumer loans. The increase could raise borrowing costs for mortgages and other debt.

Chik Quintans, a certified mortgage planner at Atlas Mortgage Inc. in Lynnwood, Wash., said rates have gone up following the jobs report. The rate on a 30-year fixed mortgage Friday was 5.125 percent, up from 4.875 late Thursday. Less than two weeks ago, the rate was about 4.75 percent.

Barclays Capital Research called the increase in hiring by private employers "solid." Other analysts also said the numbers were encouraging, pointing to a higher open when stock trading resumes Monday.

"The bond market seems to have taken it as a very positive number," said Andrew Neale, head of portfolio management at Fogel Neale Partners in New York.

It was an unusual day for investors, with the biggest economic news of the month coming out on a holiday for stock markets in U.S. and Europe.

Stock futures contracts rose in an abbreviated session of electronic trading. U.S. investors will get their first taste of how the upbeat report will drive stocks when trading in Asia begins late Sunday. Dow Jones industrial average futures and Standard & Poor's 500 index futures each rose about 0.3 percent.

The yield on the 10-year note is approaching 4 percent, a level that hasn't been seen since October 2008, just before the financial crisis peaked. The 10-year's yield went as high as 4.09 percent that month, before plummeting as low as 2.06 percent in December 2008 as the credit crisis erupted and investors poured money into bonds as they cut back their exposure to risk.

Friday's trading was the closest the yield has been to 4 percent since June, when it reached 3.96 percent.

The Labor Department said employers added 162,000 jobs in March. Economists had forecast an increase of 190,000 jobs. However, private employers accounted for most of the growth. Some analysts had forecast that temporary government hiring for the 2010 census would play a bigger role.

The dollar rose as confidence increased about the U.S. economy. The ICE Futures US dollar index, which measures the dollar against six currencies, rose 0.6 percent.

GBP/USD breaks above 1.6300 and hits 1.6360 high

2009-12-16T02:56:00.000-08:00

The Pound is building momentum on European session, and pair's rally from 1.6230 low, triggered by unexpected improvement on employment levels, has extended above 1.6300 with the pair reaching 1.6360 high, testing the top of the recent trading range.

At the moment, the Pound trades at 1.6330, with next resistance levels at 1.6340/45 (Dec 10/11 high), and above here, 1.6375/90 (Dec 9 high/Dec 1 low) and 1.6450.

On the downside, support levels lie at 1.6275/80 previous session high and below here, 1.6230 (session low) and 1.6190/00 (Range floor).

European markets advance after upbeat PMI data; Euro and Pound, sideways

2009-12-16T02:55:00.000-08:00

European markets are going through gains on early trading Thursday, with investor's appetite fuelled after positive Eurozone PMI flash estimates; in FX markets Euro remains consolidating after Tuesday's declines.

Eurostoxx 50 Index trades 0.9% up, while German DAX Index advances 0.8%, and French CAC Index adds 0.9%. In the UK, the FTSE Index trades 0.8% up.

On the macroeconomic Eurozone Manufacturing Flash PMI index has ticked up to 51.6 in December ftrom 51.2 in November, while services Flash PMI has been estimated to rise to 53.7 in December from 53.0 in November, showing that Eurozone's manufacturing and services sectors' activity continues growing after a log slump.

Furthermore, UK jobless claims fell in November for the first time since February 08, a decline of 6,300 claims , to 5.0% of the workforce, against market expectations of a 12,300 increase.

Euro and Pound remain in range

EUR/USD remains consolidating between 1.4500 and 1.4560/70 area after its decline from 1.4650 area on Monday. At the moment of writing, the Euro is trading at 1.4560 testing session high, after jumping from 1.4520 on positive flash PMI's.

GBP/USD remains trading within the 1.6200/1.6345 range. During European session, the Pound has dropped to 1.6230 day low before bouncing up to 1.6300 on the back of upbeat employment figures, although 1.6300 has not given way so far, and the Pound trades at 1.6280 at the moment of writing.

USD/JPY pullback from Tuesday high at 89.95 found support at 89.40 on early European session, and the Dollar rose to 89.85 high so far, approaching yesterday's high and 90.00 resistance area.

EUR/USD recovery, capped at 1.4560, remains in range

2009-12-16T02:54:00.000-08:00

Euro rebound from 1.4505 low on Tuesday has been capped at 1.4560 at European opening times, and the Euro pulled back to 1.4510. The Euro remains consolidating between 1.4500 and 1.4560/70 after Tuesday's drop.

At the moment, the Euro trades at 1.4535, with next resistance levels at 1.4575/85 (intra-day level/Dec 11 low) and above here, 1.4620/30 and 1.4665. Support levels lie at 1.4505 (Dec 15 low) and 1.4480 (Oct low) and 1.4445 (Aug 5 high).

According to the ecPulse.com analysis team, the pair could dip below 1.4500, unless 1.4585 resistance gives way: "We believe that, the pair will be able to touch minor resistance 1.4585 and then reverse to achieve a possible bearish intraday direction ; targeting start 1.4475 zones followed 1.4400, while keeping an eye on the bearish short term direction which will prevail if 1.4685 remains intact."

ECB's Stark: We Are Closer To Phasing Out Stimulus

2009-11-17T09:32:00.001-08:00

FRANKFURT -(Dow Jones)- The time for a tightening of monetary conditions in the euro zone is approaching, European Central Bank executive board member Juergen Stark said Tuesday.

"After extended discussions, we are moving closer to phasing out our liquidity measures, as not all of them will be needed to the same extent as in the past," Stark told a banking conference.

He noted that the revival of world trade, the rebuilding of inventories and the huge influence of fiscal and monetary policy stimulus measures had helped bring the global recession to an end, adding that "recent economic and financial information is encouraging."

Stark said that the most pressing need of the day is to remove moral hazard from financial markets, while ensuring that there is enough liquidity for "markets and solvent institutions" and that proper procedures are in place for resolving the insolvencies of systemically important financial institutions.

"The first line of defense is that market participants must be liable for their actions," Stark said, adding a heavy hint that this appeared not to be the case at present. "As yet, I have...not seen any significant change in the behavior of market participants," Stark said. He stressed that the record amount of liquidity created by central banks across the world in the wake of the 2008 financial crisis "mustn't sow the seeds of new imbalances."

Some analysts have expressed concern that the sharp rebound in equity and, especially, debt markets this year may be more due to excess liquidity, rather than any improvement in the fundamental value of those assets.

Stark also rejected the creation of an 'emergency fund' financed or co-financed by taxpayers to insure the financial system. At a recent meeting of the G-20 group of countries, U.K. Prime Minister Gordon Brown had suggested levying a tax on financial transactions to seed such a fund, but the proposal was resisted by the U.S. and others.

Stark also repeated his opinion that the ECB has no great need to change its approach to monetary policy, saying that its emphasis on monetary analysis had proved its worth. He also argued that the ECB doesn't need any new policy tools to maintain price stability in the future.

Web site: www.ecb.int

-By Geoffrey T. Smith, Dow Jones Newswires (+49 160) 743 40 90; geoffrey.smith@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=a%2B9%2B7AGMLKtlUOD8sI0Q6w%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

November 17, 2009 11:39 ET (16:39 GMT)

Copyright 2009 Dow Jones & Company, Inc.

Bank Of Portugal Upgrades 2009 GDP Forecast To -2.7%

2009-11-17T09:30:00.001-08:00

Bank Of Portugal Upgrades 2009 GDP Forecast To -2.7%

MADRID (Dow Jones)--The Portuguese economy will shrink 2.7% in 2009, the Bank of Portugal said, in a set of improved forecasts signaling that the pace of economic contraction is slowing. The Lisbon-based central bank said in its quarterly economic bulletin, published Tuesday, that its gross domestic product estimate is improved from its previous projection of a drop of 3.5% because exports and private consumption are showing more favorable trends in the second half of 2009.

Portuguese GDP was flat in 2008 and grew 1.8% in 2007.

The Portuguese economy will contract at a slower pace than other euro-zone peers because its banking sector has resisted turbulence from the global financial crisis and the country didn't suffer from a real estate price correction, the central bank added.

Consumer prices are expected to drop faster than expected, with the country's harmonized consumer price index falling 0.9% this year, compared to a previous forecast of a 0.5% drop.

Central Bank Web Site: www.bportugal.pt

-By Madrid Bureau, Dow Jones Newswires; +34-91 395 8120; djmadrid@dowjones.com;

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=a%2B9%2B7AGMLKtlUOD8sI0Q6w%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

November 17, 2009 11:00 ET (16:00 GMT)

Copyright 2009 Dow Jones & Company, Inc.