Month: April 2012

By Paul Tracy, GlobalDividends.com

I can imagine what you’re thinking after reading the headline of today’s issue…

“Government bonds don’t yield 8.7%. I can go to dozens of websites and show you that 10-year Treasuries pay 2.0%”

Truth is, you’re correct. Ten-year U.S. Treasury bonds only pay about 2% annually…

But I’ve found some government bonds paying 5.5%… 7.5%… and even 8.7%.

The catch? It’s not really a catch, it’s just that these bonds don’t come courtesy of the U.S. government. Let me show you a few examples…

The 9-year note in Chile is paying 5.9%, Russia’s 10-year bond is paying 7.7%, and India’s 10-year bond is paying a staggering 8.7% yield.

Now I’m sure you’re thinking, aren’t these risky? You’d actually be surprised…

Though there have been a number of instances of foreign governments defaulting over the years, the sovereign debt default rate is still far below that for corporate debt.

And in a study conducted by Moody’s, the credit-ratings agency found that the default rate on investment-grade sovereign debt was just 0.667% after 10 years of issuance. In other words, more than 99% of government bonds were still in good standing after a decade.

Don’t forget… it wasn’t long ago that the United States lost its coveted “AAA” rating from Standard & Poor’s. We have $15 trillion in debt — that’s more than 100% of our GDP. And the current annual deficit sits at 9% of GDP a year… or about $1.3 trillion.

And even after lowering the United States’ credit rating, Standard & Poor’s still has our rating on a “negative” outlook, meaning it could be lowered further.

Now don’t get me wrong, even after the credit rating downgrade, the U.S. is still one of the safest markets for your money… but it’s not infallible.

Meanwhile, other nations’ finances are getting better.

Take Chile for instance. Right now, Chile’s economy is growing at a 6% annual rate. That growth is accompanied by perhaps the most fiscally conservative government on the planet. Chile’s public debt totals just 9% of GDP, according to the CIA World Factbook.

In fact, Chile is required by law to run a budget surplus unless there are extreme circumstances. In 2011, it ran a surplus of roughly 1%.

It’s little surprise, then, that Standard and Poor’s gives Chile an “A+” credit rating.

Meanwhile, other countries are quickly gaining too…

Both Slovenia and Israel hold an “A+” rating… and just last year, S&P upgraded the Czech Republic two notches from “A” to “AA-,” putting the country just three steps below the coveted “AAA” rating.

Of course, none of this means anything if you can’t own these bonds… and for investors, the world of sovereign debt was all but closed just a few years ago.

But that’s no longer the case. Today, there is a simple way you can invest in these high-yield government bonds without leaving the U.S. stock exchanges.

In recent years, large fund companies like Fidelity, Eaton Vance, and others have expanded their international options by launching dozens of new mutual funds, exchange-traded funds (ETFs) and closed-end funds. In doing so, they’ve given U.S. investors an easy way to invest in foreign markets.

Here’s how it works…

These fund companies access foreign markets and buy stakes in dozens or even hundreds of foreign securities. They then package these securities into funds, and they sell the fund’s shares here in the United States. When you purchase one of these funds, it gives you direct exposure to a basket of foreign investments. And many funds focus on foreign government bonds.

For example, Templeton Global Income Fund, Inc. (NYSE: GIM) holds a stake in government bonds from over 10 different countries — including many in the emerging markets.

Normally, it would be impossible for U.S. investors to purchase most of these bonds directly. But with the Templeton Global Income Fund, buying and selling foreign bonds couldn’t be any easier. The fund trades right here at home on the New York Stock Exchange under the ticker symbol “GIM.” You can buy it just as easily as you would a share of IBM (NYSE: IBM).

There are dozens of funds, just like GIM that offer investors the chance to profit from higher interest rates abroad. So if you’re tired of earning 2% from Treasury bonds here at home, consider buying into one of these funds… they’re a great way to supercharge your yields in this 0% interest rate environment.

An added bonus? Most of the funds investing in sovereign debt pay dividends monthly — a nice treat for us income investors.

All the best,

Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist — High-Yield International

P.S. — Higher yielding government bonds are just one of the perks of investing internationally. The truth is, most of the securities that offer double-digit yields trade OUTSIDE the U.S. market.

In fact, my research team and I recently put together a presentation over this very subject. As it turns out, there are only 17 stocks in the United States paying over 12% dividend yields… but there are over 210 of these high-yielders trading abroad. I have more information — including the full list of the 17 U.S. stocks paying over 12% — in this presentation here.

Disclosure:  StreetAuthority holds GIM as part of High-Yield International’s model portfolio. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio. Members of our staff are restricted from buying or selling any securities for two weeks after being featured in our advisories or on our website, as monitored by our compliance officer.

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Article by Investment U

Floating rate funds often have yields better than CDs and so-called “safe haven investments,” like Treasuries, by as much as 2%.

Floating rate funds are closed-end mutual funds that seek to provide yields that match the prime rate. This attractive yield is often more than twice the federal funds rate and somewhat higher than the rate on five-year CDs.

In order to get these kinds of yields, prime-rate funds invest in floating-rate, secured corporate loans. These loans have been made by commercial banks and insurance companies to corporations with “iffy” financial statements. In addition to borrowing money from the banks or insurance companies, the corporations may also have borrowed money by issuing junk bonds.

What you might like about floating rate funds:

1. Floating rate funds often have yields better than CDs and so-called “safe haven investments,” like Treasuries, by as much as 2%. This can be an important difference for investors just to beat inflation.
2. The share prices of these funds tend to stay stable because they don’t invest in bonds. This means that the prices of the underlying securities in the fund portfolios won’t fluctuate in response to changes in interest rates like bonds do, as they’re floating rate instruments tied to current rates – thus an interest rate hedge.
3. Although risky, floating rate funds are usually lower risk than stocks or high-yield junk funds. floating rate funds invest in senior secured loans, which are in the front of the line to be repaid in case of bankruptcy. Senior secured lenders will receive their money before any stock or bondholder, so the prospect recouping some money seems relatively high.
4. Just like with traditional mutual funds, the diversification within the fund’s portfolio protects you against the ill effects of any single default.

The following may give you cause for concern:

1. A lot of floating rate funds only allow redemptions once a month, or once per quarter, and in some cases you have to leave it in for the first year. This may be a problem for some people, but remember that the greater access to your money can translate into a slightly lower yield.
2. There may be redemption fees if money is taken out in the first three years of the investment.
3. Many floating rate funds also have high expense ratios relative to bond funds, which can cut into your profit.
4. You probably want to know if your fund is leveraging the portfolio.
5. When you borrow money to purchase additional loans to get that higher return, the possible loss on the flip side becomes exaggerated due to the loss due to default and the cost of buying on margin.

Something else to keep in mind

Last July, the Financial Industry Regulatory Authority (FINRA) issued an investor alert warning that floating rate funds achieve their yields by investing in bank loans, which carry higher risk of default than investment-grade bonds. They’re also traded over the counter, as opposed to on an exchange, so they’re less liquid. The total effect, says FINRA, is that investors may be chasing the promise of higher returns without fully understanding the higher risk involved in these funds.

So, this market is experiencing a little of the herd mentality.

Fund managers argue…

Those who manage floating rate funds agree that they’re risky, but say the pros overshadow the cons. For one, they’re more conservative than high-yield bond funds, says Paul Massaro, the co-manager of the T. Rowe Price Floating Rate Fund (PRFRX), If an underlying issue defaults, the long-term recovery prospects are better than for other high-yield bonds, because banks have priority over other bondholders in the event of a default.

Scott Page, co-manager of the Eaton Vance Floating Rate Fund (EVBLX) says the securities are no less liquid than municipal bonds or mortgage-backed securities.

But when it’s all said and done, an investment of this complexity requires the necessary due diligence. And these are probably not a good idea until we see interest rates stabilize above their current miniscule levels.

Good Investing,

Jason Jenkins

Article by Investment U

Article by Investment U

The ETF industry now accounts for over $1 trillion. And one ETF issuer in particular dominates this market… iShares. But which iShares ETF is the best?

In the mid-90s, there were few choices when it came to investing in exchange traded funds (ETF).

Today, you can find an ETF to suit pretty much anything you want.

From tracking the S&P 500, to the global fishing industry, to small caps in Malaysia, these investments have become a powerful tool to help diversify one’s portfolio and reduce risk.

In fact, in just the last 10 years, the number of ETFs has increased over 10-fold to about 1,500. The industry now accounts for over $1 trillion.

And one ETF issuer in particular dominates this market… iShares.

Introducing iShares

With 46% of the ETF market share, iShares is the world’s largest ETF provider.

Managed by BlackRock Group (NYSE: BLK), iShares ETFs are listed in exchanges all over the world including New York, London, Hong Kong and Toronto.

The Financial Times reports, “The iShares ETF franchise… accounted for at least 27 percent of revenue at its owner BlackRock. Analysts say iShares makes up an even larger share of BlackRock’s earnings.”

These percentages are expected to go even higher in 2012.

Why do the majority of investors choose iShares?

A big reason is coverage.

The iShares family of ETFs is built virtually around every leading index provider including Barclays Capital, Cohen & Steers, Dow Jones, FTSE, FTSE/Xinhua, iBoxx, JPMorgan, Morningstar, MSCI, Nasdaq, NYSE, Russell and Standard & Poor’s.

It has over 440 funds to choose from and more than $480 billion of assets under management. This gives iShares the opportunity to have an ETF for almost any kind of investor.

Maybe there’s even one for you.

The Top-10 Performing iShares ETFs

Let’s take a look at the top-10 performing iShares ETFs in terms of their average annualized gains since they were first introduced to the markets:

Currently the average ETF expense ratio is 0.44%. iShares’ top 10 ETFs are obviously higher. But competition is quickly heating up among leading ETF issuers and annual fees are on the way down.

Bottom line: There’s a lot of opportunity to profit in ETFs today. Do your homework and cash in.

Good Investing,

Mike Kapsch

Article by Investment U

Article by Investment U

Invest in the shortage that currently exists – LNG tankers – which will only be exasperated if the United States starts exporting.

There’s a great, strange story by F. Scott Fitzgerald called, The Diamond as Big as the Ritz. In it, the Washington family has discovered a mountain that’s made entirely of diamond in an uncharted part of Montana. It’s just one giant, mountain-sized chunk.

The tale deals with greed and the basics of the law of supply.

But the Washingtons can’t let anyone know their diamond mountain exists… If people found out, it’d collapse the diamond market, making the precious stone worthless. And the Washingtons themselves would be cast into poverty.

So, it’s this strange dual existence for the Washingtons. They’re the wealthiest family in the world, but only because they vigilantly and brutally control the diamonds that flow from their mountain. They never let on there’s an oversupply.

Since 2007, the United States has undergone a series of dramatic changes. We fell into the dark days of a recession. These shadows still linger. Banks collapsed. The housing market collapsed. Jobs were lost in the millions.

We’ve scratched and clawed our way back. Though we’re not fully recovered yet.

But in those years, we also discovered that we had something we didn’t know was there. Old drilling techniques applied to new areas resulted in a staggering increase of precious resources – natural gas and oil. We found our own diamond mountain.

All of a sudden, it was a new day. We no longer needed to rely as heavily on foreign sources for oil and we had more natural gas then we knew what to do with. The billions spent on terminals to import liquefied natural gas (LNG) from overseas – once again – were obsolete overnight.

The success of hydraulic fracturing in shale areas flipped the U.S. natural gas industry on its head. And of course, the price of natural gas buckled, then collapsed, falling to new decade lows on our sudden abundance.

The problem is: Now what?

Don’t Focus on U.S. Nat Gas Exports

Here’s where things get interesting…

A lot of people are salivating at the idea of cheap U.S. natural gas being exported as LNG.

But getting that industry off the ground takes time… years. And currently, there’s only one LNG export terminal actually existing in the United States – in Alaska – that was exporting LNG to Japan for more than 40 years before the contract recently expired.

There’s a push on though in the United States and Canada with companies like Sempra (NYSE: SRE), EOG Resources (NYSE: EOG), EnCana (NYSE: ECA), TransCanada (NYSE: TRP), Exxon Mobil (NYSE: XOM), ConocoPhillips (NYSE: COP), BP (NYSE: BP), Cheniere LNG (AMEX: LNG), Dominion (NYSE: DOM) and Williams Companies (NYSE: WMB) all are at potential LNG export projects.

Cheniere is the only one that’s really made any headway. And its first LNG exports are still years away. For the others, investment decisions have to be made, permits, approval, blah, blah, blah

At the same time, Congressmen Ed Markey and Peter DeFazio and Senator Ron Wyden are looking to block U.S. LNG exports. And any projects that receive approval will have to deal with any public and environmental opposition or petitions.

This is why I wouldn’t bank my money on a U.S. LNG export industry… At least not yet. Those companies will rise and fall on news, not anything tangible reflected in their balance sheets, for the next few years in terms of LNG.

And I ultimately don’t believe the industry will be that big. The United States won’t be the next “Qatar…”

But don’t despair. There’s one aspect of the LNG industry that’s critical to international trade. And is profiting right now, and will continue to profit for the years to come…

Keep it Simple

I don’t invest in surpluses. I invest in shortages.

Companies like Teekay LNG (NYSE: TGP) or last week’s IPO of GasLog (Nasdaq: GLOG) might not be household names. If they weren’t on your radar in 2011, don’t worry, because you didn’t miss the boat… It’s a bad pun, but I’m dead serious.

They’re part of a small group that controls a very small, but vitally important resource: ships.

We’ve covered here before about how the high price of oil triggers more exploration. That means companies that own drilling rigs see demand for their services skyrocket, and rates for these services go up exponentially.

Same thing is true for LNG. Global demand for LNG is up and rising (especially in the wake of the global pullback on nuclear), the price of LNG in Europe and Asia is high, demand for LNG ships to deliver the fuel skyrockets. So, day rates for LNG ships in 2010 were $37,000. Those rates soared to a peak of $160,000 in 2011. And even though they’ve come down a bit, they’ll still likely average around $140,000 in 2012, possibly even going as high as $200,000 per day.

If you’re doing the math, a jump in rates to $200,000 would be a 441% increase in just two years.

Here’s the other kicker; there’s a shortage of LNG carriers.

Now, the utilization rate for the global LNG fleet is around 98% and will remain at that elevated level until 2015, when new builds start coming on line. The few shipyards in the world that can build LNG tankers are booked until the end of 2014.

There simply aren’t enough ships. In total, 69 new ships are currently on order. It’s projected that there’ll need to be 175 new LNG tankers by 2017, just to meet rising demand out of Asia – like China and Japan – as well as the growing LNG spot market.

And here’s the final piece: if the United States decides to export LNG, any new terminals that do come online will need to ships to haul that LNG, as well.

Don’t outsmart yourself by trying to figure out whether or not a company is going to finally start exporting LNG from the United States. There’s no money to be made there now. Invest in the shortage that currently exists – LNG tankers – which will only be exasperated if the United States starts exporting.

Good Investing,

Matthew Carr

P.S. The companies I mention above, Teekay LNG (NYSE: TGP) and GasLog (Nasdaq: GLOG), are both solid plays on LNG. Teekay even offers a healthy yield of 6.5%. But one company I saved for Investment U Plus readers has shown the highest revenue growth of the bunch.

To find out which LNG shipping company has exploding revenue growth and already pays a 3% dividend to boot, click here.

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – The euro region debt crisis has spilled over to Swiss, with the Swiss Franc breaching the Swill National Bank’s ceiling of 1.20. The Swiss Franc exceeded the cap put by SNB on September 6 for the second day yesterday prompting the SNB interim Chairman Thomas Jordan to answer questions from investors on credibility issues of the currency policy. The investors are seeking to know just how much SNB is willing to do to ensure that the policy works.

Analysts have indicated that this is the first major credibility test the SNB had to deal with regarding the currency policy. Yesterday the central insisted on its intention to do what it takes to maintain the Swiss Franc at 1.20 level. Peter Rosenstreich, the Chief Foreign Exchange Strategist at Swissquote Bank in Geneva indicated that this has acted as a wakeup call for the bank as their credibility is put on the test. The euro has weakened against major currencies due to concerns about the sovereign debt crisis.

The bullish run for the euro was sparked off by comments from the Spanish Prime Minister Mariano Rajoy who indicated that the country’s economy was in a extreme difficulty saying that the stiff budget cuts they are experiencing are better than the bailout they would get if the debt crisis were to escalate.

The Swiss Franc was trading at 1.20186 against the euro at the close of trading yesterday in London. The currency had earlier surged to as high as 1.19995. The Swiss Franc had stayed at an average of 1.2069 against the 17 nation currency since the interim Chairman Tomas Jordan took over on January 9. Economists are claiming that the current downside trend of the euro is as a result of risk aversion in the market. He said that traders are avoiding the euro adding that SNB interim chairman’s job will not be easy.

The SNB supervisory board is expected to meet on April 13 to discuss about the selection of SNB Chairman Philip Hildebrand.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
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Source: ForexYard

There will be a number of economic events expected to stir up the financial markets in the second week of April.

The reports include the U.S and Canadian Trade Balance,U.S consumer price index,Bank of Japans Rate Decision and monetary policy,Federal Budget Balance and U.S Jobless claims.

Monday :U.S. Federal Budget Balance: This report will show the changes in the U.S federal balance for March 2012. It also indicates the government debt growth and could therefore affect the U.S dollar. The previous report in February resulted in the deficit sharply rising by $231 billion.

Tuesday: Bank of Japan’s Rate Decision and Monetary Policy Statement will be published. The BoJ will decide on its interest rate and monetary policy. Up until no, the Bank of Japan has left the interest rate unchanged at 0 to 0.1 percent. If the BOJ decide to introduce monetary stimulus plans, it could potentially affect the Yen as well as commodities prices due to the fact that Japan is among the leading countries in importing commodities including crude oil.

Thursday:Canadian Trade Balance- Figures from the January 2012 report showed a decrease in exports of 2.3 percent whilst imports fell 0.6 percent. The report could possibly affect the movements of the Canadian dollar which has a strong correlation to crude oil.

Thursday: U.S. Producer Price Index: This report will present the progress in the PPI during March 2012. In the February report the index for finished goods rose slightly by 0.4 percent compared to January’s rate and showed an overall increase of 3.3 percent for the past 12 months.This report from the U.S could have an impact on precious metal prices.

There is a strong possibility that the key economic reports scheduled for release next week will have an impact on the currency and commodity markets.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By The Sizemore Letter

Brazil is world renowned for its beaches, its potent caipirinhas and, of course, the Rio de Janeiro Carnival.  And onto more serious topics, it is also a world leader in alternative energy production and happens to be sitting on one of the world’s largest supplies of traditional energy as well.  Brazil’s deep-water Atlantic fields will make the country a force to be reckoned with in the oil market for the foreseeable future.

But with Brazilian stocks drifting downward for the past two years—and showing significant weakness since March of this year (see chart)—it is fair to ask: is the party over?

The short answer is “no,” though investors may want to consider sitting out a song or two.

Brazilians have said for decades, tongue in cheek, that Brazil is the country of the future—and that it always will be.  It seems that every time Brazil started to make real development progress, the familiar hurdles of hyperinflation, class warfare and government instability would get in the way.  Brazil, for all of its potential, had never quite been able to reach that tipping point of middle-income, democratic stability—but there is real reason to believe that this might finally be changing.

Brazil’s domestic economy is healthy, and the country’s living standards continue to rise at a clip not seen in a generation.   According to Morningstar, Brazilians classified as “middle class” grew from 38% of the population in 2001 to 55% last year.  For a country of Brazil’s size, that amounts to over 32 million people.  To give a little perspective, if the 32 million Brazilians that became middle class over the past decade were an American state, they would be bigger than Texas and only slightly smaller than California.

Why the Middle Class Matters

Revolutions are rarely born in the tree-lined streets of suburbia.  Once you take on the trappings of middle class life—a job to keep, a home to maintain, neighbors to keep up with—you have a stake in the system.  Those with a stake in the system have an interest in stability, and stability breeds prosperity.

Furthermore, a consumer-based economy is far less volatile than one dominated by commodities and exports.  Brazil still depends far too heavily on both—and I will address that shortly—but its middle-class consumer market is making its presence felt.

Before I go any further, I should note that “middle class” means something very different in Brazil than it does in the United States.  Someone earning $10,000 per year and living in a 500 square-foot home (which they may or may not have proper title to) would be considered middle class in Brazil.  It may not be life in a 1950s-themed Norman Rockwell painting, but it is enough to provide for basic needs and to allow a reasonable budget for discretionary purchases such as contemporary clothes, mobile phones, and the occasional meal in a restaurant.

Collectively, Brazil’s retail market is worth about $230 billion, and I only see this growing in the years ahead.

China: the Elephant in the Room

If Brazil’s outlook is so rosy, why has its stock market underperformed both the S&P 500 and the iShares MSCI Emerging Markets ETF (NYSE:EEM)?

Figure 1: Brazil, Emerging Markets, and the S&P 500

To be sure, some of the weakness is due to the strength of the Brazilian currency, the real, and fears that it might be due for a correction.  Already, Brazil’s industrial firms have suffered from the same “hollowing out” that ravaged American manufacturers in the 1980s and 1990s during the years of the strong dollar.  Brazil’s government has vowed that it will not lose a “currency war” with other emerging markets, and investors take those claims seriously.

But the biggest worry has little to do with Brazil and everything to do with China.  China may or may not be heading for a “hard landing” (it is my view that China’s slowdown will be relatively mild), but Chinese commodity consumption should moderate in the months and years ahead as its pace of urbanization slows.  And given that Europe looks to be mired in recession and crisis for a while, the West is not likely to support higher prices either.  This presents a major risk to Brazil and other commodity exporting nations like Australia and South Africa.

So, even while Brazilian stocks are cheap—the stocks making up EEM collectively trade for just 10 times earnings—the fear is that the earnings may come under pressure as commodity demand inevitably falls.

Though I tend to take a contrarian position when “everyone” agrees on the direction of commodity prices, this time I am tempted to agree.  I cannot see commodities enjoying a sustained uptrend when final demand is weak and prices are already artificially inflated by new ETFs, mutual funds, and other “investment” products that track commodities.  (Yes, “investment” should be in quotation marks.  An ETF or mutual fund that rolls over commodities futures contracts is not an investment.  It is a speculation, and given that many popular commodities are trading in contango, a rather poor one.)

Still, I would not want to bet against the Brazilian consumer.  The growth of the middle class is real, and I believe the change is durable this time.

Investors will probably want to shy away from the popular iShares MSCI Brazil ETF (NYSE:$EWZ) due to its high concentration in materials and energy.  But investors with a long time horizon might find value in some of Brazil’s world-class consumer-oriented stocks.  I have written favorably about mega brewer AmBev (NYSE:$ABV), and I would reiterate that view today.  AmBev is a fantastic way to benefit from rising incomes among Brazil’s newly-minted middle class consumers, and it pays a great dividend of 3.7%.

Another good option would be Arcos Dorados (Nasdaq:$ARCO), which was one of the stocks selected in InvestorPlace’s 10 stocks for 2012 contest.   Arcos Dorados is the largest McDonalds (NYSE:$MCD) franchise operator in Latin America, and about a third of the company’s revenues come from Brazil.

Arcos has had a rough start to the year, but the stock should be a fantastic long-term vehicle to play rising living standards in the region.

Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter, and the chief investment officer of investments firm Sizemore Capital Management. Sign up for a FREE copy of his new special report: “Top 3 ETFs for Dividend-Hungry Investors”

Source: ForexYard

The euro continued to slide throughout yesterday’s trading session as risk aversion dominated market sentiment. The common currency dropped to a three-week low against both the US dollar and Japanese yen, while the EUR/CHF dropped below 1.2000 during the morning session. Turning to today, all eyes will be on the US Non Farm Employment Change figure, set to be released at 12:30 GMT. Analysts are forecasting that the US added 211K jobs in March, which if true, may lead to additional gains for the greenback today.

Economic News

USD – Non-Farms Data Could Help Boost Greenback

The US dollar continued to advance vs. its riskier currency rivals, like the British pound and euro, yesterday following a poorly received Spanish debt auction earlier this week. The GBP/USD fell over 100 pips during European trading yesterday, reaching as low as 1.5804 before staging a mild upward correction. The EUR/USD fell as low as 1.3032, down 125 pips for the day. Against the Japanese yen, the dollar benefited following the weekly US Unemployment Claims figure, which showed additional gains in the US labor sector. The USD/JPY moved up close to 50 pips during European trading.

Turning to today, the US Non Farm Employment Change figure is likely to generate significant market volatility. Providing the employment data comes in as predicted and shows additional gains in the US labor sector, the dollar could continue gaining vs. its main currency rivals. That could be especially true with regards to the euro, which has tumbled lately due to negative euro-zone fundamentals. On the other hand, if the Non-Farms data comes in below the expected 211K, the USD may take some losses against the safe-haven JPY.

EUR – Euro Extends Bearish Trend

The euro tumbled throughout yesterday’s trading session, as investors continued to revert their funds to safe-haven assets. The EUR/JPY fell close to 150 pips during European trading, dropping as low as 106.85. Meanwhile, the EUR/CHF briefly dropped below the psychologically significant 1.2000 level. Following the drop, the Swiss National Bank announced that they would intervene to bring the pair back above 1.2000. The euro began its bearish run earlier in the week, following a disappointing Spanish bond auction. Whether or not the common currency can rebound today largely depends on how investors react to today’s news.

In previous months, the US Non Farm Payrolls figure has generated risk taking when it came in above expectations and benefitted the euro. Should this occur today, there is a chance that the currency could rebound vs. the safe-haven Japanese yen. That being said, the USD has largely benefitted from positive US news as of late. A better than expected Non Farms figure could result in the EUR/USD sliding further ahead of markets closing for the week.

JPY – Yen Turns Bearish vs. USD

After steadily making gains vs. the US dollar earlier in the week, the Japanese yen turned bearish during yesterday’s session. The pair, which had dropped as low as 81.82 during morning trading, moved up as high as 82.39 by the afternoon. Positive US fundamentals were the main contributor to the USD/JPY’s bullish correction, including this week’s Unemployment Claims figure, which showed additional gains in the US labor sector.

Turning to today, the yen may see additional losses against the dollar, providing that the all-important US Non Farms Payrolls figure comes in at or above the forecasted 211K. That being said, if the figure comes in below 200K, it may be taken as a sign that the US economic recovery is slowing down. In such a case, investors may choose to place their funds with safe-haven currencies, which could result in yen gains to close out the week.

Crude Oil – Crude Oil Stages Mild Recovery

Crude oil turned mildly bullish during last night’s trading session, following a steep drop in prices on Wednesday. The price of oil fell as low as $101.03 a barrel following a surprisingly high US Crude Oil Inventories figure released on Wednesday. The commodity was able to bounce back during Asian trading, but still remained low throughout much of the day.

As we close out the week, traders will be closely watching how the markets interpret this month’s US Non Farm Payrolls figure. Should the figure come in better than expected, the dollar may see a boost against its main currency rivals, including the euro. In such a case, the price of oil may drop further, as the commodity would become more expensive for international buyers.

Technical News

EUR/USD

Most long term technical indicators place this pair in neutral territory, meaning that no major market movements are expected at this time. That being said, traders will want to keep an eye on the weekly chart’s Relative Strength Index, which is currently near the overbought zone. Should the indicator go above 70, it may be a sign of impending downward movment.

GBP/USD

The weekly chart’s Williams Percent Range is currently at -20, which can be taken as a sign that this pair could see downward movement in the coming days. At the same time, most other long term indicators place this pair in neutral territory. Taking a wait and see approach may be the right choice.

USD/JPY

Both the Williams Percent Range and Relative Strength Index on the weekly chart are hovering close to the overbought zone, indicating that this pair could see downward movement in the near future. Traders may want to go short in their positions ahead of a possible bearish correction.

USD/CHF

According to the Bollinger Bands on the weekly chart, this pair could see a major price shift in the near future. The Williams Percent Range on the same chart is showing that the shift could be upwards. Going long may be a wise choice for this pair ahead of a possible upward breach.

The Wild Card

AUD/NZD

A bullish cross on the daily chart’s Slow Stochastic indicates that this pair may see upward movement in the near future. The Williams Percent Range on the same chart, which is currently at -80, supports this theory. Forex traders may want to go long in their positions ahead of a possible upward breach.

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By TraderVox.com

Tradervox (Dublin) – The 17-Nation currency has dropped most in seven months against the yen due to concerns about the region’s sovereign debt crisis. This was evident in the recent Spain bond auction where investors shied away from taking the debt. This has been construed to mean that the regions efforts have not convinced investors enough to take new debt in the region. Investors are also fearful of the rising borrowing cost in Spain that has fueled concerns that debt crisis has not been contained.

According to an FX Prime Corp managing director, there has not been major improvement in the European debt situation despite the successful Greece bailout program. Marito Ueda indicated that investors are shifting their focus to other countries with debt problems such as Portugal, Italy, and Spain.

The euro has continued to decrease against the yen where it has registered a 0.1 percent decrease to trade at 107.51 yen from 107.61 close yesterday in New York. It has registered a weekly decrease of 2.8 against the yen, which the worst drop since the Friday September 9 last year. The euro maintained its yesterdays close against the dollar at $1.3070. The 17 nation currency had earlier dropped to 1.3035, which is the lowest it has been since March 15.

Euro’s bearish run has come as some negative reports from the region were released this week. In Germany, there is speculation that the export data will show a 1.2 percent decrease in February. Analysts are also expecting to see data from France that will show that the country’s output increased at a slower pace in February than in January. Further, comments by Spain’s Prime Minister Rajoy indicating that the country is in “extreme difficult” have also resulted to the decrease of the euro against major peers.

Among the ten developed economy, the euro has registered the worst performance this week declining by 1.3 percent. The dollar and the Yen have both increased by 1 and 1.9 percent respectively.

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