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The euro gave up its recent gains against the US dollar and Japanese yen yesterday, following a combination of negative euro-zone news which led to an increase in risk aversion. Worse than expected indicators out of both Germany and France, along with political uncertainty following the first round of elections in France was largely to blame for the euro’s bearish trend. Today, euro traders will want to pay attention to debt auctions out of Italy and the Netherlands. Positive results from the auctions could help the common currency. Furthermore, the US CB Consumer Confidence and New Home Sales figures are set to generate market volatility when they are released at 14:00 GMT.
The US dollar saw gains against most of its main currency rivals yesterday, including the euro and Australian dollar, following negative euro-zone news which caused investors to revert their funds back to safe haven currencies. The EUR/USD, which last week saw its biggest gains since February, dropped close to 100 pips during the European session, reaching as low as 1.3126. The aussie tumbled well over 100 pips against the greenback during mid-day trading, reaching as low as 1.0279.
Turning to today, dollar traders will want to pay attention to several indicators out of the US which have the potential to create market volatility. The CB Consumer Confidence and New Home Sales figures, both scheduled for 14:00 GMT, are forecasted to show growth in the housing and retails sectors of the US economy. If true, the dollar may be able to reverse its current bearish trend vs. the Japanese yen, while extending its gains against the euro and aussie.
For the rest of the week, traders will want to remember that several potentially significant indicators are scheduled to be released out of the US. Tomorrow in particular could prove to be volatile following the FOMC Economic Projections. Furthermore, Thursday’s Pending Home Sales followed by Friday’s Advance GDP figure means that the USD could see plenty of movement in the coming days.
After making significant gains toward the end of last week’s trading session, the euro once again turned bearish yesterday. Investor concerns regarding the political situations in France and the Netherlands, in addition to economic worries out of Italy and Spain, all contributed to an increase in risk aversion in the marketplace. The EUR/JPY fell over 140 pips yesterday, reaching as low as 106.34 during mid-day trading. Against the British pound, the euro fell close to 50 pips over the course of the day, reaching as low as 0.8150 before staging a mild upward correction.
Turning to today, euro traders will want to pay attention to the results of Italian and Dutch debt auctions. While positive results could lead to gains for the euro, analysts are quick to warn that given all the problems in the euro-zone, any bullish movement may be temporary. In addition, traders should note any announcements regarding the upcoming elections in France and the Netherlands. Any radical changes in the make-up of either government may lead to further bearish movement for the euro.
The yen turned bullish against its main currency rivals yesterday, as poor euro-zone news resulted in gains for safe-haven currencies. In addition to the major gains see against the euro, the JPY was also up close to 70 pips against the US dollar and over 150 pips against the British pound. Analysts attributed the yen’s bullish trend to a worse than expected news out of both France and Germany, the euro-zone’s two biggest economies, as well as political uncertainty following the first round of French presidential elections held this past Sunday.
Turning to today, yen traders will want to monitor US news, scheduled to be released at 14:00 GMT. Should any of the indicators come in above analysts’ expectations, the US dollar could reverse some of its earlier losses during the afternoon session. Furthermore, traders will want to note that the Bank of Japan is scheduled to have a policy meeting on Friday, in which it is widely expected to implement fresh monetary easing steps. If true, the yen could turn bearish before the week is over.
Risk aversion in the market place, largely due to economic and political uncertainties in the euro-zone, caused riskier assets like crude oil to tumble during yesterday’s trading session. In addition, news that Chinese demand for oil recently fell to its lowest level in five-months resulted in a steep drop for the commodity. The price of crude fell over $2 a barrel, reaching as low as $101.90 during mid-day trading.
Turning to today, oil traders will want to continue monitoring any developments out of the euro-zone. Further negative news may generate additional risk aversion in the marketplace. In addition, potentially significant US news is scheduled to be released this afternoon. Should that news lead to gains for the US dollar, the price of oil may drop as a result.
The daily chart’s Slow Stochastic appears to be forming a bearish cross, indicating that downward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart which has crossed into overbought territory. Traders may want to go short in their positions.
The weekly chart’s Williams Percent Range has crossed into overbought territory in a sign that this pair could see a bearish correction in the coming days. In another sign that downward movement may occur, the daily chart’s Relative Strength Index is moving up and may cross into the overbought region shortly. Traders may want to go short in their positions.
Most long term technical indicators show this pair trading in neutral territory, meaning that no definitive trend is known at this time. That being said, the daily chart’s MACD/OsMA has formed a bullish cross. Traders will want to keep an eye on other indicators on this chart, as they may provide further clues as to a possible impending upward correction.
A bullish cross on the daily chart’s Slow Stochastic appears to be forming, in a sign that upward movement could occur in the near future. In addition, the Williams Percent Range on the same chart is currently at -80, right on the border of being in oversold territory. Going long may be the preferred strategy for this pair.
The daily chart’s Williams Percent Range and Relative Strength Index have dropped into oversold territory, indicating that this pair could see upward movement in the near future. This may be a good time for forex traders to open long positions, as a bullish correction could occur.
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.
Source: ForexYard
As discussed in today’s FOREXYARD Daily Analysis, overstretched market positioning has allowed for a bit of a EUR short squeeze on the back of a solid Spanish bond auction and strong US housing numbers.
The most recent CFTC Commitment of Traders report shows speculators in the futures market have built their largest EUR short position since May 2010. As of last Tuesday speculators were holding -116k contracts short, up from -95k. The one sided positioning highlights the market’s pessimism against the EUR but also brings the possibility of a short squeeze.
Today’s short squeeze has helped the EUR/USD rise as high as 1.3120. There is short term resistance in this area as the 200-hour moving comes in at 1.3135. Also contributing to the resistance is the October 4th low of 1.3140, and the 38% at 1.3130, the Fibonacci retracement from the move stemming from December 9th to December 14th (1.3433-1.2945).
Read more forex trading news on our forex blog.
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.
Source: ForexYard
The Riksbank, Sweden’s central bank, will meet on Tuesday for its latest interest rate decision and could surprise investors. Consensus expectations are for only a 25 bp rate cut. This is despite a larger than forecasted reduction in the Norwegian interest rate by the Norges bank who cut rates by 50 bp last week.
In light of the spillover effects of the European debt crisis and lower inflationary pressures the Riksbank is expected to provide a bit of monetary policy easing with a 25 bp rate cut. There is the possibility the Riksbank could surprise investors with 50 bp of easing as CPI has steadily declined to 2.8% y/y in November from a high of 3.4% in August. Swedish growth forecasts are also likely to be trimmed as well given the expected slowdown in European.
Despite the possibility of additional easing of Swedish monetary policy the SEK has strengthened versus the EUR with the EUR/SEK falling to support at 8.9800. A break here would then find support at the September low of 8.8600, followed by February’s double bottom reversal at 0.8700. Turning to the USD/SEK the pair has surprisingly been unable to sustain a bid above the September high near 7.0000. The 50% Fibonacci retracement of the 2010 high to the 2011 low rests at 7.0500. Support is found back at the December low of 6.6890.
Read more forex trading news on our forex blog.
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.
Source: ForexYard
The EUR sunk to its lowest level since early October following comments by both Moody’s and Fitch. The rating agencies criticized last week’s EU economic summit which fell short of a solution to the current fiscal problems. There is a risk of additional sovereign credit downgrades before the end of the year which would weigh on market sentiment and the EUR.
Equities are off to a poor start today with the Shanghai Composite finishing lower by 1.9% to close on a 33-month low. Today we’ll be getting a slew of data releases from Europe. This morning there will be UK CPI which is expected to show a decline from last month’s high. Should inflation come in under last month’s 5% reading this would support additional QE from the BoE. The GBP/USD has support at 1.5520 followed by the November 25th low of 1.5420.
German sentiment is expected to fall further as the EU economy looks set to slip into a recession. The EUR/USD has support at 1.3145 from the October low. A break here will put 1.3050 in play, the 61% Fibonacci retracement of the 2010-2011 rally from 1.1875 to 1.4940. Resistance is found at 1.3210 the November 25th low and 1.3240 the bottom of the channel line from December.
The highlight of the day will be the FOMC meeting. No policy changes are expected though the Fed could restructure some of its methods of communication with the public. The recent appreciation in the USD/JPY appears to be a result of overall USD strength rather than JPY weakness as the JPY is strengthening in the crosses. As such the USD/JPY could find resistance at 78.50 from its long term trend line from 2007.
Read more forex trading news on our forex blog.
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.
Source: ForexYard
On Wednesday at 13:00 GMT the Norwegian central bank will meet. Markets have already priced in a 25 bp cut but there may be scope for further easing of monetary policy which would likely weigh on the NOK.
The 25 bp rate cut would take the Norwegian interest rate lower to 2.00% though some economists are calling for a 50 bp reduction. Recent inflation data suggests there is room for additional interest rate cuts in 2012. Statistics Norway said inflation for the month of November remained unchanged at 1% while year-over-year inflation is up 1.2%. The Norges bank keeps an inflation target of 2.5%.
As is the case with most central banks the Norges Bank is facing headwinds from the European debt crisis and is affecting Norwegian monetary policy. At the last Norges Bank press conference Governor Oeystein Olsen made it clear interest rates would decline if global growth were to turn lower. As of the latest EU economic summit the European debt crisis remains unsolved and European bond yields are once again falling under pressure. In addition Europe looks headed for a recession in 2012 given the sharp fall in PMI surveys. Thus, the Norges bank could sound more dovish in its press conference that will begin at 13:00 GMT on Wednesday.
The USD/NOK has support from last week’s low at 5.7110 with resistance in a range between the November high of 5.9350 and the October high of 5.9700. A break here would expose 6.1465, the 61% Fibonacci retracement from the June 2010-July 2011 move.
Read more forex trading news on our forex blog.
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 Central Bank News
Here's today's Central Bank News link list, click through if you missed the previous central bank news link list. Remember, if you want to submit links for inclusion in the daily link list, just email them through to us or post them in the comments section below.
By Euan Wilson, originally published in the Nov 2011 Socionomist | Download the Complete Issue (1.48 KB)
The socionomic model has often noted the dramatic effect social mood has on the public’s attitude toward sitting leaders. For example, the November 1999 Elliott Wave Theorist featured a short story on elections in a report titled “Socionomics In a Nutshell.” It showed that rising public mood tends to lead to presidential reelections while falling public mood leads to oustings. Robert Prechter, Peter Kendall and others have proposed other aspects of the mood/election relationship, such as the observation that rising mood favors traditional candidates while falling mood tends to smile upon perceived agents of change.
The charges that Obama was born outside the United States and therefore is ineligible to hold the presidency fit right in. The same charge was leveled at the Republican presidential candidate during the same election: John McCain was born in the Panama Canal Zone when his father served there as a Navy officer. The public always looks for justification to support its feelings; during extreme mood phases, voters embrace increasingly farfetched rationales.
Figure 1
Barack Obama’s presidency has so far endured two major social mood phases: the strong bear phase that he inherited and a powerful bull phase (see Figure 1). The “Birther” charges dogged him during his candidacy and early presidency, as stocks plunged. But during the subsequent two-year rally, those same charges faded–and then melted away.
It turns out that Obama is not the first sitting president to face charges of ineligibility. James Fallows of The Atlantic noted that such an expression has happened once before: to President Hoover, another big-bear-market president (see Figure 2). In 1931, John Hamill released his book, The Strange Career of Mr. Hoover Under Two Flags. Among other accusations, Hamill asserted that Hoover had given up his U.S. citizenship as early as 1900 in order to gain an edge in an overseas business deal.
Figure 2
Hoover’s eligibility question did not get legs, despite the continued plunge in public mood. But mood did do a number on Hoover’s reelection bid (and legacy). First, he was the people’s overwhelming choice for president: He entered the office with a 58% landslide victory in the popular vote as the Roaring Twenties came to a head. Then he was tossed from office just four years later in a near-mirror-image landslide defeat of 57%. The reason for this emphatic dismissal? Social mood had plunged, as displayed by the Dow, which had shed 89% of its value.
Having dodged the Birther charges, presumably for good, the question now is how President Obama will fare from here. What are his chances for reelection? The direction of public mood, as reflected by the stock market, will set the odds.
Do you want to know who will win in November? Ask The Stock Market.
Read the landmark academic paper by Prechter, Goel, Parker and Lampert that identifies the link between stock market performance and presidential election winners. Read it for yourself, courtesy of SSRN, by following this link and clicking “One-Click Download” at the top of the page.>>
This article is syndicated by The Socionomist, a publication of the Socionomics Institute, and was originally published under the headline Does Social Mood Influence Accusations of Presidential Ineligibility?. The Socionomist is designed to help readers understand and anticipate waves of social mood. Copyright © 2012 Socionomics Institute.
Source: ForexYard
The Pound appreciated against the 17 nation euro during Monday’s trading ahead of fresh concerns over Europe’s debt crisis. UK 10-Year Gilts climbed for the first time in 5 days as investors took to the sterling as a safety precaution as the French Presidential Elections and turmoil in the Dutch Government have made the British pound the more appealing “safe haven” currency.
The Sterling appreciated to its strongest level in 20 months against the Euro after French President Nicholas Sarkozy has fallen behind Socialist Francois Hollande going going into the final round of the French Presidential Elections.The Pound was given a further boost from news out of the Dutch Government where early elections are due to take place as a party from the minority ruling coalition withdrew.
The Sterling rose 0.5 percent versus the 17-nation currency and reached 0.8149, its strongest level since back in August 2010.
There are a number of financial reports expected for the next few days which could affect the movements of the currency markets. Tomorrow,Canada will release its Retail Sales Figures as well U.S New Home Sales while European Central Bank President Mario Draghi will deliver a speech on Wednesday. Other important news items on this week’s Agenda include GBP Gross Domestic Product,FOMC Statement,U.S Interest Rate Decision, a speech from Federal Reserve Chairman Ben Bernanke,New Zealand’s Interest Rate Decision as well as the Bank of New Zealand’s Rate Statement.
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.
“Taxes are what we pay for civilised society.” – Oliver Wendell Holmes, Jr. U.S. Supreme Court Judge
Rubbish.
There’s nothing civilised about taxes. And in fact, we’ll argue that taxes actually destroy society rather than enhance it.
So we prefer the comments by Albert Jay Nock in Our Enemy The State (your editor’s new favourite book):
“On the contrary, it is clear that whatever party-competition we shall see hereafter will be on the same terms as heretofore. It will be a competition for control and management, and it would naturally issue in still closer centralisation, still further extension of the bureaucratic principle, and still larger concessions to subsidised voting-power. This course would be strictly historical, and is furthermore to be expected as lying in the nature of things, as it so obviously does.
“Indeed, it is by this means that the aim of the collectivists seems likeliest to be attained in this country; this aim being the complete extinction of social power through absorption by the State.”
It’s a long quote. But worth it… in our opinion.
Of course, you may not agree. In fact, whenever we write anything that’s anti-taxation, anti-government or free market, Money Morning subscription cancellations spike higher.
It seems most don’t like it when we touch a raw nerve. Proof of that is in the feedback scores from the “After America” conference. It shows the audience disliked our presentation the most.
Perhaps it was what we said…
“It’s not that China is moving towards capitalism. It’s that Western Welfare States are becoming more centrally planned.”
“Western democracy has its own breed of thugs – politicians, bureaucrats and vested interests – who try to exert… power over individuals.”
“Before your very eyes, the whole world is slowly but surely turning towards communism and central state control. As you can tell, I despise these economies and political systems.”
It shows that even those who follow our advice closely can’t always cope with what we say.
But why not check out what offended so many people for yourself. You can find out how to access the video covering both days of the “After America” conference by clicking here.
Plus you’ll get to see which stocks and sectors the Port Phillip Publishing editorial team are most bullish (and bearish) on for 2012. Find out more here…
But getting back to the argument on taxes, it’s undeniable that taxes destroy society rather than enhance it.
Think back to your childhood… or your parents’ childhood. Back then, there were genuine communities. People looked out for their family and their neighbours.
If a neighbour was in a spot of bother, the local community would hold a whip-round for spare change or unwanted food and clothing.
But as soon as the State gains a stranglehold, individuals are far less likely to chip in. Not because they don’t care, but because the government has taken taxes, it leaves individuals with less disposable income.
But that’s not all. Taxation and the Welfare State are used to brainwash the public into thinking it’s not their place to help… after all, they’ve outsourced “helping” to someone else… namely, the government.
You saw a similar reaction following the Queensland floods. But not before human nature kicked in first. People helped… they provided food, shelter, clothing and money to those in need.
But then, as always, the stinking government took control and ruined everything. Not satisfied with the voluntary good nature of humans, the government decided it must force people to help.
The result? People who may have donated voluntarily, thought twice about it. Rather than asking where their neighbours are for help, they asked, “What’s the government going to do about this?”
It’s the same wherever government pokes its nose where it’s not needed. And it’s the same regardless of which party is elected.
Remember, contrary to belief, no-one voted for the current system of welfare states seen around the world. They happened by degrees.
That’s what makes government so sinister and evil.
One group enters government and offers favours to its supporters… paid for by the taxes of others.
The next group that enters government needs to reward its supporters, but without alienating too many others. So it keeps what it can of the previous government’s plans and then adds its own.
Or as Albert Jay Nock puts it:
“[Governments] meet from time to time, decide what can be ‘got away with,’ and how, and who is to do it; and the electorate votes according to their prescriptions.”
The outcome is perpetual growth in the size of government. And therefore, perpetual growth in government spending and taxation.
Bottom line: Given a choice, if people living under a truly free market, with limited government intervention could vote to keep their system, or vote for an exact replica of today’s bloated welfare state, there’s not a man or woman alive who would vote for change.
With one exception: the bureaucrats and hangers-on who would see the money they could make and the influence they would hold from it.
To finish, we’ll leave the last words to Mr. Nock:
“Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators and beneficiaries from those of a professional-criminal class.”
Cheers
Kris
P.S. Don’t forget to check out how you can get your hands on the “After America” DVD. Full details are available here…
The Conference of the Year “After America” DVD
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