Month: May 2012

By MoneyMorning.com.au

Friday, the price of West Texas Intermediate (WTI) crude oil, the benchmark oil contract traded on the NYMEX, fell 4% ($4.14). The one-day decline is the steepest since WTI fell 5.1% ($5.12) on January 3.

The other major benchmark, London-set Brent, also was hit, but less significantly, falling 2.6%. It was the largest Brent decline since a 4.6% dive on December 14.

However, the Brent-WTI spread is now increasing again. As of the close on Friday, the spread as a percentage of the WTI price (the better way of looking at it) stood at 14.9%, the highest differential in more than two weeks.

Two important questions follow.

First, why did this happen? Second, what is that spread again telling us?

The answers will surprise you.

Roll Out the Usual Suspects

As crude oil prices fell, TV pundits immediately paraded the usual suspects. They cited disappointing U.S. job figures, renewed concerns over European debt in general, and the Spanish situation in particular, while so-called “analysts” clamoured over a possible double-dip recession.

These concerns are not new, nor are they revelations.

Plus, the essential reasons why the oil price should be moving in the opposite direction – namely up – haven’t gone anywhere. The constriction produced by supply/demand considerations remain, and the insufficient volume available to meet unexpected demand surges and the geopolitical environment – especially the impending European boycott of Iranian crude oil imports – remain in full force.

The overall market dynamics still point strongly to a rise in oil price.

Yet the overall movement of crude oil futures has remained peculiarly restrained. In fact, WTI has given back 6.1% in the past week, and some 2.7% for the month.

Here’s what’s really happening…

Preparing for the Next Crude Oil Price Rise

The real reason we have witnessed a retreat in crude oil pricing has little to do with the condition of the market or the actual demand for product. It is the result of a classic yo-yo short in anticipation of a major advance in the oil price.

In other words, some very large traders in oil futures contracts – the so-called “paper-barrel” speculators of future actual consignments of oil (or “wet barrels”) – are manipulating a short-term cut in price after establishing a position that will profit with the price going down.

This amounts to a “put” clone resulting in an exaggerated decline in the crude oil pricing level, usually orchestrated on a five-day pricing spread introduced by a sequenced derivative move on the futures contract itself.

The trader profits when the price goes down by exercising the “put” to sell options on the futures contract at a higher strike price than that provided by the market by redeeming the derivative.

Of course, when that happens, the market price will increase. The trader then profits again by having derivatives on the increasing price already in place.

The price is manipulated just like a yo-yo moving up and down. Now the manoeuvre is only doable during periods of lower-than-average futures contract volume and a narrow period in which the price is not likely to spike because of outside developments (for example, natural disasters, a rapid escalation in hostilities, blockage of transit, collapse in production, and so on).

It becomes less useful when the market indicators themselves are decidedly moving up. The approach succeeds by wider market perceptions, not fact. It ends when the actual pricing dynamics take over. In between, a few traders make some bucks by manipulating the margins.

There will be little opportunity for this device to operate again as we move into the summer volatility.

The Iranian Embargo Looms

As for the second question, that widening Brent-WTI spread is signaling a renewed concern about the real market impact coming from the EU-Iranian embargo and the increasing inability of other producers to make up the difference over the long term.

Saudi Arabia has agreed to cover the initial shortfalls to the most highly vulnerable European importers – Greece, Spain, and Italy. But that additional volume will not guarantee price moving forward. And it will also result in both price increases and market dislocations in other regions relying on Saudi exports – Asia especially and, in particular, India.

Spain attempted to secure additional oil from Nigeria but was told the African producer could not cover additional needs resulting from the embargo. Russia may benefit in the near term, but that will certainly increase prices paid by Europe.

All of this is reflected first in Brent because it is the benchmark most impacted by these developments. However, it will be translated into rising WTI prices as well, since the price in the U.S. is still reflective of the price in Europe due to imports.

The increasing spread, therefore, tells what is really going to happen.

Crude oil is going up.

Despite what a few very large short artists will pull off now and then in the hazy funny paper world of exotic derivatives.

Dr. Kent Moors
Contributing Editor, Money Morning

Publisher’s Note: This article originally appeared in Energy & Oil Investor

From the Archives…

Why China’s New Consumer Economy Won’t Give You the Trade of the Decade
2012-05-04 – Kris Sayce

Why China Could Be The Next Destination For the Financial Crisis
2012-05-03 – Merryn Somerset Webb

How Did We Get It So Wrong on Australian Housing?
2012-05-02 – Kris Sayce

This Indicator Shows the Copper Price Could Be Set to Soar
2012-05-01 – Dr. Alex Cowie

How Gold Nanoparticles Will Create A New Kind of Gold Rush
2012-04-30 – Michael Robinson

Derivative Manipulation Hits the Crude Oil Market

USDJPY moves sideways in a narrow range between 79.63 and 80.61. Resistance remains at the upper line of the price channel on 4-hour chart. As long as the channel resistance holds, downtrend could be expected to resume, and another fall towards 79.00 is possible after consolidation. On the other side, a clear break above the upper border of the channel will indicate that the downward movement from 84.17 has completed at 79.63 already, then the following upward movement could bring price to 83.00 zone.

Daily Forex Analysis

Article by Investment U

Not many markets have been written off by investors more than uranium since last March.

Understandably, the Fukushima incident left a bad taste in everyone’s mouth. Countries such as Germany and Japan claim they’re done with nuclear power altogether.

But surprisingly there’s been a buzz recently in my inbox about a potential rebound in the uranium market.

My interest was piqued, but I wanted to dig a little deeper into the story. So I dialed up two of the smartest people I know on the subject to get their take – Global Resource Investments CEO and legendary contrarian Rick Rule and Investment U’s own commodity and resource expert Matthew Carr.

And after talking to them, it’s my belief that we’re finally at a bottom in the uranium market. There’s even reason to believe in a potential double over the next two years.

Below I’ll discuss an easy way to capitalize on the rebound. But first I’ll share what I learned about the uranium market from Matt and Rick.

Matthew Carr: “A Potential Double in Two Years”

“Few people are excited about uranium right now. And that’s understandable after the Fukushima disaster last year,” Matt told me. “It jolted the entire uranium market. Here’s the thing though: You can earn yourself a double investing now in uranium. But it’s not going to be overnight.”

Matt told me he sees Japan using more LNG for the near future. And for him it’s too early to tell if Japan will ever go back to nuclear. But he obviously sees strength in the uranium market over the long term.

“Fact is, there’s a supply deficit coming. We’re going to go from $52 a pound to $70 and $80. A lot of people aren’t going to jump in until we hit $70… That’s silly,” he said. “Ultimately, I think two years from now – and maybe sooner if the market heats up quicker than expected – you’ll pat yourself on the back for acting on this one. It’s just a game of patience. Bide your time. Build your positions. The price of uranium will continue to slowly tick higher, and so will uranium stocks.”

And when I contacted Rick, I heard more of the same…

Rick Rule: “Uranium Will Be With Us for Some Time”

“As a consequence of the disaster in Japan, the uranium industry got really, really, really trounced,” he told me. “There has been a snap-back in the uranium industry, but I think it has some to go.”

It was easy for me to understand that poor public perception hurt the demand for nuclear power and ultimately uranium. But I didn’t even think about the supply side of the equation. After all, Japan had to do something with all that extra uranium it had lying around…

“It’s worthy to note that the spot price of uranium has fallen from about $70 to $52,” Rick said. “That’s solely as a consequence of the Japanese selling on the spot market uranium that they previously had in inventory.”

But despite the negative public perception and news that countries like Germany are discarding nuclear altogether, Rick doesn’t see it going anywhere for some time…

“The world is also saying, as a consequence of Fukushima, that we need to rely less and less on nuclear power. But that isn’t what’s happening on the ground,” he said. “Many parts of the world, including ironically Japan, are or will be investing heavily in nuclear power on a going forward basis for a very simple reason – when people hit a switch they want the lights to go on. Without nuclear power in some places, it doesn’t happen.”

For places like Japan, Korea, Taiwan, or Singapore, to name a few, there are truly limited options. These densely populated areas have high energy consumption with limited natural resources. So according to Rick, fuel density is crucial for fuel security.

“In Japan they can and do store five or six years of uranium. That’s because in the face of something like the Arab oil embargo that happened in 1973, they’re bulletproof,” he said. “There is no other energy source that a place like Korea or Taiwan or Japan can store like that. Imagine trying to store six years’ worth of hydroelectric, it doesn’t work. Imagine trying to store coal or natural gas or oil. The density of uranium lends it to very, very, very secure base load power. And as a consequence of that, uranium will be with us for some time.”

And the facts seem to support Rick’s observations. The United States and Europe may be shunning nuclear power, but not the rest of the world. According to the World Nuclear Association, 60 nuclear plants are currently under construction, 150 are in the works and 340 are in various stages of proposal.

And although it’s hard to imagine Japan going back to nuclear anytime soon, there are some interesting reasons to think they may eventually go back to more nuclear power.

According to figures from the Japanese Atomic Industry Forum, Japan faces a 12% shortage of electricity this summer. Meanwhile additional fossil fuel imports are costing it about $40 billion – or $333 per person, per year – while its carbon emissions are roughly 14% above 1990 levels.

An Easy Way to Play

Looking at the graph below, you can see the Global X Uranium ETF (NYSE: URA) was trading in the $20 range just before Fukushima. Since then, it’s been on a fairly steady decline, currently trading around $8.50 a share…

The main holding, about 20%, for URA is the largest pure play in uranium mining, Cameco Corp. (NYSE: CCJ). But Global X adds some diversification for U.S. investors with some smaller miners that are only traded on the TSX.

Keep in mind that URA is a completely speculative recommendation. You shouldn’t invest any more than 1% of your portfolio and we always recommend a 25% trailing stop with any investment.

But if you share my view after hearing what some industry heavy hitters are saying, you’ll want to take a long look at this and other individual uranium plays.

Good Investing,

Justin Dove

Article by Investment U

Article by Investment U

These recent elections are just one more reminder to use extreme caution before investing anywhere in Europe.

Greece and France had elections over the weekend, and the results don’t appear to favor business, either individually or for the larger Eurozone.

Over the last few years, the Greek people have rioted enough to make it very clear how much they value their government-supported lifestyles. Every time the International Monetary Fund (IMF) demanded the ailing economy institute austerity measures and President Karolos Papoulias agreed, the Greeks would immediately get up in arms.

So it’s no surprise they decided to shake up their current power structure as soon as they got the chance to. And maybe it shouldn’t even be that shocking how they ended up electing both left- and right-wing extremists, including Neo-Nazis, for various government positions.

Scary, yes. Shocking? Not so much.

Then there’s France, which didn’t care for its own leaders’ attempts to balance the bank. Given the choice between President Nicholas Sarkozy and someone who promised to pander to them more often, they easily chose the latter.

That’s not to say that either Papoulias or Sarkozy were perfect politicians – because they certainly weren’t. But as Christian Science Monitor writer Stefan Karlsson explains, in both cases, “a majority of voters decided to throw out the incompetent incumbents and instead go for the even crazier opposition.”

Karlsson even goes so far to compare the current situation to “the incompetent and corrupt Weimar German establishment,” which lost in 1932 to the National Socialist German Worker’s Party – better known as the Nazi regime.

European Economics in a Nutshell

Only time will tell if Karlsson’s comparison is extreme or not. But what investors have to understand right now is that these European election results likely solve absolutely nothing.

In fact, they’re likely to make them that much worse.

Some economic analysts are currently claiming that neither Greece nor France’s individual actions matter much on a global scale, since the Eurozone’s fate rests solely in the hands of international organizations, like the IMF. But that’s an extremely simplistic conclusion to reach on an extremely complicated matter.

Like it or not, each country in the Eurozone is painfully interlocked with the next, while still existing as its own separate entity. They all have their own governments, economies and citizens, but they share the same currency, which makes things extremely complicated.

It puts weaker countries like Greece into positions of power they’re not strong enough to hold. They can run their economies into the ground – as many of them seem intent on doing – leaving their stronger allies with little choice but to rescue them.

Either that or let their shared euro severely devalue.

The way the Eurozone is organized, there’s no way around it: Whatever decisions Greek politicians make will somehow affect Germany, just like French decisions to focus on spending over saving will come back to bite everyone else.

That’s what sharing a currency usually means.

European History in a Nutshell

The fact that the countries in the Eurozone have long and complicated histories together doesn’t help the economic situation much, either.

Each has gone to war with the other repeatedly over the centuries, which has resulted in a lot of long-lasting hard feelings all around. Consequently (though perhaps not logically), their natural inclination isn’t necessarily to help each other out, even if it makes perfect sense to do so.

Then there’s the issue that most of Europe has been practicing dangerous economic policies for decades, fooling around with various levels of socialist policies that have left their citizens dependent on now badly insolvent governments. And when the people keep electing politicians set on continuing those strategies – like they just did in France and Greece – it makes the problem that much more complicated and long-lasting.

There’s only so much supporting a government can do before it implodes. But that doesn’t seem to deter either Greece or France at all, judging by their voting results.

If the countries in the Eurozone don’t get their act together soon, investors may be better served staying away for a very long time. And even if they do start to make positive changes, it’s still going be a convoluted mess, probably for years.

These recent elections are just one more reminder to use extreme caution before investing anywhere in Europe.

Good Investing,

Jeannette Di Louie

Article by Investment U

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 8 May 2012, 07:45 EDT

WHOLESALE MARKET gold prices fell to $1625 an ounce during Tuesday morning’s London trading – their lowest level in over a fortnight – as stocks and commodities also ticked lower and the Dollar extended recent gains, with markets still digesting the weekend’s French and Greek election results.

“Support [for gold] is at $1625, where we have seen very good support since early April,” says the latest technical analysis from bullion bank Scotia Mocatta.

Silver prices meantime fell to $29.55 per ounce – their lowest level since mid-January.

A day earlier, gold prices traded lower on Monday, while the Euro fell to a 3-month low against the Dollar.

“It is a much more hazardous [gold] environment at the moment because of the downside risks to Euro/Dollar,” says Michael Lewis, chief commodity strategist at Deutsche Bank.

“One of the supportive factors [is] we’ve already seen quite a dramatic scaling-back in speculative length in gold over the last few months, so that might reduce the positioning risk for the market, but it is definitely going to be an environment where gold is going to struggle.”

In New York, the difference between bullish and bearish gold futures and options contracts held by noncommercial traders on the Comex – the so-called speculative net long – rose 5.7% in the week ended last Tuesday, according to data from the Commodity Futures Trading Commission.

“Despite the improvement, net speculative length remains relatively weak…signaling a continued lack of confidence,” says Standard Bank commodities strategist Marc Ground.

“While investors are not overtly bullish, short positioning is also relatively low, a mildly encouraging sign that investors appear cautious of running too short.”

“Gold eased on Monday,” adds a note from Swiss precious metals group MKS, “after French and Greek elections that reflected strong anti-austerity feelings raised concerns over European ability to battle its debt crisis, knocking [the Euro] down.”

Newly-elected French president Francois Hollande is due to visit Berlin one week from today, where German chancellor Angela Merkel says she will welcome him “with open arms”,  according to press reports.

Merkel added however that there will be no renegotiation of reform measures such as the Fiscal Stability Treaty, which aims to reduce Eurozone government debt-to-GDP ratios.

During his campaign, Hollande said that is “is not for Germany to decide for the rest of Europe”, and called for pro-growth policies as well as a change in the rules governing interventions by the European Central Bank.

Europe needs “to strike a balance” between austerity and growth said Olli Rehn, European Commissioner for economic and monetary affairs, said in a speech on Saturday, ahead of the French election result.

“We need to further boost investment to supplement the other policies of our growth agenda,” he said.

Rehn added that the European Investment Bank – which makes loans to businesses on behalf of the European Union – should have its capital increased.

“Countries need to keep a steady hand on the wheel,” said International Monetary Fund managing director Christine Lagarde Monday.

“If growth is worse than expected, they should stick to announced fiscal measures, rather than announced fiscal targets…in other words, they should not fight any fall in tax revenues or rise in spending caused solely because the economy weakens.”

Greece meantime faces the prospect of fresh elections after Sunday’s poll failed to deliver a majority for the incumbent coalition, made up of the New Democracy party and Pasok, both of which publicly support the EU/IMF bailout deal.

Former Greek finance minister Evangelos Venizelos has said the terms of Greece’s bailout should be renegotiated, and spending cuts spread over three years rather than two.

Over in Spain, the government is reportedly preparing to bail out Bankia, the banking group created at the end of 2010 by the merger of seven smaller banks which were struggling with bad property loans. One Spanish newspaper reports the bailout could be around €7 billion – on top of the €4.5 billion Bankia received from the government shortly after it was set up.

India’s finance minister Pranab Mukherjee announced Monday that the government is withdrawing the 1% excise duty on all precious metal jewelry, branded or unbranded. The withdrawal is effective from March 17 – the day after Mukherjee’s Union Budget in which he extended the tax to unbranded jewelry.

Many Indian gold dealers closed down for three weeks in protest following the Budget, which also saw import duties on gold doubled – a policy that remains in place.

“People who were on the sidelines will come back to the market,” says Prithviraj Kothari, president of the Bombay Bullion Association.

“Jewelry demand will improve in the coming weeks…it’s a good move by the government.”

In China, imports of gold bullion from Hong Kong – widely regarded as a proxy for overall Chinese gold imports – rose 59% month-on-month in March to nearly 63 tonnes, according to official Hong Kong government data.

The volume of gold heading the other way, however, also rose to just under 25 tonnes, leaving net exports at a little over 38 tonnes.

“Rising prosperity levels among the population coupled with tighter laws governing property speculation are likely to contribute to sustained high demand for gold in China,” says a note from Commerzbank.

“Above all, Chinese gold demand should lend key support to the price of gold during the course of the year.”

“China’s strong demand for bullion may help support gold prices at lower levels,” adds James Steel, commodity analyst at HSBC in New York.

“A recovery in Indian gold demand should [also] be an important factor in support of gold prices.”

At the annual Berkshire Hathaway shareholders’ meeting, attended this year by U2 frontman Bono, legendary investor Warren Buffett repeated his regular advice not to buy gold – a sentiment echoed by his number two Charlie Munger and Microsoft founder Bill Gates.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox (Dublin) – Mixed data is seen coming out of the Australian economy. Today early in the morning hours the Australian economy posted Trade Deficit figures. The country’s trade deficit for the month of March doubled to $ 1587 million from previous $ 754 million. This was the highest trade deficit the country has recorded in the past two and half years. In other data coming from Australia the retail sales rose significantly indicating that consumption is gaining momentum in the country, which also reflected in an increase in the business confidence numbers.

The rising consumption boosted demand for imports which are now cheaper due to the strong Australian Dollar. Australian exports of raw materials were severely hit by global economic slowdown particularly due to the declining demand from Chinese manufactures. Also higher commodity prices and strong Australian dollar further hampered Australian exports.

Today in other events the Australian treasurer Wayne Swan presented the budget before the parliament. In his budget speech Mr. Swan expressed optimism that country may be on the track of budget surplus. This he plans to achieve by a series of reduction in government spending.

The markets have reacted negatively to trade deficit data pushing the currency lower against the US dollar.

 In the wake of the huge trade deficit the RBA may cut the interest rates to boost exports and this speculation is driving bearish positions in the AUD. The currency pared off early week gains and turned bearish early in the day. Also fueling the bears are the risk off sentiment in the financial markets after the Greek and the French elections. The Greek and the French election results indicate strong support for anti austerity parties which has renewed fears about the European financial stability and have sparked pessimism that the crisis will not end soon.

 The AUD/USD pair is currently trading at 1.0134 levels. The bearish trend is beginning to gather pace but is obstructed by the tight volatility in the market. The near term support for the currency is at 1.0118 and a break of this level could push the pair to 1.0113 levels.

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.
Follow us on twitter: www.twitter.com/tradervox

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The results of Greek parliamentary elections held over the weekend kept the euro low against virtually all of its main rivals throughout yesterday’s trading session. Investor concerns about Greece’s new government and how it will act toward tough austerity measures imposed on the country brought the euro down to a 3 ½ year low against the British pound and a three-month low against the US dollar. Turning to today, euro-zone news is once again forecasted to impact the markets. The German Industrial Production figure and a speech from the ECB President have the potential to create significant volatility.

Economic News

USD – USD Takes Slight Losses against Main Currency Rivals

After seeing significant gains when markets opened for the week, the US dollar staged a minor downward correction during European trading yesterday. After dropping to 1.2953, a three-month low, the EUR/USD began moving upward during early morning trading, reaching as high as 1.3052 by the afternoon. The AUD/USD also saw some upward movement during the European session. The pair was up close to 90 pips by the afternoon session, reaching as high as 1.0196. Against the Japanese yen, the dollar remained virtually unchanged at around 79.80 over the course of the day.

Turning to today, a lack of significant US news means that any dollar volatility will likely come as a result of euro-zone news. Traders will want to pay close attention to a speech from the ECB President, scheduled for 12:30 GMT. Should investors interpret the speech as negative for euro-zone growth, investors may return to safe-haven currencies which could result in renewed bullish activity for the dollar. Later in the week, traders will want to remember that the Fed Chairman is scheduled to give a speech. Following last week’s disappointing US jobs report, investors will be listening to the speech for any clues regarding any future plans for quantitative easing in the US.

EUR – EUR Remains Low amid Euro-Zone Worries

Investor concerns that the new Greek government will back away from previously agreed upon austerity measures sent investors to safe-haven assets, resulting in heavy losses for the euro to start off the week. The common-currency fell to a 3 ½ year low against the British pound, hitting 0.8034 during early morning trading. The EUR/GBP eventually staged a minor upward reversal, and by the afternoon session was trading as high as 0.8078. Against the Japanese yen, the euro fell over 125 pips during the overnight session, reaching as low as 103.20. The pair eventually recovered during mid-day trading to trade as high as 104.30.

Turning to today, traders will want to pay attention to both the German Industrial Production figure at 10:00 GMT, followed by a speech from ECB President Draghi at 12:30. As the biggest economy in the euro-zone, German indicators tend to have a significant impact on the euro. Should today’s news come in above the forecasted 0.8%, the euro could see moderate upward movement during the mid-day session. With regards to the ECB President’s speech, traders will want to pay attention to any mention of how the recent elections will impact euro-zone economic growth. Any negative comments could result in euro losses.

Silver – Weak Global Data Leads to Bearish Movement for Silver

Silver fell as low as $29.85 an ounce during yesterday’s trading session as poor fundamental data resulted in weak demand for the precious metal. Specifically, uncertainty regarding the prospects of the euro-zone recovering from its sovereign debt crisis led to the bearish movement. Overall, silver was down around $0.50 during European trading.

Turning to today, silver may continue to fall if poor euro-zone fundamental data results in risk aversion in the marketplace. Traders will want to pay attention to a speech from the ECB President for clues as to how this past weekend’s elections may impact the euro-zone economic recovery. Any negative comments could result in additional losses for the precious metal.

Crude Oil – Euro-Zone Worries Result in Losses for Crude Oil

Concerns regarding the euro-zone’s ability to solve its debt crisis in the aftermath of elections in France and Greece over the weekend resulted in additional losses for crude oil during yesterday’s trading session. During overnight trading, crude dropped an additional $2.25 a barrel, reaching as low as $95.24. While the commodity saw minor gains during the middle of the day, it was once again moving down toward the end of the European session.

Today, traders will want to continue monitoring any developments out of the euro-zone. Any signs that the new Greek government will go back on any of the austerity measures it promised to undertake before receiving its most recent bailout package may result in additional bearish movement for oil.

Technical News

EUR/USD

The Williams Percent Range on the weekly chart has dropped into oversold territory, indicating that this pair could see upward movement in the coming days. Furthermore, the MACD/OsMA on the same chart appears to be forming a bullish cross. Traders will want to keep an eye on this pair, as it could stage an upward correction in the near future.

GBP/USD

A bearish cross has formed on the weekly chart’s Slow Stochastic, in a sign that downward movement could occur for this pair. In addition, another bearish cross on the daily chart’s MACD/OsMA is providing further evidence of an impending correction. Traders may want to go short in their positions.

USD/JPY

Most long term technical indicators place this pair in neutral territory, meaning that no definitive trend can be predicted at this time. The one exception is the weekly chart’s MACD/OsMA, which has formed a bearish cross. Traders will want to keep an eye on some of the other indicators on the weekly chart for signs of an impending downward correction.

USD/CHF

The Williams Percent Range on the weekly chart has crossed over into overbought territory, indicating that this pair could see downward movement in the near future. Furthermore, the Relative Strength Index (RSI) on the same chart is moving upward and appears poised to cross into the overbought zone as well. Traders will want to keep an eye on the RSI. If it crosses above 70, it may be a good time to open short positions.

The Wild Card

EUR/GBP

Following the significant downward movement this pair has seen recently, technical indicators now show that an upward correction could take place in the near future. The daily chart’s Relative Strength Index has dropped into oversold territory, while the Slow Stochastic on the same chart has formed a bullish cross. Forex traders may want to go long in their positions.

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 TraderVox.com

Tradervox (Dublin) – The pound weakened against the US dollar today after a report by a London-based Royal Institution of Chartered Surveyors showed that the UK house price index fell to six month low in April. The demand for houses weakened after a stamp-duty exemption for first time buyers ended in March 24. The index fell to -19 from -11 in March registering the lowest level since June 2010. A reading below zero indicates that more surveyors registered a price drop than gains in the last month. This report came as Britain’s property market struggles to recover from the first double-dip recession in the country since 1975.

After the report was released, the Great Britain Pound fell within two cents of an eight month low against the dollar. Despite an increase of 4.3 percent within the last three month, the pound dropped by 0.3 percent against the dollar to trade at $1.6143 during the London trading session after it had rose to 1.6302 on April 30, the strongest it has been since August 31 last year. The sterling pound was little changed against the euro buying one euro at 80.65 pence, it had climbed to 80.36 pence per euro yesterday when the Euro dropped following elections in the region.

According to Peter Bolton Kings, a spokesman for Royal Institution of Chartered Surveyors, the consumer confidence was undermined by the recent talk of double-dip recession and current concerns over the economy of the nation. He also added that the lack of affordable mortgage has contributed to the declining first-time house buyers. Analysts have said that the boost in demand seen early this year was due to the tax exemption on purchases of houses costing less than 250k pounds which expired on March 24.

The Bank of England is expected to publicize its policy decision on may 10 prior to new quarterly economic forecasts expected to be released next week. The market is expecting a no change in the bond-purchases target and interest rate.

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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By TraderVox.com

Tradervox (Dublin) – The Australian dollar was just shy of this year’s low after the nation reported a more-than expected trade deficit. This has compounded already existing concerns that the spending cuts carried by the government will dampen the nation’s economic growth. The country’s budget will be announced on July 1 by Wayne Swan. The Aussie has dropped after gaining yesterday as riskier assets regained their losses after Europe election results on Sunday. The kiwi continued with its longest losing spell in six years as Greek political leaders met for the second day to try and form a coalition government.

According to Yoshisada Ishide, who is the manager of the world’s biggest mutual fund on Aussie-dominated bonds at Daiwa SB Investment, the factors that have supported the Australian dollar are disappearing and the market is realizing that the Australian Government cannot take stimulus measures and it is relying on monetary policy to support economic growth and the Aussie.

The Bureau of statistics reported that the country’s imports outdid the exports by A$1.587 billion in March. Moreover, the budget surplus is expected to contract which is expected to be negative for economic growth. However, a return to surplus will allow the Reserve Bank of Australia, room to make interest rate cuts.

Analysts are saying that the New Zealand dollar has succumbed to the weaker fundamentals that have been seen in the economy in the recent times hence the continued decline. Kiwi’s woes have been compounded by the weaker global sentiments particularly at the beginning of the week. The country has also registered a budget deficit that is wider than it had been forecasted by the market. Further, a report from the Treasury Department showed that the tax revenue slowed in March as the ANZ National Bank report showed that the export prices for commodities dropped by 4.5 percent in April.

Such concerns in the south pacific nations led the Aussie to drop by 0.3 percent against the dollar to trade at $1.0190. The kiwi was 0.1 percent lower trading at 79.36 US cents.

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