Month: July 2012

Article by Investment U

Warren Buffet has given Wells Fargo (NYSE: WFC) a second, third and fourth look over the years. And every time he looks again, he still likes what he sees.

When the U.S. markets crashed in 2008, banks bore the brunt of the blame. Easy scapegoats, they were accused of over-inflating the housing bubble, a perception – both legitimate and unjustified at the same time – that earned them lasting grief.

Financial companies like American International Group (NYSE: AIG) and Bank of America (NYSE: BAC) had their names smeared in newspapers all across the country and even the world. Certain activist groups even went so far as to camp outside of bank executives’ private homes, intimidating their families and even issuing death threats.

Meanwhile, those businesses suffered in the markets as investors learned just how foolish many of their decisions over the years had really been. Stock prices plunged and some – like Fannie Mae – never recovered at all.

Even when the larger U.S. markets rebounded promisingly in 2009, the banking sector continued to perform poorly. According to CNBC, out of the S&P 500’s 10 distinct sectors, financials performed the worst in 2011, “with banks in particular tumbling nearly 25% as measured by the KBW Bank Index.”

Admittedly, so far this year, the sector is running in second. Yet that hardly makes now the time to be picking up just any old financial stock.

Those companies are still fragile, as evidenced by German regulator BaFin’s new probe into Deutsche Bank (NYSE: DB), a significantly sized player in the international scene.

And earlier this month, in an effort to inspire public trust, some of its American competitors were busy marketing themselves as easily dismantled. In essence, they were saying that, should something bad happen later down the road, they could be downsized with minimal hassle – hardly a grand note of confidence.

Still, there is one company out there that’s worth a second look, at least according to legendary trader Warren Buffett. He’s given big U.S. bank Wells Fargo (NYSE: WFC) a second, third and fourth look over the years.

And every time he looks again, he still likes what he sees.

Warren Buffett and Wells Fargo Go Way Back

Wells Fargo first caught Warren Buffett’s eye over two decades ago.

In 1990, he made an initial venture into the company through his wildly successful investment management business, Berkshire Hathaway (NYSE: BRK-A). That first year, he acquired some five million shares for $289 million and, starting in 2005, he’s added to that position every year.

Five years into the new century, he purchased an additional 38.7 million shares. In 2006, it was 28 million shares, then 85.2 in 2007 and so on until the beginning of 2012, when he bought up an additional 10.6.

Even during 2008, when banks were at their worse, Buffett still added another one million shares… while everybody else was dropping financials like hot potatoes.

All told, that makes Wells Fargo Berkshire Hathaway’s second-largest investment. And Buffett seems perfectly content with that status quo according to the positive comments he’s made in the recent past.

What’s Not to Like?

The truth is that Wells Fargo is a solid company with a strong business history that has shaped it into the company it is today… a company that even somebody as prestigious and well-connected as Warren Buffett can appreciate.

Dating back to 1852, it offers banking, insurance, investment, mortgage and financing options today. Thanks in part to its 2008 acquisition of the recession-ravaged Wachovia, Wells Fargo has over 9,000 stores and 12,000 ATMs throughout the United States and abroad, and allegedly “serves one in every three households in America.”

That isn’t very hard to believe considering that, with $1.3 trillion in assets, it’s the United States’ fourth-largest bank and the third-largest U.S. retail brokerage firm.

The company has a positive rapport with its customers, even previous Wachovia customers, who reportedly found the transfer as stress free as possible. And it offers worthwhile perks to its investors as well, including dividends, which it has faithfully paid out every quarter since 1996 – the last of which amounted to $0.22.

Wells Fargo’s next earnings report is scheduled for July 13, with analyst EPS (earnings per share) expectations set at $0.81. And since the financial matched predictions two quarters ago and beat them the last time around, hopes are high that it will do just as well on Friday.

Warren Buffett certainly doesn’t seem nervous about the upcoming report. And that’s reason enough to consider that Wells Fargo might be a worthwhile addition to anybody else’s portfolio as well.

Good Investing,

Jeannette Di Louie

Article by Investment U

By The Sizemore Letter

The negotiations between Spain and her Eurozone partners continue.

Prime Minister Mariano Rajoy agreed to new austerity measures, released on Wednesday, as a means of avoiding a full state bailout and the loss of control to the EU’s supervisory institutions that this would entail.  In total, the moves would cut Spain’s budget deficit by €65 billion.

The value-added (i.e. sales) tax would be raised by 3 points to 21 percent—a questionable move that would dampen already weak consumer demand during a deep recession—and there would be cuts to unemployment benefits and pay and benefits to state workers.  Also on the table was the subject of pensions, though no cuts were announced at this time.  Rajoy promised to consult with the opposition Socialists before pushing through any reforms to Spain’s generous retirement system.

Though it was not announced as such, the moves appear to be part of a quid pro quo.  In return for the austerity moves, Spain will be given more time to get its budget deficit in check and it would avoid the humiliation and loss of control that come with a full state bailout.

Investors seemed to take the news well.  Spanish stocks (iShares MSCI Spain—$EWP) were up big today (one of the few countries not in the red), and Spanish 10-year bond yields eased under the psychologically-important 7% level.

There is an obvious question raised here:  Why does Spain appear to be getting special treatment that the rest of the problem countries do not?

To this, I have two simple answers.  First: size matters.

Spain is the fourth-largest economy in the Eurozone (after Germany, France and Italy), and with size comes power.  If Ireland or Greece blows up, it really doesn’t matter.  All of the fretting about Greece in recent years was not over the failure of Greece itself.  Frankly, no one cares about Greece.  If the country broke off of the European continent and sank into the Aegean Sea, it wouldn’t make a lick of difference to the global economy.

The fears over Greece were that failure would lead to contagion—to Spain and Italy. When Greece demands that its bailout be renegotiated, Germany’s Angela Merkel has the luxury of flicking them away with her index finger as if they were a buzzing gnat.  Spain is a different story.  Spain knows that it is big enough and important enough to the health of the Eurozone to negotiate.  And the rest of Europe knows that too.  If Spain or Italy sinks, so does Europe.

The second reason that Spain gets special treatment is that Spain’s crisis is very different from that of Greece.  In the case of Greece, the Greek government borrowed and spent funds it could never hope to repay and went so far as to lie about it.  This has left little room for sympathy among Greece’s Eurozone peers.

But in the case of Spain, government debt was actually lower than that of Germany prior to the onset of the 2008 crisis, and its budget enjoyed a modest surplus.  It was the collapse of the Spanish property market and banking system that sank the economy, and the gaping budget deficits were the result of the deep recession that followed. So Spain has a certain “good faith” element that Greece clearly does not.

What all of this mean for the rest of the EU countries receiving bailouts?

It means different things for different countries.  Ireland’s crisis is very similar to that of Spain—driven by a collapse of the property and banking sectors—and the Irish have endured austerity with remarkable grit.  The EU is renegotiating parts of its bailout, and in the end Ireland may get a deal that looks closer to Spain’s.  Specifically, it appears that some of Ireland’s debt will be shifted to its banks and off the sovereign balance sheet.

Greece should expect no such concessions for the reasons outlined above.

But what about Italy? Under the technocratic government of Mario Monti, Italy has largely done with the EU has asked of it and has made needed reforms.  But should Italy fall off the wagon and revert to its old ways, the EU will have a difficult choice.  Do you punish bad behavior?  Or do you recognize that Italy, like Spain, is too big to be allowed to fail?

So long as Italy more or less toes the austerity line, I don’t see any major confrontations with the EU. But if Italy’s political parties start the siren song of populism or—worse—if a non-credible leader like Silvio Berlusconi wins the premiership again, I would expect a showdown.

At that point, it becomes a question of who blinks first.

If you liked this article, consider getting Sizemore Insights via E-mail.

Related posts:

• Spain and Italy: Different Problems, Same Crisis
• Bargain Hunting in Spain

By TraderVox.com

Tradervox.com (Dublin) – The investors have embarked on safety search as concerns corporate earnings in the Canada will be lower than expected emerged. The Canadian dollar dropped to the lowest this month against the US dollar as well as the majority of major currencies the crude oil and US stocks fell for the fifth day. Canada exports crude oil to the US and one barrel was going for $84. The drop in Asian stocks and US stocks has led to a decline in the demand for higher yielding currencies as investors seek the safety of the dollar and the yen.

Philippe Denolf, who is a currency strategist at Laurentian Bank of Canada in Montreal said that traders lack something to hang their bullish bets on as the market expect to get disappointing earnings this week. However, he acknowledged that there has been good greenback buying in all markets. According to Philippe, fears about the outlook for the corporate profits have caused the market to snap earlier gains. According to market estimates, the S&P 500 companies’ profits fell by 1.8 percent in the second quarter registering the first decline in almost three years. However, sales are estimated to gain by 2.5 percent.

The Canadian dollar has declined by 2.3 percent in the second quarter versus the greenback as futures on oil plunged 18 percent in the same quarter. This has been associated with the deteriorating Europe debt crisis in Europe which is expected to slow global economic growth. The crude oil futures have declined by 2.5 percent to $83.65 per barrel at Mercantile Exchange Prices leading to a 15 percent decrease this year. The loonie continue to follow crude oil in fluctuation and decline as it is mostly associated with this commodity.

The Canadian dollar dropped by 0.3 percent against the dollar to trade at C$1.0226 at the close of trading in Toronto; this is the lowest level the currency has been since June 29.

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

By The Sizemore Letter

I like ETFs as an investment vehicle.  And I love dividends as a source of investment return.

So, one might draw the conclusion that I was favorably disposed towards dividend ETFs, and indeed I am (see “Dividend ETFs for Growth and Income”).

Today, I’m going to take a look at one relatively new entrant in what has become a bit of a crowded fields: the iShares High Dividend Equity Fund ($HDV), which tracks the Morningstar Dividend Yield Focus Index.

To meet Morningstar’s criteria for index membership, companies must have a Morningstar Economic Moat rating of narrow or wide and have a Morningstar Distance to Default score in the top 50% of eligible dividend-paying companies.  The index is then composed of the top 75 companies by dividend yield that meet these criteria.

This requires a little explaining.  Warren Buffett has spoken often of preferring companies with economic “moats” around them that make a challenge from a would-be competitor a challenge.  Coca-Cola’s ($KO) unmistakable brand would be a good example, as would Microsoft’s ($MSFT) domination of the personal computer platform through its Windows operating system and Office productivity software. Not even mighty Apple ($AAPL) has been able to scale Microsoft’s moats in its core areas of expertise.

Morningstar has built upon this “moat” concept, defining it as “the sustainability of a company’s future economic profits.”  In order to earn a narrow or wide moat rating, a company must have “the prospect of earning above average returns on capital, and some competitive edge that prevents these returns from quickly eroding.” Obviously, there is a degree of subjectivity involved, as this is not a numeric value that can be found in a stock screener.  And to be sure, not all moats prove to be unassailable (consider that Research in Motion’s ($RIMM) enterprise email and messaging ecosystem might have been considered a moat just a few years ago). 

Morningstar’s Distance to Default Score is more quantitative yet also a little more esoteric.  It uses option pricing theory to evaluate the risk of a company becoming insolvent. 

While I like Morningstar’s focus on moats, I’m a little more skeptical on its distance to default metric.  Yes, the metric would probably do a decent job most of the time of preventing you from buying a high-yielding stock that was on the verge of slashing its dividend en route to going bust.  Yet option pricing theory would have done little to foresee an event like the 2008 meltdown until it was far too late, and it certainly didn’t prevent Long-Term Capital Management from blowing up a decade before.

HDV is a sibling to the older and better-known iShares Dow Jones Select Dividend ETF ($DVY), which I highlighted in the article I referenced above and which I use in my Covestor Strategic Growth Allocation.  DVY is the granddaddy of all dividend ETFs, and tends to be heavily weighted towards utilities (currently 31% of the ETF) and consumer staples (16%).

HDV holds a much smaller allocation to utilities (just 14%), but has large allocations to health care (29%) and consumer staples (24%).

According to iShares, both ETFs currently yield 3.6%, and both have expense ratios of 0.4%.  Over time, I would expect DVY to sport a higher current yield, though I would expect HDV to offer better potential for capital gains.  In the short-to-medium term, the decision of one over the other is essentially a matter of sector preference.

For longer-term capital gains, my preference remains the Vanguard Dividend Appreciation ETF ($VIG).  Though it currently yields no more than the broader S&P 500, the ETF is comprised of companies that have raised their dividends every year for the past 10 years.  And while there is no guarantee that they will continue to raise their dividends going forward, the 10-year criteria ensures that you own a portfolio of some of the highest-quality growth companies in the world.  The dividend criteria is also more objective than Morningstar’s moat rating, which depends on the judgment of Morningstar’s analysts.

With that said, any of the ETFs mentioned in this article could be considered as long-term holdings for investor portfolios.  But investors willing to do a little research on their own should eschew buying the ETFs and should instead use their holdings as a convenient stock screener.  Pick and choose the companies you like best from each.  Coca-Cola—which happens to be one of Warren Buffett’s all-time favorites—happens to be a holding of all three ETFs.

Disclosures: DVY, MSFT and VIG are held by Sizemore Capital clients. This article first appeared on MarketWatch.

If you liked this article, consider getting Sizemore Insights via E-mail. 

Related posts:

• Charles Sizemore Discusses Actively-Managed ETFs

Source: ForexYard

At FOREXYARD, we believe in keeping our clients prepared for potentially significant news events. As such, traders will want to carefully monitor the FOMC Meeting Minutes, scheduled to be released today, at 18:00 GMT. As can be seen in the chart below, May’s FOMC Meeting Minutes caused the Dow Jones Industrials to take a significant drop as investors became worried about the state of the US economic recovery.

Don’t miss out on another opportunity to capitalize on market volatility!

Following last week’s disappointing US Non-Farm Payrolls figure, investors are once again growing concerned that the US economy is stagnating. Should today’s FOMC Meeting Minutes reinforce those concerns, indices like the Dow Jones could see significant downward movement during the evening trading session. This is an excellent opportunity for forex traders to take advantage of potentially significant news, so don’t miss out!

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 Elliott Wave International

You can find low-risk, high-confidence trading opportunities by trading with the trend. The trick is to find the end of market corrections, so you can position yourself for the next move in the direction of the trend.

This excerpt from Jeffrey Kennedy’s free 47-page eBook How to Spot Trading Opportunities explains where to find bullish and bearish trade setups in your charts and how to zero-in on these opportunities. If this lesson interests you, the full 47-page eBook is free through July 16.

On the left-hand side of the illustration below, there are two bullish trade setups. As traders, we want to wait for the wave (2) correction to be complete so we can catch the move up in wave (3) — this is the trade. What we are trying to do in this bullish trade setup is anticipate the potential for profits on the buy-side as prices move up in wave (3). Another bullish trade setup is at the end of wave (4).

As traders, we are looking to buy the pullback and position ourselves within the direction of the larger up-trend. Remember, three-wave moves are corrections, which means that they are countertrend structures. On the other hand, five-wave moves define the larger trend. As traders, we want to determine what the trend is and trade in the direction of the trend. Our buying opportunity to rejoin the trend is whenever the trend pauses and forms a correction.

Now, let’s look at the right-hand side of the illustration where we see two bearish setups. When a five-wave move is complete, it is retraced in three waves as a correction. The end of the five-wave move presents the first trading opportunity that we can take advantage of the short side (or the sell side) as the wave (A) down begins.

Notice the second bearish trade setup gives us another shorting opportunity as wave (B) tops.

So, within the classic wave pattern of five waves up and three waves down, we have four high-probability trading opportunities in which we are either positioning ourselves in the direction of the trend or identifying termination points of a trend. I want to share with you some tricks I have picked up over the years about how to analyze corrective waves and their termination points. The single most important thing I’ve learned from analyzing corrections is that corrective or countertrend price action is usually contained by parallel lines.

As shown above, draw the parallel lines by beginning at the origin of wave A and going to the extreme of wave B. You draw a parallel of that line off the extreme of wave A. So basically you have a small, slightly angled downward price channel. This will show you the containment region for wave C. It also shows you an area toward the bottom of the lower trend line where you can expect a reversal in price.

Here is another example. Again, you draw the parallel lines off the origin of wave A, the extreme of wave A and the extreme of wave B.

Toward the upper end of the upper trend line, you will usually see a reversal in price.

This example shows how countertrend price action is contained by parallel lines in the British pound, 60-minute, all sessions. Why is it important to know parallel lines contain the corrective or countertrend price action? Number one, it will increase your confidence that you are indeed labeling a countertrend move properly. Number two, it identifies areas where you will likely see prices reverse. For example, we see this reversal up near the top.

 

What to Learn More? Get the FREE 47-Page eBookThis brief trading lesson is just a small example of the opportunities you can find once you learn to identify key market patterns. Learn more in your free 47-page eBook, How to Spot Trading Opportunities. This valuable eBook is regularly $79, but you can get it free through July 16.Download your free copy of How to Spot Trading Opportunities today >>

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 11 July 2012, 07:00 EDT

HAVING seen sharp falls during Tuesday’s US trading, gold prices regained some lost ground Wednesday morning, climbing as high as $1583 per ounce, while stocks and commodities were broadly flat and US Treasuries dipped.

The Euro also rose after hitting a new two-year low on Tuesday, while by Wednesday lunchtime Spain’s Ibex stock index was up nearly 1% on the day despite news that ordinary Spanish investors may have losses imposed on them as part of Spain’s banking sector restructuring.

A day earlier, gold fell by more than 2% on Tuesday after briefly touching $1600.

“The market looked non directional with low volumes,” says a note from Swiss refiner MKS.

“Profit taking kicked in around $1600.”

Silver prices also saw a slight bounce this morning, hitting a high of $27.24 per ounce falling a 3% fall on Tuesday.

“The silver market saw a rather wide trade range [on Tuesday],” says a note from commodities exchange operator CME Group, “which in turn probably emboldened the bear camp from a technical perspective.”

Tuesday brought news of the collapse of Iowa futures brokerage PFGBest amid allegations that client funds have gone missing.

“The whereabouts of the funds is currently unknown,” said a complaint from the Commodity

Futures Trading Commission, which says the brokerage’s owner, who is reported to have attempted suicide, lied to regulators to cover a shortfall of more than $200 million.

An estimated $1.6 billion of client money went missing last year when brokerage MF Global went bankrupt.

Investment bank Jefferies confirmed yesterday it had begun liquidating PFGBest positions.

“If Jefferies is doing an orderly liquidation, you have to believe that there have to be some concerns about ‘Do I let [my] positions go?'” says George Nickas, commodities broker at INTL FCStone

“You’ve got a higher degree of emotions now in a quiet market…with the €100 billion being made available to Spanish banks, gold should not be lower,” he added.

European leaders agreed last month that Spain could borrow up €100 billion for rescue funds to recapitalize its banking sector, while this week Eurozone finance ministers agreed €30 billion will be made available by the end of this month.

Banks that receive official aid however will be required to write off their subordinated bonds and preferred shares, according to a draft Memorandum of Understanding obtained by Spanish newspaper El Pais.

“The difference between Spain and other European countries is that these instruments are held mainly by retail investors,” says Nomura banking analyst Daragh Quinn.

“People who bought them might not have known exactly what they were investing in.”
Bank of Spain data show the amount of outstanding Spanish bank subordinated and hybrid debt – which can be converted into equity – is around €67 billion, the Financial Times reports.

Spain’s prime minister Mariano Rajoy meantime unveiled his fourth austerity package in seven months Wednesday, announcing €65 billion of spending cuts and tax increases.

Elsewhere in Europe, German consumer price inflation fell to 1.7% last month – down from 1.9% in May – official data published Wednesday show.

Holdings of gold bullion to back shares in the SPDR Gold Trust (GLD), the world’s largest gold ETF, fell by 4.2 tonnes Tuesday to 1271 tonnes. The volume of GLD gold holdings has fallen by 10 tonnes over the last two weeks – though it remains higher than it was at the start of 2012.

Over in India, where the weak Rupee has contributed to record local gold prices in recent weeks, gold ETFs saw their biggest monthly outflow on record by value in June – Rs 2.3 billion – India’s Money Control reports.

“If you look at the total amount which has gone out…I would think it is marginal, not even marginal for that matter,” says Sanjiv Shah, managing director at Goldman Sachs Asset management in Mumbai.

“Some people [have] book[ed] profits. But I won’t even call it anywhere close to huge amount of redemptions.”

Analysts at Credit Suisse meantime have cut their 2012 average gold price forecast to $1680 per ounce – down from $1765. Credit Suisse’s Silver price forecast has also been cut by three Dollars to $30.50 per ounce.

Based on afternoon London Fix prices, gold has averaged $1648 per ounce so far this year, while the average silver price has been $30.88 per ounce.

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.

Source: ForexYard

A meeting of euro-zone finance ministers failed to boost investor confidence regarding the economic recovery in the region, and resulted in the EUR resuming its downward trend. The news also weighed down on commodities and precious metals, which both turned bearish during the afternoon session. Turning to today, traders will want to pay attention to the US Trade Balance figure and FOMC Meeting Minutes, scheduled to be released at 12:30 and 18:00GMT. Should any of the news signal a further slowdown in the US economy, investors may continue shifting their funds to safe-haven assets which could result in further losses for the euro.

Economic News

USD – USD Gains amid Risk Aversion

The US dollar came within reach of a two-year high against the euro yesterday, as investor concerns regarding a euro-zone plan to bring down Spanish and Italian borrowing costs resulted in risk aversion in the marketplace. The EUR/USD fell close to 80 pips during the afternoon session, eventually reaching as low as 1.2244. The greenback was also able to extend its bullish run against the Swiss franc during European trading. The USD/CHF gained close to 60 pips, and eventually peaked at 0.9805 late in afternoon trading.

Turning to today, dollar traders will want to monitor the US Trade Balance figure and FOMC Meeting Minutes, scheduled to be released at 12:30 and 18:00 GMT, respectively. Investor confidence in theUS economic recovery remains low, especially following last week’s worse than expected US Non-Farm Payrolls figure. Should today’s news indicate that the US economy is stagnating further, investors may continue shifting their funds to safe-haven currencies which could help both the USD and JPY during afternoon trading.

EUR – Euro-Zone Fears Turn EUR Bearish

A meeting of euro-zone finance ministers did little to convince investors that the EU was on its way to economic recovery yesterday. It is still unclear how the EU plans to implement its plan to lower borrowing costs in Italy and Spain, and there are signs that the region’s debt crisis is spreading to other countries in the region. As a result, the euro tumbled against several of its main currency rivals. The EUR/AUD fell close to 100 pips over the course of the day, eventually reaching as low as 1.1983 before staging a slight upward correction. Against the JPY, the euro fell to a five-week low at 97.29.

Today, analysts are warning that with little significant euro-zone news set to be released, the euro may not have very many opportunities to correct its recent losses. Still, traders will want to pay attention to the German 10-year bond auction. As the biggest economy in the euro-zone, German indicators tend to have a significant impact on the euro. Should demand for German bonds come in high today, the EUR may see some short-term gains.

Gold – Gold Resumes Bearish Trend

After advancing close to $17 an ounce during early morning trading yesterday, gold proceeded to resume its bearish trend after disappointing euro-zone news led to risk aversion in the market place. The precious metal fell from a high of $1601.26 to the $1585 level during the afternoon session.

Today, gold traders will want to monitor US indicators, specifically the Trade Balance and FOMC Meeting Minutes. Should the news result in the USD turning bearish against its riskier currency rivals, gold may have an opportunity to recoup its recent losses.

Crude Oil – End of Norway Strike Turns Oil Bearish

The price of crude oil fell yesterday after a strike in Norway, which had generated supply side fears among investors, came to an end. Crude fell approximately $1.25 a barrel during mid-day trading, eventually reaching as low as $84.60 before staging a minor upward correction.

Turning to today, oil traders will want to pay attention to any announcements out of the euro-zone. Should additional signs emerge that the euro-zone debt crisis is spreading to other countries in the region, including Germany which is holding a 10-year bond auction today, crude could extend its bearish trend.

Technical News

EUR/USD

The Williams Percent Range on the weekly chart has fallen into oversold territory, signaling that an upward correction could take place in the coming days. Additionally, the Slow Stochastic on the daily chart appears to be forming a bullish cross. Traders may want to open long positions ahead of possible upward movement.

GBP/USD

While the Williams Percent Range on both the daily and weekly chart is currently in oversold territory, most other technical indicators show this pair trading in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.

USD/JPY

Most long term technical indicators are currently showing this pair range-trading, meaning that no defined trend can be predicted at this time. Taking a wait and see approach may be a wise choice, as a clearer picture is likely to present itself in the coming days.

USD/CHF

The Relative Strength Index on the weekly chart is hovering close to the overbought zone, indicating that downward movement could occur in the near future. This theory is supported by the daily chart’s Slow Stochastic, which has formed a bearish cross. Going short may be the wise choice for this pair.

The Wild Card

EUR/AUD

The Slow Stochastic on the daily chart has formed a bullish cross, indicating that upward movement could occur in the near future. Furthermore, the Relative Strength Index on the same chart has crossed over into oversold territory. Going long may be the wise choice for forex traders today.

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.com (Dublin) – The yen has continued on its advance against the dollar for the third day as signs of deteriorating Europe debt crisis signals difficulties in economic growth in major world economies. The yen also advanced as investors speculate that the Bank of Japan will refrain from adding stimulus in the economy hence allowing the currency to strengthen. The safe haven demand which was sparked by the deteriorating Asian stock has pushed the Japanese currency to a one-month high versus the euro. This came as a court in Germany showed signals of considering a case that may decide the future of the monetary union’s bailout mechanism.

Increased turmoil in Europe has led the 17-nation to decline against most major currencies in the world with the currency declining to 0.2 percent from a record low against the Australian dollar. This came prior to some data from Germany expected to show inflation slowed and stagnation in manufacturing in the euro region. The yen increased against the dollar as the greenback experienced difficulties in demand prior to the release of the Federal Reserve meeting minutes.

According to Callum Henderson who is the Global Head of Currency Research in Singapore at Standard Chartered Plc, the BOJ is set to make further easing on its policy but it will not be at this meeting. If this is the scenario, the yen will continue to strengthen against the US dollar and the greenback which is detrimental to the country’s economy.

The yen traded at 79.35 per dollar during the Asian trading session from a close of 79.43 yesterday. The Japanese currency also traded at June 5 high of 97.10 against the euro before losing to 97.31 which is close to its yesterday’s close in the New York session. The 19-nation currency was trading at $1.2263 down from 1.2259 it closed yester after it touched $1.2235 which is the lowest it has been since July 2010.

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