Month: July 2012

By JW Jones, OptionsTradingSignals.com

Today has been quite a trading session with risk assets rocketing higher after Mario Draghi of the European Central Bank reiterated what has already been stated. The S&P 500 Index (SPX) is posting some nice gains, but price has not taken out the recent ascending trendline illustrated in the daily chart of SPX shown below. Until that ascending trendline is taken out, the bears remain in control of the price action.

S&P 500 Index (SPX) Daily Chart

Today’s rally has certainly served to work off short term oversold conditions. With the first GDP estimate for the 2nd Quarter scheduled for tomorrow things could get interesting. In the meantime, the closing price today is key. My expectation is that we will not see the S&P 500 Index push back above the ascending trendline today. For the price action to flip back bullish, we need a much stronger than expected GDP result tomorrow.

Another key daily chart which helps provide support that the bears remain in control of the price action is the Russell 2000 Index (RUT). The RUT has given back roughly 50% of its entire move and at this point has failed to even regain the 200 period moving average on the daily chart. Price action would need to climb over 20 points to simply backtest the breakdown level illustrated below.

Russell 2000 Index (RUT) Daily Chart

As long as the RUT holds below the key rising trendline, the bulls must be questioned. However, should the S&P 500 Index and the RUT push back above the ascending trendlines on their daily charts I will become much more constructive regarding the short to intermediate time frames for risk assets.

The other key chart of the day can be found no further than the U.S. Dollar Index futures. The U.S. Dollar Index futures absolutely collapsed today and move all the way down to test the 50 period moving average on the daily chart. So far, the short-term rising trendline has offered support along with the 50 period moving average and the Dollar has bounced sharply higher.

U.S. Dollar Index Futures Daily Chart

As long as price holds above the short-term rising trendline, the Dollar will be able to continue to push higher from this level. Should a breakdown occur we have even more support below around the $81 price level. After a move this strong, it could take days and maybe even weeks for the Dollar to regain its footing. However, the forthcoming Federal Reserve announcement next week will likely seal the Dollar’s fate.

Gold and silver futures are both trading nicely higher on the session in light of the weaker Dollar. However, both precious metals have faded later today as the Dollar started to drift back to the upside. Gold and silver are trying to breakout, but we need to see some continuation before I intend to get involved.

Gold Futures Daily Chart

Sometimes weak breakouts in price action can lead to ugly reversals. I’m not suggesting that a failed breakout will occur in gold and silver futures, but I remain cautious as the breakout so far does not have me totally convinced. Volume in silver is not spiking like it should be and gold volume is also weak considering the possibility that major breakouts are taking place.  Another element that is simply not confirming with strong price action or volume is the gold miners. On a day like today, all that they can muster is a relatively small gain on super light volume. Caution is warranted!

Oil futures are also not shooting considerably higher even though the Dollar remains under pressure. To me, today seems like it could be a misdirection day based on the price action and lack of volume we are seeing to the upside in hard assets like gold, silver, and oil. In addition, volume in the major equity indices and futures is super light. For now, I am going to remain cautious and will likely look to avoid taking on any major risk until the dust settles on the GDP number and the Fed’s future decision. Sometimes sitting in cash is not so bad afterall!

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Jw Jones

By forexindustryinsider.com

In a “technical amendment” notice made to the NFA’s Forex Requirements the NFA announced several new requirements for all FCMs/RFEDs operating in the US.  The NFA listed these as “minor amendements”, and while a couple of the changes minor, one is somewhat more substantial.

The full amendment reads:

Notice I-12-16

July 26, 2012

Effective Date of Technical Amendments to NFA’s Forex Requirements

NFA recently made several minor amendments to its forex requirements – amending NFA Financial Requirements Section 14 and the interpretive notice entitled Forex Transactions to conform the requirements to applicable CFTC Regulations and amending the interpretive notice related to bulk assignment and liquidation
to clarify the reporting responsibilities of assignor/transfer or FDMs
and assignee/transferee FDMs. These amendments, which are described more
fully below, do not impose any additional or new obligations on FDMs
and are effective immediately.

NFA Financial Requirements Section 14

NFA Financial Requirements Section 14 and CFTC Regulation 5.8(a)
require FCMs/RFEDs to calculate the amount owed to retail forex
customers and hold assets equal to or in excess of that amount in one or
more qualifying institutions. Currently, Section 14 requires the
calculation only with respect to U.S. customers while the CFTC
requirement applies to all retail forex customers. Therefore, NFA is
amending Section 14 to remove the reference to U.S. customers.

NFA’s Interpretive Notice entitled Forex Transactions

In September 2011, as required by the Dodd-Frank Act, the CFTC
implemented changes to its regulations to remove any references to
relying on credit ratings. To keep NFA’s requirements consistent with
the underlying rationale of the CFTC’s amendments, NFA is amending its
interpretive notice entitled Forex Transactions to remove
references to credit ratings as a factor NFA considers in determining
whether to approve an FDM’s affiliate or an unregulated person as a
person which the FDM may use to hold firm assets or to cover forex
transactions for purposes of calculating adjusted net capital.

NFA Interpretive Notice entitled NFA Compliance Rule 2-40: Procedures for Bulk Assignments or Liquidation of Forex Positions: Cessation of Customer Business

NFA is amending its interpretive notice on bulk assignments and
liquidation of forex positions to clarify that immediately after the
bulk assignment, liquidation or transfer, Assignee/Tranferee FDMs must
provide NFA with a list of affected accounts and the value of each
account as of the date of the transaction.

More information on this Interpretive Notice can be found in NFA’s March 8, 2012 Submission Letter to the CFTC. Questions concerning these amendments should be directed to Rachel Brandenburg, Manager, Compliance at [email protected] or 312-781-1472 or Sarah Walsh, Manager, Compliance at [email protected] or 312-781-1202.

Original text here
The first amendment to Section 14 of the NFA Financial Requirements should make clients sleep easier and will require brokers to hold not only a percentage of US clients’ funds in a qualifying bank but also a percentage of non-us clients’ assets as well.  Where a US RFED may have 400 US clients with a total of $4million on deposit, and 250 non-us clients with a total of $2 million on deposit the broker used to be required to keep between 10-40% of that $4million on deposit will not be required to keep between 10-40% of the entire $6 million on deposit.

All in all, the more funds a broker has in their bank, the safer they are from liquidation – That is unless your broker has been forging bank statements for the past 20 years.

Article by forexindustryinsider.com

By TraderVox.com

Tradervox.com (Dublin) – Speculation Bank of England will expand its stimulus program again rose after UK’s Gross Domestic Product shrunk more than the market was expecting.  On announcement, the pound fell to its weakest in six months against the euro as investor searched for safety. The report also resulted to a decline in two-year gilt yields to a new low. Another report from the Confederation of British Industry indicated the UK manufacturing confidence dropped in July pushing the sterling pound lower against most of its major trading peers.

Nick Parsons, who is the head of research for Europe and UK at National Australia Bank Ltd, said that despite the market being prepared for a poor number in UK GDP, the data was dreadful. He predicted that there will be more interest rates cut before the end of this year and confirmed the need for more quantitative easing. The UK GDP shrunk by 0.7 percent from its previous reading when it shrunk by 0.3 percent according to the Office for National Statistics report. The market was expecting a decline of 0.2 percent. According to CBI, the gauge of factory optimism showed a decline to negative 6 from a reading of 22 in April while the hiring intentions dropped from 16 to minus 2, which is the lowest reading since October.

The sterling pound which dropped by 0.4 percent last week, dipped 0.7 percent against the euro to trade at 78.35 pence per euro at the close of day in London yesterday. The currency had earlier fallen by 1 percent during intraday trading. Against the dollar the sterling lost 0.3 percent against the dollar to trade at $1.5467. The greenback gained 0.9 percent last week while the yen climbed 1.7 percent.

Valentin Marinov who is the head of Group of 10 Foreign Exchange strategy in London at Citigroup Inc said that the poor UK data will continue to weaken the sterling pound. He noted that the reason investors were buying UK’s gilts was because of its AAA rating and since this has been reviewed downwards, the sterling is in a precarious position.

Disclaimer
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Article provided by TraderVox.com
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By Central Bank News

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 26 July, 07:50 EST

The WHOLESALE-MARKET gold price leapt more than 1% inside an hour in London trade Thursday morning, setting 3-week highs above $1620 per ounce after European Central Bank chief Mario Draghi said “The ECB is ready to do whatever it takes to preserve” the single Euro currency.

“And believe me, it will be enough.”

Speaking in London one day after the gold price jumped following fresh rumors of more quantitative easing by the US Federal Reserve, Draghi did not specify plans, but did point to the high bond yields now being paid by Eurozone members such as Italy and Spain.

“To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” said the ECB president.

“We have to cope with the financial fragmentation, address these issues.”

Spanish bond yields retreated as debt prices rose today, while Eurozone stock markets jumped more than 1%.

The Euro currency leapt 1.5¢ within minutes of Draghi’s comments, knocking the gold price in Euros back below €42,500 per kilo – the 5-month high broken earlier on Thursday.

Gold still held just 4%, however, off September 2011’s all-time Euro high.

“It’s not obvious central banks have been effective, but they’re going to keep trying,” says John Stopford at the $98 billion UK asset manager, Investec, speaking to Bloomberg.

“Gold has shown itself sensitive to monetary policy announcements this year and any indication of further easing would buoy gold prices,” says HSBC precious metals analyst James Steel, looking ahead to Friday’s release of second-quarter US economic growth data.

“Gold has been the ultimate wealth preserver for millennia while currencies have tended to have shorter lives,” write J.P.Morgan analysts John Bridges and Shwetabh Shrivastava in a new report on the mining sector.

However, “In the short term declining inflation rates are not consistent with the case that previous monetary stimulus will drive gold prices higher,” they add.

“While we wait, investor confidence [in gold mining equities] is under pressure.”

After failing to follow gold’s sharp rise on Wednesday, silver prices also jumped today, hitting a 3-week high at $27.90 per ounce as industrial commodities including platinum also rose.

“We remain gloomy on the Euro crisis,” says a new report from Citigroup’s chief economist – and former Bank of England policymaker – Willem Buiter today,  forecasting a 90% chance of Greece quitting the 17-nation Eurozone by end-2013.

Those odds have been raised from Citi’s previous forecast of a 50-75% shot.

Picking up German magazine Speigel’s weekend claim that the International Monetary Fund won’t provide further aid to Greece once the Eurozone’s own permanent funding is in place, Citi’s report  also follows a move by the Moody’s rating agency to put German, Dutch and Luxembourg debt  on “negative outlook” by forecasting downgrades to all European sovereign states, including the UK.

The gold price in Sterling whipped violently as the Euro currency jumped and the Dollar fell, eventually trading unchanged by lunchtime in London at £1035 per ounce – back where it stood when the Bank of England announced another £50 billion injection of quantitative easing three weeks ago.

“We might see a bit more selling if the gold price stays above $1605 an ounce,” warned a Singapore-based dealer to Reuters overnight, with other Asian traders reporting a rise in scrap supply after Wednesday’s 1.5% jump.

But “physical buying has been supportive over the past week,” says a report from Standard Bank, and “Indian buying has also begun to show signs of improving.

“Seasonally, Indian demand for physical gold usually picks up in August ahead of the wedding season. Gold futures market participants in India are already anticipated this, as seen in their positioning.”

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

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 Central Bank News
    The central bank of the Philippines cut interest rates by 25 basis points to 3.75 percent, as expected by some economists, the third time this year the Bangko Sentral Ng Pilipinas has cut rates.
    Lower inflation allowed the bank to cut rates to help buffer the economy against a weaker global economy, the bank said in a statement.
    “On balance therefore the benign inflation outlook provides room for a reduction in policy rates as a pre-emptive move against the risks associated with the global slowdown,” the bank said.

    The Philippine inflation rate eased to 2.8 percent in June from 2.9 percent and gross domestic product rose by 6.4 percent in the first quarter from the same quarter last year.
    The Philippine central bank has a medium-term inflation target of 4 percent, plus or minus one percentage points for 2012-2014.
     The bank said price pressures have been receding and the risk is to the downside as pressures on commodity pressures are abating due to the weaker global outlook.
    “In the advanced economies, financial market stress continues to build up, and there remain concerns about the prospects for urgent fiscal adjustments and reforms. While the Philippine economy can rely on the resilience of domestic spending to sustain growth, additional policy support would serve as a buffer against strong global headwinds,” the bank said.
    The Philippine central bank’s overnight borrowing, or reverse repurchase rate facility (RRR), was cut to 3.75 percent, and it also cut the overnight lending or repurchase facility (RP) by the same amount to 5.75 percent. The overnight borrowing rate was already cut in January and March, each time by 25 basis points.
    
    www.CentralBankNews.info

Source: ForexYard

The euro saw gains across the board yesterday, after positive comments from an official at the European Central Bank regarding the euro-zone’s ability to combat the region’s debt crisis led to risk taking in the marketplace. At the same time, analysts continued to caution traders that any euro gains may be temporary due to rising Spanish bond yields. Today, US news is likely to create the most market volatility. Traders will want to pay attention to the Core Durable Goods Orders, Unemployment Claims and Pending Home Sales figures. Should any of the news indicate growth in the US economy, the dollar could see gains against the euro during the afternoon session.

Economic News

USD – Batch of US Indicators Set to Impact Dollar

The dollar fell against most of its main currency rivals yesterday, following positive euro-zone news which led to risk taking among investors. That being said, analysts were quick to warn that the overall trend for the dollar was still bullish, as global economic news remained negative. Still, the AUD/USD advanced close to 90 pips during the European session, eventually reaching as high as 1.0306. Against the Swiss franc, the dollar tumbled more than 75 pips to trade as low as 0.9867.

Turning to today, dollar traders will want to monitor a batch of US news that could potentially lead to market volatility. At 12:30 GMT, the Core Durable Goods Orders and Unemployment Claims are both scheduled to be released, followed by the Pending Home Sales figure at 14:00. Both the Core Durable Goods Orders and Pending Home Sales are forecasted to come in below last month’s figures. If the news comes in as expected, the greenback could see further losses during the evening session.

EUR – Euro Gains May be Temporary

Positive comments from an official at the European Central Bank regarding the euro-zone’s ability to combat the debt crisis in the region resulted in risk taking in the marketplace, which in turn led to broad gains for the common currency. The EUR/USD was up over 100 pips over the course of the day, reaching as high as high as 1.2169 before staging a downward reversal. The pair found support at the 1.2130 level. Against the Japanese yen, the euro saw gains of around 95 pips to peak at 95.18 before correcting itself toward the end of European trading.

Today, euro traders will want to continue monitoring any developments and announcements out of the euro-zone. Analysts are warning that given the current state of the Spanish economy combined with fears that the region’s debt crisis is impacting Germany, any gains the euro makes are likely to be temporary at best. Furthermore, if any of today’s news out of the US shows growth in the American economy, the euro could see losses against the dollar in afternoon trading.

Gold – Gold Advances Past $1600 amid Risk Taking

Risk taking in the marketplace due to positive euro-zone news sent the price of gold up more than $25 an ounce yesterday. A bullish euro typically leads to gains for gold, as it becomes cheaper for international buyers. The precious metal peaked at $1605.83 during mid-day trading before staging a mild downward reversal to stabilize at the $1602 level.

Today, gold traders will want to continue monitoring any developments in the euro-zone, particularly with regards to bond yields in Spain, which recently soared due to aid requests from several regions in the country. Should the euro once again turn bearish today, the price of gold could fall as a result.

Crude Oil – Crude Oil Tumbles Following US Inventories Figure

The price of oil tumbled by well over $1 a barrel during afternoon trading yesterday, after the US Crude Oil Inventories figure came in well above analyst expectations. The US data is typically used by investors to gauge demand in the world’s leading oil consuming country. After falling as low as $87.42 a barrel, crude staged a minor upward correction to reach the $87.60 level.

Turning to today, oil traders will want to pay attention to a batch of US news, set to be released at 12:30 and 14:00 GMT. If any of the data indicates expansion in the US economy, investors may take the news as a sign that oil consumption will increase, which could result in the commodity turning bullish during afternoon trading.

Technical News

EUR/USD

The Relative Strength Index on the weekly chart has crossed into oversold territory, indicating that this pair could see upward movement in the coming days. This theory is supported by the Slow Stochastic on the same chart, which is currently forming a bullish cross. Going long may be a wise strategy for this pair.

GBP/USD

A bullish cross has formed on the daily chart’s MACD/OsMA, signaling that an upward correction could occur in the near future. Furthermore, the Williams Percent Range on the weekly chart has fallen into oversold territory. Opening long positions may be the right choice for this pair.

USD/JPY

While the weekly chart’s Williams Percent Range has dropped into oversold territory, most other long term technical indicators place this pair in the neutral zone. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

USD/CHF

A bearish cross on the weekly chart’s Slow Stochastic appears to be forming, indicating that a downward correction could occur in the near future. Additionally, the Relative Strength Index on the same chart has crossed into overbought territory. Going short may be the wise choice for this pair.

The Wild Card

Platinum

The Williams Percent Range on the daily chart is currently in oversold territory, indicating that an upward correction could take place in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bullish cross. Forex traders may want to open long positions ahead of a possible upward breach.

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.

Article by AlgosysFx
New Zealand’s Official Cash Rate (OCR) was kept at 2.5 percent by the Reserve Bank of New Zealand (RBNZ) Governor Alan Bollard, saying that the bank is monitoring the Euro region for any signs of deterioration. “New Zealand’s trading-partner outlook remains poor, with several Euro area economies in recession,” Bollard said in a statement. “It remains appropriate for the OCR to be held at 2.5 percent.” The OCR has been untouched for 11 straight meetings, since March of last year, to allow for the economy’s recovery after its second largest city, Christchurch, was hit by the deadliest earthquake in 80 years.

Europe’s economic troubles worsened this week as Spanish borrowing costs reached unsustainable levels, and after its two regions signified that it would seek financial help from the government to pay their debts. With the situation in the Euro Zone getting out of hand, European Central Bank Council Member Ewald Nowotny said that there were arguments favoring to give the region’s rescue fund a banking license, which would enable it to have access to ECB lending. Such comment boosted demand for South
Pacific nation’s currencies.

Economic recovery in New Zealand has not been strong as initially anticipated, with a lagging rebuild in Canterbury and struggling retail sector as household demand weakened. But Bollard said that it should “grow modestly over the next few years,” as the rebuilding of earthquake-hit Christchurch is anticipated to boost the construction industry. He also adds that the economic outlook remains in line with that described in the June monetary policy statement, which is a forecast of 3 percent in 2014, slower than the 3.7 percent-projection in March. The June statement of monetary policy was written at a time when the Greece held a second general election, after the winners of the first elections failed to form a coalition
government.

Article by AlgosysFx Forex Trading Solutions