Month: December 2012

Source: ForexYard

After taking moderate losses during overnight and early morning trading yesterday, the euro was able to resume its upward trend later in the day. The common-currency’s bullish movement came largely as a result of risk taking due to recent monetary easing actions taken by the US Federal Reserve. As markets get ready to close for the weekend, traders will want to pay attention to the German Flash Manufacturing PMI, set to be released at 08:30 GMT, with a better than expected result likely to help the euro further.

Economic News

USD – US Core CPI May Impact Dollar Pairs Today

The US dollar was able to resume its recent bullish trend against the Japanese yen yesterday, amid speculations that the Bank of Japan will initiate a new round of monetary easing following elections this Sunday. The USD/JPY gained close to 20 pips during the European session to trade as high as 83.52. After losing some 30 pips against the British pound during the first part of the day, the greenback was able to stage a modest recovery following a better than expected US Unemployment Claims figure. The GBP/USD fell some 15 pips after the unemployment report was released, eventually reaching as low as 1.6128.

Today, dollar traders will want to keep an eye on the US Core CPI figure, scheduled to be released at 13:30 GMT. Should the figure come in above the forecasted 0.2%, the dollar could see additional gains vs. currencies like the GBP and JPY before markets close for the weekend. Conversely, a worse than expected CPI result may result in dollar losses. Additionally, attention should be given to a batch of euro-zone news. Risk taking could weigh down on the greenback if any of the indicators come in above their predicted levels.

EUR – German Indicators Poised to Give Euro Additional Boost

The euro resumed its upward trend during mid-day trading yesterday, as investor risk taking combined with the announcement of a new round of quantitative easing in the US boosted higher-yielding assets. The EUR/USD gained more than 40 pips toward the end of European trading, eventually reaching 1.3085, just below a one-week high. Against the British pound, the common-currency also came within reach of a one-week high after gaining some 20 pips to trade as high as 0.8110.

Today, euro traders will want to pay attention to several German indicators, specifically the Flash Manufacturing PMI and Flash Services PMI. Earlier in the week, the euro saw significant gains following a better than expected German ZEW Economic Sentiment figure. If either of the German indicators shows growth in the euro-zone’s biggest economy today, the euro could see additional gains before markets close for the weekend.

Gold – Gold Reverses Earlier Losses

After tumbling more than $30 an ounce earlier in the week, gold prices were able to stage a modest recovery during afternoon trading yesterday. Analysts attributed the bullish movement to the euro’s gains vs. the USD, which made gold cheaper for international buyers. By the end of European trading, the precious metal was trading just below the $1700 level.

Today, gold traders will want to pay attention to a batch of German news, set to be released at 08:30 GMT. Should the news result in further gains for the EUR/USD, gold could see additional gains during mid-day trading.

Crude Oil – Crude Oil Gains amid Risk Taking

The price of crude oil was able to gain more than $0.60 a barrel during mid-day trading yesterday, following the release of a better than expected US Unemployment Claims figure, which signaled further improvements in the US labor sector. By the end of European trading, the commodity was trading at the $86.70 level.

As markets get ready to close for the weekend, oil traders will want to pay attention to the US Core CPI figure, set to be released at 13:30 GMT. If the indicator comes in above the forecasted 0.2%, oil prices could see advance further during the afternoon session.

Technical News

EUR/USD

The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the coming days. Furthermore, the Williams Percent Range on the same chart is approaching the overbought zone, signaling that the shift could be downward. Traders may want to open short positions for this pair.

GBP/USD

While the Relative Strength Index on the daily chart is approaching the overbought zone, most other long-term technical indicators show this pair range trading. Taking a wait and see approach may be the best choice at this time, as a clearer picture is likely to present itself in the near future.

USD/JPY

Both the Williams Percent Range and Relative Strength Index on the weekly chart are currently in overbought territory, signaling that this pair could see a downward correction in near future. Furthermore, the Slow Stochastic on the same chart is close to forming a bearish cross. Opening short positions may be the best choice for this pair.

USD/CHF

The daily chart’s Bollinger Bands are narrowing, indicating that a price shift could occur in the near future. Furthermore, the Williams Percent Range on both the daily and weekly charts is approaching the oversold zone, signaling that the shift could be bullish. Opening long positions may be the smart choice for this pair.

The Wild Card

USD/MXN

The Williams Percent Range on the daily chart has dropped into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, a bullish cross has formed on the same chart’s Slow Stochastic. This may be a good time for forex traders to open long positions ahead of possible upward movement.

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

Optimism that the Euro Zone is making headway in resolving the debt crisis is believed to continue buoying the Euro opposite the US dollar today. Yesterday, EU officials struck an accord to create a single policeman to oversee important banks in the bloc and finally gave their nod to the immediate release of bailout loans to Greece. Meanwhile, vital gauges of the Euro Zone economy on tap for release today are likely to suggest that the region’s economy is steadily recovering from its slump.

European Union finance ministers achieved a landmark deal early yesterday that would bring many of the continent’s banks under a single supervisor, a move governments hope will be a major step toward solving the three-year-old debt crisis. The ministers said the ECB would begin supervising the most important and vulnerable banks in the Euro Zone come March 2014. As soon as it takes over, the ECB will be able to compel banks to increase their capital buffers and even close down unsafe lenders. Analysts say that with the deal in place, the Euro Zone has passed the first step to a banking union which is designed to cut the link between struggling banks and their governments.

In another dose of positive developments, Euro Zone ministers finally agreed to the immediate release of 34.4 Billion Euros of aid to Greece, with another 14.8 Billion Euros following by the end of March. The approval followed a successful bond buyback this week, which has halved the amount of bonds outstanding. The Eurogroup expressed confidence that a continuation of fiscal and structural reforms undertaken by the government will allow the Greek economy to return to a sustainable growth path. The development has managed to significantly cool down talks of a “Grexit” or Greek exit from the Euro. Instead, Prime Minister Antonis Samaras says the country now holds a major chance to exit from the crisis.

Today, market attention will likely be on key updates on the Euro Zone economy in the form of manufacturing and services activity gauges. Continuing the optimism, slight improvements in the figures for December are estimated. The French Flash Manufacturing PMI is set to rise from 44.5 points to 44.9 points to suggest a slower contraction while the French Services PMI is predicted to remain unchanged at 45.8 points. In Germany, its Manufacturing PMI is deemed to rise from 46.8 points to 47.1 points while its services sector is foreseen to have returned to an expansion with its PMI believed to improve from 49.7 points to 50.0 points in December. For the whole currency bloc, the Flash Manufacturing PMI looks set to increased from 46.2 points to 46.6, while the Flash Services PMI is projected to edge up by 0.3 points to 47.0. Amid such positive developments, a long position is advised for the EUR/USD today.

For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions

Source: ForexYard

Hey Everyone,

Below are some market trends for today.

Good luck!

-Dan

Gold- May see downward movement today
Support- 1686.21
Resistance- 1714.31

Silver- May see downward movement today
Support- 32.15
Resistance- 32.99

Crude Oil- May see downward movement today
Support- 86.01
Resistance-87.32

Dax 30- May see upward movement today
Support- 7534.29
Resistance- 7630.56

EUR/USD May see upward movement today
Support- 1.2989
Resistance- 1.3147

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

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

Source: ForexYard

After hitting a nine-month high at 83.90 during the beginning of Asian trading, the USD/JPY saw a minor downward correction and is currently trading around the 83.75 level. The pair’s recent bullish movement has largely been due to speculations that the Bank of Japan will initiate a new round of monetary easing in the near future.

A worse than expected German Flash Manufacturing PMI earlier today caused the EUR/USD to give up most of its gains from the overnight session. The pair fell close to 30 pips following the release of the indicator and is currently trading at 1.3080.

Main News for Today

US Core CPI- 13:30 GMT
• Analysts are forecasting the indicator to come in at 0.2%
• A better than expected result today could help the dollar extend its gains vs. the yen and may also boost crude oil prices

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

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

By MoneyMorning.com.au

Is it a bad time to buy stocks?

Our answer may surprise you. Bizarrely, although it could be bad news for stocks in general, it won’t be bad news for all stocks.

The next twelve months will continue the trend from the last twelve months. It will continue to be a stock-pickers market. But rather than investors picking blue-chips for yield, the action will come in the small-cap sector.

The Split in Australian Stocks

Yesterday we showed you the chart of the Emerging Companies Index against the financial stocks index. Here it is again:

Over the past six months dividend-paying financial stocks have taken off in anticipation of falling interest rates. At the same time investors ditched small-cap stocks and most other growth stocks.

But now that investors have got their yield play, what’s next?

Interest rates are low, and they’ll stay low for the foreseeable future. The knock on effect is lower dividend yields.

Most investors don’t realise that. Most investors look back to the 6%, 7% and 8% dividend yields of the 2000′s and think those days are still here.

They’re not. Just as the days of high-interest bank accounts are over (for the foreseeable future) so are the days of high dividend yields.

Why is that?

It’s a simple fact of investing that all investments trade relative to other investments. Put simply, if one income producing investment is riskier than another income producing investment, then the riskier investment should provide a higher income.

The higher income is your reward for taking on more risk.

But dividend yields aren’t static. They change as the market changes. So when bank deposit rates fall, investors look for higher returns elsewhere. This can result in investors buying shares, which pushes up the share price and therefore lowers the dividend yield.

You’ve seen that same scenario play out in the bond market as investors looked for the safety of bonds, which drove up bond prices and drove down bond yields (bond prices move inversely to bond yields).

We believe things are about to change. As dividend yields reach their new ‘norm’ investors will start looking at growth assets. And one of the biggest beneficiaries of this change looks set to be the biggest growth assets – small-caps.

Why Small-Cap Stocks Will Rise in 2013

But here’s the thing, large-cap stocks and small-cap stocks have reacted differently on the Aussie market than on the US market.

Look at the above chart again. There’s a 30 percentage point difference between large and small-cap stocks over the past year. Now look at the relationship between large and small-cap stocks in the US over the same period.

Below is a chart of the US Dow Jones Industrial Average (blue line), and Dow Jones US Small-Cap Index (red line):

Click here to enlarge

Of course there are a whole bunch of reasons why Aussie small-caps haven’t done as well as US small-caps.

The strong Australian dollar doesn’t help small-cap exporters, and because most resources are priced in US dollars it means fewer Aussie dollars when companies repatriate revenues and profits.

Another reason is that Aussie interest rates stayed higher than interest rates elsewhere in the world. Australia is also more affected by what happens in China…and for most of this year the Chinese economy has been on the ropes.

All of that has contributed to investors skipping growth stocks and heading into safer dividend stocks.

But despite these factors, companies tend to adapt. That’s the nature of capitalism. Companies that can’t adapt soon fail. Companies that can adapt replace them.

And because investors have ditched growth assets so savagely, it has created a sea of beaten-down, under-valued, and risky stocks.

It’s our bet that as investors look to boost their returns this is the end of the market they’ll look at. In anticipation of this, we have more open positions on the Australian Small-Cap Investigator buy list than at any point over the past two years.

And it’s not just the typical stocks you’d expect to find in a small-cap portfolio. Yes, there are resources stocks, but less than half of them are in energy or raw materials.

The others are in property, finance, media and technology. Some pay dividends, some are growth, and a couple of them offer a mixture.

Right now we believe small-caps have hit rock-bottom, and that as we head into 2013 a combination of the fabled Santa Rally and investor recognition of extremely cheap valuations will see growth assets (especially small-cap growth assets) begin to recover.

As we always tell our small-cap subscribers, it’s not risk free, but if things go as we expect there could be some spectacular returns in the coming months.

Cheers,
Kris

From the Port Phillip Publishing Library

Special Report: The Fuse is Lit

Daily Reckoning:
Why the Australian Dollar is Not as Strong as You Think

Money Morning:
Central Bank Prints More Money – No One Cares

Pursuit of Happiness:
The One Industry Where the State and Government Excels

Australian Small-Cap Investigator:
Why Invest In Small-Cap Stocks? And Why Now?

By MoneyMorning.com.au

‘Economists believe the federal government can ditch its much promised budget surplus without damaging its triple-A credit rating.

‘Treasury reportedly has advised the government to dump its commitment to a surplus, warning a slump in nominal economic growth poses a threat to revenue.’ – AAP

Don’t say we didn’t warn you.

Get ready for Australian government debt to take off…whoever wins next year’s federal election.

It already stands at $259 billion. That’s about 65% of Aussie government spending. That’s right, 65%. Most people still think the Australian economy is different to every other economy.

But look, don’t get us wrong. We’re not in favour of surpluses either. We look at government budget deficits and surpluses this way…

A surplus means the government is taxing too much.

A deficit means the government is spending too much.

And a balanced budget means the government is doing both.

As far as we’re concerned, the best government is no government. But we’ll leave that theme for our twice weekly eletter, Pursuit of Happiness.

But it’s not just the rising debt levels to look out for.

The economists in the AAP report clearly believe that government stokes the economy.

But that’s not true.

As we explained yesterday, it’s private enterprise that makes the economy tick. Yet the more the government borrows and spends, the less money there is for private enterprise to invest in their businesses.

Cheers,
Kris

From the Port Phillip Publishing Library

Special Report: The Fuse is Lit

Daily Reckoning:
Why the Australian Dollar is Not as Strong as You Think

Money Morning:
Central Bank Prints More Money – No One Cares

Pursuit of Happiness:
The One Industry Where the State and Government Excels

By MoneyMorning.com.au

The Federal Reserve embarked on QE ‘infinity’ earlier this year.

That was when it committed to keep printing a set amount of money each month until unemployment fell to a level it was comfortable with.

It announced – let’s call it QE ‘infinity and beyond’. Fed chief ‘Buzz’ Bernanke is taking experimental monetary policy to a whole new level.

Not only will the Fed keep printing more money for now. It’s also written itself a licence to print whatever it takes to get the US economy growing strongly again. In short, you shouldn’t expect US rates to rise again until inflation has gone beyond the point of being a clear and present danger.

The market had been pricing in at least some sort of action from the Fed. So stocks in the US, for example, ended up flat as investors fretted over the fiscal cliff.

A Licence to Print Money

The Fed declared it would print an extra $45bn a month to buy Treasury bonds (US government debt). This replaces the existing ‘Operation Twist’ program that’s about to end.

That’s on top of the $40bn a month in mortgage-backed bonds it began buying in September. So the Fed is now printing $85bn a month.

That was all expected. But the Fed went even further.

[The] Bank of England has an explicit inflation target. We all know by now that it couldn’t give two hoots about this target. But in theory, it’s meant to keep the consumer price index (CPI) rising at a rate of about 2% a year.

The Fed has never had any such explicit target. There was always a vague notion that it would keep inflation at a similar 2% level, but nothing set in stone.

Until now, that is.

The Fed has said it’ll keep the main US rate (the Federal Funds rate) at between 0% and 0.25% until and unless one of two things happens.

Either unemployment has to fall to 6.5% or lower. Or inflation ‘between one and two years ahead’ has to be projected to be no more than 2.5%. The Fed doesn’t expect either of these things to happen until 2015.

This is a pretty big move. For one thing, that’s a very loose inflation target. It’s a full half-percentage point above the Fed’s ‘longer-run’ goal of 2%. It’s also based on ‘projections’. We all know how little projections are worth.

You can project whatever you want to project. Mervyn King constantly justifies the Bank of England’s lack of action on inflation using those wonderful fan charts that cover just about every eventuality, yet always seem to have the Bank being bang on target within two years’ time.

So the Fed is setting an official inflation target that gives it an awful lot of leeway for ignoring inflation as long as it can pretend that it’s ‘temporary’.

Meanwhile, it’s also given itself a licence to print more money at any point that the employment rate looks like faltering. As long as the jobless rate is sitting at above 6.5%, the Fed can justify any amount of money printing it wants. All it needs to do is to say that employment isn’t growing fast enough for its liking.

The Rising Threat

What does this all mean? It means the Fed is fully committed to doing whatever it takes to get the US economy going again. QE isn’t an emergency measure anymore. It’s standard monetary policy as far as the Fed is concerned. If the economy isn’t chugging away fast enough, pump a bit more money into the tank.

This attitude makes it even more likely that it’ll do something stupid and let inflation get out of control. The Fed will be so scared of derailing any recovery, that it won’t react quickly enough to tackle inflation when it arises.

James Ferguson – who in the past rightly argued that the initial bouts of QE would not lead to rampant inflation – wrote earlier this year about why he thinks the Fed is now on dangerous ground with QE.

With the economy no longer on the brink of a deflationary collapse, there’s a serious risk that QE could be highly inflationary. Yet now the Fed is doing even more of the same.

In any case, what does this mean for your money? Well, you should hang on to gold. It’s the best way to insure yourself against a potential currency catastrophe.

John Stepek
Contributing Editor, Money Morning

Publisher’s Note: This is an edited version of an article that first appeared in MoneyWeek

From the Archives…

How You Can Use Small-Cap Stocks to Leverage Your Share Returns
7-12-2012 – Kris Sayce

How to Make Cash-Like Returns Using Shares
6-12-2012 – Kris Sayce

How Long Can the Market Ignore These ‘Warning Signs’?
5-12-2012 – Murray Dawes

Is There Any Good News to Come from the US Debt Crisis?
4-12-2012 – Dr. Alex Cowie

Buy Small Caps Now While Investors Are Crying
3-12-2012 – Dr. Alex Cowie

By www.CentralBankNews.info     Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news

Source: ForexYard

The JPY tumbled on Tuesday against most of its main currency counterparts on renewed plans for a Japanese banking stimulus and U.S. housing data. Firstly, U.S. housing data showed better-than-expected results. This led to a drop in demand for safe-haven currencies, such as the JPY and USD. Additionally, forex traders are dissuaded on putting big sums of money in the Japanese currency as Japan’s economy is scheduled to shrink by 13.1% this quarter. T

he Bank of Japan (BoJ) concludes their 2 day meeting later today, and it is expected that they are going to unveil an aggressive plan to tackle the Japanese recession. This is in coordination with Japan’s government, which is scheduled to push through the 3rd stimulus through Japan’s parliament of over $2 billion for Japan’s banks.

The leaks from the BoJ yesterday that it will continue lending large amounts of money to banks led to a rally in Japan’s stock market. This was also spurred by the stock market rally on Wall Street. These events led to a higher risk appetite in Japan, and therefore a bearish Yen. The Yen closed down 14 pips against the USD at 98.44. This is significant, considering both currencies are safe-haven and usually show little volatility when trading against each other. The JPY rose against the Pound, as traders preferred the Japanese currency over the unstable British economy. However, against the EUR, the JPY closed down about 60 pips at 128.44. Today, Traders are advised to make their trading decisions in regards to the Yen on the conclusion of the BOJ Press Conference.

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.

Being contained by 1.0624 (Sep 14 high) resistance, AUDUSD pulls back from 1.0585, suggesting that a cycle top is being formed on 4-hour chart. Range trading between 1.0500 and 1.0585 would likely be seen in a couple of days. As long as the channel support holds, the fall would possibly be consolidation of the uptrend from 1.0287, and another rise to test 1.0624 resistance is still possible. On the downside, a clear break below the channel support will suggest that the uptrend from 1.0287 has completed at 1.0585 already, then the following downward movement could bring price back to 1.0000 zone.

Daily Forex Forecast