Month: June 2013

By ForexAbode.com

GBPUSD had fallen very strongly since the beginning of 2013 to March second week. The fall had taken the currency pair from 1.6381 to 1.4831 i.e. 1550 pips. The rise from that low was strong and after some resistance near 38.2% retracement of that fall, the pair had managed to break over it. The upward gains took it to 1.5606. The interesting point here is that 1.5606 was the exact 50% retracement of the move from 1.6381 to 1.4831. A strong resistance was faced at that level for 2 weeks during end of April and 1st week of May 2013. The failure had a strong fall. The second rise from the recent bottom of 1.5008 tried again struggled against this resistance of 50% retracement.

GBPUSD’s Struggle

The Break Over 50% Retracement Resistance

At last the pair broke the above mentioned resistance cans went as high as 1.5751 but is mainly remaining in a sideways mode. We will see later where the resistance is coming from.

Another Resistance Ahead

The above mentioned resistance was not the only one to be careful about. Since the beginning of September 2009 to mid-February 2013 i.e. for almost three and a half years the price action of GBPUSD had been inside a slightly ascending triangle. During February 2013 the pair had broken below the support trend line very strongly. This break after such a long time had fueled the bearish sentiments.

The Trend Lines

The interesting point is that now this previous support trend line seems to have turned into a resistance trend line. The previous upward jump had found resistance just below this line during April last week and May first week of 2013. And now the recent upward move is again finding resistance near the same trend line. Interestingly the 61.8% retracement from the above mentioned move and the resistance of the support turned resistance trend line fall in the same range. If this resistance holds then another bigger  fall cannot be ignored. However a break of this resistance may see GBP/USD to test the previous resistance line by moving towards 1.6300 or higher.

You may also like to check daily and weekly updates at http://www.forexabode.com/

Connect with the author at Google: +Himanshu Jain.

By www.CentralBankNews.info

By www.CentralBankNews.info     Turkey’s central bank held its benchmark interest rates steady but will provide up to 9.0 billion lira in liquidity through weekly auctions, saying a flexible monetary policy stance was appropriate given  “continued uncertainties about the global economy and volatility in capital flows”
     The weekly and monthly funding auctions comes after the Central Bank of the Republic of Turkey (CBRT) last week tightened short-term policy by reducing liquidity and holding unsterilized foreign exchange sales due to “excessive volatility” in the foreign exchange market.
    Following a meeting of its Monetary Policy Committee, the CRBT said the weekly auctions beginning June 19 would provide between 0.2 and 9.0 billion lira and the upper limit for one-month repo auctions had been set at 0.5 billion lira.
    The CBRT said if there was any need to change the upper or lower limits of the funding required, either via the weekly or monthly auctions, it would announce the changes.
    The central bank said domestic demand continued to show a healthy recovery while exports were slowing down due to weak global demand and there was increased uncertainty about monetary policy due to changes in global capital flows.

    Like most emerging markets, Turkey’s lira and its markets have been under pressure in recent weeks from an expected reduction in asset purchases by the U.S. Federal Reserve. In addition, Turkey has also been suffering from domestic political unrest.
    The lira has lost 4.8 percent since early May when it started to weaken and was quoted at 1.88 per U.S. dollar today. Since the beginning of the year, it has lost some 5.3 percent.
    “In this context the effect of exchange rate movements on domestic demand and the increase in loans will be closely monitored,” the central bank said.
    The depreciation of the lira tends to boost inflation through higher import prices. Turkey’s inflation rate rose to 6.51 percent in May from 6.13 percent in April, but down from 7.29 percent in March.
    The recent outflow of capital from Turkey is in stark contrast to years of inflows which has put upward pressure on the lira and stoked local asset prices.
    The central bank has been cutting its benchmark and overnight interest rates in recent months to discourage the inflow of capital and boost domestic economic activity.
    Most recently in May, the CBRT cut its benchmark, one-week repo rate by 50 basis points to 4.5 percent, and its overnight borrowing rate – the ceiling in the central bank’s interest rate corridor – was cut by the same amount to 3.5 percent and the overnight lending rate to 6.5 percent.
    It was the central bank’s second cut in its one-week repo rate this year, bringing this year’s rate cuts to 100 basis points following a 25 basis point cut in 2012.
    Turkey’s economy has been recovering after economic growth slumped to 2.2 percent in 2012 from 8.8 percent in 2011. It is expected to grow by around 4.0 percent this year.
    In the first quarter of this year, Turkey’s Gross Domestic Product expanded by 1.6 percent from the fourth quarter for annual growth of 3.0 percent, up from 1.4 percent.

    www.CentralBankNews.info

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 18 June 2013, 07:00 EDT

GOLD drifted to a one-week low below $1380 an ounce Tuesday morning, as silver dipped below $21.80 an ounce, with stocks and commodities broadly flat on the day ahead of tomorrow’s US Federal Reserve decision, with analysts speculating on whether the Fed will give details of when and how it might slow down its quantitative easing program.

“The outlook for the gold price remains negative from a technical perspective,” says Karen Jones, head of FICC technical analysis at Commerzbank.

“Following the mid-April plunge, the market has consolidated tightly sideways in a converging range. We are viewing this as a potential symmetrical triangle. A close below $1352 will complete the pattern and trigger another leg lower we suspect.”

“We believe that the dramatic gold sell-off in April,” adds a note from Societe Generale, “combined with the prospect of the Fed starting to taper its QE program before year-end, has resulted in a paradigm shift in many investors’ attitude towards gold. This is likely to result in continued large-scale gold ETF selling this year and next.”

The SPDR Gold Trust (ticker: GLD), the world’s largest gold exchange traded fund (ETF), has seen outflows this year amounting to a quarter of the gold it held to back its shares at the start of January.

In Washington, the Federal Open Market Committee begins its latest two-day monetary policy meeting today, with a decision due tomorrow.

“[There is] much speculation as to whether [the FOMC] will detail an exit strategy [from QE],” says a note from Dutch bank ING.

“While there are views that the Fed will want to see bond yields lower, or certainly highlight that policy rates will not be raised for a significant period, we see merit in the view that transparency is the best policy choice – and it is time to more formally outline the normalization process.”

ING also argues that Fed policy uncertainty “has seen soaring volatility destroy the carry trade”, whereby investors could borrow cheaply in Dollars to invest in emerging market assets.

Fed chairman Ben Bernanke meantime has stayed in his job “longer than he wanted” and has “done an outstanding job”, according to US president Barack Obama, speaking in an interview broadcast Monday.

Over in the UK, consumer price inflation rose to 2.7% last month, up from 2.4% a month earlier, figures published Tuesday show. Mervyn King steps down as Bank of England governor at the end of this month. For the 120 months of his tenure, inflation has been above the Bank’s target in 84 of them.

Over in India, the world’s biggest gold buying nation, the authorities “are not at the end of our wits as far as gold imports are concerned,” economic affairs secretary Arvind Mayaram said Monday.

“If required, there are other measures that can be taken and they will be considered at the appropriate time.”

India has raised import duties on gold twice this year – taking them to 8% – and has also restricted imports of gold on a credit basis to only those who will re-export it. Gold and silver was India’s second biggest import item last year and has been cited as a major contributor to the country’s current account deficit.

Over in China, the world’s largest stock market-listed jewelry chain Chow Tai Fook today reported a 13% drop in profits for the year to March, a filing with Hong Kong’s stock exchange shows. The company cited “declining confidence of domestic consumers” as a factor behind the fall in profits.

Sales of silver bullion American Eagle coins by the US Mint meantime are set to record their best first-half-of-a year since at least 1986 – the year from which US Mint sales data start – with over 24 million ounces sold so far this year.

CME Group’s new 1000 ounce silver futures contract saw 25 lots of the September contract traded in its first day of trading yesterday, with 5 lots of the December contract traded. By comparison, volume for the standard 5000 contract was 11,028.

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. Ben can be found on Google+

(c) BullionVault 2013

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 George Leong

All of you know how I feel about the Japanese stock market and the economy in general.

Yes, I was wrong in the past when I suggested traders and investors stay away from the Japanese stock market. The benchmark Nikkei 225 has been the top performer this year; in fact, at one point on May 23, the stock index was up a hefty—though undeserved—70% or so.

Yet despite all of the hoopla regarding how Japanese Prime Minister Shinzo Abe has become a rock star in Japan’s equivalent of Wall Street due to the country’s massive stimulus regime referred to as “Abenomics,” I still remain unconvinced about the Japanese stock market.

Just like the Federal Reserve here with Ben Bernanke, Abenomics is all about driving the economy by flooding the monetary system with easy and, essentially, free money. (Can you say “Ponzi scheme”?) And when money is free, it is expected that consumers and corporations will spend it. But the problem, just like the one we’re experiencing here in
America, is that the flow of money down the pipeline will create an artificial Japanese economy that will stay stuck in a recession—despite the growth.

As I mentioned previously in these pages, the flowing of easy money is dangerous because spenders become addicted to the near-zero interest rates.

Just recall the use of the term “monetary cocaine” by Richard Fisher, president of the Dallas Federal Reserve Bank, in reference to the Fed’s stimulus. (Source: “Fed’s Fisher: We Cannot Live in Fear of ‘Monetary Cocaine,’” Reuters, June 5, 2013.)

The failure of the Bank of Japan to offer up new stimulus at last week’s monetary meeting and the subsequent selling in the Nikkei stock market were red flags that we need to watch.

It’s no different from here; just like the U.S., Japan is currently being driven by the easy money—and traders want more of it. Hold back the easy money, and you’ll see the stock market fall.

In the Global Economic Prospects report produced by the World Bank, Japan’s gross domestic product (GDP) growth projection was raised to 1.4% from the previous 0.8%. According to the World Bank, “In Japan, a dynamic relaxation of macroeconomic policy has sparked an uptick in activity, at least over the short-term.” (Source: “Japan growth estimate
gets World Bank boost,” The Japan Times News, June 13, 2013.)

The upward revision is encouraging for Japan, but it doesn’t justify the associated rise in the Japanese stock market. Not even close.

Moreover, last year’s launch of Abenomics will add to the already woeful debt levels in Japan, and, just like the massive debt buildup in America, this will not be good.

The Nikkei 225 has retrenched 22% from its high on May 23, and I don’t think a bottom has even been reached yet. I said it before and I will repeat it now: I would stay out of the Japanese stock market.

And just like the United States, Japan will find out very soon that its stock market will be dependent on the flow of easy money to continue its uptick. This is a risky proposition, especially as the global interest rates begin to ratchet higher. And just like America, the Bank of Japan is running a massive Ponzi scheme that could—very simply—collapse.

This article Abenomics: The Biggest Ponzi Scheme in History? was originally published at Investment Contrarians

By HY Markets Forex Blog

The European market is expected to start in a negative territory on Tuesday, while investors are still focused on the outcome from the Federal Reserve’s two-day meeting, which is expected to start later today. Investors are waiting for more information on whether the central bank would proceed with reducing its bond-buying program, which should be addressed in the Fed meeting.

Futures of the French CAC 40 slid 0.30% to 3,850.80 at 6:09am GMT, while the Germany’s DAX futures lowered by 0.26% to 8,199.30, UK FTSE 100 futures closed at 0.01 to 6,317.30 as of the same time. Futures of the pan-European Euro Stoxx 50 dropped by 0.50% to 2,689.50 as of 6.09am GMT as well.

The main focus on the Federal Reserve two-day meeting will be possible hints and clues as to when the central bank will slow down the $85 billion monthly bond purchases.

“We expect this nervousness to continue to dominate until the Federal Open Market Committee [FOMC] rate decision and Chairman Bernanke’s press conference on Wednesday, with asset prices remaining vulnerable to news headlines, keeping the volatility elevated,” analysts at Barclays wrote in a note.

The government of Spain will try and sell Treasury bills between 6 and 12 months, with a maximum target of five billion Euros.

German’s ZEW economic data for the month of June is expected to indicate a slight improvement of 37 points after the recording of 36.4 in May. While the euro zone as a whole, the ZEW index is expected to pick up to 29.4 in June from 27.6 in the previous month.

The post European stock set to open negative appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

West Texas Intermediate crude traded flat on Tuesday after reaching the highest price in more than four months.

WTI crude futures slid by 0.04% closing at $98.00 per barrel, while Brent crude increased by 0.12% trading at $105.58 per barrel, both as of 6:30am GMT.

According to a survey taken by Bloomberg, U.S crude supplies probably fell by 500,000 barrels last week.

The empire state manufacturing index and NAHB Housing market Index have had some influence on the market sentiment. Reports show that the Empire State Manufacturing index increased from 1.43 in May to 7.84 in June.

According to reports, the central bank in New York said manufacturing conditions in the second district improved modestly in June.

While the National Association of Home Builder’s (NAHB) Housing Market Index rose from 44 in May to 52 in June, exceeding predictions of a rise of 45.

The Energy Information Administration is expected to release its reports on US oil inventories for last week, later today.

Investors main focus this week, is the Federal Reserve’s two-day meeting which will commence later today. Investors are looking out for any possible hints or clues as to what the central bank intentions for its stimulus efforts, which is expected to boost the global growth in the coming years.

Investors have raised concerns over the possibility of the conflict in Syria spreading into larger oil producing regions such as Iraq and KSA. These concerns have been added to the security risk for supplies of the black gold.

The post WTI crude trades close to four-month high appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By Profit Confidential

This week marks the unofficial beginning of second-quarter earnings season as Oracle Corporation (ORCL) reports. Next week, it’s NIKE, Inc. (NKE).

These two benchmark companies offer the first glimpse of business conditions for multinational corporations. What they report is material.

Last quarter, NIKE surprised Wall Street with excellent relative growth in revenues and earnings, particularly in the North American market. Oracle came in just under consensus. The stock’s been treading water for the last several months.

Corporations have been coy with their earnings guidance, both out of the collective uncertainty regarding the economy and to make it easier to beat the Street. It’s always a delicate dance that corporations play with investors. Earnings are definitely managed, which is why it’s important to look at cash flow and other financial metrics to get a better understanding of a company’s performance.

If there’s one trend apparent in the financial results of large corporations, it’s that balance sheets have been getting stronger. And this bodes extremely well for dividend-seeking investors. I have a strong inclination this earnings season that we’re going to see continued increases in dividends and expanded share buyback programs to pay for them.

Generally speaking, I wouldn’t be buying this market, but I wouldn’t sell blue chip positions either. Market timing is always extremely difficult, but it’s pretty tough to make the case that stocks aren’t due for a break.

While there’s been some peculiar trading action over the last week in global capital markets, there is still an appetite on the part of big investors to buy stocks if earnings meet or beat consensus.

First-quarter earnings season saw corporations report revenues that were mostly underwhelming. Some of the best blue chips like Johnson & Johnson (JNJ) and PepsiCo, Inc. (PEP) really hit the mark with their earnings, and they did produce genuine sales growth that the stock market rewarded.

All the market wants to see is continued stability in earnings, along with genuine constant currency growth in revenues. It doesn’t have to be double-digits, but it does have to be real.

We have seen some good numbers from select corporations like Cabela’s Incorporated (CAB) and Costco Wholesale Corporation (COST), which are representative of improved consumer confidence. For a number of quarters now, corporations reported that price increases were not materially affecting demand. (See “Big Investors Still Buying Big-Caps; Will They Be Right?”)

One thing I’m not loosing sight of is the fact that this market has been due for a meaningful pullback for a number of months. A stock market correction is overdue and would be a very natural development after such strong capital appreciation.

This market won’t fight monetary policy, but I think it is looking for a catalyst to sell.

This week, it’s time for two corporations to produce: FedEx Corporation (FDX) and Oracle.

Article by profitconfidential.com

By Profit Confidential

China’s economy is slowing, but the rich in that country continue to get richer and are growing in number. I was reading the other day that Chinese investors are now some of the biggest purchasers of high-end real estate in the United States—Manhattan, in particular. It would not be a surprise to see a buyer from China lay down $10.0 million cash for a Manhattan loft after their first visit. Trust me: the money out of China is staggering and will only grow bigger.

Yet the super-rich may surprise you. Out of the approximately 200 billionaires in China, about 83 are politicians, so you know who really runs the country and is getting rich. (Source: Anderlini, J., “Chinese parliament holds 83 billionaires,” Financial Times, March 7, 2013, last accessed June 17, 2013.) That’s unbelievable, and you know that these wealthy politicians probably can do whatever they desire, worrying very little about any conflict of interest.

China also has about 1.3 million millionaires—which trails the United States at 5.9 million and Japan at 1.5 million, according to the Boston Consulting Group. (Source: Barris, M. and Jing, S., “China to Top Japan in millionaire stakes,” China Daily, June 1, 2013.)

For Father’s Day, you can satisfy your appetite with a three-course dinner at Morton’s at The Regent Hotel in Beijing for US$135.00, or how about champagne, wine, and beer for $80.00 each at the Senses Signature restaurant at The Westin Beijing.

But while the country is seeing a renaissance in wealth creation at a pace never seen in the history of the world, the fact is that 70% of the country can still only dream of a dinner at Morton’s. It would take months for the worker in the fields to earn enough for a meal at Morton’s.

Make no mistake about it; the wealth creation out of China is unbelievable. And trust me: it’s going to continue to grow as the gap between the rich and poor broadens further.

So while the country is seeing some stalling in its gross domestic product (GDP) growth, the rich will continue to have money to spend and spoil themselves with, buying lavish goods and services, including jet-setting to Paris and Italy to buy high-end goods on weekend trips.

What this means is that there is a vast opportunity for those companies dealing in the high-end goods and services, whether they are fashion, automobile, watches, or travel companies.

The country has become a target for companies looking for big spenders who are willing to plunk down big dollars for goods, which is why we are seeing a major push of luxury goods providers into China, including Tiffany & Co. (NYSE/TIF), Coach, Inc. (NYSE/COH), Michael Kors Holdings Limited (NYSE/KORS), BMW, Rolls-Royce Holdings plc, and Rolex, to name just a few. (Read “It’s Good Times for the Rich: Luxury Spending Surging Worldwide.”)

And in China, the money does grow on trees; it’s just a matter of owning the tree.

Article by profitconfidential.com

By Profit Confidential

There has been increased volatility in gold bullion prices as investors run from precious metals. According to data compiled by Bloomberg, gold bullion’s 60-day historical volatility reached 28.9% on June 13. This was the highest level since December of 2011. Average volatility over the past five years for gold bullion prices has been around 20%. (Source: Bloomberg, June 14, 2013.)

As the volatility continues in gold bullion prices, the fundamentals remain strong. Actually, demand for gold coins is unprecedented right now.

Aside from individual investors buying gold bullion, central banks continue to diversify their reserves into gold bullion as fiat currencies fail to protect their wealth. In spite of the decline in gold bullion prices, as has been well documented in these pages, central banks form Russia, Turkey, and Kazakhstan continue to add precious metals to their reserves.

Bullish stock advisors are forgetting that we are standing on the cusp of a global economic slowdown—an event that bodes well for gold bullion. It may be difficult for my readers to envision right now, but with the recent exodus by investors out of U.S. bonds, once the stock market starts declining, there will be few other “stores of wealth” for investors to seek aside from gold.

Major economic hubs have been slowing down for some time and now, they are taking with them smaller nations that rely on their demand. China, Japan, India, Australia, Germany, and France—they are all begging for economic growth.

But instead of getting growth, world economies are slowing. The World Bank lowered its forecast for global growth last week. It now expects the global economy to grow by only 2.2% in 2013, down from its previous estimate of 2.4%—and by the end of this year, I wouldn’t be surprised to see that forecast fall again

Meanwhile, while the politicians say there is no inflation, even the government’s own out-of-whack official figures show inflation is a problem.

The Producer Price Index (PPI), an early indicator of inflation, increased 0.5% last month (source: Bureau of Labor Statics, June 14, 2013)—annualized, that’s six percent a year in wholesale inflation that will eventually make its way to consumers!

The Federal Reserve continues to print $85.0 billion a month to purchase government bonds and mortgage-backed securities, even after seeing that aggressive money printing did not work for the Japanese economy.

Dear reader, the historical fundamental reasons that drive gold prices are still present. Gold bullion prices have come under pressure, because there’s a notion that the U.S. economy is improving and conditions are getting better. Imagine that: the U.S. economy has turned the corner because the Federal Reserve has printed trillions of dollars in new money! That doesn’t sound right to me; it actually sounds artificial.

Gold bullion prices still have a bright future. And I don’t expect the scrutiny in the precious metal to last much longer. When all the pieces of the puzzle come together, the gold bears will realize they were wrong.

What He Said:

“We will wish Greenspan never brought rates down so low as to entice so many consumers to have such big mortgages.” Michael Lombardi in Profit Confidential, April 27, 2004. Michael first started warning about the negative repercussions of Greenspan’s low interest rate policy when the Fed first dropped interest rates to one percent in 2004.

Article by profitconfidential.com