InvestMacro Forex News

April 24, 2012

Could Oracle Be the Next IBM?

Most of the major tech firms – Oracle (ORCL), EMC (EMC), Hewlett-Packard (HPQ), Dell (DELL) – continue to take steps toward looking more and more like IBM.

On January 22, 1984, Apple ran a television commercial introducing the Macintosh computer during the broadcast of Super Bowl XVIII. Inspired by George Orwell’s book 1984, a woman hurls a sledgehammer through a giant screen – in a fiery explosion – where a “Big Brother” figure is speaking to a bunch of nameless, unemotional faces.

The takeaway was, of course, that IBM (NYSE: IBM) was taking over the world. Buying a Mac would show off your individuality and support of independent thought.

That commercial was one of the most memorable and successful of all time. If the spot ran today, few would assume that the Big Brother character was IBM. A more logical assumption would be that it was Microsoft, Google, Facebook or, ironically, Apple itself.

Fact is, to this day, IBM remains firmly entrenched as the leader in enterprise technology. Its full-year sales – in the neighborhood of $100 billion – trumps the GDP of roughly 120 countries of the world.

It’s like a virtual Wal-Mart of information technology. In other words, when looking to fill technology needs, a Chief Information Officer is almost guaranteed to do business with IBM in some capacity.

“No one ever got fired for going with IBM,” goes the old corporate adage.

But that doesn’t mean an up-and-coming innovator can’t grab a nice chunk of market share. And earn us a fat profit along the way…

This Thoroughbred is Fast…

Most of the major vendors in this space – Oracle (Nasdaq: ORCL), EMC (NYSE: EMC), Hewlett-Packard (NYSE: HPQ), Dell (Nasdaq: DELL) – continue to take steps toward looking more and more like IBM. I realize that’s a bit counterintuitive. I mean, most “innovators” innovate. So why in this case is the course of action to mimic the leader?

Simply put, the strategy works. For starters, IBM has the broadest product portfolio, which enables its sales force to sell complete solutions. It’s akin to firing a shotgun versus a competitor’s rifle.

An IBM sales representative can combine many products and address a slew of customers’ needs with a single deal. Niche competitors must identify a sole need and provide a single solution, repeatedly. A shotgun always has a better chance of hitting the target.

More favorably still, with such clout, the IBM sales team bypasses mid-level managers, going straight to the top – the CEO or some other person with the name “Chief” in their title – to make the sale.

Big Blue is the standard-bearer. Period.

That being said, as an analyst embedded in the industry for 14 years, I can tell you that a handful of companies are beginning to close the gap in the race to rival IBM. I already mentioned the major horses in the field.

To the winner will go the spoils – incredible share price appreciation in the months ahead. So envy the investor who knows how to handicap this race. He’ll be the one cashing the winning ticket, as the others rip up theirs and order another beer. Who would you rather be?

Get Your Bets Down…

Oracle, Cisco and EMC have the talent, the expertise, and the willingness to make the needed changes to make a run at the finish. Hewlett-Packard is coming off significant changes and is well positioned, but likely lacks the resources to make a strong closing run. Dell is simply in a race above its class.

Leading Contenders (…And the Morning Odds)

Oracle (3:1) – With its acquisition of Sun Microsystems now complete, Oracle is a new player in the race to rival IBM. The company and its famous jockey Larry Ellison, have shown a willingness to make major splashes through large acquisitions. While new to this class of race, make no mistake, this horse knows how to win.

Bet on Oracle because it has the best chance of transforming itself into a bigger, broader entity.

EMC (5:1) – EMC is missing too much to be a serious contender. It lacks the services division and the systems divisions to go toe to toe with IBM.

EMC’s best strategy would be to cozy up nicely with Cisco. The companies enjoy a good relationship, but I would wait to see what happens before placing a big bet on EMC in this race.

Hewlett-Packard (10:1) – Hewlett-Packard already resembles IBM. That’s why they won’t surprise anyone and are unlikely to win at the end. A good company, yes. A good stock – sometimes. But the winner in this race – unlikely. Throw in a couple of years of management upheaval, and it would be amazing if this horse still knows what it was bred for.

Dell (50:1) – Dell is probably in the worst shape on this list. It may actually try to make a run at this strategy (the acquisition of Perot Systems a couple of years ago is an example) but it’s in no position to make a serious run. Dell would be better off wearing yellow – and staying afraid of the big boys. But it may not, and it may try to make a run. And if it does, it will not succeed. This company is beginning to understand the value of having a software portfolio, but this is potentially too little too late, at least for the foreseeable future.

IBM (even money, 1:1) – IBM shares have recently hit all-time highs. The strategy works. Even with a new CEO the firm is unlikely to be de-railed. In the race to “look like” IBM, is there anybody in a better position than Big Blue itself? Let the others try – they may have some success. But it will be IBM standing alongside any of the winners listed above.

Good Investing,

Gary Spivak

P.S. Although I think IBM is probably the safest play here, there’s one stock I think is better suited than the ones I mention above in challenging Big Blue.

To find out the stock I’m recommending to Investment U Plus subscribers today, click here.

Article by Investment U

April 24, 2012

Loonie Mixed on Mixed Reports

By TraderVox.com

Tradervox (Dublin) – Speculation of faster economic growth in Canada led the loonie to advance against most of its trader peers as euro tumbled over political turmoil in Netherlands and France. The Canadian dollar had fallen to the lowest against the US dollar as demand for safe assets boosted the greenback and the Japanese currency. The loonie later advanced against the US dollar after the Bank of Canada officials indicated that an increase in interest rate is likely to occur this year.

The Canadian dollar rose by 0.1 percent to trade at 99.13 cents per US dollar after touching 99.79 cents earlier. However, this gain could not be maintained after the release of Canada Retail Sales report. The report showed that Canadian retail sales notched lower on February to -0.2 percent lower than the market estimate of flat growth. The previous readings for January was at +0.5 percent.

After the release of the report, USD/CAD was pulled from sub 0.9900 level to 0.9920. However, the weakening loonie is balanced by a suffering greenback as Case-Shiller HPI report for the month of February showed a contraction of -3.5 percent. The USD/CAD cross is trading at 0.9906 just 0.01 percent up heading towards the first hurdle at 0.9930 the April 24 high exposing the 10 day moving average of 0.9948 then 21 day moving average at 0.9956 and then the April 17 high of 1.0012.

The report released earlier today showed that the Core Retail Sales without the automobile factor surpassed market expectation hitting 0.5 percent against 0.4 forecasted. It had risen from negative 0.8 percent registered in January.

A report showing that US New Home Sales plunged by 7.1 percent to 0.328 million in March has caused the US dollar to lose grounds against most pairs including the Canadian dollar. The new data is expected to affect the FOMC announcements hence causing panic in the market. The Canadian dollar has increased by 0.16 percent since the release of the report.

Disclaimer
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Article provided by TraderVox.com
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April 24, 2012

Dwolla: Threat to the Financial Services Industry?

Article by Investment U

Dwolla may well be one of the biggest “disruptors” on the financial services scene today.

Here is a bit of financial trivia. In the 116-year history of the Dow Jones Industrial Average, which component stock was the first (and only) to go into corporate liquidation?

Does the name “U.S. Leather” ring a bell?

In 1896, when the DJIA was put together, U.S. Leather carried a market cap of $2 billion (in today’s dollars). From boots to bookbindings, belts and buggy whips – leather was as much a key ingredient of the fast-growing national economy as steel or coal. Manufacturers had no other choice if they needed a material that was tough, durable and flexible.

All that changed in the twentieth century’s first decade. Autos began to displace horses as means of transportation. The first rubber-soled shoes hit the market, and so did the first pneumatic rubber tires. Rayon, the first manmade fiber, went into mass production in 1905.

U.S. Leather’s monopoly position and profits disappeared. By 1920, the keepers of the DJIA booted the company out of the index.

So here’s what I’m wondering… Is the protected, insular world of big banks about to go the same way as U.S. Leather?

Here’s what got me thinking about the analogy. One word: Dwolla.

Financial “Disruptor”

Dwolla.com is a new, but fast growing payments processing company based in Des Moines, Iowa.

If you (and a merchant) have both registered with Dwolla and downloaded the company’s smartphone app, you can buy goods and services, just like any card-based transaction. And like a debit card, Dwolla is tied into your bank account. If you buy a cup of java at a coffeehouse, Dwolla debits your account, and credits the merchant’s (at near instant response times). Simple enough.

But that doesn’t explain Dwolla’s huge growth since it opened its doors a little over two years ago. Back then, it was processing a tiny $200,000 in transactions a month. A year later, that figure grew to $4 million, and now – $30 to $50 million a month.

Here is why Dwolla may well be one of the biggest “disruptors” on the financial scene today. To use Dwolla costs:

$0.25 for any transaction costing $10 and up (to a maximum of $5,000).
For transactions under $10, there is no cost at all, to you or the merchant. There’s nothing pre-paid, no setup fees, no annual fees, and no account maintenance costs. Nada.

How can that be? Especially when banks charge (or try to charge) monthly debit card fees against your account, and per use “swipe fees,” not to mention ATM withdrawal fees (now averaging $2.40 per transaction) whenever you use a machine not belonging to your own bank?

Dwolla took one very important, extra step when it set up its business: it built its own secure, proprietary, all-digital, payments network. And by doing so, Dwolla sidestepped the biggest cost to consumers and merchants everywhere: interchange fees.

The “Squishy Center” of Banking Profits

Think of an interchange fee as a toll (roughly 1.1% to 2%) added to every transaction that’s processed on the nation’s electronic payments superhighway. Every time you buy something with your debit or credit card, the credit card companies like Visa and Mastercard add a little extra to the bill. Click here to read Visa’s recent PDF outlining its latest interchange fees. Those fees, duly collected, are sent on to whatever bank issued the credit or debit card to you.

For banks, those interchange fees add up… big. Consider that in 2010 alone…

Merchants paid $28 billion in total interchange fees to banks (estimated by the Cardhub.com website).
JPMorgan Chase (NYSE: JPM) collected $5.9 billion (5% of total revenue) in non-interest credit card income – the bulk of it from interchange fees.
Bank of America (NYSE: BAC) brought in $8.1 billion (or 7% of total revenue) through similar means.
Even a mid-size bank like Regions Financial (NYSE: RF) collected non-interest card income of almost $1.1 billion (again, mostly through interchange fees), representing 18% of its revenue base.

The irony is that, in 2011, and this year as well, bank income from interchange fees is on the decline anyway, because of new federal rules (the Durbin amendment). Wells Fargo, for instance, saw its interchange fee revenue drop by $611 million, or 36%, simply because of the rate caps.

But Dwolla’s appearance on the scene could finish the job, and do the same thing to large banks that eBay and Craigslist did to newspapers, what Netflix did to Blockbuster, what Apple and Amazon are doing to book publishers right now: Gut out the “squishy center” of their jelly donut full of profits.

Here’s one example: Rick Vosper, an executive in the bicycle retail sector (and a fan of Dwolla) estimated that if half the nation’s 3,000 specialty retail bike shops (and their customers) used Dwolla (instead of credit cards) for purchases, it would result in $67 million less in interchange fees going to the banks. That’s just one small industry. What happens when Starbucks or another retail heavy-hitter embraces Dwolla?

For now, Dwolla is still small. Its user base of consumers and merchants is still in the hundreds of thousands. But the company is growing fast – it just picked up another round of VC financing (TV star Ashton Kutcher among those investors) in February. And the company’s growth in leaps and bounds has the payments-processing industry watching carefully (especially those potential relics of twenty-first century finance… the big banks).

Good Investing,

Jeff Yastine

Article by Investment U

April 24, 2012

Euro Advances after Netherland Sales

By TraderVox.com

Tradervox (Dublin) – The euro had experienced its biggest decline after concerns rose about the region’s ability to fight debt crisis. This came as Netherland and France prepared for political realignments following elections in the country. However, the euro has continued to gain momentum advancing against the yen on speculation the Bank of Japan is set to announce another monetary easing on April 27. Last week, BOJ Governor Masaaki Shirakawa reiterated his commitment to monetary easing.

However, the main reason for the euro advance is the positive Dutch auction which went smoothly without any surprises. According to Jeremy Stretch, who is the Head of Currency Strategy at Canadian Imperial Bank of Commerce, this is a good thing for the euro and it is the reason why the euro has increased a bit against major peers. He also indicated that people are wary of the yen and they are reluctant to rush in to buying the Japanese currency ahead of the BOJ meeting set for the end of the week.

The euro advanced against the dollar by 0.1 percent to trade at $1.3165 at the beginning of the European session, after it had fallen to 0.5 percent in the Asian market registering the worst decline since April 13. The 17-nation currency was up by 0.1 percent against the yen trading at 106.88 yen. It had earlier lost 0.5 percent to the Japanese currency. The yen remained unchanged against the dollar trading at 81.17 yen per dollar.

The euro increased after Netherlands sold 1 billion Euros worth of note which is represent 3.75 percent. The notes are due in 2014 and have an average yield of 0.523 percent. It also sold 995 million euros of 4 percent bonds due on 2037 at a mean yield of 2.782 percent. However, the political situation in Europe may continue to weigh on the euro as investors avoid riskier assets.

April 24, 2012

Dutch Debt “On Edge of Downgrade”, Central Banks Add to Gold Reserves

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 24 April 2012, 08.00 EDT

SPOT MARKET gold prices climbed to $1643 an ounce Tuesday lunchtime in London – a 1.2% gain from yesterday’s low, but still below Friday’s close – as Eurozone concerns focused on the Netherlands after yesterday’s government collapse.

Based on the PM London gold fix, gold prices remain 3% below their 200-day moving average.

Silver prices rallied back above $31 an ounce by Tuesday lunchtime – though they remained around 2% off where they began the week – while European stock markets edged higher following Monday’s steep drop and commodities also made gains this morning.

The Euro meantime regained a bit of ground against the Dollar, though remained below last week’s close, with the Federal Open Market Committee due to announce its latest monetary policy decisions tomorrow.

“If the Fed fails to hint at more quantitative easing, we may see a sharp drop in gold prices,” says Hou Xinqiang, analyst at Jinrui Futures in Shenzhen, China.

“With the Dollar being slightly stronger, there is no reason at the moment to be interested in gold,” adds David Wilson, metals research and strategy director at Citigroup.

Since this time last year, the Dollar Index, which measures the strength of the Dollar against a basket of other currencies, has risen nearly 9%.

Over the same period, sales of investment gold coins by the US Mint have fallen more sharply than those for silver, the latest US Mint data shows.

The Netherlands successfully sold €1 billion of 2-Year government debt – as well as a further €0.995 billion in 25-Year government bonds – at auctions on Tuesday, following the collapse of its government a day earlier.

Average yields were little changed on previous similar auctions. The spread between benchmark 10-Year yields on Dutch and German government bonds however hit a three-year high Monday, as 10-Year bund yields fell to a record lows below 1.64%.

The collapse of the Dutch minority government, after it failed to get backing for its austerity plans, “is clearly credit-negative for the Dutch sovereign,” says Sarah Carlson, London-based senior analyst at ratings agency Moody’s.

“It generates both political and policy uncertainty.”

“The Dutch are on the edge of a negative rating action,” said Chris Pryce, director, Western Europe at fellow ratings agency Fitch last week, speaking to the Telegraph.

The newspaper reports that the Netherlands has half a million homeowners – nearly 3% of its population – in negative equity. Dutch central bank governor Klaas Knot has warned that borrowing costs will rise if the country loses its AAA status, as its debt is not regarded by investors as a safe haven in the same way as that of Germany and the US.

Here in the UK, public sector net borrowing was £15.9 billion last month – up from £15.1 billion in March 2011 – according to data published Tuesday by the Office for National Statistics.

Excluding the effects of financial interventions – the government’s preferred measure – net borrowing last month was £18.2 billion – compared to £18.0 billion a year earlier.

The March figures mean that borrowing as a percentage of GDP fell from 9.27% in the financial year 2010/11 to 8.30% in 2011/12. Preliminary first quarter GDP figures are due out Wednesday.
“They are making gradual progress in reducing the deficit,” says Royal Bank of Scotland economist Ross Walker.

“[But] it’s going to get more difficult in subsequent years…we haven’t really had any significant current expenditure cuts.”

Overall debt meantime rose from £905.3 billion (60.5% of GDP) to £1, 022.5 billion (66.0% of GDP) in the year to the end of March.

Gold prices in India rose to their highest level in two months, India’s Economic Times reports, hitting Rs 29,100 per 10 grams as many Indians celebrated the festival of Akshaya Tritiya, traditionally considered an auspicious day to buy gold.

Central banks worldwide added nearly 58 tonnes of gold bullion to their reserves last month, with Mexico and Russia each buying over 16 tonnes of gold.

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.

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.

April 24, 2012

RBA on the Spot as Inflation Slows

By TraderVox.com

Tradervox (Dublin) – Consumer price inflation report from Australia showed that inflation slowed in the first quarter of the year hence providing the RBA with the scope to make the anticipated rate cuts. The report pushed the Australian currency down against most currencies in the market.

Traders have increased their bets on Reserve Bank of Australia reducing the interest rate from the current 4.25 percent expected to be done during its next meeting in May. The report adds pressure to the already weakening Aussie as market searches for save haven assets.

According to Mitul Kotecha, the RBA will most probably make a rate cut of 25 basis points. The sentiments are shared by most analysts in the market who expect a first cut in May and another in June. The sentiments of lowering the interest rate were also shared by the RBA officials who have indicated that RBA would be willing to cut interest rate if the situation called for it.

The Australian dollar has decreased against most of its peers as traders placed bets on RBA rate cuts. The Aussie dropped by 0.5 percent against the dollar to exchange at $1.0270 in Sydney where it had fallen to $1.0247 which is the weakest it has been since April 11. The Australian Dollar was down 0.7 percent against the yen to exchange at 83.16 yen. Its south pacific counterpart, the Kiwi, declined by 0.1 percent against the US dollar to trade at 81.30 US cents; it had weakened by 0.6 percent yesterday. Against the yen, the New Zealand dollar declined by 0.3 percent to trade at 65.74 yen.

Some analysts are claiming that the Australian dollar is vulnerable, and it might find strong support at $1.0225 -$1.0260. If it breaks downward past this level, then this would open doors for 1.0125. Reports from US and Canada might marginally affect the Australian dollar only increasing marginally if they are worse the market expectation.

April 24, 2012

Sterling Pound Rises against the US Dollar

By TraderVox.com

Tradervox (Dublin) – The sterling pound has advanced against the US dollar after a report showing that the Britain’s deficit increased more that the market was expecting. Prior the release of the report, the sterling pound had increase to almost 20-month high against the euro. The pound had increased by 1.8 percent last month making it the best performer among 10 of its peers.

After the release of the report showing that the UK budget deficit increased to £15.870 billion against market estimate of £14.4 billion, the pound increased by 0.1 percent against the greenback to trade at $1.6151, it had earlier touched $1.6155 which is the strongest it has been since October 31. The figure was at £9.93 billion in its previous reading. The pound was little changed against the euro maintaining a 81.62 pence per euro level. The pound had increased to 81.48 pence earlier yesterday which is the strongest since August 23, 2010.

However, at the UK pound is retracing its gains after the report of UK public sector debt. This report indicates that the UK net debt is at 66 percent of GDP which is the highest since the records began. The GBP/USB is appreciating at 0.11 percent currently at 1.6140; the next barrier is at 1.6167 which is the October 31 high. The currency had touched this level before paring its gains. If it breaks this level, the next hurdle will be at 1.6255, the August 2 high. However, if the pound continues to pare its gains, a breakdown of 1.6060 would expose April 20 low of 1.6039 which would open the door for 1.6009.

The trend will be determined by the Housing Price Index and New Home Sales report to be released later today in the US session. Trader will be keeping a close eye on these two reports as well as reports from Canada to assess the performance of the US economy. The demand for haven assets is growing and traders are choosing the pound over the dollar.

April 24, 2012

ForexCT’s Afternoon Market Thoughts for 24 April

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

April 24, 2012

EUR Reverses Earlier Gains

Source: ForexYard

The euro gave up its recent gains against the US dollar and Japanese yen yesterday, following a combination of negative euro-zone news which led to an increase in risk aversion. Worse than expected indicators out of both Germany and France, along with political uncertainty following the first round of elections in France was largely to blame for the euro’s bearish trend. Today, euro traders will want to pay attention to debt auctions out of Italy and the Netherlands. Positive results from the auctions could help the common currency. Furthermore, the US CB Consumer Confidence and New Home Sales figures are set to generate market volatility when they are released at 14:00 GMT.

Economic News

USD – Risk Aversion Leads to Bullish Dollar

The US dollar saw gains against most of its main currency rivals yesterday, including the euro and Australian dollar, following negative euro-zone news which caused investors to revert their funds back to safe haven currencies. The EUR/USD, which last week saw its biggest gains since February, dropped close to 100 pips during the European session, reaching as low as 1.3126. The aussie tumbled well over 100 pips against the greenback during mid-day trading, reaching as low as 1.0279.

Turning to today, dollar traders will want to pay attention to several indicators out of the US which have the potential to create market volatility. The CB Consumer Confidence and New Home Sales figures, both scheduled for 14:00 GMT, are forecasted to show growth in the housing and retails sectors of the US economy. If true, the dollar may be able to reverse its current bearish trend vs. the Japanese yen, while extending its gains against the euro and aussie.

For the rest of the week, traders will want to remember that several potentially significant indicators are scheduled to be released out of the US. Tomorrow in particular could prove to be volatile following the FOMC Economic Projections. Furthermore, Thursday’s Pending Home Sales followed by Friday’s Advance GDP figure means that the USD could see plenty of movement in the coming days.

EUR – Political, Economic Uncertainties Weigh Down on Euro

After making significant gains toward the end of last week’s trading session, the euro once again turned bearish yesterday. Investor concerns regarding the political situations in France and the Netherlands, in addition to economic worries out of Italy and Spain, all contributed to an increase in risk aversion in the marketplace. The EUR/JPY fell over 140 pips yesterday, reaching as low as 106.34 during mid-day trading. Against the British pound, the euro fell close to 50 pips over the course of the day, reaching as low as 0.8150 before staging a mild upward correction.

Turning to today, euro traders will want to pay attention to the results of Italian and Dutch debt auctions. While positive results could lead to gains for the euro, analysts are quick to warn that given all the problems in the euro-zone, any bullish movement may be temporary. In addition, traders should note any announcements regarding the upcoming elections in France and the Netherlands. Any radical changes in the make-up of either government may lead to further bearish movement for the euro.

JPY – Yen Sees Gains across the Board

The yen turned bullish against its main currency rivals yesterday, as poor euro-zone news resulted in gains for safe-haven currencies. In addition to the major gains see against the euro, the JPY was also up close to 70 pips against the US dollar and over 150 pips against the British pound. Analysts attributed the yen’s bullish trend to a worse than expected news out of both France and Germany, the euro-zone’s two biggest economies, as well as political uncertainty following the first round of French presidential elections held this past Sunday.

Turning to today, yen traders will want to monitor US news, scheduled to be released at 14:00 GMT. Should any of the indicators come in above analysts’ expectations, the US dollar could reverse some of its earlier losses during the afternoon session. Furthermore, traders will want to note that the Bank of Japan is scheduled to have a policy meeting on Friday, in which it is widely expected to implement fresh monetary easing steps. If true, the yen could turn bearish before the week is over.

Crude Oil – Crude Oil Falls Over $2 amid Risk Aversion

Risk aversion in the market place, largely due to economic and political uncertainties in the euro-zone, caused riskier assets like crude oil to tumble during yesterday’s trading session. In addition, news that Chinese demand for oil recently fell to its lowest level in five-months resulted in a steep drop for the commodity. The price of crude fell over $2 a barrel, reaching as low as $101.90 during mid-day trading.

Turning to today, oil traders will want to continue monitoring any developments out of the euro-zone. Further negative news may generate additional risk aversion in the marketplace. In addition, potentially significant US news is scheduled to be released this afternoon. Should that news lead to gains for the US dollar, the price of oil may drop as a result.

Technical News

EUR/USD

The daily chart’s Slow Stochastic appears to be forming a bearish cross, indicating that downward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart which has crossed into overbought territory. Traders may want to go short in their positions.

GBP/USD

The weekly chart’s Williams Percent Range has crossed into overbought territory in a sign that this pair could see a bearish correction in the coming days. In another sign that downward movement may occur, the daily chart’s Relative Strength Index is moving up and may cross into the overbought region shortly. Traders may want to go short in their positions.

USD/JPY

Most long term technical indicators show this pair trading in neutral territory, meaning that no definitive trend is known at this time. That being said, the daily chart’s MACD/OsMA has formed a bullish cross. Traders will want to keep an eye on other indicators on this chart, as they may provide further clues as to a possible impending upward correction.

USD/CHF

A bullish cross on the daily chart’s Slow Stochastic appears to be forming, in a sign that upward movement could occur in the near future. In addition, the Williams Percent Range on the same chart is currently at -80, right on the border of being in oversold territory. Going long may be the preferred strategy for this pair.

The Wild Card

EUR/GBP

The daily chart’s Williams Percent Range and Relative Strength Index have dropped into oversold territory, indicating that this pair could see upward movement in the near future. This may be a good time for forex traders to open long positions, as a bullish correction could occur.

Forex Market Analysis provided by ForexYard.

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.

April 24, 2012

EUR Short Squeeze Presents Opportunities

Source: ForexYard

As discussed in today’s FOREXYARD Daily Analysis, overstretched market positioning has allowed for a bit of a EUR short squeeze on the back of a solid Spanish bond auction and strong US housing numbers.

The most recent CFTC Commitment of Traders report shows speculators in the futures market have built their largest EUR short position since May 2010. As of last Tuesday speculators were holding -116k contracts short, up from -95k. The one sided positioning highlights the market’s pessimism against the EUR but also brings the possibility of a short squeeze.

Today’s short squeeze has helped the EUR/USD rise as high as 1.3120. There is short term resistance in this area as the 200-hour moving comes in at 1.3135. Also contributing to the resistance is the October 4th low of 1.3140, and the 38% at 1.3130, the Fibonacci retracement from the move stemming from December 9th to December 14th (1.3433-1.2945).

EURIMM

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Forex Market Analysis provided by ForexYard.