Month: April 2009

By GCI Fx Research

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3190 level and was capped around the US$ 1.3385 level.  Many data were released in the U.S. today. First, March personal income was off 0.3% m/m and up 0.3% y/y. Second, personal consumption expenditures were off 0.2% m/m and off 0.9% y/y while core PCE was up 0.2% m/m and 1.8% y/y.  Third, Q1 employment costs were up 0.3% q/q, the smallest gain since at least 1982, and were up 2.1% y/y.  Fourth, the Chicago ISM Business Barometer rose to 40.1 in April from 31.4 in March and these data suggest the currenbt recession may end by the end of the year.  Fourth, weekly initial jobless claims were off 14,000 to 631,000.  Confidence seems to be increase following yesterday’s largely unchanged statement from the Federal Open Market Committee.  Traders are paying close attention to ongoing talks between the Obama administration and Chrysler.  In eurozone news, EMU-16 March unemployment rose to 8.9% from 8.7% in February and the EMU-16 April flash annualized inflation level printed at a record low of 0.6%.  The German government reported it will likely need a supplementary budget and the German budget deficit is set to rise to €80 billion.  Euro bids are cited around the US$ 1.2765 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥98.90 level and was supported around the ¥97.15 level.   As expected, Bank of Japan kept official interest rates unchanged and reduced its expectations for economic growth in fiscal year 2009 on account of declining exports.  BoJ also reported it expects international economies to begin recovering in the latter half of the current fiscal year.  The Nikkei 225 yesterday stock index climbed 3.94% to close at ¥8,828.26.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.05 level and was supported around the ¥128.90 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥86.80 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By Fast Brokers

Gold is experiencing a sharp retracement from the highly psychological $900/oz level and our 2nd tier downtrend line in reaction to the S&P futures leaping to new 2009 highs.  Hence, the precious metal continues to follow its negative correlation with U.S. equities, even if it registers relative strength on the knowledge that China is buying up gold to diversify its reserves.

Even though gold is showing this relative strength, losses in the precious metal could accelerate if it does in fact kiss $900/oz goodbye this time around.  Due to the vast fundamental strides made by global equities over the past 24 hours, we wouldn’t be surprised to witness gold buckle under the pressure of its downtrend.

Despite the negative developments in gold, we could see a nice decent sized pop up in the precious metal today as investors may be inclined to take profits in equities with the S&P approaching 900.  Therefore, we wouldn’t be surprised to see gold head back up towards our $889.87/oz resistance today.  The key to the downside will likely be our $877.79/oz support.  If this level doesn’t hold, we could see near-term losses accelerate.  Keep a close eye on equities as the two investment vehicles will be closely tied.

Fundamentally we find resistances of $887.19/oz, $889.87/oz, $893.01/oz, $896.59/oz, and $899.72/oz.  To the downside, we see supports of $882.04/oz, $880.03/oz, $877.79/oz, $874.88/oz, and $873.09/oz. Gold is currently trading at $884.40/oz.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The EUR/USD’s rally topped out at our 1.3389 resistance yesterday, or April 13 highs.  The hesitation comes as the S&P futures approach their critical 900 level.  Therefore, we view today’s decline as healthy hesitation.  The EUR/USD should find near-term safety in our 1.3208 support and 3rd tier downtrend line.  However, if these fundamentals don’t hold, we could see a retracement towards our 1.3089 support, or 4/10 lows.

Weakness in the Euro comes despite a better than expected German Unemployment Change Number.  Although the reading is high historically speaking, at least the release shows a topping out.  Analysts were looking for a one basis point improvement in the EU’s CPI Flash, but they didn’t get it.  The consumer price data remained at a very depreciated level, echoing the message sent on Tuesday by the German Prelim CPI number.  Therefore, the message Europe’s data is sending thus far this week is an improvement in unemployment and consumer sentiment combined with slight deflation.  Meanwhile, the CAC40 and DAX are rallying like mad, following in the footsteps of U.S. equities.  Hence, the CPI data may be lagging behind relative consumer and corporate optimism, meaning prices could begin to rebound a little over the next month.

All of these developments are good news for the EUR/USD, since a recovery in equities means the EUR/USD will tag along for the ride due to their positive correlation.  Additionally, if an economic recovery is truly taking place, the EU sits in an advantageous position since the ECB kept their benchmark rate at a respectable level while fighting off the temptation to use quantitative easing like the BOE, BOJ, and Fed.  However, the ECB is still sending a mixed message and we will have to see how events unwind as their next monetary policy meeting approaches.

While the EUR/USD could continue to experience some weakness as the S&P struggles with 900, we believe a new bullish trend could be in place.  Ultimately the currency pair will next to put 4/13 highs behind it for a shot at the psychological 1.35 mark.  On the other hand, if the EUR/USD falls apart and 4/10 lows don’t hold, we could see a real reversal into the currency pair’s debilitating downtrend.

Fundamentally, we find resistances of 1.3236, 1.3295, 1.3329, 1.3389, and 1.3420.  To the downside, we see supports of 1.3208, 1.3170, 1.3127, 1.3089, and 1.3039.  The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.3218.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The Cable reacted positively despite worse than expected Prelim GDP data from the U.S. yesterday, catapulting towards our previous top-tier resistance of 1.4951 before reversing course.  The GBP/USD’s reversal marks a failure to climb through 4/6 highs, let alone tackle 1.50 and April highs.  Therefore, the Cable certainly has its work cut out for it in to the upside as the S&P futures approach their highly psychological 900 level.  Our 1.4730 support should prove to be a critical battle ground in the near-term if the Cable is to sell off further.  If this level doesn’t hold, we could see a reversal towards 1.4626.

Weakness in the Cable comes despite a better than expected Nationwide HPI number.  Even though the data surprised to the upside, housing prices registered a decline from April 2nd’s release.  We saw a similar improvement in the HPI in November 2008 only to witness a sharp reversal in December.  Therefore, investors could be concerned we’re witnessing another head-fake in home prices.  Don’t forget the financial crisis began with a collapse in housing, meaning stabilization in this area is a crucial leg in the chair of recovery.

Skepticism aside, equities have been performing extraordinarily well as of late while breaking free of key fundamental barriers.  Therefore, if bright spots in economic data and outperformance in equities spells an economic recovery, the Pound should appreciate against the Dollar trend-wise due to its positive correlation.  That being said, we have the results of the stress tests coming on Monday, implying volatility should remain elevated through the remainder of the week.

We maintain our bullish stance on the Cable, and the currency pair could recover quickly should it pop back above our 2nd tier downtrend line.

Fundamentally, we maintain resistances of 1.4773, 1.4826, 1.4870, 1.4905, and 1.4951.  To the downside, we hold our supports of 1.4730, 1.4667, 1.4626, 1.45667, and 1.4532.  1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4749.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The USD/JPY is surging off a much better than expected Prelim Industrial Production Data.  The industrial production number shows a sharp reversal from the previous 5 months, and is likely due to a pickup in global consumption as stimulus packages kick in worldwide.  The rebound in the USD/JPY is backed by a 4% jump in the Nikkei earlier today.  Honda and Pioneer catapulted as investors speculate the worst is behind us.  Additionally, we must consider the USD/JPY’s tight positive correlation with U.S. equities.  The S&P futures sprinted to new 2009 highs yesterday and are looking to go to work on their highly psychological 900 level.

The recent recovery of the USD/JPY is a breath of fresh air for investors since the currency pair was playing with fire by trading below our 1st tier downtrend and 2nd tier uptrend lines.  Meanwhile, the currency pair avoided the idea of retesting March lows, and now looks to have more room to run towards our 99.20 and 99.79 resistances.  It will be interesting to see how the USD/JPY reacts should it reach these resistance levels, and whether it can break through to retest the key 100 level once more.  Keep in mind we have 4 more downtrend lines bearing down on the USD/JPY, so there is plenty of work ahead to the topside.

Although we’re bullish on the USD/JPY in the near-term, a 100+ future ultimately depends on the performance of U.S. equities and whether they can leave the economic crisis in the background.

Fundamentally, we find resistances of 98.56, 99.20, 99.79, 100.56, and 101.43.  To the downside, we see supports of 97.98, 97.11, 96.33, 95.55, and 95.04.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 98.43.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Scott Downing

The Elliott Wave Principle focuses on the behavior of humans and how that behavior impacts the stock market. Rather than acting in an unpredictable manner, Ralph Nelson Elliott (in the late 1920s) noticed that the market actually ran in repetitive cycles – which were a result of investors’ reactionary behavior to outside influences. The principle was published in Elliott’s books The Wave Principle and Nature’s Laws – The Secret of the Universe. Elliott believed that humans are rhythmical beings, so all human decisions and actions could be predicted in rhythms. So basically, we have a stock principle based on human behavior.

While Elliott’s Wave Principle is based partially on the Dow Theory, it expands on the belief thanks to individual wave aspects that Elliott uncovered. According to Elliott, an impulsive wave follows the main trend – and it is comprised of five other waves, a pattern that runs infinitely (these are wave degrees). Each impulse wave is followed by a corrective wave, which occurs in threes – creating a five/three pattern.

Robert Prechter et al are among the biggest proponents of Elliott Wave theory. The long-term record of such analysis is a bit spotty though — they have called some big market moves very well, yet also been on the wrong side of some gigantic long-term moves.

There are waves inside the waves – you can notice that in each of the uptrends (1, 3, and 5). Waves 2 and 4 are the corrective waves, completing the cycle. Each of those impulsive waves is made of other five/three patterns, as this pattern occurs infinitely. An Elliott Wave is fractal – meaning that each wave can be broken into parts in an infinite manner.

For those who utilize these techniques, they break down waves into degrees of the pattern, each with its own name. These degrees are not classified by their form; not by their size or duration. Therefore, waves of the same degree may have different sizes or durations. The waves are named:

o Grand Supercycle (the longest) o Supercycle o Cycle o Primary o Intermediate o Minor o Minute o Minuette o Subminuette (the shortest)

The Grand Supercycle can take years to complete while the subminuette can take mere minutes to run its course. Bottom Line: Elliott Wave (and Wave Theory in general) is fairly hard to quantify and utilize as a practical trading technique. Certainly there is a logical basis to the fact that “waves” occur both in nature and the stock market — and the psychological implications of various waves/trends from investor behavior are important, as well. Wave Theory technical analysis practitioners tend to be “true believers”, but testing and measuring indicators for short-term active investing based on these theories/methods can be difficult.

Visit http://bigtrendsaffiliates.com/trendwatch/ to receive BigTrends articles and blogs directly to your email.

About the Author

Scott Downing is a Research Analyst with BigTrends.com. Scott’s columns are published in the Daily TrendWatch and Market Commentary. He also manages the SMARToptions recommendation service.

By James Oleander

It appears that trading without indicators has become a lost art form. If you have been day trading for a little while or are a seasoned veteran, you know that there are more trading indicators than ever. There are indicators now that basically just put the word “buy” or “sell” on your trading chart to let you know when to open and close a trade. The problem is does anybody actually know why you are buying or selling at that point? It just seems like people are content to just take their chances allowing a robot to make their trading decision for them.

What many people don’t realize is, that many of these indicators are just telling the trader what has already happened, hence they are known as lagging indicators. The problem is that the markets don’t follow some kind of set plan. Just because something worked a few times in the past doesn’t mean that its going to continue to work. The market is constantly evolving. The use of lagging indicators will never account for that fact. Traders seem to be satisfied just taking their chances with indicators such as MACD, stochastics, and moving averages. To many traders, these indicators represent success and failure.

The day a trader is finally able to clear their screen and look at a chart of the respective currency pair, without any clutter, is the day they take their first step to understanding the forex market. A trader can then look at price action at its purest form. Indicators have made traders a bit lazy. They are basically using them as an interpreter of the market. The price moves a certain way and their indicator, in its own way, is translating what that move means. Well, if instead of using a translator to play the forex market, if traders actually learned the language of price action, these lagging indicators would be obsolete.

About the Author

forex reviews.

Source: ForexYard

Rising equity markets continue to push investors towards riskier assets and away from safe haven currencies such as the USD and JPY. Traders today will be following the Unemployment Claims release for further signs the U.S economic recession is easing.

Economic News

USD – Dollar Drops Against the Majors as Equities Rally

The Dollar recorded an extremely volatile day of trading as a variety of factors helped push up the demand for riskier assets, whilst reducing the demand for safe-haven positions. Equity markets in the U.S. rallied as many companies in the U.S. recorded far better-than-expected results. These led to major banking shares, such as Bank of America and Citigroup making remarkable gains yesterday. The market also continued to move on the better-than-expected U.S. consumer confidence figures from Tuesday. The equity market surge and Dollar decline was also owed to Tuesday’s impressive U.S. Consumer Confidence figures.

The USD tumbled by more than 130 pips against the EUR in yesterday’s trading to close at 133.22. This is much owed to the fall in demand for safe-haven currencies, as it seems that the U.S. recession may be bottoming out. This is despite poor U.S. GDP figures that were released yesterday. The Dollar also made losses against the GBP to end the day down 125 pips at 148.30. However, versus the JPY, the USD finished higher 0.6% or 60 pips as the demand for the safe-haven Yen plummeted in yesterday’s trading. This was largely owed to news that the economic situation in Japan, China and the U.S. was starting to improve.

As of today, there are a number of important U.S. economic data releases that are set to be released. The most important of which are the Unemployment Claims, Personal Spending, and Personal Income figures that are set to be released at 12:30 GMT simultaneously. The market is likely to be very volatile on the release of these figures. Additionally, later on today, the market is likely to take into account the poor U.S. GDP figures that were released yesterday. Therefore, the USD may reverse some of the losses that it made yesterday against its major currency crosses as investors may return to the safe-haven Dollar. We could see the EUR/USD trading near the 1.3200 level by the end of the day.

EUR – EUR Soars Versus the USD

The EUR experienced a bullish day of trading yesterday, mainly due to the European Consumer Confidence figures, showing its first month on month rise in 11 months. This added to the news from across the developed economies from the U.S. to Japan that the worst of the global economic recession may be over. The bullish equity markets in the Euro-Zone and in Britain were partly due to that of the U.S., partly due to the upgrade of British banks by brokers, and the fall in demand of safe-haven currencies. The EUR made its most notable gains against the USD in Thursday’s trading.

The EUR gained about 130 pips against the Dollar in Wednesday’s trading as demand for safe-haven currencies plummeted as the global economy begins to pick up. The pair closed at the 1.3322 level. The EUR/JPY cross rose by an impressive 210 pips to 129.90 as demand for the most safe-haven currency of all as of late plummeted as indicators from Japan showed that her economy had improved in April. Against the Pound, the EUR did make marginal gains as fears of a prolonged European recession dissipated slightly. The pair closed up 15 pips at 0.8980.

Looking ahead to today, the Euro-Zone and Britain are set to publish a number of important data releases. These include the British Nationwide HPI at 6:00 GMT and the Euro-Zone Unemployment Rate at 21:00 GMT. These figures are likely to determine the GBP and EUR’s strength going into end of week trading. Forex traders are also advised to closely follow statements coming from U.S. President Barack Obama and the U.S. Federal Reserve, as the forex market is likely to be very volatile to this.

JPY – Yen Plummets as Economy Improves

The Yen plummeted yesterday against its major currency pairs as the current economic recession in the world’s second largest economy seems to be bottoming out. The JPY slid over 60 pips Yen to 97.54 Yen per Dollar as the Yen’s demise was compounded by strong U.S. consumer confidence figures. Thus the most safe-haven currency as of late plummeted as a result of both improvements in Japan and America’s economy. The JPY also slid against the EUR, dropping a massive 210 pips to finish the day’s trading at 129.90. The Pound also made inroads into the JPY as the confidence of the U.S. equity markets swept Europe, and reduced demand for the safe-haven JPY.

As the Japanese equity markets reopened yesterday after a bank holiday, shares soared as the global economy showed signs of bottoming out. This is following good U.S. Consumer Confidence figures from Tuesday, European Consumer Confidence figures from yesterday, and positive Japanese data releases on Wednesday. The bearish JPY yesterday was compounded by impressive factory production figures, showing their first increase in 6 months. All these factors helped pour investors away from the Yen and into the riskier equity market. Today, the Household Spending and Unemployment Rate figures are likely to help determine the JPY’s strength in late trading. The USD/JPY could break the 98.00 resistance level by the end of today’s trading.

Crude Oil – Jumps 4%

The price of Crude Oil ascended by $2 or 4% yesterday to $51.44 a barrel. The increase comes despite the higher-than-forecasted Crude Oil Inventories data release. Much of the black gold’s bullishness was owed to the weak Dollar and optimism about a quicker than anticipated global economic recovery. Data coming from the U.S., Japan, China, and the Euro-Zone in the last 2 days helped bring back investors confidence into the equity and commodity markets

As a result of the renewed optimism, investors decided to return to the Crude Oil market. Moreover, the weaker Dollar added to the effects of Crude’s gains on Wednesday. What we will now have to see is can Oil maintain this bullish momentum? Maybe in the medium-term this may be possible. However, in the short-term high Oil prices are less likely, especially as the U.S. is expected to release poor Unemployment Claims data later on today. Traders may look for profit taking after yesterday’s bullish trading session. Crude could drop back to the $50.50 mark.

Technical News

EUR/USD

Yesterday’s bullish trading session may have strengthened this pair a bit too far. This could be inferred as the 4-hour chart shows the pair trading in the over-bought zone on the RSI. The chart also shows a bearish cross has formed on the Slow Stochastic. These two signals indicate an imminent downward correction. Traders may also notice the hourly chart’s Bollinger Bands tightening, indicating the potential for a violent breech. Going short could be the right play today.

GBP/USD

The 4-hour chart shows the Cable trading in an overbought state on the RSI with a bearish cross on the pair’s Slow Stochastic Oscillator. This indicates the potential for a downward correction. The Bollinger Bands show the most recent price move has originated at the upper border, indicating the potential to go all the way to the lower border. Traders may want to be short on this pair.

USD/JPY

Despite the pair failing to break the 98.00 mark, the recent upward correction that has occurred the past two days may have the potential to continue. The daily chart shows a bullish cross has formed on the Slow Stochastic Oscillator, indicating the upward momentum could continue. The price is also floating in the oversold region on the RSI. Going long might be a good strategy.

USD/CHF

The recent volatile upward movement has pushed the price of this pair into the over-sold territory on the RSI of the 4-hour chart, indicating an upward correction may be in the works. The recent bullish cross on the hourly chart’s Slow Stochastic supports this notion. Going long might be wise decision today.

The Wild Card – Oil

After yesterday’s bullish trading session, the commodity is showing strong bearish signals. The 4-hour chart shows a bearish cross has formed, pointing to a future downward correction in price. The same chart also has the price floating in the over-bought zone. This could give forex traders the opportunity to go short today on crude oil.

Forex Market Analysis provided by Forex Yard.

© 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 GCI Fx Research

€

The euro appreciated sharply vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3340 level and was supported around the US$ 1.3120 level.  Some dominant themes emerged during the North American session.  First, the Federal Open Market Committee decided to keep its federal funds rate target between 0% and 0.25%.  The FOMC reported “Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.  In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of financial and economic developments.”  The Fed’s decision was unanimous.  Second, former Fed Chairman Volcker reported no systemtically important U.S. banks will fail.  This comment was made before the results of the current stress tests are made known on Monday.  It is already being reported that Citigroup and Bank of America are likely to be told to raise a significant amount of additional capital with some whispers indicating BoA may need to raise an additional US$ 70 billion.  Third, the U.S. Q1 gross domestic product declined an annualized 6.1%, more-than-expected.  In eurozone news, EMU-16 economic sentiment indicator improved to 67.2 in April from a record low of 64.7 in March, the first improvement since May 2007.  European Central Bank President Mersch talked about the ECB’s ability to change monetary policy further, saying “We have made all the parameters of our framework more flexible and maybe there is still a small margin in this area for decisions to come.  But also in the framework of our principal instrument, which is short-term interest rates.”  Many dealers believe the ECB will initiate quantitative easing in May.  It was also reported that German new plant, machinery orders were off 35% y/y.  Additionally, EMU-16 March private sector loan growth eased to 3.2% following a 4.3% annualized growth rate in February.  These data confirm the credit crunch has reduced bank lending substantially.  M3 money supply growth fell to 5.1% in March from a downwardly revised 5.8% in February.  ECB member Stark reported “there is no evidence in the euro zone of imminent deflation.”  Euro bids are cited around the US$ 1.2765 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥97.15 level and was supported around the ¥96.35 level.   Japanese financial markets were closed overnight and liquidity was reduced during the Asian session.  Big drivers in the yen continue to be risk aversion and the global swine flu outbreak.  Traders were less risk adverse overnight, particularly after European economic data printed stronger-than-expected.   The Nikkei 225 yesterday stock index lost 2.67% to close at ¥8,493.77.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥128.65 level and was supported around the ¥126.60 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥143.70 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.40 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8245 in the over-the-counter market, down from CNY 6.8270.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

The U.S. Federal Open Market Committee concluded its monetary policy meeting by holding the U.S. interest rate steady at its record low level. The FOMC had cut the interest rate to a new target range of 0 percent to 0.25 percent on December 16th and said today “that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. Today’s unanimous committee decision to keep the rate unchanged was widely expected by market forecasts.

The Fed statement accompanying the rate decision commented on the U.S. economy, “Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit.”

GDP contracts in 1st Quarter by more than expected.

The U.S. economy contracted in the first quarter of 2009 by more than expected according to the latest release by the U.S. Commerce Department. The advance estimate report released today showed that the U.S. Gross Domestic Product contracted at an annual rate of 6.1 percent in the January to March quarter following the 6.3 percent GDP contraction in the fourth quarter of 2008. Today’s GDP numbers surpassed the 4.7 percent contraction that the economic forecasts were expecting for the first quarter and marked the first time since the 1974-1975 period that GDP has shrunk for three quarters in a row.

Contributing to the decreased GDP for the fourth quarter were declines in business inventories, exports and housing. Exports declined sharply in the quarter as exports of goods and services decreased by 30.0 percent after falling by 23.6 percent in the fourth quarter.

On the positive side, consumer spending, which makes up approximately two-thirds of U.S. economic activity, increased in the first quarter by 2.2 percent after decreasing sharply in the previous two quarters.

Forex – U.S. dollar falls in Forex Trading today.

The U.S. dollar has been falling in forex trading today against most of the major currencies.  The dollar has declined versus the euro, British pound, Canadian dollar, Australian dollar, New Zealand dollar and Swiss franc while gaining versus the Japanese yen.

The euro has advanced versus the USD for the second day as the EUR/USD trades at 1.3287 in the afternoon of the US trading session at 3:08pm EST after opening the day at 1.3186 according to currency data from Oanda.

The British pound has also climbed for the second day in a row as the GBP/USD trades at 1.4764 after opening the day at 1.4705.

The dollar has gained ground against the Japanese yen today as the USD/JPY has increased from its 96.91 opening to trading at 97.67.

The dollar has fallen against the Canadian dollar after opening at 1.2135 earlier today to trading at 1.2012 later. Meanwhile, the USD has also declined against the Swiss franc as the USD/CHF has gone from 1.1413 to trading at 1.1364.

The Australian dollar has gained for the second day in a row versus the USD as the AUD/USD trades at 0.7274 after opening today at 0.7135 while the New Zealand dollar has also increased versus the USD as the NZD/USD trades at 0.5747 after opening the day’s trading at 0.5653.

EUR/USD Chart – The Euro advancing sharply today versus the US Dollar in Forex Trading for the second day in a row.