Month: June 2009

By Fast Brokers – The Cable has propelled from our 3rd tier uptrend line to make a solid run past the psychological 1.60 level.  While the performance of the GBP/USD over the last 24 hours has been encouraging, the upward movement came with relatively weak volume as compared to last week’s pullback.  Regardless, bulls are coming to the defense of the Cable, and the currency pair could make a pop toward our 2nd tier downtrend line.  As with the EUR/USD, the significant volume to the downside was disconcerting and makes us contemplate whether we have entered a new, near-term downtrend.  U.S. equities and crude futures are on an impressive run, and there is belief that these investment vehicles may have overextended themselves.

Since economic data will be relatively quiet around the globe this week, the Cable may ultimately choose to abide by its positive correlation with the S&P futures.  However, Britain will release Manufacturing Production and its Trade Balance tomorrow, which may prove to be market movers.  If the economic data comes in weaker than anticipated and U.S. equities experience profit taking, we would not be surprised to see the Cable exhibit further downward pressure.  That being said, we maintain our near-term negative outlook on the GBP/USD unless we see a strong move to the upside accompanied by convincing volume.  On the other hand, the climb back above 1.60 is certainly encouraging, and we wouldn’t be surprised to witness more upward momentum today.

Meanwhile, the Pound continues to show relative strength, exemplified by the negative performance of the EUR/GBP.  This is likely due to the fact that EU and U.S. economic data has been coming in mixed over the past six weeks, while numbers from Britain have been overwhelmingly positive.  Therefore, we believe pure economic fundamentals are giving the Pound its edge.  Furthermore, as a result of the improvement in economic data, we believe the medium-term still has a lot of strength despite any near-term downward pressure.

Fundamentally, we find resistances of 1.6233, 1.6315, 1.6371, 1.6412, and 1.6458.  To the downside, we see supports of 1.5863, 1.5777, 1.5703, 1.5629, and 1.5552.  The 1.60 level acts as a psychological cushion with 1.65 serving as a psychological barrier.  The GBP/USD is currently exchanging at 1.6222.

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 continues its balancing act from our 2nd tier uptrend line, and is making a push for the psychological 1.40 level.  Despite the recovery from 5/28 lows, volume is declining with the upward movement, signaling a lack of support to the upside.  The largest volume we’ve seen in the last month was on the sell side.  Therefore, we aren’t convinced that Monday’s bottom will be lasting.  The key barriers to the upside for the near-term are 1.40, our 3rd tier uptrend line and 1.4035 resistance.  If the EUR/USD can climb past these obstacles, we could see a near-term pop towards 1.41.  However, the downward pressure on the EUR/USD seems to be greater than the near-term upward momentum, meaning we could see further losses from present levels.  To the downside, our 2nd tier uptrend line and 5/28 lows are the important lines of defense.  If these floors are broken we could see near-term losses accelerate.  Though we maintain our negative outlook on the EUR/USD for the near-term, the medium-term uptrend has an incredible foundation built up over the year.  With all of the economic data coming in signaling a global recovery, it will take a hefty blow to destroy the uptrend in place.

The EUR/GBP is buckling under the pressure of its downtrend, indicating a relative weakness in the Euro.  The weakness results from a disappointing German Industrial Production number this morning.  While the lackluster data point is negative, the development is nothing to be overly concerned about at this time.  The question becomes whether the slowdown in industrial production is just a bump in the road to recovery, or if the data slumps back into its downtrend.  We won’t get a better idea until next month’s release, yet investors should take note nonetheless.  With the EU relatively quiet data-wise this week, the EUR/USD may take its lead from U.S. equities.  Therefore, if we see a breakout in the S&P futures to the upside, the EUR/USD could follow suit due to their positive correlation.  Meanwhile, investors should keep a close eye on volume patters in the EUR/USD to see whether there is more interest to the downside.

Fundamentally, we find resistances of 1.4003, 1.4035, 1.4090, 1.4103, 1.4139, and 1.4185.  To the downside, we see supports of 1.3945, 1.3891, 1.33855, 1.3815, and 1.3766.  The 1.40 area serves as a psychological resistance with 1.35 acting as a psychological cushion.  The EUR/USD is currently exchanging at 1.3986.

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 – Gold continues its recovery from our 2nd tier uptrend line and the psychological $950/oz level as it rises with the depreciation of the greenback.  Volume is perking up slightly, a positive sign technically.  However, volume is still weak as compared to last week’s pullback, meaning we could be in store for more downward pressure once the present bounce tops out.  The precious metal is encountering our 3rd tier uptrend line and $963.45/oz resistance.  If gold can climb past these barriers, we could witness a near-term pop towards our 2nd tier downtrend line.

Meanwhile, investors should keep an eye on the behavior of the GBP/USD, EUR/USD, and S&P futures.  Gold’s positive correlation with both the GBP/USD and EUR/USD seems intact, while these currency pairs may follow U.S. equities this week due to the relatively light presence of economic data.  Even though today’s pop is encouraging, we maintain our negative near-term outlook on gold due to the recent, overwhelming volume to the downside.  If the precious metal does experience more downward pressure, our 2nd tier uptrend line and 5/26 lows should prove to be key defenses against accelerated movements to the downside.

Fundamentally we find resistances of $960.47/oz, $963.45/oz, $965.98/oz, $968.77/oz, and $972.32/oz.  To the downside, we see supports of $957.11/oz, $954.32/oz, $951.79/oz, $946.47/oz, and $943.68/oz. Gold is currently trading at $959.90/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.

From www.bloomberg.com today, June 9

“The Wall Street firms that trade directly with the Federal Reserve say speculators betting that interest rates may head higher this year are wrong.

Policy makers will keep the target for overnight loans between banks in a range of zero to 0.25 percent this year, according a survey of 15 of the 16 primary dealers of U.S. government securities that trade with the central bank. A majority predict no increase until at least the second half of 2010. Cantor Fitzgerald & Co. officials weren�t able to immediately provide a forecast.

Yields on two-year Treasury notes surged 44.4 basis points June 5 and 8, the biggest two-day increase since Sept. 18 and 19, and Fed funds futures contracts show a 58 percent probability of a rate increase by November on signs that the economy is bottoming. Implied yields on eurodollar futures, also used to speculate on changes in central bank policy, increased even as the U.S. government said on June 5 that the unemployment rate rose to 9.4 percent, the highest since 1984.”

____________________________________________

We find this news article quite interesting. Essentially it seems that the biggest dealing desks are at odds with the market participants. So will the “smart money” dealing desks, with their connections to the US Fed, and their quantitative pricing models be correct, or will the markets view win out? Remember that markets are affected by George Soros’ theory of reflexivity, which poses that markets are effected by participants’ actions, thereby effecting the market’s fundamentals.

In this case the “house” (bond dealers) and the “players” market participants are at odds. We will be watching the yield on the 10 year US Treasury Note as it closes in on 4% to see where the line in the sand is drawn by the dealers.

The interest to currency traders is that as longer term interest rates have moved higher, the short term rates controlled by the US Fed stay low. This creates a steepening of the yield curve that implies inflation in the future. That change in the steepness of the yield curve is what has hurt the USD over the last two months. Inflation will erode the value of the USD.

So keep an eye on the yield curve to see if as the yield on 10 year Treasuries closes in on 4%, the market and the US Fed start to raise the short term rates which would lessen the steepness of the yiueld curve. This would be bullish for the USD.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Source: ForexYard

After gathering some positive momentum at the end of last week from US employment data, the US Dollar now faces a new ordeal. As the US Supreme Court attempts to block the sale of Chrysler to Fiat, recently gained confidence in the US economy has begun to show signs of wear. Forex traders may see added volatility to a market that was forecast yesterday to be flat. News events such as this tend to push markets in a way which traders can greatly benefit. Today is a great day to trade the USD!

Economic News

USD – Chrysler Sale Delay Weighs in on Dollar

The Dollar moved on a number of factors in yesterday’s trading. One of the most important of these was the sale of Chrysler being blocked by U.S. Supreme Court. President Obama fears that this could kill the deal if the issue is not resolved in the nearest time. If this did happen, the effects on the U.S. economy may be disastrous. In turn, the Dollar may plummet as people could lose confidence in the American economy. In the meantime, forex traders are also trading on other issues, such as Obama’s plan for economic recovery.

The Dollar rose against most of its major currency pairs yesterday, as Obama unveiled his plan to create new jobs, and tackle rising unemployment. The EUR/USD finished Monday’s trading lower by nearly 100 pips at the 1.3886 level. The USD also rose about 80 pips against the CHF to close at the 1.0934 level. However, the USD lost ground against the British Pound, as optimism returned to Britain, after the opposition Conservative party faired well in the European elections. The GBP/USD cross finished higher at 1.6024.

Today, U.S. Treasury Secretary Timothy Geithner is set to be asked about the TARP (Troubled Asset Relief Program) repayments and forecasts for U.S. economic recovery in a Senate hearing at around 14:30 GMT. It would be a wise move for forex traders to open up their USD positions both prior to and after this major news event, as the market is set to be very volatile throughout today’s trading.

EUR – German Industrial Orders Data Pushes Down EUR

Optimism spread through the Euro-Zone following the release of the German Industrial Orders Data. Even though the results were in line with forecasts, this showed the first major sign of stabilization in the Euro-Zone economy. Additionally, March’s figures were revised from 3.3% to a significantly improved 3.7%. However, this led to investors to go short on the EUR in some cases, as traders decided to take risks. Furthermore, many of these traders returned to other currencies, such as the USD and GBP.

Other factors also helped push down the EUR against the major currencies yesterday. These include optimism returning to the British Pound, as the British Conservative Party fared well in the European parliamentary elections and recent reports showed British housing market stabilization. This sparked hope that PM Gordon Brown’s unpopular government will soon collapse.

The EUR/GBP rate tumbled by 85 pips to close at the 0.8660 rate. This alone was owed to great optimism from Germany’s economy. The EUR/USD pair finished Monday’s trading lower by nearly 100 pips at the 1.3886 level. The EUR/JPY finished lower by 120 pips at 136.51, reversing recent gains for this pair.

There are several factors that are likely to dominate EUR trading later today. Firstly, the Euro-Zone’s reaction to recent statements by the IMF (International Monetary Fund) to fix the banking system in the 16-nation region. Secondly, the release of the publication of the results of the German Industrial Production indicator at 10:00 GMT. Thirdly, U.S. Treasury Secretary Timothy Geithner’s speech at 14:30 GMT.

JPY – Yen Extends Gains against US Dollar

The Yen extended its gains against the Dollar yesterday, as optimistic results from Japan’s M2 Money Stock and Economy Watchers Sentiment indicators led to a relatively strong JPY against most of its major currency crosses in yesterday’s trading. The USD/JPY finished lower by 20 pips at 98.27. The EUR/JPY cross finished lower by 120 pips at 136.51. However, the JPY lost over 50 pips against the GBP to close at 157.44.

Looking ahead to today, the forex market is set to be very volatile, as the whole developed economies look to U.S. Treasury Secretary Timothy Geithner’s speech at 14:30 GMT. In late trading today, the Yen is also likely to be affected by the release of the Japanese Core Machinery Orders data at 11:50 PM GMT. Forex traders are advised to open their JPY positions now, as the markets are set for a volatile trading day.

Crude Oil – Crude Gains 1% on Krugman Remarks

Yesterday, Crude Oil gained 1% or 56 cents to close at $68.46. This was following remarks made by the Nobel Prize Winning economist Paul Krugman. He stated that the U.S. recession could end later this year. As a result, this signaled higher energy demand. This could be a ripe possibility as developed countries are continuously showing improved economist results each week.

The price of Crude may hit $70 a barrel in trading later today, if signs from the U.S. and global economy are positive. At the forefront of this will be U.S. Treasury Secretary Timothy Geithner’s speech at 14:30 GMT. Additionally, traders are advised to follow statements by U.S. and European leaders, as they could add to volatility in the market.

Technical News

EUR/USD

It appears that the bearish trend may have run out of strength as the current price level has dropped the pair into the over-sold territory according to the 4-hour chart’s RSI. The pair also currently floats near the lower border of the hourly chart’s Slow Stochastic suggesting a bullish correction may be imminent. In that case, going long with tight stops may be the correct strategy

GBP/USD

After the recent bearish trend, the Cable has consolidated around the 1.6070 level. However, bullish momentum on the hourly chart’s Slow Stochastic suggests that the resumption of general upward mobility is imminent. A bullish cross on the hourly chart’s Slow Stochastic also indicates that the upwards move is impending. Going long might be the right choice today.

USD/JPY

The sharp bearish move that took place during the past couple of days seems to have more room to run. The RSI on the daily chart is crossed above the 50 line, suggesting that the pair may fall further. The bearish move on the daily’s Slow Stochastic also supports this notion. Next target could be 97.75.

USD/CHF

The daily chart shows that the pair has been range-trading this week. However, a bearish cross on the 1-hour chart’s Slow Stochastic suggests that a bearish move is imminent. Going short with tight stops appears to be preferable.

The Wild Card – Oil

The bullish move which was initiated this week seems to be galloping at full speed. As of this morning, all oscillators are indicating the continuation of the bullish momentum. This might be a great opportunity for forex traders to join a very promising corrective trend.

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 Adam Hewison

A conundrum wrapped in an enigma… that’s the S&P 500 index.

I was just looking at the S&P 500 index as we come to a close for the week of June 6th. While the market appears to be higher for week, it also appears that we’re losing momentum on the upside.

This can be seen in the second attempt to close over the 950 level. Also some of our momentum indicators are showing negative divergences. This means that while the S&P 500 is making new highs for the move, the momentum indicators are not showing the same configuration and making new highs. This can often be the first clue of a potential market correction.

In this short video on the S&P 500, you’ll will see exactly what I’m looking at and why.

See the New Video here…

The video is free to watch and there is no need to register. I would love to get your feedback about this video and your own predictions about these markets on our blog.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

By CountingPips.com

The U.S. dollar has continued to be stronger in forex trading against the major currencies today after gaining on Friday following the better than expected Nonfarms Employment data. On a day without a major economic new release, the dollar has gained against the euro, Australian dollar, Canadian dollar, Swiss franc and New Zealand dollar while showing declines against the British pound and Japanese yen.

The euro has fallen in trading versus the dollar from today’s 1.3981 opening at 00:00 GMT to trading at approximately 1.3906 in the afternoon of the US trading session at 1:18pm EST according to currency data by Oanda.

The British pound has turned around early losses to the dollar as the GBP/USD has gone from its 1.5934 opening rate to trading at 1.6048 in the U.S. session.

The dollar has declined very slightly so far today against the Japanese yen as the USD/JPY has risen from its 98.46 opening to trading at 98.38.

The Australian dollar has fallen versus the USD with the AUD/USD trading at 0.7864 after opening today at 0.7975. The New Zealand dollar has also lost ground versus the US dollar as the NZD/USD trades at 0.6185 after opening the day at the 0.6277 exchange rate.

Against the Swiss franc, the USD has been gained ground today as the USD/CHF has risen from its 1.0854 opening to trading at 1.0912. The dollar has increased against the Canadian dollar after the USD/CAD opened at 1.1172 earlier today to trading at 1.1202.

AUD/USD Chart – The Australian Dollar continuing its decline against the US Dollar in Forex Trading after reaching a high for 2009 last week at the 0.8264 exchange rate.

GBP/JPY has touched the top channel line that we noted this morning. We enter a Sell Order at market (current Bid 157.37). Our Stop Loss level is above the channel but below the top BB at 158.10. Our Target Level is towards today’s lows at 155.75.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

By Fast Brokers – Last Thursday’s pullback on large volume was a warning sign, as we had feared.  The EUR/USD has continued its slide on heavy action, dropping back below the psychological 1.40 level.  Volume remained at elevated levels during Friday’s downturn, confirming the conviction of the pullback.  Fortunately for bulls, the EUR/USD has popped back above 5/28 lows on declining volume and is balancing on our 3rd tier uptrend line, avoiding another collapse at least for the immediate-term.  Despite the present stabilization, the pullback on such large volume is disconcerting, and gives us reason to believe there may be more room to go to the downside.  Therefore, although the medium-term uptrend is still intact, it appears as if we’ve entered a new near-term downtrend.  If 5/28 lows don’t hold we could see a retracement towards the 1.35-1.355 zone.  As for the upside, bulls should look out for a recovery above the psychological 1.40 level and our 2nd tier uptrend line on large volume.  If this doesn’t occur, then the currency pair may be inclined to continue its downward path.

We’ve seen a quick, sizable appreciation of the Dollar across the board over the last few sessions, so the Euro is not alone.  Even though many analysts highlight Friday’s job report as the engine behind the appreciation, we believe the rise of the Dollar has more to do with the strong language from Bernanke concerning the need to tighten liquidity as soon as possible without squeezing the economic recovery.  The probability of the Fed raising rates by year end has risen substantially over the past week, giving investors a reason to favor the Dollar.  However, we also view the recent public addresses from both Bernanke and Geithner as a means to change the negative psychology surrounding the sustainability of the Dollar.  Though psychology is obviously a strong market force, the fundamentals are still in favor of a medium-term uptrend in the EUR/USD unless the currency pair should continue to collapse through strong supports on heavy volume.

Today’s German Factor Order report came in line with analyst expectations and received a muted reaction.  News will be relatively quiet on the economic data front in the EU this week. The U.S. will announce retail sales on Thursday which should be a market mover.  However, although there isn’t much data to sift through this week, investors should keep in mind that we have seen volatile sessions and light economic data over the past 8 months.

Fundamentally, we find resistances of 1.3891, 1.3945, 1.4003, 1.4035, and 1.4090.  To the downside, we see supports of 1.3815, 1.3766, 1.3734, 1.3663, and 1.3581.  The 1.40 area serves as a psychological resistance with 1.35 acting as a psychological cushion.  The EUR/USD is currently exchanging at 1.3871.

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 is finally forming a temporary bottom after its swift selloff.  Friday’s downturn gained traction as Gordon Brown faced the resignation of another top official who asked for Brown’s resignation.  The incredible shake up taking place in the Labor Party is unsettling since investors dislike such uncertainty.  The Cable managed to drop beneath the psychological 1.60 level in the process, though it is trying to fight back above right now.  On an encouraging note, volume continues to tail off with the GBP/USD’s decline, meaning a near-term bottom is certainly feasible.  However, Thursday’s large volume to the downside could prove to be significant, indicating we are witnessing the beginning a new near-term downtrend in both the Cable and the EUR/USD.  In the meantime, if our 1.5777 support doesn’t hold, we could witness another pullback towards the psychological 1.55 level.  On the flipside, a near-term pop back above 1.60 and our 3rd tier uptrend line would be a comforting fundamental movement for the bulls.

Regardless of the near-term downward pressure coupled with political instability, we can’t forget economic data from Britain has been very encouraging over the past six weeks.  Britain has outperformed both the U.S. and the EU as far as an economic recovery is concerned, which has given the Pound relative strength.  Therefore, the medium-term uptrend in the Cable is alive and well unless the currency pair should make some drastic downward movements.  Much progress has been made in the GBP/USD since January, and it will take several more convincing pullbacks to destroy the medium-term uptrend.  Meanwhile, the present pullback in both the Cable and the EUR/USD is indicating a retracement in the S&P futures due to their positive correlation.  Therefore, investors should keep an eye on U.S. equities this week to see if key supports in the S&P can hold.

Though economic data will be relatively light from Britain this week, we will see Manufacturing Production on Wednesday along with the U.S. Trade Balance.  We maintain our negative near-term outlook on the GBP/USD trend wise due to the meaningful volume accompanying the pullback.

Fundamentally, we find resistances of 1.5940, 1.6023, 1.6089, 1.6171, and 1.6233.  To the downside, we see supports of 1.5863, 1.5777, 1.5703, 1.5629, and 1.5552.  The 1.60 level acts as a psychological resistance with 1.55 serving as a psychological cushion.  The GBP/USD is currently exchanging at 1.5907.

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.