Month: December 2009

By Fast Brokers – The Cable has cleared our 4th tier uptrend line and its psychological 1.65 level as the currency pair runs higher with the risk trade.  Investors are heading back to riskier investment classes after China’s Manufacturing PMI results showed Dubai’s debt issue does not necessarily imply a slowdown in the overall growth of emerging markets.  In addition to China’s positive data release, the RBA raised its benchmark rate by another 25 basis points as widely expected.  The RBA’s vote of confidence in Australia’s economic recovery is encouraging investors to reconsider the risk trade after the occurrence in Dubai shook FX markets.  The Cable is a direct beneficiary of this boost in confidence despite a lighter than expected UK Manufacturing PMI number.  However, UK’s economy is more service-based, reducing the weight of manufacturing.  Furthermore, Nationwide’s HPI figure printed in line with expectations, implying a stable UK housing market.  As a result, the Cable is showing little hesitation to participate in today’s broad-based weakness of the Dollar.

Meanwhile, gold is knocking on the door of its psychological $1200/oz level as the S&P futures rally beyond their psychological 1100 level pre-market.  Hence, the Cable’s positive correlations are currently creating an environment supportive of further downward movements in the Dollar sound economic fundamentals comply.  That being said, investors should also keep an eye on the EUR/USD and its interaction with our 3rd tier downtrend line as well as November highs should they be tested.  A topside breakout in the EUR/USD could signal a more extensive rally in the FX risk trade, thereby benefitting the Cable.

Technically speaking, the Cable still faces multiple downtrend lines along with 11/25 and 11/17 highs.  Our 4th tier downtrend line appears to carry the most weight since it runs through 11/17 highs.  A movement beyond our 4th tier could imply more extensive near-term gains in the Cable.  As for the downside, the Cable could find supports in the psychological 1.65 area along with 11/20, 11/30, and 11/27 lows.  Additionally, the GBP/USD has multiple uptrend lines serving as technical cushions.

Present Price: 1.6596

Resistances: 1.6616, 1.6634, 1.6673, 1.6707, 1.6730, 1.6748, 1.6790

Supports: 1.6571, 1.6543, 1.6498, 1.6461, 1.6409, 1.6372

Psychological: 1.65, November Highs and Lows

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 is trading in the green again today as the risk trade regains some of its positive momentum.  The combination of in line Chinese Manufacturing PMI data and the RBA raising its benchmark rate by another 25 basis points is giving investors confidence that economic performances remain on the path to recovery.  Although the RBA signaled that its latest rate increase places the central bank’s monetary policy in coordination with expected inflation, the RBA’s vote of confidence is enough to refuel the risk trade.  Naturally, the EUR/USD is benefitting from today’s events since the Euro was already flexing a relative strength despite the debt issue in Dubai, which now appears not as severe as previously speculated.  The EU released a bit of data of its own, including a positive Germany Unemployment Change figure along with an expected 9.8% EU Unemployment Rate.  German Retail Sales did print a basis point shy of expectations, although this doesn’t seem to be having too large of an impact on the currency pair at the moment.  Meanwhile, investors should note that gold is knocking at $1200/oz while the S&P consolidates above 1100.  Hence, the EUR/USD’s positive correlations are strengthening and could be preparing for another leg higher should fundamentals and psychologicals work in favor of the risk trade.

Technically speaking, the EUR/USD is creating some space between present price and the psychological 1.50 level.  The currency pair has cleared October highs once again and could take a shot at November highs.  That being said, investors should monitor the EUR/USD’s interaction with our 3rd tier downtrend line and 11/25 highs should they be tested.  A breakout beyond these two technical barriers could yield a more accelerated upward movement.  As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with intraday lows and the psychological 1.50 level.

The EU news wire should be relatively quiet until Thursday’s ECB meeting.  At the ECB’s previous press conference, Trichet seemed to have a more aggressive tone in terms of the central banks intentions to unwind alternative liquidity measures.  Exactly which liquidity tools and when they would be dismantled remains to be seen.  Either way, Thursday’s monetary policy meeting could carry a bit of uncertainty.  For the time being, investors should eye the EUR/USD’s topside technicals along with any developments in the currency pair’s positive correlations.

Present Price: 1.5076

Resistances: 1.5082, 1.5097, 1.5117, 1.5133, 1.5154, 1.5168, 1.5117, 1.5133

Supports: 1.5068, 1.5060, 1.5045, 1.5027, 1.5015, 1.4988, 1.4977

Psychological: 1.50, November Highs

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 CountingPips.com

The Reserve Bank of Australia increased its interest rate by 25 basis points for the third consecutive month today. Today’s decision to raise the cash rate to 3.75 percent was generally expected by market forecasters. Australia became the first G20 economy to increase its interest rate since the financial crisis in October as the Australian economy has been picking up steam. The October rate increase was the first rate change since April 2009 when the RBA decreased the rate by 25 basis points to the 3.00 percent level, a 49-year low.

Australia’s Glenn Stevens, Governor of Monetary Policy, said in his policy statement that, “The global economy has resumed growth.  With economic policies remaining expansionary, growth is likely to continue next year, though it will probably be modest in the major countries, due to the continuing legacy of the financial crisis. In China and Asia generally, where financial sectors are not impaired, recovery has been much quicker to date and prospects appear to be for good growth in 2010.”

Australia’s economy handled the economic crisis better than most others as a technical recession was avoided with government stimulus as well as strong demand for Australian goods from China helping the economy avert a deep downturn. In 2009, the GDP of Australia rose for the first half of the year with a 0.4 percent increase in the first quarter followed by a 0.6 percent gain in the second quarter.

Stevens commented on the Australian economy today saying that, “In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery. The effects of the early stages of the fiscal stimulus on consumer demand are fading, but public infrastructure spending is starting to provide more impetus to demand. Prospects for ongoing expansion of private demand, including business investment, have been strengthening.”  Stevens also said that inflation has continued to be moderate and that unemployment has likely peaked at a level that is lower than previously predicted.

The Australian dollar has been mixed today in forex trading after the interest rate announcement.  The Aussie has gained against the US dollar, euro and Japanese yen while declining versus the New Zealand dollar and Canadian dollar according to currency data from Oanda at 12:52pm EST.

AUD/USD Chart – The Australian dollar gaining versus the US dollar in forex trading today after the RBA increased its interest rate for the third month in a row. The AUD/USD had fallen below 0.9000 last week on risk aversion after Dubai’s economic troubles came to light but has headed higher so far this week.

By Adam Hewison – Well here we are in the month of December and things can get pretty tricky this month. For this reason, I wanted to produce a video that I thought would be helpful to you during this time.

In my new video I show you the exact points that we’re looking at for a major trend change in the S&P 500. I also point out the exact number that will show an exit point, but not a major trend change, in this same index.

Watch the New Video Here…

As always our videos are free to watch and there is no need to register and we look forward to your comments.

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

By Anton Eljwizat – Scandinavian markets were greatly affected by global events this past week. Swedish Krona headed for its second monthly depreciation versus the EUR, falling 0.5% to 10.4946 per EUR yesterday after Dubai’s government said Dubai World’s debt is not yet assured. The Krona also dropped 0.5% today to 6.9987 per Dollar.

Sweden’s economic activity declined by 5% in the 3rd quarter as business inventories exhibited a larger than expected drop. The result also weighed on the currency against the Dollar and EUR. The country’s gross domestic product however, grew by 0.2%. Overall, Sweden’s economy is now starting to stabilize.

Norway’s Krone also fell on concerns over Dubai’s plan to postpone debt repayments, posting its first monthly decline versus the EUR since June. The Krone fell 1.3% against the EUR in November and 0.6% against the Dollar in the month.

Technical analysis

• The chart below is the daily chart of the EUR/NOK currency pair.

• The indicators used are the Slow Stochastic, MACD/OsMA, and RSI.

• Point 1: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 2: The RSI signals that the pair sits near the upper border, suggesting a downward correction may be imminent.

• Point 3: The MACD indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future.

EUR/NOK Daily Chart

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.

The FX Buzz

Last week ended with a rather negative tone as debt problems in Dubai caused worries over the economic recovery to refloat once more but most importantly it spurred rumors there is more Dubai like bubbles awaiting to be burst. It seemed that the positive sentiment which fed markets only a few days before faded rather quickly moving investors to re-price risk in their positions. But not all investors were on the red, the FX market was in the eye of the storm and on the centre of the Buzz, investors who reacted quickly to the rumors echoing from Dubai were those who closed their positions in the money. Traders who bought the Dollar above 1.51 per Euro and the Yen above 150¥ per Sterling last week, were able to Sell both substantially higher having juicy profits even before the week ended. Meanwhile the Strom in Dubai has eased somewhat after UAE central bank pledged to assist distressed banks in the region. However the past week made one thing clear, when market Buzz is dominant market volatility is prominent, and with volatility comes opportunities. We therefore have decided to prepare for you a few update on the latest FX Buzz and some suggestion on how you should react to them.

The Buzz: Will the SNB (Swiss national bank) intervene with the CHF rate?

Lately investors are betting more and more on an intervention by the SNB to contain the strength of the Franc. Why then if Swiss export held well does the SNB need to intervene? The reason is carry trades , Eastern Europe Real Estate ventures barrowed heavily from Banks in Switzerland in Swiss Francs and whenever the Franc gains strength those borrowers have a hard time paying the debt placing strong pressure on the Swiss banking system.

So what should you look for?

The Swiss GDP is due today with investors expecting a 0.3% Growth QoQ any surprise downwards will signal the Swiss economy is having a hard time dealing with a Strong Franc, spice it a little with a CHF close to 1$ trading around 1.5CHF per Euro and you get a perfect recipe for rumors on an SNB intervention to start floating. In this case the classical rule goes Buy USD/CHF, EUR/CHF on rumor sell on fact.

The Buzz: Will the BOJ (Bank of Japan) come to the rescue?

Many ask themselves what is the factor that eventually led the Japanese Yen to break the 87 support against the Dollar? The answer is deflation, Japanese CPI figures published just before the dawn of the 27 of November pointed inflation in Japan is -2.5% YoY. This caused investors to move quickly into Japanese Government bonds for safe haven, folding counter Yen bets and pushing the Yen to a 14 Year high against the Dollar. The record high Yen against the Dollar which is the main export zone for Japan is burdening on Japanese exporters  generating an increasing tension between the government which wants more of an active intervention and the Central bank which is reluctant to do so.

So what should you look for?

The BOJ can either interfere directly in the FX rate, the USD/JPY encounters strong demand under 85¥. The BOJ can also purchase corporate Bonds to ease credit conditions (effectively print money). Look for any hints on BOJ statements of assets purchases. A large scale of asset purchasing by the BOJ can push the Yen lower very rapidly.

The Technicals:

USD/CHF Daily

Bullish Scenario-A daily close above 1.0250 would move the pair to retest the 1.035 resistance.

Bearish Scenario- Since the pair is still in a bearish trend line the downside risk is still higher. Another failure to break the 1.02 resistance will pull back to retest the 0.99 very quickly.

EUR/CHF Daily

Bullish Scenario- The pair is currently just 85 pips short of the 1.5 key level making it a good risk reward trade with a potential target at 1.5250.

Bearish Scenario- A Daily close below 1.4900 could push the pair to retest the 1.45 support.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Source: ForexYard

The Dollar declined slightly against most rivals in today’s early trading, as concerns over Dubai’s debt repayment problems eased, boosting demand for higher yielding currencies and commodities.

Economic News

USD – Dollar Declines as Concerns over Dubai Ease

The Dollar declined slightly against higher yielding currencies in today’s early trading as concerns over credit losses in Dubai eased and better than expected economic data signaled the global economy is on the way to recovery, boosting demand for riskier assets. The Dollar weakened to $1.5013 per EUR from $1.5005 yesterday in New York. The greenback lost 1.9% in November overall. The Dollar was at Y86.45 from Y86.75 yesterday.

Investors also appeared hesitant ahead of this week’s U.S. and Euro-Zone economic data as well as interest-rate decisions by several major central banks, therefore limiting their risky positions. Throughout the economic crisis, the U.S. Dollar has tended to fall on improved economic outlook and equity gains. The Federal Reserve’s policy of near-zero interest rates has which the U.S. Dollar one of the lowest yielding currencies in the world also adds to the negative pressure on the Dollar against riskier, higher yielding currencies such as the EUR. Giving a lift to sentiment Monday and weighing on the USD, the Chicago PMI showed more businesses in the Chicago region were expanding in November. The business activity index rose to 56.1% this month, the highest since August 2008.

Looking ahead to today investors should follow the release of the ISM Manufacturing PMI and Pending Home Sales due to be released at 15:00 GMT. A continuation of the optimistic data will likely continue putting pressure on the greenback.

EUR – EUR Boosted by China’s Manufacturing Data

The EUR was little changed against the Dollar following a report that showed China’s manufacturing growth maintained its fastest pace in 18 months. The EUR was at $1.4990 from $1.4955 late Friday and at Y130.50 from Y129.71. Expectations that German Retail Sales expanded in November also helped boost risk appetite.

This week investors will be weighing in on key economic data from Europe and the U.S, including today’s release of Euro-Zone Manufacturing data and Friday’s U.S. Non-Farm Payrolls. The European Central Bank will announce Thursday whether it will raise its key interest rates. While The ECB is not expected to change rates, investors will be paying attention to any comments regarding the timing and exit strategy of the current monetary policy.

JPY – Yen Steady against the Dollar

The Yen fell for the first time in six days against the EUR on optimism regarding Dubai World debt issues. The safe haven Yen also remained up against the Dollar, despite the cautious move back to riskier assets.

The move to safety followed the news of a payment freeze on the $60 billion debt of Dubai World. The Yen traded at 86.44 per Dollar from 86.41. The Yen was at 129.77 per EUR from 129.64. The Yen seems to be able to hold on to the gains it makes during flights to safety by investors during days of poor financial sentiment.

Crude Oil – Crude Prices Up on Improved Economic Outlook

Crude for January delivery rose $1.23, or 1.6%, to end at $77.28 a barrel on the New York Mercantile Exchange Monday. Further boost to Oil prices came after the Institute for Supply Management Index for the Chicago area climbed to 56.1, the highest level since August 2008. Furthermore, China’s manufacturing growth maintained the fastest pace in 18 months in November.

The Oil market was also supported by tensions with Iran, as the country announced over the weekend its intention to build 10 uranium-enrichment plants. Iran is the world’s fourth-biggest Oil producer.

Technical News

EUR/USD

The pair currently sits near the upper border of the 4-hour chart’s RSI, suggesting a downward correction may be imminent. The downward direction on the weekly chart’s RSI also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

USD/JPY

The USD/JPY cross has experienced a bullish trend yesterday, and currently stands at the 87.30 level. The daily chart’s Slow Stochastic supports this currency cross to rise further today. However, the hourly chart’s RSI signals that a bearish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

USD/CHF

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the pair currently sits near the bottom border of the weekly chart’s RSI, indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Gold

Gold prices rose significantly in the last month and peaked at $1178.60 an ounce. However, the daily charts’ RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex forex traders to enter the trend at a very early stage.

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.

Market Movers of the Day

Europe

*UK Gfk Consumer Confidence worse than expected at -17

*EU CPI better than expected at 0.6%

Americas

*Canada’s GDP (3Q) lower than forecasted at 0.4% annualized

*US Chicago PMI above estimations at 56.1

The Overall Sentiment

Equities

US stock markets closed the day with modest gains as worries about Dubai’s debt started to lighten. Equities fell on early trading hours as the results of the Black Friday’s sales disappointed investors but managed to recover the losses as Dubai World stated it started negotiations with creditors. The S&P advanced 0.4% and the Dow Jones added 0.3%. In Europe, however, the risk of a potential default from Dubai World still weighed on the markets as most of the debt is owed to European banks. The British FTSE 100 and the German DAX index lost 1.1% each.

Forex

The dollar weakened against higher-yielding currencies as concerns about Dubai’s debt eased and positive US economic data boosted risk appetite. EUR/USD advanced in early hours topping around 1.5080, correcting as the day advanced but managing to close above the 1.50 mark. The pound declined against all the majors as UK Consumer Confidence unexpectedly disappointed and the Dubai situation continued to worry investors as around 40% of the Dubai World’s debt is owed to UK banks. GBP/USD fell below 1.65 settling around 1.6450. The Canadian dollar closed the day rather flat at around 1.0550 against its US counterpart after battling between gains and losses as Canadian GDP reported lower-than-expected figures but confirmed that Canada came out of recession in the third quarter. The Aussie dollar traded sideways around 0.9150 as investors remained expectant ahead of the RBA’s interest rate decision. USD/JPY continued to trade in a volatile manner without taking any definite side away from the 86.50 area.

Commodities

Gold closed slightly below $1180 recuperating from the huge sell-off on Friday as Dubai’s debt worries eased. Silver advanced as well modestly surpassing $18.40. Crude Oil rallied above $77 on reports about Somali pirates capturing a tanker that was carrying oil from Saudi Arabia to the US.

The Day Ahead

The day will start with the Reserve Bank of Australia’s interest rate decision. The RBA has already raised interest rates two months in a row and investors expect a further quarter percentage point increase to 3.75% as the Australian economy continues to grow. The European session will be filled with data starting with a 0.3% expected expansion for Switzerland’s GDP quarterly figures and a 0.6% gain forecasted for German Retail sales in October. Germany and the EU will release their PMI manufacturing numbers as well as Unemployment data. The UK’s PMI manufacturing is also due for release. In the US, the ISM Manufacturing Index is expected to fall to 54.8 from 55.7 the previous month.

Read more about the Aussie interest rate decision

Technical Analysis

GBP/JPY DAILY

When GBP/JPY broke above the wide 139-144 range it quickly climbed almost 1000 pips. After trading around 150 for some time the cross corrected back inside the range. The next sessions should be closely followed expecting a potential break above 144 that could send GBP/JPY to the 150 surroundings once again, where a drop below 139 could be the trigger to a big bearish move.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.