Month: February 2010

By Editorial Staff

Government debt is no longer just a problem for emerging countries. Portugal, Spain, France and Greece (as we have seen in recent weeks) are living in fear of credit default. Consequently, the value of their credit default swaps is skyrocketing.

The following is an excerpt from the February issue of Global Market Perspective. For a limited time, you can visit Elliott Wave International to download the rest of the 100+ page issue free.

High levels of global debt are both financially debilitating and deflationary because they commit scarce cash to servicing interest payments. Up until now, most sovereign credit defaults occurred in emerging-market countries, such as Argentina and Russia. The deflationary tide, however, is starting to lap up against more developed Eurozone economies.

The chart shows the value of credit default swaps — an instrument similar to an insurance contract that pays holders (if they are lucky) in the event of default — for Greece, Portugal, Spain and France. In recent weeks these contracts have soared, with credit-default swaps on Greece’s and Portugal’s debt already surpassing the January-March 2009 extremes established in the latter part of Primary degree 1 down.

Obviously, the market is growing more skeptical that Greece can pay its debts, so the cost of protecting against default is rising fast. Greece’s budget deficit is 12.7% of gross domestic product, and Portugal faces a budget shortfall that’s more than twice the European Union’s limit. Traders are now buying default protection on sovereign debt at a rate of more than five times that of specific company bonds. “Greece’s neighbors would ‘step in’ to prevent a debt default to avoid ‘a problem for the whole of Europe,’” a Tokyo-based bondsalesman says. Maybe so, but who will step in to bail out Portugal, Spain, the next sovereign default or the one thereafter?

The world is running out of money to service its mounting debts, and this chart simply depicts the front edge of the next great wave of credit contraction, which will sweep into more established countries throughout Europe and eventually to the United States.

By CountingPips.com

Economic news out of the U.S. today showed that new orders for durable goods increased by more than expected in the month of January. Durable goods orders in the United States rose by 3.0 percent in January to a total of $175.7 billion following December’s revised 1.9 percent gain, according to the report released by the U.S. Commerce Department today. January’s advance marked the second consecutive month of increases after October and November registered declines.

Market forecasts had been expecting that durable goods orders would increase by approximately 1.5 percent for the month. Durable goods are products manufactured in the U.S. and considered to last more than three years.

New orders for durable goods excluding transportation decreased by 0.6 percent in January following a revised increase of 2.0 percent in December. This data was worse than the market forecasts which were predicting an increase of 1.0 percent for durables minus transportation for the month.

January’s results for shipments of durable goods decreased by 0.2 percent after gaining for four straight months. Unfilled orders increased by 0.1 percent after falling for fifteen straight months while durable good inventories decreased 0.1 percent for the thirteenth consecutive month. January non-defense orders for new goods rose by 4.7 percent while defense orders for capital goods increased by 19.2 percent.

Weekly Jobless Claims rise by 22,000.

A separate government release by the U.S. Labor Department showed that weekly U.S. jobless claims increased in the week that ended on February 20th. New jobless claims climbed to a total of 496,000,000 unemployed workers, an increase over the prior week by 22,000 workers. This gain of jobless claims was more than expected as market forecasts predicted a fall to 465,000 jobless claims. A 4-week moving average of unemployed workers declined by 6,000 from the prior week to a total of 473,750.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending February 13th also increased for the week. Continuing claims rose by 6,000 workers to a total of 4,617,000 unemployed workers. A four week moving average of continuing claims edged up by 4,250 to 4,600,750.

US Dollar trades higher in Forex.

The U.S. dollar has been mostly stronger in forex trading today against the other major currencies on investor risk aversion. The dollar has advanced today versus the British pound, Canadian dollar, New Zealand dollar and the Australian dollar while falling against the Japanese yen, according to currency data by Oanda as of 2:29 pm EST.

Against the euro and the Swiss franc, the American currency is trading virtually unchanged from today’s opening rate after registering gains that have been pared by this afternoon. The euro had fallen versus the dollar to the 1.3452 exchange rate earlier today from the 1.3542 opening rate before an afternoon surge that has brought the EUR/USD pair to back to the 1.3541 level.

The U.S. stock markets, meanwhile, are declining today with the Dow Jones following by approximately 90 points, the Nasdaq decreasing over 10 points and the S&P 500 down by almost 7 points so far.  Oil has fallen by $1.94 to $78.06 while gold has gained by $11.30 to trade at the $1,107.80 per ounce level.

USD/JPY 1-Hour Chart – The US Dollar falling today in forex trading versus the Japanese Yen by over 100 pips on trader risk aversion. The USD/JPY fell under the 89.00 level for the first time since February 5th and is down by over 200 pips since Sunday after gaining last week.

By Adam Hewison – It’s been about eight days since we did a video on gold, and given the market action today I thought I would look at what is causing the downward pressure in this market.

If you did not watch my last video on gold, I strongly recommend you click here to watch the video titled “Five Reasons Why Gold Will Not Make a New High This Time” as it will give you a bigger picture of how we see this market playing out in the next 12 months.

Watch the New Video

In today’s short video we look at an indicator that we have not talked about before in any of our videos. The indicator, which is an overlay on top of the chart, is called the Donchian Channel Indicator.

Richard Donchian, who has since passed away, came up with this indicator in the late ’40s. The reason why I like this indicator is the fact that it has successfully stood the test of time. I think you’ll really enjoy seeing how it can help you make money in the gold market.

Also in this video, I point out one very important cycle that is in play now and where I think the next tradable low is coming into this market.

Watch the New Video

As always our videos are free to watch and there are no registration requirements. I would really like to hear back from you, with regards to your thoughts on the gold market. You can comment quite easily on our blog.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

Gold is floating just beneath its highly psychological $1100/oz level despite broad-based risk aversion in the FX markets.  The Cable, Aussie, USD/JPY and EUR/USD have all made large legs down today amid fresh uncertainty in Greece.  Additionally, economic data from around the globe was less than encouraging, particularly the rise in weekly U.S. Unemployment Claims.  Today’s negative psychological and fundamental developments have led investors for safety, reflected in the downturn in the risk trade.  However, gold is holding up very well considering the rise in the Dollar and Yen.  Gold has been negatively correlated with the Dollar, making its present stability intriguing.  Meanwhile, the risk trade is trying to right itself at the moment, so it will be interesting to see if gold can pop back above $1100/oz regardless of strength in the Dollar.  The UK and U.S. will both release GDP data tomorrow, meaning volatility in the FX markets could end the week on a volatile note.  Hence, gold may follow suit if the Dollar’s run continues.

Technically speaking, gold faces multiple downtrend lines along with 2/24 and 2/23 highs.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday and 2/12 lows.  Furthermore, the psychological $1100/oz level could continue to play an influential role over the near-term.

Present Price: $1093.80/oz

Resistances: $1094.34/oz, $1096.04/oz, $1098.51/oz, $1100.74/ oz, $1103.10/oz, $1106.18/oz

Supports: $1091.58/oz, $1089.87/oz, $1087.66/oz, $1085.21/oz, $1083.25/oz, $1080.79/oz

Psychological: $1100/oz, $1125/oz, February highs and lows

(click to enlarge)

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.

The Aussie is logging sizable gains today as the risk trade sells off across the board.  The Cable, EUR/USD, and USD/JPY are all heading south amid fresh uncertainty in Greece.  Although Australia’s CapEx data came in stronger than expected today, instability in the EU makes a rate hike by the RBA next week less certain.  Investors should recall that Stevens cited insecurity in the EU as an influential factor guiding the RBA’s decision to halt its rate hikes at the last meeting.  Hence, should problems in the EU heat up over the next few sessions then the RBA could decide to hold off on a rate hike once again.  However, Australia’s economic data has been rather strong lately, meaning the RBA does have fundamental reasons to raise when the decision making process comes around.  Meanwhile, although Australia will release Private Sector Credit data tomorrow, focus will likely be on the UK and U.S. with the release of Revised GDP and Prelim GDP, respectively.  Additionally, investors should continue to monitor news headlines regarding debt issues in Greece, for further uncertainty could create more volatility in the risk trade across the board.

Technically speaking, the Aussie has multiple uptrend lines serving as technical cushions along with intraday and 2/12 lows.  Speaking of 2/12 lows, investors should eye our 3rd tier uptrend line since it runs through these levels.  Hence, a failure of our 3rd tier uptrend line could yield a retest of the .8780 area over the near-term.  As for the topside, the Aussie has multiple downtrend lines serving as technical barriers along with the highly psychological .90 level should it be tested.

Price: .8824

Resistances: .8830, .8845, .8863, .8875, .8885, .8903

Supports: .8809, .8798, .8781, .8765, .8745, .8734

Psychological: .90, February highs and lows

(click to enlarge)

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.

The USD/JPY has tumbled below its highly psychological 90 level as investors divert from the risk trade across the board.  More uncertainty in Greece coupled with discouraging U.S. unemployment claims has sent investors towards safety, and the Yen is obviously clearly from this movement.  Meanwhile, there has been no new news concerning the BoJ changing its neutral monetary policy stance.  This stance is likely benefitting the Yen during moments of risk aversion since investors aren’t pricing in looser liquidity in the near future.  Japan will release CPI, industrial production, and retail sales data tomorrow.  Attention will likely be focused on the Tokyo Core CPI since the DPJ’s concern about deflation has been at the center of conversations lately.  Should consumer prices print weaker than anticipated the administration could place more pressure on the BoJ to loosen liquidity.  On to other hand, solid CPI data could benefit the Yen since such a development could relieve pressure from the BoJ to take action.  The UK will release Revised GDP data tomorrow followed by Prelim GDP numbers from the U.S.  Hence, the FX markets could end the trading week on a volatile note.

Technically speaking, the USD/JPY has dropped beneath our 3rd tier uptrend line and has our 1st and 2nd tiers serving as supports for the time being.  Meanwhile, the USD/JPY is getting closer to a retest of February lows, so it will be interesting to see if the currency pair can stabilize from here.  As for the topside, the USD/JPY faces multiple downtrend lines and the psychological 90 area is now serving as a technical barrier.

Present Price: 89.02

Resistances: 89.10, 89.19, 89.28, 89.41, 89.54, 89.67

Supports: 88.93, 88.85, 88.73, 88.54, 88.36, 88.26

Psychological: 90, February lows

(click to enlarge)

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.

The Cable is under considerable selling pressure today, tumbling below previous February lows amid relative weakness as highlighted by another leg up in the EUR/GBP.  It’s difficult to pinpoint the reason driving the Pounds dive lower.  Although Prelim Business Investment printed far below analyst expectations, CBI Realized Sales came in strong.  Therefore, the force driving the Pound lower could be fears of the UK’s ties with Greece’s debt.  In the past there were rumors circulating that some UK financial institutions have sizable exposure to Greek debt.  However, this is merely speculation with no grounds.  Hence, we’ll have to wait and see what reasoning there is behind the Pound’s tumble.  Considering several psychologically negative news stories have surfaced concerning Greece today, a belief that the Cable’s tumble is associated with troubles in the EU may not be so far-fetched.  The S&P and Moody’s warned that they may downgrade Greece’s debt should the government not successfully implement its rescue package.  Additionally, Greek government officials have made provocative statements towards Germany, raising fears that the EU will not bail out Greece should its fiscal situation deteriorate further.  In addition to fresh uncertainty in Greece, the U.S. released a disconcerting weekly unemployment claims figure while durable goods printed mixed.  Negative fundamental developments aren’t proving to be too helpful for the risk trade, placing additional downward pressure on the Cable.  Meanwhile, it will be interesting to see if the Cable can stabilize ahead of tomorrow’s UK Revised GDP and HPI data.  The U.S. will also release its Prelim GDP data, meaning the FX markets could end the week on a volatile note.

Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday, 2/24, and 2/23 highs.  Additionally, the 1.55 level could serve as a technical barrier should it be tested.  As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with intraday lows.

Present Price: 1.5277

Resistances: 1.5290, 1.5317, 1.5348, 1.5365, 1.5390, 1.5416

Supports: 1.5253, 1.5235, 1.5195, 1.5171, 1.5145, 1.5126

Psychological: February lows, 1.55, 1.53

(click to enlarge)

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.

The EUR/USD has dipped back below its psychological 1.35 level and is testing February lows as uncertainty in Greece regains steam.  S&P and Moody’s warned that they may downgrade Greece’s debt by the end of March should the government not successfully implement its austerity plan.  Meanwhile, Greek government officials are throwing verbal grenades at Germany, effectively harming ties with the country Greece may need to rely upon for a bailout.  The deteriorating relationship between the two countries is stoking speculation that Germany may leave Greece to its own devices to correct its economy or go to an outside source, specifically the IMF.  Regardless of the lasting effects of the spitballs flying around, today’s developments are having a negative impact on the risk trade.  The EUR/USD, Cable, AUD/USD, and USD/JPY are all heading south in a clear signal that investors are heading for safety.  Exacerbating today’s move is a disconcerting rise in U.S. weekly unemployment claims along with mixed durable goods data.  Although the headline outpaced expectations, the core number disappointed.  All that being said, the EUR/USD is holding up relatively well thus far, likely a result of encouraging German Unemployment Change data.  The Euro’s comparative strength is highlighting by another solid step higher in the EUR/GBP.  Meanwhile, the data wire won’t slow down with U.S Prelim GDP and Existing Home Sales due tomorrow.  Additionally, the EU will release some CPI numbers.  Should EU consumer prices print poorly then the EUR/USD could experience further downward pressure in the anticipation that liquidity tightening is not in the picture for the foreseeable future.  After all, it’s difficult to imagine tighter liquidity with the fiscal issues in the PIIGS nations.

Technically speaking, the EUR/USD faces multiple downtrend lines along with 2/24, 2/23, and 2/17 highs.  As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 2/19 lows.  Furthermore, the psychological 1.35 area could continue to have an impact on price movements.

Present Price: 1.3473

Resistances: 1.3493, 1.3516, 1.3546, 1.3572, 1.3594, 1.3634

Supports:  1.3458, 1.3440, 1.3420, 1.3394, 1.3377, 1.3358

Psychological: February lows, 1.35

(click to enlarge)

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 Russell Glaser – A continuation of the previous Forex Technical Analysis of the EUR/USD 4-hour chart shows that it may be time to close out those short positions that were opened two days ago.

Traders who were short on the EUR/USD may want to close those positions at a profit, or at least pair their exposure at this time. The 4-hour chart shows some resistance building, if only in the short term.

Below we have the 4-hour EUR/USD with a long term trend line that begins on Jan 26th (not shown) and a new short term trend line that begins at yesterday’s price high of 1.3625

1. The Stochastic Slow Oscillator is showing a bullish cross forming below the 30 level. This indicates the potential for an appreciation of the price.

2. The 7-day Relative Strength Indicator briefly dipped below the oversold level and has since moved above this level. This indicates a sell signal.

3. The price reached a significant support line at the price of 1.3956. The pair has since reversed upwards.

4. The next resistance lines for the pair stand at 1.3512, 1.3570. 1.3625.

The pair looks to be making a slight correction in the long term bearish trend. Traders may find a new entry point to go short on the EUR/USD pair at one of the resistance levels above.

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.

Source: ForexYard

The U.S. Unemployment Claims is the primary publication today that is set to determine the level of the USD when it is released at 13:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the Dollar and EUR is the publication of the German Unemployment Change and British CBI Sales at 8:55 GMT and 12:45 GMT respectively. Traders may find good opportunities to enter the market following these vital announcements.

Economic News

USD – New Home Sales Fall Sharply

The dollar fell against the Yen and EUR Wednesday after data showed sales of new U.S. homes fell sharply in January, raising doubts about the U.S. economy and causing investors to reduce exposure to risk. Sales of newly built U.S. single-family homes unexpectedly fell to a record low in January, dropping 11.2 %. As a result, the EUR/USD shot up over 30 pips before correcting itself. Currently the pair is trading around the 1.3490 level. Similarly, the USD/JPY pair fell almost 80 pips, pushing the oft-traded currency pair to 89.60.

The greenback also remained under selling pressure on expectations that U.S. interest rates will stay at very low levels for some time, following comments by Federal Reserve chief Bernanke on Wednesday. Low interest rates make the dollar less attractive to investors than higher-yielding currencies, stocks and commodities. In addition, the economic recovery does not appear to be improving at the speed many investors were hoping for, and currencies appear to be tracing the movement of stocks as a result.

Looking ahead to today, the most important economic indicators scheduled to be released from the U.S. are the Unemployment Claims and Durable Goods Orders at 13:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Federal Reserve Chairman Ben Bernanke’s testimony at around 14:00 GMT. This testimony is very important as it is very likely to impact the Dollar’s volatility. Traders are advised to watch closely, as this is likely to set the pace of the dollar going into the rest of the week’s trading

EUR – German Unemployment Change on Tap

The EUR completed yesterday’s trading session with mixed results versus the major currencies. The 16 nation currency was little changed against the USD and the pair closed at 1.3490 levels, but slightly higher against the GBP in a volatile session and closed at 0.8785 levels.
The EUR fell to a nine-month low of $1.3440 last week on concerns about Greece’s public finances. A rating downgrade of Greece’s four largest banks by Fitch on Tuesday reminded investors of the financial woes facing the country. Moreover, recent data showing German consumer sentiment set to decline in March also added to negative EUR sentiment, as did a weak German business sentiment Tuesday.

Sterling pound rose 0.2% to $1.5430 against the USD in the early trading yesterday, after having tumbled on Tuesday when the Bank of England left the door open to more emergency measures and issued a downbeat economic outlook.

Looking ahead today, the news event that may have a very large impact on the EUR and its main currency pairs in today’s trading is the German Unemployment Change around 8.55 GMT. This report is very important and is likely to impact the EUR’s volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release

JPY – Yen Gains against Most Major Currency Counterparts

The Yen experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The JPY extended gains versus the EUR during yesterday trading session and closed at 120.90. The Japanese yen also saw bullishness against the USD as it jumped around 80 pips and closed at 89.60.

The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today, especially the U.S Unemployment Claims at 13:30 GMT. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

OIL – Oil Recovers, Climbing Above $80 a Barrel

Crude oil rose more than $1 to $80.20 a barrel after Federal Reserve Chairman Bernanke said the U.S. economy is in a “nascent” recovery that requires low interest rates to encourage demand by consumers and businesses.

Oil climbed 1.5% as Bernanke told the House Financial Services Committee that private-sector demand growth for goods and services will fuel the rebound. The Energy Department reported oil supplies gained 3.03 million barrels last week to 337.5 million, the highest level since November.

As for today, traders are advised to watch carefully the leading stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone in order to predict the next movement in oil prices.

Technical News

EUR/USD

The latest downtrend in this pair has pushed the price into the over-sold territory on the RSI of the hourly and 4-hour charts, indicating that a downward correction may be imminent. With fresh bullish crosses occurring on the hourly charts Slow Stochastic, this notion may indeed be correct. Going long might be a wise choice today

GBP/USD

The pair is continuing its bearish development, as the cable dropped almost 300 pips in the past 2 days. All oscillators on the hourly chart are pointing down, indicating that the falling trend has more room to go. Next price target might be 1.5250.

USD/JPY

The Slow Stochastic and the RSI on the 4H chart are showing a continuation of the current bearish correction. There is also a very accurate bearish channel forming on the daily chart. In addition, all indicators on the hourly chart are pointing down. Going short might be the right choice today

USD/CHF

The bullish momentum continues with full steam as the pair breached the key Fibonacci level of 1.0850. Currently, all oscillators on the daily chart are giving bullish signals; hence, going long seems to be preferable

The Wild Card

CHF/JPY

The latest downward movement on this pair has given traders two distinct signals for a bullish correction later today. The first is a bullish cross on the 1 hour Slow Stochastic, suggesting a upward movement is imminent. The second is a fresh doji candlestick formation on the 4-hour chart, which typically signals a reversal is in the making. Entering long positions as soon as possible may help forex traders capture decent profits.

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.