Month: February 2010

Nervousness in the Forex market resumed as dented US home sales and the Fed’s exit scheme weighed on the Fed’s pledge to low rates. Yesterday the Fed Chairman Ben Bernanke gave his Semi-Annual testimony to Congress. The Fed chairman outlined the move last week to raise the discount rate to 0.75% was strictly a move towards normality and does not pose a preliminary move towards a hike of the benchmark rate. The Fed chairman reiterated the benchmark rate will be low for an extended period stressing that the US job market remains extremely fragile and acts as a lager on the US economy. The Fed chairman emphasized the importance of the housing market as US banks hold a substantial exposure to the market. However the chairman gently avoided reference to the weak housing figures as to prevent fears over the Feds intention to exit the Mortgage debt market.

Meanwhile data from the housing market painted a gloomy picture for US Real-Estate with home sales falling by 11.2% MoM to an annual pace of 306k houses a year, a low not seen since measurement started back in the 60s. The Fed’s intention to gradually exit more than 1 Trillion of mortgage debt it holds, clouded its pledge for low rates and spurred speculations the Fed is in a gradual move to squeeze excess liquidity out of the system. Forex players rather than placing Dollar bids on the low rate outlook crowded their bets on the Dollar and Yen to curb risk. Adding to the FX unrest was the circling rumors Greece will suffer further deterioration in its credit rating this morning. The Yen moved to a one year high against the euro trading under 120.5¥ per Euro and was able to breach the 90 support against the Dollar. The Dollar edged higher and traded around 1.34 and 1.53 against the Euro and the Sterling respectively.

Euro at one Year low against the Yen

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AUDUSD breaks below 0.8678 key support, suggesting that a short term cycle top has been formed at 0.9070 level on 4-hour chart and the uptrend from 0.8577 has completed. Pullback to 0.8750 area would more likely be seen in next several days.

Daily Forex Signals

By GCI Forex Research

Fundamental Outlook at 1500 GMT (EDT + 0500)

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3625 level and was supported around the $1.3500 figure.    The common currency advanced higher after Federal Reserve Chairman said the U.S. economy is in a “nascent” recovery that still requires low interest rates.  Bernanke added “A sustained recovery will depend on continued growth in private-sector final demand for goods and services.  Private final demand does seem to be growing at a moderate pace.”  Additionally, Bernanke reported the recent 25bps hike in the discount rate to 0.75% should not be construed “as a shift in monetary policy.”  Recent U.S. economic data have suggested the U.S. economy could be moderating.  This week’s consumer confidence data were quite weak and data released today saw January new home sales plummet to 309,000 from a revised 348,000, off 11.2% m/m.  Other data released today saw MBA mortgage applications weaker by 8.5% from the prior reading of -2.1%.  Data to be released in the U.S. tomorrow include January durable goods orders, weekly initial jobless claims, continuing claims, and December house prices.  Some economists are speculating jobless claims data could worsen and re-approach the 500,000 level.  In eurozone news, EMU-16 industrial new orders expanded 0.8% m/m and 9.5% y/y in December.  Also, German March GfK consumer confidence is estimated to decline to 3.2 from February’s print of 3.3.   Other dat saw German Q4 gross domestic product remain unchanged q/q and decline 1.7% y/y.  The eurozone sovereign credit crisis stills remains the dominant issue impacting the common currency.   Euro bids are cited around the US$ 1.3335 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.75 level and was capped around the ¥90.35 level.  Bank of Japan Deputy Governor Yamaguchi said recent consumer price movements have been consistent with forecasts and said the market views Japanese finances as being “stable” but noted the “fiscal situation is very severe.”  Yamaguchi added the central bank is “always ready to take necessary action” and noted economic growth should be soft until the summer.  Data released in Japan overnight saw the February retail investor sentiment index slump 22 index points to -48.  Most traders believe Japan’s deflationary pressures will persist through at least fiscal year 2011.   Bank of Japan yesterday reported the economic recovery is continuing but added “there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand.”  BoJ also noted exports and production will continue to improve and regarding deflation, the BoJ added “the year-on-year pace of decline in consumer prices…to remain more or less unchanged for the time being, and then moderate as the aggregate supply and demand balance improves gradually.” The Nikkei 225 stock index lost 1.48% to close at ¥10,198.83.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥121.60 level and was capped around the ¥122.60 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥138.35 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥83.75 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8269 in the over-the-counter market, up from CNY 6.8267. Chinese financial markets were closed for the Chinese New Year holiday.  The Chinese government reported its recent sales of U.S. Treasuries were “commendable,” leading to speculation China may continue to reduce their massive war chest of U.S. assets.   Last week, People’s Bank of China reconfirmed it will “gradually guide monetary conditions back to normal levels from the counter-crisis mode.”

₤

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5385 level and was capped around the $1.5475 level.  Sterling got a little bid of a bid during the European session after it was reported that Santander – formerly Abbey National Building Society – will increase its maximum loan sizes available to first-time home buyers.  Bank of England Monetary Policy Committee Posen reported the central bank can extend quantitative easing if required.  Cable bids are cited around the US$ 1.5340 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8810 level and was supported around the ₤0.8750 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0735 level and was capped around the CHF 1.0840 level.  Data released in Switzerland this week saw the January trade surplus climb to  CHF 2.42 billion from CHF 1.36 billion in December.  Also, the ZEW February expectations survey fell to 52.5 from 56.2 in January.  Dealers this week again speculated the Swiss National Bank sold francs for euro in an intervention to help Swiss foreign trade.  Many dealers believe the Swiss National Bank will not be able to prevent the Swiss U.S. dollar offers are cited around the CHF 1.0930 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4625 level while the British pound depreciated vis-à-vis the Swiss franc and tested bids around the CHF 1.6605 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

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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 CountingPips.com

New Home Sales in the United States decreased more than expected for the month of January according to data released by the Department of Commerce today. Purchases of new single family homes fell to an annual rate of 309,000 in January for a 11.2 percent decline from December. Revised data showed that new home sales decreased in December by 3.9 percent to an annual rate of 348,000 homes. On an annual basis, January’s rate of new homes sold was 6.1 percent lower than the January 2009 level.

Today’s sales data failed to match market forecasts which were expecting a 3.5 percent increase in sales for an annual rate of 354,000 new homes sold.

Contributing to the decrease in December was a 35 percent drop in new homes sold in the the Northeast while the West registered a 12 percent decline in sales. Sales in the South fell by 10 percent while the Midwest saw an increase by 2.1 percent from December to January.

US Dollar mixed in Forex Trading

The U.S. dollar has been mixed in forex trading today against the other major currencies after the new home sales report and the Federal Reserve’s Semiannual Monetary Policy Report to the Congress today. The Fed report provided anticipation in the markets for any new hint of when interest rates might move. The Fed statement put to rest much of any rate hiking speculation with the usual line that rates are “likely to remain exceptionally low for an extended period”.

The dollar lost ground during the Fed’s congressional meeting but has managed to pare some of those losses later while U.S. stock markets were pushed higher. Overall today, the dollar has gained today versus the British pound and the New Zealand dollar while falling against the euro and the Swiss franc, according to currency data by Oanda at 2:55 pm EST. The dollar, despite early ups and downs, is currently trading virtually unchanged versus the Canadian dollar, Japanese yen and the Australian dollar compared to today’s opening day rates.

The U.S. stock markets have stayed positive today with the Dow Jones gaining by over 60 points, the Nasdaq increasing over 15 points and the S&P 500 up by just under 8 point at time of writing. Oil has edged higher by $1.00 to $79.86 while gold is about unchanged at the $1,102.70 per ounce level.

Gold is trading back below its highly psychological $1100/oz level amid weakness in the Cable and Aussie.  Gold’s large leg down during today’s Asia trading session is a bit mysterious since the precious metal exhibited a relative weakness.  That being said, investors should keep an eye on activity in the Dollar.  Investors will have their eyes fixed on U.S. New Home Sales and Bernanke’s Congressional testimony.  Statements from Bernanke have the potential to create considerable volatility in the FX markets.  Hence, should Bernanke give any hints regarding a tighter monetary policy from the Fed, this could favor the Dollar and place further downward pressure on gold.  On the other hand, should Bernanke reiterate a loose monetary policy for the foreseeable future the risk trade may be able to continue its stabilization and keep gold around $1100/oz.  However, the risk trade is tilting lower ahead of Bernanke, so it will be interesting to see how today’s trading session plays out.  Meanwhile the psychological $1100/oz level could continue to have an influence on gold.  Volatility in the FX markets could continue tomorrow with the release of Durable Goods Orders along with statements from King and Bernanke.  Investors should also keep an eye on the EUR/USD and Cable and their ability to hold above February lows.

Technically speaking, gold faces multiple downtrend lines along with intraday and 2/22 highs.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 2/18 lows and the highly psychological $1100/oz level should it be tested.

Present Price: $1094.25/oz

Resistances: $1096.04/oz, $1098.51/oz, $1100.74/ oz, $1106.18/oz, $1107.91/oz

Supports: $1093.81/oz, $1091.58/oz, $1089.87/oz, $1087.66/oz, $1085.21/oz, $1083.25/oz

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

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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 Aussie is bouncing off intraday lows after the currency pair dropped below 2/19 lows during the Asia trading session.  The Aussie came under selling pressure earlier wage prices came in at 0.6%, 2 basis points below analyst expectations.  Since inflationary pressures aren’t reflected in wages at this point in time the RBA could opt to keep its monetary policy unchanged next week.  However, there remains a good amount of uncertainty in regards to whether the RBA will raise next week or not.  Hence, the Aussie could prove to be a volatile currency over the next few trading sessions.  Australia will release Private CapEx tomorrow and stronger than expected capital spending could send the Aussie higher, and vice versa.  Meanwhile, investors are awaiting U.S. New Home Sales accompanied by Bernanke’s testimony before Congress.  Investors will be paying particularly close to Bernanke this time around since the Fed raised its discount rate by 25 basis points last week.  Therefore, any surprise statements from Bernanke could have a sizable impact on the Dollar.  Bernanke will continue his testimony tomorrow along with a public address from the BoE’s king and U.S. Durable Goods Orders data.  Hence, activity in the FX markets could pick up over the 24 hours should statements from central banks or economic data stray from expectations.

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 1st tier uptrend line since it runs through these levels.  Hence, a failure of our 1st 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: .8914

Resistances: .8920, .8936, .8957, .8969, .8984, .9008

Supports: .8903, .8885, .8873, .8856, .8842, .8823

Psychological: .90, February highs

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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 stabilizing around its highly psychological 90level following yesterday’s large pullback in the wake of psychological developments.  Today BoJ Deputy Governor, Yamaguchi, supported the BoJ’s defense of its neutral monetary policy despite pressure from the finance minister and prime minister to loosen liquidity in order to combat deflationary pressures.  Yamaguchi implied that the BoJ has little wiggle room liquidity wise, effectively throwing the ball back into the DPJ’s court.  However, the USD/JPY didn’t show too much of a reaction to Yamaguchi’s comments since the BoJ’s stance seems to have been priced in yesterday.  On the other hand, the USD/JPY did weaken a bit after Japan’s Trade Balance yielded a larger surplus than anticipated.  Exports to China and the U.S. printed stronger than expected, giving life to Japan’s struggling manufacturing sector and consequently placing downward pressure on the USD/JPY since a recovering Japanese economy could allow the BoJ to remain neutral.  However, the USD/JPY has held above Tuesday lows thus far and 90 is proving to be a solid defense once again.  Meanwhile, investors are awaiting U.S. New Home Sales accompanied by Bernanke’s Congressional testimony.  Strong U.S. data could help the USD/JPY continue its stabilization since investors may move back into the Dollar should data print positive.  Additionally, statements from Bernanke carry the potential to move markets due to their psychological potency.  It will be interesting to see whether Bernanke addresses the Fed’s 25 basis point hike in the discount rate or gives further details in regards to the exit plan timeline.  Although Japan will be quiet on the data wire tomorrow, the U.S. will release Durable Goods Orders along with the continuation of Bernanke’s testimony.  Strong DGO data could imply an increase in demand for Japanese products.  Hence, the USD/JPY could remain active for the next 24 hours.

Technically speaking, the USD/JPY has multiple downtrend lines serving as technical barriers along with intraday, 2/16, and 2/17 highs.  As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 2/16, and 2/11 lows.  Furthermore, the highly psychological 90 level could continue to serve as a technical cushion for the time being.

Present Price: 90.23

Resistances: 90.25, 90.37, 90.47, 90.57, 90.66, 90.81

Supports: 90.12, 90.03, 89.91, 89.79, 89.67, 89.54

Psychological: 90, February highs and lows

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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 still trading well below its psychological 1.55 level as the Pound experiences a relative weakness, highlighted by today’s pop in the EUR/GBP.  Although the UK was quiet on the data front today, a BoE policy maker, Adam Posen, reiterated King’s statement that the central bank is prepared to expand liquidity should the UK economy deteriorate further.  On the other hand, Posen also stated that the BoE may need to find a way to tighten should the economic recovery pick up steam.  In essence, Posen affirmed the BoE’s new flexible monetary policy stance.  The possibility of looser liquidity could be what is weakening the Pound today.  Meanwhile, investors are waiting for U.S. New Home Sales data along with Bernanke’s Congressional testimony.  Strong housing data would weigh on the Cable with investors favoring the U.S. economy.  On the other hand, weak housing data could buoy the Cable and the risk trade.  Furthermore, investors will be eyeing Bernanke’s testimony for any hints in regards to the Fed’s future plans and specifically the Fed Chief’s reaction to inquiries concerning the recent 25 basis point hike in the discount rate.  Should Bernanke happen to imply additionally tightening measures down the road, this could apply downward pressure on the Cable since tighter liquidity in the U.S. is a Dollar positive.  Meanwhile, it will be interesting to see if the Cable can hold above 2/23 and previous February lows.  King will address the general public tomorrow and the UK will release CBI Realized Sales data.  It wouldn’t be surprising to see King maintain the BoE’s flexible monetary policy stance for the time being.  All eyes will likely remain on the U.S. tomorrow as Bernanke continues his testimony along with the release of U.S. Durable Goods Orders and weekly Unemployment Claims.

Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday 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 (off screen) along with 2/23 and 2/18 lows.

Present Price: 1.5410

Resistances: 1.5415, 1.5436, 1.5458, 1.5482, 1.5503, 1.5524, 1.5543

Supports: 1.5390, 1.5365, 1.5348, 1.5317, 1.5290, 1.5263, 1.5226

Psychological: February lows, 1.55, 1.53

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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 balancing above 1.35 as investors await U.S. New Home Sales data along with Bernanke’s testimony before Congress.  It will be interesting to see what kind of impact the New Home Sales number has on the risk trade.  With the EU still mired in fiscal worries strong home sales data could lead investors to the Dollar due to the comparative strength of the U.S. economy.  However, should home sales print weak it remains to be seen whether investors would run to the Dollar in safety or continue to stabilize the EUR/USD due to weakness in both economies.  The EU did have a bit of good news today with Industrial New Orders printing much stronger than expected while the previous release was revised higher.  Hence, it appears a weaker Euro is spurring demand for EU goods, boosting manufacturing influenced data such as today.  This could explain the upward momentum in the EUR/GBP right now.  As for Bernanke, should he by chance imply that the Fed is tightening its stance more than anticipated this could lead investors to the Greenback once again.  On the other hand, should Bernanke commit to loose liquidity for the foreseeable future the risk trade may stabilize.  Meanwhile, although gold registered a large bar down during the Asia trading session, the precious metal is stabilizing just below its highly psychological $1100/oz level.  That being said, investors should monitor activity in gold for a significant technical setback could lead investors to the Dollar due to their usual negative correlation.  Although the EU will release German Unemployment Change and M3 data tomorrow, attention will likely remain focused on the U.S. with the continuation of Bernanke’s testimony along with U.S. Core Durable Goods Orders and weekly Unemployment Claims.  On the other hand, more positive EU data could be a welcome development for the Euro and provide further stability considering the behavior we’ve witnessed in reaction to today’s Industrial New Orders number.

Technically speaking, the EUR/USD faces multiple downtrend lines along with 2/18, 2/22, and 2/23 highs.  As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with intraday, 2/23 and 2/18 lows.  Furthermore, the psychological 1.35 area could continue to serve as a technical cushion should it be retested.

Present Price: 1.3545

Resistances: 1.3572, 1.3592, 1.3612, 1.3632, 1.3652, 1.3679

Supports:  1.3542, 1.3526, 1.3511, 1.3493, 1.3473, 1.3453

Psychological: February lows, 1.35

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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 Rita Ruvinski – The EUR bounced higher against the U.S dollar Wednesday after a slide in U.S. consumer confidence to 10-month low raised doubts about the pace of a global economic recovery. Traders shift their focus now to Federal Reserve Chairman Ben Bernanke, whose testimony before the Congress on Wednesday and Thursday may set the tone for the EUR/USD pair.

The European currency pared some losses made the previous day but remained under pressure after the German Ifo index of business sentiment dipped unexpectedly, while French household spending and Italian consumer confidence turned lower. The EUR edged up 0.3% to $1.3543, having lost nearly 0.7% yesterday.

The single currency also inched up 0.3% against the Japanese yen to 122.18, lifted by speculation that hefty buying linked to launches of new Japanese mutual funds would boost higher-yielding currencies and assets in emerging countries. Still the EUR gains were not enough to make up for its 1.7% dive against the Yen the previous day.

The big event for the Forex market today is the central bank governor’s testimony at 15:00 GMT. If Bernanke is more dovish than the market expects, the USD could rally on risk aversion outlook. However if he remains hawkish and warns of additional normalization in the near future, the EUR/USD may decline to $1.34 as the outlook for U.S. interest rates brightens.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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