Month: April 2010

Source: Forex Yard

Uncertainty was apparent throughout most of the trading day as market worries continue over the Greek financial position and are affecting the direction of the currencies. A lack of economic data releases may have allowed the market to consolidate prior to the news heavy trading day that awaits traders.

Economic News

USD – Dollar Fails to Find Direction in Forex Trading

The markets continue to feel the squeeze from Greece’s fiscal troubles. U.S. equities lost their early gains to finish at their opening levels. The dollar was stronger most of the day but gave back the gains after the New York trading session. A lack of economic data releases did not allow for a particular direction to form in the markets. Therefore, traders were forced to rely on the weekend’s events following the conclusion of IMF meetings in Washington. Traders remain skeptical following Greece’s request to tap the EU/IMF bailout funds package. The prevailing view in the market is despite access to the new funds, Greece may still struggle to meet their debt payment schedule.

The EUR/USD was trading higher following the closing of the New York trading session when the currency pair rallied to a high of 1.3414 after opening the day at 1.3369. The GBP/USD was unchanged at 1.5469, as was the USD/CHF at 1.0730.

Today’s trading should be influenced by economic releases and speeches. The key data releases for the day will be British CBI Realized Sales at 10:00 GMT and U.S. CB Consumer Confidence at 14:00 GMT. Both Fed Chairman Ben Bernanke and ECB President Trichet are due to speak at separate events close to 14:00. The EUR/USD could fall further as market sentiment is clearly against the EUR. The next major support level for the pair rests at 1.3180.

EUR – EUR Rallies after New York Close

The 16-nation currency was higher versus the Dollar after Monday’s trading following positive comments from EU officials. This helped to reduce fears over the aid package offered to Greece. German Chancellor Angela Markel said that a bailout package could be implemented before Greece’s next debt payment which is scheduled for May 19. Greece will most likely be required to implement strict austerity measures as a precondition to any EU/IMF aid package. The negotiations between the Greek government, the EU, and the IMF could be dragged on until the debt payment is due. The EUR was also supported by comments by Bundesbank President Axel Weber who said that despite the Greek debt crisis, there is no risk of a collapse of the euro.

The EUR/USD was higher following the close of New York trading at 1.3414 from an opening price of 1.3369. The EUR/GBP was unchanged at 0.8664.

This past weekend’s meeting of the IMF and World Bank gave the impression that the world’s finance heads were unimpressed with the EU’s response to the Greek crisis. Leaders would have liked to have seen a faster and larger response by the EU and the IMF. A lack of action, particularly on Germany’s part was noted. It is apparent that the Greek sovereign debt crisis is far from being resolved and should continue to weigh on the EUR.

JPY – Yen Mixed in Choppy Trading

The Yen was mixed in yesterday’s forex trading, trading lower against the Dollar and unchanged versus the Pound and the EUR. A lack of economic data was a primary cause for a trend-less trading environment.

The USD/JPY finished the day lower at 93.90 from an opening day price of 94.18. The GBP/JPY closed at 145.06 while the EUR/JPY was at 125.64. Both of the currency pairs closed near their opening day prices.

Traders will have to wait until the end of the trading day to get any Japanese economic data releases. At 23:50 GMT, Japanese Retail Sales numbers are due to be released. Thursday will bring the release of inflationary data and Friday the Bank of Japan will announce the Overnight Call Rate. No change is expected in the rate but the accompanying rate statement may bring heavy market volatility. The USD/JPY has a major resistance level at the price of 94.80. A break of this price could propel the pair to the 97.80 price level.

Crude Oil – Crude Oil Shows Bullish Chart Pattern

The price of spot Crude Oil declined sharply yesterday as traders were concerned that overly strong economic data may lead the Federal Reserve to raise interest rates. Economic data from the previous week was stronger than expected for new home sales and durable goods. A rise in the interest rate the Fed charges banks could cause the U.S. economy to slow, thereby reducing future demand for Crude Oil.

Spot Crude Oil prices finished the day at $84.15, from an opening price of $85.43. The price found support near the 83.90 price level.

The Federal Reserve Open Market Committee (FOMC) is due to meet on Tuesday and Wednesday. On Wednesday the FOMC will release its rate decision and accompanying rate statement. Any change to the wording in the Fed’s statement could be a negative for the price of spot Crude Oil.

The price of spot Crude Oil appears to be in a consolidation pattern as of recent. A bullish flag pattern has formed on the daily chart with the top of the pattern beginning at the price high of $87. A break of this price could propel the price of spot Crude Oil towards the $94 range.

Technical News

EUR/USD

The pair’s recent upward correction may have been over extended as the pair’s RSI is seen floating in the overbought territory on the hourly and 4 hour charts. Going short with tight stops might be advised for today.

GBP/USD

The pair’s RSI is floating in the overbought territory on the 4 hour chart and a bearish cross is evident on the 8 hour chart’s Slow Stochastic. Going short with tight stops may be advised for today.

USD/JPY

The RSI for the pair seems to be floating in the oversold territory as evident on the hourly and 2 hour charts while a bullish cross is evident on the 4 hour and 2 hour charts’ Slow Stochastic. However, a bearish cross is evident on the daily chart’s slow stochastic with the 7 hour RSI floating near the overbought territory. Waiting on a clearer direction for the pair may be advised for today.

USD/CHF

The pair seems to be range trading at the moment between 1.0700 and 1.0750, with most indicators floating in neutral territory. Waiting on a clearer direction for the pair may be advised.

The Wild Card

Dow Jones Industrials

The Relative Strength Index (RSI) on the 4-hour chart currently shows the Dow Jones in overbought territory. This typically indicates that a downward correction is imminent. The Stochastic Slow on the daily chart currently shows a cross above the upper resistance line, which lends support to the theory that a bearish trend may occur in the near future. CFD traders are advised to go short with tight stops today.

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.

AUDUSD stays in a trading range between 0.9157 and 0.9381 and the price action in the range is treated as consolidation of uptrend from 0.8577 (Feb 5 low). As long as 0.9157 key support holds, another rise towards 0.9500 is still possible, and a break above 0.93.81 could signal resumption of uptrend. However, a clear break below 0.9157 support could indicate that the uptrend from 0.8577 has completed at 0.9381 already, then the following downtrend could take price back to 0.8500 area.

Daily Forex Signals

By CountingPips.com

The euro has started off the week slightly lower against the U.S. dollar in forex trading after declining last week to finish just under the 1.3400 level.  The euro-dollar pair (EUR/USD) fell quickly overnight to a low of 1.3292 but has pared those losses and has risen today to trading near the 1.3365 level. This is approximately even from the day’s opening rate of 1.3362 at 00:00 GMT. Last week, the euro fell by almost 100 pips to the 1.3384 exchange rate versus the dollar as the Greece debt difficulties took center stage again and weighed heavily on the common euro currency.

Today, there was virtually no economic news releases on the schedule. The one indicator out of the U.S. was the Dallas Fed Manufacturing Activity which showed that manufacturing jumped in April to increase for the sixth straight month. The manufacturing activity score rose to 21.1 percent in April from a 7.2 percent score in March. This surpassed market forecasts expecting a rise to 9.8 percent. The production index doubled to a 18 percent reading from 9 in March with 40 percent of the surveyed manufacturers claiming increased output for the month.

Tomorrow’s economic schedule is fuller and includes Australian producer prices, the U.S. Case-Shiller home price index, U.S. consumer confidence and the Japanese retail trade reading overnight.

EUR/USD Chart – The Euro today rebounding slightly against the US dollar on the 1-hour chart today after falling below the 1.3300 exchange rate earlier. The pair looks to be on a short-term upswing and currently trades above the 23.6 fibonacci retracement level (on the down move from 1.3817 to 1.3202 that started on March 17th). The RSI is poking its head above the 50.0 level while the MACD crossover indicates a possible bullish signal is about to emerge.

By Susan C. Walker

How do you choose one lesson from a basic tutorial that is chock-full of excellent information about Elliott wave analysis? You could browse through all 50 sections distributed over 10 lessons. Or you could do what some people do when they open a dictionary: let the book fall open and point your finger at a word. Sometimes you learn more from a random search than a deliberate one.

That’s exactly how I chose this excerpt from EWI’s Basic Tutorial to show how clear the writing and illustrations are. The one best place to start learning about wave analysis is this online tutorial, which is available to all Club EWI members — a membership that is free and that brings you many resources about the kind of technical analysis and forecasting that we do here at Elliott Wave International.

The topic that my electronic finger pointed to online when I opened the online Basic Tutorial was Lesson 6.2: Channeling Technique. These four graphs and the accompanying explanation give a tantalizing taste of what you can learn when you take The EWI Basic Tutorial.

* * * * *

Excerpted from The EWI Basic Tutorial

Chapter 6.2: Channeling Technique

R.N. Elliott noted that parallel trend channels typically mark the upper and lower boundaries of impulse waves, often with dramatic precision. The analyst should draw them in advance to assist in determining wave targets and provide clues to the future development of trends.

The initial channeling technique for an impulse requires at least three reference points. When wave three ends, connect the points labeled “1” and “3,” then draw a parallel line touching the point labeled “2,” as shown in Figure 2-8. This construction provides an estimated boundary for wave four. (In most cases, third waves travel far enough that the starting point is excluded from the final channel’s touch points.)

Figure 2-8

If the fourth wave ends at a point not touching the parallel, you must reconstruct the channel in order to estimate the boundary for wave five. First connect the ends of waves two and four. If waves one and three are normal, the upper parallel most accurately forecasts the end of wave five when drawn touching the peak of wave three, as in Figure 2-9. If wave three is abnormally strong, almost vertical, then a parallel drawn from its top may be too high. Experience has shown that a parallel to the baseline that touches the top of wave one is then more useful, as in the illustration of the rise in the price of gold bullion from August 1976 to March 1977 (see Figure 6-12). In some cases, it may be useful to draw both potential upper boundary lines to alert you to be especially attentive to the wave count and volume characteristics at those levels and then take appropriate action as the wave count warrants.

Figure 2-9

Figure 6-12

Throw-over

Within parallel channels and the converging lines of diagonal triangles, if a fifth wave approaches its upper trendline on declining volume, it is an indication that the end of the wave will meet or fall short of it. If volume is heavy as the fifth wave approaches its upper trendline, it indicates a possible penetration of the upper line, which Elliott called “throw-over.” Near the point of throw-over, a fourth wave of small degree may trend sideways immediately below the parallel, allowing the fifth then to break it in a final gust of volume.

Throw-overs are occasionally telegraphed by a preceding “throw-under,” either by wave 4 or by wave two of 5, as suggested by the drawing shown as Figure 2-10, from Elliott’s book, The Wave Principle. They are confirmed by an immediate reversal back below the line. Throw-overs also occur, with the same characteristics, in declining markets. Elliott correctly warned that throw-overs at large degrees cause difficulty in identifying the waves of smaller degree during the throw-over, as smaller degree channels are sometimes penetrated on the upside by the final fifth wave. Examples of throw-overs shown earlier in this course can be found in Figures 1-17 and 1-19.

Figure 2-10

Debt Denial and the Five Stages of Greece

Justice Litle, Editorial Director, Taipan Publishing Group

The phenomenon of “debt denial” has gripped not only Greece and the eurozone, but the entire roster of rich Western nations. When the smoke finally clears, you’ll want to own gold coins…

The eurozone is slowly but surely imploding under an unsustainable debt load. Greece is still center stage, but the woes will soon spread. Ultimately, Greece is the first domino in a long chain of looming debt defaults… and at the end of that chain lies the United States.

You’ll want to be paid up on “printing press insurance” before the final domino falls – and gold coins might fit the bill nicely in that regard. More on that at the end of today’s piece…

Q: What’s the difference between Greece and the rest of the OECD countries?
A: Greece is small enough to be bailed out.

Ha ha. Funny stuff, right? Or maybe not. That sobering riddle is posed by Dylan Grice of Societe Generale. (OECD, which stands for “Organization for Economic Cooperation and Development,” is simply shorthand for rich Western nations with democratic governments.)

As Grice writes to his SocGen clients (emphasis mine), “Back in January, when Greece’s debt problems first surfaced, I thought it would be the first in a series of fiscally driven market seizures… I still think Greece is the beginning of a wave of government funding crises, not the end.”

Your humble editor agrees. What’s happening in Greece is a prelude to far larger troubles.

For months now, the Greek soap opera has played itself out on the world stage. During all this, the euro has lurched up and down – but mostly down – in concert with investor moods.

The optimists have put up a truly impressive fight. Over and over we have heard that “the situation will be solved”… that “Greece will not be allowed to fail”… that “a solution is just around the corner” and “Greece will be bailed out.”

Yet every time, the supposed “solution” has been little more than hot air. Political fantasy keeps running aground on the hard shoals of reality. European pols have trashed their credibility so many times now, it’s hard to keep count.

Fiscal Crisis and the Kübler-Ross Model

The Greek debt situation could ultimately prove fatal – not just for Greece, but for the entire eurozone. In their extended display of denial, one could thus argue investors are passing through the “five stages of grief.”

(Or in this case, the five stages of Greece. Get it? Gallows humor, I know…)

The five stages of grief are central to the Kübler-Ross model, as first described by Dr. Elisabeth Kübler-Ross in her book On Death and Dying in 1969. Per Wikipedia, the stages look like this:

1. Denial. “I feel fine… this can’t be happening to me.”
2. Anger. “Why me? It’s not fair! How can this happen to me?“
3. Bargaining. “I’ll do anything for a few more years…”
4. Depression. “Oh, what’s the point… why even bother going on?”
5. Acceptance. “I can’t fight it. I may as well prepare.”

We can see all these stages at work with Greece. At first, outright denial was the order of the day. Then came the anger… and the hopeful bargaining… and now, as the euro nears a fresh test of 12-month lows, we are edging our way into the depression stage, in which reality can no longer be denied.

Not Just Greece

But again, as SocGen analyst Dylan Grice points out, denial ain’t just a river in Egypt… and the sovereign debt problem is not just confined to Greece.

The above chart shows official net debt and total net liabilities for various OECD countries. The gray bar shows net liabilities – the total obligations both “on” and “off” the balance sheet – for each country shown.

When it comes to net liabilities, Greece is the runaway leader of the pack (the tall gray bar on the far right). From a whole country perspective, Greece’s obligations are more than 750% of annual income (GDP), a truly staggering amount.

But Grice’s key point is that “Greece isn’t that different” from the other, bigger nations. The net liabilities of the United States – the gray bar next to Greece – are now more than 500% of GDP. The U.K., France, the EU as a whole, and even Germany are right in there too.

This next chart (also from Grice) is the real kicker…

In case it’s hard to see, the print at the top reads: “% of stock of outstanding debt to be issued this year; Greece is nearly best in class!”

The red portion of each bar represents maturing bonds – debt that will need to be “rolled over” soon. The gray portion is new issuance. And who is the big kahuna by this measure? That would be the USA (the tall bar on the far left).

It is still an open question as to who will supply Uncle Sam with the many trillions he needs to borrow, just to keep the whole scheme afloat.

A Borrowed Recovery

This goes back to a central problem of the “economic recovery” narrative. We have managed to “buy” a broad perception of recovery in the same manner that a gambler in a casino buys a little more time at the tables by drawing down his line of credit.

With a fat enough pipeline of credit, any businessman can look like a genius – for a little while at least. All one has to do is borrow hand over fist… invest the borrowed dollars in at least a semi-sensible way… and then proudly point to the profits accrued, without bothering to mention the ballooning debt side of the ledger.

Like the classic credit card “kiting” scheme, in which one credit card is used to pay off another, this modus operandi can work for a long time… until the revolving credit lines max out or the lender finally balks, at which point the music suddenly stops.

Greece’s Bill Is Now Due – And Others Will Be Next

In fact, the credit card analogy may be the simplest means of understanding what’s happening in Greece.

Monetary union in the eurozone was the equivalent of a joint-issued credit card for all 16 countries that signed up. With its ability to borrow in euros – and the implied promise of eurozone solidarity – Greece was given the ability to tap Germany’s credit rating.

Over the course of a decade or so, Greece used this newfound line of credit irresponsibly. The country borrowed much more, at a much lower rate of interest, than it ever could have done without the eurozone imprimatur. Now the bill is coming due… and Greece can’t pay.

Market jitters suggest that Portugal is up next. “Portuguese bonds fell,” Bloomberg recently reported, “pushing yields to the highest relative to German bunds in 13 months, on mounting concern that governments in the euro region will struggle to control their budget deficits.”

First Greece, then Portugal. (Latvia has already imploded, but it is too small to register – no offense intended to Latvian readers.) After Portugal, the small countries start to get bigger. Who will be next in line? Italy? Spain?

In debt crisis terms, we are looking at a chain of dominoes here. That chain starts with Greece… wends its way around the eurozone… stops off in Asia at the doorstep of Japan… and ends with the United States.

Gold Coins as Printing Press Insurance

Few things in life are guaranteed, other than death and taxes. One thing we can say with certainty, though, is that human nature does not change. The average politician, if not the average man in the street, is in love with the easy solution – the painless path, the quick fix.

Politicians do not manage for the long term. They manage for the next election cycle. And that means borrowing in ever-greater amounts to keep perceptions of recovery intact. When that strategy fails, the “five stages of Greece” will be writ large. And the printing press will be the final answer to the West’s looming “debt denial” problem.

In other words, when all other measures fail – and they will – the West will inflate and debase its way out. The playbook is centuries old, millennia old even. It is nature’s inevitable way, just as rivers run to the sea.

The above is why you should consider gold coins for a portion of your investment portfolio (if you haven’t done so already). The final act of this tragicomic play will be big… it will be ugly… and it will be all encompassing. Fiat currencies across the board could be reduced to confetti.

That is the type of environment where a stash of coins – gold you can keep in your possession, rather than own at arm’s length through a trading account – might come in handy.

I bring up this final point because my publisher, Sandy Franks, tells me that $5 Gold Eagles (a popular coin issued by the U.S. Mint) are, quite literally, disappearing. They are flying off the shelves, and the Mint can’t meet demand. Given the long-term troubles we face – and the reality of Greece as prelude to something bigger – this doesn’t surprise me one bit.

You can find out more about Gold Eagles by clicking on this link.

Don’t forget to follow us on Facebook and Twitter for the latest in financial market news, company updates and exclusive special promotions.

About the Author:

Justice Litle is the Editorial Director of Taipan Publishing Group, Editor of Justice
Litle’s Macro Trader and Managing Editor to the free investing and trading
e-letter Taipan Daily. His articles have been featured in Futures magazine; he
has been quoted in The Wall Street Journal and contributed regular market
commentary to Reuters and Dow Jones.

By Dan, ForexYard – The Scandinavian currencies have made significant gains against the Euro as of late, with the single currency still hurting following the failure to fully implement a Greek bailout package. In the last week alone, both the Swedish Krona and Norwegian Krone have gained over 1300 pips on the ailing European currency. That being said, a string of positive U.S. news events have led to a steep drop in value for the Kroner against the greenback. The last week saw the Dollar move up over 600 pips against the Danish Krone.

In the near future, Scandinavian traders can look forward to a fairly volatile week, as a string of U.S. and European news events will likely dictate the direction for the Kroner. On Tuesday, the U.S. CB Consumer Confidence Report as well as a speech from Fed Chairman Bernanke will both create heavy market activity. Providing the news shows further improvements in the American economy, the Scandinavian currencies will likely suffer against USD as a result. On Wednesday, the Preliminary German Consumer Price Index (CPI) is set to be released. As the leading economy in the Euro-Zone, German economic indicators typically play a somewhat exagerated role in where EUR goes compared to other European countries. If the news is positive for Germany, the Euro could recoup some of its earlier losses against the Kroner.

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 Finexo.com

Past Events:
• USD  Core Durable Goods Orders m/m out at 2.8%, versus expected 0.7%, prior 1.7%
• USD Durable Goods Orders m/m out at -1.3%, versus expected 0.2%, prior 1.1%
• USD New Home Sales out at 411K, versus expected  326K, prior 324K
• EUR German Ifo Business Climate out at 101.6, versus expected 98.8, prior 98.2 (revised)
• EUR Industrial New Orders m/m out at 1.5%, versus expected 0.9%, prior -1.6% (revised)
• GBP Prelim GDP q/q out at 0.2%, versus expected 0.4%, prior 0.4% (revised)
• CAD Core CPI m/m out at -0.2%, versus expected 0.1%, prior 0.7%
• CAD CPI m/m out at 0.0%, versus expected 0.2%, prior 0.4%
• CAD Core Retail sales m/m out at -0.1%, versus expected 0.7%, versus 2.0% (revised)
• CAD Retail sales m/m out at 0.5%, versus expected 0.9%, prior 0.9%
• AUD Import Prices q/q out at 0.3%, versus expected -1.4%, prior -4.3%

Upcoming Events:
• EUR  ECB President Trichet Speaks (1730GMT)
• AUD PPI q/q (tomorrow 0230GMT)

Market Commentary:
“Europe and the members of the euro zone, are committed to a common currency and will defend it at any cost,” Greece’s Finance Minister George Papaconstantinou told reporters yesterday in Washington, following his meeting with the International Monetary Fund and World Bank. According to the Greek Prime Minister, Europe’s response to the Greek fiscal crisis shows that the bloc will do whatever is necessary to protect its unilateral currency.
Greece is currently negotiating the terms of a bailout worth as much as €45 billion this year as investors continue to doubt that that the tiny Mediterranean nation can finance itself after its budget deficit totaled 13.6% of gross domestic product last year. With Greece facing €8.5 billion of bonds maturing May 19, finance ministers are seeking a swift resolution of the talks.

Last Thursday, the Euro plunged to a new one year low of $1.32574 after a EuroStat report that Greece’s budget deficit was larger than previously thought. Greece called for activation of the joint EU-IMF €45 billion ($60 billion) bailout fund this year in an unprecedented test of the Euro’s stability and European political cohesion. The appeal for help from the European Union and International Monetary Fund follows a rapid rise in borrowing costs to what Greek Prime Minister George Papandreou called unsustainable levels that would ruin all  efforts to cut the budget deficit that is more than four times the EU limit. Greece’s request of the bailout fund comes one day after the yield on the country’s benchmark two-year note topped 11%, approaching that of Pakistan, and Moody’s Investors Service lowered Greece’s creditworthiness by one notch to A3, saying it was considering further cuts.

On Friday, the single currency managed to rally against the US Dollar, as German business confidence rose more than expected to hit a two year high in April.  The Germany Ifo Climate, a survey based on 7,000 executives, jumped from a revised 98.2 to 101.6 (the market had expected 98.2) as the global economic recovery boosted export demand and warmer weather allowed workers back onto construction sites. The Euro’s 12% drop in the past five months has made German exports more competitive outside the currency bloc and as a result, German manufacturing is expanding at a record pace. Moreover the arrival of spring weather has significantly boosted building activity and consumer spending.
Following the release of the better than expected report, the euro rose to trade at $1.3335 (at 11 a.m. in Frankfurt), up from 1.3230 that morning. Unfortunately, the Euro was unable to fully recover from Thursday’s detrimental losses and fell for a second week in a row to close at $1.33837, up 0.88% from the day’s opening price but down 0.78% from the week’s opening price.

In the Asian trading session this morning, the EUR/USD gained some ground as the pair hit a high of 1.33961. Analysts, predict that Euro will continue to fluctuate this week as investors await a solid plan on a financial lifeline for debt-stricken Greece. Later today, the European Central Bank president, Jean-Claude Trichet will speak (1730GMT).
Across the Channel, the U.K economy grew half as much as expected in the first quarter of this year, highlighting that Britain still continues to struggle with its recovery. Britain’s Prelim GDP report showed a 0.2% increase from the last quarter of 2009, when a 0.4% expansion pushed Britain out of the recession. The pound tumbled 0.4% to $1.5318 following the report, from $1.5397. The British currency managed to recovery against its U.S counterpart, to close the week at $1.53749, up 0.05% from the day’s opening price. The EUR/USD closed at 0.87027, down 0.82% from the day’s opening price of 0.86318.

The US dollar advanced for the first time in three weeks against the Japanese Yen on evidence of a global economic recovery including a surge in the U.S. housing market before next week’s Federal Reserve policy meeting.  After hitting a high of 94.306, the USD/JPY closed the week at 93.957.
On Friday, the US Census Bureau reported that New-Home sales jumped 27% in March, the most since April 1963. A soon-to-expire tax break combined with low mortgage rates and favorable weather sent new home sales flying past market expectations 326K, to hit 411K. However, the department of Commerce reported on Friday, that the demand for U.S.-made durable goods dropped for the first time in four months as orders for new aircraft plunged 67%. Orders for durable goods fell 1.3% in March to a seasonally adjusted $176.7 billion after a 1.1% gain in February. However, excluding transportation goods, the core rate showed a rise of 2.8% to $136.5 billion in March, the fastest increase since the recession began in December 2007.

Across the border, the Canadian dollar posted its biggest five-day gain in three weeks as the central bank signaled that a rate hike could possibly happen as soon as June 1st. Last week the Loonie hit its strongest price against the USD in 22 months, gaining beyond parity as investors speculated the Bank of Canada will raise rates before the U.S. Federal Reserve does. On April 20th, the Bank of Canada announced that the time for holding its benchmark interest rate at a record low 0.25% in order to spur growth “is passing” as the country’s economy rebounds from a global recession. According to Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal, the nation’s fourth-largest lender an announcement such as this one “really sets the market up for probably five consecutive hikes from the Bank of Canada, which should keep the Canadian dollar on a firm footing for quite some time.”

On Friday, Statistic Canada announced that the country’s  annual inflation rate unexpectedly slowed in March to 1.4% from 1.6% the previous month, as clothing and mortgage interest expenses declined while gasoline costs rose.  The Core rate, which excludes the eight most volatile items, slipped to 1.7% from 2.1%.

On a positive note, Canadian retail sales had increased for their third straight month, rising by 0.5% to C$36 billion ($35.9 billion). Consumer spending helped pull the country out of a recession last year and the BOC said this week consumers will remain one of the biggest sources of economic growth through 2012. Excluding car and parts dealers, the so called Core retail sales slipped 0.1% in February, Statistics Canada said.  While the CAD hit a low of $1.00626, the currency managed to recover from its losses to close blow the parity line at $0.9989.

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.

By Dan, ForexYard – The following is the Forexyard daily chart for EUR/SEK. As will be shown through a variety of technical indicators, following a prolonged downward trend the pair is due for a bullish correction.

The technical indicators used are the Bollinger Bands, Relative Strength Index (RSI) and Stochastic Slow.

1. The tightening of the Bollinger Bands at the lower support line indicates that a drastic price change may occur in the near future. While the direction of the price change is not yet known, our other technical indicators will paint a clearer picture of where the pair is headed.

2. As seen in our chart, the RSI line is dipping below the lower support line. This typically indicates that an upward correction should take place in the very near future.

3. Our theory of an imminent bullish correction is further substantiated by the Stochastic Slow. As seen in the chart, the lines are crossing below the lower support line. This is usually an indication that an upward correction is likely to occur.

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 Forex Yard – After making strong gains against the USD, among others, the EUR now seems to be facing sell pressure as the opening of the US markets draw near. Initially receiving a boost from the surge of risk appetite following well performing Asian equities, such as the Nikkei 225, riskier currencies like the EUR, CHF, AUD, and NZD now seem to be leveling off.

The EUR/USD pair has fallen from 1.3400 this morning towards 1.3295 a few hours after the European markets opened. Asian traders dumping their safe-havens in exchange for riskier currencies has changed the dynamic in the forex market so far today, but with little market news this impact is difficult to determine in light of other fundamentals. Analysts are beginning to point to a possible retracement of the EUR/USD, saying that a valid target may be near 1.3440 in the short-term.

In other news, the Canadian Dollar (CAD) appears to have sustained its growth and is steadily holding its ground above parity with its American counterpart, the US Dollar. The Loonie has gained from an above average performance of its economy as well as rising crude oil prices, which are always a boon to the North American economy. With the USD experiencing mixed price behavior from likewise mixed economic reports, the USD/CAD pair may remain below parity for some time.

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 Forex Yard – During last week’s trading session, the Dollar continued to strengthen, mostly due to the Greek debt crisis which weakens the Euro. This week however, Interest Rates Announcements are expected from the U.S, Japan and New Zealand. This promises a much more volatile week, with unique opportunities to see high profits. Will you take advantage?

Economic News

USD – U.S. Interest Rates Announcement Expected on Wednesday

The Dollar rallied last week against the most of the major currencies. The Dollar gained about 200 pips against the Euro, and saw a 300 pips rise against the Yen. The Dollar slightly tumbled against the Pound.

The Dollar soared following a series of positive data from the U.S. economy. The Producer Price Index climbed by 0.7% in March, beating expectations for 0.4% rise. This shows that inflation is steadily rising in the U.S. which means that an Interest Rates hike might take place soon. In addition, the Existing U.S. Home Sales rose by 6.8% in March to a 5.35 million annual rate, from a 5.01 million pace in February. Considering that the housing sector in the U.S. was the main reason for the recent recession, every positive data regarding the building industry tends to boost the Dollar. The positive data from the U.S. economy continued as the Core Durable Goods Orders rose by 2.8% on March. This report is a leading indicator of production, and the positive result shows that the economy is advancing faster than expected.

As for the week ahead, many interesting economic publications are expected from the U.S. Yet the publication which holds the greatest impact on the market will surely be the Federal Funds Rate. The Federal Funds Rate is in fact the U.S. Interest Rates for May. Current expectations are that the Fed will leave rates at lower than 0.25%, however, considering the recent positive economic data, an interest rates hike won’t be a complete surprise. This means that every decision is likely to have a large impact on the market, and traders are advised to follow this publication.

EUR – Euro Continues To Tumble on Greek Fiscal Crisis Woes

The Euro dropped against most of the major currencies during last week’s trading session. The Euro dropped about 200 pips against the Dollar as the EUR/USD pair reached a weekly low a 1.3200. The Euro dropped about 200 pips against the Pound as well.

The main reason for the Euro’s bearishness continues to be the fragile Greek debt issue. There are currently concerns that that the $60 billion bailout plan by the Euro-Zone will fail to ease investors’ woes regarding Greece’s ability to recover from the debt crisis. It appears that until Greece will publish concrete data that shows real improvement regarding its fiscal crisis, the Euro might continue to tumble. Even several positive data from the Euro-Zone’s leading nations failed to support the Euro. The German ZEW Economic Sentiment rose to 53.0 points. This reflects the best result in 6 months, indicating that German investors feel greater confidence regarding their financial outlook. In addition, the German Manufacturing Purchasing Managers’ Index rose to a record high in April. The manufacturing sector rose to 61.3 in April from 60.2 in March, marking a record high. Yet it seems that as long as the Greece debt crisis continues to be the main story, the Euro could fall farther.

Looking ahead to this week, traders are advised to look for every update regarding the Greek fiscal crisis, as every data on this issue tends to have an instant impact on the Euro. In addition, traders should follow the major publications from the German economy. Such as the Preliminary Consumer Price Index on Wednesday and the Unemployment Change on Thursday.

JPY – Yen Drops On All Fronts

The Yen tumbled against all its major counterparts during last week’s trading session. The Yen dropped about 200 pips against the Dollar and about 300 pips against the Euro. The Yen marked its greatest drop against the Pound, as the GBP/JPY pair gained over 500 pips in one week.

There appear to be two major factors for the Yen’s freefall. The first factor is the positive U.S. economic data, and the second factor is the rise in most of the Asian Stocks. The combination of the two is leading investors to look for riskier assets than the Yen, as risk-appetite increases following the recovery of two of the largest economies. It currently seems that as long as the U.S. and the Japanese economies will continue to report positive data, the Yen might weaken further.

As for this week, a batch of data is expected from the Japanese economy. However the most significant publication looks to be the Overnight Call Rate on Friday. The Overnight Call Rate is the Japanese Interest Rates announcement for May. Analysts have forecasted that the Bank of Japan (BoJ) will leave rates at 0.10%. Nevertheless, if the BoJ will surprise and decides to hike rates, the Yen is likely to be boosted as a result.

Crude Oil – Crude Oil Recovers to $85 a Barrel

Crude Oil saw mixed trading during last week’s session. With the beginning of last week’s trading, Crude Oil saw a bearish trend and dropped below $82 a barrel. However by Thursday Crude Oil began to recover, and is currently trading at $85.50 a barrel.

It seems that speculations regarding an increasing demand for energy are boosting Crude Oil. The main reason for these speculations is the series of positive data from the U.S. economy, which were published lately. The report showed that the inflation in the U.S. is risings, and also that the housing sector in the U.S. is recovering. Considering that the U.S. is the world’s largest energy consumer, the positive reports create speculations that American citizens will feel safer to consume, and as a result will increase demand for oil.

Looking ahead to this week, traders are advised to continue follow the major data from the U.S. and the Euro-Zone, as these publications seem to have a large impact on oil prices. In addition, traders should follow the U.S. Crude Oil Inventories release on Wednesday, as this report tends to have an immediate impact on the market.

Technical News

EUR/USD

While most indicators for the pair are currently floating in neutral territory, the pair’s recent downward trend may continue today as well as the 2 hour RSI seems to be floating in the overbought territory and an impending bearish cross is evident on the hourly MACD. Going short for the day may be advised.

GBP/USD

The pair may be seeing a correction to its recent bullish trend today as the hourly RSI is floating in the overbought territory with a bearish cross evident on the hourly and 2 hour charts’ Slow stochastic. Furthermore a breach of the upper Bollinger Band is evident on the 2 hour and 4 hour charts. Going short for the day may a good option.

USD/JPY

The RSI for the pair is floating in the overbought territory on the 2 hour, 4 hour and 8 hour charts. Furthermore, a bearish cross is evident on the 8 hour and daily charts’ Slow Stochastic. Going short for the day may be advised.

USD/CHF

While most indicators for the pair are currently floating in neutral territory, the pair’s recent upward correction may continue today as well as the 2 hour RSI seems to be floating in the oversold territory and an impending bullish cross is evident on the hourly MACD. Going long for the day may be advised.

The Wild Card

USD/MXN

Some upward correction may be seen for the pair today as the hourly and 2 hour RSI is floating in the oversold territory and a bullish cross is seen on the 2 hour, 4 hour and 8 hour charts’ Slow Stochastic. Forex traders may be advised to go long for the day.

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.