Month: May 2010

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2360 level and was capped around the $1.2575 level.  Dealers pushed the common currency lower on rumours that French President Sarkozy threatened France would leave the euro if Germany supported any additional bailout packages.  French finance minister Lagarde later characterized the rumours as “rubbish” but the pair fell to within twenty pips of their lowest level since April 2009.  Some euro bears continue to speculate the pair will move to parity and many dealers are selling the euro on moves higher.  Eurozone sovereign credit concerns remain at very elevated levels and are negatively impacting many asset classes and markets.  There remains speculation that Greece or other eurozone countries may default on debt obligations, perhaps even this year despite the significant bailout packages that have been appropriated.  European Central Bank member Weber reported unconventional measures have been a “success” and said there is “no alternative” to a credible fiscal consolidation.  In U.S. news, data released today saw April retail sales decline to +0.4% from an upwardly-revised prior reading of +2.1% while the ex-autos component fell to +0.4% from an upwardly-revised +1.2%.  Also, April industrial production improved to +0.8% from the revised reading of +0.2% and capacity utilization climbed to 73.7%.  Other data saw March business inventories print at +0.4% while mid-May University of Michigan consumer sentiment improved to 73.3 from the prior reading of 72.2.  Chicago Fed President Evans said the Fed’s provision of swap lines with European counterparties “will limit” the contagion impact of European spillover effects “greatly.”  On the U.S. monetary policy front, Evans said he is comfortable with his assessment that “accommodation continues to be appropriate.”  Evans expects the economy to expand about 3.5% this year but sees the jobless rate remaining high “for a number of years.”  Euro bids are cited around the US$ 1.2585 level.

¥/ CNY

The yen depreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥91.80 level and was capped around the ¥93.10 level.  Data released in Japan today saw April bankruptcies decline 13.2% y/y while April machine tool orders were up 220.5% y/y.  Also, the April economy watchers survey was released overnight and the current index improved to 49.8 from the prior reading of 47.4 while the outlook improved to 49.9 from the prior reading of 47.0. Bank of Japan Deputy Governor Yamaguchi this week said the central bank has “no need to alter the outlook in our semi-annual economic report” following recent market volatility.  Finance minister Kan this week reported equity and currency markets will “start to stabilize.”  Minutes from last month’s BoJ Policy Board meeting were released yesterday and policymakers observed “balance sheet adjustments in the banking sector and the fiscal deficit problem in some European countries might further slow the pace of economic recovery” in the region.  The Nikkei 225 stock index declined 1.49% to close at ¥10,462.51.  U.S. dollar offers are cited around the ¥96.85 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥113.50 level and was capped around the ¥117.00 figure.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥133.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥81.00 figure. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8266 in the over-the-counter market, down from CNY 6.8280.  Data released in China overnight saw April foreign direct investment up an actual 24.69% y/y, up from the prior reading of 12.08%.  Yuan forwards registered their largest weekly gain this year on speculation China will revalue its currency in short order.  The U.S. and China will hold their second U.S.-China Strategic and Economic Dialogue in Beijing on 24-25 May.  People’s Bank of China member Li Daokui reported “conditions for China’s interest rate adjustment are basically mature now.”

£

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4495 level and was capped around the $1.4640 level.  Bank of England Governor King was on the tape as saying the U.S. faces some of the same fiscal dangers as Greece.  Traders are increasing their positions that would benefit if Bank of England keeps interest rates lower for a longer period of time.  Yields on two-year and 10-year gilts fell to their lowest level this year.  Traders continue to express doubts that the new coalition government will be able to adequately reduce the U.K.’s mammoth fiscal deficit.  The new government has suddenly found an ally in Bank of England Governor King who has publicly supported their decision to reduce spending by as much as £6 billion.  Cable bids are cited around the US$ 1.4335 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the £0.8500 figure and was capped around the £0.8620 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 Fast Brokers – Gold is testing its psychological $1250/oz level as it breaks away from other foreseeable technical barriers.  The precious metal continues to benefit from its win-win position, and this should be the case so long as investor uncertainty is so high.  Austerity concerns are weighing on the EUR/USD and risk trade as a whole, leading investors towards dollar, gold, and yen.  Additionally, gold tends to flex its negative correlation with the greenback when the risk trade does rally, meaning gold is in an opportune environment.  However, should concern about the EU manage to abate and FX markets stabilize then gold may finally reach a more lasting top.  That being said, there’s no end in sight as far as uncertainty is concerned with important economists, analysts, and central bankers placing more psychological pressure on the Euro.  On the other hand, some near-term profit taking in gold wouldn’t be surprising considering the run the precious metal has been on this month.

Technically speaking, gold faces technical barriers in the form of intraday highs and the psychological $1250/oz area.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday lows and the highly psychological $1200/oz area.  Gold has run out of meaningful technical barriers, normally a positive sign concerning near to medium term performance.

Present Price: $1240.13/ oz
Resistances: $1244.32/oz, $1249.04/oz
Supports: $1239.51/oz, $1236.76/oz, $1232.64/oz, $1227.49/oz, $1225.88/oz
Psychological: $1250/oz, $1200/oz

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 – Though the Aussie is exerting a relative strength today, the currency pair is still shrugging lower and testing weekly lows as the risk trade deteriorates across the board.  The Aussie’s relative strength likely stems from yesterday’s stronger than expected employment change data as Australia benefits from demand for its resources.  Hence, the RBA could be enticed to raise rates again next month should uncertainty in the EU manage to calm over the next couple weeks.  However, if the Euro continues its downturn then the RBA may find global conditions too unstable in regards to tightening again.  Regardless, Australian fundamentals are still strong, allowing the Aussie to hold above .89 level despite incredible weakness in the Euro and Pound.  On the other hand, the downturn in China’s SCI and  recent weakness in China real estate prices could be a cause for concern for the Aussie over the medium-term should this impact Chinese fundamentals.  However, the near-term picture is improving and the Aussie is taking full advantage of its relative strength for the time being.  Meanwhile, investors should keep an active eye on the EUR/USD and Cable, for a return to last week’s volatility may leave the Aussie little option but to follow suit.

Technically speaking, the Aussie faces technical barriers in the form of the psychological .90 area along with intraday and 5/10 highs.  As for the downside, the Aussie has technical cushions in the form of intraday and 5/7 lows along with the psychological .89 and .88 levels.

Price: .8911
Resistances:  .8923, .8932, .8947, .8962, .8976, .8987, .9001
Supports:  .8908, .8898, .8885, .8869, .8855, .8843
Psychological:  .90, .89, .88

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 sliding as investors divest from the risk trade across the board, a negative for the Yen’s safe haven status.  The USD/JPY is testing 5/11 lows, a negative near-term technical development as the currency pair tries to avoid a return to last week’s rampant selling activity.  Focus remains on the EU with prominent economists and central bankers throwing their hats into the ring as they voice their uncertainty concerning the effectiveness of the $1 trillion rescue package and the overall viability of the union.  Despite the BoJ’s $22 billion liquidity injection last week, the USD/JPY is still prone to a downturn in the wake of extraordinary psychological circumstances as we’re experiencing today in Europe.  Hence, investors should keep a sharp eye on the EUR/USD with the currency pair testing its October 2008 lows.  If the EUR/USD really takes a turn for the worse, this could drag the USD/JPY and U.S. equities lower as well.  On a positive note, U.S. consumption data satisfied analyst expectations, giving investors to buoy the USD/JPY due to relative economic performance.

Technically speaking, the USD/JPY faces technical barriers in the form of multiple downtrend lines along with intraday and 5/13 highs.  Additionally, the psychological .93level could serve as a solid barrier should it be tested.  As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday and 5/7 lows.  Furthermore, the psychological .92 area could continue to serve as a solid support over the near-term.

Present Price: 92.19
Resistances: 92.21, 92.38, 92.50., 92.66, 92.82, 92.95, 93.06
Supports:   92.03, 91.92, 91.80, 91.70, 91.53, 91.31
Psychological: .93, .92, .91, .90

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 has undergone a disconcerting selloff over the past 24 hours as the risk trade drops across the board.  Investors seemed to have had a delayed reaction to the negative BoE inflation report with the central bank offering a sluggish outlook on inflation due to expected economic headwinds.  Negativity from King and the BoE counters confidence stemming from a coalition in parliament and planned austerity measures.  Although the coalition has received a warm welcome so far, their plans for splitting up large banks could be dragging on the Cable.  However, there are a lot of psychological forces at work across Europe, so it’s difficult to pinpoint a specific cause for the Cable’s recent downturn.  Speaking of Europe, the EUR/USD has dropped below its highly psychological 1.25 level as economists, central bankers, analysts, and investors question the effectiveness of the $1 trillion rescue package and the validity of the EU has a whole.  Hence, speculation is spreading to nations with troublesome fiscal houses, making the Pound an easy target.  In addition to these negative forces, investors are also disturbed by more SEC investors in the U.S. as regulatory agencies dig into cases from the economic crisis.  On a positive note, most of the consumption data coming from the U.S. today satisfied expectations, continuing the theme of solid global fundamentals.  However, solid U.S. data gives investors even more of an incentive to sell the Pound and Euro for the Dollar with the Greenback becoming a desirable safe haven amidst global economic uncertainty.

Technically speaking, the Cable faces mounting downtrend lines along with intraday and 5/13 highs along with the psychological 1.46 and 1.47 levels.  As for the downside, the Cable has support in the form of an uptrend running through intraday lows along with the psychological 1.45 level.

Present Price: 1.4574
Resistances: 1.4590, 1.4616, 1.4630, 1.4654, 1.4679, 1.4701
Supports: 1.4574, 1.4563, 1.4531, 1.4507, 1.4495
Psychological: 1.47, 1.46, 1.45, May lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 Sell off in the EUR/USD is proceeding at a persistent, yet accelerated pace as it makes 100 basis points look like a standard movement.  Rhetoric concerning the viability of the EU is heating up with prominent figureheads making their thoughts known, including Volcker, Bernanke, and King.  The vocal hesitancy from well-respected economists and central bankers has investors second guessing the effectiveness of last weekend’s $1 trillion EU rescue package.  Hence, the selloff is the EUR/USD is gaining steam, dropping below 5/6 lows and its highly psychological 1.25 level.  Portugal joined Spain in announcing the implementation of austerity measures to reign in budget deficits.  Although this could prove to be good news concerning the long-term health of the EU, analysts and investors fear that austerity measures could hamper economic growth to an effect that contradicts the very purpose of the $1 trillion package.  Hence, the legitimacy of the EU has been thrown into question and the Euro is suffering as a result.  Most disconcertingly, the $1 trillion price tag doesn’t seem to be having its designed purpose, which is ridding the market of speculators.  The EU didn’t release any pertinent economic data today, allow psychological forces to control today’s price action.  Not that this would matter since the EUR/USD has shrugged off this week’s encouraging EU prelim GDP figures.  Meanwhile, investors are waiting on U.S. prelim UoM consumer sentiment data.  Retail sales and industrial production printed a little bit above expectations, though the numbers aren’t anything to get overly excited about.  The story of the EUR/USD remains the fiscal problems in the EU and finance ministers are hoping a weekend break will cool down speculation.

Technically speaking, the EUR/USD clearly faces an uphill battle with a wealth of downtrend lines hanging over head.  Additionally, the EUR/USD faces technical barriers in the form of intraday, 5/12, and 5/13 highs along with the psychological 1.25 level.  As for the downside, the EUR/USD has a limited near-term support system in the form of October 2008 lows and its psychological 1.23 area.

Present Price: 1.2457
Resistances: 1.2480, 1.2521, 1.2544, 1.2581, 1.2622, 1.2652
Supports:   1.2456, 1.2432, 1.2405, 1.2372, 1.2329
Psychological: May 2010 lows, March 2009 lows, October 2008 lows,1.26, 1.25, 1.24, 1.24

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 – Gold prices retreated from their all time high, but yesterday’s pull back in the price was limited due to the price running into a significant support level.

The price of spot gold fell to $1235.10, down from the commodity’s opening day price of $12360.60.

The drop in the price of spot gold was restrained when compared to the price volatility the commodity has seen as of recent. The price of spot gold has risen 14% in the past 7 weeks.

Per the spot gold daily chart below:

1. Yesterday’s price decline that was halted the near the support line of $1224.50.
2. A short term trend line that shows the sharp price appreciation for the past 7 weeks.
3. A long term trend line that takes into account all the price action.
4. Support at $1169
5. Support $1058.65

Traders can use the support and resistance lines when trading spot gold. Depending on the time frame and direction of the trade, the prices mapped out below should serve as areas for setting stops and limits for reducing risk and potential profit taking.

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 Rita Ruvinski – The EUR was struggling on Friday, trading around 14-month lows against the U.S. dollar as concerns about anemic growth in the Euro-Zone dragged it lower. The EUR weakened for a 3rd day against the U.S dollar on concern governments may not cut budget deficits fast enough after the European Union announced a near $1 trillion bailout.

The British pound was also on the defensive below $1.46, having shed 1.4% on Thursday, hurt by data showing the UK goods trade deficit widened more than expected in March. That came after Bank of England Governor Mervyn King said weaker Euro Zone export markets had increased growth risks for the British economy.

According to analysts the European single currency was likely to be defended around the $1.25 level on talk of some large option barriers around there. Still, the outlook for the EUR remains bearish with investors nervous over the commitment and resolve of EU member states to make significant inroads in consolidating fiscal positions. Traders say that if the EUR breaks below $1.25, investors’ selling could push it toward $1.2330 in the upcoming days.

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. dollar rose to its highest level Thursday, gaining on the EUR and the British pound, as currency traders’ appetite for risk remained restrained because of rising worries about the long-term implications of Euro-Zone debt problems.

Economic News

USD – The Dollar Extends Gains after U.S. Jobless Claims Data

Encouraging data from the U.S. and expectations that the Federal Reserve will be the first to move amongst the major central banks to raise Interest Rates supported the U.S. dollar Thursday. The U.S currency was near a 13-month high, in part boosted by inflows from investors fleeing the Euro-zone and in part driven by expectations that the recovery in the U.S. was on much solid ground.

The greenback extended gains versus the EUR after data showed the number of U.S. workers filing new applications for unemployment insurance fell last week, though by an amount slightly less than expected. Initial jobless claims in U.S. fell by 4,000 to 444,000 in the week ended May 8, higher than the median forecast of economists.

EUR – The EUR Slides for a 3rd Day on Budget Deficit Concern

The EUR was struggling on Friday, holding above 14-month lows against the U.S. dollar as concerns about anemic growth in the Euro-zone dragged the EUR lower. The EUR weakened for a 3rd day against the U.S. dollar on concerns the governments may not cut budget deficits fast enough after the European Union announced a near $1 trillion bailout.

The British pound was also on the defensive, trading below $1.46, having shed 1.4% on Thursday, hurt by data showing the UK trade deficit widened more than expected in March. That came after Bank of England Governor Mervyn King said weaker Euro-zone export markets had increased growth risks for the British economy.

According to analysts the European single currency was likely to be defended around the $1.25 level on talk of some large option barriers around there. Still, the outlook for the EUR remains bearish with investors nervous over the commitment and resolve of EU member states to make significant inroads in consolidating fiscal positions. Traders say that if the EUR breaks below $1.25, investors’ selling could push it toward $1.2330 in the upcoming days.

JPY – Yen Weakens Broadly on Recovery Signs

The Japanese yen slipped against 15 of its 16 major counterparts as stocks rose and economic data pointed to improving employment in Australia and the U.S. The Yen weakened for a second day against the EUR as signs the global economy is recovering reduced demand for Japan’s currency as a refuge.

Japan’s currency fell to 117.74 per EUR from 117.62 yesterday. The Yen was at 93.36 per dollar from 93.24.

OIL – Oil Prices Fall Below $74 a barrel

Crude Oil prices settled lower Thursday, hitting their lowest level in nearly 3 months as concerns over European economic stability weighed on the EUR and helped lift the U.S. dollar. Oil also slipped after U.S. equities retreated on widening probes of banks’ mortgage-bond deals. Crude dropped as much as 58 cents, or 0.8 percent, to $73.82 a barrel. Yesterday, the contract fell $1.25 to $74.40.

Oil prices will likely continue to struggle in the near term as the tendency is still a strong Dollar and weaker oil prices according to analysts. A change in direction for Crude Oil would only come after a Dollar weakness, they said.

Technical News

EUR/USD

Yesterday the pair reached a new low at 1.2515 for the bearish trend that began in December of 2009. The strong downward movement continues as the 10, 20, 50, 100, and 200 day simple moving average lines all have a negative slope. The next major support level rests on the weekly chart at 1.2450.

GBP/USD

The dollar continues to strengthen versus the pound and the daily chart’s 14-day Relative Strength Index shows the bearish move has significant momentum behind it. The RSI is currently floating in the oversold zone and has a sharp downward sloping trend line. A breach of 1.4570 could send the pair lower to the next support level of 1.4215.

USD/JPY

The 4-hour chart displays the Bollinger Bands tightening, indicating a breakout may occur in the near term. It can be inferred from the chart that the breakout will be to the upside as a bullish cross has formed on the Slow Stochastic Oscillator. The RSI-14 is also positive sloping, indicating that the momentum is to the upside. Traders should wait for the breakout and go long.

USD/CHF

The recent bullish streak on the 4-chart is showing some technical resistance. A bearish cross has formed on the Slow Stochastic, indicating that the pair may fall in the near term. This is supported by the RSI-14 that has recently crossed below the 70 line, indicating a sell signal.

The Wild Card

Gold

The price of gold fell to a short term support level at $1233.20 and quickly bounced back. Momentum is sill strong to the upside for the commodity with the daily chart showing a rising MACD histogram and a rising 14-day Relative Strength Index. CFD traders should continue to be long on gold as the commodity could test the all-time high of $1248.60.

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.

GBPUSD has formed a cycle top at 1.5053 level on 4-hour chart. Now the fall from 1.5053 could possibly be resumption of downtrend from 1.5522. Deeper decline to re-test 1.4475 previous low support is possible later today, a break below this level could confirm that the downtrend has resumed, then next target would be at 1.4300 area. Resistance is at the falling trend line, as long as the trend line resistance holds, downtrend will continue.

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