Month: May 2010

Source: Forex Yard

With the Euro already recording fresh 14-month lows against the U.S. Dollar on Thursday, the single currency may see a significantly larger price drop following the U.S. Non-Farm Payrolls report. Set to be released at 12:30 GMT, the report is forecasted to show an increase in the American employment figure. This will likely weigh heavily on the Euro.

Economic News

USD – Non-Farm Payrolls Could Lead to Big Gains for the Greenback

While the Dollar was able to capitalize on the turmoil in Greece and make huge gains on the Euro, it tumbled against the Japanese Yen in trading yesterday. In the last 24 hours, USD/JPY has fallen over 200 pips, and the pair is currently trading around 91.75. Analysts largely attribute the drop to a reaffirmation of the Yen as a safety net compared to the more volatile currencies.

Still, the Dollar has been able to largely maintain its safe-haven status, and as such has gained versus most of its main currency rivals. The GBP/USD has fallen well over 200 pips since this time yesterday. The AUD/USD has also recorded a 200 pip loss in the same amount of time.

Today, traders will want to pay careful attention to the Non-Farm Payrolls Report, set to be released at 12:30 GMT. Analysts are forecasting a jump in the U.S. employment number, which if true, could lead to further gains for the greenback. That being said, traders should note that the opposite effect could also occur. Should the Non-Farm report come in above expectations, investor confidence in the global economic recovery could be boosted. In this case, there could be a return to risk taking, which would lead to a drop for the Dollar.

EUR – Euro Continues to Fall With No End in Sight

Turmoil throughout Greece has weighed heavily on the Euro over the last few days. With violence recorded throughout Greece, there is now a very real fear that fiscal instability could spread to other European currencies. The most glaring example of the single currencies troubles is illustrated by EUR/USD, which is currently trading at fresh 14-month lows. The last 24-hours alone have seen the pair drop almost 200 pips. In addition, EUR/JPY has fallen from 120.55 to its current level of 116.50 in the same amount of time.

Today, traders will want to pay attention to the market reaction to the U.S. Non-Farm Payrolls report, set to be released at 12:30 GMT. Some analysts are forecasting a return to risk taking should the report come in above expectations. While this could potentially happen, most are skeptical that this would translate into serious gains for the Euro. Best case scenario, a return to risk sentiment would mean that Dollar and Yen gains would be slowed down against the single currency.

JPY – Yen Makes Big Gains as Safe Haven Currency

Investor fears that the Greek deficit crisis could spread to other countries within the Euro-zone led. This led to big gains for the Japanese currency in trading yesterday. In addition to the USD/JPY, which has fallen some 200 pips in the last 24 hours, the Yen has also recorded gains on the British Pound and Swiss Franc.

Traders can expect the Yen to remain at its current high levels as long as the Greek crisis remains in the headlines. That being said, the Japanese currency may take some losses today against the greenback, depending on the result of the Non-Farm Payrolls report. A positive figure, say around 200K, would likely lead to solid gains for the Dollar against the Yen.

OIL – Spot Crude Plummets on Market Turmoil

Concerns that the Greek deficit crisis will soon spread to other European countries has sent the price of crude oil spiraling down in the recent trading sessions. The price of crude has experienced its largest weekly drop since January 2009, largely due to what is happening in Greece, as well as the consistently rising level of U.S. inventories.

Currently the price of crude is fluctuating around $77.20. Depending on the outcome of today’s Non-Farm Payrolls report, that price could drop significantly lower. Traders can assume that a better than expected payrolls figure, will likely lead to a drop in the cost of crude.

Technical News

EUR/USD

Yesterday the pair broke below the major support level of 1.2600. Momentum appears to be trending strongly to the downside as the major moving average lines are pointed sharply lower. Traders may want to target the 1.2450 support level, which is the bottom of the previous bearish trend on the weekly chart.

GBP/USD

The pound has fallen sharply but the losses were halted at the support line of 1.4710. The 14-day Relative Strength Index is downward sloping and has dipped into the oversold region. However, traders should look to be short on the pair until the RSI line breaks above the 30 line. The next support level for the pair rests on the daily chart at 1.4585.

USD/JPY

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

USD/CHF

The pair has shown bullish behavior in the past several days. However, the technical data indicates that this trend may reverse any time soon. For example, the daily chart’s Slow Stochastic signals that a bearish reversal is imminent. When the downward breach occurs, going short with tight stops appears to be a preferable strategy.

The Wild Card

Oil

Crude oil prices are once again dropping and the commodity is currently traded around $77.35 per barrel. And now, the 4-hour chart’s RSI is giving bullish signals, indicating that crude oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

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.

Forex Market Analysis provided by eToro

Euro Hits 14 Month low

EU members have sealed the bailout deal for Greece on Sunday 2^nd of May agreeing to an unprecedented €110 billion Euros of bailout however Greek protest and political instability threaten Greece’s ability to make budget cuts and raised investors fears of a default(Sovereign bankruptcy) to new levels. Moreover investors now fear that the Greek debt problem will spread across euro. In one of the most volatile session in latest years with fears over the stability flooding the market the Euro was hammered vigorously and was pushed to a 14 month low at 1.25.

EUR.USD Falls a staggering 840 pips in just 4 days

EUR.JPY Falls a record 800 pips in less than 3 hours!!!

Sterling hit by hung Parliament

As market fears over sovereign debt hit new highs Brittan’s election which took place yesterday pointed on a hung parliament and raise big question and the UK ability to tackle its own budget deficit. Sterling was pushed sharply lower falling from around 1.511 to as low as 1.4708 in one day.

GBP.USD Falls 300 pips in less than one day

The Nonfarm Pay rolls and the Trading Error

An unclear trading error triggered heavy selling in US Equities and caused US indices to fall sharply with the Dow falling -3.2% the S&P 500 -3.24% all in less than 20 minutes between 2:40-3:00 PM New York. This unexpected event amid woes in Greece only added more nervousness to the volatile Forex market causing short traders to crowd even more bets against the Euro and the Cable. The Indices recovered rather quickly but market nervousness remained high.

Nonfarm Payrolls- Market which is currently rather sensitive to negative news will watch closely the Nonfarm figures coming from the US with consensus bets on a 200k gain in jobs. If the NFP will disappoint this could lead FX traders to bet the relative advantage of the US is smaller and push the Dollar for a slight correction. If the figure will be around consensus or better than expected the Greenback might move into further gains. However since the debt woes in Europe weigh on risk appetite and can create unexpected reactions .For example a disappointing figure can also trigger some risk aversion and give the Dollar some support in case investors continue to move into safe haven. Therefore it is advisable to trade on low leverages and see how the market reacts to the news before determining a trend.

Market Analysis provided by eToro

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

© 2009 eToro Blog.

Forex Market Analysis provided by eToro

The Euro sliced through support levels as the Greek Austerity package was pasted, and protesters took to the streets in Athens.  The currency is likely to remain under pressure as no specific financial aid package has been proposed to handle the European crisis.

Click here to read the full daily Review

USDCHF has formed a cycle top at 1.1245 level on 4-hour chart. Sideways movement in a range between 1.1000 and 1.1245 would more likely be seen in a couple of days. However, the sideways movement is treated as consolidation of uptrend from 1.0434, as long as the rising trend line support holds, one more rise to 1.3400 area is still possible, and a break above 1.1245 could signal resumption of uptrend.

Daily Forex Signals

The ascending dominance of the “Currency Contagion” meme will raise the selling price of this asset 197%.

It’s all about faith, my friends. And unfortunately, that’s an increasingly rare commodity these days.

A body participates in a system if they have reasonable faith of making a decent return. If they have no faith – no expectation that the system will honor and reward their participation, they will eventually cease to take part in it, and the system will collapse.

Dogs pack up, because they figure that they might lose a piece of their next meal to the pack’s alpha male, but they have faith that the pack is the best way to assure that there will be a “next meal” on a pretty regular basis.

The Cost of Failure

It may take a while before they notice that they are missing out on a regular basis. But it is a given that a pack that does not expect adequate food will begin to slowly lose members. When things get bad enough, the remaining dogs will gang up and expel the failed Alpha.

Similarly, human participation in transactional relationships requires a certain measure of faith.

On the simplest level, one must have faith when one is trading goats for wheat that the gentleman across the table from you will not smack you upside the head with a large stick, and walk off with the goats, the wheat and perhaps your clothes, stone axe and mate. Thus we have open palm salutes and handshakes, wherein we establish to one another that we are not concealing a weapon of some sort.

Currency: A Valuable Fiction

Now let’s take things up a notch in complexity. Some say that currency exists because it is a bit of a pain dragging around goats and carts of wheat with you all the time. But really, currency exists because it allows for specialization of labor.

I might be particularly good at raising goats, while the fellow across the way is better than I am at keeping bugs out of the wheat. Neither of us makes a halfway decent boot mind you, but that’s OK, because a chap in the next town is a whiz with a scissors and a hammer.

A currency of some sort allows each of us to focus on what we do best. It also allows a body to store wealth without worrying about the smell a pile of dead goats inevitably generates.

However, any currency, be it shells, beads, coins or pieces of paper, requires a great deal of faith. One must trust that each iteration of that currency, each bit of specie will retain its value over time, or it cannot possibly be an adequate storehouse of value.

One must have faith in the creator of said specie, or the whole system falls apart, and we are stuck hauling about cartloads of stuff again. Worse yet, I would have to make my own shoes, and I am quite sure that my feet would suffer awfully.

The Gold Bug Fallacy

As long as we are discussing currencies, I’d like to take a moment to address a common fallacy. Many folks in this business like to label all command currencies as fictive and therefore undeserving of your faith.

They frequently have a good point there, as most every government has inevitably debased its command currency so as to ease the burden of paying its debts. In plain English, they borrow goats and print bucks to pay off the loan.

But these same folks will point to certain minerals as having “genuine value.” Gold and silver are the usual favorites because of their pleasant coloration and heft and relative resistance to corrosion. However attractive these bits of rock may be, their ability to retain value is simply a meme, a thought shared by millions perhaps, but still just as fictive as any paper currency.

But Can You Eat It?

A friend asked me recently if I concurred with the idea that “all hell was about to break loose,” and what they might to do about such things. They thought that perhaps they ought to convert a substantial portion of their holdings into gold coins of some sort.

I am not so sanguine as to the eventual fate of our current systems as to completely disregard his point. But I did suggest that if he really thought that our civilization was verging on one of its periodic dark ages, he might do better to invest his money in a few courses at his local community college.

In particular, he should acquire the ability to grow corn, clean and patch wounds (and given a little more time, deliver babies), prop up roofs, and brew alcohol (the basis of most all chemistry). Learning to make shoes wouldn’t be a bad idea either.

In a real crisis, you can’t eat gold. At best, I suppose you could put a chunk or two in a sock and kill marauders with it.

As much as it is romantic to ponder such dramatic turns of affairs as dark ages and depressions, I am not really looking to address such complete societal breakdowns in today’s column.

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The Price of Faith…

Let’s presume for a moment that we will indeed be able to buy shoes for some time to come, and focus instead on the decline of the meme of faith as it pertains to certain of our fiscal systems.

Currencies are not the only fiscal contracts that require faith in the issuing party. The same is most certainly true for both stocks and particularly, bonds.

No one in their right mind would lend to a company, town or country if they had no faith whatsoever in the borrowing entity’s intent or ability to repay that loan, preferably with some interest. But these things are seldom absolute, so we posit an inverse relationship of faith in repayment against additional cost asked of the borrower.

…And the Cost of Risk

Right now, for example, the more fiscally sound portion of the EU (read as Germany and France) is pondering how much interest it must charge the less sound “PIIGS” states in return for lending them adequate funds to avoid bankruptcy.

The problem is, very few honest observers have any faith that Greece et al. will ever change their spendthrift ways. So if Germany and France participate in a rescue package, will this increase faith in the European Union’s future? Or will the rest of the world lose faith in Germany and France as well?

And once this “Loss of Faith” meme begins to ascend and replicate, will it become dominant within the “Menome,” the total global kettle of conscious thought? Once folks start to ponder the ability of sovereign governments to honor debt through their own specie, the illusion of both debt and command currency (always a bit tattered around the edges) begins shred entirely.

A Dangerous Descent

The last time we saw such a breakdown was the Asian Contagion episode of 1997, wherein faith in the ability of government to control the ability of currency to act as a reservoir of value was stretched to the breaking point. And that time around, the focal point of the loss of faith was halfway around the world. We were able to comfort ourselves – to find faith – in the idea that Western governments would never engage in such dangerous shenanigans.

View Larger Chart

This time, the focal point is right here in the West. When one peruses such newspapers as the International Herald Tribune, one is treated to multicolored displays reveling in the sheer impossibility of genuinely solving Europe’s Gordian knot of debt.

Stateside, one cannot go a day without reading of the overwhelming weight of debt Washington has taken on. These figures are critical both as facts, and as ascending memes, ideas that are gathering power in the minds of more and more investors. As faith in sovereign debt and currency declines, investors (at least those who are not pondering a new dark age) are looking toward the usual safe harbors of gold and silver.

Critical Memes

As mentioned earlier, I have no particular faith in gold and silver’s inherent values. But I do note with much interest the relative increases in the rate of uptake of the “Gold” and “Silver” memes.

Gold has long been the obsessive’s dream, the stuff they make movies like “Treasure of the Sierra Madre” about. But silver does a heck of a lot more of the heavy lifting. As Nobel Laureate economist Milton Friedman is said to have told Jim Blanchard, “The major monetary metal in history is silver, not gold.” Think about it: Gold is kept in vaults around the world – but most every coin in your pocket right now is covered in silver.

Both gold and silver have been used to hedge against inflation driven crashes like we saw in 2007 (and like we are about to see again in 2010). In October of 2007 the S&P 100 was trading at 714.51, Gold futures were $745 an ounce, and silver was available for $13.89. (That’s a ratio of 53-to-1, an important figure we will come back to in a moment.)

Six months later, the stock market was down 18.32% (on its way to a total loss of 56.79%). Gold futures were up to $1033.9 an ounce (a gain of 38.78%) and silver was up to $18.85, a similar gain of roughly 36%. The relationship between gold and silver was still holding even at about 55-to-1.

A Curious Gap – and 197% Gains

We are approaching a critical moment in the market very similar to the precipice we stepped off in 2007. Oil is skyrocketing again, and is spreading its inflationary poison throughout the system.

But investors are facing an extraordinary problem: Gold’s nonstop rise over the past year has already pushed futures to $1,166 – just a whisker away from its all-time high. Silver has also been rising. But its current price of $17.27 an ounce leaves it 18.46% shy of its March 2008 high of $21.18.

More importantly, there is a unique distortion in the ratio between gold and silver: Right now it takes almost 68 ounces of silver to buy an ounce of gold! This gap cannot last more than a moment or two, as investors looking to hedge against stocks rush in to take advantage of silver’s discount to gold.

With this closing gap in mind, I suggest to you that you expose yourself to silver’s pending upside. Since I retain the view that even silver’s value is in the end just as fictive as any five dollar bill, I suggest instead a vehicle such as iShares’ Silver Trust ETF (SLV:NYSEArca). My charts indicate a pending upside run that could easily add 30% to SLV’s current share price of $17.19.

Taking this idea another step, I have suggested to my WOW readers that they divorce themselves even further from physical silver, and involve themselves primarily in SLV’s upside motion via the purchase of select SLV calls, with the intent of harvesting gains ranging as high as 197%.

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About the Author:

Adam Lass is the Senior Editor of WaveStrength Options Weekly along with Bryan Bottarelli, and a regular contributor for free market e-letter Taipan Daily. Adam’s fascination with technical analysis started in his early days as a wholesale purchasing manager, when successfully forecasting the public’s future spending habits (using Treasury reports, stock trends, interest rates, even the Farmer’s Almanac) could mean the difference between prosperity and failure.

He has been called “one of the most brilliant charting minds in the country.” His deep insight into the economy and value analysis enables him to reliably guide readers through today’s incredibly volatile market in WaveStrength Options Weekly.

By CountingPips.com

The U.S. dollar and Japanese yen surged sharply higher against the other major currencies in forex trading today as risk aversion again shook the financial markets. The U.S. stock markets and risk positive currencies were rocked hard by risk aversion in what was the most volatile trading day since the height of the financial crisis. Fears over the debt crisis in Greece and the other high-debt countries in the Eurozone put investors in a full-force selling mode while the Greek government voted to approve austerity measures and protesters demonstrated for the second consecutive day.

The U.S. stock markets tanked dramatically in afternoon trading before pulling back. The Dow Jones at one point lost almost 1,000 points then quickly turned around most of those losses to finish the day down by almost 3 percent and a total of 347 points. The Nasdaq took a 82 point loss today while the S&P500 fell by over 35 points. Oil declined by almost 4 percent to cross under $80 per barrel and to level at $76.78 per barrel. Gold acted as a safe haven asset and jumped by $34.40 to ascend to the $1,209.00 per ounce level.

The dollar and yen, the two major safe haven currencies, climbed sharply against the euro, British pound, Swiss franc, Australian dollar, New Zealand dollar and the Canadian dollar as the day unfolded. Head-to-head, the dollar was sharply lower versus the yen and fell to a one-month low (chart below).

There could be more volatility in the markets into tomorrow as we can expect the results of the U.K. election for Parliament and the release of market-moving U.S. government’s nonfarm employment report as well as Eurozone countries voting to approve the latest Greek bailout package.

USD/JPY Daily Chart – The US Dollar today plummeting against the Japanese Yen in forex trading to touch a one-month low. The pair opened the day around the 93.87 exchange rate and fell all the way to a low of 88.01 before pulling back and paring some of those losses. Amazingly, the USD/JPY had touched a high of almost 95.00 yesterday and then today briefly had lost all of the gains it had made over the previous month, touching the 100% fibonacci retracement level that started on March 4th.

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$ 1.2690 level and was capped around the $1.2855 level. The common currency reached its lowest level since March 2009 as traders found big stops below the US$ 1.2740 level, representing a major technical retracement level.  Dealers dumped the pair after European Central Bank President Trichet reported the Governing Council did not discuss bailouts for other eurozone countries including Spain and Portugal and did not discuss buying eurozone debt in the secondary market in a new quantitative easing policy.  Trichet countered that Spain and Portugal “are not Greece” yet the spread between Greek bunds and Spanish 10-year debt continues to widen.  The threat of additional sovereign credit contagion in the eurozone is significant and may eventually require additional ECB policies, an International Monetary Fund bailout, or other measures.  Moody’s warned sovereign credit risk may spread to other banking systems including Spain, Italy, Portugal, Ireland, and the United Kingdom.  Eurozone officials continue to signal that Greece will not default on its debt and the IMF indicated its bailout package gives Greece about eighteen months of financial assistance.  Money is moving into U.S. Treasuries on the heels of the European debt crisis with the yields on 10-year U.S. Treasury Notes at a four-month low of 3.53%.  As expected, the European Central Bank kept its main refinancing rare unchanged at 1.00% overnight.  Data released in Germany today saw March factory orders up 5.0% m/m and 26.1% y/y, an improvement from February’s prints.  March industrial production data will be released tomorrow.  In U.S. news, data released today saw Q1 non-farm productivity print at 3.6%, down from the downwardly-revised +6.3% prior reading.  Q1 unit labour costs came in at -1.6%, up from the revised -5.6%.  Weekly initial jobless claims printed at 444,000, down from the revised prior reading of 451,000, and continuing jobless claims printed at 4.594 million, down from the revised prior reading of 4.653 million.  Also, ICSC chain store sales fell significantly to +0.8% from the prior reading of +9.0%.  Tomorrow’s April non-farm payrolls data will be closely scrutinized.  Non-farm payrolls growth is expected to print around +190,000 while the unemployment rate is expected to print around 9.7%.  Fed Chairman Bernanke reported he “sees some reasons for optimism” even though bank credit remains tight.  Richmond Fed President Lacker noted “My worry is that we will let the obvious slack in the economy lull us into a false sense of security regarding inflation.”  Boston Fed President Rosengren warned it “is likely to take years” before the economy attains “full employment” again.  Euro bids are cited around the US$ 1.2295 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥93.30 level and was capped around the ¥93.95 level.  Japanese financial markets reopened after the Golden Week holiday.  Some Democratic Party of Japan legislators indicated the government should send the message that it will require Bank of Japan to continue “bold” monetary easing to counter deflation.  Traders continue to move into yen as a safe haven play on account of the global sovereign credit crisis.  Last week, Bank of Japan kept monetary policy unchanged overnight and reported it will help lenders provide credit, possibly using methods from 1998-1999 when lenders gave cash to lenders to address the credit squeeze.  The headline overnight unsecured call rate target was maintained at 0.1%. BoJ Governor Shirakawa directed the central bank to stimulate lending “with a view to strengthening the foundations for economic growth.” He added “The government is also trying to map out an economic growth strategy, and the Bank of Japan hopes to give a boost to such efforts with new policy measures.” Last week’s data released in Japan evidence an improving economy that is mired in a deflationary spiral and the central bank’s enhanced rhetoric last week reflects that dichotomy.  The new forecast for inflation suggests deflation will end during the next fiscal year with CPI at +0.1%.  April monetary base data will be released tonight.  The Nikkei 225 stock index lost 3.27% to close at ¥10,695.69.  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 ¥118.85 level and was capped around the ¥120.70 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥140.20 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥84.70 level. 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, up from CNY 6.8263.  The State Administration of Foreign Exchange reported “As the global economy recovers, cross-border capital inflows will increase in 2010 because of yuan appreciation expectations, interest rate differentials between Chinese and foreign currencies, and domestic asset prices.  China will prevent abnormal capital inflows from enlarging asset bubbles through in-depth analysis and precise crackdowns.”  People’s Bank of China is expected to revalue its yuan currency at any time.  Ratings agency Fitch reported Chinese banks may need to be bailed out “if we do see a pretty serious correction in the property market.”

£

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4925 level and was capped around the $1.5145 level.  Attention is focused on today’s General Election in the U.K. with most pollsters predicting David Cameron and the Tory party will win a minority government.  If Cameron wins, the size of his victory will become crucial and will likely determine which party he tries to form a majority government with.  At the very least, today’s likely election result suggests the Blair-Brown Labour movement of the past fifteen years has runs its course. A Cameron victory could be positive for sterling as the Tories voted against the Labour initiative years ago to join the euro and accede Economic and Monetary Union.  Data released in the U.K. today saw April PMI services fall back to 55.3 from the prior reading of 56.5.  Cable bids are cited around the US$ 1.4335 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the £0.8425 level and was capped around the £0.8520 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1085 level and was capped around the CHF 1.1245 level.  The franc went on a rampage today as the Swiss National Bank was deemed to have been absent from the market.  The central bank may have deemed that euro sentiment is so negative that it would have been futile to buy euro for francs today.  The CHF 1.4320 level on the cross has been talked about a lot as a key level the SNB has supported recently.  Data released in Switzerland today saw April consumer price inflation climb 0.9% m/m and 1.4% y/y.  Higher inflation rates are troubling for the SNB because if they lead to higher interest rates, they could engender further strength in the franc.  April unemployment and March retail sales data will be released tomorrow.  U.S. dollar offers are cited around the CHF 1.1270 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4105 level while the British pound depreciated vis-à-vis the Swiss franc and tested bids around the CHF 1.6705 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

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 Greg Holden – Another new month brings with it a fresh Non-Farm Employment Change report from the US government. No doubt many investors have been watching the riots unfold in Greece, bailout packages getting solidified and a shocking plummet in the value of the EUR and Crude Oil. The USD has surged to 1-year highs against a number of currencies, the EUR primary among them. This makes tomorrow’s Non-Farm Payroll (NFP) report even more significant.

The American economy appears to be a short-term safe-haven for investors who feel uncertain about the Euro-Zone. As a result, any positive news coming out of the US may help to facilitate this perception and add strength to the Dollar. This is precisely what we’re expecting tomorrow with the NFP report.

Expectations are for a growth, in the non-farm sector of the American economy, of 197K jobs. A forecast which may indeed be accurate, even underestimated, given current conditions. Last month we saw a growth in NFP by 162K jobs, and most data we have says that employment has only improved since then. Temporary hiring and long-term employment are both up. Jobless claims and layoffs are both down. Wednesday’s ADP report was better than expected. Safe-haven status of the USD and falling oil prices guarantee stronger buying power of American firms, thus further growth. And lastly, the unemployment rate has held steady in the face of systemic layoffs around the globe.

As stated before, any positive data from the US should lead to a strengthening of the safe-haven status of the USD. If the NFP report comes inline with forecasts, give or take a few thousand jobs, the USD will likely continue to mount record gains against its rivals going into next week. It appears as if tomorrow’s data can only help the Dollar, even if worse than forecast results are given.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Analysis by Finexo.com

Past Events:
• USD ADP Non-Farm Employment Change out at 32K, versus expected 29K, prior 19K
• USD ISM Non-Manufacturing PMI out at 55.4, versus expected 56.1, prior 55.4
• EUR Retail Sales m/m out at 0.0%, versus 0.1%, prior -0.2% (revised up)
• GBP Construction PMI out at 58.2 versus expected 53.5, prior 53.1
• AUD Retail Sales m/m out at 0.3%, versus expected 0.8%, prior -1.2%
• AUD Trade Balance out at -2.08B, versus expected -2.09B, prior -1.70B
• NZD Employment Rate out at 6.0%, versus expected 7.3%, prior 7.1%

Upcoming Events:
• GBP U.K Parliamentary election (all day)
• GBP Halifax HPI m/m (6th-8th)
• GBP Services PMI (930GMT)
• EUR German Factory Orders m/m (1100GMT)
• EUR Minimum Bid Rate (1245GMT)
• EUR ECB Press Conference (1330GMT)
• CAD Building Permits m/m (1330GMT)
• USD Unemployment Claims (1330GMT)
• USD Fed Chairman Bernanke Speaks (1430GMT)
• CAD Ivey PMI (1500GMT)

Market Commentary:
The Euro tumbled to its weakest level against the U.S dollar in over a year amid growing concerns that Greece’s fiscal woes will spread to other indebted nations. The 16-nation currency hit a low of $1.27881 for the first time since March 2009 as Moody’s Investors Service placed Portugal’s Aa2 government bond ratings on review for another possible downgrade. In Greece, a nationwide general strike crippled the country, as protests against the government’s recently announced austerity measures turned violent, with a firebomb attack on a central Athens bank killing three people. The riots escalated as citizens of the debt-stricken nation halted flights and shut shops in a direct response Prime Minister George Papandreou’s plans to cut wages and pensions and raise taxes in return for a 110 billion- euro ($143 billion) rescue package. The Euro closed at $1.28126, down 1.17% from the day’s opening price and down 3.80% from the week’s opening price.

The EUR/JPY tumbled to a low of 119.935. The pair closed at 120.170, down 2.13% from the day’s opening. The Euro continued to fall against the Yen, touching on a low of 119.481 in this morning’s trading session.
President Jean- Claude Trichet will be fighting for the credibility of the ECB as well as the Euro today as he faces questions over the institution’s decision to throw away collateral rules for Greek debt. On Tuesday, Trichet altered the rules for the second time in a month to guarantee the ECB will keep accepting Greek government bonds as collateral for loans even though they had been downgraded to junk status.  This move comes in a direct contradiction to the declaration made earlier this year by Trichet that the central bank would not alter its collateral rules for the benefit of a single country.

According to economists the central bank may have to extend that to other nations, renew a program of lending unlimited cash to banks for a year, and even start buying government debt if the €110 billion- ($146 billion) bailout plan for Greece fails to stop the euro’s slide. The ECB decision raises tough questions that will make Trichet’s monthly news conference “more than difficult,” wrote economists at BNP Paribas.
Today, the ECB will announce its minimum bid rate decision – the central bank is expected to hold its key interest rate at its current record low level of 1.0%.

The Euro’s weakness helped the dollar index hold on to its impressive gains this week. The index was up at 84.11, not far from a one-year high of 84.31 hit earlier in the session. The U.S Dollar got a boost from data showing U.S. private sector employers added 32,000 jobs last month, bolstering the view that U.S. interest rates will likely rise from record lows well before action on rates in the euro zone.

Companies in the U.S. added workers in April for a third month, according to data based on private payrolls. Data from the ADP Employer Service yesterday reported an increase of 32,000, following a revised 19,000 gain the prior month. The ADP figures were forecast to show a gain of 30,000 jobs. According to economists’ estimations, Friday’s highly anticipated Non-Farm Payrolls are predicted to show another month of strong gains – 197K. Last month, the NFP finally re-entered positive territory and recorded an increase of 162K in the number of employed.
Service industries in the U.S. expanded in April at the same pace as the prior month, indicating factories will drive any pickup in the economy. The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, held at an almost four-year high of 55.4 for a second month. Readings above 50 signal expansion.

Going into its election, the British currency traded near a nine- month high against the Euro, touching on 84.77 pence per euro yesterday afternoon. The GBP rose as the latest UK election polls pointed to a likely victory for the Conservative Party and in reaction to report of strong UK construction PMI and rising retail price inflation.
The UK general election will be held all day today. The latest polls suggest that the Conservative Party will win in a close election that will most likely result in a hung parliament. Investors remain concerned that a hung parliament will make it less likely that the new UK government will take quick action to reduce UK deficit, which could lead to a downgrade of the UK AAA sovereign debt rating.

The UK manufacturing sector is grew at the fastest rate in more than 15 years, boosted by an unprecedented leap in exports of finished goods, according to a closely-watched survey. Yesterday a report showed UK construction sector activity surged in April, but employment in the sector is still continuing to decline. The April Construction Purchasing Managers’ Index spiked to 58.2 from 53.1 in March. It was the highest level since September 1994, and driven largely by a jump in new export orders to 60.7 from 56.8, which was also the highest since the measure was first introduced in the survey in January 1996. This morning, the Markit will release the Service PMI. The last purchasing managers’ index refers to the services sector. This sector already reached 58.3 points but then dropped back to 56.5 points last month. Economists expect that index to rebound slightly, to reach 57.1

The Canadian dollar traded at a five week low versus the greenback, pressured by a spike in risk aversion, and weaker equity and commodity markets. Yesterday, the Loonie depreciated 0.61% against its American counterpart – to close at C$1.03088. This morning, the Canadian currency continued to slide touching on a low of C$1.03566.
This afternoon, Stats Canada will release the change in the number of building permits issues between March and April of this year. This important indicator leaped 5 months ago, and has been falling short of expectations since then. Two consecutive months of drop will probably be followed with a rise this time – showing that the housing sector is aligning with other factor of the economy. Economists predict a rise of 0.6% this time. Also out this afternoon, the Ivey PMI. The Richard Ivey School of Business’ important index recovered from a drop at the beginning of the year and reached 57.8 points – the highest since October. It’s predicted to edge up to 59.3 points this time.

Australia’s trade deficit widened in March for a third month as exports of coal fell and oil imports rose, a sign domestic demand continues to spur the economy. According to the bureau of statistics, the trade gap swelled to 2.08B AUD, from a revised 1.7B AUD in February. Australia’s widening trade gap suggests robust domestic demand and investment are increasing imports, highlighting the central bank’s view that the nation’s economy is expanding at or close to trend. Earlier this week Governor Glenn Stevens increased the benchmark lending rate this week by a quarter point to 4.5%, the sixth move in seven months.

The Australian dollar fell to 90.63 U.S. cents at from 90.85 cents just before a separate report released at the same time showed retail sales rose in March at less than half the estimated pace. In this morning’s trading session, the Aussie continued to slide against the USD, for the third day on a row, to touch on a low of 0.89944. Since Tuesday, the Australian currency has lost 3% of its value against the U.S Dollar.

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By Russell Glaser – The recent damage that has been done to the euro by hand of the dollar may show where the EUR/USD is headed in the long term. The weekly chart below displays the next price targets.

1. Yesterday the pair broke the long term support level from the previous bullish trend at 1.2885. Today the price of the pair moved lower to the short term support at 1.2750.

2. The next short term target for the pair can be found at 1.2600.

3. In the long term, the major support is the bottom of the pair’s previous bearish trend at 1.2450.

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