Month: May 2010

By Ashley Smith – Euro-Zone debt concerns will likely continue to influence the markets today. Investors should also pay attention to the results of the U.K election as it will have a major impact on the Pound.

A conservative victory will likely support the currency. Investors should also keep an eye on the ECB rate statement. While the European interest rates will likely remain unchanged, the accompanying statement should shed light on the current sovereign debt crisis as well as provide a future outlook for the region.

Also today there is a speech by Fed Chairman Ben Bernanke at 13:30. As with the ECB statement, investors should pay attention to any signals as to the future of monetary policy tightening and interest rate hikes.

The U.S Unemployment Claims are published today at 12:30 GMT, while they are not expected to provide much volatility, the data will be useful ahead of tomorrow’s release of the Non Farm Payrolls data.

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: Forex Yard

Fears that the sovereign debt issues will spread to other weak economies such as Spain and Portugal as well as concerns that the bailout package will not be enough to return Greece to solvency caused the EUR to fall to its lowest level in 14 months versus the USD.

Economic News

USD – USD Gains on Negative Market Sentiment

Negative market sentiment precipitated by growing concerns that the Greek debt crisis will spread to further economies in the Euro-Zone boosted the safe heaven USD and JPY. As investors flee riskier assets such as stocks, commodities and currencies of emerging market, the USD and JPY rose for their perceived safety. The USD is currently traded at $1.2839 versus the EUR and at 93.83 Yen.

While news from the Euro-Zone will likely dominate today’s trading as well, investors should follow the release of the Unemployment Claims at 12:30 GMT, particularly in light of Friday’s release of the Non Farm Payrolls Report as well as Fed Chairman Bernanke’s testimony at 13:30 GMT for any clues on the future of monetary policy and interest rate hikes.

EUR – EUR Drops over 1% versus the USD

The EUR dropped to a 14 month low against the Dollar yesterday, reaching below 1.2800, as fears intensified over the spreading Euro-Zone debt crisis. As protests in Greece intensify, investors are concerned the €110 billion ($143 billion) aid package to Greece will not ensure solvency in Greece. Furthermore, concerns mount regarding Portugal, Spain and other weak economies in the Euro-Zone could. A warning by Moody’s that it could cut Portugal’s “Aa2” sovereign rating by as much as two notches sent the EUR to its lowest level since March 2009.

The EUR is currently trading at $1.2837 and is at 120.39 Yen. The Pound is at $1.5123, ahead of today’s general election. While the consensus still points to a hung parliament, the conservative party has been gaining ground in recent days. A decisive victory of the conservative party will likely provide support for the Pound.

Today, investors should keep pay attention to the ECB interest rate meeting and statement at 12:30 GMT. While the European Central Bank is expected to keep rates on hold, investors should focus on the meeting minutes and any comments on the spreading Euro-Zone debt issues and future direction of monetary policy.

JPY – Yen Rallies versus Counterparts

The Yen rallied Wednesday as negative sentiment pushed down equities, commodities and higher yielding currencies, with investors turning to the safe heaven status of the Japanese currency. The Yen was up 2.1% against the EUR and 0.9% against the USD.

The NZD advanced Wednesday after central bank Governor Alan Bollard hinted he may soon start to raise interest rates from a record low. New Zealand’s currency was also boosted after the release of employment data which showed the unemployment rate declined last quarter.

Today may prove to be a volatile trading day for the Yen with possible further gains versus the EUR as Japanese markets return to trading after a 3 day hiatus and as negative market sentiment persists.

OIL – Crude Price Drop blow $80 a Barrel

Crude Oil dropped below $80 a barrel as the Dollar strengthened, reducing the appeal of commodities and as U.S. inventories increased more than expected. Oil dropped 3.3% yesterday on concerns that Greece’s bailout may have to be extended to other indebted nations. Crude stockpiles rose 2.76 million barrels last week to the highest level since June, much higher than the forecasted increase of 0.6M barrels.

Light, sweet crude for June delivery settled down $2.77, or 3.5%, at $79.97 a barrel on the New York Mercantile Exchange, after plunging as low as $79.15 a barrel earlier Wednesday. Currently spot Oil is trading at $80.20 a barrel.

Technical News

EUR/USD

The pair continues to fall without so much as a pause, breaking a key support level at 1.2880 and is approaching the 1.2750 support. The price is trading under the 200, 100, 50, 20, and 10-day simple moving averages, indicating a strong trending environment. Traders should be short on the pair with the next support level resting at the price of 1.6880.

GBP/USD

The strong bearish trend continues with the strengthening of the dollar as the pair breached the 1.5130 support level. Currently the 14-day Relative Strength Index on the daily chart is slanting downwards, indicating the momentum is firmly towards the downside. The next support level for the pair rests at 1.5015.

USD/JPY

The downward momentum for the pair continues after the pair broke through the 93.70 support level. Yesterday the daily chart’s 14-day Relative Strength Index moved below the 70 level, indicating a sell signal. Traders should be short on the pair with the first take profit level at the support of 92.50.

USD/CHF

The pair has broken above the key resistance level at 1.0900 and continues to strengthen. Keeping in-line with the major pairs, the daily chart shows a positive slanting 14-day Relative Strength Index that has crossed into overbought territory. However, traders should continue to be long on the pair until the indicator turns lower and breaks below the 70 level. The next major resistance line for the pair is at 1.1425.

The Wild Card

Oil

Spot crude oil continues to decline and has fallen below the support level of $79. The MACD histogram is downward sloping, indicating that the momentum is to the downside. CFD traders may want to go short with a price target at the next major resistance level on the daily chart at $78.

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

Continued worries about Greek debt issues, and the downgrade by Moody’s of Portugal, pushed the Euro through support levels at 1.2900.  The market is currently very short Euro’s against many currencies, and any positive news out of the ECB will create a short squeeze.

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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$ 1.2805 level and was capped around the $1.2995 level. The common currency reached its lowest level since March 2009 as sovereign credit concerns worsened in the eurozone and the threat of contagion to other major industrialized countries worsened.  Germany and France are offering the most financial assistance to Greece as part of a multilateral bailout plan that includes the eurozone and the International Monetary Fund.  The European Central Bank this week decided to allow Greek debt for repo-eligible collateral despite the fact that it has been downgraded to junk status.  The ECB will announce its interest rate decision and is expected to keep all options open but not reduce its headline main refinancing rate target.  ECB member Weber highlighted the risk of “contagion effects” from the Greek crisis.  The risk of contagion has certainly heightened as Moody’s reported it placed Portugal’s Aa2 government bond rating on review for a possible downgrade, a move that would likely happen in the next three months.  Data released in the eurozone today saw EMU-16 April PMI services improve to 55.6 from the prior reading of 55.5 while the April PMI composite remained steady at 57.3.  Also, EMU-16 March retail sales improved to 0.0% m/m and -0.1% y/y.  German data saw April PMI services improve to 55.2 from 55.0 while French April PMI services improved to 59.2 from 57.8.  In U.S. news, data released in the U.S. today saw MBA mortgage applications improve 4.0% from the prior reading of -2.9%.  Also, April Challenger job cuts were off 71.1% y/y, down from the prior reading of -55.0.  On a positive note, the April ADP employment change survey came in stronger than expected at +32,000 private jobs, up from the upwardly revised +19,000 prior reading.  Finally, the April ISM non-manufacturing composite ticked higher to 55.4.  The most important data to be released this week include the April non-farm payrolls data with many forecasts calling for a gain of about 190,000 jobs and the unemployment rate steady at 9.7%.  Boston Fed President Rosengren reported he is still “worrying about” the weak housing market. Euro bids are cited around the US$ 1.2740 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.00 figure and was capped around the ¥95.00 figure.  Traders continue to move into yen as a safe haven play on account of the global sovereign credit crisis.  Japanese financial markets were again closed overnight for the ongoing Golden Week holiday.  .  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 tomorrow.  The Nikkei 225 stock index climbed 1.21% last Friday to close at ¥11,057.40.  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 ¥120.70 level and was capped around the ¥123.35 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥141.85 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥84.25 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8263 in the over-the-counter market, down from CNY 6.8268.  Data released in China this week saw the April HSBC manufacturing PMI index decline to 55.4 from the prior reading of 57.0.  In contrast, the CFLP April PMI measure released last week improved to 55.7 from 55.1.  The markets reacted this week by focusing on the weaker number, enhancing global risk aversion.  Chinese banks are increasing their reserves after People’s Bank of China raised its bank reserves ratio for the third time this year this weekend and Chinese equities declined to a seven-month low today.  There is market chatter that China may lift its reserve ratio as high as 18% in a bid to manage economic growth.  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$ 1.5065 level and was capped around the $1.5170 level.  There is a growing consensus that Tory leader Cameron could win tomorrow’s general election and may agree a deal with Ulster unionists that could cement a majority in Parliament, averting a hung Parliament.  If Cameron wins the election, his ability to form a majority election will be dictated by the number of seats his Tory party picks up.  If he is close to a majority, a deal with the Ulster unionists could be made to avoid having to agree a deal with the Liberal Democrats and Clegg.  If he is not close to a majority, he may have to agree a deal with the Liberal Democrats and Clegg to try and consolidate power.  Regardless of the outcome, a Cameron victory could push the pound higher as it was the Tories who resisted the Blair initiative several years ago to accede Economic and Monetary Union and join the euro.  Data released in the U.K. today saw April PMI construction improve to 58.1 from the prior reading of 53.1.  Cable bids are cited around the US$ 1.5030 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the £0.8490 level and was capped around the £0.8575 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1185 level and was supported around the CHF 1.1020 level.  There is ongoing talk that the Swiss National Bank continued to protect the CHF 1.4320 level on the EUR/CHF cross to prevent Swiss exporters.  Data to be released in Switzerland tomorrow include April consumer price inflation followed by the April unemployment rate on Friday along with March retail sales.U.S. dollar offers are cited around the CHF 1.1270 level.  The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.4325 level while the British pound appreciated vis-à-vis the Swiss franc and tested offers around the CHF 1.6865 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

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DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

U.S. employment data released today in the form of the ADP National Employment Report showed that U.S. private employment rose for a third straight month in April as the jobs data of the past two months was revised higher. The nonfarm private employment increased by 32,000 workers in April to narrowly surpass market forecasts that were expecting an approximate increase of 30,000 jobs. The job gains were led by the service sector which added a total of 50,000 jobs for the month.

March’s jobs data was revised higher from the original estimate of 23,000 jobs lost to a gain of 19,000 jobs while February’s data was also revised higher to show a gain of 3,000 jobs.

The service-providing sector’s increase of 50,000 jobs offset a decline of 18,000 jobs in the goods-producing sector. Manufacturing hiring rose by 29,000 jobs and increased for the third straight month while construction jobs fell by 49,000 workers and declined for the thirty-ninth month in a row.

All size of businesses added jobs in April as large businesses created 14,000 jobs, medium sized businesses took on 17,000 jobs and employment by small businesses gained by 1,000 jobs.

The market-moving US Nonfarm Payrolls report for April is to be released Friday at 12:30 pm GMT with market forecasts predicting an approximate gain of 100,000 jobs.

By Adam Hewison – We have been concerned for some time that the market was in a rotational phase and that some key levels were being tested on the upside. The action today, Tuesday, can only be viewed one way, and that is negative. We do not expect this market to make a miraculous recovery to new highs and would not be surprised if we have seen the highs for the year.

In today’s short video on the Dow, we look at potential downside targets that this market may be headed for. One of the key things to remember in trading, and this applies to all markets, is perception. This is why technical analysis plays such an important part in detecting shifts in market perceptions. Our “Trade Triangles” have done extraordinarily well in this environment.

As always you can watch our videos without registration and there are no fees involved.

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Enjoy the video and take a moment to comment on our blog.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub.com

To see more of Adam’s Videos click here or to take advantage of Adam’s Free 10-part Professional Trading Course click here.

By Fast Brokers – The EUR/USD has extended yesterday’s selloff, collapsing below 1.30 as negative psychological forces strike the Euro.  If there were alarm bells, they would be ringing right about now.  A perfect combination of events has now given investors ample reason to dump the EUR/USD after weathering headwinds from Greece for so long.  Speaking of Greece, fresh austerity program protests have turned violent, casting the feasibility of implementing these measures in a pale light.  Yesterday rumors circulated that Spain will need over 200 billion Euros to shore up its own finances.  However, we stress that this news is purely speculative, yet significant damage has been done anyways.  To make matters worse, Moody’s announced today that it is reviewing Portugal for a possible downgrade.  The triple whammy has ratcheted up conversations of contagion and the fact that all eyes are on the EU doesn’t help matters much.  In fact, the IMF president announced that the risk for contagion is considerable.  So there you have it, a perfect storm of psychological forces have left the Euro at the mercy of fear.  One needs to look no further than the EUR/GBP to gain an understanding of the extent of the Euro’s relative weakness at the moment.  The fiscal crisis, if we may call it a crisis now, has finally bled into equity markets and the S&P futures look set to open today’s session lower again.  Meanwhile, the U.S. advance non-farm payrolls number finally turned positive, coming in a bit stronger than expected along with an upward revision for the previous release.  This gives investors even more incentive to rush to the dollar amid uncertainty, placing further downward pressure on the EUR/USD.  The EU will light up the news wire again tomorrow with an ECB meeting on tap.  Although it is highly unlikely that Trichet & Co. will tighten considering the circumstances, the ECB could try to calm the fire and allow the EUR/USD to settle.  The UK will also have its parliamentary election tomorrow, meaning the FX markets should be in for an active 24-48 hours.

Technically speaking, the EUR/USD is now trying to stabilize along its psychological 1.28 level with key March 2009 lows not so far away.  Although the EUR/USD gave up on 1.30 very quickly, if politicians can manage to calm the markets then the currency pair may be inclined to hover back towards 1.30 over the near-term due to its psychological significance.  As for the topside, the EUR/USD faces a marathon of downtrend lines along with intraday highs and the psychological 1.29 and 1.30 levels.

Present Price: 1.2835
Resistances: 1.2873, 1.2914, 1.2941, 1.2965, 1.2995, 1.3019
Supports:   1.2819, 1.2803, 1.2779, 1.2755, 1.2728, 1.2701
Psychological: March 2009 lows, 1.27, 1.28, 1.29, 1.30

(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 Adam Hewison – For some time now we have been concerned about the lack of upside momentum and the divergences that have been building in many key oscillators. We were also concerned that we’d reached a very important Fibonacci level which we pointed out in a recent video.

It never ceases to amaze me how these levels have worked both in the past and in the present. If you’re serious about the markets, you must pay attention to these key levels as many professional traders do, and perhaps you will understand why.

In today’s short video, we’re looking at the S&P 500 and some of the downside targets we have scoped out using a very simple tool. We had a nice run on the upside based on our “Trade Triangle” technology and we are happy to cash in our chips and watch from the sidelines for the time being.

As always you can watch our videos without registration and there are no fees involved.

Watch the New Video Now…

I hope you’ll find the video informative and leave your comment on our blog.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub.com

To see more of Adam’s Videos click here or sign up for Adam’s Free 10-part Professional Trading Course.

Market Analysis by Finexo.com

By Russell Glaser – Spot crude oil prices tumbled yesterday over continued worries following the Greek bailout and increasing fears that the financial troubles will spread to other European nations. A stronger greenback also contributed to the falling spot crude oil prices.

At the close of yesterday’s trading, spot crude oil was trading at $82.34 from an opening day price of $85.80. The price decline of 4% largely erased the previous 3-day price rally.

Renewed concerns that the Greek debt crisis has yet to have been secured helped to send the EUR/USD to a 12-month high. This in turn hurt the price of spot crude oil as crude oil is denominated in dollars. As the dollar appreciates in value, crude oil becomes more expensive.

Traders are concerned that a failure of the EU/IMF bailout package to contain the Greek debt crisis will slow European growth and future consumption of crude oil. Rising fears that Spain may also seek aid also weighs on Europe.

This remainder of the trading week should be influenced by key data releases. On Wednesday, the weekly crude oil inventories report will be released by the U.S. Energy Information Administration. Expectations are for an increase of 0.6M barrels of crude oil to be added to U.S. supplies. This would be the third consecutive week of increasing U.S. crude oil supplies.

On Friday the U.S. Non-Farm Employment change will be released. A positive outcome for this highly influential economic data piece could spur crude oil buying. The next short term resistance level for spot crude oil rests at $83.00.

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.