Month: May 2010

By Greg Holden – Typical of a sustained movement, similar to what Gold prices have been experiencing, there eventually arrives a decision point. Concerning the price of Gold, that point may have arrived. We’ve seen gold prices climbing steadily these past few weeks as concerns over the Euro-Zone’s sovereign debt crisis and potential Greek default have pushed many investors out of currency safe-havens and into commodities such as Gold.

What we see now in the charts is Gold prices hitting a potential breaking point. The $1,181 price level appears to represent a strong resistance line for Gold prices. It is only natural then that our technical indicators, displayed below, are showing an impending downward correction. But is the price of Gold really ready to halt its upward mobility?

– The chart below is the Gold daily chart by ForexYard.

– The indicators used are the Williams Percent Range, Stochastic (slow), and the Fibonacci Retracement lines were also drawn.

– Point 1: Here we see that the price has reached a significant resistance point, represented by the 76.4% Fibonacci Retracement line.

– Point 2: Our Williams Percent Range shows the price highly over-bought and beginning to turn downward.

– Point 3: There are multiple bearish crosses on the Stochastic (slow) which highlight an impending downward correction.

– Taken together, all of this information leads us to suspect that Gold prices should react in the near future to technical pressures and correct downward. But fundamental analysis tells a different story. For more on the fundamental side of the equation, read Peter Robinson’s analysis on Gold and the European markets here.

Gold – Daily Chart

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 Fast Brokers – Australian home prices came in stronger than anticipated today, an encouraging development for the Aussie considering the RBA will announce its monetary policy decision tomorrow.  Recent uncertainty in the EU coupled with this weekend’s announcement from China that it is raising its reserve ratio again could lead the RBA to keep its benchmark rate unchanged.  While fiscal issues in the EU challenge the sustainability of the global economic recovery, tightening in China could effectively slow China’s growth, a negative for the Aussie since the currency pair is thriving off of Asian demand for the nation’s commodities.  Additionally, the RBA’s Stevens recently mentioned that interest rates may be approaching par, a signal that the rate hikes could be coming to an end.  However, the RBA still seems to be leaning towards a hawkish stance, meaning there’s certainly potential for another rate raise tomorrow.  That being said, the Aussie could experience a boost in volatility during tomorrow’s Asia trading session due to slight uncertainty surrounding the RBA’s decision.  Even if the RBA should raise rates again, any more language regarding an end to the central bank’s hawkish stance could prove negative for the Aussie.  Meanwhile, investors are looking ahead to today’s U.S. manufacturing PMI release along with any more psychological developments regarding Greece and the UK parliamentary elections.

Technically speaking, the Aussie faces technical barriers in the form of intraday, 4/30, 4/26, 4/21, 4/15 and 4/12 highs.  Additionally, the psychological .93 and .94 levels could continue to serve technical obstacles over the near-term.  As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday and 4/28 lows.

Price: .9262
Resistances: .9264, .9273, .9283, .9291, .9300, .9313
Supports: .9245, .9235, .9224, .9216, .9208, .9194
Psychological: .93, .94, .92, April highs and 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 – Gold is battling its psychological $1180/oz level as investors digest the EU’s decision to supply Greece with roughly $150 billion over 3 years.   Thus far the Euro has reacted negatively to the news, capping gains in gold.  Additionally, it wouldn’t be surprising to see a little profit taking considering the run the precious metal has been on the past month.  Should uncertainty continue in the EU and UK this could benefit gold over the near-term since the precious metal is an ideal safe haven when investors have fewer places to turn.  The news and data wires will get hectic mid week with U.S. employment data, UK parliamentary elections, and an EU monetary policy decision.  Should these events prove damaging for the risk trade gold may be able to test its highly psychological $1200/oz level.  Additionally, should these events prove beneficial for the risk trade gold may also benefit due to its usual negative correlation with the greenback.  Hence, gold seems to be in a win-win position right now.  However, there are some tough obstacles hanging over head, meaning the topside could prove to be more challenging if the precious metal approaches $1200/oz.

Technically speaking, gold is continuing to set fresh April highs as the month comes to a close, certainly a positive development for the precious metal in terms of momentum.  That being said, gold is now squaring its sights on the highly psychological $1200/oz level and previous all-time highs.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday, 4/28 and 4/27 lows.  Additionally, the psychological $1170/oz and $1160/oz areas could serve as solid cushions should they be tested.

Present Price: $1177.30/ oz
Resistances: $1178.77/oz, $1181.58/oz, $1184.84/oz, $1187.12/oz, $1189.74/oz, $1191.69/oz
Supports: $1175.89/oz, $1174.22/oz, $1172.43/oz, $1170.77/oz, $1169.32/oz, $1162.21/oz
Psychological: $1200/oz, $1180/oz, $1170/oz, $1160/oz, April highs and 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 USD/JPY is undergoing one of its common consolidation phases around the psychological 94 area as the FX markets start off the week on a relatively quiet note.  Thus far the EU/IMF rescue package for Greece has yielded a muted reaction in the Euro and other major dollar pairs, although we’ll have to see how they behave when the U.S. markets open.  Meanwhile, the USD/JPY is holding above the downtrend line running through April highs, a positive sign momentum wise.  However, the USD/JPY still does need to tackle those April highs along with its psychological 95 level.  The data wire is pretty tame today outside of America’s manufacturing PMI figure due later.  Since Japan will be on a banking holiday Tuesday and Wednesday, this leaves the USD/JPY in the hands of psychological forces and key events such as U.S. employment data and Thursday’s ECB meeting and parliamentary election.  The technicals look positive for the USD/JPY barring a development triggering broad-based risk aversion.  Should the risk trade regain some of its confidence as the EU rescue package digests then this may benefit the USD/JPY.  However, considering there’s a plethora of key news this week the tide could really turn in either direction.

Technically speaking, the USD/JPY faces technical barriers in the form of previous April highs.  As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 4/23, 4/22, and 4/19 lows.  Additionally, the psychological 93 level could continue to serve as a psychological cushion should it be tested.

Present Price: 94.06
Resistances: 94.11, 94.20, 94.33, 94.52, 94.66, 94.79
Supports:   93.88, 93.73, 93.60, 93.45, 93.29, 93.04
Psychological: .94, .93, April highs and 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 Finexo.com

Past events:
• USD Advance GDP q/q out at 3.2%, versus expected 3.4%, prior 5.6% (revised down)
• EUR CPI Flash Estimate y/y out at 1.5%, versus expected 1.4%, prior 1.4% (revised down)
• EUR Unemployment Rate out at 10.0%, expected 10.0%, prior 10.0%
• CAD GDP q/q out at 0.3%, versus expected 0.5%, prior 0.6%
• CHF KOF Barometer out at 1.99, versus expected 1.99, prior 1.96
• AUD HPI q/q out at 4.8%, versus expected 3.2%, prior 5.1%

Upcoming Events:
• USD Core PCE Price Index Index m/m (1330GMT)
• USD Personal Spending m/m (1330GMT)
• USD ISM Manufacturing PMI (1500GMT)
• AUD Cash Rate (tomorrow 0530GMT)

Market Commentary: Greece seals bailout deal, but Euro continues to fall

The Euro fell from a one-week high against the U.S Dollar on concern that the €110 billion-euro ($146 billion) bailout package for Greece will fail to contain the region’s sovereign-debt crisis. The single European currency declined for the first time in four days against the U.S Dollar and Japanese Yen as EU leaders prepare to meet on May 7th to discuss the timeline of the parliamentary approval for loans to Greece, and as Germany plans to debate the plan on the same day. In the Asian trading session this morning, the Euro dropped to $1.32047 from $1.32934 on Friday’s close, and down as much as 1.12% from yesterday’s high of $1.33595. The EUR/JPY struck a low of 123.977, down 1.17% from yesterday’s high of 125.450, and down 0.63% from Friday’s close.

Yesterday, Greek officials finalized a deal with the European Union and the IMF that will give Greece access to a muti-billion euro financial bailout. Greek officials agreed to budget cuts worth €30 billion ($40 billion), on top of measures already agreed and aimed at reducing the nation’s colossal budget deficit. The aid package, expected to total up to €110 over three years, represents the first rescue of a member of the 16-nation euro zone. On Sunday, the finance ministers of 16-euro nations agreed that the 15 other countries would lend €80 billion over three years. The IMF will, in parallel, offer a €30 billion package.

The Euro dropped for a fifth month versus the greenback in April, the longest stretch of losses since November 2008 as fear escalated that Europe’s deficit crisis would spread. Last week, the 16-nation Euro touched $1.311531, the lowest level since April 2009, when Standard & Poor’s cut Spain’s credit rating was cut from AA+ to AA, a sign that the debt crisis is spreading. It fell below $1.32 the previous day for the first time in a year after S&P sliced Greece’s credit rating to junk and lowered Portugal’s to the third-lowest investment grade.

In the United States, a report showing the economy grew at a slightly slower-than-expected pace in the first quarter had little impact on the greenback. Despite the below-forecast headline number, analysts said the GDP report shows signs of an improving economy. On Friday, the Advance GDP showed that the economy expanded by 3.2%, slightly slower than the predicted 3.4%, and significantly smaller than the 5.6% growth seen in the last quarter of 2009. On Friday, the USD/JPY hit a high of 94.569, before settling back down to close the week at 93.837, 0.17% below its opening price. The USD was up against the British Pound, closing the week at $1.52584, up 0.55% from the day’s opening price.

Later today, the US will release the ISM Manufacturing PMI – a survey of 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The US manufacturing sector has shown very good signs of recovery. In the past 8 months, the result has been above 50, indicating economic expansion. After surprising last month and reaching 59.6, further gains aren’t expected this time.

Across the border, Canada’s dollar registered its biggest weekly drop since January. The Loonie fell for the first time three days on Friday, depreciating 1.38% against the U.S Dollar to close the week at C$1.01768. The currency also tumbled against the Euro and the Yen as a plunge in stocks outweighed data showing that Canada’s economy expanded. Stats Canada reported on Friday that Gross Domestic Product grew by 0.3% in February from January, the sixth consecutive monthly increase, pushed higher by stronger manufacturing and the Olympics.

The Canadian currency gained last week as speculations increased that the BOC would raise the interest rates, possibly as early as June 1st. At their last meeting, the BOC held the benchmark at its current record low level of 0.25%, but dropped the conditional commitment to hold it there through June – spurring rapid gains in the Canadian Dollar. However, last week, Mark Carney, the central bank governor, modified his language slightly hastening speculations that the markets had been pricing in too much chance of an increase as the June 1 rate meeting.

Down under in Australia, house prices rose the most since 2003, in the three months through March. An index measuring the weighted average of prices for established houses in the eight capital cities climbed 20 percent from a year earlier, the Australian Bureau of Statistics said in Sydney this morning. House prices rose 4.8% in the first quarter from the previous three months, when they gained 5.2%, according to the figures released this morning. The 20% annual gain was the biggest since March 2003 in a quarterly series that began a year earlier. The Aussie touched a high 0.92624USD following the release of the report, up 0.22% from Friday’s close of 0.92419USD
Surging property prices are a key reason that Governor Glenn Stevens is predicted to raise the central bank’s benchmark lending rate tomorrow by 0.25bps to 4.5%, the sixth increase in seven meetings.

Forex Market Review & Analysis by Finexo.com

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

By Fast Brokers – The Cable is sticking with its April trading range as we kick off the month of May.  The Cable is edging lower today as investors are unimpressed with the EU and IMF’s bailout plan thus far.  Meanwhile, the Cable does seem to have a downward bias as it sets lower highs (4/30, 4/26, 4/15).  Even though the data wire is relatively quiet today outside of America’s manufacturing PMI, activity in the FX market looks set to bloom as the trading week progresses.  Australia will kick off the news barrage tomorrow with an RBA meeting followed by the UK’s own manufacturing PMI figure.  However, the core of the news and data will come on Thursday with the UK printing its services PMI along with the highly anticipated parliamentary election.  Election polls have really jolted the Cable over the past couple months, so it wouldn’t be surprising to see volatility peak election day.  Investors should keep in mind that no clear majority, or a hung parliament, could prove to be negative for the Cable over the near-term due to speculation that the government won’t be able to tackle the nation’s fiscal problems.  On the other hand, should the conservatives manage to eek out a victory then this could result in a huge pop in the Cable.  Meanwhile, attention will remain focused on the EU along with any unexpected news concerning the election.

Technically speaking, the Cable has multiple uptrend lines serving as defense along with 4/19, 4/26, and 3/31 lows.  Additionally, the psychological 1.51 and 1.50 levels could serve as solid technical cushions should they be tested.  As for the topside, the Cable faces multiple downtrend lines along with technical barriers in the form of 4/5, 3/17, and 4/26 highs.  Furthermore, the psychological 1.53 level could serve as a solid barrier should it be reached.

Present Price: 1.5247
Resistances: 1.5260, 1.5279, 1.5293, 1.5317, 1.5339, 1.5351
Supports: 1.5235, 1.5223, 1.5209, 1.5191, 1.5170, 1.5141
Psychological: 1.53, 1.52, 1.51, 1.50, April highs and 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 EUR/USD has taken a step lower to start off the week, testing its psychological 1.32 level despite an agreement being reached in which the EU and IMF will provide Greece with roughly $150 billion over 3 years so long as austerity measures are implemented.  Investors are reacting with speculation since some believe the plan is too little too late and won’t prevent contagion.  However, the aid package could prove helpful for the Euro over the near to medium term since it takes some of the pressure off of the EU region and it will take time to deduce whether the financial measures are sufficient in preventing a Greek tragedy.  Meanwhile, it will be interesting to see how bond yields behave not only in Greece, but the other PIIGS nations as well.  If bonds rise and yields head lower then downward pressure on the EUR/USD may ease.  Investors should keep in mind that EU data was fairly encouraging during the month of April and may otherwise have resulted in sufficient gains in the Euro if it wasn’t for Greece’s fiscal problems.  On the other hands should yields remain at an abnormally high level and the financial aid proves unsuccessful then the downtrend could take hold of the EUR/USD with a vengeance.  Although the data wire is relatively quiet today, activity should really pick up as the week progresses.  The ECB will have its monetary policy meeting on Thursday along with the UK’s parliamentary elections.  Investors will also receive key employment data from the U.S.  As usual, there also remains the potential for a psychological flare, meaning investors should stay on their toes.  Either way, this could prove to be a very eventful trading week.

Technically speaking, the EUR/USD faces mounting downtrend lines along with intraday and 4/27 highs.  Additionally, the psychological 1.33 and 1.34 levels could continue to serve as a psychological barrier over the near-term.  As for the downside, the EUR/USD has April 2010 and May 2009 lows serving as technical cushions along with the

psychological 1.32, 1.31 and 1.30 trading zones.
Present Price: 1.3246
Resistances: 1.3251, 1.3269, 1.3295, 1.3311, 1.3326, 1.3347
Supports:  1.3219, 1.3208, 1.3184, 1.3165, 1.3144, 1.3114
Psychological: April highs and lows, May 2009 lows, 1.33, 1.32, 1.31, 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 Ashley Smith – This week began with a sharp appreciation of the Euro, following the Euro-Zone’s $146 billion rescue plan for the Greek economy. However, once the optimistic clouds scattered, the concerns regarding the Euro-Zone’s future have dominated the market.

Currently, despite the Greek aid package, investors have great concerns regarding the Euro-Zone’s ability to control the current gloomy situation. The effects of the enormous aid package in addition to the uncertainty of the Irish, Portuguese and Spanish economies have continued to put downward pressure on the Euro. As a result, the Euro dropped over 150 pips from a 1-week high at the 1.3358 level.

As for today, traders should first and foremost follow all updates regarding the Greek economy. Moreover, for the near future there are no doubts that this issue will continue to have an immense influence on the market.

Here are today leading news publications:

• 12:30 GMT, US Personal Spending – This report measures the change in the total value of expenditures by consumers. The consumer spending accounts for a majority of overall economic activity. Current expectations are that the personal spending in the US grew by 0.7% on March. If the actual result will be similar, it is likely to strengthen the Dollar.

• 14:00 GMT, Manufacturing Purchasing Managers’ Index (PMI) – It is a survey of purchasing managers, who are asked to rate their current business conditions. If the end result will beat expectations for 60.0, the USD is likely to be boosted as a result.

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

After a bullish week for the Dollar and a bearish week for the Euro, the speculations regarding an aid package for Greece have corrected looses for the Euro. Eventually, the European leaders have confirmed the rescue plan yesterday, and as a result promptly boosted the Euro. Currently the first reaction seems to be limited as the Euro erasing profits, and it seems that only certain thing is that unique opportunities to make high profits will take place this week. Make sure you’ll take advantage of what promises to be an extremely volatile trading week

Economic News

USD – Non-Farm Payrolls Expected On Friday

Last week’s trading session began with a sharp appreciation of the Dollar. The Dollar gained about 280 pips against the Euro and about 450 pips against the Pound. However as the week progressed, the Dollar erased a big portion of the gains vs. the major currencies.

The Dollar’s bullish trend from the beginning of the past week came mostly as a result of the positive data that was published from the U.S. economy. The Consumer Confidence survey showed that the confidence among U.S. consumers rose in April to the highest level since September 2008. This seems to be due to the rapidly improving employment data which were published over the past 2 months. The growing confidence in the U.S. economy has boosted the Dollar, which strengthened against all its major counterparts. However, near the weekend some less reassuring data was published, which erased some of the Dollar’s gains. The Advance Gross Domestic Product (GSP) showed that the U.S. economy has expended by 3.2% in the first quarter, failing to reach analysts’ expectations for a 3.4% expansion. Whilst this is still considered to be a positive result, especially considering the recent recession, the failure to achieve forecasts have created a technical correction that slightly weakened the Dollar.

As for the week ahead, the most interesting news publications will surely be the Non-Farm Payrolls which is expected on Friday. The Non-Farm Payrolls is the best measurement for the U.S. labor market, and is considered to be one of the most impacting news releases in the market. Analysts have forecasted that payrolls grew by 183,000 during the past month. If the actual result will be similar, the Dollar might be boosted further.

EUR – Greece Rescue Package to Boost the Euro

The Euro saw an extremely volatile session during last week’s trading. The Euro began last week with sharp drops against all the major currencies, including a 350 pips slide against the Yen, yet managed to erase most of its losses just before the weekend.

What impacted the Euro mostly during last week’s trading was the uncertainty regarding the Greek economy and its potential affect on the Euro-Zone. As the European leaders failed to produce a rescue plan, the risk-appetite in the market kept reducing, leaving investors to look for safer assets such as the Dollar and the Yen. As the week progressed, more and more rumors insisted that the bailout package is merely a matter of time, and indeed yesterday the $146 billion aid package was approved. The primary reaction to the aid package has boosted the Euro on all fronts, especially against the Dollar. Nevertheless, it currently seems that investors will look for further indications that the Euro-Zone will not be severely damaged by the Greek economy, or the rest of the immersing European economies.

Looking ahead to this week, traders must remain updated regarding two different issues. The first one is of course the Greek rescue plan and its outcomes. The second one is the European Minimum Bid Rate, which is expected on Thursday. The Minimum Bid Rate is the European interest rates announcement for May. Current expectations are that the European Central Bank will leave rates at 1.00%, yet every other decision could have an enormous impact on the Euro.

JPY – Yen Slightly Strengthens Against the Majors

The Yen saw a very jumpy trading session during last week’s trading. The Yen began last week’s trading with a bullish trend against all the major currencies. The trend then reversed, yet the Yen kept modest profits against the majors.

The Yen was boosted by the positive Japanese economic data which was published last week. The Japanese Retails Sales rose by 4.7% on March, beating expectations for a 3.7% rise. The Retail Sales are a primary gauge of consumer spending, and the positive figure has added to Yen’s demand. In addition, the Household Spending, another consumer spending indicator, rose by 4.4% in March, beating the 0.7% expectations as well. The combination of the two indicators proved that the Japanese citizens have greater confidence regarding their economic outlook and thus feel safer to consume. However, the Yen’s bullish tend has reached its end once speculations regarding the Greek Rescue Package became more and more realistic. The rescue package has increased risk-appetite in the market, and turned investors to look for riskier assets such as the Euro.

As for this week, traders are to keep track of the Greek bailout plan, as this seems to be the most influential news event at the moment. Traders should take under consideration that positive data regarding the Greek economy is likely to boost risk-appetite and as a result to weaken the Yen.

Crude Oil – Crude Oil Reaching Over $86 A Barrel

Crude Oil has reached a 3-week high lately after peaking at $86.75 a barrel. Crude Oil rose from $81.20 a barrel on Wednesday, to complete 3 consecutive days of rising trend.

Crude Oil’s bullish trend seems to be the result of speculations that global demand for energy will increase, mostly due the U.S. recovery signals. The U.S. economy is the biggest oil consumer in the world and thus the series of positive publications is leading investors to believe that demand for oil will increase. In addition, the aid package which was offered to Greece is also supporting oil prices. The Greek economy was the source of high uncertainty in the market lately, and the resolution of its problems is likely to hike risk-appetite, and as a result to boost crude oil.

As for the week ahead, traders are advised to continue follow every update regarding the Greek economy. The Greek rescue package seems to be the main catalyst to impact the market at the moment, and this is likely to remain that way for the near future. In addition, traders should follow the major U.S. economic publications; especially the Non-Farm Payrolls on Friday, as this tend to have an immense impact on Crude Oil trading.

Technical News

EUR/USD

While most indicators for the pair seems to be floating in neutral territory at the moment, a bullish cross is evident on the hourly chart’s Slow Stochastic with the RSI floating near the oversold territory. Going long for the day may be advised.

GBP/USD

Most indicators for the pair are floating in neutral territory at the moment with the pair range trading between 1.5235 and 1.5270. Waiting on a clearer direction may be advised for today

USD/JPY

While most indicators for the pair seems to be floating in neutral territory at the moment, a bullish cross is evident on the hourly and 4 hour charts slow stochastic. Going long for the day may be advised

USD/CHF

A bearish cross is evident on the hourly chart’s Slow Stochastic with the hourly and daily RSI floating near the overbought territory. Going short for the day may be advised.

The Wild Card

Russell 2000

After the recent sharp drop a correction may be taking place today as the RSI seems to be floating in the oversold territory on the hourly and 2 hour charts and a bullish cross is evident on the 4 hour chart’s Slow Stochastic CFD traders may be advised to go long for the day.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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

Forex Market Analysis provided by eToro

The financials lead the markets lower this week as news that the US attorney’s office was investigating Goldman Sachs for potential criminal misconduct created uncertainty. This news on top of the downgrades earlier in the week by S&P, Moody’s and Fitch, put pressure on the broad equity indexes. The S&P 500 finished the week down 30 points or 2.5%.

Greek bailout
Calling what is taking place a “Greek bailout” is a misnomer. The funds that the European governments and the IMF are going to make available to Greece are not going to stay in Greece. The money will used to service Greece’s debt, of which something close to 70% appears to be in foreign hands. With various spending cuts, wage cuts and job losses, it is hard to see how Greece itself is being bailout out. Instead of Athens that is being made whole, it is Greece’s creditors that are getting so-called bailed out and essentially another bank will transfer (European) government funds to European banks. Greece is merely an intermediary. While other bond markets in southern Europe are benefitting from strong ideas that Greece will be given funds in time to avoid problems with the May 19th maturity and coupon payment, it is far from clear that investors will be satisfied for long. News Friday that Spanish unemployment rose to 20.1% in Q1 from 18.8% in Q4 09 illustrates the kind of economic headwind the periphery of Europe faces. This was a larger rise than economists expected and is around 7 times the EU average. Consider that since joining the euro zone Portugal has average less than 0.5% growth a year or that S&P expects Spain to average around 0.7% annual growth through 2016. It is difficult to see how the European/IMF package is scalable or how it really gets ahead of the curve of expectations or shows any appreciation for the fact that underlying the debt/deficit issues is really a competitive issue.

During the week, S&P downgraded Spain one notch to AA from AA+ and kept a negative outlook. Greece was cut a full step (three notches) to BB+ by S&P from BBB+ previously, moving it into junk status. Negative outlook was kept in place. This is a very, very aggressive move, but the rating agencies are clearly trying to play catch-up after missing the boat on this earlier. Right before the Greece downgrade, Portugal was cut two notches to A- by S&P, who kept the negative outlook. This too was a very aggressive move. Fitch cut Portugal in March to AA- from AA previously, but it is clear that both it and Moody’s remain well behind the curve, as Portugal is clearly not a double-A credit. Moody’s and Fitch still have Spain as a triple-A credit. This will probably not last, and there will probably be multiple downgrades ahead for Spain. When those other two move into double-A range, they will likely cause even bigger ripples than today’s S&P move. Indeed, Spain is the 800-pound gorilla in the room. Greece and Portugal are small countries, but Spain is about five times their size concerning GDP.

The Euro consolidated during the ladder half of the week after pushing through support at 1.32.

Japanese data, inflation still a thorn

Japan released a slew of economic data at the end of the week, none of which was particularly inspiring. Unemployment ticked up to 5.0% from 4.9% in January and February. The job-applicant ratio rose to 49 from 47, but it is still dismal (49 job opening for every 100 applicants). Industrial output rose 0.3% in March. The market had expected a 0.8% increase after a 0.6% decline in Feb. The MOF survey picked up expectations of a further decline (-0.3% rather than -0.1%) in April’s manufacturing output, but a large rise in May (3.7%). Core inflation fell for the 13th month in March with little change in the pace of decline and in fact deflationary forces strengthening in Tokyo in April. New BOJ forecasts were largely in line with expectations, their GDP forecast was revised this year to 1.8% from 1.3%, but next year’s forecast was shaved to 2.0% from 2.1%. Core CPI, which excludes fresh food, is expected to fall 0.5% this year before rising to 0.1% next year (previously was -0.2%). Bottom line here is that pressure is likely to remain on the BOJ to take additional steps to spur lending and arrest deflation.

Crude Oil Remains Strong
Crude oil and products look to be continuing their move higher, as the easing of EU sovereign debt concerns have helped the market overcome high storage levels. At 357.8 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Currently it is interesting to note that the only area of the oil complex not close to new highs for the move are the front two months in WTI crude oil, as the supply glut in Cushing, has kept them down. With expectations for increased summer driving activity seen as a reflection of US economic recovery capacity, any sort of sustained drawdown in crude stocks could send prices towards new highs for the year, particularly as this does not take into account sustained demand from China and the rest of the world. Additionally news of higher a-float oil supply this week is not undermining oil prices. Floating storage is reported to have increased from 21 million barrels to 47 million barrels as traders profit from cash and carry storage plays. Crude oil has broken out on a daily chart, breaking through trend line support.

US Growth

First quarter GDP was largely in line with expectations. The 3.2% annualized pace was slower than the 5.6% of Q4 09, but everyone recognized that the prior pace was not sustainable. Although growth seemed solid, price pressures eased, further underscoring the lack of inflation risks. Despite the slightly above trend growth for the second consecutive quarter, the Fed remains securely on the sidelines. Consumption rose 3.6% after a 1.6% advance in Q4. It contributed about 2.5 percentage points to the GDP figure. Inventories added about 1.6%. Business spending on equipment increased 13%, but its spending on structures fell 14%. For first time in three quarters, house construction fell. The core PCE deflator, among the Fed’s most cited indicators of inflation, fell moderated to 0.6% from 1.8% in Q4. This is smallest increase in the core PCE deflator since the time series began in the late 1950s. In year over year terms, GDP rose 2.5% in Q1 compared to 0.1% in Q4.

The difference between the US economic optimists and the pessimists seems to be the difference between 1.5% growth this year and 3.0%. Both recognize that fiscal policy will be less supportive for the economy as the stimulus spending runs its course. Government spending in the preliminary Q1 estimate shaved 0.4% off GDP growth. That is to say, it has already turned from a tailwind to a headwind. That headwind is likely to grow in the coming quarters.

However, that drag may be offset by improvement elsewhere. Job creation is the key and so is the workweek to boost incomes, consumption and output. The drag from non-residential structures is lessening, even though it was off 14% in Q1, which represents the smallest decline since Q4 08. A turning in the second derivative should continue. The government does not have the full set of trade and inventory figures for the quarter and this is where economists will focus on for potential revisions, which historically are frequently statistically substantive. The US consumer and business investment may be the key to growth going forward. The inventory cycle still appears incomplete and could still contribute to GDP over the next couple of quarters. Net exports are not so much a function of US growth as rest of the world’s growth.

Next week’s economic calendar is full of data releases. On Monday the US PCE and Personal income and spending leads off followed by construction spending and the ISM manufacturing report. On Tuesday, the RBA makes its interest rate decision. The market is expecting a 25 basis point hike to 4.5%. On Wednesday, EMU retails sales are the headline for Europe, which is followed by the ADP private employment figures in the US. On Thursday, the ECB makes its interest rate decision. On Friday, the entire market will be watching the US employment figures.

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