Month: June 2010

By Fast Brokers – The Aussie is hold well above .86 while staring down monthly highs as the Euro posts a solid bounce.  Investors continue to gain confidence in the risk trade as EU leaders meet for a one day summit in an effort to boost confidence in the union.  Spain also announced it will release the results from its bank stress tests and other nations may follow suit.  In all, money flows into the Euro have been encouraging and the risk trade as a whole has made a promising recovery from June lows.  However, economic headwinds do remain and the Aussie is no exception.  As we mentioned in our previous commentary, investors should keep a close eye for any developments in China regarding currency reform.  Several articles have popped up in the China Daily lately suggesting that the government is planning to appreciate soon.  Should the Chinese government in fact take action this could apply some near-term downward pressure on the Aussie since a stronger Yuan should cool growth in China.  Meanwhile, the Shanghai Composite is still hanging around 2500 and it will be interesting to see whether this psychological level continues to hold.  Australia will be quiet on the data wire for the remainder of the week, meaning the currency pair will likely follow its positive correlation with the risk trade for the time being.

Technically speaking, the Aussie faces technical barriers in the form of 6/14 and 5/18 highs.  As for the downside, the Aussie has supports in the form of uptrend lines running from May lows along with 6/11 lows and the psychological .85 and .84 levels.

Price: .8615
Resistances:  .8671, .8690, 8713, .8738, .8770, .8794, .8831
Supports:  .8633, .8613, .8587, .8565, .8543, .8523, .8500
Psychological:  .85

(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 Dan Eduard – Over the last year, while the global economic crisis has weighed down on the U.S. dollar and deficit concerns have caused the euro to freefall, the Canadian dollar, also known as the loonie, has emerged as one of the strongest performers in the currency marketplace.

A number of factors have caused the CAD to become one of the benchmark global currencies, preferred by investors and national banks alike. It is for these reasons that now may be a good time to take a look back on the assent of the loonie in the forex market.

This week, Russia announced that the CAD will become the country’s newest reserve currency. In addition, it has been widely reported that China has been buying up an unknown amount of loonies. This is largely due to the perceived notion of Canada as a stable country politically, with a highly secure economy.

While the CAD was for a long time tied to the price of oil, the Bank of Canada (BOC) has done an excellent job of diversifying its economy.

Furthermore, Canada recently became the first Group of Seven (G7) country to raise interest rates since the beginning of the financial crisis. As the pace of the global economic recovery intensifies, investors see plenty of opportunities in Canada. The countries vast supply of national resources alone makes it an attractive place to invest.

The last 12 months have seen the loonie climb 10% against its American counterpart, and an astounding 23% versus the euro. The bearish trend in the EUR/CAD pair can be partly attributed to the Greek deficit crisis. At the same time, one cannot ignore the progress the loonie has made in the past year.

Below we see the weekly chart for EUR/CAD provided by ForexYard. The pair has dropped more then 3,500 pips over the last year, with no perceived end in sight. As long as solid economic news continues to come out of Canada, it is very likely the loonie will soon establish itself as one of the premier currencies, alongside the USD and JPY.

EUR/CAD – Weekly 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.

Source: ForexYard

Despite a rise in U.S inventories last week, Crude prices rallied, boosted by strong equities and largely positive U.S economic data and demand figures.

Economic News

USD – USD Gains on Poor Housing Data Release

The US dollar advanced slightly versus the EUR and JPY Wednesday after U.S economic data showed a bigger-than-forecasted drop in housing starts. A decline was expected due to the expiration of a federal tax break for home buyers.

The return of risk aversion was also supported by reports that Spain may also seek financial aid, resurfacing concerns regarding the euro zone debt crisis. The USD’s appreciation versus the euro continued during today’s early Asian trading as well.

However, the USD’s rally was modest as better-than-expected U.S. manufacturing data returned some optimism to investors as it signaled that the global economy is recovering despite the crisis in the euro zone. Riskier currencies such as the Australian dollar benefited from the news.

Looking ahead to today, another exciting news day is expected with the release of the CPI data and unemployment claims at 12:30 GMT and the Philly Fed Manufacturing Index at 14:00 GMT.

EUR – EUR Declines on Spain Concerns

The EUR declined against the USD and JPY after the release of mixed US data and renewed concerns about the euro zone’s financial stability. These concerns pushed the EUR down from the two-week high of $1.2354 hit earlier on Wednesday.
The EUR is currently at $1.2275, compared with $1.2305 late Wednesday. The EUR also weakened to 112.06 yen from 112.83 yen. The British pound dropped to $1.4710 from $1.4819.

Investors were focused on Spain’s debt woes fearing the possibility it will need to seek foreign aid, as the country is struggling with high deficits at a time of soaring unemployment, despite denials by both the European Union and the Spanish government.

While most news releases are expected from the US today, traders should follow closely the EU summit held today as the Bank of Spain plans to publish the results of stress tests carried out, providing financial markets with full insight into the stability of the country’s banking system.

JPY – Yen Rises amid Renewed Euro Zone Concerns

The Yen rose against the EUR amid renewed concerns regarding Europe’s debt crisis, boosting demand for Japan’s currency as a refuge. The JPY strengthened against all 16 major counterparts on speculation possible tightening of regulation on financial markets by EU leaders will hamper recovery in the region.

The EUR’s decline was bolstered by the Bank of Spain’s announcement that it plans to publish the results of stress tests carried out on the nation’s lenders.

Japan’s currency climbed to 112.06 per EUR in Asian trading today from 112.57 in New York yesterday, when it touched 113.32, the lowest level since June 4. It is currently at 91.29 per USD from 91.44 yesterday.

Crude Oil – Price of Crude Oil Rises Above $77 a Barrel

Crude Oil futures rose Wednesday after a government report showed US gasoline demand hit a 10-month high. Light sweet crude for July delivery settled 73 cents, or 1%, higher at $77.67 a barrel on the New York Mercantile Exchange, its highest close since May 10.

US gasoline demand rose by 144,000 barrels a day last week, to 9.338 million barrels a day, according to a US Energy Information Administration (EIA) report. The growth coincides with the beginning of the US driving season signaling that the seasonal increase in US gasoline consumption is taking hold as summer vacationing begins. Oil prices were also aided by a better-than-expected US industrial production report.

With the US driving season ahead, and if concerns regarding the stability of the euro zone’s regional economy continue to ease, crude prices are likely heading to $80 a barrel as confidence in the consistency of the economic recovery grows.

Technical News

EUR/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.3390 level. The daily chart’s Slow Stochastic is showing a fresh bearish cross suggesting that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is an impending bullish cross forming on the 4- hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. In that case traders are advised to swing in after the breach takes place.

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 mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

USD/CHF

The cross has experienced much bearishness for the past several days, and currently stands at the 1.1305 level. There is much evidence in the chart’s oscillators that supports a possible bullish correction today. This is supported by the daily chart’s Slow Stochastic. Going long with tight stops may turn out to bring big profits today.

The Wild Card

Crude Oil

Oil prices rose significantly in the last week and peaked at $77.20 a barrel. However, the 4-hour charts’ RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

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 eToro – The Euro consolidated as the market absorbed in-line inflation data and continued deterioration of European bonds.  The Euro is poised to continue to grind higher to resistance levels near 1.2500.Click here to read the full daily Review

Forex 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.

GBPUSD remains in uptrend from 1.4346 and the falling from 1.4854 is treated as consolidation of uptrend. Support is now at the lower boundary of the rising price channel now at 1.4630. As long as the channel support holds, uptrend could be expected to continue and further rise to 1.4900-1.5000 area to reach next cycle top on 4-hour chart is possible. However, a clear break below the channel support will indicate that the rise from 1.4346 has completed at 1.4854 already, then another fall towards 1.4230 previous low could be seen.

Forex Signals

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2255 level and was capped around the $1.2350 level.  The common currency moved off of intraday lows during the North American session as U.S. equities reversed course and most of their intraday losses evaporated.  European Central Bank member Quaden said the eurozone is unlikely to encounter a double-dip recession while Bank of Israel Governor Fischer suggested some countries may not remain in the eurozone.  The Spanish government denied rumours that Spain requires assistance with external finance.  ECB member Gonzalez-Paramo called for a revival of the securitization market in the eurozone and ECB member Ordonez said bank restructuring will be complete before summer.  The ECB again failed to get any bids in a seven-day U.S. dollar term auction, the third consecutive time this has happened, and this underscores the comparative attractiveness of swap deals.  The European Union today called on countries to reduce their deficits, adding a “cold shower” consolidation plan may be required in some instances.  ECB member Noyer called for more exchange rate flexibility and Germany’s Bundesbank reported banks’ capital requirements are likely to increase significantly.  Data released in the eurozone today saw May EMU-16 consumer price inflation increase 0.1% m/m and 1.6% y/y at the headline level and 0.8% y/y at the core level.  The ECB will publish its June monthly report tomorrow.   In U.S. news, data released today saw MBA mortgage applications climb 17.7% while May housing starts were off 10.0% to an annualized 593,000 units and building permits were off 5.9% m/m to an annualized 574,000 units.  Also, May headline producer price inflation was off 0.3% m/m and 5.3% y/y and the ex-food-and-energy component was up 0.2% m/m and 1.3% y/y.  Additonally, May industrial production was up 1.2% with capacity utilization stronger at 74.7%.  May consumer price inflation data will be released tomorrow.  There is speculation that Fed officials may reduce their forecasts for U.S. economic growth on account of European economic woes when policymakers convene next week.  In April, Fed officials estimated the economy would expand between 3.2% and 3.7% in 2010.  Euro offers are cited around the US$ 1.2460 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥91.10 level and was capped around the ¥91.80 level.  Bank of Japan kept its economic assessment unchanged overnight after improving its assessment in May following better capital spending and foreign trade.  The central bank reported Japan’s economy is evidencing a “moderate economy” and said the “degree of severity has eased somewhat” in employment and income conditions.  The yen’s gains today were largely precipitated by renewed concerns over Europe’s sovereign debt struggles. Yesterday, BoJ unveiled details regarding a ¥3 trillion lending program to stimulate the economy and counter deflation.  Data released in Japan overnight saw the April tertiary industry index improve to +2.1% from the revised prior reading of -2.7% while May machine tool orders were up 192.5% y/y.  The Nikkei 225 stock index climbed 1.81% to close at ¥179.26.  The euro moved lower vis-à-vis the yen as the single currency tested offers around the ¥111.70 level and was capped around the ¥113.30 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥134.50 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥81.30 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8334 in the over-the-counter market, up from CNY 6.8333.  It is being reported that China’s holdings of U.S. assets may now be at or near all-time highs.

£

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4745 level and was capped around the US$ 1.4830 level.  New U.K. Chancellor of the Exchequer Osborne announced Bank of England will obtain new powers to prevent financial crisis and reduce credit risk.  Osborne’s first “Mansion House” speech is scheduled for tonight and more information about the U.K. economy may be forthcoming.  Osborne is expected to give the BoE more responsibility for macro prudential supervision.  Former BoE Chief Economist Vickers will lead a new panel to review the U.K. banking sector.  Data released in the U.K. today saw the May claimant count rate decline to 4.6% as the jobless claims were off 30,900.  The April ILO unemployment rate ticked lower to 7.9%.  The euro came off vis-à-vis the British pound as the single currency tested bids around the £0.8285 level and was capped around the £0.8335 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1275 level and was capped around the CHF 1.1340 level.  Swiss national bank will released its interest rate decision tomorrow and is expected to keep its three-month Swiss franc Libor target rate at 0.25%.  Data released today saw the June ZEW survey decline sharply to 17.5 from 40.5 and data to be released tomorrow include Q1 industrial production.  U.S. dollar offers are cited around the CHF 1.1470 level.  The euro came off vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.3870 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.6685 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.

The cable or the GBPUSD pair has been staging a nice rebound for the past couple of weeks after it touched a low of 1.4227 last May 20. From my previous post about the cable last May 28, I mentioned that if and when it moves past 1.4600, it could reach 1.4800. At present, the pair is already trading around that area. And as I’ve said, it could experience some selling pressure at this level. With the stochastics now in the overbought territory, the pair could indeed turn around and move lower in the next coming days. Once it does, it could aim for its 2010 low again. On the other hand, the pound bulls could still meet a lot of resistances at the three Fibonacci retracement levels just above 1.4800, 1.4900, and 1.5050, and even at the downtrend line even if it is able to close above 1.4800. So until it breaks the downtrend line and reverses, my sentiment towards the sterling pound is still bearish. But that’s just me.

On the fundamental side, the pound’s movement for today will take cue from the result of the UK’s retail sales performance in May. The UK’s headline retail sales are seen to have grown by a mere 0.1% after rising by 0.3% in April. A worse than projected number would more likely push the GBP lower. For the first time in the last three months, the UK’s inflation cooled off in May. This could suggest that the demand for goods and services for the same period could have slowed as well. Such could likewise translate to a weak retail sales figure for the month.

More on LaidTrades.com …

The NZDUSD pair has come a long way from my last post (click here). Looking at its 4-hour chart, you can see that it has recently broken out from a double bottom formation. Now, a double bottom is generally seen as a downtrend reversal pattern. Given this, the New Zealand dollar could rise against the USD in the short term. With stochastics still far from the oversold area, the pair could hover for awhile above the pattern’s neckline before continuing its ascent. Once it does, it could aim for its previous high just below the psychological 0.7300 marker. On the other hand, if the support at 0.6900 gives way, the pair could fall all the way back down until it finds support at the trough of the pattern which is around 0.6550.

Fundamentally, the Kiwi’s recent rise was helped by the improving optimism in the markets. There was a nice rally to end last week when the US’s University of Michigan consumer sentiment index surpassed the market’s forecast. Traders’ optimism was sustained come Monday when the euro zone’s industrial production also exceeded the market’s expectations. Yesterday, a rally once again occurred when the 11th straight month of rise in the Federal Reserve Bank of New York’s manufacturing index added signs that the rebound in the global economy is withstanding the debt crisis in Europe.

Now, the data that will be coming out of the UK and the US will likely sway the Kiwi’s short term valuation. The UK’s May retail sales are seen to have printed a 0.1%  after rising by 0.3%  the other month. Back stateside, the latest initial jobless claims are expected to taper a bit to 452k from 456k. Though, its Philadelphia Fed Manufacturing Index is likewise projected to soften to 21.1 from 21.4. However, the recent jump in the New York Fed Reserve manufacturing index could also indicate a possible better than projected result in the formaaer’s number as well. In any case, any positive suprise from these accounts could buoy the anti-dollars like the NZD.

More on LaidTrades.com …

By Fast Brokers – The Aussie is settling below monthly highs after yesterday’s bounce wasn’t able to carry through 6/14 levels.  Although the Aussie still faces considerable downward pressure, the risk trade as a whole has newfound upward momentum with investors dipping back into the risk pool on oversold conditions.  Although EU news wires were relatively quiet last week, rumors have spread that the IMF and U.S. Treasury are working on a $350 billion line of liquidity for Spain.  Therefore, investors should keep an eye out for any further developments since Spain carries much more weight in the EU than Greece.  However, we should keep in mind that rumors are only rumors until confirmed.  More importantly for the Aussie, the U.S. is putting more pressure on China to appreciate the Yuan since this month’s trade balance revealed an encouraging improvement in demand for Chinese exports.  Stories have been popping up in the China Daily that the government could make a move on the currency in the next two weeks.  Should China appreciate, this could slow China’s economic growth and deliver a near-term blow to the Aussie.  Therefore, investors should stay on their toes since.  Australia will be silent on the data wire again tomorrow, meaning the currency will be in the hands of any psychological forces along with key U.S. data on deck.

Technically speaking, the Aussie faces technical barriers in the form of 6/14 and 5/18 highs.  As for the downside, the Aussie has supports in the form of uptrend lines running from May lows along with 6/11 lows and the psychological .85 and .84 levels.

Price: .8615
Resistances:  .8617, .8637, .8664, .8690, .8713, .8738, .8770
Supports:  .8587, .8565, .8543, .8523, .8500, .8469, .8455, .8435
Psychological:  .85

(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.

Gold is creeping higher in what can be considered an upward consolidation as the precious metal benefits from both its status as a safe haven and its negative correlation with the dollar.  Gold’s negative correlation with the greenback finally kicked into gear yesterday as the precious metal popped towards $1240/oz with the EUR/USD and Cable continuing their recovery from their respective monthly lows.  However, gold must still deal with $1250/oz, which has proven to be a thorn in its side on the previous two attempts.  Rumors are spreading that the IMF and U.S. Treasury are piecing together a $350 billion line of liquidity for Spain.  Although rumors are just rumors right now, should troubles in Spain accelerate this could be the driving force sending gold beyond $1250/oz since the precious metal becomes an ideal investment vehicle during moments of heightened uncertainty.  Therefore, investors should keep an eye on the EU news wires over the next few trading sessions.  Meanwhile, U.S. earnings are trickling in with key data points in deck tomorrow.  Hence, markets could stay volatile over the next 24-48 hours, normally a suitable environment for gold.

Technically speaking, gold faces technical barriers in the form of intraday and 6/8 highs.  Additionally, the psychological $1250/oz level should continue to serve as a solid technical barrier should it be reached.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 6/10 and 6/4 lows.  Furthermore, the psychological $1200/oz should serve as a solid technical support should it be tested.  Meanwhile, gold is running low on topside technical barriers, normally a positive sign for the near-term.

Present Price: $1231.15/ oz
Resistances: $1232.22/oz, $1233.98/oz, $1235.75/oz, $1238.16/oz, $1241.94/oz, $1245.87/oz
Supports:  $1229.56/oz, $1227.63/oz, $1225.20/oz, $1222.09/oz, $1219.16/oz, $1215.42/oz
Psychological:  $1200/oz, $1250/oz

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.