Month: June 2010

Yahoo Finance Video 3: Prechter: Bank Reform Will Shrink Credit and Kill the Economy

The Senate version of financial regulation is bad for business on Wall Street and, according to the Wall Street Journal, could cut the profits of major financial institutions by roughly 20%. Find out why Robert Prechter thinks it’s also bad for the economy in the third excerpt from Robert Prechter’s May 20 interview with Yahoo! Finance Tech Ticker host Aaron Task.

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By CountingPips.com

The U.S. dollar has been on the defensive in forex trading against the other major currencies today as risk appetite has flowed in the financial markets today. The positive investor sentiment has pushed the U.S. stock markets and crude oil higher while gold, the dollar and the Japanese yen have fallen lower. The dollar has declined versus the euro, Swiss franc, British pound, Canadian dollar, Australian dollar and the New Zealand dollar while trading almost unchanged against the Japanese Yen, according to currency data by Oanda near the end of the U.S. trading session.

The euro increased to its highest level since last week against the dollar and has ascended over the 1.2100 exchange rate while the pound, Australian dollar and New Zealand dollar have also traded at their highest levels since last week. The Canadian dollar and Swiss franc both reached their best levels versus the dollar since May 18th in today’s trading action.

The U.S. stock markets, meanwhile, advanced sharply higher today with the Dow Jones ending the day up by approximately 273 points, the Nasdaq increasing about 60 points and the S&P 500 up by over 31 points. Oil rose by $1.40 to $75.78 per barrel while gold has fallen lower by $11.80 to trade at the $1,216.70 per ounce level.

Economic News: US Trade Deficit pushes higher

The United States trade deficit increased to its highest level since December 2008 in April, according to a release by the Commerce Department today. The U.S. trade deficit rose by 0.6 percent as the deficit registered $40.3 billion in April following a revised deficit of $40.0 billion in March. Market forecasts were expecting the deficit to rise to approximately $41.0 billion for the month.

The U.S. had a total of $148.8 billion worth of exports in April which was a decrease of $1.0 billion from March’s total while April imports edged lower by $0.8 billion to a total of $189.1 billion worth of imports.

The politically sensitive U.S. trade deficit with China increased to $19.3 billion from a deficit of $16.9 billion in March. Other notable U.S. trade deficits were with the European Union at a $5.7 billion, Japan at $4.8 billion, Mexico at $5.3 billion, OPEC at $9.3 billion and Germany at $3.0 billion.

U.S. trade surpluses with other countries included Australia at $1.2 billion, Hong Kong at $1.7 billion, Belgium at $1.0 billion.

Weekly Jobless Claims dip

U.S. weekly jobless claims decreased in the week that ended on June 5th, according to a release by the U.S. Labor Department today. New jobless claims fell by 3,000 workers to a total of 456,000 unemployed workers for the week while the 4-week moving average of unemployed workers increased by 2,500 workers from the previous week to a total of 463,000.

Market forecasts were expecting jobless claims to edge down to 450,000 workers following the prior week’s revised 474,000 claims.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending May 29th also decreased for the week. Continuing claims fell by 255,000 workers to a total of 4,462,000 unemployed workers. The four week moving average of continuing claims dropped by 49,250 workers to a total of 4,617,500.

The Canadian dollar has continued to gain against euro for several months now. Notice that the EURCAD pair hasbeen sliding along a descending triangle. In my last post (click here) about the pair, it already marked a new 2010 low in May at 1.2642 before staging a strong rally. This week, though, it was already able to move below  the mentioned level and mark a new low at least for this year. At present, the pair is trading around 1.2500 which is very near its 10-year low. A break of this level could send it very close to parity. But with the stochastics in the oversold territory, it could range for awhile before continuing its descent. In any case, the pair would likely fall unless it is able to break the descending channel’s resistance and reverse.

On the fundamental side, I guess by now we pretty much know what is behind the weakness in the euro. The debt problem in the euro zone, especially the one in Greece, has been plaguing the region. Recently, Hungary also joined the party with some statements that it could p[ossibly fall into default as well. Just this week, 75% of the people that were polled think that Greece would eventually pass on their dues while a good 40% believes that the country would drop using the euro as their currency. While this poll is just a tally on the market’s outlook and is not representative of what is really gonna happen, it still pretty much affects and weighs on the current valuation of the higher yielding assets and the euro.  Any such event would more likely reduce the euro closer or even past the Loonie-parity.

Canada’s economy, on the one hand, is one of the better ones this year with its GDP rising by 0.6% during the first quarter of the year. Given its stellar retail sales and the sustained improvement in its housing market, the Bank of Canada had recently upped its interest rate to 0.50% from 0.25%, making the Canadian more attractive than the euro. The Loonie’s advantage in interest rate plus Canada’s stronger economy favors a decline in the EURCAD pair.

More on LaidTrades.com …

Here’s an update on the gold prices from my previous post last May 27, 2010. Despite the overall bearish sentiment in the markets, gold has managed to mark a new all-time high last Tuesday at $1,251.68 per ounce. Though, it was not able to hold that position for so long as it declined since then. Presently, gold is trading around its 2009 high at $1,226.30. If this level and the shorter term uptrend line get breached, its price could fall all the way until it finds some support at $1,160.00. With the stochastics in the overbought area, there’s a chance that this could happen. But if it does not and its present support holds, it could just move sideways for awhile before aiming for a new high again.

Fundamentally, gold’s push for a new high was helped by China’s astounding 50%  year-over-year exports growth the last month. Remember that for China to productions and sales outside of its country to grow at such pace, of course, it also needs to import its raw or input materials. China is the number one gold consumer in the world and if it can sustain or even improve its exports, its demand for the input materials like gold that it uses would more likely increase as well.

On the sentiment side, it seems that the investors’ downbeat outlook on the global market particularly in the euro zone has been favoring gold as of late. Generally, investors place their money in gold at times of economic uncertainty since it is one of the few assets that is able to maintain its intrinsic value. So with all the bearishness around, gold could perhaps be one of the assets of choice among investors.

More on LaidTrades.com …

By Russell Glaser – Spot gold prices fell from their record high following rising Chinese exports and positive comments from Fed Chairman Ben Bernanke. This helped to reduce the level of risk aversion in yesterdays trading as traders bought riskier assets, shunning safe-haven assets such as spot gold and the U.S. dollar.

The price of spot gold fell yesterday and continued its decline into the afternoon hours of today’s European trading session. Spot gold is currently trading down at $1224 from an opening day price of $1230.60. This is off from Tuesday’s record high price of $12156.70.

Due to the positive sentiment, traders bought higher yielding assets such as the euro, spot crude oil, and equities.

Higher yielding currencies and equities were in favor yesterday after the release of a report showing Chinese exports rose a whopping 50% in the month of May.

Also Ben Bernanke’s testimony before Congress helped to increase trader’s risk appetite. Bernanke forecasts the U.S. economy to grow between 3%-4% this year. The Fed chief also expects consumer and business spending to make up for the end to the government stimulus in the economy. Bernanke said he did not understand the surge in the price of gold given the declining price of other commodities but identified with investor need for safe-haven asset in times of market uncertainty.

Over the past 5 months, spot gold prices have risen to record levels as the European debt crisis unfolded. Fears of a restructuring or a default in the debts of Greece, Portugal, Spain, and Hungary have driven investors to seek safe haven assets.

Short term price declines in spot gold may continue if further positive economic data is released, driving traders to riskier assets. The near term support levels for spot gold trading rests at $1219, followed by a range between $1192 and $1197.

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 Anton Eljwizat – The pair has recorded much bearish behavior in the past week. However, the technical data indicates that this trend may reverse anytime soon. For example, as I demonstrate below, the 4-hour chart signals that a bullish reversal is imminent, and it might have the potential of reaching towards 1.0500 levels in the coming days. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

• The technical indicators used are the Relative Strength Index (RSI), Williams Percent Range and MACD.

• Point 1: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• Point 2: The Williams Percent Range also supports the upward direction.

• Point 3: The MACD indicates an impending bullish cross, which may signal an upward movement is going to occur in the near future.

• The volatile downward movement which occurred prior to this upward correction has generated these indicators, and there appears to be room for this correction to continue.

USD/CAD 4-Hour 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 Greg Holden – This article is a little more time-sensitive than most traders are comfortable with, but it needs to be put forth in order to attempt providing the best advice possible. I’m of the opinion that the EUR/USD is in a position to “decide” what its price will be. I’m also of the opinion that this choice is at a level which may decide the future of the euro.

Now when I say the EUR/USD is in a position to decide, I mean that traders have an opportunity to make a statement about its future, not that the EUR/USD is actually going to decide anything, being an ethereal object and all.

We’ve witnessed an unprecedented drop in the value of the euro against its American counterpart. Seeing as the euro zone is in no position to be making gains, this drop was reasonable and expected. But we are now approaching dangerous waters. The euro is currently trading only 100 pips above its 2002 opening price, and that’s after correcting upward for the past few days.

Meanwhile, safe-havens, like the USD, are still rising and we now have Ben Bernanke, the Federal Reserve Board’s Chairman, claiming that the US will do all it can to prevent Europe’s economic woes from oozing across the Atlantic. This puts obvious pressure on the euro, which may struggle to survive if its value continues to plummet. A prominent argument being discussed is the viability of the euro zone to recuperate fully without tossing the euro into the scrap-heap of history.

It has been said repeatedly that Greece would have been able to recover much quicker had it possessed its own sovereign currency. The same goes for Spain and Portugal. The weaker the euro gets, the story goes, the more pressure gets put on the region to take austerity measures, which are highly unpopular. The tougher things get in the struggling countries the more likely a radical politician is to get elected and take more “popular” measures, such as abandoning the euro instead of raising taxes and cutting jobs. Just watch the Dutch election as an example.

So now the world has a choice. Do we keep the euro and hold off its decline, or do we continue to take bets that Europe won’t recover anytime soon and watch the euro fall into obscurity?

Technical Analysis

– The chart below shows the price movements of the EUR/USD for the past few months.

– Each number represents a similar decision point for traders, and each time thus far we’ve seen a choice to sell the euro.

– Now here we sit at number 4 and the choice is going to be made in the next day or two about where we see the euro’s future.

– If we bank on historic price movements it becomes all too reasonable to assume a continued drop in value. But the importance of the current psychological support level may outweigh many sentiments about selling. Today’s interest rate decisions throughout the region may help determine the direction of this pair. Let us hope the euro can break out of this bearish channel and hold tight through the remainder of this crisis.

EUR/USD 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.

Source: ForexYard

After a receiving a slight boost following comments from Fed chairman Bernanke yesterday, the Euro largely reversed its gains in overnight trading versus the U.S. Dollar and Yen. Investors appear to be waiting on news from a meeting today at the European Central Bank as to whether more help will be provided to debt ridden Euro-zone countries.

Economic News

USD – Dollar Improves as Investors Return to Risk Aversion

Following losses yesterday against currencies like the British Pound and Euro, the greenback appeared to be back on top in overnight trading. GBP/USD fell over 70 pips from yesterday afternoon before slightly rallying to its current level of 1.4545. EUR/USD similarly fell from yesterday’s high of 1.2060, to its current level of 1.1975. At the same time, the Dollar did see a slight drop against the Yen. USD/JPY has fallen from 91.57 yesterday afternoon, to its current level of 91.15.

Today, traders will want to watch out for a number of key economic indicators that are likely to impact Dollar pairs. At 12:30 GMT the monthly Trade Balance report, as well as the weekly Unemployment Claims figure are set to be released. Both pieces of news are considered fairly important and tend to generate a substantial amount of market volatility.

Analysts are predicting a slight decrease in the Trade Balance figure, as well as a slight increase in the number of people seeking unemployment insurance this week. While both of these reports may be bad for the U.S. economy, the Dollar may see a slight boost against its main counterparts today, should investors fear the pace of the global economic recovery and turn to the safe haven USD.

EUR – EUR Reverses Gains, Awaits News From ECB Meeting

After seeing moderate gains in trading yesterday, the Euro has reversed courses and fallen once again versus the safe haven currencies. After reaching as high as 110.30 yesterday, EUR/JPY has since dropped over 100 pips to its current level of 109.20. EUR/USD also fell almost 100 pips from yesterday’s highs, and the 16-nation currency has also taken significant losses against both the British Pound and Swiss Franc.

Today, Euro-zone investors are eagerly awaiting any news from a meeting of the European Central Bank. The official purpose of the meeting is to set the Minimum Bid Rate for the Euro-zone. While no one is expecting the rate to change from its current level of 1.00%, investors will be paying attention to any news regarding further assistance to some of the more financially troubled European nations. Should any positive news emerge, the Euro could see some gains in late day trading.

JPY – Safe Haven Yen Continues to Rally Against Its Rivals

The Yen appeared to be the big winner in overnight trading, not only making gains on riskier currencies like the Euro and sterling, but also against the fellow safe-haven U.S. Dollar. USD/JPY, which at one point was trading as high as 91.56 yesterday, has since dropped following remarks by the Japanese finance minister. Currently USD/JPY is trading around the 91.15 level.

Today the Yen is likely to see more gains, as there is no positive news forecasted for the Euro-zone and American news will not likely show any substantial growth in the U.S. economy. Should the U.S. Trade Balance and Unemployment Figures come in as predicted, traders can expect the greenback to fall further against the Yen in afternoon trading.

Crude Oil – Crude Corrects Itself After Major Gains Yesterday

Following yesterday’s jump in crude prices, the commodity has since corrected itself following a speech from the Fed chairman. Oil prices climbed as high as $74.80 yesterday, but after news that the U.S. economy is still growing, albeit at a modest rate, it has since fallen to its current level of $73.90.

Today, crude traders will want to pay attention to any movement among USD pairs. Should the Dollar respond favorably to any of the day’s news events, oil prices will likely continue to drop. With risk aversion still the preferred strategy among investors, there does not appear to be much room for a price increase for crude oil at this time.

Technical News

EUR/USD

The EUR/USD cross has experienced a bearish trend for the past few months. However, it seems that this trend may be coming to an end. The RSI of the weekly chart shows the pair floating in the over-sold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.

GBP/USD

The cross has experienced much bullishness yesterday, and currently stands at the 1.4595 level. There is much evidence in the chart’s oscillators that supports a possible bearish correction today. This is supported by the 2-hour chart’s RSI. Going short with tight stops may turn out to bring big profits today.

USD/JPY

The pair currently sits near the bottom border of the 4-hour chart’s RSI, suggesting an upward correction may be imminent. The upward direction on the hourly chart’s Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The cross has been dropping for the past 3 days now, as it now stands at the 1.1430 level. However, the 4-hour chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to be the right choice today.

The Wild Card

Crude oil

Crude oil prices rose significantly in the last week and peaked at $74.70 per barrel. However, the 4-hou chart’s 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 tested resistance above 1.20 before collapsing down to 1.1990 at the end of the US trading session.  The ECB will announce potential remedies to the European debt issues tomorrow that will give traders a guideline to potential futures movements of the Euro.Click here to read the full daily Review

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.

USDJPY remains in uptrend from 88.98. The fall from 92.88 is more likely correction of uptrend. As long as 90.53 key support holds, another rise towards 94.98 is still possible and a break of 92.10 could signal resumption of uptrend, only fall below 90.53 support will indicate that the bounce from 88.98 is complete.

Daily Forex Forecast