Month: June 2010

By Fast Brokers – Kan preceded Osborne today by announcing Japan’s own plans for reducing its huge budget deficit.  Japan will cap annual spending and plans on balancing the budget within 10 years while reducing bond issuance.  Hence, fiscal austerity is now stretching to the East and the Yen strengthened on the news.  However, the initial reaction from ratings agencies has been far from encouraging since Japan’s austerity plan lacks details and conviction.  On the other hand, Kan may be waiting until next month’s upper house elections conclude before revealing more specifics.  Meanwhile, the USD/JPY is also facing headwinds from a declining Euro as investors lock in profits from this month’s risk rally.  Investors are currently awaiting existing home sales data from the U.S.  Although Japan will be quiet on the wire tomorrow, the EU will print its flash PMI data set along with the UK’s BoE meeting minutes and the Fed’s monetary policy decision.  Hence, there will be several fundamental and psychological factors impacting the FX markets over the next 24-48 hours.

Technically speaking, the USD/JPY faces multiple downtrend lines along with 6/21 and 6/16 highs.  As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with intraday and 5/26 lows.  Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.

Present Price: 90.67
Resistances: 90.74, 90.86, 91, 91.13, 91.34., 91.48, 91.70, 91.85
Supports:   90.63, 90.50 90.31, 90.20, 90.05, 89.90, 89.77, 89.55
Psychological:  .90, .92, June 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 has bounced back to $1240/oz after undergoing a swift sell-off yesterday as the risk trade pulled back across the board.  However, the weakness in gold likely stemmed from overbought conditions as the precious metal remains locked within its steady uptrend.  It will be interesting to see how much lost ground gold can make up over the near-term or whether another bout of selling ensues.  So far gold is exhibiting a healthy technical rise and there’s presently no reason to panic from yesterday’s downturn.  Meanwhile, investors are digesting austerity measures from the UK and Japan and we will have to see how the risk trade fares over the next 24-48 hours.  We have key data from the EU coming across the board tomorrow along with the BoE’s meeting minutes and a Fed monetary policy decision.  Should either event deal a negative psychological blow to the risk trade this may benefit gold due to its safe haven status.  On the other hand, if the risk trade steps back into its uptrend then gold should also follow suit due to the precious metal’s negative correlation with the greenback.

Technically speaking, gold faces technical barriers in the form of intraday and 6/21 highs.  Additionally, the $1250/oz level becomes a psychological hindrance once more.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 6/21, 6/16, and 6/7 lows.

Present Price: $1240.08/ oz
Resistances:  $1241.91/oz, $1244.40/oz, $1248/oz, $1251.55/oz, $2155.12/oz, $1260.06/oz
Supports:  $1237.38/oz, $1235.75/oz, $1233.98/oz, $1231.35/oz, $1229.56/oz, $1227.63/oz
Psychological: $1250/oz, June highs

(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.

With the trading day in full swing, many analysts seemed to have been forecasting a drop in the British pound just hours ago. Ahead of the British Annual Budget report there were some skeptics which were anticipating a soft jobs report and a drastic austerity budget. The budget release was indeed full of tax increases, from VAT to capital gains, as well as a muted growth forecast, which no doubt led the pre-announcement drop.

Prior to the budget announcement traders were witnessing a decline in the value of the GBP, with forecasts for a further drop perhaps being priced in. However, we’ve experienced a short-term bounce as the price began to absorb the news that Britain may indeed go as far as necessary to save itself from further economic woes.

Now that the value of the GBP/USD has sprung back towards 1.4781, from as low as 1.4689 this morning, one begins to wonder whether such an upward correction can sustain itself back into the previous uptrend. Given the austerity measures which will begin to come into effect over the next few months, it appears more likely that a drop should occur prior to a healthy recovery.

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 Russell Glaser – Yesterday the dollar showed for a bit of strength in the face of the two week EUR/USD correction. This was due to doubts over the new flexible Chinese fx policy.

We can see from the daily chart that the two week period of strength from the EUR may just be a short term correction in the long term bearish trend for the EUR/USD.

Trend line 1 notes the long term trend line which takes into account all the price action of the EUR/USD’s bearish move since December. Sharper sloping trend lines are drawn below this. Trend lines 2 and 3 show when the bearish trend of the pair accelerated.

The recent upward correction for the EUR/USD shows a breach of trend Line 3, but the appreciation halted at trend line 2, with 2 failed attempts to close above this line. This shows significant selling pressure at this trend line and at the price of 1.2460.

Trend line 2 begins on April 15th. The second point of contact is on May 10th, and the 3rd point of contact is yesterday. The three contact points show the trend line is a significant trend line. Taking a position when the price arrives at a trend line can be a good entry opportunity into a trending market.

Continued selling of the EUR/USD should send the pair to its next support level at 1.2150, with a further target at the swing low of the daily chart at 1.1875.

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 Peter Robinson – The Euro might have ended its two weeks rally against the greenback yesterday. After a good start the Eur/Usd almost hit $1.2500. The pair rally ended straight after Fitch Ratings’ rating agency downgraded BNP French bank rating.

The most significant data today will published at 14:00GMT, U.S. Existing Home Sales, if the figure is lower than expectation this might add to market fears about the U.S. economy which could hit a double dip recession. Right after, treasury Secretary Geithner would address the public and should provide information regarding U.S. plans to end Relief Programs.

09:00 GMT EUR German Ifo Business Climate

– A survey about business conditions and expectations for the next 6 months. The report is a leading indicator of economic health in Germany released monthly. Analysts forecast that the index would decrease to 101.2 compared to the previous month, which came 101.5. Any better than expected result could benefit with the EUR.

14:00 GMT USD Existing Home Sales

– This sector has seen a strong rise due to government programs which recently ended. Forecast are at 6.17 which is higher than previous data. If the data is indeed at that level in spite of the end of government subsidies it would support riskier currencies. Some highly regarded analysts still believe the U.S. housing market is yet to deteriorate before gradually improving in the future.

14:00 GMT USD Treasury Sec Geithner Speaks

– Fed policymakers will be making public comments again in the post-FOMC meeting period. The focus will range from monetary policy to financial system regulation. The speech will have a direct market impact as traders will be watching for clues regarding future monetary policy.

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.

Like the NZDUSD pair in my other post today, the AUDUSD had also broken out from a double bottom formation. After doing so, it then consolidated within an ascending triangle before moving north again. And like the New Zealand dollar, the Aussie made a runaway gap over the dollar as well to start this week’s trading. Now, a bullish runaway gap is a gap on the price chart that occurs during strong bull movements. It usually occurs near the middle of the identified uptrend and can be seen as a signal of an increase in the trend’s intensity. With an overbought condition, the pair could, however, consolidate for awhile again or even retrace before continuing its trek upward. If the Aussie weakens, it could fall back to the bottom of the gap before aiming for its minimum upside target, which is computed by projecting the height of the double bottom from the point of breakout, near 0.9050.

As I’ve mentioned in my other post, this week’s gap among the higher yielding currencies like the AUD was due to the news that China would make its currency, the Yuan, more flexible. At present, the Yuan is pegged to the USD, making its value artificially low. Now, a weak currency is in a sense good as it makes a country’s exports relatively cheaper. It’s no wonder why China was able to post a 50% year-over-year jump in their exports last month. Moving to a more flexible currency policy would negatively impact China’s exports but the flip side is it would make the ones priced in other currencies (products from S. Korea, Germany, the UK, the US) more competitive in global trade. Once this happens, China’s economy would move to a more balanced one and the Western’s exports industry would improve.

Sentimentally, this would be positive for the likes of the Aussie. Fundamentally, however, it would such would be bearish on it. Why? Well, Australia is one of China’s biggest supplier of raw materials. If China’s exports dip, its demand for raw materials would decline as well. But that’s over the long term.

In the mean time, the Aussie could get some lift today if at least one of the high impact reports from Germany, Canada and the US prints an upbeat figure. Germany is slated to report is Ifo business climate today which is seen to taper a bit to 101.2 from 101.5. Canada’s inflation numbers are also due with the core account projected to rise again by 0.3% and the headline figure to post a modest gain of 0.1%. Back stateside, the US will then make public its latest existing home sales which is expected to have reached 6.17 million during the last month. Stay tune for these updates!

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Market Analysis by Finexo.com

EUR/USD
The Euro rose briefly against the Dollar on Tuesday, after China lowered the Dollar/Yuan reference rate.  However the Euro’s rally was short lived as the Yuan fell on apparent Dollar-buying from Chinese banks.The euro dipped 0.1 percent to $1.2298, down from the day’s high of $1.2355. Investors now see the Chinese Central Bank’s recent shift in monetary policy as a short term trading factor that could affect the EUR/USD performance.

Fueling Euro selling was Fitch decision to cut PNB Paribas rating from AA to AA-.  The leading French bank’s rating downgrade has re-ignited concerns about the overall state of the European economy.
Up ahead, Forex Investors are advised to keep an eye on this morning’s German Ifo Business Confidence.

Support/Resistance 1.2281/1.2385

GBP/USD
Today, Britain’s Treasury chief George Osborne is set to deliver one of the most important as well as most severe budget releases in the last 30 years.  Faced with one of the highest budget deficits in the world in terms of percentage of GDP, Britain’s newly elected government has warned of drastic spending cuts and tax increases that analysts predict to be the equivalent to 8% of GDP over the next five years.  Threatened with losing its AAA credit rating, Britain needs to effectively tackle its mounting deficit in order to maintain market confidence in its public finances.

Support/Resistance 1.4736/1.4825

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 eToro – The Euro sold off as North American investors were enthusiastic about the PBOC move to create a more flexible Yuan. The Euro slipped 60 pips after touching 1.2470 early in the European trading session. The Euro is likely to consolidate near 1.2300. 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.

Source: ForexYard

The EUR/USD pair almost touched $1.2500 during yesterday’s trading session, but declined sharply thereafter, following a rating downgrade. Fitch Ratings’ downgraded French banking giant BNP Paribas from AA to AA-. The move increased analysts’ concerns about the economy after the day passed with almost no major news events.

Economic News

USD – Dollar Rallies on Renewed Euro-Zone Concerns

The USD traded higher against most counterparts yesterday, except the Yen, as excitement about China’s decision to relax the Yuan’s pegged exchange rate subsided and as concerns regarding the stability of the Euro-Zone banking system resurfaced.

The EUR/USD pair declined by more than 150 pips after it reached $1.2466 at the start of the New York trading session. Traders moved away from riskier currencies after China cautioned they will only gradually raise the Yuan against the USD.

Looking ahead to today, traders are advised to follow the release of the Existing Home Sales report at 14:00 GMT. A better than expected result might back some optimism to the markets, supporting the EUR/USD pair slightly.

EUR – BNP Paribas Rating Downgrade Weakened EUR

The EUR weakened against all its major counterparts yesterday following a rating downgrade. Fitch Ratings downgraded French banking giant BNP Paribas from AA to AA-. The move increased analysts’ concerns about the economy after the day passed with almost no major news events.

The EUR declined versus the U.S. Dollar yesterday as investors lost confidence in the European currency. Although the Bank’s quarterly results improved, it is still exposed to vulnerable assets. Fitch’s BNP rating downgrade reminded investors’ of Europe’s fragile economy.

The general mood towards the EUR remains negative, despite the rally of the past two weeks. It would not be surprising to see the EUR/USD pair trading back at lower levels, near $1.2000.

As for today, traders should follow the release of the German Ifo Business climate release at 8:00 GMT as well as continue to monitor statements from financial leaders and rating agencies as recently they tend to greatly influence the currency market.

JPY – Concerns about European Banks Turn the Yen Popular Again

The Yen appreciated yesterday versus riskier assets such as the EUR and GBP as investors turned to the safe heaven appeal of the currency following the downgrade of French Banking Giant BNP Paribas.

The Yen gained versus 13 of its 16 major counterparts after officials from the European Central Bank stated some banks in the 16-nation region are facing funding problems and as deep spending cuts are expected to be announced from Britain.

Japan’s currency advanced to 111.90 per EUR from 112.18 in New York yesterday. The Yen is at 90.89 per USD from 91.11 yesterday.

Crude Oil – Crude Declined as the Dollar Appreciated

Crude Oil declined as excitement about China’s plan to allow the Yuan to appreciate against the USD and as equities fell on renewed concerns that Europe’s sovereign-debt crisis will affect economic recovery.

China is the world’s largest Oil consumer outside the U.S; while the decision to loosen the exchange rate is expected to increase the country’s Oil demand, the transition will likely be gradual and therefore the increase in demand will be more modest than initially expected.

Crude for July delivery dropped as much as 63 cents, or 0.8%, to $77.19 a barrel in electronic trading on the New York Mercantile Exchange yesterday. Currently Oil prices are back to trading near the $78.00 a barrel level.

Technical News

EUR/USD

We can see from the daily chart that the two week period of strength from the EUR may just be a short term correction in the long term bearish trend. The appreciation in the price has stalled at a trend line that began on April 15th. The second point of contact is on May 10th, and the 3rd point of contact is yesterday. The three contact points show the trend line is a significant trend line. Therefore we may expect the pair to continue it’s long term bearish trend with the next target the support line at 1.2150.

GBP/USD

The pair seems to be exhibiting some mixed signals. While the hourly RSI is floating in the oversold territory and the MACD is near the lower limit, indicating an impending upward movement, a bearish cross can be seen on the daily chart’s Slow Stochastic as well as the 8 hour MACD. Waiting on a clearer direction for the pair may be advised.

USD/JPY

Some upward correction may be expected for the pair today as the RSI for the pair is floating near the over sold territory on the hourly chart while a bullish cross is evident on the 4 hour and 8 hour MACD. Going long for the day may be advised.

USD/CHF

The pair may be seeing a much need upward correction today as the RSI for the pair is floating in the oversold territory on the 4 hour, 8 hour and daily chart with a bullish cross evident on the daily charts’ Slow Stochastic. An impending bullish cross can be also seen on the 4 hour and 8 hour MACD. Furthermore, a breach of the lower Bollinger Band is evident on the daily chart indicating an imminent upward movement. Going long for the day may be advised.

The Wild Card

Gold

Gold prices dropped following a rise to a new record price at $1262.20. But the price then quickly fell and is now trading near the price of $1238. The buying binge may have exhausted itself for the time being as the daily chart’s RSI 14 has dipped below the 70 line, indicating the potential for further price declines. A new buying opportunity for CFD traders may be found at $1216.

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.

Like what I said in my previous blog about the NZDUSD pair last June 17, the could be a short term buy on it. At that time, the pair had already broken out from a double bottom pattern. It then continued to consolidate within a symmetrical triangle before breaking out again. Furthermore, it also gapped up to begin this week’s trading. Presently, the pair is trading around 0.7100. However, I think that the New Zealand dollar will pare some of its gains over the greenback for awhile and consolidate probably within some continuation pattern (triangle or box) or even retrace given its overbought conditions before moving up again. If it slips, it could fall back to the bottom of this week’s gap before making a move towards its minimum upside target just above 0.7200.

Fundamentally, news that China will shift its currency policy from being fixed and pegged to the USD to a more market oriented one sent the higher yielding currencies higher and the US dollar weaker during for the most part of yesterday’s trading. However, the early rally was not sustained and the Kiwi manged to close only with a modest gain. In any case, the forecasted improvement in New Zealand’s current account balance from -NZ$3.57 billion to 0nly -NZ$ 0.30 billion could support the NZD. The result of this will be billed tomorrow. However, today’s big time economic updates from the euro zone, Canada, and the US could definitely sway the currency’s valuation especially if there are any deviations between the actual result and the market’s forecast. Germany will report the latest result of the Ifo business climate survey which is seen to cool off a bit to 101.2 from 101. while Canada is set to release its inflation figures for the month of May with its headline number projected to print a modest 0.1% gain from last month’s 0.3%. The US, on the other hand, is anticip[ating a 6.17M number from its May exiting home sales. An upside from any of these accounts would likely spur some risk taking which would consequently lift the NZD.

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