Month: November 2010

Anyeonghaseyo! The present political and military conditions particularly in the orient are very shaky given the recent artillery attack to South Korea by its neighbor up north. Yesterday (November 23), the world, especially South Korea, was caught off guard when NoKor bombarded Yeonpyeong Island with artillery shells, killing at least 2 and hurting dozens. SoKor, of course, was then forced to return fire and to scramble their fighter planes for defense. North Korea’s attack, by the way, came after it sent a warning to Seoul days earlier, demanding them to their military drills in the area.

The tension between the two Koreas started way back in 1950. In case you do not know, the two Koreas are technically still at war today since no peace treaty was ever signed following the Korean war during the 50′s. Anyway, North Korea, which was ruled by a communist government which was headed by Kim Il Sung (the father of Kim Jung Il), and South Korea with a democratic one, both wanted to unify the entire Korean peninsula under their own government. To unify the region by force, NoKor invaded South on June 1950. North almost took over the whole South but it was not able to get Pusan. The South, UN forces, and the Americans, then rallied and hit Inchon which was a city located at the north west of SoKor. This led the Southern forces to regain control of Seoul. Eventually, they were able to push most of the north forces back behind the 38th parallel.

SoKor, however, continued to attack the north and almost took the whole peninsula. But then the Chinese came to the north’s side and pushed the south forces back below the parallel. As I’ve mentioned, no formal peace treaty between the two was ever signed. Since the major part of the war, skirmishes between the two nations have been continuing every once in awhile near the border. In fact, SoKor was blaming the north for the sinking of its naval ship this March.

So how does the tension between the two Koreas affect the global markets?

Well of course, any threat to global stability especially a potential war between two powerhouses (one economic and the other nuclear) negatively affects the market’s sentiment. At these times, investors rather place their money in safer instruments. The less safe investments like equities would surely take a toll and it did. Ironically, however, this incident in the East further supported the recent rally of the greenback. Again, at times of fear, people move to safe investments like the USD and JPY and away from the higher yielding ones like the AUD, EUR, GBP, etc. Therefore, if any more military conflict between the two occurs, the USD would surely benefit from it. But given the backing of the US to SoKor and the diplomatic stance of the United Nations, it is unlikely that there will be more attacks on either state – unless of course north does their thing again.

By the way, below are some pictures of the former childhood residence of the Northern Korean leader Kim Jung Il that I took during one of my visits in the peninsula this year.

The kid in the pic with the head scratched off (by South Korean tourists) is Kim Jung Il of North Korea.

More on LaidTrades.com …

It was a turbulent day on the markets yesterday! Though EU officials had hoped that announcing an Irish bailout package would calm the markets and restore confidence in the euro, the opposite happened. Political uncertainty inside Ireland meant the markets were not reassured, and insurance rates for Portuguese government bonds rose to dangerous levels.

Given this EURUSD exchange rates fell to two month lows.

This morning meanwhile Germany has released the newest Ifo Business Climate figures. These are positive and indicate that business sentiment within Germany has grown more optimistic this month. However, far from easing concerns about the common currency, the release instead highlights the disparity between the German economy and those of EU periphery members.

Hence, though the Ifo numbers are positive, they are unlikely to allay fears about the euro.

Outside the EU meanwhile North Korea’s attack on South Korea’s Yeonpyeong Island added more fuel to the fire, and caused the dollar to spike. This happened because in moments of political uncertainty risk appetite is low, and the markets treat the dollar as a safe haven currency.

Hence both sterling and the euro fell against the dollar.

This North Korean development though is unlikely to impact the dollar on a long term basis: both South Korea and the US were quick to reassure the markets they would not allow the crisis to escalate. In fact domestic numbers from inside the US point to increased dollar weakness: the Fed yesterday cut forecasts for growth in the US economy, while housing data was also disappointing.

Hence it is possible the dollar spike will dissipate in the medium term.

Finally sterling has benefited from market fears about the common currency in the last day, and risen against the euro. This optimism has been reinforced this morning by announcements that third quarter GDP estimates are robust.

However there are some concerns that the UK economy is vulnerable to Irish debt, given that RBS and Lloyds TSB have exposure of £140 billion. Hence confidence in sterling is unlikely to be solidified until the markets feel the EU periphery members can become solvent, and GBPUSD exchange rates fell yesterday.

By Peter Lavelle at PureFX.co.uk

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar managed to hold onto yesterday’s gains against the euro during the Asian session, but lost some ground to the Australian and New Zealand dollars. S&P cut Ireland’s long-term sovereign credit rating by two notches to A from AA-. The rating remains on negative watch. EURUSD traded in a 1.3360-1.3419 range, briefly slipping 20 pips on the Ireland downgrade, before recovering. USDJPY traded 82.83-83.36. Risk appetite in general remained muted. Asian equities were mixed, after the S&P 500 closed down -1.4%. US data was mixed too, with the second estimate of Q3 GDP slightly better than expected and the Richmond Fed manufacturing index above consensus, but existing home sales disappointed. The latest FOMC minutes were largely as expected as most officials saw the benefits of QE2 outweighing the costs but there were disagreements as some thought that more easing would put unwanted pressure on the dollar. The lack of cohesiveness could cast doubt that QE2 lasts beyond the current prescribed June end-date. The FOMC cut the central tendency growth projections in line with expectations and the QE2 decision. 2011 growth was cut to 3.0-3.6% from 3.5-4.2%. 2012 growth was little changed at 3.6-4.5%. On inflation, core PCE prices for 2010 and 2011 were increased slightly, as were projections for total PCE inflation, and unemployment rate projections were raised across the board. Ahead we have initial jobless claims, durable goods, new home sales and University of Michigan confidence data in the US.
EUR

German Chancellor Merkel said the euro is in an “exceptionally serious” situation following Ireland’s request for aid. She said that while the situation in Ireland is different to that of Greece, it is just as worrying. ECB Governing Council member Nowotny, however, said it is individual states, not the euro, which are in danger. He said he does not see any country leaving the euro in 10 years. ECB Governing Council member Mersch said that contagion is not afflicting the Eurozone.
Reuters reported the EU/IMF will offer EUR85 bn to recapitalize the Irish banks and fund public finances. The main opposition party, Fine Gael, later said it will act constructively in the interest of Ireland. The government is due to present its austerity plan Wednesday. A Moody’s official commented that while Spain is fundamentally strong, they do have concerns on Portugal because of the banking system’s reliance on ECB Financing.
PMIs in the Eurozone all rose more than consensus, following similar results for France and Germany. Manufacturing at 55.5 and services at 55.2 both beat market expectations, pointing towards a solid reading in Q4 GDP. The German Ifo readings are up next.
JPY

Finance Minister Noda said Japan must make efforts to ensure that there is no economic impact from yesterday’s clash on the Korean peninsula. Economy Minister Kaieda conceded that the economy could be adversely affected.
NZD

RBNZ Governor Bollard said an improvement in the domestic savings rate would take upward pressure off both interest rates and the NZD. He added it would also reduce New Zealand’s exposure to external shocks.
CAD

Canadian CPI was above consensus at +2.4% y/y, suggesting there is scope for a rate hike in the near future. The core figure also surprised to the upside at +1.8% y/y. Retail sales were slightly below consensus and USDCAD remained largely driven by risk aversion flows, which benefited the US dollar.

TECHNICAL OUTLOOK
EURUSD support at 1.3265
EURUSD BEARISH Decline through 1.3363 has exposed 1.3265. Resistance at 1.3786 ahead of 1.4282
USDJPY BULLISH Stalls near 83.99; push through the level would expose 85.93. Initial support at 82.40 ahead of 81.66 reaction low
GBPUSD BEARISH Move below 1.5840 shifts focus to 1.5650. Resistance at 1.5965 intraday high.
USDCHF BULLISH Stalled in front of 0.9998; beyond this the pair has room for a run towards 1.0183. Near-term support at 0.9829
AUDUSD BEARISH The pair has support at 0.9652 ahead of 0.9542. Resistance at 0.9954 ahead of 1.0183
USDCAD BULLISH Sustained break of 1.0264 and 1.0380 required to confirm the bull trend. Initial support at 1.0070
EURCHF BEARISH Violation of 1.3229 would expose 1.3072. Near-term resistance at 1.3488
EURGBP BEARISH Sell-off from 0.8942 violates support at 0.8449 with scope for 0.8390 next. Initial resistance at 0.8598
EURJPY BULLISH Violation of 111.05 exposes Fibonacci support at 109.35. Near-term resistance at 113.67, yesterday’s high.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

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

By Russell Glaser – A continuation pattern has formed on the silver charts setting up a breakout play to the upside.

The 4-hour chart displays a triangle chart pattern with the ascending leg beginning on the 3rd of November and the descending leg beginning at the all-time price high of silver at $29.34.

Traders should be anticipating a breakout to the upside as this trade would be in line with the direction of the long term trend. However, a breakout lower is also viable but less likely.

To find the expected move following a breakout the base of the triangle is measured. Therefore, we can anticipate a potential move higher of $5 with an approximate target at $32.50.

Patience will be needed as traders should wait for a definitive signal that silver has moved outside of the triangle chart pattern.

A protective stop should be placed inside the triangle to guard against a potential false breakout. The stop can be located below the support at the price of $27 (S1).

Forex Market Analysis provided by ForexYard.

© 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 Ireland sought financial rescue on Sunday, expectations were that this should calm the tension in European markets, and should support the euro. However, this has merely revived concerns that other European nations, especially Spain and Portugal, will soon seek for similar aid. As a result, the euro falls on all fronts.

Economic News

USD – Better Than Expected GDP Data Boosts the Dollar

The U.S. dollar rallied against most of the major currencies on Tuesday. The dollar gained over 200 pips vs. the euro, and the EUR/USD dropped to a two-month low as a result. The dollar gained about 200 pips against the British pound as well.

The dollar rallied on Tuesday as reports showed that the U.S. economy grew at a 2.5 percent annual rate in the third quarter of 2010, more than estimated. The U.S. gross domestic product rose as companies increased shipments abroad and Americans boosted their spending, signaling that the economy is recovering at a faster pace than expected. Nevertheless, the dollar erased some of its gains during the evening trading session, following an unexpected fall in Existing Home Sales. Purchases of existing homes dropped more than expected in October to 4.43 million, from 4.53 million in September, failing to reach expectations for 4.51 million sales. The U.S. housing sector continues to provide unsatisfying figures, and as a result puts bearish pressure on the greenback.

As for today, several significant economic releases are expected from the U.S. Traders are advised to focus on the Core Durable Goods Orders, Unemployment Claims and the New Home Sales reports, as these are likely to have a large impact on the dollar’s trading. If the end results will provide further indications that the economy is expanding, the dollar might see another bullish session.

EUR – Euro Falls on Concerns Irish Crisis Will Spread; Gold Soars in Response

The euro fell on all fronts during yesterday’s trading session. The euro fell over 200 pips against the U.S. dollar, marking a two-month low. The euro also dropped about 100 pips vs. the British pound and about 200 pips against the Japanese yen.

The euro dropped on Tuesday as German Chancellor Angela Markel commented that the currency is in an exceptionally serious situation following Ireland’s request for financial aid. The euro is falling on concern that Spain and Portugal might be in need for a rescue package as well, as the cost of insuring the nations’ bank debt surges. The true worry is that the euro-zone will not be able to sustain its debts, and this puts further bearish pressure on the euro, and boosts risk-aversion.

As a result of the low risk-appetite in the market, investors turned to alternative assets, such as gold. Gold is considered to be an appealing investment in times of high-uncertainty, and recent Irish turmoil has ended gold’s bearish correction from the past week. As a result gold peaked at $1,382 an ounce yesterday.

Looking ahead to tomorrow, traders are advised to follow every update regarding the Irish debt crisis, and its repercussions on the euro-zone. Special attention should also be given to the German Business Climate release. Positive data from the German economy might ease investors’ concerns, and as a result erase some of the euro’s losses.

JPY – Yen Rallies as Risk Aversion Increases

The Japanese yen rose against most of its major counterparts during Tuesday’s trading. The yen gained about 200 pips vs. the euro, and the EUR/JPY pair fell to a two-month low. The yen gained about 200 pips against the British pound and about 100 pips against the U.S. dollar as well.

The yen rallied yesterday as North and South Korea exchanged artillery fire, and enhanced the already high uncertainty in the market. This has boosted demand for safe-haven currencies and the yen surged as a result. Adding to the equation the Irish turmoil and its possible effect on the entire region, the market seeks relatively safe assets, and the yen qualifies for the category. It currently seems that as long as uncertainty continues to dominate markets, the yen might see further bullishness.

As for today, traders are advised to follow all updates regarding the Korean tension and the Irish debt crisis, as these issues are likely to have the largest impact on yen’s trading. Traders should also follow the Japanese Trade Balance release, as a positive end result might support the yen further against its major rivals.

Crude Oil – Crude Oil Falls amid European Debt Concerns

Crude oil began yesterday’s trading session with a sharp fall to $80.30 a barrel from $82.10 in morning trading. However crude managed to erase most of its losses and is currently trading near $81.60 a barrel

Crude oil declined yesterday on concerns Europe’s debt will damage the region’s economic growth, and will decrease demand for energy. In addition, speculations that the Irish turmoil will affect other European economies, such as Spain and Portugal, have also pushed oil prices downwards. However crude managed to erase most of its losses on expectations U.S. Crude Oil Inventories report will show a further decline in crude inventories.

Looking ahead to today, traders are advised to follow the leading economic publications from the U.S. and the euro-zone, as these tend to have the largest impact on oil trading. Traders should also follow the U.S. Crude Oil Inventories release, which is scheduled for 15:30 GMT, as this report tends to have an instant impact on the market.

Technical News

EUR/USD

The EUR/USD pair dropped sharply during that past couple of days, and is currently trading near a two-month low. In addition, a bearish cross on the daily chart’s Slow Stochastic indicates that the bearish movement has more steam in it. Going short might be the right decision today.

GBP/USD

The pair’s bearish trend gradually continues, as the cable is now trading near the 1.5820 level. Currently, both the RSI and the MACD on the 4-hour chart are providing bearish signals, indicating that the bearish movement might continue today, with a key-target level of 1.5750.

USD/JPY

The USD/JPY pair is slowly rising during the past couple of weeks, and yesterday the pair reached as high as the 83.83 level. However, a bearish cross on the daily chart’s Slow Stochastic suggests that a bearish correction might be in place. Going short with tight stops might be the preferable strategy today.

USD/CHF

The USD/CHF pair is trading within a restricted range for the past week. Currently, after the pair has failed to breach through the upper boarder of the range, a bearish correction might be impending, with potential to reach the 0.9850 level.

The Wild Card

Gold

After a week of falling prices, gold began correcting losses since the beginning of the week, and is currently trading near the $1,375 level. The MACD on the 4-hour chart and the Slow Stochastic on the 1-day chart provide bullish signals, indicating that the bullish trend might extend today. This might be a great opportunity for forex traders to join a very popular trend.

Forex Market Analysis provided by ForexYard.

© 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.

AUDUSD broke below 0.9724 support, suggesting that the downtrend from 1.0182 has resumed. Deeper decline towards 0.9651 key support could be seen later today, a breakdown below this level will indicate that the longer term uptrend from 0.8066 (May 25 low) has completed at 1.0182 already, then the following bearish move could bring price to 0.9000 area.

Daily Forex Forecast

Market News Video

There was no shortage of unsettling news rattling the markets today. Worldly events – especially North Korea’s attack on South Korea AND the unravelling of the Irish government following its acceptance of emergent financial help sent all US equity indexes sharply lower, right out of the gate this morning.

The US dollar has gained ground against the Indian rupee in the forex market for a second straight day as the dollar rose broadly today in trading.

The USD/INR currency pair opened the day near the 45.72 exchange rate and rose to touch its highest exchange rate since September 24th at the 46.07 exchange rate, according to currency data from Oanda.

The pair currently trades near the high above the 46.00 exchange rate at the end of the US session.

The dollar has continued to cement its strong reversal off the decline to a 26-month low point against the rupee that was reached on November 5th at the 44.03 level.

USD/INR – Dollar/Rupee currency pair rising above the 200-day simple moving average (sma) in today’s trading for the first time since September.

About the Author

FxNewsIndia.com – India Forex News

Dycom Industries (DY) reported that it has approximately $1.3 million of remaining authorization under its current share repurchase program. Since the repurchase program began, in February 2010, the Company has used approximately $38.7 million to acquire about 4 million shares of common stock.

The German economy grew by 0.7 percent in the third quarter of 2010, according to a report by the German Federal Statistics Office. The latest data was a slower pace of growth than the second quarter which rose by 2.3 percent from the first quarter. German exports increased by 2.3 percent in the third quarter while investment in equipment rose by 3.7 percent.

Economic forecasts were on the mark as they had expected that today’s GDP numbers would advance by 0.7 percent.

On an annual basis, GDP grew at an annual rate of 3.9 percent in the third quarter from the third quarter of 2009 following a second quarter annual rise by 4.3 percent.

FxNewsEurope