Month: December 2010

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UK Public Sector Borrowing Soars In November

This morning the Treasury has announced that public sector borrowing for November soared to its highest ever level,  reaching £23.3 billion compared to £17.4 billion a year ago.

The news casts serious doubts on the credibility of the Coalition Government’s spending plans.

Commenting on the figures Philip Shaw at economics firm Investec told The Telegraph: “November’s numbers seem to be a result of very strong spending and weak receipts growth and it is very difficult to judge whether this is just a rogue figure or whether it re presents something more fundamental.”

Following the announcement sterling fell against the euro and dollar.

The pound has already been adversely affected today by announcements that UK consumer confidence has hit a 12 month low.

by Peter Lavelle with foreign currency exchange specialist Pure FX.

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UK Consumer Confidence Hits 12 Month Low

This morning the GfK Consumer Confidence figures for December have been released, and revealed that UK consumer confidence has hit a 12 month low. This reflects (a) consumer concerns about scheduled VAT rises and (b) concerns that the Coalition Government’s tax hikes will cut disposable income next year.

This has caused the GBPEUR exchange rate to fall to 1.1770, and bodes ill for sterling in 2011.

In the last 24 hours the outlook for the euro has also soured. The planet’s biggest bond fund Pimco has recommended that the indebted PIGS (Portugal, Ireland, Greece and Spain) temporarily exit the EMU in order to restructure their debt and devalue their currencies. The head of Pimco’s European Portfolio Andrew Bosomworth noted too that he believes the present EMU arrangement is unsustainable.

Furthermore in the last 24 hours credit rating agency Moody’s has (a) devalued the credit supplied by leading Spanish banks and (b) warned that it may reduce the debt rating of the Portuguese Government.

Presently these announcements have not adversely affected the euro exchange rate as the markets enter their Christmas holding pattern. However they point to continuing troubles for the common currency in 2011. This could negatively affect sterling owing to close UK relationships with the euro zone, and bolster the dollar as investors seek a safe(er) haven.

In the US meanwhile the outlook looks stronger for 2011. The Fed recently announced that QE II has successfully boosted growth of the US economy, and Regional President James Bullard has commented saying the Fed may cut short its program of quantitative easing if growth continues.

by Peter Lavelle with foreign currency exchange specialist Pure FX.

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Gold to Trade Higher on Elliott Wave and Fibonacci Patterns?

By David Banister- www.MarketTrendForecast.com

The gold bull has been moving in very reliable Elliott Wave and Fibonacci patterns for many years now, but once in awhile the waters get a little murky for sure. Recently we have seen a fair amount of volatility near year end as position squaring and year end machinations take hold. With that said, it does appear that Gold should be poised to power higher near term, and I’m looking for a completion to a 5 wave rally that began from about $1,040 per ounce in February of this year.

Over the past several weeks, I see a clear Fibonacci trading day relationship on Gold’s swings from pivot highs to pivot lows. 8 days of correction, 13 days of rally, 8 days of correction is the recent pattern over the past 5 weeks or so. Below is a chart outlining these crowd behavioral based patterns that I rely on for both my trading service and market forecasting services. You can see the clear relationships, confirmed by the stochastics indicators at the tops and bottoms as well:

Based on the recent patterns, I believe we completed a minor wave 3 from the February bottom at $1424 a little over 5 weeks ago, and had a shallow period of 8 days to complete a wave 4 to $1,330. Now, we are in the final 5th wave up pattern to complete an entire 5 wave move from February of 2010. In the near term then, I’m expecting a pretty strong rally from this recent $1365 area to at least $1,480 per ounce, and eventually a good shot at completing the structure at $1525 ranges. Short term, we should begin a wave 3 up here, followed by a 4th wave correction, and then a final and terminal 5th wave. Below is a multi- month weekly chart view of where I see us heading and where we’ve been.

Recently, I completed a brief E-book on Behavioral Based investing and trading, and it is free for new subscribers to TMTF or ATP services. If you’d like to stay updated on a more frequent basis, you can subscriber or otherwise sign up for weekly reports at www.MarketTrendForecast.com

By David Banister- www.MarketTrendForecast.com

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US Dollar advances versus the Euro on Euro zone’s sovereign debt crisis

The US dollar advanced in overnight trading session on Monday against the Euro as uncertainty increased among the investors and trader regarding sovereign debt situation of European countries. The Euro also declined to its ever low against the Swiss Franc as the investor’s think that European Union has not been able to take a concrete action over the euro zone’s debt situation.

The dollar index DXY which measures the greenback’s performance versus its six major counterpart currencies moved up to 80.376 in overnight trading as compared to 80.402 as on late Friday.

The Euro declined to 1.3146 versus the US dollar as compared to $1.3173 as on Friday. The Euro has also touched it’s ever low against the Swiss Franc to 1.2691 reporting a decline of more than 0.6 percent. However the Pound Sterling gained 0.1 percent to 1.5534 against the greenback in overnight trading.

The US dollar declined versus the Japanese Yen to 83.73 as compared to 83.90 on late Friday.

European leaders decided to come with a permanent solution for euro zone’s sovereign and arranged a meeting in last week. However the no positive measures were produced out of the meeting which could help in regaining confidence of investors.

Moreover the downgrading of Ireland’s credit rating by Moody’s Investors Services has created more bearish sentiments for the single currency.

Strategists Adrian Schmidt and Kenneth Broux from Lloyds TSB commented, “The lack of any substantive plan to bulk up the European Financial Stability Facility or provide an alternative crisis-management system has kept the market euro-negative as the downgrades keep rolling in, while there may well be something more forthcoming over the next few weeks, for the moment the market is likely to see this as a green light to sell the euro, suggesting risks of a break below $1.30”

Daily forex trading news written by Rehan from DailyForexTrade.com

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Week Ahead Market Report: 12/20/2010

Investors this week will be focusing on key pieces of economic data for signs of an economic recovery as the Christmas holiday approaches. Good morning, Im Kristin Bianco, with the Week Ahead Market Report for December 20, 2010.

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FOREX: Currency Speculators raise bets against US Dollar

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Chicago Mercantile Exchange, showed that futures speculators increased their short bets of the US dollar against the other major currencies. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $9.46 billion against other major currencies as of December 14th. This is higher from than the total short position of $8.42 billion on December 7th, according to data published by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFx: Currency specs decreased their shorts of the euro against the U.S. dollar to 10,304 short contracts as of December 14th. This is approximately 5,000 less than the short positions on December 7th which saw 15,290 euro short contracts.

The COT report is published every Friday by the Chicago Mercantile Exchange (CME) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. Open interest is the number of open contracts that have not been closed by a transaction or by delivery.

GBP: The British pound sterling positions reversed three straight weeks of declines with 8,186 short net contracts as of December 14th. This is a change from 12,920 short contracts on December 7th.

JPY: The Japanese yen net long contracts decreased for a second straight week to 12,735 long contracts as of December 14th from 23,288 net long contracts reported on December 7th.

CHF: Swiss franc long positions rose higher for second week to a total of 10,716 long contracts as of December 14th after totaling a net of 8,987 long contracts on December 7th.

CAD: The Canadian dollar positions were basically unchanged as of December 14th. CAD long positions registered 33,396 contracts after totaling 33,722 net longs on December 7th.

AUD: The Australian dollar positions advanced higher for second consecutive week following nine straight weeks of declining positions. AUD contracts increased to a net amount of 53,778 long contracts as of December 14th from 43,352 long contracts on December 7th.

NZD: New Zealand dollar futures positions declined for a fourth straight week as of December 14th. NZD long positions fell to a total of 12,521 long contracts after a total of 18,261 long contracts the week before.

MXN: Mexican peso long contracts increased higher as of December 14th to 77,168 net long positions from 59,482 longs the week prior. The latest data reverses three straight weeks of decreases for the Mexican peso speculative positions.

COT Data Summary as of December 14th, 2010
Large Speculators Net Positions vs. the US Dollar

EuroFx: -10,304
British pound sterling: -8,186
Japanese yen: +12,735
Swiss franc: +10,716
Canadian dollar: +33,396
Australian dollar: +53,778
New Zealand dollar: +12,521
Mexican peso: +77,168

Go to the Commitment of Traders CME raw futures data

Further COT Resources from around the web:

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ECB Fears About Irish Debt Bring Down Euro

This morning the European Central Bank (ECB) raised concerns that the newly passed Irish austerity budget did not guarantee Irish assets as security against the Irish bailout. In the rush to secure funds for the Irish Government the ECB-IMF signed an agreement that does entirely secure Irish banking assets as collateral for the loan.

In short the ECB has questioned the legal basis of the bailout.

Following this announcement the euro fell against the dollar to a two month low. In addition bond spreads on Irish Government bonds widened to 8.65% as the markets sought alternative investments. German Government bond spreads by comparison tightened to 3%.

by Peter Lavelle with foreign currency exchange specialist Pure FX.

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Holiday Grind in Stocks & Forex: SP500 and Dollar to stay on trend?

By Chris Vermeulen, TheGoldAndOilGuy.com

It’s that time again when volume dries up and prices rise into the new year. A lot of individuals are scrambling to prepare for the holidays, even though we had a year to prepare. The big money has already done most of their year end shuffling and will be taking it easy until January.

The market is overbought and sentiment readings are at extreme levels which in the past have been the start of large sell offs and even bear markets. While I am keeping a close eye for a top, there is not much we can do but stay long stocks and commodities until the market tips its hand and distribution selling is in control. The U.S. federal government is the only wild card going into year end that should be on traders’ radars. They have been doing a great job boosting prices in the equities and commodities market, but can they continue to hold things up when the big money and the proverbial herd start unloading positions in 2011?

SP500 Holiday Grind – Daily Chart
This chart shows the slow and steady grind higher that we have seen in the S&P 500. I expect this to continue into 2011 The market in my opinion is on the verge of some serious selling so long positions should be small going forward.

US Dollar On Pause For A Couple of Weeks
This 4 hour candle stick chart of the dollar shows price testing resistance (a previous high). I am expecting to see the U.S. Dollar trade sideways or possibly move closer to the previous high as we enter the new year. A sideways dollar will allow the equity and commodity markets to rise.

Weekend Conclusion:
In short, I think we could see an intraday pullback early this week and then a grind higher. The pullback would shake out some weak positions before the holiday march higher takes place. I typically don’t trade much going into the holiday season and new year. I may put on a small long position if I like what I see forming on the charts, but that would likely be about it. Light volume can be very dangerous to trade because sharp price spikes up or down can occur in a blink of an eye catching traders off guard.

If you would like to learn more about trading while getting trade alerts for ETFs join my newsletter at: – http://www.TheGoldAndOilGuy.com

Chris Vermeulen

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Risk-averse Trade for GBPUSD

By Forex Signs, Inc.

At today’s trading session, the GBPUSD pair kicked off at 1.5518 price level. Just after one candlestick at H1 chart, it had a bearish breakdown by 30 pips. Then another candlestick reversed the breakdown by 31 pips. After the fast-tracked turnaround, the pair consolidated at 15 pips higher. Resistance is measured at 1.5889 while support is at 1.5473. The latter was just quantified at the previous session as it had broken the 2-week support by 50 pips. During yesterday’s trade, the GBPUSD made some dramatic movements as it consolidated at 13 candlesticks in H1 chart then it suddenly collapsed into a bearish momentum. It tried to go back but only reached 38.2 percent Fibonacci retracement of the breakout. Meanwhile, the Alligator indicator seems to pursue a downtrend as it opened its mouth after the sudden collapse yesterday. However, at H1 chart today, the lips and the teeth are gradually becoming closer and that can possibly lead to making the alligator fall asleep. A snoozing alligator means no trend; volatility must not be set high as chances are it can have a reversal. In the interim, %R (14) is approaching the neutral level. At the time of writing, the indicator is valued at -36.55. Anyhow, despite slight hesitations of a bearish trend, it is still suggested to sell the pair as the Greenback is getting its strength from reports of them having a strong economy.

American Session Outlook

In the previous trading session, the US dollar had a series of bullish breakouts against its European currency pairs. The trade started in favor of the rival legal tender then after 8-12 candlesticks at H1 chart, the trend had a bullish reversal. This intense U-turn may have been brought about the EU Economic Summit that occurred that day. At the summit, it was highlighted that EU banks face an extra £80bn of bad debts. As expected, investors turned out to their currency haven. At the end of the trading session, the Greenback augmented 42, 110, 60 pips against Swissie, Sterling, and Fiber respectively.

For today’s session, the US dollar may expect another bullish sentiment as conjectures say that the Treasury Currency Report will be released today. Previous statement by the Department of Treasury discussed about their decision to stop short of branding China a currency manipulator. With that, the USD trade against Asian currencies had a minor bullish breakout. For the awaited statement, traders are expecting that the Treasury Department will speak about the tax cuts. The tax cuts are foreseen to spur the US economy. This agreement spearheaded by President Barack Obama is probably to oppose forecast that 2010 deficit is nearly at 10 percent of GDP. Deficit may be slightly lower than last year but it suggests that the economy will take more time to recover. Anyhow, if Treasury Currency report will be released today, chances are the Greenback will sky-rocket again.

About the Author

Forex Signs, Inc., Founded in 2006 in Wall Street, New York City, FSI relentlessly strives to be the premier Forex brokerage company in the industry by providing exclusive and unmatched trading and investment related services while constantly developing innovative solutions that cater to the vast requirements of both individual and institutional market participants.