Month: December 2010

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

FX markets were relatively quiet during the Asia session, and the price action was subdued. EURUSD traded 1.3188-1.3233, USDJPY 83.96-83.56. Earlier, some better US data helped push US equities higher, and the 10y Treasury yield breached 3% for the first time since July. A positive pending home sales print broke a recent string of disappointing housing data. Although initial jobless claims were slightly higher than consensus, the four-week average continued to drop. Philadelphia Fed President Plosser, a voter in 2011, was not supportive of QE2 prior to the decision and said he remains skeptical as to how much of a stimulative effect we might see. Both Plosser and St Louis Fed President Bullard, a 2010 voter, said the Fed could adjust the QE2 program in both directions depending on data. Bullard, though, maintained his constructive view on QE2 as he said the program should spur increased activity in 6 to 12 months and that the recent rise in yields does not mean QE2 is failing.

Our team of analysts remain constructive on the dollar over the short and medium term as a solution for Eurozone problems remains elusive, and as our analysts expect an above-consensus payrolls print today.
EUR

The euro stayed supported during the Asia session after yesterday’s volatile price action in and around the ECB’s press conference. The ECB’s policy decision itself was in line with what most informed observers had expected, and three-month fully-allotted liquidity will continue to be provided into Q1. The euro sold-off initially as newspaper articles had fuelled expectations in some quarters that further extraordinary measures to support European sovereign bond markets might be announced. The euro soon rebounded sharply afterwards though, amid media reports that the ECB had begun heavily buying sovereign bonds.
S&P said it may cut Greece’s BB+ long-term credit rating some time in the next three months. S&P placed the rating on credit watch negative citing the risk that Greece might need funding after 2013 from the newly-proposed European Stability Mechanism.
As expected, Eurozone GDP growth slowed to +0.4% q/q. Whilst exports slowed substantially, they are likely to benefit from a weaker euro going forward, and domestic demand remains strong.
CHF

Whilst Q2 GDP was revised down significantly, figures for Q3 showed a solid performance by the Swiss economy, as it grew by 0.7% (Q/Q) and 3.0%(Y/Y). CPI data is due and our European economists expect it will remain in positive territory.
CAD

Canadian labour data is due and consensus is for an increase in the net change of employment to the tune of +19.8k, and an unchanged unemployment rate of 7.9%. But more importantly for USDCAD will be the US labour data and a good print there could see USDCAD push lower as a recovering US economy is supportive for Canada as investors look to higher-beta assets.

TECHNICAL OUTLOOK
USDJPY stalled at 84.41.
EURUSD BEARISH Pullback from 1.4282 found support at 1.2969, scope for 1.2796 next. Resistance at 1.3354.
USDJPY BULLISH Stalled at 84.41; breach of the level would expose 85.40 reaction high. Initial support at 82.79.
GBPUSD BEARISH Sell-off from 1.6299 found support at 1.5485; move below the level would expose 1.5297. Near-term resistance at 1.5773.
USDCHF BULLISH Next big resistance lies at 1.0183. Near-term support at 0.9926.
AUDUSD BEARISH Recovery eyes 0.9818 resistance but overall outlook is bearish. Expect losses to target 0.9537 and 0.9477 next.
USDCAD BEARISH Abrupt fall through 1.0076 brings focus on the 0.9978/31 support zone. Resistance at 1.0190.
EURCHF BEARISH While resistance at 1.3229 breakout low holds, expect losses to target 1.2933 and 1.2766 next.
EURGBP BEARISH Focus is on 0.8329; a break here would expose 0.8202. Resistance at 0.8564.
EURJPY BEARISH Decline through 108.35 and 107.73 would open up the way towards 105.44 key low. Near-term resistance at 111.98.

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.

DMCI Holdings, Inc. or DMC, which is one of the leading construction firms in the Philippines, has been one of the best stock performers since the start of 2009. During the start of 2009, the company’s shares opened at PHP 2.26 in 2009. Since then, its shares has picked speed until it soared to a high of PHP 41.00 in November 5, 2010. Now that’s a whopping 1,814% gain in less than two years! If only I had placed 1 million back then, I could have retired comfortably by now. Oh well.

Looking at DMC’s daily chart, it seems though that it is already bound for a bearish reversal. It’s glory days may already have been over as it just broke down from a head and shoulders formation. During the last couple of days, it managed to rally but the neckline of the head and shoulders acted as a strong resistance which would most likely push its price back down. In the next trading sessions, if it is unable to clear above the neckline then it could turn south and fall down to its minimum downside target of about PHP 26.00.

More on LaidTrades.com …

Source: ForexYard

With euro-zone debt crisis showing signs of stabilization, at least in the short term, eyes are again turning to the U.S and any economic data publications from the region that might give clues to the pace of the U.S economic recovery. And one of the main economic indicators is the Non-Farm Employment Data, expected to be released at 13:30 GMT. The results of this indicator will likely help set the direction for the EUR/USD pair heading to the end of the year.

Economic News

USD – USD Declines After Better than Expected Housing Data

The dollar declined against its riskier counterparts Thursday after better than expected U.S Pending Home Sales data release and as gains in stocks and commodities boosted investors’ risk appetite. Pending home sales jumped 10% after dropping 1.8% in September.

The dollar depreciated 0.5% to $1.3209 per euro at closing time in New York, from $1.3139 Wednesday. The pair remained mainly flat overnight and is currently trading around $1.3200 level. It touched $1.2969 on Nov. 30, the strongest level since Sept. 15. The greenback weakened 0.4 percent to 83.70 yen, from 84.19 yen.

Today the highly anticipated Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT. The number is expected to show a slight decline from last month, yet still show that employers added jobs to the economy. The ISM Non-Manufacturing PMI is expected to be released at 15:00 GMT and expected to show a modest increase from the previous month. A result in line with expectations or better will likely boost market optimism further, pushing down the USD versus risker, higher yielding assets.

EUR – EUR Jumps on Possible Bond Purchasing Program

The euro gained versus the dollar and yen Thursday after indications of aggressive bond buying by the European Central Bank. After dropping early Thursday as ECB President Jean-Claude Trichet failed to provide any new support for the region’s stressed economies, the euro rallied later in the trading day as speculations arose that the ECB was actually aggressively buying debt. Though not confirmed, the possibility of ECB bond purchases helped ease market sentiment and boosted the euro. The common currency rose above $1.32 after having earlier fallen to $1.3060.

Much better than expected housing data from the U.S helped boost investors’ sentiment further, pushing higher yielding currencies such as the euro, the Australian and the New Zealand dollars higher versus the dollar and yen.

Late Thursday, the euro was at $1.3225 from $1.3137 late Wednesday and at 110.95 yen from 110.57 yen. The U.K pound was at $1.5597 from $1.5620.

Today, the release of the euro-zone retail sales numbers at 10:00 GMT is expected to show an increase, possibly giving additional push to the common currency. Traders are also strongly advised to follow the release of the U.S Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT as this indicator tends to have major effect on the EUR/USD pair.

JPY – Yen Declines as Risk Aversion Eases

The yen continues its decline versus the euro during today’s Asian trading hours after dropping Thursday on signs the global economic recovery is picking up which boosting demand for higher-yielding assets. Against the dollar the yen showed gains, despite the release of better than expected economic data from the U.S. After reaching a high of 84.35, the pair declined to currently trade around 83.70 yen. The Japanese currency is currently at 110.49 versus the euro, after reaching a high of 111.19 yesterday.

As for today, traders are advised to follow any news publications from the euro-zone and the U.S, particularly the release of the euro-zone retail sales numbers at 10:00 GMT and the release of the U.S Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT.

Crude Oil – Crude Jumps to Near $88 a Barrel

Crude futures settled at a two-year high Thursday, jumping to $88 a barrel after better than expected release of U.S housing data. Light, sweet crude for January delivery settled $1.25, or 1.4%, higher on the New York Mercantile Exchange.
The decline in the dollar gave additional boost to the commodity as it is dollar denominated and therefore a weaker dollar makes it cheaper.

Today traders are strongly advised to follow the release of the U.S Non-Farm Employment Data and Unemployment Rate are released at 13:30 GMT as this indicator tends to have major effect on the USD pairs and dollar linked commodities such as crude oil.

Technical News

EUR/USD

The pair seems to be exhibiting some mixed signals; while the hourly chart’s Slow Stochastic is showing a bullish cross and the daily charts RSI is floating in the oversold territory, the 4 hour chart’s Slow Stochastic is exhaling a bearish cross with the RSI floating in the overbought territory. Waiting on a clear signal for the pair may be advised for today.

GBP/USD

The pair has been trading in a tight range between 1.5560 and 1.5610 with most indicators floating in neutral territory. Waiting on a clearer signal for the pair may be advised.

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

USD/CHF

It seems that the pair’s upward correction is likely to continue today as well; a breach of the lower Bollinger Band is evident on the 8 hour chart while the RSI for the pair is floating in the oversold territory on the 2 hour chart. Going long with tight stops may be a good choice for today.

The Wild Card

EUR/NOK

The RSI for the pair is floating gin the oversold territory on the daily, 8 hour and 2 hour charts while a bullish cross is evident on the daily chart’s Slow Stochastic. A breach of the lower Bollinger Band is evident on the daily chart indicating an imminent upward move while a doji candlestick is evident on the 8 hour chart, indicating a reversal in direction might take place. Forex traders are advised to go long for the day.

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.

For the past week or so, the US dollar has rallied strongly against its major peers thanks to the drama in Ireland and in the Korean peninsula. Ireland needed about €85 billion ($114 billion) to help service its ballooning deficit and to provide some liquidity in its commercial banks. With the Irish economy contracting for the last three years, and its debt seen to exceed 120% of its total output, Ireland’s long term credit score was downgraded. Last week, Ireland’s credit rating was downgraded by the international ratings agency, Standard & Poor’s, to A from AA-. This, of course, was coming at the heel of Greece which in 2009 caused a ruckus in the financial market because of its deteriorating fiscal condition.

In the Eastern part of the globe, the growing tension between North and South Korea also caused panic among investors which in turn benefited the like of the US dollar because of its “safe” nature. In a surprising turn of events, North Korea fired its artillery towards a populated territory in South Korea which killed at least 4 people and injured dozens. South Korea, of course had to respond by firing towards the North as well. At least for now, though, the firing between the two Koreas has come to a standstill. Still, with news that the North is operating “thousands of uranium centrifuges,” the threat of war remains.

In my opinion, the worse case scenario in the two regions, eurozone and Korea, may already have been “priced in” by the market. Greece and Ireland’s fiscal situation have already spread beyond their borders by causing the spreads in the other countries’ sovereign bonds to widen. It’s no secret that other countries like Spain and Portugal are having difficulty servicing their spending and debt as well. The only difference now is that they will have to pay a larger cost if they needed to borrow more funds.In Korea, while a war is still a possibility it is still quite unlikely given today’s international diplomatic processes. Nevertheless, a war could indeed sink the international market and propel the USD upward.

Technically, the US dollar index has retraced back to the neckline of the previous head and shoulders formation after touching a low of 75.631 in the first week of November. Interestingly, the neckline also falls in line with the 61.8% Fibonacci retracement level of the most recent down wave. With an overbought condition, as indicated in the stochastics, and the last daily candle forming a bearish doji, it is quite likely that the USDX will dip again. If it does, it could fall back to 76.00 once more. But if risk aversion persists and the index manages to break above the neckline, it could the reach 83.00.

GBPUSD has formed a cycle bottom at 1.5484 level on 4-hour chart. Now the price action from 1.5484 is treated as consolidation of downtrend. Bounce towards the upper border of the price channel would likely be seen in a couple of days. As long as the channel resistance holds, downtrend is expected to resume and another fall to 1.5300-1.5400 area is still possible.

Daily Forex Signals

The euro has continued trading higher against the US dollar today in the forex markets for a second straight day. The euro had fallen sharply to start the week against the dollar to its lowest level since the middle of September below the 1.3000 level.

The EUR/USD opened the day at the 1.3114 exchange rate and has advanced above the 1.3200 level to currently trade near 1.3213, according to currency data from Oanda at the end of the US trading session.

The euro’s rebound of the last two days has brought the common currency back above the significant 200-day moving average (red line) and out of the oversold territory on the relative strength index indicator (RSI) on the daily forex chart.

About the Author

FxNewsEurope.com – Euro Forex News

The US dollar has been on the decline against the Indian rupee for the third straight day in the forex markets, according to currency data near the end of the US session today.

The USD/INR currency pair opened today near the 45.44 exchange rate level and touched an intraday high of 45.56 before retreating lower and has now fallen to its lowest since November 15th.

The dollar had been on the rise against the rupee for three straight weeks after the American currency declined to a 26-month low at the 44.03 level on November 5th. The dollar rose as high as 46.29 on November 26th and had broken above the 200-day moving average (red line) before this week’s fall.

The pair is currently trading slightly above the 45.00 exchange rate level and right at the 50-day moving average (white line), according to data from Oanda.

About the Author

FxNewsIndia.com – India Forex News

Former SAC Capital Advisors head researcher Aaron Cowen has joined Soros Fund Management to be a portfolio manager, according to a recent article by the Wall Street Journal.

Cowen, a key figure at last year’s publicized hedge fund dinner that traded ideas on shorting the euro, has reportedly taken a position as a portfolio manager for equities at Soros Fund Management LLC as of November 29th.

Soros Fund Management LLC, founded in 1969 by investor and chairman George Soros, privately manages hedge funds including the investor’s famed Quantum fund.

By CountingPips.com

The US dollar has been on the defensive today in the forex markets as the US stock markets have increased and investors have pushed riskier currencies higher. The dollar has declined against the euro, Swiss franc, Japanese yen, Australian dollar, Canadian dollar and the New Zealand dollar while trading slightly higher against the British pound sterling, according to currency data from Oanda.

The euro has risen against the dollar for a second straight day with the EUR/USD currency pair trading above the 1.3200 for the first time in three days. The euro had fallen to the 1.2969 level against the dollar on Tuesday before rebounding and could make its way to the resistance level near 1.3300, the November 29 high point and past resistance level.

The US stock markets, meanwhile, have had a positive session today with the Dow Jones industrial average rising by approximately 100 points, the NASDAQ increasing by proximately 25 points and the S&P 500 higher by over 10 points at time of writing. In commodities, gold has been higher by $2.20 to trade at the $1389.80 per ounce level and oil has been higher by $1.11 to trade at the $87.86 per barrel level.

By Sara Nunnally, Editor, Smart Investing Daily, TaipanPublishingGroup.com

On Sunday, European ministers agreed to an 85 billion euro bailout of the Irish economy. This long-anticipated move had mixed results that rippled through the global economy — even here in U.S. markets.

Why would an Irish bailout affect the markets here in the States? (And drastically at that!) By midday on Monday, the Dow Jones Industrial Average dipped more than 130 points, trading below 11,000 — a level that has been repeatedly tested over the past two weeks.

Take a look at this chart:

View larger chart

This is the third time since Nov. 15, and we’re seeing the Dow struggle to break 11,200.

No doubt the U.S. economy has its own troubles, but what is it about the European bailouts that affects the U.S.economy so much?

In a backward sort of logic, here’s one reason. The European bailouts push the value of the euro lower, which in turn makes the U.S. dollar appear more valuable — and investors flock to the safety of the U.S. dollar, making the greenback even more expensive. This makes U.S. markets fall.

The announcement of the Irish bailout sent the euro down 0.8% in morning trading on Monday. It was trading for $1.3136 — its lowest level since Sept. 21.

U.S. and European markets fell in response. Indeed, the only group of stocks that appeared to like the bailout news was the Irish banks on the receiving end of the cash. But Ireland isn’t the only country with debt problems causing concern in global markets.

Spain and Portugal are still struggling… and they could be next in line for a bailout. These countries’ bond yields are sky high, reflecting the risk associated with the countries’ chance of default.

And here’s the scary part… There may not be enough funds to bail out Spain.

That’s the other part of the scenario. A lower euro means a higher dollar, and a defaulting country could mean a domino effect that ripples through the entire European Union.

We saw the same fears with the Greece crisis back in late spring this year, though fears were probably worse then.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy and I simplify the stock market for you with our easy-to-understand investment articles.)

Between May and July, the Dow fell from 11,151 to 9,686, before rebounding. I don’t think we’ll see anything like that massive drop, unless Portugal and Spain do continue to tremble under the weight of their sovereign debt.

For now, these fears are trumping even the outstanding Black Friday sales. Preliminary reports show a 14% increase in online spending from Thanksgiving through Saturday, and the National Retail Federation said that 212 million people visited stores and websites — up from 195 million last year.

That means investors will have to get creative with their portfolios. Looking outside the euro-U.S. investment scene, we find the only markets up on Monday were Asian markets and Israel (though only slightly).

The Hang Seng was up 1.26% as of midday on Monday, and BSE 30 (Bombay’s main index) was up 1.40%. Australia, Japan, Taiwan and Malaysia were all up nominally, while Shanghai, Indonesia and South Korea were all off less than half a percent.

This is pretty interesting, considering the military scare between North and South Korea last week.

South Korea’s Kospi Composite Index hasn’t quite broken down out of its six-month uptrend, either, though it’s precariously hanging on…

It would be simple to say just follow the U.S. dollar , but that’s not a complete picture.

I spoke about some key characteristics to look for in any international market back in mid-October.

In a nutshell, international markets have to have a well-developed financial system, one that’s dynamic enough and diverse enough to handle a global economy. International m arkets should also have significant cash reserves. Just look at Ireland and Greece, which needed bailouts. They don’t have any ready cash for crises of this nature and need to go begging.

The contagion could spread to other nations, like Spain and Portugal, so if you’re looking at international markets as a way to diversify your portfolio, keep these characteristics in mind.

That’s not to say these bumps in international markets aren’t actionable. Traders will be having a field day with these market dips and economic fears.

The BBC reports:

Germany‘s finance minister Wolfgang Schaeuble attacked market speculation over the financial woes of Portugal as “irrational”.

At the same time he praised the rescue deal for the Irish Republic.

“The speculation on the international financial markets can barely be explained rationally,” he told German radio station Deutschlandfunk.

Countries are put under pressure leading to “fear effects,” he said, adding “the markets can make a lot of money in this way.”

Certainly, international markets — if played correctly — can offer a lot of opportunities for investors, too.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.