Month: April 2011

AT&T (T) said today its first quarter profit surged 39%, largely do to strength in the wireless business. Earnings rose to $3.41 billion, or $0.57 per share, compared to $2.45 billion, or $0.41 per share, in last years first quarter.

International Business Machines (IBM) reported earnings after the close of trading yesterday that rose 10%. Net income totaled $2.9 billion, or $2.31 per share, compared to $2.6 billion, or $1.97 per share.

By Russell Glaser

The euro climbed to a 15-month high in light trading as risk aversion continued to evaporate with a surge in European equities. Trading of the pound was volatile with the release of the BOE meeting minutes.

A decline in risk aversion is noticeable as European equities surged with the FTSE 100 trading up 2.20% and the DAX up by 2.77%. US equity futures are also trading higher prior to the opening bell in New York. Lighter volumes may also be supporting the large gains in equities and the euro as many trading desks are working on a skeleton staff with the approaching Easter holiday.

Towards the opening of trade in New York the euro climbed to a new 15-month high as European equities continued to rebound from Monday’s sell-off following the sharp increase in Greek debt yields.

The euro is higher versus the majors with EUR/USD is trading at 1.4530 from an opening day price of 1.4397. The EUR/JPY moved as high as 120.38 before trading back to the 120.00 level. The EUR/GBP was up at 0.8860 from 0.8802.

Traders shrugged off less than expected German PPI numbers and continued to bid the euro higher throughout the European session. The report showed inflationary pressures rose to 0.4% after last month’s increase of 0.7%. Economists had forecasted a rise of 0.8%.

Despite the lower than expected inflationary data the long term picture does not change as European interest rates are expected to continue to rise which should support further euro gains. EUR/USD resistance is found at the recent high at 1.4520, followed by 1.4580, and the November 2009 high at 1.5140. Support comes in at 1.4350 and yesterday’s low at 1.4150.

The pound traded with higher than usual volatility following the release of the BOE meeting minutes. No change was seen in the report and the knee jerk reaction by traders was to sell the pound. The GBP/USD fell from its intraday high to a low of 1.6306 where the pair found buyers amid the risk on crowd. The pair is currently trading near its daily high at 1.6390. Resistance for the Cable is located at the recent high of 1.6425 followed by 1.6460, and the August 2009 high at 1.7040.

During the New York trading session, traders should be eying the release of US existing home sales at 14:00 GMT and crude oil inventories at 14:30.

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.

Wells Fargo (WFC) posted a 48% increase in net income in the first quarter, the top home lender said today. The bank earned $3.76 billion, or $0.67 per share, compared to $2.55 billion, or $0.45 per share, in last years first quarter.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

Today’s existing home sales figures out of the United States will likely provide less help for the USD from yesterday’s downtick versus the euro, but risk aversion appears to be moving back in favor with the greenback as debt concerns in both regions favors safe-havens over higher yielding assets. Traders may want to anticipate a give-and-take trading session today as many are having difficulty assessing market direction.

Economic News

USD – Dollar Bearish vs. Euro despite Debt Concerns

The US dollar’s short-term bullish run seems to have met resistance yesterday. The EUR/USD fell to as low as 1.4310 by mid-day on Tuesday as risk aversion in the global economy helped spur growth in both the USD and JPY. However, reports out of Europe showing positive growth in manufacturing halted the greenback’s movement and pushed the EUR/USD back towards 1.4380 by yesterday’s close.

Risk aversion present in the market was initially driving the USD higher yesterday morning. Towards the end of trading, however, the greenback had shifted into a bearish posture whereas other safe havens, such as the Swiss franc and Japanese yen, continued to soar. Technical pressure also appears to be weighing on the buck as many investors have added momentum to this latest downtick.

Today’s existing home sales figures out of the United States will likely provide less help for the USD from yesterday’s downtick versus the euro, but risk aversion appears to be moving back in favor with the greenback as debt concerns in both regions favors safe-havens over higher yielding assets. Traders may want to anticipate a give-and-take trading session today as many are having difficulty assessing market direction.

EUR – EUR Bullish Contrary to Greece Debt Woes

The euro rebounded against its currency rivals despite warnings of Greece’s impending debt restructuring. Yesterday’s manufacturing data out of France, Germany and the broader region uplifted market watchers, rising significantly beyond many of the prevailing forecasts.

In lieu of these positive figures, the EUR soared against the British pound (GBP), reaching upwards of 0.8916 this morning before settling near 0.8906. Against the US dollar, the euro reached upwards of 1.4380 as of this morning. Inflation also appears to be on track in the euro zone, which could help explain the steady growth of the 17-nation currency.

This morning’s inflationary figures from Germany may help the euro hold its recent gains, though the added weight will likely be insignificant for day traders. The persistent nuclear crisis in Japan, and rapidly climbing oil prices, has many investors concerned about industrial output figures around the globe. Should the data fall short of expectations the EUR may see a minor corrective blip, though few are expecting a reversal in value any time soon.

JPY – Unwinding Carry Trades Fuel JPY Growth

The Japanese yen appears to have maintained its steady growth from yesterday due to heightened risk aversion in the global market. A dip in US stocks yesterday has helped push many investors into safe haven assets such as the yen and Swiss franc.

The island currency has gained roughly 1% against the US dollar since yesterday, and has reached towards 82.95 as of this morning. Injecting momentum into the yen’s bullishness was an unwinding of carry trades yesterday as investors felt over-exposed in the euro given the recent fear of a needed debt restructuring for Greece. Traders may want to watch for any additional shifts such as yesterday’s, especially considering that no impactful news will be published from Japan today.

Crude Oil – Reduced Oil Output Has Little Impact on Price

Oil prices fell for a second day Tuesday despite recent sentiments expressed by the Organization of Petroleum Exporting Countries (OPEC) and Saudi Arabia in particular. The oil cartel insisted on Monday that global supply was adequate and blamed market speculation and a variety of unrelated factors for the recent run-up in price.

To affirm the notion that supply was suitable to current demand, Saudi Arabia announced a decision to scale back its oil production. The move was unexpected given that the price for a barrel of oil is currently trading over $105 a barrel.

Saudi oil ministers expressed their expectation for a steep fall back in oil prices as global demand begins to slump from worldwide debt concerns. If true, the cutback appears to signal that Saudi Arabia desires prices to remain as high as they are by pushing against any sharp downward movements. Traders may want to begin expecting the price downfall, but current technical data suggests the price is well supported above $100 a barrel.

Technical News

EUR/USD

The Relative Strength Index and Williams Percent Range on both the 8-hour and daily charts show this pair floating in neutral territory. With technical indicators not showing a specific direction for the pair today, traders may want to take a wait and see approach today.

GBP/USD

The 8-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour chart’s Williams Percent Range is already floating in the over-bought territory indicating that a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The USD/JPY has gone bullish yesterday, and currently stands at the 83.00 level. The daily chart’s Slow Stochastic supports this currency cross to rise further today. However, the 2-hour chart’s RSI signals that a bearish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

USD/CHF

The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI indicating 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.

The Wild Card

Gold

Gold has reached an all-time high of $1,499.83 an ounce early today, yet a technical correction wasn’t late to come, and gold is now trading near $1,497.50 an ounce. Currently, as the Relative Strength Index on both the d8-hour chart and the 1-day charts is pointing down, it appears a bearish trend may proceed. This might be a good opportunity for forex traders to join a 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.

USDJPY remains in downtrend from 85.51. The bounce from 82.18 is likely consolidation of downtrend. Resistance is at the upper border of the price channel on 4-hour chart, as long as the channel resistance holds, downtrend could be expected to resume, and another fall towards 81.50 is still possible after consolidation. However, a clear break above the channel resistance will indicate that a cycle bottom is being formed at 82.18, then further rally could be seen to 83.45 zone.

Written by ForexCycle.com

By CountingPips.com

The latest housing data out of the US showed that housing starts and building permits rebounded in March after declines in February. Housing starts increased by 7.2 percent in March to an annual rate of 549,000 following February’s decrease by 18.5 percent to an annual rate of 512,000 starts, according to the latest data by the US Commerce Department. On an annual basis and despite the monthly increase, March’s level is 13.4 percent below the March 2010 standing.

Building permits, a measure of future construction, rose by 11.2 percent to an annual rate of 534,000 permits in March. This follows a decrease by 5.2 percent to an annual rate of 594,000 building permits registered in February. On an annual basis, March’s building permits are 13.3 percent lower than the March 2010 level.

Housing completion data, released in the same report, showed that housing completions fell by 14.2 percent in March from February. On an annual basis, completions were below the March 2010 housing completion level by 20.8 percent.

Forex Update: Dollar on the defensive

US dollar has been trading mostly lower against the other major currencies in forex market action today after a gaining day yesterday. The dollar has been losing ground to the euro, British pound sterling, Canadian dollar and the Australian dollar while trading higher against the Swiss franc. The American currency is currently trading close to unchanged against the New Zealand dollar and the Japanese yen, according to data from Oanda.

The US stock markets, meanwhile, have been positive today with the Dow Jones industrial average increasing by over 30 points, the NASDAQ rising by approximately 2 points and the S&P 500 advancing by approximately 4 points at time of writing.

In commodities, gold touched a high close to $1,500 per ounce before retreating a bit to currently trading near the $1495.30 per ounce level and oil has been moderately higher trading at the $108.21 per barrel level.

A 90-Page “Deflation Survival Guide” Gives the Answer

By Elliott Wave International

“Every excess causes a defect; every defect an excess. Every sweet hath its sour…The waves of the sea do not more speedily seek a level from their loftiest tossing, than the varieties of condition tend to equalize themselves.”

This quote comes from Ralph Waldo Emerson’s essay, “Compensation.” He opens the essay with a poem which includes these two lines:

“Mountain tall and ocean deep
Trembling balance duly keep.”

Do Emerson’s prose and poetry actually speak to the subject of deflation? Indeed they do.

Recent decades have seen the biggest credit inflation the world has ever known. So the question is: What will “duly keep” the “balance” of so great an “excess”? Well, a deflation of the same scale.

And the depth of deflation will be in proportion to the height of the credit build-up.
How high was the mountain of debt/credit? In 2008, it reached its zenith at $65 trillion. This chart from the January 2011 Elliott Wave Theorist shows what has happened since:

In that same issue of the Theorist, EWI’s Robert Prechter observes: “This decline in overall money and credit is the first on an annual basis since 1929-1933. It is a big deal.”

And the $65 trillion is a conservative number. Prechter also states:

“It does not count derivatives, which are IOU-ifs representing an estimated risk of indebtedness of $600t., or the unfunded liabilities of the federal government, which by some estimates amount to $300t.”

Does history shed light on vast excesses in debt/credit and deflation? Read the excerpt below from Conquer the Crash (2nd ed.), pp. 88-90:

“Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt)… Elliott wave expert Hamilton Bolton… summarized his observations this way:

‘In reading a history of major depressions in the U.S. from 1830 on, I was impressed with the following:

(a) All were set off by a deflation of excess credit. This was the one factor in common.
(b) Sometimes the excess-of-credit situation seemed to last years before the bubble broke.
(c) Some outside event, such as a major failure, brought the thing to a head, but the signs were visible many months, and in some cases years, in advance.
(d) None was ever quite like the last, so that the public was always fooled thereby.
(e) Some panics occurred under great government surpluses of revenue (1837, for instance) and some under great government deficits.
(f) Credit is credit, whether non-self-liquidating or self-liquidating.
(g) Deflation of non-self-liquidating credit usually produces the greater slumps.'”

Note that we have had more than “a major societal buildup in the extension of credit.” The chart above also shows that “a deflation of excess credit” has been underway since 2008. As Hamilton Bolton said, this is the one factor all major depressions have in common.

To help plan and prepare for your financial future, we suggest that you take a FREE look at our deflation survival guide titled, “The Guide to Understanding Deflation.” It’s an eBook of Robert Prechter’s most important recent warnings and teachings about deflation, and it’s free.

To start your free read, simply sign-up to become a Club EWI member (membership is also free). Becoming a member only takes moments after you click here.