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
Forex traders, who had been hesitant to short the greenback due to a variety of reasons last week, found many justifications to push heavily against the greenback these past two days. The EUR/USD has now risen to a three-year high, reaching towards 1.4900 in yesterday’s session. The AUD/USD witnessed a similar bull run, climbing to a 29-year high of 1.0920. The USD/JPY joined the chorus, despite weak fundamentals in Japan, and fell to 81.52 from 82.17 yesterday.
The US dollar has continued to plummet since yesterday after statements from the Federal Open Market Committee (FOMC) removed all doubt about US monetary policies remaining unchanged. The record low interest rates will persist for the foreseeable future, according to the FOMC report and subsequent statement. What market participants are witnessing now is the aftermath.
Forex traders, who had been hesitant to short the greenback due to a variety of reasons, found many justifications to push heavily against the greenback; especially since little resistance should be seen in the days ahead. The EUR/USD has now risen to a three-year high, reaching towards 1.4900 in yesterday’s session. The AUD/USD witnessed a similar bull run, climbing to a 29-year high of 1.0920. The USD/JPY joined the chorus, despite weak fundamentals in Japan, and fell to 81.52 from 82.17 yesterday.
Yesterday’s Advance GDP report gave dollar bears yet another reason to dump on the greenback as it fell just shy of its expected 1.9%, coming in at 1.8%; well below last quarter’s adjusted 3.1%. There does not appear to be any reason to resist the bear session on the USD for the remainder of the week. Dollar traders should look to short the greenback against all of its currency rivals until this bear session loses a bit of its current momentum.
The euro has been a top performer against the US dollar after statements by the US Federal Open Market Committee (FOMC) regarding US monetary policy reaffirmed the disparity in monetary policies between the Atlantic rivals. The statement reaffirmed the notion that the Fed would hold interest rates at their record low for the foreseeable future, driving traders away from the greenback en masse and into higher yielding assets.
With Europe and Great Britain on track to tighten their monetary policies, currency traders have been pouring their investments into the region with expectations for a surge in value in the coming weeks. Though debt concerns loom in the euro zone, and industrial production falters globally, the higher yielding assets like the GBP and EUR appear positioned to gain despite poor fundamentals. This trend appears to have little opposition as dollar traders shift substantial value into other assets.
As for Friday, the euro looks to be gaining against the greenback as traders find additional reasons to pull out of their dollar positions in exchange for higher yields. Germany will publish its retail sales data today, along with the euro zone’s unemployment rate. These factors, however, will likely be outweighed by the shift in sentiment towards the buck after yesterday’s FOMC statement. Look for long positions on the EUR to continue through to next week.
The USD/JPY has been trading lower recently as investors flee the greenback on the coattails of the Fed’s monetary policy statements. After reaching upwards of 82.75 on Tuesday, the pair quickly dropped to a daily low of 81.61 Wednesday, and dipped farther in Thursday’s sessions after the Bank of Japan (BOJ) decided to hold rates steady and maintain present levels in its Asset Purchasing Program.
While the yen suffers from its own economic concerns, shifts in consumer sentiment have helped lift yen values against a number of its rivals. The pair also looks to be continuing this movement for the foreseeable future given the massive shift away from the US dollar. As the week comes to a close, traders shouldn’t see much change in JPY values directly correlated with its own economic news. As global investors digest the impact that the recent sell-off in US dollars will have on their portfolios, we should look to some stability and consolidation prior to this week’s closing.
Oil prices ended yesterday trading slightly higher on the day as traders largely moved away from the US dollar, lifting commodity values. As investors bailed out of their long positions with the USD, oil prices found support, pushing the commodity back towards $113 a barrel with a closing price of $112.86 yesterday.
As for today, crude oil traders may want to consider that commodities, which are linked to the value of the US dollar, are likely going to continue receiving a boost in the immediate future due to recent monetary policy statements out of the US. Hawkish statements about economic growth may suffice to hold prices stable between $112 and $115, but many speculators are beginning to anticipate another bull run in commodity prices and traders would be wise to watch for the bounce after the price corrects from yesterday’s movement.
After climbing about 700 pips in the past couple of weeks, the pair’s bullish trend was slightly halted yesterday. In addition, as the RSI on the 4-hour chart has dropped below the 70-line, it seems that a bearish correction might proceed today. Going short with tight stops might be the right strategy today.
The cable saw a mild bearish correction yesterday, and fell from the 1.6740 level to as low as the 1.6625 level. Nevertheless, as a bullish cross takes place on the 4-hour chart’s Slow Stochastic, it appears that the pair might resume the bullish trend today, with potential to reach the 1.6750 level.
The USD/JPY pair saw a relatively peaceful trading session yesterday, trading around the 81.60 level. Today, as the daily chart’s MACD continues to point downwards, it appears that the pair might once again face a bearish session. Going short seems to be the right choice today.
After bottoming at the 0.8690 level, the pair saw a minor bullish correction yesterday, and is currently trading near the 0.8730 level. However, a bearish cross on the 4-hour chart’s Slow Stochastic is suggesting that another bearish session could be expected today, with a key-target level of 0.8650.
Gold continues to rally at full steam and yesterday it gained about 1,400 pips to reach as high as $1,538 an ounce. Currently, as all oscillators on the weekly chart are providing bullish indications, it seems that gold might break a new-record high within the next few days, providing a great opportunity for forex traders to join a very popular trend.
Forex Market Analysis provided by ForexYard.
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Being supported by 0.9453 previous low, USDCAD rebounded from 0.9463, suggesting that lengthier consolidation in a range between 0.9453 and 0.9575 is underway, and another rise to 0.9650 to reach next cycle top on 4-hour chart is still possible. Key support is at 0.9453, a break below this level will indicate that the downtrend from 0.9973 has resumed, then further decline could be seen to 0.9300-0.9400 area.
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If you are looking for further evidence as to just how bleak the outlook is for Portugal, consider this – it costs more for Portugal to borrow for six months, than it does Germany for thirty years.
Consider also that the yield spread between Portugal’s debt and the benchmark German bunds continues to widen with each passing day and on Tuesday, the spread surpassed a whopping 636 basis points. This is the highest spread for Portuguese debt since the formation of the Eurozone region and the subsequent adoption of the shared euro currency.
As a result, Portugal’s two-year bond yield climbed to 11.74 percent, while the ten-year yield rose to 9.61 percent. This is a dramatic increase and as recently as of the end of March, the two-year yield was about two hundred basis points lower at 8.78 percent, while the ten-year yield was 8.41 percent.
Adding to the perplexity of the situation is Portugal’s latest revision to last year’s deficit. This latest amendment has once again revealed the actual deficit to be greater than originally reported and is now pegged at 9.1 percent of the country’s Gross Domestic Product compared to the 8.6 percent figure announced previously.
All this is taking place against the backdrop of a fresh round of meetings in Lisbon where representatives from the European Central Bank, European Union, and the International Monetary Fund are attempting to hammer out a bail-out plan that would permit Portugal to meet its growing debt obligations. Time is becoming more of an issue, however, as Portugal has two key repayment dates looming on the horizon. The first of these is scheduled for June 15th when it is required to repay nearly five billion euros (US$7.3 billion), with a similar amount due in October.
Portuguese Prime Minister Jose Socrates – who resigned last month after failing to win approval to cut government spending – will be replaced in elections scheduled for June. As one of his last acts as Prime Minister, he has called for a bailout plan to be in place by mid-May. While he has not said so explicitly, the implication is that without this emergency funding, Portugal will be unable to meet the June bond repayment date.
Scott Boyd is a currency analysts and a regular contributor to the OANDA MarketPulse FX blog.
George Cavaligos, MF Global – The FOMC meeting on Wednesday reinforced the FEDs intention to continue QE policies. The US Dollar Index made new lows and Gold and Silver have made new highs, by cheapening the US Dollar they continue to feed the inflation fears of the world.
The dollar continues to control the equities and commodities market with its inverse relationship to them. The past couple years it seems that the dollar does what it wants and the all other investments move according to their relationship with rising or falling dollar prices.
Most of you know that I follow the dollar very closely. And each morning I provide my analysis with what I feel will take place throughout the session or next 48 hours.
In Today’s (Wednesday’s) pre-market trading analysis I talked about the strength of the equities market in the past few sessions and that it looks as though it still has more power behind it.
Dollar Index 60 Minute Chart
Taking a look at the US Dollar I noticed this morning that it was pointing to even lower prices and that it would likely happen today. It was only a few hours later that the dollar went into a free fall blowing through my downside price target of $73.30. It was this sharp drop in the Dollar which sent stocks, silver and gold soaring higher yet again in our favor.
Equities Market – SPY 60 Minute Chart
Stepping back a couple hours before the US dollar dropped in value sending stocks higher I did see fear creep into the market as traders started selling their shares and buying put options expecting the stock market to fall. When I saw this I got exciting because higher stock prices are usually just around the corner which they were! That’s when I sent an update out subscribers noting we should see some fireworks very soon.
While I am bullish on the stocks and metals at the moment and are long in several positions I am starting to see signs that a pullback is becoming more likely each trading session. This is when money management is important. I do not want to give back to much profit, but I must make sure we lock in some gains during times when the market is overbought like this.
Mid-Week Trading Conclusion:
In short, we continue to ride the trend of higher stock and precious metal prices as the US Dollar spirals down out of control. Our SP500 positions are deep in the money and we continue to ride it for all it’s worth raising our stops as we go.
The big question is if the Sell In May, and Go Away will take shape or not… Im thinking it will as when the time is right I will be looking to short the market.
The UK economy grew by 0.5 percent for the first quarter of 2011 according to the latest figures to be released by the Office for National Statistics. While not spectacular by any stretch of the imagination, the return to positive growth after six months of negative growth may bring the end of talk of a “double dip” recession for the beleaguered economy.
The ONS did caution that the GDP calculation is still preliminary and there will be two revisions in the next month or so, but the feeling on the street is that the 0.5 percent reported yesterday is a “worst case” scenario.
One area that appears ripe for revision is the 4.7 percent decline in the construction sector. Weather aside, it is difficult to pinpoint a reason for such a dramatic decline. This is even more suspect considering the 1.1 percent growth in Manufacturing and a similar increase in the Services sector. Also, the published GDP figure is considerably less than the projected 0.8 percent put forward by the Treasury’s Office for Budget Responsibility tasked with providing an independent review of public finances and the overall economy.
Inflation and Austerity to Be Factors
If sustained growth has indeed returned to the British economy, the spotlight will now focus even more sharply on inflation and to a lesser degree, the impact of the scheduled government spending cuts.
Unless the GDP figure is revised sharply upwards, first quarter growth is considerably less than the Bank of England and indeed the government predicted and this could have two important implications. Firstly, weaker growth means lower tax revenues for the government and this could throw a spanner into the works making it more difficult for the government to meet its budget “austerity” targets.
Secondly, the weaker-than-expected growth could force the Bank of England to delay interest rate hikes until the economy gains more traction. This is a bit of a worry as price inflation is on the rise in the UK and at last count, was clipping along at an annualized rate of 4 percent.
On the other side of the coin however, there is an argument that the recent spike in energy costs are largely responsible for the price increases which, when combined with a weak currency, drives the cost of energy higher. So long as “core” inflation remains acceptable, the need for an interest rate increase becomes less urgent.
Scott Boyd is a currency analysts and a regular contributor to the OANDA MarketPulse FX blog.
April 28 (Bloomberg) — Australian Resource Minister Martin Ferguson talks about the outlook for commodities demand and economic growth in Asia. He speaks with Francine Lacqua on Bloomberg Television’s “On The Move.”
