Month: April 2011

April 5 (Bloomberg) — Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd., talks about Portugal’s credit rating which was cut by Moody’s Investors Service for the second time in three weeks amid expectations it will be unable to avert a European bailout. Halpenny, speaking with Tom Keene on Bloomberg Television’s “Surveillance Midday,” also discusses the outlook for the euro and European credit markets. (Source: Bloomberg)

The NASDAQ OMX Group (NDAQ) said today the NASDAQ 100 Index will undergo a special rebalance effective May 2. The rebalance will bring the weights of the stocks on the index closer in line with their actual market capitalizations.

Who’s taking the lead in the world of smartphones across the pond? According to UK software provider Intelligent Environments, they found that Google’s (GOOG) Android operating system now accounts for 28% of the British smartphone market, while Apple’s (AAPL) iOS has a 26% share and Research In Motion comes in with a 14% share.

The Federal Trade Commission is considering an investigation of Googles (GOOG) internet search dominance, Bloomberg reported. Before deciding on a probe, the FTC is waiting to see whether the Justice Department will challenge Googles acquisition of ITA software, Bloomberg said, citing two people familiar with the matter.

By Jared Levy, Editor, Smart Investing Daily, taipanpublishinggroup.com

One way of searching for investment opportunities is to look for businesses that are thriving with products and services that are in demand. But another method for finding investment opportunity is counterintuitive: Look for something that is broken or doesn’t make sense. Once you locate that problem or fault, either look for a company that may have a solution or perhaps look at the problem itself to see if it is viable or just noise.

Financial regulation, or FINREG, is one of those “problems” that contains some noise. FINREG creates challenges for banks, brokerages, lenders and the consumer.

If you are not completely familiar with the complex 2,300-page bill, The Wall Street Journal assembled this interactive page that details the different facets.

How Can You Profit From the Confusion?

Sometimes an apparent roadblock (legislation in this case) may have holes that make it less restraining than first thought. Now, I’m not going to say that FINREG isn’t a highly restrictive, far-reaching, costly (in several respects) and poorly timed bill.

But some parts are just plain ridiculous and bad for the American consumer, and should be altered or removed. One of those pieces is the “Durbin Rule.”

Back on March 10, in a note to my subscribers of WaveStrength Options Weekly I detailed this flawed piece of the FINREG puzzle:

Some of you may have heard of the “Durbin Rule” — it’s imbedded in the Dodd-Frank financial regulation bill.

The rule essentially states that “interchange fees,” those fees that retails incur anytime you swipe a credit or debit card, are to be limited (fixed) to 12 cents per transaction (the average is 44 cents). It means retailers will be capped in the amount they have to pay in merchant fees that are charged by banks and by Visa, MasterCard, etc. Good news for retailers and bad for banks and our friends over at Visa and MasterCard. This rule equates to BILLIONS of dollars annually!

Our genius politicians thought this legislation would benefit the consumer because the retailers would lower prices because of their savings. This may be true in some cases, but there are serious flaws.

If this is implemented in its current form, big banks like Bank of America and JPMorgan Chase will lose billions of dollars in revenue, as will Visa and MC. What’s worse is that the bill excludes smaller banks (which was meant to help them), but if small banks continue to charge high fees and the large banks are forced to do it cheaper, the small banks will lose business.

All the banks are waging war on Capitol Hill to get this rule overturned or, more realistically, modified, which I believe will happen.

Our angle is that the markets have NOT priced in a good outcome for MasterCard, but I believe a compromise will come about, because the rule as it stands now just doesn’t work — this will be beneficial for MA.

Since then, MasterCard (MA:NYSE) stock went from $241 to a high of $262. WOW subscribers were able to capture some fantastic profits there and have since exited, but I wanted to take this a bit further and share this story with you.

On Tuesday the Federal Reserve declared that it is going to delay its ruling on appropriate levels from April 21 till July 21, which was a big win for MA and Visa (V:NYSE), not to mention my hypothesis from two weeks prior.

What “Durbin” Means for You

FINREG is supposed to “help” the American consumer, but aside from the issues for the banks, there are many ways in which this hurts us. Banks have shareholders to report to, which means they must keep profits up. If you take a couple billion dollars away from their balance sheets, they must replace it.

Guess who gets to replenish their balance sheets? The American Consumer!

Some of these changes are ALREADY happening, here are some of the ways the Durbin rule and FINREG is “helping” (hurting) you:

• Higher ATM fees — JPMorgan Chase (JPM:NYSE) and other banks are “testing” $5 ATM fees. You think $1 or $2 is too much to pay? (I do.) How about a 300% increase in the average ATM fee to withdrawal your money? Remember, that is a “fixed” fee at most ATMs.
• No more rewards — Wells Fargo announced on Tuesday that it will no longer be offering debit card rewards. Say goodbye to frequent flyer miles and gift certificates. Chase and PNC are following suit.
• Higher minimum payments and balance levels — For those of you who carry credit card balances, you may have noticed that your minimum payments have increased over the past year. You may also see that the breakpoints for “no fee” checking and savings accounts have increased.
• Increase in annual fees for credit cards — These increases started with the “CARD” act, which went into effect in early 2010. Chances are that if we see the Durbin rule passed as written, you can expect more of the same. Fees have gone up across the board at many banks. Make sure you check your statements and disclosures. By the way, you can contest some fee increases that are initiated after you have an active account, so always keep a close eye on everything your bank (credit card company) sends you!
• Limited purchase amounts on debit cards — JPMorgan Chase and others are also considering capping the debit purchase amount to $50 or $100. Imagine going for a nice dinner, weekly food shop or clothes shopping for the kids and having a purchase limit of $50? Will we now have to swipe the card five times and sign five times for a nice family dinner out? Does this seem like it makes our lives as Americans better?

What Happens Now?

This is really a war between retailers and banks, we the consumer stand to lose no matter what, but more so if this rule is passed.

If the Durbin rule passes as written, we will have to deal with the above issues and still pay roughly the same amount for our goods and services. Remember, retailers who pay the fees have to turn a profit as well.

There is a slim chance that your new 3-D TV will go from $999.99 to $999.45, and even if it does, I would rather pay 45 cents on a thousand-dollar purchase than $5 to withdrawal 20 bucks for a couple of beers.

The bottom line is that the Durbin Amendment makes about as much sense as a cup holder in an Indy racecar.

I have faith (albeit minimal) that the Fed will see the uselessness and carelessness of the current bill, not to mention that price fixing is illegal (isn’t it?), and either kill it altogether or at least put something together that makes sense.

In either of those cases, you can expect MasterCard and Visa to catch a bid. Of course there is risk that the bill stands as is, but I believe a good portion of that risk has been factored in.

I still think there is long-term upside for both of these companies.

Editor’s Note: If you don’t mind making money at the U.S. government’s expense, I urge you to read the following Investigative Exposé immediately. It will make you mad as hell. It could also make you very rich, very soon. Get all the details in this free investment research report.

About the Author

Jared Levy is Editor of WaveStrength Options Weekly, our options trading research service and Co-Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.

He has been featured in several industry publications and won an Emmy for his daily video “Trader Cast.” Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.

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

Yesterday, President Obama announced that he would seek a one-third reduction in crude oil imports by 2025, as part of a new energy policy… one that would include a shift to cleaner-burning fuels, according to the Associated Press.

This is perfect timing with the article I wrote about investing in oil and ethanol. We’ll get back to Obama’s initiative in just a minute.

It seems my article from Tuesday struck a nerve with you. No surprise. Alternative energy in all forms has cheerleaders and detractors. I’ve taken my fair share of ribs from readers over the years, so I expected some opinions on my ethanol article.

Here are a couple:

I live in New Zealand but invest in the US stock markets (ours is tiny). I was interested in your article on ethanol a product that is not that popular here. I am also interested in the many reports about the American economy leading to suffering by your people because of rising prices for commodities. By your standards we in New Zealand are destitute. For example we are paying $2.15 a litre for petrol which translated into US Dollar terms, equals $10.82 a gallon. The bread (plain white not fancy) cost $5.32 US (exchange rate 0.75224). Our national average wage is $54. You work it out, then maybe you will see that Americans don’t necessarily have too much to complain about after-all. — J.B.

The ethanol gas is burning up outboard motors. I wish there was some way to stop it and put the corn into food products. — W.W.

I have read and reread, still not sure — are you saying this is a good time to invest in ethanol or avoid it???? If the supply of imported crude oil becomes restricted, how many days would the 18 Million barrels provide? How long will it take to increase production output?? I have a small farm I am trying to sell (40 acres), is this the time to hold out for top money or maybe even take it off the market?? — B.B.

Several years ago, I was writing for a publication called Material Profits, a newsletter analyzing commodities and commodity-based companies. One of my pet sectors was alternative energy (thus the ribbing).

Back in 2007, I wrote an article comparing oil consumption growth between the United States and the European Union.

In response to J.B.’s comments, I said that cheap oil and gasoline has done more harm to the United States than good. I believe if the government levied more taxes on the stuff we’d be using a lot less of it, and we’d have implemented more efficient technologies to make better use of what we do use.

For example, the higher taxes on fuel in Europe has led to near stagnant growth in oil consumption (excepting the inclusion of new EU member states), whereas the cheaply available oil and gasoline in the U.S. has led to continuous growth in consumption.

Indeed, between 1990 and 2007, the 27 members of the European Union increased consumption of oil by 3.8%. During the same timeframe, the United States experienced a 21.7% growth in oil consumption.

No surprise, then that most European-model cars have better fuel economy than U.S. cars (though this is starting to change). Also no surprise that Europe has an extensive train system and better public transportation in city centers than many urban areas in the U.S.

As far as agricultural commodities go, the U.S. is in an easier position, as we are the world’s largest grower of corn, the fourth-largest producer of wheat, top producer of soybeans, and fifth-largest grower of oats. This might have an effect on lower food prices as compared to J.B.’s food prices in New Zealand, though I haven’t done the research on how many grain commodities are grown in your country.

That’s not to say food prices aren’t climbing… or having a negative effect on people’s pockets. Interestingly, our government does not count the price increases in food and fuel in inflation statistics, which will have greater ramifications down the road.

There’s no denying that higher food prices are already weighing on people’s income. That’s why many people, like Smart Investing Daily reader W.W., believe that we shouldn’t be wasting corn on fuel.

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

But there’s a difference between food corn and feed corn. Feed corn is what corn-based ethanol is being made from. Feed corn is what’s fed to livestock, not people.

As I noted in Tuesday’s article, it’s not clear how much acreage has been removed from food production to be used to plant feed corn specifically for ethanol production, though I am sure that this has happened at least on some level.

As to W.W.’s other comment, it’s true. Ethanol can be harmful to some engines, mostly smaller engines like those on boats. But for cars, most engines can run on up to a 10% blend of ethanol without any harm coming to the engine, and without any modifications needed.

But let’s move on to B.B.’s questions, and let me clarify our current stance on investing in ethanol.

Yesterday’s announcement from President Obama set up the lofty goal of mandating all cars purchased by federal agencies after 2015 be alternative fuel vehicles. This means, hybrids, electric vehicles, natural gas vehicles and flex fuel vehicles (cars that run on a high blend of ethanol or other alternative fuel).

That sent some ethanol producers higher, but it’s clear that Obama favors electric vehicles, as he wants 1 million electric vehicles on the road by 2015.

In short, the ethanol industry needs some more support.

At least, this is what Poet CEO Jeff Bruin told the Senate Agriculture Committee, as per Reuters. Poet makes cellulosic ethanol, which is where the biofuels industry is headed at an aggravatingly slow pace.

Things like subsidies and blending targets are coming under scrutiny from Congress. The House of Representatives passed legislation that rolls back the EPA’s decision to raise ethanol blends from 10% to 15%. Reuters also reports that other proposals are seeking an immediate end to the 45-cent per barrel subsidy that ethanol currently has.

Combine this uncertain future with high feedstock and fuel prices and ethanol has an uphill battle to remain competitive.

To speak plainly, even though I think we should — as a country — be using ethanol as an alternative fuel, it’s not a home-run investment like it was six years ago.

The 18 million barrels of ethanol inventory could not replace oil one-for-one should import supplies be pinched. We have a Strategic Petroleum Reserve for that, and it’s filled to the brim with 727 million barrels of oil, enough to last us about 38 days if oil production and imports completely dried up.

According to the Renewable Fuels Association, the U.S. has 204 ethanol refineries in operation producing some 13.67 billion gallons a year. There’s a further 522 million gallons of production capacity under construction. How quickly this extra capacity will be brought on line depends on demand and the cost of production.

If producers lose their subsidies you can expect a lower number to come on line.

As far as your farm, B.B. — best of luck to you. There was a 39-acre farm down the road from me that just sold… but there are plenty more where that came from. And from a quick search on Realtor.com in a couple of the major corn-producing counties in Michigan, prices are being reduced on farms or ranches for sale at nearly every price point, except the very lowest, if there were any listings at all.

Editor’s Note: If you don’t mind making money at the U.S. government’s expense, I urge you to read the following Investigative Report immediately. It will make you mad as hell. It could also make you very rich, very soon. Get all the details in this exclusive investment report.

About the Author

Sara is Managing 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. Most recently, Sara co-authored a book with Sandy Franks called, Barbarians of Wealth.

As Senior Research Director, global correspondent and managing 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.

The European Central Bank is facing a true dilemma with its upcoming interest rate vote. On the one hand, the Bank is cognizant of the rising rate of inflation in certain economies comprising the 17-member Eurozone of countries, while on the other, it is aware of the pressures the so-called “periphery” nations face as they deal with the ongoing credit crisis.

For ECB President Jean-Claude Trichet and the governing council which votes on interest rate actions, the task before them is straight-forward enough – implement an interest rate policy that meets the needs of the Eurozone. The trick however, is understanding exactly what meets the needs of the entire region.

European Central Bank

Here’s the thing. Inflation is growing at an alarming rate in some Eurozone economies and under ordinary circumstances, the course of action would be simple – hike rates to make borrowing more expensive. This standard central bank response is the tried and tested method of reigning in spending and reducing the rate of growth back to a more acceptable level.

The problem confronting the ECB of course, is that inflation is not uniform across the Eurozone and while some countries are experiencing rapid growth, others are struggling with high debt and weak growth. Increasing interest rates at this time could further reduce economic activity and potentially tip countries such as Spain and Portugal into insolvency.

Because raising interest rates increases the risk of default for those countries already on the bubble, the Bank has no choice but to formulate a policy that deals with the needs of all member nations when it makes its announcement on Thursday.

Actually, no, the ECB must avoid the temptation to be all things to everyone.

By attempting a weak, overly-accommodating policy, the Bank will simply worsen the situation across the board. For those countries with inflation approaching twice the targeted level of two percent annual growth, a strong message is needed now to show the bank is serious about tackling inflation. Anything less will simply allow inflation to continue. After all, when forced to endure bitter medicine, best to take enough to do the job properly rather that taking half-doses over an extended period.

For the peripheral nations, it is true that a rate hike will be painful and could even force the more perilous nations to default. However, if Portugal and Spain are indeed fated to go the way of Greece and Ireland and are ultimately forced to appeal to the EU for financial assistance, then let’s cut to the chase and do it now and eliminate further speculation. Allowing the entire economy to suffer rather than limiting it to the weakest economies is a fool’s game that will actually lead to greater overall suffering, extended over a longer period of time.

It appears that the ECB will opt for the decisive action route when it releases its updated interest rate policy this Thursday. Lat month, a statement from the Bank warned that “strong vigilance” was needed to deal with inflation and Trichet repeated the stance in subsequent comments. Thus, it seems that a rate hike is very likely later this week and this is already leading to speculation of a strengthening euro.

Scott Boyd is a currency analyst at OANDA and blogs on MarketPulse FX.

(http://forexblog.oanda.com/20110405/ecb-expected-to-raise-interest-rates-this-week/)

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.

By Russell Glaser

The US dollar rallied across the board after Moody’s slashed the credit rating of Portugal. The lone exception is versus sterling following a significantly stronger than expected services PMI. The pound is by far the strongest performer during European trading. China also raised interest rates 25bp. Market participants will be turning towards the US with the release of the ISM-Non Manufacturing PMI and the Fed meeting minutes.

After Moody’s Investors Service downgraded the sovereign credit rating of Portugal the euro slumped while the dollar rallied. The credit rating was lowered to Baa1 from A3 and Moody’s says the European peripheral nation could face a further drop in its credit rating. The move by Moody’s does not come as a big surprise as this brings Moody’s in line with Fitch Ratings who downgraded Portugal on April 1st. Following the downgrade the euro slumped to a daily low at 1.4158 after opening at 1.4192. Versus the Swiss franc the EUR/CHF moved as low as 1.3053 from 1.3112 and is now trading at 1.3094.

A stronger than expected UK services PMI brought strong bids to sterling. The survey rose 57.1 in March from 52.6 in February and the GBP/USD climbed to 1.6249 from 1.6116 before settling back at 1.6225. The pair looks on its way to the next resistance level at 1.6400.

The Australian dollar is off its all-time high for the second consecutive day. The declines come following the RBA holding interest rates steady coupled with a sharp drop in the trade balance. During the month of February the country was a net importer as the trade balance fell to a -0.21B deficit from a 1.43B surplus. Adding to the Aussie dollar’s misfortune was this morning’s Chinese interest rate hike. While monetary policy tightening was expected and largely priced into the market it remains a setback for Australia as China is Australia’s largest trade partner and has a 23.1% share of Australian exports. A vast majority of these exports are mining products such as iron ore and coal. Traders may find viable entries long into the AUD/USD at the 1.0250 support level off of the February high.

This afternoon traders will be following the ISM Non-Manufacturing PMI at 14:00 GMT. Expectations are high for the report that could show the seventh consecutive rise in the data. Fed meeting minutes are also due out at 18:00 GMT and may show further disputes between the hawks and the doves over US monetary policy.

The EUR/USD may decline further as Thursday’s ECB policy decision nears. A retracement target from last week’s low to yesterday’s high comes in at 1.4115. Below that stands the low from last Friday’s payrolls release at 1.4060. To the upside the 1.4280 level should cap any short term gains.

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

As expected, the Reserve Bank of Australia held rates steady at 4.75% in light of the natural disasters in the region and RBA Governor Glenn Stevens will speak later today regarding future Australian monetary policy. In the New York session, traders will be looking for positive results from the ISM services survey and the previous Fed meeting minutes.

Economic News

USD – Federal Reserve in Focus

In quiet trading yesterday the dollar was mixed as a lack of any large scale news events kept the majors in tight ranges. In a closely followed speech late yesterday, Fed Chairman Ben Bernanke said policy makers must follow inflation closely in order to distinguish increasing costs driven by rising commodity prices that are not temporary in nature. Bernanke also noted that if inflation expectations remain well anchored and commodity prices do not continue to dramatically rise, then the increase in inflation should be only short-term. The Fed Chairman also noted that if inflation expectations are higher than forecasted the Fed would need to respond to maintain price stability.

Bernanke’s speech is important as Fed members have recently come out in opposition to the loose monetary policy the Fed has enacted. The public comments have stirred a debate in the FX markets as to when the Fed will begin to tighten monetary policy which would be a catalyst for the greenback.

Today’s release of the last Fed meeting minutes will help to shed light on the previous comments for the US economy and monetary policy which has become a major focus in the FX markets. Also due to speak today is Minneapolis Fed President Kocherlakota. His last comments were more hawkish than usual and spurred a round of dollar buying.

The ISM Non-Manufacturing PMI will be released and is expected to show continued improvement in the US economy as the survey may come in with its seventh consecutive gain. Forecasts are for a rise to 59.8 from 59.7. An ISM report higher than forecasts would be dollar positive.

EUR/USD support is found at the rising trend line off of the January low at 1.4070, followed by last week’s low at 1.4020 and 1.3860. Resistance comes in at Sunday night’s high of 1.4270 followed by the January 2010 high at 1.4580.

EUR – Traders Await ECB Rate Decision

The euro traded in a defined range yesterday as traders are awaiting the ECB rate decision on Thursday which will provide future direction for the euro. European PPI m/m came in above expectations at 0.8%. The previous month’s inflationary data were reduced to 1.3% from 1.5%. Expectations were for a rise of 0.7%.

Yesterday the EUR/USD moved as high as 1.4268 in early Asian hours but quickly fell back and closed the day down at 1.4192. The EUR/CHF was off its 5-week high at 1.3112 from 1.3150. The EUR/JPY was unchanged at 119.72.

Market participants are split as to the severity of the interest rate increases to come in the EU. In a speech yesterday, ECB President Jean-Claude did not expand on the intentions of the central bank. Traders will need to wait until Thursday to know if the expected 25 bp interest rate will be a one off adjustment or the beginning of a tightening cycle with multiple adjustments to the Minimum Bid Rate.

A series of interest rate increases would help to extend the euro’s appreciation and could take the EUR/JPY higher to the 128 level.

JPY – RBA Keeps Interest Rates on Hold

As expected, the Reserve Bank of Australia held rates steady at 4.75% in light of the natural disasters in the region. RBA Governor Glenn Stevens will speak later today regarding future Australian monetary policy. According to Australian bank bills, there is a 32% chance Stevens will keep the interest rate steady for the remainder of the year.

The Aussie dollar is off its all-time high of 1.0415 as increased investments in mining operations have increased growth expectations, though forecasts may have been cut following the Queensland flooding and natural disaster in Japan. Risks to the Aussie dollar’s climb include the reluctance of the RBA to raise interest rates, a pullback in commodities prices, or the tightening of monetary policy by the US.

Following the interest rate announcement, the AUD/USD dipped but held at the 1.3010 level. Resistance is found at the all-time high at 1.0415. Support levels are 1.0250 and 1.0200, followed by a 38.2% retracement of the March move which comes in near 1.0150.

OIL – Crude Oil Remains Above $108 a Barrel

The price of crude oil came off a 2-1/2 year high during Asian trading, despite continued violence in the Middle East and positive US data released last week. At the close of the New York session yesterday oil was trading close to $108.50 a barrel, its highest price since August 2008. The commodity is currently trading steadily at just over $108.00.

Analysts attribute the spike to a combination of global factors, including violence in Libya and a positive US jobs report released last week that has increased demand in the world’s largest oil consuming country.

Turning to today, a slow news day will likely have little impact on the price of oil. Traders will still want to pay attention to the US ISM Non-Manufacturing PMI, scheduled to be released at 14:00 GMT. A positive figure will likely continue to increase demand in the US and further drive up oil prices. In addition, any escalation in violence in Libya is likely to increase supply side fears among investors and could lead to a spike in prices.

Technical News

EUR/USD

Technical indicators are mostly showing this pair in neutral territory, meaning that no major price shift is expected in the near future. That being said, it looks like a bearish cross may be forming on the 8-hour chart’s MACD. Traders will want to take a wait and see approach today to see if other indicators will show support for a downward correction.

GBP/USD

The daily chart’s Slow Stochastic appears to be on its way to forming a bearish cross. In addition, the Williams Percent Range on the 8-hour chart looks like it is inching toward overbought territory. Traders will want to pay attention to these two indicators. If they continue on their current trend, downward movement may occur.

USD/JPY

The 8-hour chart’s Relative Strength Index has moved into overbought territory, indicating that a downward correction may be on the horizon. In addition, the daily chart’s Slow Stochastic has formed a bearish cross. Going short may turn out to be a profitable choice for this pair today.

USD/CHF

Most technical indicators show this pair trading in neutral territory, meaning that no major price change is forecasted at this time. This could all change very quickly though. Traders will want to pay attention to the hourly charts for any signs of a possible shift for this pair today.

The Wild Card

EUR/CHF

The 8-hour chart’s Relative Strength Index is approaching the overbought zone, signaling that a downward correction may occur today. This theory is supported by the Stochastic Slow on the daily chart, which has formed a bearish cross. This may be a great time for forex traders to open up sell positions for this pair before the downward breach takes place.

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.