Month: May 2011

Source: ForexYard

Looming over the current ECOFIN meetings in Brussels, Belgium, is the arrest of Dominique Strauss-Kahn (also referred to by the media as DSK) regarding an alleged attack on a hotel maid while on a trip in New York City. Strauss-Kahn is currently serving as the Managing Director of the IMF and is a member of the Socialist Party of France. Many forex traders had assumed the current finance meetings would provide perspective into the region’s debt woes, but this media distraction has many large investors looking for safety instead of higher yields, creating a range-trading behavior for the EUR.

Economic News

USD – US Dollar Mixed as Traders Eye Manufacturing and Housing Data

The US dollar was trading with mixed results yesterday after traders began to hedge on their euro positions given the recent economic news vacuum in the euro zone. The Strauss-Kahn affair has overshadowed much of the positive comments coming out of the ECOFIN meetings and for that reason traders have tried to balance between European debt woes and interest rate differentials. This dynamic has generated a range-trading pattern for several major currencies, including the dollar.

Economic figures out of the United States have also been partially behind this flatter movement. Monday’s TIC long-term purchases figure was well below expectations, as were Tuesday’s housing figures. But yesterday’s flattening out in US oil stockpiles may have given a short bump to the greenback as traders assumed higher consumption by industry ahead of today’s manufacturing figure out of Philadelphia. The Fed’s recent policy minutes also signaled healthier growth and relatively hawkish statements about interest rates.

As for today, the euro zone remains absent during the week-long ECOFIN meeting, but the US is scheduled for a heavy news day. To kick things off, the US Department of Labor will publish its weekly unemployment claims figure at 13:30 GMT which may show fewer applications for unemployment benefits than were seen last week.

Shortly thereafter will be the publication of important housing figures followed by the Philly Fed Manufacturing Index and Mortgage Banker Association’s report on mortgage delinquencies. All in all, the USD should see some heavy volatility today, but if traders continue to hedge while awaiting more news out of Europe, the dollar may continue to see mixed results.

EUR – EUR Range-Trading as Investors Await Economic News

The euro rose has been trading flat this week as economic news, mixed with some political drama, has had investors balancing between debt concerns and interest rate differentials. Soft data out of the American economy this week has held many traders leery of seeking safety in the greenback, whereas the current absence of news out of Europe has many others skeptical of healthy movements towards handling the current debt crisis. The result has been this week’s odd range-trading pattern for EUR pairs.

Looming over the current ECOFIN meetings in Brussels, Belgium, is the arrest of Dominique Strauss-Kahn (also referred to by the media as DSK) regarding an alleged attack on a hotel maid while on a trip in New York City. Strauss-Kahn is the Managing Director of the IMF and a member of the Socialist Party of France. Many forex traders had assumed the current meetings would provide perspective into the region’s debt woes, but this distraction has many large investors looking for safety instead of higher yields, creating a range-trading behavior for the EUR.

As for today, the euro zone will be absent from the calendar again as the ECOFIN meetings continue. Hawkish statements could hint towards a tightening monetary policy in the near future, but traders should be wary of a return to risk aversion should the meeting produce less-than-stellar commentary. Major housing and manufacturing news out of the United States today may help provide some needed commentary on this week’s soft US data, but any continuation of such weakness may further keep the greenback in a holding pattern.

JPY – JPY Moves Bearish after GDP Shrinks 0.9%

The Japanese yen (JPY) began trading in a bearish direction against most of its currency rivals yesterday after the Bank of Japan (BOJ) released data which showed the Japanese economy contracting by 0.9% so far this quarter. After a week of ups and downs, the Japanese yen now appears to be in a weaker position and is taking a beating by traders in today’s early hours. The dominant stance of risk aversion overarching this week and last had many traders moving towards the yen until yesterday. The dominant stance now appears to be a flight to other safe-havens like the Swiss franc and, in many instances, the Scandinavian kroner.

As of this morning, the USD/JPY has moved up over 50 pips from 80.00 to 80.53. Japan’s tertiary activity was published yesterday morning and also revealed a severe downturn of approximately 6.0%. This morning’s GDP figure was another bearish marker on the currency and so far traders are moving away from their JPY investments as a result. As with the rest of this week, market news released out of the US today will likely be the driving force behind JPY values, though, and traders will definitely want to consider what effect today’s GDP data will have on the island economy.

Crude Oil – Crude Oil Prices Jump after US Stockpiles Show No Growth

Oil prices jumped above $100 a barrel this morning following a report out of the United States which revealed zero growth in their weekly stockpile data. These US oil stockpile reports had shown growth of over 3 million barrels a week for the past two consecutive weeks. The sudden halt of this inventory growth had a sharp effect on the value of Crude Oil as its price jumped above $100 a barrel shortly after the report was published.

Whether oil traders decide to respond with a bearish push on oil prices is yet to be determined, especially considering the strangeness of the inverse relationship to USD values this week. The greenback’s decline yesterday may have a delayed effect today and oil traders may see the price bouncing even higher if that is the case. The Strauss-Kahn affair in the US is also creating some instability in trading as it masks the commentary emerging from the current ECOFIN meetings. Commodity prices may therefore receive a bump in the rest of this week’s trading if this rumor mill doesn’t die out.

Technical News

EUR/USD

The Williams Percent Range on the 8-hour chart indicates that this pair has entered overbought territory, signaling a downward correction is likely to take place in the near future. This theory is supported by the Stochastic Slow on the same chart, which has formed a bearish cross. Traders may want to go short in their positions today.

GBP/USD

The Relative Strength Index on the daily chart has dropped into the oversold zone, which is typically a sign of an impending bullish correction. In addition, the Williams Percent Range on the same chart is currently below the -80 level, lending further support to the theory of future upward movement. Traders may want to go long for this pair today.

USD/JPY

The typical range trading on the hourly chart continues. The daily chart RSI is floating in neutral territory. However, there is a fresh bearish cross forming on the 4-hour chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.

USD/CHF

The USD/CHF has gone increasingly bearish in the past few days, and currently stands at the 0.87670 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 8-hour chart’s Williams Percent Range signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

The Wild Card

EUR/GBP

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the 8-hour chart’s Williams Percent Range. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

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.

The British pound (GBP) jumped back this afternoon following the morning’s publication of retail sales figures out of the United Kingdom. Expectations were for a rise of approximately 0.9% but the actual results came in slightly higher at 1.1%.

As a result of this report, traders jumped back into the pound in short-term trading, pushing the value of the GBP back to today’s opening price after a morning drop of 50 pips versus most of its primary currency pairs.

Helping this movement back into the GBP was a better-than-forecast industrial order expectations report. Published at 12:00 GMT, the industrial orders data showed a quickened increase in the industrial sector from the previous month’s faltering.

Today’s news highlighted a relatively strengthened British economy, though many remain skeptical of growth figures given their fragile nature these past several months. For the day ahead, prior to this week’s close, the British pound appears to be in a position to continue gaining. As of late-afternoon trading, the GBP/USD has pushed beyond its opening price by about 15 pips and does not appear to have much standing in its way.

ead more forex trading news on our forex blog.

The Japanese yen (JPY) began trading in a bearish direction against most of its currency rivals yesterday after the Bank of Japan (BOJ) released data which showed the Japanese economy contracting by 0.9% so far this quarter.

After a week of ups and downs, the Japanese yen now appears to be in a weaker position and is taking a beating by traders in today’s early hours. Adding to this bearish sentiment is also the revised industrial production figure which was released this morning slightly lower than expectations.

The dominant stance of risk aversion overarching this week and last had many traders moving towards the yen until yesterday. The dominant stance now appears to be a flight to other safe-havens like the Swiss franc (CHF) and, in many instances, the Scandinavian kroner (i.e. SEK, NOK, DKK).

As of this morning, the USD/JPY has moved up over 80 pips from 80.00 to 80.88. Japan’s tertiary activity was published yesterday morning and also revealed a severe downturn of approximately 6.0%.

This morning’s GDP figure was another bearish marker on the currency and so far traders are moving away from their JPY investments as a result. Should tomorrow’s monetary policy statement give further dovish statements, the yen may find itself losing value against its primary currency rivals prior to this week’s close.

Read more forex trading news on our forex blog.

Panama City, Panama:

Dear Live and Invest Overseas Reader,

I was reminded of the simplicity of investing in a condo-hotel unit during my most recent trip to Medellin, Colombia, where I toured such a unit in a completed hotel. This unit is currently available directly from the developer, as the original buyer couldn’t complete the sale. The hotel is already up and running, making this particular property especially attractive. The developer wants to move it quickly, of course…and the buyer would be investing in a very turn-key asset. My Marketwatch members will hear more about this apartment and other current rental investment opportunities in Medellin next week.

Meantime, another interesting condo-hotel opportunity is currently available in Panama City. I alerted Marketwatch members to this project a year ago, when it was being offered at launch prices. The project is still in pre-construction sales, but prices have been increased as sales have been made. Still, this is a good opportunity for someone looking for a relatively hassle-free real estate investment in this market.

The condo-hotel concept is straightforward. You buy the unit, and the management company takes care of renting and maintaining the property. The pricing can seem confusing. You can’t compare condo-hotel pricing in any market with regular retail apartment pricing in that market. You’re not buying a simple apartment.

You’re buying a furnished hotel unit, including standard hotel furniture, fixtures, and systems, including, for example, television and phone systems, sometimes concierge systems, mini-bar fridge, etc., meaning, again, that you can’t compare condo-hotel units with regular apartments, even on a per-square-meter basis.

When considering a condo-hotel investment, you have to look at the numbers, specifically the projected yield on the invested amount. And you have to look at the target market for the hotel.

The condo-hotel in Panama that I’m alerting you to here is called Unicorn. The developer behind it has impressed me by putting in place the right mix of location, room product, and amenities. The projected net yield to owners is in the 10% to 11% range using conservative room and occupancy rates. Generally speaking, you want to get about US$1 of ADR (average daily rate) out of a hotel room for every US$1,000 the room cost to put into service. At that rate, a hotel will make a profit, assuming reasonable operating costs and occupancy rates.

Occupancy rates in Panama hotels have been relatively high the last few years…into the 80+% range for most hotels. Typically, large flag hotels are profitable if their occupancy is at least 65%. Unicorn has used 60% the first year for their projections, rather than the current market occupancies, increasing that rate in their projections to 75% in year three.

Unicorn will target the business traveler with their all-suite hotel. Panama City is a market attracting a large and growing volume of executive travelers who return regularly over some extended period (for an assignment or a particular project). Typically, these travelers like to stay in the same hotel, for convenience, comfort, and familiarity.

Business travelers usually come into town for a day to a week, but longer-term stays for executives in transition can also be accommodated by the design of the Unicorn suites.

The location of the hotel is convenient to the business and banking district, but not right in the middle of it, meaning it’s not as noisy as that part of the city can be during the day.

Unicorn will have typical hotel amenities, including a restaurant with room service, a bar, a pool, a gym, and conference rooms. Everything will be managed through a hotel management company so that owners don’t have to worry about the operations of the hotel or the management of their individual units.

Prices start at US$240,188 for the 47-square-meter suite and US$258,563 for the 50-square-meter suite. All of the 61-square-meter units have been sold or reserved.

Work through those numbers, and you arrive at a per-square-meter price of a bit more than US$5,000. If these were apartments, they’d be overpriced, but, remember, they’re not. They are hotel rooms…furnished hotel rooms with amenities, facilities, and fixtures that you don’t get with an apartment. And you’re buying for investment, meaning the yield projections and how they will be achieved are what you need to compare to other opportunities you might be considering.

In this case, getting a double-digit net yield with no management hassles to worry about yourself is a good deal.

Furthermore, as the project in Panama, where bank financing is available to foreigners, you can get a loan for 70% of the purchase price if you qualify, making the cash requirements for investment even more attractive.

For more details on Unicorn, you can get in touch here.

Lief Simon

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http://www.liveandinvestoverseas.com

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See More of Kathleen’s Special Reports:

• Live & Invest in Panama
  
• Around Asia
  
• The Argentine Vineyard Buyer’s Guide
  
• Panama Without The Sugar Coating
  
• Belize Report & The Belize Starter Kit
  
• Top Health Insurance Options For The Retiree Abroad

By CountingPips.com

Important News Releases – May 19, 2011

01:00 New Zealand consumer confidence index
08:30 United Kingdom Retail Sales
09:00 Swiss ZEW Survey
12:30 United States initial jobless claims/continuing claims
13:45 Eurozone ECB Trichet Speech
13:45 United States consumer comfort index
14:00 United States existing-home sales
14:00 United States Philadelphia Fed Survey
14:00 United States Leading Indicator Index
14:30 Canada BOC Review

Full Economic Calendar

May 18 (Bloomberg) — Diane Swonk, chief economist at Mesirow Financial Inc., talks about the minutes of the April 26-27 meeting of the Federal Reserve’s policy-setting Federal Open Market Committee and the outlook for central bank monetary policy. Fed policy makers began to coalesce last month on a strategy to reverse record monetary stimulus by first ending their reinvestment policy and later raising interest rates and selling assets. Swonk speaks with Mark Crumpton and Michael McKee on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

EURUSD has formed a cycle bottom at 1.4048 on 4-hour chart. Range trading between 1.4048 and 1.4339 would likely be seen in a couple of days. Key resistance is at 1.5339, a break above this level will indicate that the downward movement from 1.4939 had completed at 1.4048 already, then the following upward move could bring price back to 1.4500-1.4600 area. However, as long as 1.4339 resistance holds, the price action from1.4048 is treated as consolidation of downtrend from 1.4939, another fall towards 1.3800 is still possible after consolidation.

Daily Forex Forecast

Stocks held on to most of their earlier gains as investors digested a Fed announcement at 2 o’clock this afternoon. The Fed reportedly said raising interest rates to curb inflation was discussed at its meeting in April, but will not have to start anytime soon.

By CountingPips.com

The US Dollar has been mixed in forex trading today against most of the major currencies on a day with little economic data released from the US. The dollar has lost ground to the New Zealand dollar and the Canadian dollar while gaining against the Japanese yen, British pound sterling and the Swiss franc. The dollar has been virtually unchanged on the day versus the euro and the Australian dollar, according to currency data at the end of the US session.

The US stock markets, meanwhile, had a winning session today with the Dow gaining by approximately 80 points, the Nasdaq increasing 31 points and the S&P 500 up by over 11 points.

In commodities, Oil traded slightly lower to the $99.80 level while gold futures rose by $17.20 to $1497.00 per ounce.

Economic news releases today showed that the US FOMC minutes indicated the Federal Reserve Committee was deliberating on the best timing and procedure to exit their quantitative easing program and zero interest rate policy to work towards more of a  normalization in policies. The QE policy is scheduled to expire in June.

David Song, currency analyst at DailyFx.com, commented on the release saying, “The majority of the FOMC said they favored raising the benchmark interest rate before unwinding its asset purchases, with the group debating a possible exit strategy at the policy meeting earlier this month. However, the Fed went onto say that the recent discussion should not be interpreted as an imminent tightening in monetary policy as the committee continues to see a “moderate” recovery in the world’s largest economy. The minutes revealed that QE3 remains off the table unless there’s a marked shift in the economic outlook, and noted that the first step to normalizing monetary policy would be to cease MBS reinvestment.”

Looking ahead to tomorrow and the important news releases:

01:00 New Zealand consumer confidence index
08:30 United Kingdom Retail Sales
09:00 Swiss ZEW Survey
12:30 United States initial jobless claims/continuing claims
13:45 Eurozone ECB Trichet Speech
13:45 United States consumer comfort index
14:00 United States existing-home sales
14:00 United States Philadelphia Fed Survey
14:00 United States Leading Indicator Index
14:30 Canada BOC Review

The markets moved higher today on the back of a weaker Dollar and stronger oil. Stocks like Chevron and Exxon are surging today, carrying the Dow Jones Industrial Average.