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Oil prices dropped sharply yesterday with the New York Mercantile Exchange session closing just below the $98 price mark. US oil stockpiles rose over 3 million barrels for the second week in a row, marking a significant uptick in American hoarding behavior. The possibility exists that this is a tactic to release excess stockpiles at the start of the American summer in order to push down on gas prices ahead of the driving season.
The US dollar rebounded strongly versus the euro yesterday as traders began to bail out of the region out of fear that euro zone policymakers would fail to meet the Greek debt crisis rapidly enough. The result has been for the EUR/USD to move strongly bearish, with 1.4200 well in reach. Against the pound, the greenback held close to 1.6340, though bullishness in Britain has generated pressure beneath the Cable in anticipation of an uptick.
Yesterday’s widening trade deficit in the United States initially appeared to support the US dollar by assisting in a shift to safe havens. But yesterday evening’s publication of the federal budget balance, which revealed a somewhat diminished deficit, had the effect of leveling the dollar off and caused many investors to evaluate the EUR instead. Such attention brought to light the weakness of Greece and the stark debt conditions which persist throughout the region and this has largely caused a flight to the safety of the greenback.
For today, US retail sales are on tap with an expectation to hold last month’s growth figures steady. The producer price index (PPI) and its complimentary core data are also scheduled for today, with inflation also forecast to hold its current rate of growth. The US dollar has gained from risk aversion, with its own economic fundamentals appearing soft, but today’s stable data may also support further bullishness on the USD.
The euro was holding near a three-week low versus its primary currency counterpart (i.e. USD) yesterday morning, but as the day wore on the 17-nation common currency could bear the weight no longer. As speculators tore into the euro zone with a harsh reaction to the sluggish speed of officials’ handling of the debt woes, the EUR felt the sting and dropped to as low as $1.4210 in later trading hours.
The EUR was not able to hold its recently stable price against the US dollar as regional investors battled over the direction of the 17-nation common currency. Regional bears won the day as the rumor mill chewed on the speculative reports that Greece had already secured a new financial aid package, or that it was planning to exit the euro zone. With both staunchly refuted, traders rapidly moved to safety as the speed of assistance appears to be slow in coming.
As for today, the euro zone will be largely absent from the economic calendar aside from several smaller reports, predominant among them is the ECB’s Monthly Bulletin regarding interest rates. The industrial production figure scheduled for 10:00 GMT also carries the potential to reveal further stagnation in the industrial sector of the region’s collective economy. Such news will likely not be beneficial for the EUR, but any movement back into higher yielding assets could help the common currency find a modicum of support.
The Japanese yen (JPY) has been trading with somewhat mixed results since Friday, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to take losses today as investors appear to be seeking higher yields. The dominant stance of risk aversion overarching yesterday’s environment of optimism has many traders moving towards the yen against the higher yielding currencies like the euro, which dropped to a six-week low during yesterday’s afternoon sessions.
However, the yen was slightly lower versus the US dollar as the pair moved up from previous intervention levels near 80.00. The USD/JPY held steady at yesterday’s low, finding support near 80.30 and moving up towards 80.90 by today’s opening Asian sessions. Japan’s Current Account was published this morning and revealed a sharp downturn in data which may put some pressure on the island currency. Market news released out of the US and Europe today will likely be the driving force behind JPY values, though.
Oil prices dropped sharply yesterday with the New York Mercantile Exchange session closing just below the $98 price mark. US oil stockpiles rose over 3 million barrels for the second week in a row, marking a significant uptick in American hoarding behavior. The possibility exists that this is a tactic to release excess stockpiles at the start of the American summer in order to push down on gas prices ahead of the driving season. Whether it will pay off is yet to be seen.
The value of the US dollar versus the euro in recent trading has pushed towards a three-week high near 1.4200, but oil prices continued to rebound until yesterday afternoon as traders price in an expected boost in consumption as the driving season kicks into high gear in the Northern Hemisphere. With yesterday’s sharp downtick during the later sessions, and this morning’s continuation of that movement, traders appear likely to see oil reaching a bit lower as this week comes to an end – though a return to riskier assets could lift oil prices one more time if the market deems it worthy.
The pair has recorded much bearish behavior over the past several days. However, the technical data indicates that this trend may reverse soon. For example, the 8-hour chart’s RSI signals that a bullish reversal is imminent. Going long with tight stops might be a wise choice.
The pair has been range-trading for a while now, with no specific direction. The daily chart’s Slow Stochastic is providing us with mixed signals. Oscillators on the 4 hour chart are not providing a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.
The USD/JPY has gone bullish in the past 2 days, and currently stands at the 81.15 level. The daily chart’s Slow Stochastic indicates that the currency cross will rise further today. However, the 8-hour chart’s Stochastic Slow signals that a bearish reversal will take place. Entering the pair when the signs are clearer seems to be the wise choice.
The USD/CHF cross has seen bullish movement over the past 2 days. However, it seems that this trend may be coming to an end. The RSI on the daily chart shows the pair floating in the overbought region, indicating that a downward correction could happen in the near future. Going short with tight stops might be a wise choice.
The Williams Percent Range on the 8-hour chart is in oversold territory. In addition, the daily chart’s Stochastic Slow has formed a bullish cross, indicating upward movement is likely to occur. Now may be a great time for forex traders to open up long positions before the upward breach occurs.
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.
GBPUSD has formed a cycle top at 1.6516 on 4-hour chart. The fall from 1.6516 is now treated as consolidation of downtrend from 1.6745. Another fall would likely be seen later today, and target would be at 1.6150 area. Key resistance is at 1.6516, only break above this level could trigger another rise towards 1.7000.
The markets were again blasted by a sharp spike in the Dollar. For every tick higher in the Dollar, the markets drop equally.
By CountingPips.com
The United States trade deficit widened by more than expected for a second consecutive month in March, according to a release by the Commerce Department today. The U.S. trade deficit in goods and services increased by 6 percent or $8.7 billion as the deficit leveled at $48.2 billion in March following a revised deficit of $45.4 billion in February. The March data represents the highest deficit level since June of 2010.
The trade data surpassed market forecasts that were expecting a deficit of approximately $47.0 billion for the month.
The U.S. had a total of $172.7 billion worth of exports in March which was an increase of $7.7 billion from February’s total. March also saw an increase in imports with a 
total of $220.8 billion worth of imports compared with $210.4 billion in February for a increase of $10.4 billion for the month.
The politically sensitive U.S. trade deficit with China edged lower in March with a $18.1 billion shortfall after a deficit of $18.8 billion in February. Other notable U.S. trade deficits in March were the deficits with the European Union at $9.0 billion, Mexico at $6.2 billion, Japan at $6.1 billion and OPEC at $10.8 billion.
The U.S. trade surpluses with other countries for March included Hong Kong at $2.7 billion, Australia at $1.1 billion and Singapore at $0.9 billion.
Forex: US Dollar stronger in trading today. Stocks, Commodities lower.
The U.S. dollar has been on the rise today in the forex markets while the American stock markets and commodities have traded lower. The dollar has advanced versus the euro, Canadian dollar, New Zealand dollar, Japanese yen, Swiss franc, British pound sterling and Australian dollar on the day, according to currency data by Oanda.
The U.S. stock markets had a negative session so far today with the Dow falling by 130 points, the Nasdaq decreasing by over 26 points while the S&P 500 fell by over 15 points at the close of trading.
In commodities, oil has traded lower by $4.58 or almost 5 percent to $99.12 per barrel while gold has fallen by $12.40 to trade at the $1,504.20 per ounce level.
The oft-traded EUR/USD has fallen sharply back towards 1.42 during today’s American market sessions after investors expressed concern that euro zone policy makers would not be able to respond rapidly enough to debt concerns in Greece and Portugal.
According to a report in Reuters, debt-laden countries in the euro zone are approaching a critical decision point and there is significant fear that regional officials will fail to meet that challenge in a timely manner. The euro/dollar, as a result, was seen pushing below its recent support at 1.43 to a current price just above 1.4210. If the pair breaches its psychological barrier at 1.42, forex traders could see a quick sell-off that pushes the pair into the upper 1.30s.
Rumors of an additional $87 billion aid package to Greece surfaced recently, which granted the EUR some effervescence in this week’s early trading. Greek officials have staunchly denied the rumor, however, dispelling any belief that the pair’s rise was sufficiently supported by fundamentals. This afternoon’s plummeting value, seen in this light, is indeed backed up by what analysts are viewing among the technical and fundamental figures.
Should euro zone officials continue to deliberate over further aid to these ailing economies, the EUR may find itself in a sharply bearish downturn versus its primary currency rivals. A downturn in French industrial production last month, alongside similar reports from Britain and Germany, has also caused a stir as many view the industrial and manufacturing sectors of the euro zone to be faltering this quarter.
Has your morning cup-o-Joe gotten more expensive lately? Check your online trading platform to find out why. Coffee prices surged to a 34-year high last Tuesday, climbing over $3 a pound before meeting resistance.
Coffee prices behave in interesting ways. Whereas many commodities will respond to price jumps with shifts in demand and consumption, coffee behaves more like a narcotic. No matter how high prices go, consumers are still willing to dish out the cash to get their next fix.
As a socially acceptable addiction, the caffeine from coffee and resultant energy boost due to its consumption has become a societal norm in the business world among most countries. There will be variations between nations which prefer tea over coffee, but those which down that glass of hot java each morning have no doubt felt the pinch these past several weeks.
Recent consumer reports have noted that the price for coffee at most cafés in Europe and the United States have been raised by $0.10 to $0.30 per cup. The size of each price hike was not just associated with coffee, however. Rising sugar prices have also been passed on to consumers since sugar packets are often given as complimentary to coffee purchasers.
Look at your online trading platform, today’s price for one pound of coffee is $2.75 (coffee prices are reported in US cents/lb.). Now, sugar prices have fallen significantly since touching their recent high of $0.35 a pound, so the relative price of sugar may have less impact than it did three months ago. Nevertheless, rising prices among these basic food-stuffs has caused many morning commuters to dole out additional funds for that energy-granting cup of coffee.
Note from Managing Editor Sara Nunnally: In response to Monday’s article on retirement and inflation, we received this letter from Smart Investing Daily reader N.H.
I was just reviewing some prices of a number of things circa 1934, when I was 5, and old enough to remember a number of them personally. By my reckoning, today’s dollar buys only about what six cents would buy then (on average). When it comes to hospitalization it’s about two cents, using comparable procedures, such as appendectomy or tonsillectomy. For those that are not concerned about inflation, pay attention.
Inflation is like another tax; one that many folks don’t even know they’re paying. It can takes years to see a big differences in prices. But lately, it seems like inflation is speeding up in certain areas. N.H. mentioned healthcare, where prices have certainly climbed out of control. But other areas are in food and energy prices — things that people buy every day.
Back in the 1930s, a dozen eggs went for 29 cents. Potatoes were a penny a pound, and a quart of milk cost you a dime. Today, those same items will cost you about $2 a dozen, 79 cents per pound, and about $1 per quart, respectively.
That’s some serious inflation, and things could get worse.
We’ve already seen governments overthrown because of skyrocketing food prices. This is the beginning of a global food crisis. That’s why I want to share with you part of Kent Lucas’ of Safe Haven Investor March Issue. He explains why food prices are so high, and what investors can do about it.
Read on…
Are you prepared to pay three, four or even five dollars for a loaf of bread? How about five dollars for a box of cereal?
Better yet, is your portfolio prepared for the shake-up that lies ahead?
“The Great Food Crisis of 2011” is here. I did not invent that hyperbolic phrase. That is what the highly respected magazine Foreign Policy is calling the rampant food inflation that is causing problems worldwide.
The British government just completed a two-year study involving 400 experts from 35 countries to assess the global food situation. The results are scary. See for yourself:
By 2050 global food supplies will not be sufficient to feed an expanding population. The UN estimates that food production must rise by 70 percent to feed a world population of more than nine billion in 2050. [But] rising demand and surging global population coupled with increasing resource conflicts over land, water, and energy will hamper food production.
The United Nation’s Food and Agriculture Organization (FAO) states that the “double whammy of high food prices and the global economic slump pushed an additional 115 million people into poverty and hunger.” Over 1 billion people go hungry every day and the figure is rising.
Why? It is a combination of factors. In part, Mother Nature is to blame. Couple a handful of devastating floods and a widespread drought with rising demand and the problem grows exponentially. The result is higher food prices that fewer people can afford.
The supply-and-demand economics suggest long-term imbalances. We have a real crisis when we combine the dismal long-term outlook with short-term supply shocks caused by the forces of Mother Nature and, arguably, climate change. It is time to be prepared.
Wheat prices are nearing all-time highs in Britain and France. Governments around the world are stockpiling grains. They are stashing away millions of tons of essential commodities to prevent social unrest and to attempt to contain inflation.
This buying frenzy is adding to the pricing pressure.
Countries across the globe, including the major wheat exporter Russia, have banned exports to control prices. But that is causing prices to rise even further as businesses and consumers stock up.
China has implemented serious policy and pricing measures to keep inflation under control and to keep its suffering rural citizens at bay. But Chinese insiders tell me “the natives are getting restless.”
Last year, with floods in China and Pakistan, food prices in Asia surpassed the extremes of 2007-2008. For example, the critical food staple rice shot up from $300/metric ton to $1,100/metric ton — a surge of over 250%.
The shocking stories are everywhere.
Here at home, we’re just starting to feel the pinch. But for most of the world, the pain and suffering is at extreme levels.
In many developing countries, the high cost of basic food staples is exceptionally dangerous as the world’s poorest citizens spend close to 75% of their miniscule income on food! A 15% increase in food prices is flat-out devastating to these regions.
(Don’t forget, you can sign up for Smart Investing Daily and to recieve all of regular editors Sara Nunnally and Jared Levy’s easy-to-understand articles.)
“Bring us sugar!” was the chant by thousands of Algerian rioters just a few weeks ago. Sugar is a cheap, popular source of calories in many developing countries and the price of sugar is now at 30-year highs.
When I mention rioting, Egypt immediately comes to mind. But that country isn’t the first. Actually, more than 60 food riots have occurred in more than 30 countries in the past several years! And in the past few weeks, there have been government protests in Tunisia, Algeria, Morocco and Yemen — all in part because of rising food prices.
But when severe riots and protests bring down a country as relevant as Egypt, that’s different. When the situation in Egypt threatens Mideast stability and consumes our daily news, we know we have a problem on our hands.
The recent riots were not only about dethroning Hosni Mubarak, the 30-year president. The real catalyst was the poor standard of living and the leader’s reluctance to improve Egyptians’ daily lives. At the core of that discontent is, of course, food inflation.
And the same kind of anger is brewing in many other Middle Eastern countries. Who knows how far social unrest will spread in the Middle East? But the unsettled political climate in Egypt and in many other countries is worrisome and is likely to continue this year.
Prices will rise even further in 2011. There is no relief in sight for food inflation.
The bottom line is the demand for food is rising faster than food can be produced.
That’s where this month’s Safe Haven stock pick comes in. This leading company represents a safe harbor during a raging storm. Its agricultural products are critical to increasing the supply of key crops, and its seeds and biotech chemicals help farmers grow larger and better crops.
The company is DuPont, or officially E.I. du Pont de Nemours & Company (DD:NYSE). DuPont has been around since 1802 and has evolved into the leading global science and chemical company. In a nutshell, DuPont makes the world a better, healthier and safer place through science, innovation and chemistry.
When it comes to solving the needs of rapidly developing economies, DuPont is very well positioned. The company gets 40% of its revenues from developing countries and just 30% of its sales from North America. Better yet, in 2010, developing markets sales grew 24%.
DuPont’s agriculture & nutrition segment is the largest and most important. Essentially DuPont focuses on improving “global nutrition through higher crop yields and healthier foods.”
In the context of the food crisis, this business has potential for double-digit sales growth.
Within this segment, there are three key businesses that are tied to the global food supply: crop protection, Pioneer seeds, and land management (i.e. herbicides).
Essentially, DuPont provides high-yielding hybrid seeds, herbicides, insecticides and fungicides for critical crops such as corn, soybeans, cotton and wheat. Sales for this division were up 13-14% in the fourth quarter of 2010 with seed volumes up 25%, indicating a strong start to 2011.
DuPont spends close to 60% of its R&D budget on the agricultural & nutrition segment, which represents just one-third of sales. Yes, the research is complex, dealing with seed genetics and plant DNA, yet the spending shows the company understands the importance and opportunity regarding the future of food and that its products are critical to global agricultural viability.
Management’s financial commitment to this division tells me DuPont knows global food shortage risks are real and the “the Great Food Crisis of 2011” is the start of a much bigger problem.
Weather plays a pivotal role in annual crop production, but it is also affected by fertilizers, biotech seeds and crop protection chemicals.
That’s where DuPont puts its focus.
Global product penetration is low and crop yields in the U.S. (where hybrids are commonly used) are usually much higher when compared to other countries. That tells us there is a lot of room for global yield gains through hybrid seeds and crop protection products.
As more farmers worldwide use these products global yields will rise. And as DuPont continually improves the effectiveness of these seeds, herbicides and insecticides, crop yields will rise.
That’s how the food crisis will get solved… eventually. Having fewer mouths to feed is out of our control in the short run. But using biotech seeds and certain chemicals is a proven (and safe) way to increase yields.
That is why I like DuPont as a global Safe Haven investment. It is at the center of the primary solution to the long-term food crisis. Demand for DuPont’s agricultural technologies will always be high.
Owning this stock is a great way to profit from the global food crisis, a serious problem that is getting worse, not better.
I hope you enjoyed this piece of Safe Haven Investor. The full issue is available online to subscribers.
Before I let you go, I wanted to tell you one other thing that Kent mentioned about DuPont…
He said, “The company has always paid a dividend — for 426 consecutive quarterly periods since 1904. And during the crisis of 2008, DuPont did not cut its dividend, which wasn’t the case for many other large, economically sensitive companies.”
Dividends are a big part of Kent Lucas’ investment philosophy. They are a great way to boost your portfolio gains just by being an investor.
Learn more about Kent Lucas and Safe Haven Investor.
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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.
