Dec. 7 (Bloomberg) — Simon Lack, founder of SL Advisors, talks about his equities, fixed-income and currencies strategy. Lack also discusses profits in the hedge fund industry with Owen Thomas on Bloomberg Television’s “Countdown.”
North Dakota Edges U.S. Closer to Energy Independence… and Double-Digit Returns in a Flat Market
North Dakota Edges U.S. Closer to Energy Independence… and Double-Digit Returns in a Flat Market
by Steve McDonald, Investment U Contributing Editor
Sunday, December 4th, 2011
Up first, the EU maybe offering the greatest bond trade of the decade, maybe the century.
How’s earning about 50% on a German or French bond?
Without getting too technical, I know most folks don’t really understand how bond markets function; here is why this is almost a guarantee.
If the euro and the EU are to survive, France and Germany are going to make it happen, it’s that simple. In order for them to make it happen their interest rates and debt levels have to go up.
When that happens, their bonds will drop in value. So, short the French and German 10 year bonds.
The Journal reported this past week that since September German 10 year yields have already jumped from 1.6% to 2.3%, and the French bond is up from 2.45% to around 3.83%. Those are big moves and it means the dollar value of these bonds is dropping as the yield is rising.
The relationship between yield and cost works just like a dividend paying stock.
Germany and France are the only EU countries that can afford to bailout the EU. If they do, which I think they will, maybe not in time to avoid real interim problems, but they will, their debt levels have to rise and with that their 10 year rates will also have to run up.
If they don’t bailout their EU neighbors’ the EU falls apart and bond rates will go crazy in the weak members and that will spill over into France and Germany. Both outcomes are possible but both lead to unavoidable rate increases.
Italy cannot survive with rates at their current level above 7%. In fact the Journal article stated that Italy has to have a rate of about 4.5% just to pay its interest. It has to come from somewhere and that somewhere is Germany and France.
A Euro Bond, backed by France and Germany, is the consensus solution to the problem according to the Journal, and that too will drive up German and French rates.
The bottom line, rates for the two most solvent members of the EU have to go up and shorting their bonds is how to make money on it.
Gold or gold miners
A Barrons’ article this past week quoted MKM’s leading technical strategist, Katie Stockton. She thinks gold is over sold, especially the miners.
Another analyst for the firm, Jim Stagger says there is a clear green light for precious metals after the recent multi month drop and he is on board with the miners over the metals as well.
MKM is very high on the small cap miners’ etf, symbol, GDXJ, over gold or paper gold. The chart with a 200 day moving average is on your screen now. As you can see the miners small cap etf is well below its 200 day average.
The chart on your screen now shows a comparison between the small cap miners and the gold etf, GLD. You can see the huge gap between the performances of the two for the past year. It’s no wonder MKM is so high on it.
And from another side of the gold universe, Jim Rogers, one of the most successful investors in the world, said in a CNBC interview, “don’t sell your gold” or your paper gold, the next 10 years will be as strong as the past ten years for the yellow stone.
His reasoning; governments are on a money printing rampage and that will erode the value of the paper and continue to drive gold prices for sometime to come. He was a little more cautious about when to buy though. He believes we will see a little more of a correction in price and he stated he would be very excited at or below $1600.
One other point he made that seemed worth mentioning. The paper gold market, etfs and other derivatives, he thinks will be more volatile going forward because of the convenience they offer. They are just a lot easier to sell than physical gold.
That’s worth keeping in mind.
Silk worms in Silicon Valley
Ultra thin flexible electrical circuits made with a solution extracted from silk worm cocoons may have medical applications.
The Economist ran an article this past week about a John Rogers of the University of Illinois, who has combined ultra thin silicon circuits with a solution made by boiling the cocoons of silk worms.
These circuits were implanted in the brain of an anesthetized cat. The silk portion of the circuit dissolved and left the metal circuit in place, and it was able to detect neurological activity better than existing implanted electrodes.
The next step for the process is to test to see if these circuits can detect seizures in dogs.
The possible applications for this research are beyond estimates. It is still years from applications in humans but looks to be a very promising technique.
Put this one on the back burner and watch for companies who buy up the rights to it. Being able to patch neurological paths in the brain might be the next giant leap for mankind.
Slap in the Face Awards
This week my favorite face slapper, our president, gets the award.
He has launched his 2012 presidential campaign, a year before the election, with two new 30 second TV spots. I guess he has a lot of time on his hands and has so little to worry about that he can focus on his reelection before he even has an opponent.
In the spots he states that the outcome of the presidential election is not about what he does between now and then, it’s about what his supporters do.
The direct quote is on the screen now.
“I need you to do me a favor. It’ll only take a minute. The 2012 campaign is underway, and the outcome will depend not on what I do, but on what you do”
Don’t you think it’s a little scary to have a president who admits his actions have nothing to do with his own re-election.
This administration has reached the Twilight Zone level of absurdity.
The worst part, the press won’t say a word about a blunder so screamingly blatant.
Article by Investment U
The Dollar Reigns Supreme in November
The Dollar Reigns Supreme in November
by Jason Jenkins, Investment U Research
Wednesday, December 7, 2011
Among all the volatility that occurred in the markets last month, it seems the dollar (DXY) was the best place for investors beating returns on worldwide bonds, commodities and stocks as the world attempts to come to grips with a European sovereign debt crisis that threatens to derail global growth.
The US Dollar Index (USDX) is a measure of the value of the dollar relative to a basket of six specific foreign currencies. It’s a weighted geometric mean of the dollar’s value compared with the following currencies:
- Euro (EUR) – 58.6 percent weight
- Japanese yen (JPY) – 12.6 percent weight
- Pound Sterling (GBP) – 11.9 percent weight
- Canadian dollar (CAD) – 9.1 percent weight
- Swedish krona (SEK) – 4.2 percent weight
- Swiss franc (CHF) – 3.6 percent weight
The Index was up 2.9 percent in November, leaving it down less than one percent for the year.
Bank of America Merrill Lynch index data shows that even with U.S. Treasuries gaining 0.7 percent, global fixed-income securities overall lost 0.5 percent.
The Standard & Poor’s GSCI Total Return Index – formerly the Goldman Sachs Commodity Index, which serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time – rose 1.4 percent.
The MSCI All Country World Index (MXWD), a free-float weighted equity index that includes both emerging and developed markets, fell 2.9 percent with dividends.
“Headline Risk” Sends Investors to Safe Havens
We’re all aware of the severity of “headline risk” in this current market and the almost daily volatility it has caused. The current environment has caused flight to perceived safety and quality and the most reassuring bet right now is keeping money in U.S. dollars and Treasuries.
The sovereign debt issue in Europe made its mark on Italy last month skyrocketing yields to €-era record highs well above seven percent. The contagion even spread to all-mighty Germany and curbed demand for German Bunds. Germany was only able to sell €3.644 billion of the offered €6 billion in 10-year Bunds with an average yield of 1.98 percent two weeks ago.
The December Outlook
The Organization for Economic Cooperation and Development (OECD) last week stated the lack of faith in the survival of Eurozone is the primary risk to the world economy. The 34-member organization spans the globe, from North and South America to Europe and the Asia-Pacific region that includes many of the world’s most advanced countries and also emerging countries, expects their collective growth to be around 1.9 percent this year and 1.6 percent for 2012.
But these numbers are down from 2.3 percent for 2011 and 2.8 percent next year that they predicted earlier this May.
The U.S. currency will trade at $1.35 on Dec. 31 against the euro – up from $1.3446 at November’s end. The safe-haven appeal of the dollar has strengthened with the better than expected U.S. economic numbers that came out last week.
“The favorite strategy will be to locate the cleanest dirty shirts — the United States, Canada, United Kingdom and Australia at the moment,” Bill Gross, who runs the world’s biggest bond fund as co-chief investment officer at Pacific Investment Management Co. in Newport Beach, California, wrote in his monthly commentary this week.
Good Investing,
Jason Jenkins
Article by Investment U
Gold Rallies, Stocks Fall, ECB Borrowing “Positive for European Liquidity”, China “Facing Severe Trade Challenges” Next Year
London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 7 December, 08:30 EDT
SPOT MARKET gold prices jumped to $1737 an ounce Wednesday aftetnoon in London, as rumors continued to build of more aggressive monetary stimulus ahead of tomorrow’s European Central Bank meeting.
German opposition to proposed changes to the Eurozone’s rescue framework also threw doubt on whether this Friday’s summit will deliver a significant deal.
Earlier in the day, Gold Prices fell to $1721 per ounce – 1.4% down on the week – with stocks and commodities giving up their morning’s gains.
“No one wants to hold stockpiles ahead of the year end and the market is extremely quiet,” adds Dick Poon, Hong Kong-based manager of precious metals at German refiner Heraeus.
“Physical demand may pick up at the end of the month or early January, as jewelers prepare for the [Chinese] Lunar New Year.”
However, “the market is reluctant to sell gold aggressively ahead of the European Summit on Friday,” says Walter de Wet, commodities strategist at Standard Bank.
Silver prices drifted down to $32.23 per ounce – 1.2% down on the start of the week.
A day earlier, gold prices jumped as high as $1732 per ounce following news that Europe may get a second rescue fund to run alongside the existing one. US stocks also rallied on Tuesday, as did Asian stocks early on Wednesday.
European markets opened strongly – with banks among the strongest performers – but by lunchtime Germany’s DAX was flat on the day and the FTSE had entered negative territory.
Eurozone banks meantime borrowed $50.7 billion from the European Central Bank Wednesday morning – five times the amount forecast in a poll of money market traders by newswire Reuters.
Thirty-four banks received three-month loans in the ECB’s first Dollar liquidity operation since six of the world’s central banks cut the cost of Dollar funding last week in a coordinated move.
“Thirty-four banks is quite an impressive number,” says Alan James, head of inflation-linked research at Barclays Capital in New York.
“It suggests by making the terms easier, the ECB increased expectations of use and reduced the stigma associated with using the facility…that’s a positive for European liquidity.”
Italy’s banks meantime accessed €153.2 billion in emergency ECB funding last month – up from €111.3 billion in October and €41.3 billion in June – data published Wednesday by the Bank of Italy show.
Press reports suggest the ECB, which is widely expected to cut its main interest rate to record low of 1.0% tomorrow, is privately considering more aggressive solutions – possibly involving some members leaving the Eurozone – but does not wish to discuss these publicly.
“What I think is important at the moment is not showing politicians that there might be an alternative, because in their mind that might be less costly than the options they have,” Reuters quotes one Eurozone central banker.
Bank of England governor Mervyn King said last week that the authorities in Britain “are making contingency plans against a wide range of contingencies”, acknowledging the possibility of Eurozone breakup and adding “there will still be questions of default” either way.
King also warned banks to prepare for a “systemic banking crisis” while the BoE’s Financial Stability Report said banks should “give serious consideration to raising external capital”.
Elsewhere in Europe, the European Stability Mechanism – the permanent bailout mechanism originally intended to replace the ad hoc European Financial Stability Facility – may now be set up to run alongside the EFSF in order to boost the single currency’s rescue system, the Financial Times reported late on Tuesday.
The ESM is intended to have a lending capacity of €500 billion – in addition to the €440 billion the EFSF has at its disposal. It is hoped the ESM will be up and running next year, though it remains unclear precisely how it will be funded.
By Wednesday afternoon, however, reports were circulating that German officials will oppose any changes to Europe’s bailout mechanisms.
Germany’s DAX dropped sharply early Wednesday afternoon, while stock markets elsewhere in Europe and in the US also fell.
There was also confusion yesterday over so-called private sector involvement (PSI) in any future Eurozone bailout.
“Germany has agreed to let go of the participation of the private sector, of private investors in case of the restructuring of sovereign debt,” French prime minister Francois Fillon said Tuesday.
“We only made it clear,” countered Steffen Seibert, chief spokesman for German chancellor Angela Merkel, “that the kind of PSI you had with Greece is an extreme case that won’t be repeated.”
European leaders agreed in July that private sector Greek bondholders should take losses of 21% – then agreed in October the losses should be 50%, with July’s bond swap program left incomplete.
Here in the UK, Britain’s prime minister David Cameron has said Britain “will not agree to a treaty change that fails to protect [Britain’s] interests”, ahead of Friday’s European Union summit.
Germany and France agreed earlier this week to a revision of the entire EU governing treaty.
UK Industrial production fell by 1.7% in the year to October – a faster fall than the previous month, where a 1.5% year-on-year fall was recorded – data published Wednesday show.
Over the same period German industrial production grew 4.7% – slowing from 5.4% y-o-y growth in September.
In China meantime – the world’s second-largest source of gold bullion demand – exports to the US fell 5% in the year to October, while exports to the EU saw a drop of 9%, data published today show.
“Next year, I think that we will face severe challenges in our exports and imports,” China’s foreign trade director Wang Shouwen said.
“Two key tail risks to the global economy and to commodities in particular remain,” says Koen Straetmans, senior strategist, real estate and commodities at ING Investment Management.
“A hard landing in China…[and] policy inaction leading to a meltdown of the Eurozone…we have an overweight position in precious metals to hedge for this tail risk.”
In Japan meantime, some investors who buy reconstruction bonds – which go on sale next year to raise funds for rebuilding areas devastated by the tsunami – will be eligible to receive commemorative gold coins worth over $900 at current gold prices, Japan’s finance minister announced Tuesday.
Gold value calculator | Buy gold online at live prices
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
If You Invest in Crude Oil, You Need to Know This
Written by Andrew Snyder, Editorial Director, Inside Investing Daily, insideinvestingdaily.com
Iran is up to no good. The price of crude oil has not soared yet on the news of increased fighting in the region, but it is showing signs it could do it any day.
A massive spike in crude oil prices may be on the way. Like we wrote yesterday, the news from the Mideast is not good. Despite a decade of war, the region is in desperate shape.
Nowhere is that more evident than in Iran.
We’ve got a missing drone. A “mysterious” explosion outside the British embassy. Nuke plants taken down by the Stuxnet virus. And a handful of dead scientists.
It is no longer a question of when we put our crosshairs on the back of Iran’s head. We are already at war. We’ve pulled the trigger.
Whether it’s a political decision or one with military significance, the fight in Iran is decidedly covert. They’re not telling us anything close to the truth. That’s OK, though…
The market never lies:
At the same time a meltdown in euro debt is threatening to bring the global economy to a halt, the traders in the oil pit are spooked.
We know it is not a function of demand. Across the U.S., we’ve got too much of the stuff right now. And Europe certainly isn’t bidding for more oil.
That means the price spike must be due to supply concerns.
For the ultimate insider’s opinion on the subject, we turn to… Iranian Foreign Ministry Spokesman Ramin Mehmanparast. He tells us on Sunday that if the West were to block Iran’s oil exports, the price of crude will double.
With that troubling nugget in mind, it’s clear why the world’s powers want to keep their fight with Iran on the quiet side.
But, dear reader, in this age of tell-it-all journalism, it won’t stay a secret for long. If we can get Herman Cain’s dating record through his first day of high school, we can certainly learn who’s killing who in Iran.
In fact, we argue it won’t be more than three weeks until this situation spins into a real mess. That means today’s crude buyers are likely getting a great deal — maybe even a 50% discount to the price to come.
There are several reasons we’ve got such a dire outlook. But the one we haven’t mentioned much erupted last Thursday…
The Senate voted 100-0 for legislation that would penalize any foreign bank that does business with Iran’s central bank. In effect, it’s a backdoor oil embargo. Just about all of Iran’s oil money flows through its state-run bank.
Granted, no laws with any sort of teeth get through the current Senate. And nothing, but the occasional fluff proposal, gets through on a unanimous vote.
In other words… the legislation and its 100-0 vote is a farce. The rules won’t get through the House. And Obama has already wagged his finger at Capitol Hill for proposing such tough sanctions.
But, come January, European Union leaders (if their union is still around) have pledged to take on the idea of Iranian sanctions.
While the chances of a full-on sanction are slim (given the little information we have), all it will take to spawn a serious rally in crude prices is a slight escalation in hostility. Between now and the end of the year, I am certain we’ll get it.
P.S. As if Iran weren’t creating enough trouble, there is threat of renewed violence in Egypt this week. The Muslim Brotherhood has threatened to take to the streets if there is any attempt to manipulate the results of last week’s election. Already, though, officials have tossed out votes and even nullified the results of entire polling stations. To understand what it all means, here is a full report.
New Zealand Interest Rate Decision
Source: ForexYard
Today at 20:00 GMT we will get the interest rate decision and press conference from the Reserve Bank of New Zealand. The RBNZ is expected to hold rates steady at 2.50% unlike the RBA which lowered Australian interest rates by 25 bp.
Given the headwinds facing the global economy the RBNZ would most likely enjoy loosening monetary policy. However, because of higher inflation the RBNZ may keep interest rates on hold. Currently New Zealand inflation stands at 4.6% y/y. The RBNZ targets inflation between 1-3%.
The NZD/USD should be supported in the near term if some of some sort of compromise comes from this week’s EU economic summit. The 6-month trailing correlation between NZD/USD and EUR/USD stands at 0.80. A correlation closer to 1.00 means the currency pairs move in the same direction. This should help keep the NZD supported versus the USD and the NZD/USD has resistance at the top of the recent consolidation pattern at 0.7840 followed by 0.7980 off of the falling trend line from the August high. Support comes in at 0.7730.
For those traders looking to avoid exposure to the EUR the AUD/NZD may offer just that as the pair has a 6-month trailing correlation of with the EUR/USD of -0.16. This indicates there is a weak relationship between the movement of the two currency pairs. The technical picture for the AUD/NZD shows a triangle consolidation pattern from the November 18th high and the November 25th low. The initial resistance from the pattern is 1.3210 followed by 1.3380 off of the trend line from the yearly high.
Read more forex trading news on our forex blog.
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 8 Rules I Use to Earn $124.29 in Dividends Per Day
By Paul Tracy, globaldividends.com
I counted twice, just to be sure…
$41,513.18.
That’s the amount in “daily paychecks” — more commonly known as dividends — I’ve received from my investment portfolio in 2011. That total comes to $124.29 for each day of the year. Cash.
Why am I telling you this?
It’s not to brag. I was born and raised in Wisconsin. The typical Midwestern mentality is so ingrained in me, I very rarely talk about money. And I’m not one to show off, either. I drive a Nissan I bought six years ago. I get my hair cut at Supercuts.
No, I’m telling you this because I honestly think what I’ve discovered is the single best way to invest, hands down.
I’m talking, of course, about the “Daily Paycheck” strategy. If you’ve read Dividend Opportunities for even a couple of weeks, you’re likely familiar with Amy Calistri and this strategy.
Amy is the Chief Strategist behind our premium Daily Paycheck newsletter. Her goal is to build a portfolio that pays at least one dividend every day of the year. The idea for her advisory came from my personal “Daily Paycheck” experiment.
I’ve been following the strategy personally for a few years now. In that time, I’ve not only been able to build an investment portfolio that pays me more than 30 times a month, but the checks are getting bigger and bigger as time passes.
What I like best is that it’s the easiest way to invest you can imagine. Once you get started, it runs on autopilot. Of course, you’ll make a few portfolio adjustments now and then, but you won’t have to anxiously watch your holdings every day.
Now it’s time to come clean. If you start this strategy tomorrow, it’s unlikely you’ll be earning $124 a day by the weekend.
I’ve been fortunate to start with a healthy-sized portfolio. And as I said, I’ve enjoyed the benefits of implementing the “Daily Paycheck” strategy for a few years now, so my payments have grown much larger than when I started.
But here’s the good news… it doesn’t matter. Whether you have $20,000 or $2 million, you can start your own “Daily Paycheck” portfolio today. The results are fully scaleable, and anyone can have success, as long as you follow eight simple rules Amy and I created to not only build our portfolios, but also manage risks…
1. Dividend payers beat non-dividend payers. 2. Higher yields beat lower yields. 3. Reinvesting your checks beats cashing them. 4. Small caps beat large caps. 5. International beats domestic. 6. Emerging markets beat developed. 7. Tax-free beats taxable. 8. Monthly payouts beat annual payout. |
It’s these eight rules I’ve followed to build a portfolio that has not only paid me $124 a day in 2011, but that is also seeing rising payments. In November, I earned 37 checks, at an average daily amount of $160.30.
I’ve been investing for the better part of two decades. During that time, I’ve tried just about every strategy and style you can imagine. And don’t get me wrong — you can make money any number of ways in the market.
But earning thousands of dollars each month consistently? I never experienced that until I implemented the “Daily Paycheck” strategy.
Good Investing!
Paul Tracy
Co-Founder — StreetAuthority, Dividend Opportunities
P.S. — My ultimate goal is to build a portfolio that pays me $10,000 a month. In November I pocketed $4,808.87, so I’m well on my way. To learn how easy it is to set up your own “Daily Paycheck” portfolio, be sure to read this memo. It has all the details on how to get started yourself.
Forex CT 7-12-11 Video News Update
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.
Positioning for the ECB Press Conference/EU Economic Summit
Source: ForexYard
The most recent CFCT IMM data shows EUR non-commercial traders have their largest short position built in the futures market since June of last year. The one sided positioning could create a short squeeze if European leaders begin to instill a bit of investor confidence towards the end of the week.
Economic News
EUR – Positioning for the ECB Press Conference/Economic Summit
The EUR is shrugging off the recent negative headlines as investors begin to position themselves prior to the ECB policy meeting on Thursday and the 2-day EU economic summit. Market expectations are for at least a 25 bp interest rate cut and some are calling for a 50 bp reduction in ECB interest rate. The rate decision will come 45 minutes before the main event which is the ECB press conference. Investors will be looking for signs the ECB has softened its stance and want Draghi to hint that the ECB will take out its “bazooka” to support the financially struggling nations with additional bond purchase.
Last week Draghi suggested if there was a commitment by political leaders to stricter budget discipline that other elements might follow, “But the sequencing matters.” Given his prior statements the ECB may wait and see what comes from the 2-day EU summit before committing itself to a more aggressive policy of supporting the likes of Italy and Spain.
Market participants may be positioning themselves for a positive outcome from the EU summit. The most recent CFCT IMM data shows EUR non-commercial traders have their largest short position built in the futures market since June of last year. The one sided positioning could create a short squeeze if European leaders begin to instill a bit of investor confidence towards the end of the week. EUR/USD resistance is found at Monday’s high of 1.3490 and at Friday’s high of 1.3550. Support looks to be at the November 30th low of 1.3260 followed by the October low of 1.3145.
CHF – Swiss CPI Shows Deflation
Switzerland released CPI numbers yesterday and the data is worrisome. Consumer prices declined by -0.2% m/m and the yearly rate of inflation now stands at-0.5%. With deflation creeping into the Swiss economy there are increased discussions of a pending move by the SNB to raise the floor of the EUR/CHF to 1.25 or 1.30 from 1.20. So far the SNB has been successful as investors have been the ones to push the EUR/CHF closer to 1.25 after the SNB said they would not tolerate a rate below 1.20. The SNB has done with without intervention in the FX spot market. Thus we may not expect any additional action to weaken the CHF on the part of the SNB until the market attempts to push the exchange rate under the SNB’s line in the sand. The EUR/CHF has support at its 200-day moving average of 1.2220 and resistance at 1.2500.
AUD – RBA to go 3 for 3 on Interest Rate Cuts
As expected the Reserve Bank of Australia cut interest rates by 25 bp yesterday. This is the second consecutive reduction in the interest rate. The bank will next meet in February and there is the chance the RBA will go 3 for 3. Currently Australian interest rates stand at 4.25% and are still far above the rest of the major global economies, making the AUD an attractive currency. Traders should be concerned over slowing growth in China which is Australia’s largest trading partner. The most recent HSBC services PMI dropped to 52.5 in November from 54.1. This is the slowest rate of growth for the survey over the past 3-months. The manufacturing PMI came in at 49, below the 50 boom/bust level and the lowest November 2008. However, with last week’s cut in the Chinese reserve requirement it appears that Chinese officials are ahead of the policy curve and recognize the potential for lower economic growth. The AUD/USD maintains resistance at 1.0350 from the November 14th high where the 100-day moving average comes in.
Gold – Gold Uptrend Fails to Break Resistance
Spot gold prices failed to move above a significant short-term resistance level and have followed through with a move lower. The initial cause of the price decline can be linked to USD strength as the USD continues to move higher versus the G10 currencies. The price of spot gold topped out at $1,761 where the falling trend line off of the September and November highs comes in before the price moved lower to the initial support of $1,700. Additional support is located at the pivot from November 21 at $1,666.
Technical News
EUR/USD
The weekly chart shows the pair is trading in a symmetrical triangle pattern with the resistance line falling from the May high and support line rising from the yearly low. The first support from this chart pattern comes in this week at 1.3200. A break here will likely open the door to not only the October low of 1.3145 but also1.3050 from the 61.8% Fibonacci retracement of the bullish move spanning 2010 to 2011. The January low of 1.2875 could contain the near-term price action. To the upside the November 18th high of 1.3610 is the initial resistance followed by the mid-November consolidation at 1.3860 where the 100-day moving average also lies. The top of the triangle pattern would likely contain any move higher near 1.4230-1.2350.
GBP/USD
Last week cable found resistance at 1.5780, a level that has proven to be resistive in the past. Additional resistance is found at the October high of 1.6165. Monthly and weekly stochastics continue to move lower and as such the November low of 1.5435 is the initial support followed by the October low of 1.5270. The last bastion of support for the GBP/USD is found off of the rising trend line from the 2009 and 2010 lows which comes in at 1.0590.
USD/JPY
The USD/JPY is encroaching on its long term trend line off of the 2007 high and comes in at 78.70. A break above this level is needed to confirm the recent price appreciation. Both weekly and monthly stochastics are moving higher so traders may look for additional resistance at 79.50 from the post intervention high. The 200-day moving average is also lurking just below this price. Should the pair fail at the long-term trend line the congestion between 77.50-77.60 may prove to be supportive while the all-time low near 75.60 stands out as the last support.
USD/CHF
As weekly stochasttics have already turned lower the monthly stochastics are beginning to roll over. This is occurring after the pair looks to have failed to break above the 0.9330 resistance level. As such the pair has support at last week’s low of 0.9065 followed by the November low of 0.8760 and the October low of 0.8565. A break above the 0.9330 resistance could spur gains towards this year’s high of 0.9780.
The Wild Card
Gold
Spot gold prices have ran into resistance at the trend line from the September and November high which comes in at $1,754. Additional resistance is found at the November high of $1,708. Forex traders should note that if the trend line holds spot gold has support at $1,700 from the November 30th low followed by the November 21st pivot of $1,666.
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.
Gold Daily outlook – 07 December
The gold market has experienced much flatter trading since the start of November compared to what we’ve been accustomed too for a very long time. In recent weeks we’ve seen the market hovering around the 1700.00 area with little direction.
Tuesdays trading saw gold once again using 1700 as an area of support. In early trading the market was drawn towards the level; however later in the day we saw a rejection resulting in a bullish daily pin bar.
The pin bar is very similar to the one seen on the 1st November which also rejected the 1700 area.
Our identified level of support is further strengthened by a 61.8% Fibonacci retracement. A look at the chart below clearly shows the market rejecting both the 1700 area and the 61.8 Fib level. Its important to take note of how yesterdays price bounced almost perfectly off the 61.8.
With the strong support levels we’re seeing in the gold market and the bullish price action chart patterns, we will be looking to buy into this market; either when we break the highs of the pin or at a 50 – 61.8 retracement of the pin. Initial targets will be at the most recent swing high (1762) with the possibility of further gains, possibly up to 1800.
