Month: February 2012

Gold and EUR/AUD Down – Euro Trading Mid-Range On Greece Uncertainty

Analysis from: Forex FX 4X

Gold Analysis: (XAUUSD) is currently making new lows for the week and price is located at the ascending trend line shown on the chart below.   US data has been stronger recently and QE is no longer a given. This has seen a high momentum drop in the price of Gold as the bulls were quick to liquidate positions in the precious metal.

XAUUSD

EURAUD makes new record low.  The Reserve Bank of Australia (RBA) has held the key rate after the two previous consecutive cuts.  This caught the market off guard and went against analyst expectations.   The Greece debt negotiations should be monitored closely as a quick change in sentiment could see high volatility.  AUD has been in bullish mode since the break of key 1.0390 resistance and the Australian economy is well set to gain if the gloabal economy continues to improve.  EURUSD is trading in the middle of the recent range (approx 2 cents) with a break of either side needed to clarify the near term directional bias.

EURAUD

Any information or views found in this post are provided for educational reasons and do not in any way represent investment advice. The article author doesn’t guarantee the accuracy or completeness of this or any other information provided. Forex-FX-4X or the post authors will not accept liability for any losses arising directly, indirectly or because of reliance on any of the trading setups or associated analysis in any way.

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 7 February 2012, 07:45 EST

U.S. DOLLAR gold prices touched a 2-week low of $1711 an ounce Tuesday lunchtime in London, with stocks, industrial commodities and the Euro also falling amid uncertainty over whether Greece is approaching default.

Silver prices dropped to $33.20 per ounce – down 1.6% on the start of the week.

“The $33.00 level [is proving] to be strong support,” says the latest technical analysis note from bullion bank Scotia Mocatta.

Gold prices Tuesday lunchtime remained more than 3% above where they were on January 25, the day the US Federal Reserve revealed its policymakers expect near-zero interest rates to persist until at least the end of 2014.

The Fed announcement “put an end to the correction in gold,” reckons Mark Arbeter, chief technical strategist at S&P Capital IQ.

France and Germany have suggested that part of the €130 billion second bailout for Greece be set aside to pay Greece’s creditors, with Greek leaders yet to agree to austerity reforms required by the so-called troika of international lenders, the European Central Bank, European Union and International Monetary Fund.

“We want Greece to stay in the Euro,” German chancellor Angela Merkel told a press conference in Paris on Monday.

“But I also say there can be no new Greek program if agreement is not reached with the troika…all those who bear responsibility in Greece must know we will not deviate from this position.”

The lack of agreement among Greek leaders over how to reduce public spending has led to the postponement of a Eurozone finance ministers meeting scheduled for this week, at which the new bailout was to be finalized, the Financial Times reports.

“I honestly can’t understand how additional days will help,” Merkel said yesterday.

“Time is of the essence. A lot is at stake for the entire Eurozone.”

European Commission vice president Neelie Kroes however has played down the implications of Greece leaving the Euro.

“[Politicians] always said if a country is let go or asks to get out, then the whole edifice will collapse,” she told Dutch newspaper Volkskrant.

“But that is simply not true.”

Citi economists Willem Buiter and Ebrahim Rahbari see the likelihood of Greece exiting the Euro – which they term ‘Grexit’ – as “50% over the next 18 months”.

“The implications of Grexit for the rest of the Euro Area and the world would be negative, but moderate, as exit fear contagion would likely be contained by policy action, notably from the ECB.”

“Greece is sitting right on the edge of default,” adds Standard Bank currency analysts Steve Barrow, “with Portugal possibly not too far behind.”

“It is still possible to avoid a disorderly default,” insists one unnamed senior European official quoted by the FT.

“[However] the delays have been damaging [and] have dangerously increased the degree of uncertainty, and they are entirely due to the Greek side.”

“The problem today,” countered Greek socialist Pasok party spokesman Panos Beglitis on Monday, “is the depressing imposition of Germany’s strategy on the Eurozone. Nobody is listening to us. We are lonely.”

Greek trade unions have called a 24 hour strike today. There were disturbances in Athens, where riot police fired tear gas at protesters.

“My timeline says a German flag has been set alight outside the Greek parliament,” reports Greek Dow Jones journalist Matina Stevis on her Twitter account.

“As ever, the ongoing uncertainty would keep gold prices underpinned,” said a note from VTB Capital this morning.

Here in London, FTSE-listed Glencore, the world’s largest stock market-listed commodities trader announced today it has completed its merger with mining giant Xstrata in a $90 billion deal.

China’s gold imports from Hong Kong meantime rose 260% in 2011, according to new data from the Hong Kong Census & Statistics Department on Tuesday.

Rising to a record 428 tonnes, last year’s total was greater than China’s domestic gold mining production – itself a new record, and the world’s largest national output. Today’s news most likely puts total Chinese gold bullion demand for 2011 at well over 800 tonnes.

World number one consumer India imported some 878 tonnes in 2011, according to the Bombay Bullion Association.

Ben Traynor
BullionVault

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.

By The Sizemore Letter

With the first week of February behind us, one trend has been unmistakable in early 2012: cyclical and more speculative sectors are outperforming defensive ones (see Figure 1).  At 13 percent YTD returns apiece, materials and financials have nearly doubled the 6.9 percent return of the S&P 500.  More staid utilities, telecom and consumer staples are actually in negative territory.

Figure 1

Though I consider “sin stocks” to be a stock sector in of themselves, tobacco and alcohol generally fall under the umbrella of defensive consumer staples.  And as such, the sin stock recommendations of the Sizemore Investment Letter have underperformed the market year to date (see Figure 2).

Figure 2

After massively outperforming the market in 2011, Sizemore Investment Letter recommendations Altria (NYSE:$MO), Philip Morris International (NYSE:$PM), and Diageo (NYSE:$DEO) have all underperformed the S&P 500 year to date.

I continue to recommend the three, and I expect all to generate market-beating returns over time.  Sin stocks such as these throw off buckets of cash flow and pay great dividends.  They are exactly the kinds of stocks you want to own during a protracted sideways market; at a time when capital gains are unreliable, getting paid in cold, hard cash may be the only return you get at all. And while there is no such thing as a truly “recession proof” stock, tobacco and alcohol are about as recession resistant as they come.

Bottom line: it makes sense to have sin stocks as a core piece of your long-term portfolio.  (For a longer explanation on the virtues of investing in vice, see “The Price of Sin.”)

Investing for the long-term is great, but many readers are no doubt asking “what about now?”

Whether sin stocks enjoy a good 2012 or not will largely depend on what happens in Europe.  If the crisis conditions continue to ease, more speculative sectors should continue to outperform for at least the first two quarters of the year.  This is the scenario that the Sizemore Investment Letter considers most likely, and we’ve chosen German, Spanish, and Emerging Market stocks as our preferred way to profit from this return of risk appetites.

But as investors, we must always hope for the best but prepare for the worst.  If Europe slips back into crisis, I expect 2012 to follow the same basic path as 2011: on again / off again volatility in a market that hangs on every conflicting word coming out of the mouths of European policymakers.  In this scenario, sin stocks would be an attractive safe haven, as they were in 2011.

In the Sizemore Investment Letter, we’re increasing our risk exposure by allocating to riskier sectors.  But we’re also hedging our bets by maintaining long-term positions in our core sin stocks.  Tobacco and booze served us well during a very turbulent period in the stock market, providing calm and stability when it was needed most.  We would expect much the same were the volatility to return.

And if the stocks themselves aren’t sufficient to help us relax…well…we might just have to rely on the products.  Scotch, anyone?

If you liked this article by Sizemore Insights, you’d probably enjoy The Sizemore Investment Letter, our premium members-only newsletter. Click here for more information.

By TraderVox.com

On February 9 at midday in London, the bank of England will release its conclusion on what new interest rates should be and also whether they will implement their QE program. We highly expect interest rates to remain unchanged but many analysts foresee an increase in the QE program from 275 Billion pounds to 325 Billion pounds.

Although the UK has seen recent positive data being released in the past weeks, the UK economy still remains poor and therefore sufficient reason to go in for more QE. We examine reasons why?

1. Contraction of UK economy in fourth quarter of 2011.

The UK’s economy contracted 0.2% during the final quarter of 2011.This was worse than the anticipated contraction of 0.4%.This contraction brought about renewed ideas of a recession. The BOE will be keen to avoid another contraction as it will not speak well, they will therefore be keen on more QE.

2. The former QE will soon come to an end.

The BOE added to their QE program last October and with the program set to expire this month and a new program may be put into place in order to avoid changing interest rates.

3. Inflation dropping.

BOE bosses anticipated that inflation will surely drop in the nearest future. And true to their anticipation UK inflation has dropped. The Annual CPI figure for December showed a drop from 4.8% in November to 4.2% in December, which is a 6-month low. BOE experts think this was as a result of retailers having to cut prices because of the lower consumer demand. The situation is expected to go on for a few more months.

 4. BOE January meeting.

After the BOE policy meeting in January, several members of its monetary policy committee declared their intentions to vote for more asset purchases.

With all the above reasons in mind, we can expect more QE, but the statements that accompany the QE are going to be a key factor. If the new QE program comes with an alert from the BOE that more QE is due, this does not speak will of the UK economy and the GBP is sure to crash. One thing that is sure is that this announcement shall move the market.

Article provided by TraderVox.com

By TraderVox.com

Data released today by the ministry of finance in Japan indicates that Japan used stealth intervention in November to prevent the Yen from making more gains as exports became more and more expensive.

The data showed that the ministry injected 1.02 trillion yen into the market during the initial four days of November. This followed an 8.07 trillion yen selling it conducted at the end of October last year after the Yen climbed to post WWII high of 75.35 yen per dollar. Due to a strong yen, exporters such as Honda Motor Co. and Sharp Corp. had recorded decreasing profits.

Analysts are saying that Japan intends to make more such interventions to stop the yen from getting stronger despite the growing concerns of interventions in the market. These sentiments are derived from the Finance Ministers Jun Azumi’s comments that the November unannounced intervention was the most effective strategy of weakening the yen. The minister also added that he wouldn’t rule out any measures to curb the yen from growing stronger.

Despite the growing criticism of Japan’s action from US, analysts are claiming that these are some of the strategies that Japan has used before to keep the yen at low level against the dollar. The first intervention in 2011 was done on March 18^th and was worth 692.5 billion yen. This was a coordinated intervention efforts that were lead by bank of Japan together with seven nations to counter the strength of the yen. The yen had grown stronger after the strong earthquake struck the country leaving the investors speculating that companies would send back overseas assets to pay for rebuilding. The Finance minister then ordered the bank of Japan to make another intervention on August 4^th.

Despite these efforts, the Yen has continued to remain strong recording a high of 76.03 yen per dollar on Feb. 1 this year. This was its strongest showing since its post World War II high on October 31^st. Today, the yen opened trading at 76.72 in Tokyo. With the finance minister’s remarks in mind, another intervention might be on the way.

Article provided by TraderVox.com

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Source: ForexYard

The euro was largely bearish yesterday, after Greece once again failed to come to an agreement with its creditors to restructure its debt. Losses were seen against most of its main currency rivals, including the US dollar, Japanese yen and British pound. Today, in addition to any euro-zone developments that may occur, traders will want to pay attention to a speech from the US Fed Chairman at 15:00 GMT. Any positive statements could help the USD extend its recent bullish trend.

Economic News

USD – Dollar Remains Bullish to Start off Week

The US dollar was able to extend the boost it received late last week during trading yesterday, as negative euro-zone news fueled risk aversion and sent investors to the safe-haven greenback. Greece’s inability to reach a debt-swap agreement with its creditors sent the EUR/USD as low as 1.3026 before the pair staged a slight upward correction. Last week’s positive US jobs report helped the dollar maintain its gains against the JPY throughout the trading day yesterday. The USD/JPY reached as high as 76.79 before a minor downward reversal.

Turning to today, USD traders will want to pay careful attention to a speech from Fed Chairman Bernanke, scheduled for 15:00 GMT. Any positive statements regarding the US economic recovery are likely to give the dollar additional momentum going into the rest of the week. Specifically, should Bernanke indicate that the US may raise interest rates earlier than planned, the dollar will likely see significant gains as a result.

Following Bernanke’s testimony today, the dollar’s next big test will likely be the weekly US Unemployment Claims on Thursday. While last week’s jobs report was promising, analysts are warning that the fluctuations in the employment number are likely to occur. Should Thursday’s figure come in worse than forecasted, the dollar may give back some of its earlier gains to close out the week.

EUR – EUR Still Bearish amid Negative Greek News

News that Greece has yet to reach a deal to restructure its debt, continued to weigh down on the euro during yesterday’s session. The euro took significant losses against both the US dollar and Japanese yen throughout the day after investors chose to place their funds with safe-haven assets. The EUR/USD fell as low as 1.3026, while the EUR/JPY dropped to 99.83 before staging an upward reversal.

Turning to today, Greek news is likely to continue being the driving force behind the euro’s movements. Any positive developments with regards to the debt-swap deal are likely to boost the common currency, at least in the short term. At the same time, analysts are warning that the Greek situation is not the only issue facing the euro-zone at the moment. The next most pressing matter is Portuguese debt, which will likely have to be dealt with in the near future as well. Regardless of Greece’s problems, it appears that the euro-zone crisis is far from being resolved.

CAD – Ivey PMI Boosts Loonie

The Canadian dollar saw some positive gains against its safe-haven counterparts yesterday, following the release of a better than expected Ivey PMI. The PMI is considered one of the leading indicators of Canadian economic health. The figure, which analysts were originally predicting to come in at 58.6, came in at a surprisingly strong 64.1. While gains were recorded against both the USD and JPY, investor risk taking following the release of the indicator caused the euro to gain on the loonie.

Turning to today, traders will want to keep track of any developments in the euro-zone. In particular, the Greek debt situation is likely to influence the direction the CAD takes. Any positive developments are likely to lead to an increase in risk taking, which could help the CAD extend its gains against both the USD and JPY. At the same time, such a development would likely lead to further losses against the euro.

Crude Oil – Risk Aversion Leads to Flat Trading For Oil

The price of crude oil saw relatively little movement during trading yesterday, as risk aversion kept prices close to the $97 a barrel level. Crude tumbled last week, following a positive US jobs report which caused the US dollar to spike against its main rivals. Oil prices tend to fall when there is a strong dollar, because the commodity becomes more expensive for international buyers.

Today, the price of oil may see some upward movement providing a Greek deal to restructure its debt is finally announced. Any further delay in implementing a debt-swap deal is likely to result in an increase in risk aversion which could cause the price of oil to slip further.

Technical News

EUR/USD

Technical indicators are currently mixed for this pair. While the weekly chart’s Relative Strength Index is right around the 30 level and oversold, a bearish cross has formed on the daily chart’s Stochastic Slow, meaning that downward movement could occur in the near future. Traders may want to take a wait and see approach for this pair until a clearer picture presents itself.

GBP/USD

Most technical indicators show that this pair is currently overbought and may see a downward correction in the near future. The daily chart’s Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the same chart is above the -20 level. Going short may be a wise choice for the near future.

USD/JPY

Technical indicators on the daily chart show this pair in the oversold zone, meaning that upward movement is possible in the near future. A bullish cross is forming on the MACD/OsMA, while the Williams Percent Range is hovering close to the -80 level. Going long may be a wise choice for the pair.

USD/CHF

The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. The Relative Strength Index (RSI) on the same chart is hovering close to the 70 level, which typically means that a downward correction is going to take place. Traders will want to pay attention to the RSI. If it crosses the 70 line, a bearish correction may take place.

The Wild Card

AUD/CHF

Technical indicators on the daily chart are showing this pair in overbought territory, meaning that a downward correction could occur in the near future. A bearish cross has formed on the Slow Stochastic, while the Williams Percent Range is currently at the -20 level. Forex traders may want to go short in their positions today.

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.

By TraderVox.com

Australian dollar attracted most of the attention during the Asian session today with a crucial interest rate decision by RBA today. RBA contrary to the expectation kept the interest rates unchanged at 4.25%. Expectation was a decrease in the interest rates by 25 basis points.

Australian dollar reacted positively by gaining 100 pips within an hour after the announcement. It printed a high of 1.0821, last seen in the month of August. It is currently trading at 1.0780, up half a percent. The resistance now lies at 1.0810 and 1.0900. The support lies at 1.0780 and below at 1.0750.

Pain for Euro continues today with no concrete development on the Greek front. Although a possibility of Greece accepting the austerity measures have resurfaced and Euro reacted to this by holding the 1.3100 level. Euro broke the 1.3100 level to form a low of 1.3088. But it managed to come above the 1.3100 mark. Currently it is trading at 1.3125, flat for the day. The support may be seen at 1.3100 and below at 1.3030 levels. The resistance may be seen at 1.3150 and at 1.3200. Fed chairman Barnake will speak during the US session. Markets will watch for any cues on quantitative easing.

The sterling pound is trading at 1.5815, near the opening price. Sterling pound has no major impacting event so far. The interest rate will be decided by BoE later this week. No change in the interest is expected. The support lies at 1.5800 and resistance lies at 1.5840.

The USD/CHF pair is trading around 0.9200, up about 0.15%. Support lies at 0.9200 and 0.9160. The resistance may be seen at 0.9230 and 0.9250.

The general US dollar strengthening was also seen in USD/JPY pair. It is now inching towards 77 level resting the intervention possibility as of now. It is currently trading at 76.76, near the high of 76.80. The support may be found at 76.65/70 and resistance may be seen at 76.80- 77 area.

The dollar index is currently trading at 79.21, almost flat for the day. There are major events happening this week and developments on Greek deal needs to be followed closely.

Article provided by TraderVox.com

By TraderVox.com

One of the most difficult things to do in trading is adapting your positions on the opening of the US markets. The difference in events between the US and European markets always make way for a change in market sentiment once the US session overlaps the European session and even worst once the European session closes to leave the US session flying solo.

Yesterday was no different, The Euro staged a remarkable comeback yesterday and unsurprisingly this is not the first time we have seen a currency do that in recent days.EUR/USD fell yesterday consistently to a daily low of 1.3028 after having opened the day at 1.3120.But we saw an incredible rally during the US session and the EUR/USD eventually closed the day at 1.3131, an immense 11-pip gain given the circumstances.

The Greek government is still stalling with creditors and private investors over a debt deal and this had a huge play in the valuation of the euro yesterday. However the currency is still close to its highs and the implications are that investors likely have high hopes to see a last minute deal go through. Also reports yesterday coming from the euro zone were definitely better than expected and we are sure this had a huge part to play in the euro’s comeback.

The Sentix Investor confidence index for the month of February was released yesterday. We saw a figure of -11.1, which is certainly better than the expected figure of -14.8 analysts were expecting. Germany’s factory orders for December also went beyond expectations and recorded an increase in 1.7% a figure remarkably higher than the 0.7% increase expected.

For today we have a report on German Industrial production coming out of the euro zone. This is due at 11.00 am GMT. Analysts think the German industrial sector contracted by about 0.1% in December and any figure better than the expected figure will surely be able to keep the euro afloat for the meantime.

Also keep tabs on Greece because several analysts expect a deal will be announced soon. How many times have we said that in the past weeks?

Article provided by TraderVox.com

The Reserve Bank of Australia (RBA) held the cash rate unchanged at 4.25%.  The RBA said: “At today’s meeting, the Board noted that interest rates for borrowers have declined to be close to their medium-term average, as a result of the actions at the Board’s previous two meetings. With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment. Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy.”

The Bank previously previously cut the cash rate by 25 basis points at its November and December meetings, meanwhile the RBA last increased the interest rate by 25 basis points in November last year.  Australia reported annual consumer price inflation of 3.1% in Q4 last year, compared to 3.5% in Q3, 3.6% in Q2, and 3.3% in Q1, and 2.7% in the December quarter of 2010, and only just outside the Bank’s inflation target of 2-3%.