Month: March 2012

Source: ForexYard

While the US dollar was able to move up against many of its main rivals during morning trading yesterday, the currency was not able to maintain its bullish trend during the evening session. US fundamental data, which showed a decrease in US housing starts in February, caused the greenback to turn bearish against both the yen and euro. Today, traders will want to pay attention to another US indicator for clues regarding market sentiment. The Existing Home Sales figure, scheduled to be released at 14:00 GMT, is considered an accurate sign of health in the housing sector, and could lead to market volatility.

Economic News

USD – USD Reverses Bullish Trend

Risk aversion led to significant dollar gains during morning trading yesterday, as the combination of poor Chinese and euro-zone news boosted safe-haven currencies. The greenback was not able to maintain these gains, and by the afternoon session had once again turned bearish against its main currency rivals.

Analysts attributed the dollar’s reversal to the news that housing starts in the US decreased last month, in a sign that the US economic recovery still has a long way to go. The EUR/USD spiked over 50 pips during the afternoon session, reaching as high as 1.3243. The USD/JPY dropped over 40 pips in the same amount of time, reaching as low as 83.31.

Turning to today, US news is once again forecasted to influence market sentiment. A testimony from Fed Chairman Bernanke is likely to give clues as to any plans to increase US interest rates in the near future. While no major announcements are expected, Bernanke’s speeches tend to generate speculation among investors, which can lead to dollar volatility. Following the speech, the Existing Home Sales figure is scheduled to be released. Analysts are predicting a slight increase in today’s figure, which if true, could help the USD offset yesterday’s losses.

EUR – Euro Recovers vs. USD, Extends Gains against AUD

The EUR/USD tumbled during the morning session yesterday, falling as low as 1.3170. That being said, fears that the US economic recovery is not proceeding as quickly as originally thought eventually caused the common currency to correct its earlier losses. As a result, the EUR/USD rose as high as 1.3243 during the afternoon session. Against the Australian dollar, the euro extended its recent bullish trend. The EUR/AUD was up well over 150 pips yesterday, reaching as high as 1.2629 before staging a mild downward reversal.

Turning to today, euro traders will want to pay attention to a batch of US news. Specifically, the Existing Home Sales figure may generate volatility for the EUR/USD pair. The euro’s gains yesterday were primarily due to a decrease in US housing starts from last month. With analysts predicting today’s figure to show an increase in US home sales, the euro may once again turn bearish during the afternoon session today. In addition, fears that Portugal will have to eventually restructure its debt have recently come about. Any additional signs of future euro-zone debt issues may weigh down on the common currency.

JPY – JPY Turns Bullish vs. USD

The Japanese yen saw bullish movement vs. the US dollar during the afternoon session yesterday, following disappointing US housing data. The USD/JPY dropped over 40 pips, reaching as low as 83.31 before staging a mild upward correction. The yen also saw mild gains against the euro during yesterday’s session. At one point, the EUR/JPY was down 55 pips for the day, reaching as low as 110.27. The pair eventually corrected itself, and by the evening session was trading at 110.60.
Turning to today’s session, the yen may reverse yesterday’s gains if the US Existing Home Sales figure comes in as predicted. That being said, some analysts are predicting an increase in investments in the Japanese economy towards the end of the month, the conclusion of the Japanese business year. Traditionally the end of the business year in Japan sees renewed investor confidence which could ultimately support the Japanese currency.

Crude Oil – Crude Oil Tumbles

Crude oil declined steeply on Tuesday, as weakened demand weighed down on the price of the commodity. The price of oil steadily decreased yesterday, falling as low as $106.13 a barrel before staging a correction during the evening session. Analysts attributed oil’s bearish trend to decreased demand in the EU and China, as well as an increase in US inventories.

Today, traders will want to pay attention to any announcements out of the EU. Negative rumors regarding the current state of several euro-zone countries have led to risk aversion among traders. Any pessimistic announcements regarding the current debt situation in Portugal or Italy could cause investors to revert back to safe-haven assets. In such a case, oil could drop further.

Technical News

EUR/USD

Most long-term technical indicators show this pair range-trading, meaning that no significant movements are forecasted at this time. That being said, traders may want to take a wait and see approach, as a clearer picture may present itself in the near future. The daily chart’s Williams Percent Range, which is trending upward at the moment, may eventually reach overbought territory. In such a case, a bearish correction could occur.

GBP/USD

The weekly chart’s Williams Percent Range is currently hovering in the overbought zone, indicating that a bearish correction could occur in the coming days. A bearish cross on the daily chart’s MACD/OsMA lends further support to this theory. Traders may want to go short in their positions.

USD/JPY

A bearish cross on the weekly chart’s Slow Stochastic indicates that a downward correction could occur in the near future. Furthermore, in another sign that the pair could move down, the daily chart’s Williams Percent Range is currently at -20. Going short may be the wise choice for this pair.

USD/CHF

A narrowing of the Bollinger Bands on the weekly chart indicates that a price shift could occur in the coming days. That being said, most other technical indicators are not showing a clear picture as to which direction the shift could be. Traders may want to take a wait and see approach for this pair.

The Wild Card

NSE Nifty Index

A bullish cross on the daily chart indicates that the Nifty could see upward movement in the near future. The 8-hour chart’s Williams Percent Range, which is currently below -80, lends additional support to the theory that upward movement could occur. Forex traders may want to go long in their positions ahead of a bullish correction.

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

Tradervox (Dublin) – Euro advanced against the yen and the dollar today, after the Greek Prime Minister Lucas Papademos secured a parliamentary approval for the international bailout package for his country. This came ahead of Germany’s PMI report expected later today and Bernanke’s testimony to the Congress today. Greece secured the world’s largest bailout package with 213 votes for the accord and 79 votes against. The Prime Minister had received the mandate on November 16 with 255 lawmakers giving him a go ahead.

Papademos has been very influential in securing the Greek bailout package convincing private investors to forgive 100 billion Euros of debt that paved the way for EU leaders to give the bailout money. The euro zone governments have been asked to offer a better firewall to curb the debt crisis in the region. Countries such as Portugal and Ireland are already receiving financial aid and there is risk of contagion in Italy and Spain.

The rose after the vote to 110.88 yen from 110.78 yen level it closed yesterday in New York. The euro also climbed against the dollar by 0.2 percent to $1.3254. The New Zealand and Australian dollars also climbed against the yen and dollar after the report of the approval. Germany is expected to give its manufacturing and services data tomorrow.

Earlier yesterday, the euro fell against the buck and pound due to concerns about the economic growth in the region. These concerns still linger as Netherlands have increased its 2013 budget deficit forecast from 4.6 percent to 4.5 percent. Further, German Federal Statistics Office have indicated that producer prices increased by 0.4 percent from January’s 0.6 percent increase. It had been estimated to increase by 0.5 percent by most economists around the world.

The positive news from the euro region are much welcomed by investors who are very keen to understand the prospects of the region as a looming economic recession is forecasted later in the year. The Asian market was upbeat about the Greek vote and we are yet to see what will happen in the US session.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Tiffany’s FY2011 results came in lower than expected this morning mainly because of the company’s underperformance in 4Q. Net income fell 1.6% YoY to $178.4m, or $1.39 per share. The financial situation in Europe explains a large part of this underperformance. For luxury retailers, European sales tend to split 50/50 between local customers and customers who travel to Europe. For Tiffany, however, the split is a little different and purchases from local customers account for up to 75% of their European sales. So it’s not surprising the slowing down in Europe economy dented Tiffany’s earnings. Tiffany also did not expand as quickly as it hoped in China. It only opened 2 new stores in 2011, although the 16 stores in China brought in 12% of its global sales in FY2011. Management provided FY2012 guidance aiming for 10% net sales growth, 16%-19% profit growth and 24 new stores worldwide. That is the reason why the stock gave us the biggest rally in the past 6 months by zooming more than 6% today. Management gave us an upbeat tone on the recovery of luxury consumption on the East Coast of the US as well as Europe. So do you buy Tiffany? I like that store, if for nothing else, it’s fun spot to visit in New York. There is a sterling silver section with modestly priced pieces, so even when your name is not Newt Gingrich, you can still take something out with you. Please send in your comments to our show when you get a chance or tweet me @juliasun_onair. I’m Julia Sun for the Financial News Network.

By TraderVox.com

Tradervox (Dublin) – China’s weakening economic outlook reports led the south pacific dollars to decline against the US namesake with the New Zealand dollar losing 1.1 percent against the buck. It closed the New York session at 81.72 cents. The Aussie declined 1.2 percent to settle at $1.0480 at the close of the New York trading yesterday. Apart from China’s growth outlook, south pacific dollars were also affected by the BHP Billiton Ltd comments that production of steel was flattening.

This decline have been overturned in the Asian session today as optimism about the Europe crisis emerged after Greek Prime Minister Lucas Papademos secure parliamentary approval for the second bailout package. These reports boosted demand for higher-yielding assets increasing the demand for the Aussie and the Kiwi. Ben S. Bernanke is also expected to show his optimism today when he addresses congress. Text from his written report to the Congress indicates that he believes that the debt crisis in the region has eased.

213 lawmakers in Greece voted for the legislation to secure the bailout package while 79 of them were against the motion. This marks the biggest sovereign restructuring in the world with private investors agreeing to forsake 100 billion Euros of debt. The approval by the Greek parliament has brought new hope for the euro region which is plagued by debt crisis. Concerns still linger over the fate of Ireland and Portugal which are receiving financial assistance from IMF, and contagion concerns rise over Italy and Spain.

Reports of Greek parliament approval led to the increase of the south pacific currencies with Australian dollar increasing by 0.4 percent to settle at 1.0519 after it had declined by 1.2 percent yesterday. Against the yen, Aussie gained 0.3 percent to settle at 87.96 after it had dropped by 0.8 percent yesterday. The Kiwi also advanced against the dollar by 0.5 percent to trade at 82.09 US cents and also increased against the yen by 0.3 percent to trade at 68.63 percent.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Here's today's Central Bank News link list, click through if you missed the previous central bank news link list.  Remember, if you want to submit links for inclusion in the daily link list, just email them through to us or post them in the comments section below.

The Bank of Thailand held its benchmark 1-day bond repurchase rate unchanged at 3.00%.  Bank of Thailand Assistant Governor, Mr. Paiboon Kittisrikangwan, said: “The MPC assessed that the risks from the global economy had decreased and that the recovery in the Thai economy was gaining momentum. At the same time, inflationary pressure had edged up. In this context, the MPC deemed  the current level of the policy rate to be appropriate in supporting economic recovery while still consistent with keeping inflation within target. The MPC, therefore, voted unanimously to maintain the policy rate at 3.00 percent per annum at this meeting.”

The Bank of Thailand previously cut the rate 25bps in January and at its December meeting, and previously raised the rate to 3.50% at its August meeting, and increased the interest rate in July last year by 25 basis points to 3.25%.  Thailand reported headline inflation of 3.6% in December, down from 4.29% in August, 4.08% in July, 4.1% in June, compared to 4.19% in May, and 4.04% in April.  The Bank of Thailand has an inflation target range of 0.5% to 3.0%.  

Linsanity is now brought to you by Volvo. The New York basketball star signed a two-year endorsement contract with Volvo to become their new brand ambassador worldwide. The detailed terms were not disclosed, but Jeremy Lin will participate in the company’s marketing activities for the next two years. Volvo plans double the company’s global sales to 800,000 by 2020, and signing Jeremy Lin might be the best deal yet. During the press conference where this was announced, Jeremy Lin said when he grew up, he never had any luxury cars or watches, and both quality and affordability are very important to him. Is that what Volvo is? Send in your comments to our show or tweet me @juliasun_onair. I’m Julia Sun reporting for the Financial News Network in New York City.

By MoneyMorning.com.au

There was one big surprise from the Port Phillip Publishing ‘After America’ investment symposium. It was the lack of questions about the Australian housing market.

We felt sure we’d get a grilling on it.

But we didn’t.

In a way, that’s good. We think it means investors have moved on from wondering if the Aussie housing market will crash, to thinking about how long the crash will last.

In our view, it’s going to last a long, long time. And that means there’s still plenty of time for you to take a punt as Australian housing enters a multi-year (perhaps even multi-decade) bear market.

So, what’s the best way to profit? Simple. You bet against the sector most leveraged to Australian house prices…

The Worst Property Investment You Could Make

But first, there is something you should avoid. And that’s the ASX Property Index.

According to the Australian Securities Exchange (ASX):

“The indices have been specifically designed to track daily value changes in the Australian residential property market and are constructed using the latest possible property sales information thereby avoiding the 6 to 8 week reporting lags present in other property indices.”

At the moment, the index isn’t tradeable. But there’s no doubt the ultimate aim of the ASX is to develop a tradeable instrument.

The problem we have with the index is that it’s only derived from house prices. It isn’t an index of actual house prices. By that we mean it’s subject to the mathematical formulas used to create the prices rather than actual trading in the housing stock.

Sure, it takes into account property sales. The trouble is, it uses fancy formulas to work out the price of other houses.

To our way of thinking, that leaves too much of the pricing process in the hands of boffins rather than investors.

Add to that the ASX’s poor record of creating new trading products and… well, let’s put it straight: there are other, better ways of betting on or against the Australian housing market.

The best of them is the Australian banking sector…

Lower Profits and Lower Returns

Today the Australian Financial Review (AFR) takes note of what we’ve said for years. Most recently here. The AFR writes:

“Investors in bank stocks have been warned that the ‘glory days’ of the big four profiting from windfall gains by playing the financial markets are over.”

Trust the mainstream press to arrive late on the scene. Just as they’re only now warning about falling Australian house prices – something we warned you about when it was useful… over three years ago!

The banks are leveraged so much to the Australian housing market, it’s just not funny. The only reason the banks have clocked up big profits is because they helped fuel rising house prices. The higher prices went, the bigger mortgages became.

But as anyone with even a basic idea of leverage will tell you, it’s a double-edged sword. When the market is going in your favour, leverage provides a nice boost. But when the market goes against you… the leverage goes against you too.

As the Age reported yesterday:

“Property information group RP Data said that 6.4 per cent of homes were valued at less than their purchase price in the December 2011 quarter, rising from 4.9 per cent of the market in the September quarter.”

And that’s not the worst of it. Because it doesn’t include properties valued marginally higher than the debt. That’s important because with interest rates at 7%, borrowers need house prices to rise at least that much in order to be ahead of the game.

So if you include interest costs, we’ll guess you can double the number of households that are in negative equity.

And as anyone with even a basic idea of the banking system will tell you, negative equity and falling Australian house prices is bad news for Australian banks. Because it means a borrower needs smaller loans to buy a house… and that means less income for the banks.

And that means lower profits and lower returns for investors.

That’s what makes it a good idea to sell the banking sector now. Despite the fact Australian bank stocks have already taken a beating over the past two years…

To some degree, investors have priced in lower bank profits. Proof of that is in the high dividend yields. Investors are saying they don’t believe the banks can keep racking up profits and increasing dividends.

The Surest Way to Invest in “Aussie Property”

But as we see it, the big Aussie banks haven’t seen the worst of it yet. The longer the Australian housing market stagnates, the more disillusioned property investors will become.

And with negative rental yields and no capital growth, that makes housing a terrible, terrible investment. Look for Australian house prices and Aussie bank share prices to head even lower this year.

Sell or short sell ANZ Bank Ltd [ASX: ANZ], Commonwealth Bank [ASX: CBA], National Australia Bank Ltd [ASX: NAB], and Westpac Ltd [ASX: WBC].

But manage your position and risk carefully. This market is very volatile. So never risk or invest more than you can afford to lose.

Cheers.
Kris

Related Articles

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The Australian Property Market and the Conversation Nobody Wants to Hear

Sydney – Hero or Villain of the Aussie Housing Market?

The Best (and Worst) Way to Bet on Falling Australian House Prices

By MoneyMorning.com.au

Ed Note: David Thomas, BRIC expert and entrepreneur, gave a great presentation at ‘After America’, Port Phillip Publishing’s first investing conference. Today he shares some ideas on China…and where to look for investment opportunities. You can pre-order the After America DVD now to learn more, plus his thoughts on India, Brazil and Russia.

China has three imperatives, as comprehensively described in their 12th Five Year Plan (2011 – 2015):

Driving investment offshore, in real corporate assets to diversify their exposure to US Treasuries, to secure resources and commodities. Also to upgrade their service sector (tourism, education, healthcare, technology, financial services etc.). This creates new opportunities for foreign companies to participate in China’s industrial revolution and nation-building activities.

Investing in the development of their 2nd and 3rd tier cities in their inner and western provinces, increasing productivity and consumption, creating jobs and continuing the process of rapid urbanisation, whilst focusing on the progressive industries of the 21st century (IT, biotech, high value manufacturing) and a cleaner, sustainable environment for their increasingly urban population.

Accelerating the development of clean technology with a commitment to spend US$65 billion each year (investment in renewable energy spending has grown at 77% p.a. since 2008) in the development of new renewable energy sources (hydro, nuclear, solar, wind, biomass and more efficient use of coal and existing energy sources). And clean energy vehicles to reduce their dependence on fossil fuels and improve the environment by a 40% to 45% reduction in carbon intensity from 2005 levels by 2015

But the key to the future growth of their economy depends on an increase in domestic consumption. Leading companies, entrepreneurs and business leaders are competing for access to their rapidly growing market. Opportunities exist across the board, but one example of this is in the area of fresh and organic food.

China’s domestic food market is already very strong and vibrant and, with its rapidly growing middle class and urbanisation program, is in a state of transition. For centuries, the Chinese have purchased their daily fruit, vegetables, meat and other perishables from local fresh produce markets.

More recently, with increasing urbanisation, modern supermarkets are gaining popularity and the trend to purchase weekly is slowly becoming more convenient for busy commuters. In the past, little attention was paid to the origin or treatment of the food, as “fresh” was simply considered the best option.

Whilst fresh is still a major consideration, Chinese shoppers are now focused on food safety, health and diet. The spate of food quality incidents and a heightened awareness of the effects of pesticides have produced a more discerning consumer and fresh and organic options have gained popularity.

Soil depletion, over-cultivated land, pollution and public health issues have also forced the Government to look for solutions. They see organic farming as a potential remedy and for the past 30 years have been working on initiatives to develop a national standardisation body.

When it comes to fresh and organic food products, price sensitive Chinese consumers still pay close attention to whether produce is grown locally or internationally. With time, and as China continues to develop their local food industry, more local options and choice will become available to local consumers. In the meantime, foreign players are beating a path to China’s door.

David Thomas
Contributing Writer, Money Morning

Profit Opportunities in China

By MoneyMorning.com.au

In this article, we’re going to show you a different way to profit from nuclear power… Yes, nuclear power.

But not in the way you may think.

Because, as you’ll soon see, this opportunity has nothing to do with buying the last of the beat-down uranium stocks from the ‘Fukushima Fire Sale’… Giving terrorists access to nuclear fuel… Or subjecting anyone, anywhere, to the risk of radiation poisoning.

In fact, this is an opportunity to make money CLEANING UP the nuclear industry. And by cleaning up, we mean SHUTTING DOWN.

You see, as of July 2011, the World Nuclear Association has retired the following nuclear related facilities from operation:

• 100 uranium mines…
• 85 commercial power reactors…
• 45 experimental or prototype reactors…
• 250-plus research reactors…
• And ‘a number’ of fuel cycle facilities…

All of them need to be decommissioned.

But so far, the International Atomic Energy Agency (IAEA) reports, only 17 of the 218 commercial nuclear reactors on the ‘permanent shut down’ list have been dismantled completely and made ‘perfectly safe’…

This is why New Scientist recently reported, ‘Decommissioning nuclear power plants will become a huge global business in the 21st century’.

Guess how much it costs to decommission a single nuclear power plant… Around half a billion dollars. Let’s call it $480 million.

Multiply that by the 201 reactors the IAEA says still need to be dismantled and you’re looking at a $96.4 billion dollar industry.

And that’s just the spoils that will go to the clean-up crews. As you’ll see in a moment, there are plenty of other businesses on the outskirts of this industry who could claim a slice of this monster-profit pie.

You see, even if more countries follow Germany, Italy and Switzerland and pull the plug on their nuclear plants, it will be great news for this sector. Because the number of plants to decommission will grow – fast.

And then there are the ‘pro nuclear’ countries, such as China and India. According to the World Nuclear Association, China’s demand for uranium may rise to 20,000 tonnes a year by 2020… That would be equal to 39.6 per cent of the 50,500 tonnes mined around the world in 2010… Because it has plans to build 100 new reactors. And Srikumar Banerjee, Chairman of the Atomic Energy Commission, says India will increase its nuclear capacity 13-fold in the next 20 years…

And you know what that means… Sustained demand for nuclear power plant decommissioning services well into the future.

Therein lies the heart of what could be a huge profit opportunity for you as an investor.

This is a service we will need from today all the way through to at least 2060.

Whether it’s investing in the companies that produce gear to protect workers from radiation… (Such as UniTech Services Group, a fully owned subsidiary of UniFirst Corp [NYSE: UNF].)

Tech companies that produce the gadgets and machinery used – right now – to shut down plants safely…

A small-cap tech innovator coming up with faster, safer ways to clean up the closed plants…

Or the groups that decommission the plants…

This sector could give you MORE gains than any cheap uranium stock.

Of course, this business is yet to take off. As we said above, only 17 plants have been fully and safely shut down so far. But there are hundreds to go. And that number is growing all the time.

Is there profit potential in this idea? There could be. But then again, maybe there’ll be nothing in it for investors.

Either way, it’s a new way of looking at the nuclear energy problem. And with gas prices at record lows, maybe this is where fossil fuels make a comeback.

It would be ironic if the thing to kill the nuclear energy industry wasn’t the rabid green movement… but fossil fuels!

Aaron Tyrrell
Editor, Money Morning

The “After America” Archives…

‘After America’: The World Reset
2012-03-17 – Callum Newman

‘After America’: Threats and Opportunities
2012-03-16 – Callum Newman

China and The Revolution
2012-03-15 – Callum Newman

Cocktails and Central Banks
2012-03-14 – Callum Newman

Prelude to ‘After America’
2012-03-13 – Callum Newman

How to Invest in the Fastest-Growing Energy Business of the 21st Century – Before it’s Worth $96.4 Billion Dollars