Month: March 2012

Source: ForexYard

The USD maintained its bullish trend yesterday, as strong employment data out of the US last week boosted investor confidence in the American economic recovery. The EUR/USD dropped as low as 1.3078 during the morning session yesterday, before staging a slight recovery. Meanwhile, the USD/JPY reached as high as 82.38 before dropping slightly during mid-day trading. The pair eventually stabilized around the 82.20 level. Today, traders will want to pay attention to a statement from the Fed. While the Fed is not forecasted to adjust US interest rates, the statement may give important clues as to the state of the US economic recovery.

Economic News

USD – Retail Sales Data May Help Boost Dollar Today

Investor confidence in the US economic recovery helped the USD maintain its gains from last Friday during yesterday’s trading session. US employment statistics released last week signaled continued growth in the labor sector, which helped the dollar move up against most of its main currency rivals. The EUR/USD spent much of yesterday’s trading session around the 1.3120 level, after falling as low as 1.3078. Against the British pound, the dollar saw additional gains yesterday. The GBP/USD dropped some 95 pips during European trading, before stabilizing around the 1.5615 level.

Turning to today, traders will want to pay attention to a batch of US data that could impact dollar pairs. The Retail Sales and Core Retail Sales figures, set to be released at 12:30 GMT, are both forecasted to show improvements over last month’s readings. If true, the dollar may be able to extend its bullish trend during the afternoon session. In addition, traders will want to note the FOMC Statement at 18:15 GMT. While the FOMC is not expected to make any changes regarding US interest rates, the statement will give investors an idea of the current state of the US economic recovery.

EUR – Pessimism in Greek Economy Keeps EUR Bearish

The euro maintained its recent bearish trend against the USD yesterday, as pessimism in Greece’s ability to successfully overcome its debt crisis caused investors to keep their funds with safe-haven assets. That being said, the common-currency did see gains against some of its riskier counterparts, including the AUD and GBP. The EUR/AUD moved up over 100 pips yesterday, reaching as high as 1.2525 during the evening session. The EUR/GBP shot up around 70 pips, reaching as high as 0.8416 before staging a slight reversal.

Turning to today, euro traders will want to pay attention to the German ZEW Economic Sentiment figure, set to be released at 10:00 GMT. As the largest economy in the euro-zone, German indicators tend to have a significant impact on the EUR. With analysts forecasting today’s news to come in well above last month’s, the euro may be able to recoup some of its recent losses during mid-day trading. Additionally, traders will want to note a speech from ECB President Draghi at 11:30 GMT. The euro could see volatility if Draghi mentions anything regarding the current state of the euro-zone economic recovery.

JPY – JPY Maintains Gains vs. Euro

The Japanese yen made gains on the euro yesterday afternoon, as uncertainty regarding several euro-zone economies sent investors to safe-havens. Despite positive news last week, regarding Greek’s ability to meet its debt obligations, investors are expressing uncertainty towards the overall strength of the euro. This uncertainty is made worse given the ongoing debt problems in Portugal and Spain. As a result, the EUR/JPY spent most of the day trading around the 107.60 level.

Turning to today, traders will want to pay attention to a batch of news out of the US. Should the Retail Sales and Core Retail Sales figures show additional growth in the US economy, the yen may extend its bearish trend vs. the greenback. Additionally, the FOMC statement may boost confidence in the US economy, which could lead to further yen losses.

Crude Oil – Crude Oil Remains Steady, But May See Drop

Following last week’s gains, crude oil remained steady throughout yesterday’s session. Taking into account a number of global indicators, some analysts are wondering if the price of crude may have peaked. Recent news out of China regarding its shrinking manufacturing sector and overall weakened growth rate has pushed down demand for crude oil. Countries across Europe have also been reporting a shrinking demand for oil, which could inhibit any further rise in price.

Turning to today, traders will want to continue monitoring any developments out of the euro-zone which could impact risk taking. Any signs of euro-zone growth, particularly when the ECB President gives a speech at 11:30 GMT, may cause higher yielding assets like oil to spike during the afternoon session.

Technical News

EUR/USD

The Relative Strength Index on the daily chart has dropped into oversold territory, indicating that upward movement could occur in the near future. That being said, most other long-term indicators place the pair in neutral territory. Taking a wait and see approach for the pair may be a wise choice.

GBP/USD

While the Williams Percent Range on the daily chart has entered the oversold zone, which means that upward movement could occur, most other technical indicators are inconclusive at this time. Traders will want to keep an eye on indicators like the Slow Stochastic and Bollinger Bands on the daily and weekly charts, as a more defined trend may present itself in the near future.

USD/JPY

Following the spike the pair saw to close out last week’s session, technical indicators now show that downward movement could occur in the coming days. The Slow Stochastic on the daily chart has formed a bearish cross, while the Relative Strength Index on the weekly chart has entered overbought territory. Going short may be the wise choice for this pair.

USD/CHF

The Bollinger Bands on the weekly chart have begun to narrow, indicating that a price shift could occur in the coming days. The Relative Strength Index on the daily chart, which has crossed into overbought territory, shows that this shift could be downward. Traders may want to go short in their positions.

The Wild Card

AUD/USD

The 8-hour chart’s Slow Stochastic has formed a bullish cross, indicating that the pair could see upward movement in the near future. Furthermore, the daily chart’s Williams Percent Range has dropped well into oversold territory. Forex traders may want to go long in their positions for this pair.

Forex Market Analysis provided by ForexYard.

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This is what’s in the news for Monday, March 12, 2012. The Wall Street journal reports Airbus (EADSY) and a group of European airlines again warned that the European Commission faces a trade war after extending its emission trading scheme to the global industry. The Wall Street journal also reports Volkswagen (VLKAY) said it expects operating profit in 2012 to remain steady and expects higher costs for new technology to offset a rise in vehicle sales and revenue. Reuters reports Mexican billionaire Carlos Slim is financing an Internet TV network that will include an interview show with former TV host Larry King. Reuters also reports JetBlue (JBLU) has talked with the management of Aer Lingus about the possible purchase of a stake in the Irish airline, the Irish Times says. Finally Bloomberg reports Barry Diller, chairman of IAC/InteractiveCorp (IACI), expects his Aereo Inc. Web-based TV service to be in 75-100 cities within a year after making its debut this week in New York.

The Bank of Mozambique dropped its standing facility lending interest rate 125 basis points to 13.75% from 15.00%.  The Bank said [translated]: “The Monetary Policy Committee noted the results of inflation, which are favorable, and analyzed the predictions of short and medium term for this indicator, as well as the environment of stability that the financial sector observed and considered to have conditions for enlargement of the space money in order to facilitate bank financing to the private sector of the economy, contributing to the GDP growth targets set for this year, against a backdrop of low inflation and controlled.”

Previously the Bank held rates unchanged, after it cut the interest rate 25 basis points, and RRR by 25 basis points at its December meeting, and last cut the key lending rate by 50bps to 16.00% at its August meeting, after raising the rate by 100 basis points to 16.5% at its January meeting last year, where it also raised the interest rate paid on deposits by 100 basis points to 5%, and lifted the required reserve rate by 25 basis points to 9%.  

Mozambique saw inflation in it’s largest city, Maputo, of 7.7% in November, down from 8.3% in October, 7.8% in September, 7.9% in August, 7.7% in July, and lower than 9.3% in June.  Mozambique’s economy expanded 6.7% in the September quarter, compared to 6.8% in the June quarter and 8.1% in the March quarter.

Mozambique’s currency, the Metical (MZN) last traded around 27.40 against the US dollar.  The Bank of Mozambique next meets on the 11th of April this year.

By MoneyMorning.com.au

In 1992, bestselling author Michael Crichton published a novel called Rising Sun. It begins with the strangulation of an American girl inside the US headquarters of a Japanese corporation.

The story was fiction. But for Crichton, it was also something of a thesis. Japan looms over the US in the book the way the strangler arches over the blonde – threateningly, with greedy hands outstretched. Crichton thought America was selling its future to a cash-rich Japan – and would keep doing so, until there was nothing left.

What Crichton failed to realize was that Japan was going into a long bear market. The figures even then showed that the Japanese stock market, real estate and foreign investment were all down from huge highs. And time would show that they would keep going down. But it looked different then. Japan still looked like it would recover.

There were plenty of people who thought Japan would come back. But if they invested accordingly, they would have lost money. A lot.

Today, the story is China. The easy story the mainstream tells us is an industrialising Asia will put a floor under Australian prosperity as a zombie America fades. Things are more complex than that. But a weakness in human beings (as investors) is we fall back on simple stories to explain events.

There are no easy answers. Certainly not ones you can use to shape an investment strategy you could bet your life savings on.

But at ‘After America’, the editors at Port Phillip Publishing will sort through the ideas – both theoretical ideas and investing ideas – and see which ones are valid. Some ideas will be already ‘priced in’ to stock prices. But there are sure to be some that aren’t. That’s where the profit potential is.

If you can get the big investing themes right, managing your money should be easy, or at least easier. Because most of your capital will be in the right asset class in the right market from the start (according to the famous Brinson Study, this is the biggest influence on your returns over time.)

But of course, you have to be in the right market and asset class in the first place.

And our first ever investing symposium is designed to make sure fact isn’t getting mixed up with fiction as the future unfolds.

So get on board – Money Morning is going on tour.

My name is Callum Newman – the most recent addition to the editorial team at Money Morning – and I’ll be your roving reporter at Port Phillip Publishing’s ‘After America’ conference.

We’re not quite in Sydney yet, but the reckoning begins today. Your regular editors, Kris Sayce and Dr. Alex Cowie, are putting the final additions to their speeches and recommendations right now. The other Port Phillip editors are doing the same thing. They’re all in for a busy week. So I’ll send you a daily update, including Money Weekend, with the key insights, themes and memorable quotes from the conference.

“After America” kicks off tomorrow, in the bar. It’s probably the best place to be in over the coming days – I certainly hope so – to corner the editors, special guests and attendees to discuss key money-making ideas.

The barman should end up happy – he’ll get an earful of financial expertise instead of the usual lecture on cricket and the drinking prowess of the Australian male… especially this one. That’s because I’ll be listening, instead of talking, in order to be your eyes and ears.

The things we want to know – and hope you do too – are the key things we’ll discuss:

• Will the ASX continue to trade in a range?
• Is the recent correction in gold a ‘falling knife’ or a dip to buy?
• What is the direction for interest rates?
• Can a command economy like China defy history and function in the long term?
• What is the outlook for Australia?

We’ll also explore hedges, risks, defensive plays, speculations, profit opportunities, retirement plans, trading strategies, price signals, chart movements, moving averages, historical lessons and opposing views – everything that makes a market.

The job is then to distil all of it into an actionable plan. Making serious money is, after all, why we’re going. The recommendations won’t be theoretical. They’ll be a call to action.

Of course, in these notes, we’ll have to leave out any specific recommendations our speakers make. But we’ll share every important investing theme with you. And there are plenty to discuss. We certainly picked the right moment. It’s an excellent time to get together. There are plenty of pieces to the investing puzzle right now, such as…

• The sovereign debt crisis in Europe
• A hostile Iran
• A broke America
• A slowing China
• Speculative frontier markets

The only problem for most investors is the pieces never seem to fit together in the way they should.

But that’s why our editors are on a serious undertaking to make sure you survive financially intact.

The market always brings challenges. Just as it always brings opportunities. Investing isn’t easy, but if you want to live a comfortable retirement, you have to do something with your money.

The time has come for us to leave mission control in St Kilda and head to Sydney. As of tomorrow, we’re on location.

Callum Newman
Roving Reporter, After America

Prelude to ‘After America’

The markets were mixed today amidst investors digesting news from Europe. In economic news, the Treasury Department said that the deficit grew by $232 billion in February, increasing the imbalance through the first five months of the budget year to $581 billion, or 9 percent less versus the same period in 2011.

Cabot (CBT) was upgraded today by Jefferies (JEF) to buy from hold with a price target of $50 as the company issued forable EPS revisions and structural changes. Shares are higher by about a tenth of a percent.

Euro zone finance ministers meeting in Brussels are set to sign off on the second bailout package for Greece and shift their focus to Spain which is set to miss deficit reduction targets again this year.

As the saying goes, there are many possible reasons for an insider to sell a stock, but only one reason to buy — they expect to make money. So let’s look at two noteworthy recent insider buys.

This is the inaugural Central Bank News link list. This is a move to expand the coverage of the website to bring our readers some of the best and most interesting stories around the world on central banking and monetary policy. Basically just another step towards making Central Bank News the ultimate resource for central banking news and information. Feedback is always welcome, and comments are highly encouraged.

By TraderVox.com

Euro zone governments have been able to rescue the region from a possible Greek default, but the debt crisis is far from over. After the finance ministers prepare to sign the bailout deal, there are concerns that as Greece tries to force the recalcitrant bondholder to comply, it might cause a major credit event in the region.

For some analysts, the Greece bailout deal and the refinancing done by the ECB have had tremendous effects on the region’s economy, but much needs to be done to safeguard against contagion.

Countries’ such as Ireland, Spain, Portugal, and Italy are showing signs of following Greece. Spain, which has shown signs of trouble for the same period as Greece, has announced that it could not meet last year’s deficit target and it is slated to default in 2012.

Some analysts have stated that Spain might be the cause of the next euro zone crisis creating fears and causing risk aversion measures.  While there has not been great impact in the Forex market, crisis in Spain might not spare the market since Spain is among the five major economies in the region.

Market participants are also keeping a keen eye on the developments in Portugal as the government continues to face high financing costs. According to Germany’s Finance Minister Wolfgang Schaeuble the euro region should not rule out a third bailout plan in 2012. The crisis in Europe is expected to force the ECB to push the benchmark interests to below zero to ensure economic recovery.

The euro continues to decline against the dollar as investors keep looking for opportunities to selloff their risks. Safe haven assets seem to be gaining demand as investors keep watch on the actions to be taken by Greece after the March 23 deadline for the recalcitrant bondholders to comply with the Collective Action Clause. The euro region is far from crisis and further action will have to be taken to reverse the situation. Region’s troubles are further compounded by the negative trade data report from China.

Article provided TraderVox.com
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