InvestMacro Forex News

June 19, 2012

Loonie Falls on Economic Slow Down Concerns

By TraderVox.com

Tradervox (Dublin) – The loonie has dropped against the US dollar after concerns rose about economic growth in the country is slowing. The country’s exports to the US declined as oil exports dropped last month due to slowing economic recovery in the US, Canada’s largest exporter. The Canadian dollar dropped for the third day as Federal Reserve officials meet to discuss monetary policy where they are expected to extend the twist program.

Dean Popplewell who is the chief strategist at Oanda Corp indicated that the Fed is under pressure to do something proactive otherwise the market will lose risk appetite. At the start of trading today, the Canadian dollar had increased to C$1.0193 but was unable to move beyond the C$1.0200. This will create a triple bottom which has the potential to spur “short-term buying interest” for the US dollar against the loonie. George Davis suggests that this sets up the potential to test the C$1.0268. George Davis is the Chief Technical Analyst RBC Capital Markets in Toronto.

Concerns about Greece exiting the euro zone declined after pro-bailout party won the election; however, concerns about Spain and Italy have continued to dog the market. According to Jeremy Stretch of Imperial Bank of Commerce in London, there are a lot of Canadian data to be released this week which might cause a lot of uncertainty in the direction taken by the USD/CAD pair. There are economists who are predicting that Statistics Canada will provide reports showing a slowing economic growth in the country this week as they release wholesale and retail sales.

It is expected that wholesale sales data will show a decline from 0.4 percent in March to 0.2 percent in April. This has caused the Canadian dollar to decrease against the US dollar by 0.3 percent to CS$1.0243 at the close of business in Toronto.

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
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June 19, 2012

FOMC “Influencing Gold More Than Eurozone”, Extending Operation Twist “May Not Be Sufficient”, Spanish Borrowing Costs Soar

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 19 June 2012, 08:30 EDT

THE U.S. DOLLAR gold price hovered around $1630 an ounce during Tuesday morning’s trading in London – in line with where it ended last week – while stocks and commodities were also broadly flat ahead of the latest Federal Reserve policy meeting.

The silver price traded in a tight range just below $29 an ounce – 1.7% up on Monday’s low.

Over in India, traditionally the world’s biggest gold buying nation, local press report that the Rupee gold price set a fresh record in Delhi Tuesday, as the Rupee fell against the Dollar on international currency markets.

“There has been very light buying from India, but it’s really quiet there,” says one Singapore-based dealer, adding that there has been a pickup in scrap gold bullion sales from Thailand.

“I guess there’s a kind of wait-and-see attitude because there’s a lot of uncertainty in the market.”

“For the moment,” adds Lynette Tan, investment analyst at Phillip Futures in Singapore, “we expect policy decisions from the Fed to influence the gold price more than risk appetite linked to the Euro crisis.”

The Federal Open Market Committee meets today and tomorrow to decide any changes to US monetary policy.

“We would be quite surprised if we saw no [Fed policy] easing this week,” says a note from Jan Hatzius, chief US economist at Goldman Sachs.

“We believe that an extension of Operation Twist could well be insufficient on its own and could thus be followed by additional easing action before long,” added Hatzius, suggesting the Fed could consider a “sufficiently large program” of mortgage-backed securities purchases.

However, “the agency MBS market might have more trouble accommodating the Federal Reserve this time” says a note from Barclays. The Barclays economists point out that the Fed will be keen to avoid its actions creating “dislocations” in markets, meaning it could include more US Treasury bond buying in any new round of quantitative easing.

Here in Europe, Spain saw its borrowing costs rise to over 5% for one year – up from 1.985% last month – when it auctioned €2.4 billion of 12-Month bills on Tuesday. A further €639 million of 18-Month bills were sold at an average yield of 5.1%, up from 3.3% at the last similar auction.

Benchmark Spanish 10-year yields eased slightly following the auction, but remained above 7% by Tuesday lunchtime in London.

European leaders announced last week that Spain plans to borrow up to €100 billion from Eurozone rescue funds to finance the restructuring of its banking sector, with stress test results due to be published later this week.

“It is not at all clear whether Spain’s rescue package will help bring about the definitive clean-up of its banking sector,” says Nicholas Spiro, managing director of consultancy Spiro Sovereign Strategy, which specializes in sovereign credit risk.

“Spaniards, like the markets, fear the €100 billion credit line is the prelude to a full bailout accompanied by much stronger conditionality.”

Elsewhere in Europe, investor sentiment in Germany has turned decidedly bearish in recent weeks, according to the widely-followed ZEW Indicator of Economic Sentiment. The indicator has fallen by 27.7 points – the biggest fall since 1998 – from 10.8 last month to -16.9.

The International Monetary Fund announced Monday that the amount of additional funding pledged by governments has risen from $430 billion to $456 billion.

The additional funds “Will be drawn only if they are needed as a second line of defense”, IMF managing director Christine Lagarde said.

Eurozone governments “will take all necessary policy measures to safeguard the integrity and stability of the Euro area, including the functioning of financial markets and breaking the feedback loop between sovereigns and banks”, according to a leaked draft of the communique from the G20 meeting in Mexico, which continued Tuesday.

“Trader concerns are being confounded by the apparent idleness at the G20,” says one trader quoted by the Wall Street Journal.

“What was hoped would be a definitive meeting of the world’s most powerful economies devising a solution to the slowing global growth story, unfortunately looks to be plagued with the same sort of inertia that led Eurozone policy makers to stand by as the crisis mushroomed.”

Here in the UK meantime, consumer price inflation eased to 2.8% last month – down from 3.0% in April – according to consumer price index data published Tuesday. This is the first time CPI inflation has fallen below the Bank of England’s upper tolerance of 3% since 2009.

Across the Atlantic, CME Group, which operates New York’s Comex exchange, has announced plans to allow holders of short-dated gold options to exercise into gold futures positions at expiry, with effect from the start of next month – though CME tells Reuters it has no plans to extend this to longer-dated instruments. Currently, all gold options holders are only able to settle for cash.

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.

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.

June 19, 2012

Central Bank News Link List – June 19, 2012

By Central Bank News

Here’s today’s Central Bank News link list, click through if you missed the previous central bank news link list. The list is updated during the day with the latest news about central banks so readers don’t miss any important developments.

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.

• BOJ chief says central banks stand ready to pump in liquidity (Reuters)

• Euro crises shifts to Spain as Merkel faces G-20 pressure (Bloomberg)

• Draft: G-20 will produce plan for global growth(AP)

• Fed meets as many await possible help for the economy(AP)

• Fed will ease monetary policy this week:Goldman(CNBC)

Source:www.CentralBankNews.info

June 19, 2012

Dollar Down against Major Currencies on Easing Speculation

By TraderVox.com

Tradervox (Dublin) – The US dollar fell against the euro and the yen as Federal Reserve commenced on a meeting to discuss the monetary policy as speculation the Fed may change the current monetary policy to accommodate further stimulus measures rose in the market. The euro has continued with its gain as the G20 members meet in Mexico to focus on how to respond to the crisis in Europe. The euro advance has been limited by the enormous debt crisis in the region as Spain’s borrowing cost continues to rise. The Australian dollar also advanced against the US dollar for the fourth day after reports indicated that the recent cut in interest rate by the RBA was as a result of finely balanced discussions.

According to Jefferies & Co. and JPMorgan Chase & Co. the Fed might extend Operation Twist which is supposed to expire this month. However, according to Yuki Sakasasi of Barclays Capital in New York, the mere extension of the Operation Twist Program will disappoint the market as investors are looking for something more aggressive. If this happens, the dollar might gain as investors sell off their risk. The US dollar has continued to decline after results from Greek Election showed that pro-bailout party won the election increasing risk appetite in the market.

The Group of 20 nations’ leaders meeting Los Cabos in Mexico has also initiated speculations that leaders will agree on a coordinated response to the euro crisis. The IMF has already pledged $456 billion that will be used as “second line of defense” as it seeks to get a better solution to the crisis in Europe.

The dollar has dropped by 0.3 percent against the euro to trade at $1.2613 at the start of the London session after it had declined to as low as $1.2748 yesterday, which is the weakest since May 22. Against the yen, the US dollar dropped by 0.3 percent to exchange at 78.88 yen.

June 19, 2012

ForexCT Afternoon’s Market Thoughts for 19 June 2012

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.

June 19, 2012

EUR Reverses Gains during European Trading

Source: ForexYard

News that pro-austerity political parties won in the Greek election held over the weekend gave the euro a boost against both the USD and JPY during overnight trading yesterday. That being said, ongoing worries regarding the Spanish banking sector outweighed the news out of Greece, and by mid-day trading the common currency had already given up all of its earlier gains. Turning to today, in addition to any developments out of the euro-zone, traders will also want to pay attention to the US Building Permits figure at 12:30 GMT. Should the figure come in below the forecasted level, it could raise expectations that the Fed will move to initiate a new round of quantitative easing, which may turn the dollar bearish.

Economic News

USD – Dollar Benefits from Spanish Banking Worries

The US dollar saw gains against several of its main currency rivals during trading yesterday, as ongoing concerns regarding Spain’s banking sector drove investors to safe-haven assets. In addition, investors remain worried about what the makeup of the new Greek government will be, despite the win of pro-austerity political parties on Sunday. The GBP/USD fell close to 100 pips over the course of the day, eventually reaching as low as 1.5636 by mid-day trading. Against the AUD, the dollar gained more than 60 over the course of European trading. The AUD/USD eventually settled at the 1.0060 level during the afternoon session.

Turning to today, dollar traders will want to pay attention to the US Building Permits figure, set to be released at 12:30 GMT. While analysts are forecasting the figure to come in roughly at the same level as last month’s, traders will want to note that most US indicators have come in below expectations as of late. Should today’s news disappoint, the dollar may give up yesterday’s gains during the afternoon session.

EUR – Spanish Banking Worries Lead to Fresh EUR Losses

After shooting up around 100 pips against both the US dollar and Japanese yen in overnight trading yesterday, the euro proceeded to give back virtually all of its gains over the course of European trading. While the reaction to Greece’s election was largely positive among investors, Spanish debt worries continued to dominate market sentiment which led to the euro’s losses. After reaching as high as 1.2746 during the Asian session, the EUR/USD fell more than 160 pips, eventually hitting 1.2590. The EUR/JPY dropped close to 150 pips during European trading, eventually reaching the 99.30 level.

Turning to today, traders will want to continue monitoring any developments out of the euro-zone, particularly with regards to Spain’s debt issues. In addition, the German ZEW Economic Sentiment, set to be released at 9:00 GMT, may create some volatility for the euro. Analysts are forecasting today’s news to come in well below last month’s figure. If true, it may lead to fears among investors that the euro-zone debt crisis is spreading, which could result in additional euro losses today.

JPY – Safe-Haven JPY Sees Significant Gains

The Japanese yen saw gains across the board yesterday, as euro-zone fears drove investors to safe-haven assets. The AUD/JPY fell close to 100 pips during European trading, eventually reaching as low as 79.31 before staging a mild upward correction later in the day. The pair eventually settled around the 79.60 level. Against the USD, the JPY gained over 40 pips, eventually reaching the 78.85 level during the mid-day session.

Whether or not the yen can maintain its bullish trend today largely depends on news from the euro-zone. Traders will want to pay attention to news out of Spain in particular. Any signs that Spanish bond yields could continue going up may result in increased risk aversion, which will likely help the JPY.

Crude Oil – Crude Oil Tumbles amid Euro-Zone Fears

After opening the week on a positive note due to the election of pro-austerity political parties in Greece, crude oil proceeded to tumble over the course of the day. Analysts attributed oil’s bearish turn Spanish bond yields, which increased to over 7% yesterday. The price of oil slid from a high of $85.49 a barrel to as low as $82.34 in mid-day trading.

Today, oil traders will want to pay attention to any ongoing developments in Spain and Italy. Any negative announcements out of either of the two countries could result in additional losses for oil. Furthermore, if the German ZEW Economic Sentiment figure comes in below expectations, oil could extend its bearish run.

Technical News

EUR/USD

Long term technical indicators are providing mixed signals for this pair. On the one hand, the weekly chart’s MACD/OsMA seems like it is about to form a bullish cross. On the other hand, the daily chart’s Williams Percent Range is in overbought territory, indicating that downward movement could occur. Taking a wait and see approach for this pair may be the best choice.

GBP/USD

The Williams Percent Range on the daily chart is currently in the overbought zone, indicating that downward movement could occur in the near future. In addition, the Slow Stochastic on the same chart seems like it is about to form a bearish cross. Traders will want to pay attention to this indicator. If it forms the cross, it may be a good time to open short positions.

USD/JPY

The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the coming days. Furthermore, the Williams Percent Range on the same chart is hovering close to the oversold zone. Traders may want to go long in their positions for this pair.

USD/CHF

A bullish cross on the daily chart’s Slow Stochastic indicates that this pair could see an upward correction in the near future. This theory is supported by the Williams Percent Range on the same chart. Going long may be the best choice for this pair.

The Wild Card

EUR/AUD

The daily chart’s Relative Strength Index has dropped into the oversold zone, indicating that an upward correction could occur in the near future. Furthermore, a bullish cross has formed on the same chart’s Slow Stochastic. This may be a good time for forex traders to open long positions ahead of a possible upward correction.

Forex Market Analysis provided by ForexYard.

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.

June 19, 2012

Market Review 19.6.12

Source: ForexYard

The euro staged a mild recovery in overnight trading against the US dollar, but still remained bearish due to record high Spanish bond yields. Crude oil also took losses last night, while gold continues to benefit from its status as a safe-haven asset. The precious metal is currently trading above $1630 an ounce.

Main News for Today

German ZEW Economic Sentiment-09:00 GMT

• Analysts are predicting the figure to come in at 3.8, well below last month’s result of 10.8
• If true, it may raise fears that the euro-zone crisis is spreading to other countries in the region and may result in further euro losses today

US Building Permits- 12:30 GMT

• Analysts are forecasting a slight increase over last month’s figure
• Should the news come in above expectations, the dollar could see gains against the yen today

Advantages of Forex Trading Versus Stock Trading

Richard Nixon just made your investment portfolio sexier. When the former President dropped the gold standard
in 1971, investment trading in the foreign-exchange market, also known as Forex, opened up. Now, investors have a reason to be happy even if the economy is all frowns. Forex trading offers enticing advantages over stock trading.

Forex Trading Offers a Way to Make Money in a Bad Economy

The future of the economy remains uncertain. When the economy is down, stocks are down as well. Forex trading, on the other hand, pits one currency against another. In this situation, one currency will always rise relative to the other currency. There is never a bear market in Forex trading.

Forex Trading Offers Instant Buying and Selling

In stock trading, a company has a finite amount of stock to sell and the stock exchange business hours means traders have to make their decisions in the wee hours of the morning.

The Forex market is open 24 hours a day, 5.5 days a week. You are free to make your trades on your schedule, when you are alert and unrushed.

Foreign-exchange markets are the largest financial market in the world, with trades totaling $1.9 trillion per day, according to The Economist . The liquidity inherent in Forex means trades can be executed in seconds.

Forex traders use derivatives to hedge their bets. Derivatives often cause the most confusion for beginners. While there are many types of derivatives, below are two common examples.

Forward Contract: A forward contract is a contract between a buyer and seller that specifies the amount of currency to be traded, the amount at which it is to be traded and the future date it is to be traded. The buyers and sellers who enter into a forward contract are speculating, and make or lose money, on the future price of the currency.

Binary Options: Binary options are derivatives that give you the option to trade currency at a future date at a set price. When that date arrives, if the trade would result in a loss to you, you have the option to not buy. Your only loss would be the upfront price for the binary option.

There Are No Commissions in Forex Trading

When you trade stocks, you pay a commission to a broker every time you buy or sell stock. Frequent buys and sells mean you lose money even if your investments don’t.

There are no commissions in the Forex trading market. Firms that facilitate Forex trading make money with the bid-ask spread. The spread is the amount by which the seller’s asking price is higher than your bid. The advantage of Forex trading is that the bid-ask spread is very low due to the high volume of trades and the trader only has to pay it once.

Forex Trading Offers Market Transparency

When you trade stocks, it is more difficult to get information about the companies you are trading. Foreign-exchange rates involve public information that is often covered by the news media. Forex trading is so transparent that there is no such thing as insider trading when trading currencies.

Forex Trading is Great for Enterprising Investors

There are many of advantages to Forex trading. But like any investing, it involves risk. Forex trading is a great opportunity for an investor who works hard to study the process and treats Forex trading as a business. Belief in Richard Nixon’s sexiness is not required.

About the Author

June Owensboro loves hiking and reading, and is working to start her career in writing. She is a freelance writer for a term life insurance quotes website.

June 19, 2012

Bullish Gold Indicator at Five-Year Low Signals Time to Buy

By MoneyMorning.com.au

According to some very interesting research by the World Gold Council, the gold market is as liquid as the bond markets.

And in terms of size, if it was slotted in with the bond markets it would be the third biggest in the world.

So I think it is just a matter of time before we see some of the funds that are looking for safety head over to gold.

In fact, recently gold has been trading like a risk asset once again. This hasn’t been the case for most of the year. But now, with the market risk levels dialling up, gold has been rising in price as it is supposed to.

I’ll admit I was worried by the huge drop in gold imports from the world’s biggest gold importer – India – causing a weak gold price. I think, at least in part because of this, gold has had a lousy year so far. However, after bouncing off the $1550 level again, gold is looking lively once more.

Gold price – rising in times of strife again

Source: stockcharts

Could the market be looking at gold as the next lifeboat for funds? It would be about time if they did.

With the problems in Europe, a break-up of the euro is still a very real prospect. Gold is the perfect hiding place in that event as it has no counter-party risk.

However, if the European Central Bank (ECB) decides to increase their balance sheet again in another failed attempt to fix the debt crisis, then gold stands to increase as the euro is devalued.

Then in the States, the Fed is holding a two-day meeting, finishing with an announcement to markets on Wednesday night. There has been much build-up to this, with investors expecting the Fed to announce some form of money printing (QE3).

Bond King Bets Big on QE3

The head of the $260 billion PIMCO fund, Bill Gross (known in the markets as the Bond King), has been more vocal than most. He has about half of his enormous fund positioned for QE3, and expects an announcement about this on Wednesday.

Gold has risen on the back of QE in the past, though less the second time round than the first. What happens this time depends on what the Fed comes through with – if anything.

So expect the gold price to be as volatile as a kid on red cordial over the next few days as the market tries to second guess the next moves from the Fed, and possibly the ECB as well.

But that’s not all. Something else that tells me it’s a good time to buy gold is the lack of media coverage.

Google trends tracks how much media coverage there is of certain keywords. Right now – media coverage on ‘gold’ is at a five-year low.

Global media coverage on gold at a 5-year low

Last time media coverage dipped significantly was January 2011 – which was also a good time to buy. The last time it peaked was August 2011, which was a good time for short term investors to sell.

Of course, using media coverage isn’t a fool-proof method, but I’ve got to admit it has worked pretty well as a contrarian indicator in the past. If this holds up, then the current 5-year low in media coverage of gold could make this the best buying opportunity in years.

Plenty of Room for Gold Buyers

This certainly stacks up against what we’re looking at in the global economy right now; the euro heading for the chopping block, and the chance of more money printing from both the Fed and the European Central Bank in the near future.

This week in particular could be volatile for gold. So we’re having a sweepstake round the office this week to predict the gold price this Friday!

Most of the predictions lie between $1425 and $1764.

One brave soul has staked his claim on $42,000! We’re not shy of making a brave prediction round here of course, but I think the odds might be a bit long on that one!

This is all just a bit of fun of course, and overlooks gold’s more serious role as a long term preserver of wealth.

Keep your eye on the gold price this week. Especially on Thursday, after the Fed meeting.

Dr. Alex Cowie
Editor, Diggers and Drillers

P.S. Gold is a great place to put your money if you’re looking for safety. But if you’re after quick gains, there’s a better place to put your cash to work – gold stocks. When gold is rising, gold stocks tend to rise even faster. Though, after a savage 12 month sell off, it has been a while since we have seen gold stocks rising. But they are now starting to move. I’ve recommended 4 gold stocks to Diggers and Drillers readers, and after a rough 12 months, it finally now looks like a good time to pick up good gold stocks at fantastically cheap prices. Click here for more…

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June 19, 2012

The Broken Bond Market

By MoneyMorning.com.au

‘I believe that economists put decimal points in their forecasts to show they have a sense of humour.’ – William Gilmore Simms

So, were the economists at the Organization for Economic Co-operation and Development (OECD) trying to be funny in 2011 when they forecast the Spanish economy to grow at 1.6% this year?

Today it is contracting at 0.4%.

It’s hard to fathom this prediction when the country’s unemployment rate was already close to 20% at the time, and the country was in the middle of the worst housing bust in Europe.

Yesterday I wrote to you about Greek elections being a sideshow to the bigger economic problems in Spain and Italy. Today the shine has already come off the Aussie stock market after the Spanish 10-year bond yield crashed through the 7% level, to reach as high as 7.28%.

This takes Spanish debt to new highs, and well into ‘code brown’ territory.

So, what does this all mean for investors? I’ll show you now…

The bond market is telling us that Spain’s economy is close to the point of no return.

Meanwhile other areas of the bond market tell us that investors are bracing for the worst.

The yield on the US 10-year bond has plummeted to 200-year lows recently, as have UK, French, German and Dutch bonds.

So much cash has moved into these reputed ‘safe havens’ that investors are prepared to take a lower return on their money than anyone else in the last 200 years. And when you take inflation into account, investors are in fact paying to park their money in bonds. They must be pretty worried about something.

The bond yields are so low on these ‘safe haven’ bonds now, that you could say these lifeboats are ‘full’.

In that case, where else can investors park large amounts of cash in a crisis?

What about the gold market?

Dr. Alex Cowie
Editor, Diggers and Drillers

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