InvestMacro Forex News

Article by Investment U

Today there are only 10 dividend-paying stocks that have increased their dividend payments consistently for over 50 years.

If you’re an income-seeking individual, there may be no better time than right now to pick up shares of dividend-paying stocks.

After all…

• Most returns from U.S. Treasury bonds are in the negative when taking inflation into account.
• Money market accounts average returns of just 0.02%.
• And regardless of what the Fed says, there’s no magic crystal ball that can predict exactly when things will turn around.

But according to Marketwire, “In 2012, S&P 500 companies are on pace to pay out a record amount in dividends…”

What’s more, U.S. corporations are also sitting on a record amount of cash, $2 trillion total. And more and more companies are starting to use their enormous cash reserves to reward income seeking investors…

How to Earn More With “Boring” Dividends

But how do you get the most out of your dividend investments?

Senior Analyst Marc Lichtenfeld reveals one of the most important things to consider is a company’s payout ratio.

This simply measures the percentage of a company’s earnings that it paid out to shareholders as dividends. It’s important to note that Marc uses cash flow from operations rather than earnings. This is because accountants can play some pretty slick tricks with earnings figures.

Marc tells me that he tries to avoid companies with a payout ratio higher than 75%. At this point, if that firm’s cash flow takes a hit, more than likely it’ll be forced to cut its dividend.

Which brings me to another important thing to look for – reliability of a company paying and increasing its annual dividend payments.

In fact, today there are only 10 companies that have increased their dividend payments consistently for over 50 years.

[Reference: The Dynamic Dividend]

These certainly aren’t exciting companies per se – there’s no interesting stories or technological breakthroughs here. But the real thrill of investing for me isn’t what a company does, it’s how much money I make in the end.

Just take a look at Proctor & Gamble…

According to Wharton School of Business Professor Jeremy Siegel, P&G would’ve turned a $10,000 investment in 1957 into more than $4 million today. Not bad for a “boring” investment in my opinion.

What’s more, even after 55 years of consecutive dividend increases for its shareholders, P&G still expects to increase its dividend 10% per year going forward.

But you don’t even need to wait 55 years to see massive gains from reinvested dividends.

Take for instance an example Marc recently wrote about using the stock of Kimberly-Clark (NYSE: KMB).

As Marc wrote, this stock “isn’t going to get anyone’s adrenaline pumping. I mean, you can only get so excited about Huggies, Kleenex and Scott paper towels.”

But Kimberly-Clark pays a healthy 4.1% dividend yield, or $2.96 per share. If you bought $10,000 worth of stock, reinvested the dividends, and the dividend grew 9% per year like it has for the past 10 years, in 2022 your stock would yield nearly 14% on your original investment. Instead of $416 in income that you receive the first year, you’d get paid $1,388.

And if you could keep on reinvesting the dividends, the compounding machine kicks into overdrive the longer it goes. In 15 years, you’d receive $2,900 per year in dividends, or a 29% yield on your original cost. And in 20 years, $6,482 for a ridiculous 65% yield. So you’d make your original investment back every 18 months at that point.

These numbers do assume the stock price rises 5% per year, but that’s not too far-fetched considering it’s risen 9% per year over the last 10 years.

The bottom line: It really pays to have a sound dividend investment strategy. And it’s really never too late to get started. In just 10 or 15 years, you can really start to cash in.

Good Investing,

Mike Kapsch

Article by Investment U

By Chris Vermeulen, GoldAndOilGuy.com – ETF Trading Analysis & Alerts

Investors and traders just can’t seem to catch a break when it comes to economic news. For example Tuesday in the United States we saw strong ISM manufacturing numbers which surprised the market. The numbers were way above expectations and it triggered a feeding frenzy in US based investments like stocks and the green back.

The following session Italy reported terrible PMI and unemployment rate numbers which took most of the wind out the European and US stocks. One day the data is great, next day it’s bad…

The strong numbers in the US have everyone including myself thinking that this week’s jobless claims (unemployment rate) will be down. If this is the case then we will see stocks jump along with the dollar, much like what we saw trader do last Tuesday which is what Jim Cramer says best – BUY BUY BUY.

Normally we do not see the dollar index rally along with stocks but if EU continues to show signs of weakness then it is very likely the dollar and equities inverse relationship could decouple. Reason being investors around the globe will focus their money on the more stable US investments like the dollar and US stocks.

You can learn how to trade economic news with my free Economic Indicator Trading Tool: http://www.thetechnicaltraders.com/economic-indicators.pdf    

The Dollar is Trading at a Major Tipping Point – Weekly Chart

The dollar index is something that I watch very closely on a daily basis. Focusing on the weekly and 8 hour charts I look for support and resistance levels along with price patterns.

As you can see from the weekly dollar chart below, a large bull flag has formed. This pattern typically means higher prices and in this case the price target is between the 86 and 88 level.

There are few wild cards to toss into the game on what will unfold next:

1. Currency manipulation seems to be strong and if the US wants a low dollar value then it’s likely it will stay low. This bodes well for stocks and commodities.
2. Depending on what happens and how things unfold in Euro-land the dollar/stock relationship could decouple meaning they could start to rise together. If we get neutral economic data out of the EU and positive data out of the US it will likely boost the value of stocks and the dollar. But strong negative data out of the EU will more than likely just sent the dollar higher and spooking investors and triggering a selloff in stock prices.

Dollar Index 4 Hour Chart

I find the dollar index to be a great trading tool in helping me time short term reversals in the equities market.

Taking a look at the 8 hour chart below you can see recurring bullish falling wedge patterns. The most recent brake out was this week and I anticipate the 79.50+ levels to be reached in the near term. If the dollar does continue to move higher then I expect sideways to lower stock prices for a couple more sessions.

That being said, the mixed economic data between the US and EU is going to cause this scenario to be unpredictable. Depending on the jobless claims this week stocks could actually rally while the dollar moves higher. Unfortunately, this week’s mixed data does not provide any trading opportunities that I feel comfortable making.

Mid-Week Market Conclusion:

In short, I feel a higher dollar is likely to happen. As for stock prices, well they are more of a wild card at this time but my analysis slightly favors higher prices.

To quickly touch on precious metals, they are likely to be under pressure for a few sessions simply because of the rising dollar.

I hope my analysis helps paint a picture of what to expect in the coming days.

Happy Trading,

By Chris Vermeulen, GoldAndOilGuy.com – ETF Trading Analysis & Alerts

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 3 May, 08:50 EST

THE PRICE OF GOLD in wholesale trading slipped to a new 1-week low at $1640 per ounce in London on Thursday as the US Dollar rose and crude oil slipped again.

Ahead of Friday’s much-anticipated US Non-Farm Payrolls report for April, weekly data showed a fall in the number of jobless benefit claimants.

Spain meantime sold €1.6 billion of new 3- and 5-year government debt, paying 1.4 percentage points more in interest than at the last time of asking.

A sale of €5 billion in new government debt in France, where current president Sarkozy looked set to lose this weekend’s election to Socialist candidate Hollande, meantime drew a greater excess of investor demand than at the last sale in April, with interest rates falling slightly on 9- and 10-year debt.

The Euro held at $1.3130 – right in the middle of the last month’s tight 2.5¢ range.

With trading volume now lower for longer than any time since late 2007, US stock market futures pointed 0.2% higher after the Dow Jones Industrial Average yesterday slipped back from 4-year highs.

Slipping in line with the gold price, silver fell back to $30.40 per ounce.

“In this lackluster environment, it seems like the gold bullion market is in need of more than just resilience,” says a note from Swiss refining and finance group MKS.

“[The gold price] has FLAT LINED on a closing basis,” says the latest technical analysis from Russell Browne at Scotia Mocatta in New York, “staying glued between 1635 and 1670 over the past month.

“This sideways consolidation is the calm prior to the next storm…The long-term bullish trend line comes in near 1630 on daily chart.”

Over in India in contrast – the world’s #1 gold consuming nation – “Gold traders have extended their positions in futures market as prices of the precious metal in spot market touched an all-time high,” reports the Economic Times.

Touching INR 29,690 per 10 grams today, the gold price for Indian wholesalers has now recovered 2012’s early 10% fall to reach a series of fresh all-time highs this week.

Amid a wave of strikes and protests by Indian jewellers against this year’s duty and tax rises, last month’s Akshaya Tritiya festival failed to stoke consumer demand, says the Bombay Bullion Association, with gold bullion imports falling to just 30 tonnes from April 2011’s level of 90 tonnes.

Helping gold rise, the Rupee fell further again on the FX market Thursday, extending this week’s drop vs. the US Dollar to more than 1% and erasing the last of 2012’s rally so far.

“The financing of the current account deficit will continue to pose a major challenge,” the Reserve Bank of India recently noted in a policy statement.

“Lot of new positions has been created in [Indian gold futures ] after traders noticed sharp rise,” Money Life quotes Badruddin Khan, researcher at Angel Broking & Commodities.

“The momentum is likely to be continued with a back-up of Dollar appreciation.”

Back in Europe, where the European Central Bank today left its key interest rate unchanged at 1.0% for the sixth month running, factory-gate inflation in the 17-nation Eurozone slipped to 3.3% per year in April, new data showed.

Here in the UK, where the ruling coalition’s Conservative and Liberal Democrat parties were both expecting “dismal”  results in local council elections on Thursday, house prices showed a near 1% annual slip on the Nationwide index.

In London, precious metals consultancy GFMS – now part of the Thomson Reuters news group – said the surplus of available metal over demand rose sharply in both platinum and palladium in 2011, thanks to stockpile sales and weak auto demand, especially in Europe.

Silver bullion stockpiles yesterday retreated further on Wednesday from this week’s 25-year record highs, with the withdrawal of half-a-million ounces of “eligible” metal – which qualifies for settlement in Comex futures, but isn’t made available by the owner – taken out of approved depository storage.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

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.

Since the beginning of this week, GBP/USD has been making convincing gains above its range. And, earlier in U.S. session today, the pair topped at 1.6157. Will it
come down or continue climbing the charts?

U.K’s preliminary report released today at 8.30 am GMT failed to meet consensus in the market. The report came in at -0.2% against
an earlier projection of 0.1%. Since the number came in negative, pound sell-off was triggered in the market, and it lost considerable ground against the other
major pairs. In the previous GDP report, the country also reported a negative figure. Therefore, since it has experienced two straight quarters of
contraction, investors are now pointing to a possible technical recession in the country. This may lead to continued poor performance of the pound in the
coming days.

As earlier mentioned, technical analysis on the GBP/USD reveal that it is experiencing an upside break from its range. Immediate resistance for the pair is found at 1.6170. A convincing break above this area could see it test 1.6250. On the flip side, immediate support is found at 1.5970. A convincing break above this area could see it test 1.5800.

Medium term traders who were long in the pair should hold on to their positions as long as the breakout is still convincing. Short term traders would rather wait for all this drama and the earnings season to end before having a fresh call on the pair. The fundamental condition is still favoring pound sell-off, so long term traders can still take this opportunity to harvest massive profits.

DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER. FOR MORE INFORMATION AS WELL AS UP TO DATE FOREX ANALYSIS VISIT www.pipstoday.com

Since the start of this week, EUR/USD has been heading northwards. And, earlier during the London session, the pair touched 1.3260, the
highest point this month. Traders have shifted their focus to riskier assets due to strong reports of euro-zone debt auctions released earlier in the week.

EUR/USD has continued to maintain its bullish momentum since the beginning of the week due to risk taking among traders who have avoided safe haven assets. As a result, the common currency has been gaining considerable ground across the board. Although the dollar managed to recoup some of its losses after the positive economic news released from the U.S. today, the real effect of this is yet to be seen in the market.

EUR/USD has been on an uptrend for sometime now. Immediate resistance for the pair is found at 1.3260. A convincing break above this area could expose 1.3333. On the flipside, immediate support is found at 1.3157. A convincing break above this area could expose 1.3063.

Medium term traders who were long in the pair should hold on to their positions as long as the bullish momentum is still evident. However, they should remember that the euro-zone debt problems still have the possibility of making the common currency depreciate in value. Short term traders would rather wait for all this drama and the earnings season to end before having a fresh call on the pair.

DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER. FOR MORE INFORMATION AS WELL AS UP TO DATE FOREX ANALYSIS VISIT www.forex-australia.com.au

By The Sizemore Letter

It’s that time of year again, dear reader.  Twice per year, Barron’s does a survey of large professional money managers to get their outlook for the market (see “Reason to Cheer”).

I get a lot of value out of reading the survey results, but not necessarily for the reasons you might think.  This is a topic I first covered for Market Watch late in 2011 (see “Big Money Looks Bullish”).

It generally pays to invest with the Big Money.  After all, these are some of the best and brightest minds in the business, and they have the ability to move the market.  But even professionals can succumb to herding behavior at times.  When it appears that “everyone” is on the same side of a trade, surveys like these can be useful for crafting contrarian bets.  Ideally, you like to see a general consensus among the Big Money but not quite unanimity.

So what says the Big Money today?

They are more bullish than they were six months ago, which makes sense when you consider that the survey was done before April’s volatility put a damper on the first-quarter rally.  55% of those surveyed were “bullish” or “very bullish” about the market’s prospects through June 2013.  31% were “neutral,” and only 14% were “bearish” or “very bearish.”

This is the sort of bullish consensus I like to see; the Big Money is optimistic without being euphoric. 

Sentiment towards other asset classes tells a very different story, however.  81% of the investors surveyed were bearish on U.S. Treasuries.  17% were neutral, and only 2% were bullish.

Normally, skewed sentiment like that would get my pulse racing, and I would be tempted to take the other side of that bet.  2% bullishness would suggest that there is “no one left to sell,” in trader parlance.  Unfortunately, with Treasury yields what they are, there is simply not enough upside potential to make the trade worthwhile.  Even if the 10-year note were to fall in yield from its current 1.96% to something along the lines of 1.50%, this would not be a particularly profitable trade unless you used reckless amount of leverage.  Some trades are best left alone.

Bullishness is surprisingly high for Latin American stocks, at 53%.  39% are neutral on the region, and only 8% are outright bearish.

Interestingly, the Big Money is not particularly bearish on Europe, despite Spain’s recent travails.  56% were neutral on the region, and 27% and 17% were bullish and bearish, respectively.  It would appear that the Big Money agree with Sizemore Capital’s view that the attractive valuations on offer in Europe more or less compensate investors for the short-term risks they face in investing there (Sizemore Capital has a large allocation to Europe in its Tactical ETF Portfolio).

Returning to the U.S. market, the Big Money appears to be a bit torn with respect to Apple (Nasdaq:$AAPL).  Apple made the “favorite” list, but was also ranked as one of the eight most overvalued stocks.  Go figure.

At the sector level, I see some evidence of mild herding (see chart).  Technology, presumably led by Apple, was picked as the best performer for the next 6-12 months by 31% of respondents and as the worst by none.  Meanwhile, utilities were picked as the worst performer by 30% and as the best by only 3%.

During last year’s volatile second and third quarters, the utilities sector performed extraordinarily well relative to the rest of the market.  Given the low expectations for the sector, could another solid run be a possibility?

Given investor hunger for yield these days, utilities could easily enjoy a nice run in an otherwise choppy market.  Investors wishing to test this theory can buy shares of the Utilities Select SPDR (NYSE:$XLU).  It yields a handsome 4% in dividends and should provide some measure of protection should the market experience another wave of volatility.

Disclosures: Sizemore Capital has no position in any securities mentioned. 

Source: ForexYard

A batch of negative euro-zone economic indicators, including a worse than expected manufacturing PMI, drove the EUR/USD to its lowest level in over a week during trading yesterday. The news also resulted in the euro dropping over 140 pips against the yen during the European session. Turning to today, European news is forecasted to generate significant market volatility. Traders will want to pay attention to the results of a Spanish debt auction, as well as to the ECB Press Conference at 12:30 GMT. Should any of the news signal further troubles regarding the euro-zone economic recovery, the common currency could drop further before markets close for the week.

Economic News

USD – ADP Employment Figure Leads to Dollar Losses

The US dollar fell vs. the safe-haven JPY throughout European trading yesterday, as a batch of worse than expected international data led to an increase in risk aversion. Specifically, a worse than expected euro-zone manufacturing PMI followed by a disappointing US ADP Non-Farm Employment Change figure resulted in the USD/JPY tumbling over 50 pips over the course of the day. The pair dropped as low as 80.04 before staging a slight upward correction. The euro-zone news resulted in the EUR/USD dropping over 90 pips to reach its lowest level in close to a week and a half. The pair eventually stabilized around the 1.3130 level during the afternoon session.

Turning to today, dollar traders will want to pay attention to the weekly US Unemployment Claims figure scheduled to be released at 12:30 GMT, followed by the ISM Non-Manufacturing PMI at 14:00. Yesterday’s employment news led to increased doubts among investors regarding the pace of the US economic recovery. Should today’s news come in below analyst expectations, the dollar may continue to slide against currencies like the yen and Swiss franc.

EUR – ECB News Set to Impact Euro Today

The euro tumbled against virtually all of its main currency rivals during yesterday following a worse than expected German Unemployment Change and euro-zone Manufacturing PMI. German unemployment unexpectedly rose by 19K last month. Analysts had been predicting the figure to decrease by 9K. Meanwhile, the manufacturing PMI dropped to 45.9, its lowest level since June 2009. In addition to taking losses against the USD and JPY, the euro dropped close to 80 pips against the CAD and 75 pips against the AUD during morning trading. Both the EUR/CAD and EUR/AUD staged slight upward corrections later in the day.

Turning to today, significant euro volatility is expected following the Minimum Bid Rate and ECB Press Conference, scheduled for 11:45 and 12:30 GMT. While the ECB is not forecasted to adjust euro-zone interest rates, the press conference is likely to provide clues as to the current state of the region’s economic situation. Any indication that further trouble is still to come in the euro-zone could result in losses for the common currency today. Additionally, a Spanish debt auction may signal just how far Spain still needs to go toward economic recovery after its recent credit downgrade. Should the debt auction disappoint investors, the euro could extend its losses further.

AUD – Risk Aversion Leads to Aussie Losses

The AUD took losses against both the Japanese yen and US dollar throughout trading yesterday, following disappointing euro-zone and US indicators that led to increased risk aversion in the marketplace. The AUD/JPY, which earlier in the week saw substantial upward movement, fell over 80 pips during the European session. Against the USD, the aussie extended its bearish trend, falling an additional 60 pips. The AUD/USD eventually found support at the 1.0285 level.

Turning to today, the direction the aussie takes will largely be determined by a batch of euro-zone indicators. With political and economic uncertainty dominating the news in Europe, investors may decide to continue shifting their funds to safe-haven assets, which could lead to further aussie losses. That being said, should any of the news today come in above expectations, the AUD may be able to rebound before markets close for the week.

Crude Oil – US Inventories Figure Causes Oil to Drop

A combination of poor global economic data and a higher than expected US Crude Oil Inventories figure caused the price of oil to fall during yesterday’s trading session. Oil typically falls when US inventories rise unexpectedly, as it is taken as a sign of decreased demand in the world’s largest oil consuming country. Oil fell from a morning high of $106.01 a barrel to $105.24 during the afternoon session.

Turning to today, the direction oil takes will largely be determined by euro-zone news. Should the results of the ECB Press Conference and Spanish debt auction convince investors that they need to shift their funds to safe-have assets, the price of crude oil could fall further ahead of Friday’s all important US Non-Farm Payrolls figure.

Technical News

EUR/USD

The MACD/OsMA on the daily chart appears close to forming a bearish cross, indicating that this pair could see upward movement in the near future. Additionally, the Williams Percent Range on the same chart is moving down at the moment and could soon cross into oversold territory. Traders will want to keep an eye on these indicators, as they may signal an impending upward correction.

GBP/USD

The Williams Percent Range on the weekly chart is in overbought territory, meaning that this pair could see downward movement in the near future. Furthermore, the MACD/OsMA on the daily chart appears to be forming a bearish cross. Going short may be the preferred strategy for this pair.

USD/JPY

A bullish cross on the daily chart’s Slow Stochastic points to a possible upward correction. That being said, most other long-term technical indicators show this pair trading in neutral territory, meaning that no defined trend can be predicted. Traders may want to take a wait and see approach, as a clearer trend may present itself shortly.

USD/CHF

Most long-term technical indicators show this pair range-trading, meaning that no defined trend can be predicted at this time. That being said, the weekly chart’s MACD/OsMA appears close to forming a bearish cross. Traders will want to keep an eye on this indicator. Should the cross form, it may be a sign of impending bearish movement.

The Wild Card

CHF/JPY

The daily chart’s Williams Percent Range has dropped into oversold territory, indicating that an upward correction could occur in the near future. Additionally, 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 breach.

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.

Source: ForexYard

The Norwegian Krone has continued its bull run against the Euro. Hitting fresh multi-week highs against the 16-nation currency, the NOK currently trades near 8.1550 versus the EUR. While the US Dollar made hefty gains versus the NOK in recent weeks, it appears that the Krone is back on its way to erasing those gains as of this week.

The NOK climbed as high as 5.5383 against the greenback before dropping as a result of the Dollar’s year-end run. As of this morning, the USD/NOK is reaching back towards 5.6200 with few signs of a correction impending.

Sweden’s currency, on the other hand, doesn’t seem to be fairing as well as its Norwegian neighbor. The Swedish Krona experienced similar losses against the greenback during its bullish run in December, but its ability to regain those losses appears muted.

It had reached as high as 6.7833 before plummeting against the buck, but has regained less than half of the price which it lost. However, the SEK was able to regain all of its losses made to the EUR at year-end, which seems to suggest that the SEK’s inability to regain losses made against the Dollar may be due more to the American economy than Sweden’s.

Price targets for the Swedish and Norwegian Kroner against the USD seem somewhat straight forward. Both appear to be on a bullish run against the greenback and may continue doing so for the coming week. A target of 100-150 pips from current price levels could be a safe bet. Against the EUR, on the other hand, both appear to be giving off hints of a downward correction and traders should anticipate this movement before going long on the Kroner against its European counterpart.

Technical Analysis

– As mentioned above, the SEK and NOK are giving off hints of a downward correction versus the EUR. This technical analysis will highlight those indications for the EUR/NOK pair.

– The chart below is the EUR/NOK daily chart by ForexYard.

– Point 1: A doji candlestick formation has apparently taken place yesterday, indicating a reversal may be imminent.

– Point 2: The Relative Strength Index (RSI) is showing that this pair is heavily over-sold and may be experiencing strong upward pressure.

– Point 3: There is a fresh bullish cross on the Stochastic (slow) which highlights the impending bullish move. The Stochastic also appears to have turned upwards, meaning this movement may in fact be underway.

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.

Source: ForexYard

In Scandinavian news this week we have a few factors to consider. First is the purchase of 4 billion Thai Baht by Sweden which has helped boost Sweden’s market share and ability to conduct more long-term business in the South-Asian markets. Immediate impact, on the other hand, was a drop in the value of the SEK, which analysts anticipate will reverse in the near future.

Norway’s currency also appears damaged by recent volatility in the Crude Oil markets as the NOK is tied with commodities. If Crude Oil loses its support above $70 a barrel, as it has done repeatedly these days, we could see the Norwegian Krone take another hit. Good news for the NOK, however, is the sudden sharp rise in oil prices during the last 24 hours, which has helped push the commodities-tied currency to modest strength.

We can verify the connection to commodities by seeing the relatively flat-trading EUR/NOK as opposed to the strong fluctuations of the USD/NOK, which signifies a link to oil. If it fails to make a solid breach of its recent downtrend against the USD, traders should anticipate a sharply falling NOK in the days ahead (See chart below for technical analysis).

Overall, the Scandinavian currencies, with the exception of the Danish Krone, are losing strength to the USD and EUR as a rise in risk aversion damages these high-yielding currencies. The uncertainty of commodities markets puts a damper on currencies like the NOK. Also, the portfolio diversification of Swedish banks doesn’t appear to be over, which will lead to a short-term downfall in the SEK. Once the economy begins to pick up we should see a recovery for these currencies, which is the good news at the end of a bleak article such as this.

USD/NOK – 4-Hour Chart

– Above is the 4-hour chart of the USD/NOK by ForexYard.

– The indicators used are the Stochastic and MACD.

– Point 1: The recent uptrend appears to have been breached, suggesting a downward movement.

– Point 2: The bullish cross on the Stochastic suggests an impending upward correction.

– Point 3: As the price has crossed into the territory below 0.0, there is a chance that a bullish cross is in the works, supporting the notion of an upward move.

– While the downtrend appears to be broken, this may NOT be the case. The indicators presented here suggest that an upward movement is impending, which means this pair may have just been testing the lower border. Expect bullishness.

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.

Source: ForexYard

Norway appears to be an active market player for the forex world lately. With a recent discovery of a sizeable oil well in the northern Norwegian Sea, the price of the black gold remains a serious factor for the NOK. As the USD gains strength from recent risk aversion, the price of Crude Oil has entered a slump which has weighed heavily on Norway’s economy, but the discovery will no doubt help future development and growth for their market share.

Also adversely affecting the NOK’s value is the recent decrease in Norway’s interest rates to 1.25%, a move which was expected by most market analysts, but carries the expectant impact of weakening the currency that was needed to help boost exports.

In Sweden, the Riksbank announced on June 10th that it will borrow up to 3 billion EUR to shore up its financial backing. This comes as no surprise since many banks are still under threat of losing substantial capital from the prospect of Latvia devaluing its currency, the Lat, due to the recent crisis in the Baltic States.

Since many of Sweden’s banks receive the bulk of their funding in foreign currencies, the banks will need to sufficiently back up their foreign reserves. This EUR-borrowing operation is intended to assist in this backing, but works as a way of devaluing the SEK, which many forex traders can now see quite clearly.

USD/SEK 1-Hour Chart

• The above chart is the USD/SEK hourly chart by ForexYard.

• The indicators used are the Bollinger Bands, RSI, and MACD.

• Point 1: The price has just entered the over-bought territory on the RSI, signaling a downward movement may be in the making.

• Point 2: The MACD shows multiple bearish crosses which support the notion of a downward movement.

• Point 3: The Bollinger Bands on the chart appear to be tightening as foreshadowing of an impending sharp, volatile movement.

• Conclusion: This pair is either going to experience a downward movement before a volatile jump (direction is unclear for the jump), or the jump is going to be downward if the value of the USD takes a hit today. Either way, a downward movement is imminent; the size of that move is what is undetermined at this point.

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.