Month: November 2009

By Fast Brokers – The Cabled has recovered nicely from Tuesday lows after bottoming along our 2nd tier uptrend line and just above 10/26 lows.  Buyers come to the rescue following positive economic data flows from Britain coupled with another large topside breakout in gold.  Yesterday’s Halifax HPI number tagged onto the positive Manufacturing PMI performance on Monday by printing 4 basis points above analyst expectations.  Today’s Services PMI data completed the trifecta, printing at 56.9 vs. 55.4E.  We mentioned previously how the Services PMI number should carry a little more weight since the services industry comprises roughly 70% of GDP.  The Services data didn’t disappoint, and the 56.9 reading falls in line with pre-crisis levels.  The Pound has reacted positively, flexing its relative strength while sending the EUR/GBP lower.

The Cable also got a boost from yesterday’s impressive breakout in gold.  The precious metal is presently looking to test its highly psychological $1100/oz level.  As we mentioned in today’s EUR/USD commentary, gold’s large topside movement could signal a coinciding decline in the Dollar due to their negative correlation.  On the other hand, yesterday’s action in gold may been largely due to India’s sizable purchase of bullion from the IMF.  Either way, gold’s breakout sends some positive signals, helping the Cable’s uptrend.  However, despite today’s strength in the Cable, the currency pair still faces our 3rd and 4th tier downtrend lines along with  10/29, 10/23, and 9/11 highs.  Therefore, a few worthy topside technicals remain between present price and more significant topside movements.  As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with 11/03 and 10/23 lows.  Furthermore, the psychological 1.65 level may now work in the Cable’s favor.

The next 24-48 hours will be all about the central bank meetings.  The Fed will announce its monetary policy this afternoon with the BoE and ECB following early Thursday PST.  While the Fed is expected to keep its loose liquidity policy intact for the ‘foreseeable future’, the BoE and ECB meetings carry more uncertainty.  Although analysts are expecting the BoE to increase its QE package by 50 billion, the BoE has expressed a more hawkish tone as of late. Prelim GDP aside, recent British econ data has been more positive than negative.  Therefore, although the BoE is expected to inject more liquidity tomorrow, there remains a possibility that the central bank may just stand pat.  Considering the slight uncertainty surrounding upcoming monetary policy decisions, we could be in for a volatile couple trading sessions in the FX markets.  Therefore, investors should keep a sharp eye on the Cable’s interaction with its technical levels as well as the behavior of its correlations.

Present Price: 1.6526

Resistances: 1.6544, 1.6566, 1.6604, 1.6630, 1.6662, 1.6688

Supports: 1.6505, 1.6473, 1.6428, 1.6397, 1.6362, 1.6329

Psychological: 1.65

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY has popped back above its psychological 90 level in reaction to solid gains in both the EUR/USD and GBP/USD.  Hence, the USD/JPY’s recent behavior stems from a slight return to risk, supported by the S&P’s rally to 1050 and Crude’s climb back to $80/bbl.  However, despite today’s recovery in the risk trade, upcoming central bank meetings could move the markets either way.  The Fed, BoE, and ECB will all announce their monetary policy decisions in the next 24 hours, meaning the FX market could experience heightened volatility due to uncertainty surrounding the events.  Although investors are expecting the Fed to stay pat, the BoE and ECB decisions could be wildcards should the central banks decide to diverge from their respective stances.  Since Japan doesn’t have any events on the board besides tonight’s release of the BoJ meeting minutes, the USD/JPY’s movements will likely be linked to broad based activity in the Dollar and U.S. equities.  Because the USD/JPY is moving in correlation with the risk trade today, the currency pair may exert a positive correlation with the EUR/USD, GBP/USD, and U.S. equities for the time being.  Considering the Dollar is at a crossroads, investors should keep a sharp eye on upcoming activity in reaction to monetary policy decisions.

Technically speaking, the USD/JPY has created a little breathing room by getting back above 90 along with our 1st and 2nd tier uptrend lines.  Furthermore, should another downturn take hold, the currency pair has November and October lows to fall back on.  However, the last pop in volume came on Friday’s large pullback, meaning near-term momentum may be in favor of the downside.  As for the topside, the USD/JPY potentially faces multiple uptrend lines along with 10/30 and 10/27 highs.  Investors should keep in mind that there is still a debilitating, long-term downtrend at work, meaning the road to the topside may be filled with speed bumps.

Present Price: 90.76

Resistances: 90.78, 90.93, 91.08, 91.26, 91.44, 91.61

Supports:  90.60, 90.41, 90.29, 90.16, 89.91, 89.77

Psychological: 90

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Russell Glaser – A big fish has just entered into the gold market; the Reserve Bank of India. Yesterday India’s national bank purchased 200 metric tons of gold from the IMF. The major transaction helped to drive the price of the commodity to a new record high.

While it was known the IMF was shopping 403.3 metric tons of gold on the open market, it was not expected that a national bank would take such a large percentage of the sale. The enormous bulk purchase is viewed as a reduction in the supply of gold in the market as the Reserve Bank of India is expected to hold the gold in its long term reserves. Speculation is now building for other national banks to begin stocking up on the commodity. This move may be a way of national banks to add a bit of diversification to their holding as the dollar continues to weaken against a basket of currencies. The dollar is considered the main holding for a nation’s currency reserves.

Yesterday’s large purchase helped push the price spot gold through its resistance level of $1070 and the commodity is now trading at a record high, approaching the $1100 price level. Perhaps China, the world’s largest holder of U.S. Treasury Bonds will be the next major central bank to move away from the dollar and diversify with gold, fueling more demand for the commodity and pushing the price higher.

Forex Market Analysis provided by Forex Yard.

© 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 Federal Reserve is expected to keep its benchmark Interest Rate unchanged near zero today, as traders get ready for a busy news cycle. Investors will focus on the interest rate outlook, but many analysts say the Fed is unlikely to change the wording of its pledge to keep rates low for an extended period. This may have the result of stabilizing USD trading, or potentially driving the world’s primary currency to new extremes. Will the USD experience a reversal from yesterday’s bullishness?

Economic News

USD – Dollar Advances vs. EUR ahead of Fed Statement

The U.S. Dollar clung to small gains versus the EUR Tuesday, but pared earlier gains as traders waded through mixed signals on the health of the economy and the Federal Reserve started its 2 day policy meeting.

The Dollar climbed to a 1-month high against the EUR as concerns about the global banking sector reignited safe-haven demand for the greenback. The Dollar climbed against its major rivals as investors retreated from risk assets on jitters over banks and braced for central bank meetings in the United States, the Euro-Zone and the UK.

Traders remained wary ahead of this week’s heavy news cycle; the U.S. Federal Reserve started its 2 day policy meeting on Tuesday and the European Central Bank (ECB) and the Bank of England (BOE) will also hold policy meetings later in the week.

The overwhelming consensus is that the Fed will hold the federal funds rate steady at near-zero, where the Fed’s target has been since last December. Investors will be paying close attention, however, to the wording of the Fed’s statement for any clue as to when the central bank would begin pushing Interest Rates higher. Once American markets open for the day, traders should expect a lot of volatility.

EUR – Sterling Falls Sharply on UK Banking Sector Concerns

The EUR reversed its gains against the U.S. Dollar and the Yen Tuesday, when concerns over the banking sector boosted the greenback, which tends to gain when investors shed risk assets.

The 16-nation currency traded at $1.4760, from $1.4775 yesterday in New York, after rising to $1.4811 earlier. It was also at 132.95 yen, from 133.32 yesterday after strengthening to 133.98 earlier. Sentiment on the financial sector in Europe was weak and that pressured the EUR and the Pound earlier and contributed to the recent strength of the U.S dollar, analysts have said.

The Sterling tumbled to a 1-week low against the U.S. Dollar after the UK Treasury announced a shake-up of British banks, which raised concerns about the financial sector. The British Pound declined for a 2nd day against the EUR and slid 0.1% versus the Dollar at $1.6398 on speculation the BOE will extend its asset-buying program this week.

JPY – Yen Hits Session Low vs. USD

The Japanese yen hit a session low in trading on Tuesday as U.S. stocks cut losses, reducing safe-haven demand for the Japanese currency. The Yen weakened to 90.46 per Dollar from 90.21.

The Yen climbed earlier on reduced demand for higher-yielding assets after the 101-year-old commercial lender CIT Group Inc. listed $71 billion in assets and $65 billion in debt in its Chapter 11 filing in U.S. Bankruptcy Court in Manhattan recently. Low interest rates in the U.S. and the bankruptcy filing of CIT Group are among the reasons Japan’s currency is rising against the USD, analysts have stated.

The JPY fell against the EUR on speculation the global economic recovery will boost demand for higher-yielding assets. Japan’s currency dropped to 133.89 versus the EUR from 133.32 yesterday.

Crude Oil – Crude Oil rises 2% Ahead of U.S. Factory Data

Oil prices rose above $79 a barrel on Tuesday after data showed U.S. factory orders in September expanded at a quicker pace than expected, signaling potential for more fuel demand in the world’s biggest energy consumer.

Crude prices had fallen sharply earlier in the day as the U.S. Dollar firmed to a 1-month high against other currencies and equity markets declined. A firming dollar and falling stock prices are typically signs of investors shunning riskier assets, including commodities.

Oil traders were awaiting weekly U.S. oil inventory data. Analysts expect that U.S. crude inventories rose by 1.4 million barrels last week, but stocks of distillates, like heating oil and diesel, were expected to fall by 1 million barrels, according to experts.

Technical News

EUR/USD

This pair appears to be continuing to trade within a minor bearish channel. Currently at a peak within this channel, it now appears that there are some indications of an impending downward correction. The pair is currently over-bought on the hourly RSI and the daily MACD shows a bearish cross. Going short may be a wise tactic today.

GBP/USD

This pair has neared the end of a consolidation trend on the daily chart and a tightening of the Bollinger Bands is beginning to show. As this trend continues, traders will likely see very few indications of a clear direction, but a sharp movement may be on the way in the next week and traders should be on the lookout. Waiting for clearer signals may be a wise move today.

USD/JPY

With many indicators floating in neutral territory, this pair appears to be floating within a very tight range. With a fresh bullish cross on the 4-hour MACD, there is a possibility for an impending upward movement. Forex traders should try to capture profits on this pair today by buying on lows and selling on highs within its current range.

USD/CHF

This paid continues to show modest bullishness, and few indications that this will stop any time soon. The hourly RSI shows this pair floating near the over-sold border, which could suggest a level of upward pressure. The weekly Momentum oscillator also shows an upward turn, hinting at the quickening pace of the upward movement. Going long appears to be today’s preferable strategy.

The Wild Card – USD/TRY

This pair is giving off some decent indications of downward movement. The pair has been trading within a tightening consolidation trend since yesterday morning and now appears to have reached the tipping point. Many indicators show neutrality, but the longer-term momentum appears to be down. Forex traders can see a fresh bearish cross on both the 4-hour MACD and daily Slow Stochastic, and use this information to anticipate the strong bearish movement which will likely occur today in order to capture great profits!

Forex Market Analysis provided by Forex Yard.

© 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.

Asia – Pacific

Japan’s Monetary Base came out lower than its last result at 4.5%

Europe

England’s Construction PMI was Weaker than expected at 46.2%

England’s Nationwide Consumer Confidence hit expectations at 72.00

Americas

America’s Total Vehicles Sales increased by 10.5M

The Overall Sentiment

Equities

After dropping at the start of the session, the major U.S stock indices managed to find support and climb back into positive territory. Investors experienced a volatile session yesterday as sentiment quickly flip-sided due to Buffets new transportation deal and upbeat results from Ford and GM. The major indices closed the session with an average gain of 0.3%

In one of his largest acquisitions ever, the market guru, Warren Buffet purchased the railway company Burlington Northern Santa Fe for $100 per share. Even though Buffet already had 22.6% of the company’s shares, he decided to go forward and purchase the remaining 77.4% for a whopping $44 billion.

The auto industry also showed positive signs yesterday as Ford sales increased by 2.6% thanks to its new fuel efficient cars. General Motors sales increased by 4.7%. Even though the auto industry helped to boost yesterday’s session, one must note that the recent figures were influenced by the cash for clunkers program.

From a technical point of view, the transportation index, known as a market leader, showed an enormous turnaround and climbed higher throughout the session. When taking a glance at the chart below one can see the enormous bullish candle accompanied by high volume. Even though yesterday’s session is classed as a positive sign for a broader market continuation, resistance lies at key levels, which could prevent the market from immediately climbing higher.

Forex

On the Forex market, Dollar bulls encountered a volatile session as the Dollar Index retraced all of its early morning gains. Even though most of the individual pairs traded around recent levels, the Dollar experienced selling pressure, due to a spike in Gold.

This inflation hedge commodity, increased dramatically during yesterday’s session as the Reserve Bank of India purchased over 200 tons of Gold. According to Bloomberg news this was one of the largest purchases in over 30 years. Even though India is known to be a large purchaser of Gold, primarily in the form of Jewelry, this time round analysts are speculating that the buying was due to investment diversification.

Gold soared higher yesterday to close the session just off the 1085 mark.

The Day Ahead

The heat should rise over the next couple of trading days as the Federal Reserve’s policy statement will be released today, followed by the governments ADP report.  Furthermore New-Zealand will release its unemployment result, one that is expected to show an increase of job losses to 6.4%. Apart from today’s expected volatile session one should take into consideration tomorrow’s interest rate decisions and Friday’s NFP result, all expected to have an impact on the markets.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

The forex market awaits the results of the ADP Non-Farm Employment Change from the U.S. at 13:15 GMT. The publication will be crucial in determining the value of the U.S. Dollar as end-of-week trading approaches. The forecast is 188,000 people, significantly better than the previous result of 254,000 people. A result similar or better than forecast could lead to a mass sell-off of the safe-haven USD, as investor confidence in a continuing global economic recovery increases.

As of now, the Dollar is trading 30 pips lower against the European currency at the 1.4762 mark. As a result of very optimistic British Services PMI earlier today, the GBP has risen by over 100 pips vs. the USD to the 1.6530 level. The U.S. currency is also trading lower against the Canadian Dollar, as a sell-off of the USD today is already underway. As the trading day passes by, much of today’s trends are likely to continue.

Forex traders are encouraged top take advantage of the weak Dollar, as big money can be made in the next few days. Highly desirable crosses seem to be the GBP/USD, EUR/USD and USD/JPY. Very popular commodities remain to be Gold and Crude Oil. These commodities will be very volatile in the coming hours, as vital U.S. data is set to be published. This includes other publications, such as the ISM Non-Manufacturing PMI, Federal Funds Rate and the Crude Oil Inventories.

Since yesterday afternoon, USD trading has been dominated mainly by the rebound in U.S. Factory Orders. The market reacted very strongly, as new orders for manufactured goods jumped by 0.9% in September. This is remarkable compared to the 0.8% decline in August. This is good news for the U.S. economy, as we have seen a string of positive news in the past week. As for today, the greenback is trading lower against its most traded currency crosses.

The EUR/USD pair is currently trading higher by 30 pips at the 1.4760 level. The GBP/USD cross is trading higher by 60 pips at the 1.4682 level. You should follow this pair very closely, as Britain is set to publish the Services PMI at 09:30 GMT. The Dollar is also trading lower against the CAD and CHF. However, it is currently trading higher vs. the JPY. Later today, this cross will be under pressure, as we await the Japanese Monetary Policy Meeting Minutes at 23:50 GMT.

In the coming hours, there will be some crucial data that will be published from the U.S. economy. The ADP Non-Farm Employment Change will be released at 13:15 GMT, the Federal Funds Rate and FOMC Statement at 07:15 GMT, and the Crude Oil Inventories report at 15:30 GMT. The results of these publications are set to mostly affect Crude prices, Gold, the EUR/USD and GBP/USD crosses. Open your positions in these now, as you have the opportunity to make big profits today.

By CountingPips.com

The Reserve Bank of Australia increased its interest rate by 25 basis points today to 3.50 percent and raising its rate for the second meeting in a row.  Today’s decision to raise the cash rate was expected by market forecastors after last month Australia became the first G20 economy to increase its interest rate since the financial crisis. The October rate increase was the first rate change since April 2009 when the RBA decreased the rate by 25 basis points to the 3.00 percent level, a 49-year low.

Australia’s Glenn Stevens, Governor of Monetary Policy, said in his policy statement that, “The global economy has resumed growth.  With economic policy settings likely to remain expansionary for some time, the recovery is likely to continue during 2010 and forecasts have been revised higher. The expansion is generally expected to be modest in the major countries, due to the continuing legacy of the financial crisis.”

Australia’s economy weathered the economic crisis better than most others as a technical recession was averted and government stimulus as well as strong demand for Australian goods from China has continued to help boost the economy. In 2009, the GDP of Australia rose for the first half of the year with a 0.4 percent increase in the first quarter followed by a 0.6 percent gain in the second quarter.

Stevens commented on the Australian economy today saying that, “Economic conditions in Australia have been stronger than expected and measures of confidence have recovered. Some spending has probably been brought forward by the various policy initiatives. With those effects now diminishing, these areas of demand may soften somewhat. Some types of capital spending are likely to be held back for a while by financing constraints, but it now appears that private investment will not be as weak as earlier expected.”

By Adam Hewison – In our last video on the S&P 500 (10/27), we indicated that this market may have topped out for the year. Today’s action puts in place a weekly “Trade Triangle” which indicates that a temporary or a permanent top is now in place for this market.

In this latest video, I share with you some of the ideas that I think could potentially come into play for this market. Not only do I have some downside targets in mind, but I also see a pattern that could evolve in the next several weeks which will confirm that we’ve made a serious high in this market.

Watch the New S&P500 Video for Free Here….

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

By Greg Holden – It seems last week’s rise in Norwegian interest rates had the expected effect of raising the value of the NOK in the short run. However, cautionary statements about decreased growth resulting from a strong Kroner helped push the currency back down against the USD. The peak price levels experienced by the Scandinavian currencies against the greenback have fallen off this week, with most returning to levels unseen since September.

The sudden rise in risk aversion has pushed many investors back into the safety of the Dollar, with the Scandinavian Kroner experiencing a minor setback as a result. Norway appears on track to raise its interest rates steadily in the coming months, which lends weight to the notion that the NOK may rise steadily through to mid-2010.

Investors are still less certain about the Swedish Kroner (SEK), but a return to risk appetite could help boost the SEK to last week’s peak levels in no time. Denmark may still be under pressure to adhere to EU legal and monetary standards, but the pressure does not seem to be affecting its currency value and the DKK is largely following suit with the other currencies of the northern region.

Technical Analysis

– The chart below is the 4-Hour chart for the USD/SEK currency pair from ForexYard.

– The indicators used are the Bollinger Bands, the MACD/OsMA, and the Williams Percent Range.

– Point 1: The price is currently sitting near the upper border of the Bollinger Bands which indicates that there may be moderate downward pressure.

– Point 2: There appear to be a number of bearish crosses on the MACD which signals an impending downward move.

– Point 3: The Williams Percent Range has peaked at the 0 marker and has turned bearish, this means that there may actually be a strong level of downward pressure.

– Traders should expect a strong bearish correction from the current price level.

Forex Market Analysis provided by Forex Yard.

© 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.