Feb. 6 (Bloomberg) — Gregory Smith, founder of Australian investment company Global Commodities Ltd., talks about the outlook for crude oil, corn, sugar, and soybeans. He speaks from Singapore with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
Kotecha Favors Commodity Currencies, Won, Rupee, Rupiah
Feb. 6 (Bloomberg) — Mitul Kotecha, Hong Kong-based head of global currency strategy at Credit Agricole, talks about his investment strategy. He also discusses the U.S. and Chinese economies, Europe’s sovereign debt crisis, and Reserve Bank of Australia monetary policy. He speaks with Rishaad Salamat, Susan Li, David Ingles, and Zeb Eckert on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)
Gold “Rollercoaster” Heads Yet Lower as Greece Hits “Crunch Time for Bankruptcy”
London Gold Market Report
from Ben Traynor
BullionVault
Monday 6 February 2012, 09:00 EST
SPOT MARKET gold prices fell further Monday morning in London, reaching $1713 an ounce by lunchtime – a 2.8% drop from last week’s high – as stock and commodity markets also ticked lower, while US Treasury bond prices gained.
Silver prices dropped to $33.09 per ounce – 3.9% down on the high from last week – as uncertainty grew over the long-running Greek debt issue.
Gold prices began their downward move on Friday following the publication of better-than-expected US nonfarm jobs data. Stock markets by contrast rallied immediately following the release.
“[The fall] may serve as a warning of an interim top,” reckons Russell Browne, technical analyst at bullion bank Scotia Mocatta, adding “there is key support at the $1550 level from the long-term uptrend.”
On the currency markets, the Euro drifted lower Monday morning against the Dollar, which saw gains against a basket of major currencies.
“It’s been a bit of a rollercoaster, the relationship between gold and the Euro,” reckons Royal Bank of Scotland metals analyst Nikos Kavalis.
“One day it’s positive, one day it’s negative. But this morning, Dollar strength, or Euro weakness, is clearly affecting gold.”
“Gold is not seeing the big declines we saw in November and December,” adds Edel Tully, precious metals strategist at UBS.
“Gold has become more of the safe haven asset…although gold is not in the all-out bullish camp yet, investors have been adopting a more friendly approach, but they are not going all bets in on gold—yet.”
Greece’s prime minister Lucas Papademos has said that Greek political leaders have agreed on measures to reduce public spending by the equivalent of 1.5% of GDP.
However, there is still no formal agreement to the terms set by the so-called ‘troika’ of international creditors – the European Central Bank, the European Union and the International Monetary Fund – as part of Greece’s €130 billion second bailout.
“If Greece substantially deviates from the reform course through its own fault, then Athens can no longer expect that others will show solidarity in the form of financial contributions,” Jean-Claude Juncker, chairman of the Eurogroup of single currency finance ministers, said in an interview with German newspaper Der Spiegel over the weekend.
“If we were to conclude that everything is going wrong in Greece, then there won’t be any new aid program, which would mean that Greece will have to declare bankruptcy in March.”
Greece has over €14 billion of maturing bond to pay on March 20.
“It will be very bad if there is no white smoke from Athens today,” one Eurozone government source tells newswire Reuters.
“We have already missed deadlines…we need a decision now to put the mechanism of rescheduling in place.”
“This week is crunch time for Greece,” agrees Witold Bahrke, senior strategist at PFA pension in Copenhagen, which oversees $45 billion in assets.
“We can no longer completely exclude extreme scenarios such as a disorderly default or, a bit further down the line, an exit from the Euro area.”
Greece is also continuing negotiations with private sector creditors to determine by how much the Greek debt they hold will be written down.
In his Der Spiegel interview, Juncker denied that Portugal will receive the same treatment as Greece.
“There will be no debt haircut for Portugal,” he said. “We have always said that Greece was a special case. There, it was necessary to have a certain participation of the private sector. But, that is definitely out of the question for other countries.”
Elsewhere in Europe, the European Banking Authority, which oversees regulation of the continent’s banking sector, is unconvinced by banks’ proposed efforts to boost the amount of capital they hold as a buffer against financial market shocks, the Financial Times reports.
The EBA said in December that 30 European banks needed to boost their capital if they are to reach the regulator’s 9% target for the ratio of Tier 1 core capital to assets. Those banks submitted their plans to the EBA last month.
“According to one person close to the process, as much as half of the measures outlined in those plans do not look credible,” the FT reports.
Banks will be able to borrow more money when the ECB holds its second 3-year longer term refinancing operation later this month. December’s LTRO saw European banks borrow nearly €500 billion in total. Many observers expect banks to borrow at least twice as much as this month’s operation.
The difference between bullish and bearish gold futures and options contracts held by traders on New York’s Comex – the so-called speculative net long – rose for the fourth week running in the week ended last Tuesday gaining 21%, according to the latest data from the Commodity Futures Trading Commission.
“This has been the most aggressive display of confidence in gold we’ve seen in some time,” says Marc Ground, commodities strategist at Standard Bank.
“However, given that these moves were largely as a result of the Fed’s dovish announcement, and that before these moves the futures market remained cautious of gold’s prospects, we still would not be surprised to see a pull-back.”
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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.
(c) BullionVault 2011
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.
The Senior Strategist: Profit Taking Ahead after Rally
After a nice equity rally the last six weeks its time to see some profit taking this week, assesses Jyske Bank Senior Strategist, Ib Fredslund Madsen.
Henderson Says Asian Currencies `Good, Long-Term Bet’
Feb. 6 (Bloomberg) — Callum Henderson, global head of foreign-exchange research in Singapore at Standard Chartered Plc, talks about Asian currencies, the dollar, and euro. Henderson also discusses U.S. and European economies. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
Forex CT 6-2-12 Daily Outlook & Update
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.
Positive Jobs Report Boosts USD
Source: ForexYard
The USD saw gains across the board on Friday, following a significantly better than expected US Non-Farm Payrolls figure that helped boost confidence in the US economic recovery. Perhaps most significantly, the USD/JPY came off its recent three-month low. The news calmed fears that the Bank of Japan would soon intervene to limit yen growth. This week, Greece is likely to be back in the headlines as investors eagerly await news of a possible debt-swap deal. Any positive developments are likely to help riskier currencies like the euro and Australian dollar.
Economic News
USD – USD/JPY Comes off Three-Month Low Following Jobs Report
The better than expected US Non-Farm Payrolls last Friday, resulted in positive gains for the USD to close out the week. 243K jobs were added to US payrolls in January, in yet another sign that the American economic recovery is progressing. The unemployment rate dropped to 8.3% percent as a result, its lowest level in almost three years. The USD/JPY closed out the week on a bullish note at 76.58 after hitting a three-month low on Thursday. As a result, fears of a Bank of Japan market intervention were temporarily calmed.
Turning to this week, both European and US news will likely determine whether the dollar can extend its bullish trend. On the European front, Greece’s inability to reach a deal with its creditors has raised concerns that the country could default on its debt. Traders will want to continue paying attention to any announcements out of the euro-zone. If a Greek deal is not finalized in the coming days, the USD could see further gains as a result.
With regards to US news, the most significant event at the moment will likely be a speech from Fed Chairman Bernanke on Tuesday. Should Bernanke indicate that the Fed may raise interest rates earlier than previously thought, the dollar could see gains during mid-week trading. At the same time, if Bernanke voices any pessimism regarding the US economic recovery, the greenback could come under renewed pressure.
EUR – Euro Trend Uncertain amid Greek Debt Negotiations
The euro tumbled against the US dollar following the release of Friday’s Non-Farm Payrolls figure. The better than expected payrolls data renewed faith in the US economic recovery and boosted the dollar. The EUR/USD dropped as low as 1.3065 before staging an upward correction to close out the week at 1.3159. Against the yen, the euro saw fairly significant gains as investors reverted to riskier assets following the positive news. The EUR/JPY closed out the week 100.78, after dropping as low as 100.15 earlier in the day.
Turning to this week, news out of Greece is once again forecasted to impact the markets. Greece has yet to reach a debt-swap deal with its creditors, and is now facing the possibility of default. Unless positive developments occur this week, the euro may come under renewed pressure as investors are likely to revert back to safe-havens like the USD and JPY.
JPY – Fears of BOJ Intervention Temporarily Calmed
Following the bearish turn the JPY took to close out last week, concerns that the Bank of Japan would soon intervene to limit yen growth have subsided. Both the USD/JPY and EUR/JPY crosses saw gains after a better than forecasted US jobs report boosted risk taking. That being said, the dollar is still relatively close to its recent three-month low. Should the pair turn bearish once again, rumors of a BOJ intervention are likely to come about again.
Whether or not the dollar continues to gain against its Japanese counterpart will likely depend on US news scheduled for this week. Traders will want to pay particular attention to a speech from the Fed Chairman on Tuesday. Should he indicate that the US may increase interest rates ahead of schedule, the USD/JPY will likely extend its current trend.
Crude Oil – Oil Prices Spike to Close out Week
The price of crude oil spiked after a positive US jobs report convinced investors that American demand would also increase. Additionally, fresh threats from Iran to limit exports led to supply side fears which also boosted prices. The price of crude increased almost $2 on Friday to close out the week at $97.81 a barrel. Whether or not the commodity can maintain its current trend largely depends on market events this week.
Any further escalation in tensions between Iran and the West is likely to result in another spike in the price of oil. Furthermore, additional signs that the US economic recovery is advancing may also lead to an increase in prices. At the same time, should Greece once again fail to reach a debt-swap deal with its creditors, the euro could tumble which would likely bring oil down as a result.
Technical News
EUR/USD
Technical indicators are currently mixed for this pair. While the weekly chart’s Relative Strength Index is right around the 30 level and oversold, a bearish cross has formed on the daily chart’s Stochastic Slow, meaning that downward movement could occur in the near future. Traders may want to take a wait and see approach for this pair until a clearer picture presents itself.
GBP/USD
Most technical indicators show that this pair is currently overbought and may see a downward correction in the near future. The daily chart’s Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the same chart is above the -20 level. Going short may be a wise choice for the near future.
USD/JPY
Technical indicators on the daily chart show this pair in the oversold zone, meaning that upward movement is possible in the near future. A bullish cross is forming on the MACD/OsMA, while the Williams Percent Range is hovering close to the -80 level. Going long may be a wise choice for the pair.
USD/CHF
The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. The Relative Strength Index (RSI) on the same chart is hovering close to the 70 level, which typically means that a downward correction is going to take place. Traders will want to pay attention to the RSI. If it crosses the 70 line, a bearish correction may take place.
The Wild Card
AUD/USD
Most technical indicators show this pair in overbought territory, meaning that a downward correction could take place in the near future. The daily chart’s Relative Strength Index is above the 70 line, while the Stochastic Slow on the same chart has formed a bearish cross. Forex traders may want to go short in their positions ahead of any downward 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.
GBP/USD Outlook – Feb 5, 2012
GBP/USD moved the way we had indicated during last weekend. the surrency pair moved as high as 1.5883 or 3 pips above what we had mentioned (1.5880) and found some resistance there and closed for the week at 1.5814. 1.5883 resistance was just below the resistance of November 18th and is an important point to note that the pair did not break this previous resistance.
For the next week, if 1.5880/1.5885 resistance holds then we would expect some sideways movement initially. Overall the sentiments are bullish for the short-term but we will wait for a firm break over 1.5885 to expect further upward move.
On the upside if GBP/USD breaks strongly over 1.5885 then we would expect a minor resistance near 1.5935/1.5940 and above that near 1.5980 because of the approaching 1.6000 psychological resistance level.
On the downside we would expect some support near 1.5705. Any firm break below this should take the currency pair towards 1.5640/1.5650. This range was a support during January 27th to January 30th and a break of that will not only represent the break of this support but a good break below 22-day EMA. Please note that even if such downward move takes place, we would expect frequent support below that i.e. near 1.5615/1.5625 (55-day EMA as well as the support range during January 22nd to 25th) and the 1.5575 or the Kijun-sen level of daily Ichimoku cloud. These supports are also important because of the approaching psychological level of 1.5500 range.
Please note that overall we expect a slower move on either side. GBP/USD is approaching a resistance zone and even with the recent upward move, the overall bearish sentiments and outlook have not changed. There is no change on our overall bearish outlook as yet and that will only change with any firm break first over 1.6000 and then finally over 1.6165.
On the down side a break below 1.5516 will turn our focus back towards downside towards first 1.5400 support and then to retest the recent 1.5279 and then 1.5233. A firm break below this and the minor support of 1.5220 should take the GBPUSD towards 1.5160. The psychological support of the approaching 1.5000 ranges should gain strength from this level.
You may also check the weekly gbp usd forecast and daily gbp/usd analysis at FA, your forex trading site.
Risk Aversion Ad Absurdum
Barron’s ran a featured story by Kopin Tam in last weekend’s edition titled “Just Don’t Lose It” that was telling. Tam pointed out that, even after the best January in well over a decade, investors weren’t embracing equities, and neither were their financial advisors. Only 44 percent of financial advisors planned to increase their clients’ exposure to stocks in 2012 compared to 63 percent this time last year.
I wasn’t particularly surprised to read these statistics. After all, the financial wealth of this country is dominated by the Baby Boomers, the largest and richest generation in history. The Boomers lived through the biggest bull market in history (1982-2000), but they also saw a decade’s worth of returns go up in smoke in 2008. At this stage of their lives, they don’t feel like they can afford the risk of another meltdown. I get that. Even while I myself am bullish, I understand Boomer risk aversion.
This is where it gets weird: it’s not the Boomers that are skittish. It’s their children.
As Tam writes, “Risk aversion is particularly acute among ‘Generation Y’ investors born after 1980, who have decades to go before they retire but are especially reluctant to invest… As a result, this cohort allocates roughly 30% of their money on average to cash, more than any other age group.”
Far from being the reckless risk takers that youth are wont to be, this generation is showing a level of risk aversion I might have expected from an elderly retiree that lived through the Great Depression. Fully 40 percent of the Gen Y investors said they would “never feel comfortable investing in the stock market.”
I can’t say that I don’t understand the general squeamishness with equities these days. The same Barron’s article noted that the average daily move in the S&P 500 was 1.44 percent in the second half of 2011. That’s nearly double the 0.75 percent average that has prevailed since 1928.
Still, when I see this kind of pervasive fear in the market, particularly among those who should normally be aggressive, I can’t help but be bullish. Bearishness has reached the level of the absurd.
For the past two years, I’ve advocated investing in high-quality, dividend-paying stocks, and I continue to recommend these as the bedrock of a portfolio. The alternatives for most conservative investors are sparse. Cash pays nothing in interest, and most bonds pay only slightly more. Meanwhile, the cash levels of U.S. companies are at an all-time high, and dividend payouts are hovering near all-time lows. Conservative investors can assemble a portfolio of stocks that will out-yield a bond portfolio today and that will almost certainly benefit from rising dividends in the years to come.
For more aggressive investors, the time has come to “risk up” by buying the sectors that took the biggest beating in 2011. I am bullish on Europe (see “Going Long on Two Euro Stocks”) and emerging markets (see “Emerging Markets Will Make a Comeback in 2012”). And while I don’t make a habit of recommending commodities, I would have to add commodities to my list of cyclical sectors likely to do well in 2012.
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EUR/JPY Outlook- Feb 5, 2012
the Euro-Yen fell strongly from 101.46 but found support at 99.24, which was above the previous low and support of 98.92. The currency pair, then, moved to 100.88 and closed for the week at 100.79.
For the coming week, though initially we stay neutral for EURJPY but if the currency pair does not break below 99.95 then we would expect some more upward gains towards the resistance of 101.46. For any further upward gains, the break of this resistance i.e. 101.46 is important. This level represents the previous resistance as well as the resistance of the upper edge of the daily Ichimoku cloud. A firm break of 101.46 may take EUR/JPY to retest 102.22. On the upside even a break of the resistance of 102.22 should bring some stronger resistance near 102.52, which was the peak of the resistance zone during December 14th to December 27th, 2011. If EURJPY breaks over this resistance then we would expect further slow move towards the psychological resistance of 104.80/105.20.
On the downside any firm break below 99.95 should bring some support near 99.60/99.65. A break of this will also indicate the break of the minor support of daily Ichimoku cloud’s Kijun line support and in that case we would expect further down ward move towards 98.80/98.90 i.e. one of the previous supports as well as the lower edge of the daily Ichimoku cloud.
Any firm break below 98.80 will indicate that the recent correction is over and we can change our focus back towards a retest of 97.03. As we have been mentioning for past couple of weeks that below 97.00 the strong psychological support of 95.00 would start working and any subsequent downward move should be slow and with frequent supports near 96.60 and above 96.20 and 95.60. But in case the market sentiments do not have sudden change because of some major economic news from the Euro zone, subsequently we expect a move towards 94.10/94.05 (inverse 61.8% projection of the upward correction between October 3rd to 30th and also the psychological aspects of the price action).
You may also check the daily eur/jpy analysis and forex correlation at ForexAbode.
