InvestMacro FX

The Top Five “Green” Predictions for 2012

by David Fessler, Investment U Senior Analyst
Wednesday, January 11, 2011

It’s no secret that a number of companies – and their shareholders – are cleaning up in the shale oil and gas business. I’ve written about many of them right here.

However, I thought I’d stick my neck out (again) and make a few predictions regarding “green” products and services, and give you my take on them from an investment standpoint.

Last year we saw the demise of Solyndra and Beacon Power here in the United States. So much for the federal government picking winners. A more sound policy would be to incentivize private industry, but let the chips fall where they may.

While they’re falling, could there be some winners in 2012? Let’s see what could happen in the green space this year.

Prediction #1: EV Sales Continue to Accelerate

After a slow start in 2011, electric vehicle sales will continue to make inroads on their gas-guzzling counterparts in 2012. The Nissan LEAF and Chevy Volt have the early lead, but Toyota will be introducing a new line of its popular Prius model. Some will come with a plug and a larger battery, allowing for Volt-like range and performance.

The reality is that, this year, it’s different. Why? Just about every car manufacturer you’ve heard of – and some you probably haven’t – is producing, or has announced, some form of battery electric vehicle (BEV) or plug-in hybrid electric vehicle (PHEV).

It probably won’t be the United States that drives sales, as some politicians are already calling for the third demise of electric vehicles, and the elimination of the $7,500 federal tax credit.

Unlike the United States, other countries are aggressively jumping on the EV bandwagon. Europe is especially interested, as gasoline prices are nearly twice what they are here in the states.

Asia’s not far behind in its push towards electrics, as supplies of gasoline and diesel are expected to become scarce, and more expensive, as demand increases dramatically over the next three to five years.

Prediction #2: Smart Meters… Smart Bet

While not really a green product, smart electric meters are becoming more widely adopted around the world. Here in the United States, many utilities are slowly replacing all their old meters with new smart ones.

The advantages are that they can be read remotely and customers will have the option of programming “smart” appliances to operate when electric costs are lower, thereby saving energy.

Great Britain expects to have all of its meters replaced with smart meter technology by 2018. Smart meters will also spawn information technology companies specifically geared towards developing software to interact with them. Yes, there will probably be “an app for that.”

Prediction #3: Energy Catastrophe Will Strike Again

Three Mile Island… Alaska’s Exxon Valdez spill… Russia’s Chernobyl… BP’s Gulf disaster… Japan’s Fukushima… All of these incidents cite the fragile and sometimes careless attention the world gives to its energy supplies.

What’s next? Iran? North Korea? A terrorist bomb on a pipeline? I don’t know. But I do know this: Whatever happens, it won’t be good for oil prices. Oil traders have their trigger fingers poised to send oil soaring at the slightest hint of a disruption in supply, regardless of the source.

Prediction #4: The Future Lies Offshore

Despite the complete lack of it here in the United States, offshore wind energy is making great strides elsewhere, particularly offshore Europe.

As of June of last year, according to the European Wind Energy Association, there were 1,247 offshore wind turbines located at 49 farms in nine countries. These are fully connected to the grid, and provide a total of 3,294 megawatts (MW) of power.

This year, an additional 1,084 MW are due to be added, primarily in Germany and the United Kingdom.

Here in the United States, Maine, Rhode Island, Massachusetts and Virginia all have active projects in various stages of planning and approval. However, it’s still unclear when actual construction of the first offshore wind facility will start, and where it might be located.

Prediction #5: The United States Won’t Pass a Comprehensive Energy Plan in 2012

This one shouldn’t be too surprising. After all, it’s an election year. Little if anything of substance will happen on the energy front. Much of what happens in 2013 will depend on who gets elected. If Obama gets re-elected, green projects will continue to receive more attention than if he loses.

Oil and gas companies will fare just the opposite. It will be bullish for oil if Obama loses, and somewhat bearish if he wins (everything else being equal, which it won’t be).

There are a lot of intangibles affecting the price of oil right now, and that will continue to be the case for the foreseeable future.

As for Green investing?

Offshore wind? Not yet. EVs? Not enough traction yet (pun intended). Solar? Still too expensive.

Smart meters? Itron, Inc. (Nasdaq: ITRI) comes to mind, but its stock is off 33% over the last year. A better, but much more diverse, bet would be General Electric Company (NYSE: GE), which is actually up 3% in the last year.

In general, most green technologies are in their infancy. As such, they’re niche products and services, and not particularly well suited as investments. Unless, of course, you’re prepared to wait a long time.

The best green investment? Natural gas producers and pipeline transmission companies…

Gas is so cheap, power plants and vehicle manufacturers are switching over to it. The big truck transportation sector could begin a widespread switch to it in a couple of years.

That will give the other green technologies time to mature and become more mainstream. And just maybe the feds will have a comprehensive energy plan by then. Hope springs eternal.

Good Investing,

David Fessler

Article by Investment U

Jamie Dimon’s Medicine to Cure America

by Marc Lichtenfeld, Investment U Senior Analyst
Wednesday, January 11, 2011: Issue #1684

It’s difficult to spend time at the J.P. Morgan Healthcare Conference and not feel optimistic.

Sitting in on presentations, talking with brilliant scientists, meeting with CEOs and hearing about incredible developments in medicine and medical technology always gives me the feeling that tremendous progress is being made in the way many diseases are treated.

But none of the doctors had a prescription for what’s ailing America and its economy.

However, J.P. Morgan Chase’s (NYSE: JPM) CEO, Jamie Dimon, did.

In a stirring one-hour interview with CNBC’s Maria Bartiromo during the lunch break, Dimon showed why he’s one of the most revered business leaders in America today. With his standard bluntness, Dimon told Maria and the audience of 8,500-plus why things aren’t so bad and how they can get better.

Dimon, the unapologetic capitalist, told the audience, “You should feel pretty good about the lives you save. And you should be allowed to make a profit.”

He said the United States is in a mild recovery, which is strengthening and is broad based across most sectors. “Companies are in fabulous financial shape,” he stated.

The CEO noted the consumer debt ratio is back where it was 20 years ago, and that housing supply and demand are starting to balance out.

He believes housing is near the bottom. “When you see employment going up three, four or five hundred thousand a month, you better buy that house you want because the price won’t last,” he warned the audience.

But it wasn’t all sunshine and rainbows. There’s a lot of hard work to do. Dimon’s recipe for getting America back on its feet is for executives to stop griping and work hard to build their companies regardless of the economic, geopolitical, or regulatory environments.

In dealing with tough economic times, Dimon suggests every business run a stress test, like banks are required to do. He told the assembled group, many of whom were healthcare executives, to model a worst-case scenario in terms of revenue, cost of goods, etc.

He practically laughed at the notion that businesses should take geopolitical concerns into account. “They are there every day of your life,” he said. “Iran doesn’t matter because there’s always something out there… Always.”

In terms of regulatory issues, his approach was two-fold.

One, make sure you’re represented in Washington. Allocate resources to ensure that your case is being heard in Washington. “There’s nothing wrong with that. It’s democracy.”

Two, deal with it. Dimon emphasized that he’s all for regulation when it’s done properly. Usually, it’s not. But he has no choice but to figure out the best way to run his business within the rules as they stand. Hopefully, some day they get better. But executives have to keep plugging along and grow their companies whether the rules are strict or not.

He got political as well about various topics:

Occupy Wall Street – “Stop vilifying big business. Things are pretty good, but we can’t get out of this malaise (if business continues to be attacked).”

Immigration – “America has the best military and universities in the world. It’s pathetic and immoral that we teach kids from all over the world and then make them go home.”

Subsidies – “Government should stop subsidizing business. Just get out of the way.”

Obamacare – “Would I like to see universal healthcare? Yes. But all we did was pile more stuff on top of a crappy system.”

Payroll tax – “The payroll policy is in effect for two months! What kind of a joke is that?!”

He snapped at an audience member who questioned Wall Street’s short-term focus on quarterly results. “Sometimes the market will overvalue your company. Sometimes it will undervalue it. Get over it. Run your company and build your business for the long term.”

Thoughts From the Conference

This year, more than 8,500 people are attending the conference. That’s the most in the six years I’ve been here. Chatter in the hallway indicates there’s money to invest looking for a home in the healthcare space.

Canaan Partners, a Menlo Park, California-based venture capital fund, raised $600 million that will be invested in technology and healthcare companies.

Many presentations are standing room only. If you didn’t get to Dendreon’s (Nasdaq: DNDN) 10 minutes early, you were probably standing in the hall.

Of the presentations I’ve seen so far, Vertex Pharmaceuticals (Nasdaq: VRTX) was the most interesting. Rather than crowing about hepatitis C drug Incivek having the strongest product launch in biotech history, the CEO spent much of his time on the company’s pipeline, including Kalydeco. The FDA makes its decision on the cystic fibrosis drug on April 18. This would be the first drug for CF that addresses the cause of the disease, not just a symptom.

However, it’s only designed to treat a small minority of CF patients that have a specific genetic defect.

The conference is still going on. I’ve got a ton of presentations to still sit through and several sit downs with CEOs. I’ll have lots more next week after I’ve had time to go over all of my notes. Stay tuned.

Good Investing,

Marc Lichtenfeld

P.S. Here’s a one-on-one interview that Dimon did with Maria Bartiromo for CNBC. It’s not the same one-hour interview that Marc talks about above, but Dimon touches on some of the same issues:

Article by Investment U

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 11 January 2012, 08:40 EST

SPOT MARKET gold prices rose to a one-month high of just under 1647 per ounce Wednesday morning – a 5.1% gain for January – before easing back as the Dollar rallied on the currency markets.

The gold price in Euros meantime touched levels not seen since December 8, hitting €41,502 per kilogram (€1290 per ounce), while the Euro currency fell to 15-month lows against the Dollar following disappointing German growth data.

The previous day saw spot market Dollar gold prices break through their 200 day moving average, which yesterday sat at $1626.86 per ounce by PM London Fix prices.

“The move higher today was not expected as it was against a bearish picture,” writes Russell Browne, technical analyst at bullion bank Scotia Mocatta, adding that “it will take a number of days of closes above the 200 day moving average to give the bulls confidence to re-enter the market.”

“While the Dollar may not see a significant correction soon,” says a note from Societe Generale, “and is likely to continue to gain against the Euro as the Eurozone crisis persists, the negative effects of a stronger Dollar on gold are likely to be largely diminished in 2012, allowing the bullish macro drivers to dictate price action once again.”

Silver prices meantime rose to $30.31 per ounce – level with the week’s high and 8.6% up for the month so far – before they too eased back, while stocks and commodities ticked lower and major government bond prices gained.

Germany’s economy shrank by 0.25% in the fourth quarter of 2010, newswire Reuters reports, citing an official from the Federal Statistics Office. For 2011 as a whole, gross domestic product grew at 3.0%, down from 3.7% a year earlier, official data show.

Growth in the Eurozone meantime was half that initially reported in Q3, European Union statistics agency Eurostat now says, after revising Q3 2011 growth from 0.2% to 0.1%.

“Germany cannot isolate itself so easily from tensions within the Eurozone,” says Joerg Zeuner, chief economist at VP Bank in Liechtenstein.

“In addition the export sector is facing a difficult period given the fall in global demand.”
“The best resolution [to the Eurozone crisis]…is that Germany take steps to reverse its trade surplus,” argues Beijing-based economist Michael Pettis.

“[However,] countries that run large and persistent trade surpluses never seem to understand that their surpluses are mainly the consequences of domestic policies that generate additional domestic growth by absorbing foreign demand.”

Italian prime minister Mario Monti has called for more support from the European Union ahead of a meeting in Berlin today with German chancellor Angela Merkel.

“I am demanding heavy sacrifices from Italians,” he tells German newspaper Die Welt.

“[Unless] concrete advantages become visible…a protest against Europe will develop in Italy, including against Germany, which is seen as the ringleader of EU intolerance, and against the European Central Bank.”

Almost the entire €489 billion the ECB lent to Eurozone banks at last month’s 3-Year longer term refinancing operation has been redeposited with the central bank reports news agency Bloomberg, citing estimates from Barclays Capital made using ECB data.

“It’s illusory to think that the [3-Year LTRO] will translate into credit generation,” says Philippe Waechter, chief economist at Natixis Asset Management in Paris.

“It will assuage some of the anxiety banks have regarding their liquidity needs. But they’ve engaged into a massive overhaul of their strategy and shrinkage of their balance sheets, which is, coupled with the deteriorating economy, not compatible with increasing credit.”

Authorities in Iran meantime have blamed Israel for a car bomb that killed a nuclear scientist in Tehran.

Also in Iran, local press reported yesterday that officials had denied rumors that the authorities were blocking any text messages that contained phrases such as ‘Dollar’ or ‘foreign currency’. The imposition of US sanctions has reportedly led to increased interest in holding gold and Dollars as a hedge against Rial depreciation.

Gold bullion dealers reported strong demand from India on Wednesday, Reuters reports, as the Rupee rallied 1.5% against the Dollar to hit a one month high. The weak Rupee saw record domestic gold prices in India last year, weighing on demand during what is traditionally a strong season for buying gold.

China meantime imported a record volume of gold from Hong Kong in November, according to official data. The Hong Kong government’s Census and Statistics department reports that just under 102.8 tonnes of gold were imported by China, equivalent to 18% of China’s total private sector gold consumption in 2010 by World Gold Council figures. Imports from Hong Kong are generally regarded as a proxy for overall imports.

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.

(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.

A look back on 18 months of analysis and reports on the European Credit Crisis

By Elliott Wave International

In 1999, 11 European countries surrendered their currencies for the euro and a shared monetary authority. Barely a decade later, the once-celebrated EU is in the midst of a credit crisis and its currency is facing collapse.

Elliott Wave International’s analysts have been anticipating and tracking the credit contagion across the European nations for the past two years. EWI subscribers were first alerted to the still-developing European debt crisis back in December 2009.

The following is excerpted from a December 2010 report from The European Debt Crisis, a new report from EWI. This free report provides important analysis from February 2010 through today that helps you understand what the European economic crisis can mean for your investments. Plus, you’ll get a unique perspective on what’s ahead. Find out how to access this free report below.

The Credit Crisis Spreads — December 2010
The credit crisis is escalating as expected. Back in January 2010, when ratings agency Moody’s bestowed “investment grade” status on a widely followed index of sovereign bonds, The European Financial Forecast argued that a renewed Primary-degree decline would in fact aim the credit crisis directly at this critical new realm. Our case for the looming sovereign debt debacle rested primarily on two pieces of evidence: (1) Primary wave 3 (circled) had begun in Europe’s peripheral markets, and (2) premiums for credit-default swaps on European sovereigns (think of an insurance policy against a national default) were already signaling the next phase of the crisis by surpassing their 2008-09 price extremes. The February 2010 issue of EFF published a chart showing rising Greek, Spanish and Italian swaps and offered this description of how Europe’s credit crunch would escalate: “The theme during Primary wave 1 (circled) was default at the individual, corporate and quasi-government level. The theme for Primary wave 3 (circled) will be default at the sovereign level.”

Today, the credit crunch is clearly angling itself away from mere corporations and toward whole countries. On November 15, Bloomberg announced the escalation with this headline:

Companies Safer Than Sovereigns as
Crisis Cracks ‘Old Order’
— Bloomberg, November 15, 2010

London credit strategist Greg Venizelos tells Bloomberg that the “old order” was the one where investors believed large sovereign nations to be better credit risks than corporate borrowers. However, debt is being repriced, he says, and today “corporates are now better credit quality than sovereigns in the periphery.” Indeed, swaps on Italian government bonds are more expensive than 75% of the Italian companies contained in the iTraxx Europe Index of European corporations. In Spain, traders deem Spanish sovereign debt to be riskier than all six Spanish companies in the index. Even in the supposedly safe core European country of France, 5-year swaps tied to French government bonds climbed to an all-time high of 105 basis points in November. At that level, more than half of the 25 French companies in the iTraxx index trade tighter than the French sovereign, according to Bloomberg.

The chart above shows another way to view the escalation of the credit crisis. By plotting the difference, or “spread,” between swaps on European corporations versus those on European sovereigns, the rising line shows derivative traders’ increasing fear over sovereign default relative to corporate borrowers. So, yes, the old order of safer sovereigns is over. But notice, too, that the debt crisis began escalating when the continent’s peripheral markets started topping way back in October 2009. The billion-euro question is, “Who is next?” The media is clearly focusing on Portugal, as 5-year credit default swaps tied to Portuguese bonds are setting all-time records. But charts show that so too are swaps tied to Spanish and Italian bonds. Five-year swaps on Belgian debt also reached an all-time high last month. Either one of these countries could be next. Maybe they’ll all go down together, but in the larger scheme of things, it doesn’t matter. The most important thing to observe is that even core European countries like France and Germany exhibit spiking default insurance premiums, too. These countries are the largest contributors to the �440 billion Facility, the same one that backstops the rest of Europe.

The June 2010 European Financial Forecast said unequivocally that before the storm is over, “at least one, but more likely several, G8 nations will capsize.” We stand by our forecast.

The European Debt Crisis is affecting investments across the globe. Gain a valuable perspective on the European debt crisis and get ahead of what is yet to come in this FREE resource from Elliott Wave International. Read Your Free Report Now: The European Debt Crisis and Your Investments.

Jan. 11 (Bloomberg) — Riccardo Barbieri, chief European economist at Mizuho International Plc, talks about the outlook for the German and Italian economies. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

By Hubert Moolman

In part 1, I stated:

“We are at the edge of a major economic crisis. Our monetary system is the underlying cause of this major crisis. The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver, has over the years diverted value from these metals, to all paper assets (such as bonds) linked to the debt-based monetary system.

The process of the devaluation of gold and silver, started by the demonetization of gold and silver, is about to reverse at a greater speed than ever before. This is similar to what happened during the late 70s, when the gold and silver price increased significantly. However, what happened in the 70’s was just a prelude to this coming rally. The 70’s was the end of a cycle, this is likely the end of a major cycle; an end of an era of the debt-based monetary system (dishonest money).”

What this debt-based monetary system has done, is to create what I call a “mirror-effect”, whereby, silver (and gold) is pushed down in value, to a similar extent as to which paper assets such as general stocks are pushed up in value. This mirror-effect clearly shows up on the long-term charts of gold, silver and the Dow.

Here (in part 2), I would like to show how this “mirror effect” of silver versus the assets linked to the debt-based monetary system (general stocks in this case), shows up on the long-term charts. This “mirror effect”, also reveals an interesting cycle, which provides more evidence to support my view, of the impending judgment of this system (monetary system), in terms of standards according to the Holy Scripture.

Below, is a long–term silver chart (real and nominal) from 1850 to present (generated at minefund.com):

MineFund’s real precious metals prices are deflated by U.S. consumer price inflation (Consumer Price Index-All Urban Consumers, not seasonally adjusted, January 2011 = 100).

I have drawn a vertical red line, approximately where silver was demonetized (1870s). Notice how the real price of silver collapsed after the red line, from about $30, until it bottomed in 1931 at $4.29. It then traded side-ways (from the big-picture view) for many years, until it spiked from about the early 1970s, making a peak in 1980, where after, it bottomed again in 2001.

Technically, the bottom in 2001 was the completion of what would be a remarkable double bottom reversal, with the first bottom being in 1931. After a double bottom formation, there is often a big rally, and that is exactly what happened next. If this pattern continues to follow the pattern of a valid double bottom, it will reach levels that will exceed the 1980 high by at least one multiple, but probably by many more.

However, the purpose of this article is not to deal with targets. The interesting thing about this possible double bottom is the fact that the two bottoms came 70 years apart. This 70 years period also appears on the long-term Dow chart. Below is a Dow chart (from stockcharts.com) from 1900 to present:

On the chart, I have indicated a 70 year period from when the Dow peaked in 1929, to the peak in 1999. The reason for using the 1999 peak instead of the 2007 peak, is the fact that the 1999 peak represents the real peak, since the Dow/Gold peaked in 1999 (like it did in 1929).

Notice the dates of the peaks and how they fit in with that of the bottoms of the real silver price, as well as the similar 70 year periods between. In my opinion, the occurrence of the 70 year period on both charts, in the context as explained above, provides additional evidence of the link between silver’s demonetization (or suppression) and the massive debt bubble of this century – as explained in part 1 of this article.

While the Dow is inflated to the peak in 1929, silver is suppressed to its low in 1931. And again, the Dow is inflated to its peak in 1999, while silver is suppressed to its bottom in 2001.

So, the peaks and troughs, as presented in the above charts, are the manifestation (in visual form) of the debt-based monetary system causing paper and related assets to rise, while suppressing silver. Another way of looking at it is that the debt-based monetary system is fuelling speculation in paper assets by using energy diverted from precious metals. THIS IS THE REAL MANIPULATION OF GOLD AND SILVER – it is in the open.

Silver (like gold) stands in direct opposition to the current monetary system (they are inescapably linked). The fall (and falling) of this system is the rise of silver as money; therefore, massive increases in what silver can buy in real terms.

Update on the silver pattern presented in my previous article

In my previous article on silver, I presented the following graphic that compares the silver chart from 2007 to today, to the gold chart from 2008 to 2010 (all charts generated at fxstreet.com):

It seems that silver has now made that low at point 12 (note, there is still a possibility of a retest). Price is now looking to break out of the down-trend since September (point 7). If silver continues to follow gold’s pattern above, we could see new all-time highs over the coming months.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my free newsletter or premium service. I have also recently completed a fractal analysis report for gold and silver – more detail on my website.

Warm regards and God bless,

Hubert

http://hubertmoolman.wordpress.com/

[email protected]

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

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.

Source: ForexYard

Riskier currencies like the euro saw mild gains in trading on Tuesday, as investors eagerly await euro-zone news set to be released on Thursday and Friday. Debt auctions from Italy and Spain, as well as the European Central Bank’s interest rate decision are forecasted to generate heavy volatility for the rest of the week.

Economic News

USD – USD Falls against Riskier Currencies

The US dollar took slight losses against most of its main currency rivals on Tuesday, as investors continue to unload some of their short USD positions following an increase in risk-taking. This is largely due to meetings between European leaders which many are hoping will lead to a plan to combat the euro-zone debt crisis. That being said, the overwhelming market sentiment is for a bullish dollar. The EUR/USD is still trading below the 1.3000 level and analysts are warning that the pair could stay there for some time.

Traders should note that the dollar’s upward momentum is being driven by poor euro-zone news. Investors view the USD as a safe-haven currency and often turn to it in times of economic uncertainty, often at the expense of riskier currencies like the euro and British pound. It is for this reason that the rest of the week’s euro-zone news may create heavy market volatility. Any negative news is likely to benefit the USD. Conversely, if any plans to boost the euro-zone economies are unveiled, the dollar could slip against its main currency rivals.

EUR – Risk Taking Benefits Euro

Investors took meetings between European leaders and the IMF as a sign that a plan to help combat the euro-zone debt crisis may soon be unveiled. As a result, riskier currencies like the euro, Australian dollar and British pound saw mild gains on Tuesday. Analysts are warning that these gains may prove to be insignificant in the long run, and that the market is still overwhelmingly in favor of the safe-haven US dollar. Evidence of this can be seen in the EUR/USD, which failed to break the psychologically significant 1.3000 barrier yesterday.

Turning to today, a slow news day once again means that any information out of the euro-zone is likely to dictate the direction markets take. Italian and Spanish debt auctions scheduled for later in the week, as well as the European Central Bank decision on interest rates are forecasted to generate heavy market volatility.

Positive news out of the euro-zone may prove to be highly beneficial for the common currency. At the same time, analysts are saying that the EUR/USD has the potential to drop to the 1.2600 level, should the EU fail to come up with a credible solution to the current crisis.

CAD – Loonie Moves Up vs. USD amid Risk Taking

The Canadian dollar saw some fairly substantial gains against its American counterpart in trading on Tuesday. The loonie was bolstered following meetings between euro-zone leaders which led to risk taking among investors. The CAD, which is largely linked to commodity and equity prices, tends to move up following positive euro-zone news.

Whether the CAD will be able to maintain its gains today is still unknown. The euro-zone situation is still extremely fragile. Any news that creates doubt in the European economic recovery could cause the loonie to reverse course. Furthermore, should the euro-zone crisis worsen, the CAD is likely to turn bearish extremely quickly.

Crude Oil – Crude Once Again Bullish Ahead of Euro-Zone News

Crude oil saw some significant gains in trading on Tuesday, as risk taking among investor bolstered the commodity. Prices once again were above $103 a barrel, as optimistic euro-zone news sent investors toward commodities.

Additionally, increasing tensions between Iran and the west drove oil prices higher. Supply side fears tend to drive up prices, and analysts are now warning that oil could reach as high as $105 a barrel unless something is done to calm the situation in the Middle East.

Turning to today, crude oil may continue to trade higher if rumors of a plan to combat the euro-zone crisis dominate the headlines. Traders will want to pay attention to any announcements from European leaders for indications about what direction oil will take.

Technical News

EUR/USD

Technical indicators on the daily chart place this currency pair in the oversold zone, indicating that an upward correction may take place in the near future. A bullish cross is forming on the Stochastic Slow, while the Williams Percent Range is right around the -90 level. Going long in your positions may be a wise choice.

GBP / USD

Indicators on the weekly chart are showing a possible upward correction for this pair may take place. The Relative Strength Index is drifting toward the oversold zone, while the Williams Percent Range is already below the -90 level. Traders may want to go long in their positions.

USD / JPY

Most long-term technical indicators are showing this pair trading in neutral territory, meaning that a clear trend has yet to present itself. Traders are advised to take a wait-and-see approach with their trades until a clearer picture develops.

USD / CHF

After spiking in trading last week, technical indicators are showing possible bearish movement for this pair in the near future. The daily chart’s Stochastic Slow has formed a bearish cross, while the Relative Strength Index is hovering in the overbought zone. Traders may want to go short in their positions.

The Wild Card

Gold

Technical indicators are showing that gold may see downward movement in trading today. The 8-hour chart’s Williams Percent Range is currently at -10 and pointing down, which typically means that bearish movement is on the horizon. In addition, the daily chart’s Relative Strength Index is approaching the overbought zone.

Forex traders may want to go short in their positions today.

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.

Bloomberg reports, citing the Times of London that due to small and irregular profits, Royal Bank of Scotland (NYSE:RBS) has plans to close its cash and equities unit.The Times also notes that the bank hasn’t found a buyer for the whole equities unit, Jeffries (NYSE:JEF), Oriel Securities and Numis Corp are interested in buying Hoare Govett, its small corporate equities broking division.Royal Bank of Scotland is currently below its 50-day moving average (MA) of $6.70 and below its 200-day MA of $9.86.

The Central Bank of Sri Lanka held its benchmark repurchase rate steady at 7.00%, and reverse repurchase rate at 8.50%, and Statutory Reserve Ratio at 8%.  The Bank said: “the significant structural changes that have taken place in the Sri Lankan economy over the last several years are expected to provide the momentum for the economy to grow by about 8 per cent in 2012, even in the midst of the slowdown in global economic activity. Continued development efforts aimed at improving economic and social infrastructure  are expected to augment the productive capacity of the country and thereby enable the realisation of the country’s growth potential.”

Sri Lanka’s central bank also kept its monetary policy settings unchanged at its December meeting last year, while the Bank last cut its key interest rates in January last year.  Sri Lanka reported an annual headline inflation rate of 4.7% in November, down from 6.4% in September, 7% in August, 7.5% in July, 7.1% in June, and 8.2% in May.  

Sri Lanka had targeted 8.5% GDP growth in 2011, after its economy expanded 8% in 2010.  Sri Lanka reported 8.2% annual GDP growth in the second quarter (7.9% in Q1).  The Sri Lankan Rupee (LKR) last traded around 114 against the US dollar.  The Central Bank of Sri Lanka next meets on the 9th of February 2012.