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The markets were again blasted by a sharp spike in the Dollar. For every tick higher in the Dollar, the markets drop equally.

By CountingPips.com

The United States trade deficit widened by more than expected for a second consecutive month in March, according to a release by the Commerce Department today. The U.S. trade deficit in goods and services increased by 6 percent or $8.7 billion as the deficit leveled at $48.2 billion in March following a revised deficit of $45.4 billion in February. The March data represents the highest deficit level since June of 2010.

The trade data surpassed market forecasts that were expecting a deficit of approximately $47.0 billion for the month.

The U.S. had a total of $172.7 billion worth of exports in March which was an increase of $7.7 billion from February’s total. March also saw an increase in imports with a total of $220.8 billion worth of imports compared with $210.4 billion in February for a increase of $10.4 billion for the month.

The politically sensitive U.S. trade deficit with China edged lower in March with a $18.1 billion shortfall after a deficit of $18.8 billion in February. Other notable U.S. trade deficits in March were the deficits with the European Union at $9.0 billion, Mexico at $6.2 billion, Japan at $6.1 billion and OPEC at $10.8 billion.

The U.S. trade surpluses with other countries for March included Hong Kong at $2.7 billion, Australia at $1.1 billion and Singapore at $0.9 billion.

Forex: US Dollar stronger in trading today. Stocks, Commodities lower.

The U.S. dollar has been on the rise today in the forex markets while the American stock markets and commodities have traded lower. The dollar has advanced versus the euro, Canadian dollar, New Zealand dollar, Japanese yen, Swiss franc, British pound sterling and Australian dollar on the day, according to currency data by Oanda.

The U.S. stock markets had a negative session so far today with the Dow falling by 130 points, the Nasdaq decreasing by over 26 points while the S&P 500 fell by over 15 points at the close of trading.

In commodities, oil has traded lower by $4.58 or almost 5 percent to $99.12 per barrel while gold has fallen by $12.40 to trade at the $1,504.20 per ounce level.

The oft-traded EUR/USD has fallen sharply back towards 1.42 during today’s American market sessions after investors expressed concern that euro zone policy makers would not be able to respond rapidly enough to debt concerns in Greece and Portugal.

According to a report in Reuters, debt-laden countries in the euro zone are approaching a critical decision point and there is significant fear that regional officials will fail to meet that challenge in a timely manner. The euro/dollar, as a result, was seen pushing below its recent support at 1.43 to a current price just above 1.4210. If the pair breaches its psychological barrier at 1.42, forex traders could see a quick sell-off that pushes the pair into the upper 1.30s.

Rumors of an additional $87 billion aid package to Greece surfaced recently, which granted the EUR some effervescence in this week’s early trading. Greek officials have staunchly denied the rumor, however, dispelling any belief that the pair’s rise was sufficiently supported by fundamentals. This afternoon’s plummeting value, seen in this light, is indeed backed up by what analysts are viewing among the technical and fundamental figures.

Should euro zone officials continue to deliberate over further aid to these ailing economies, the EUR may find itself in a sharply bearish downturn versus its primary currency rivals. A downturn in French industrial production last month, alongside similar reports from Britain and Germany, has also caused a stir as many view the industrial and manufacturing sectors of the euro zone to be faltering this quarter.

Has your morning cup-o-Joe gotten more expensive lately? Check your online trading platform to find out why. Coffee prices surged to a 34-year high last Tuesday, climbing over $3 a pound before meeting resistance.

Coffee prices behave in interesting ways. Whereas many commodities will respond to price jumps with shifts in demand and consumption, coffee behaves more like a narcotic. No matter how high prices go, consumers are still willing to dish out the cash to get their next fix.

As a socially acceptable addiction, the caffeine from coffee and resultant energy boost due to its consumption has become a societal norm in the business world among most countries. There will be variations between nations which prefer tea over coffee, but those which down that glass of hot java each morning have no doubt felt the pinch these past several weeks.

Recent consumer reports have noted that the price for coffee at most cafés in Europe and the United States have been raised by $0.10 to $0.30 per cup. The size of each price hike was not just associated with coffee, however. Rising sugar prices have also been passed on to consumers since sugar packets are often given as complimentary to coffee purchasers.

Look at your online trading platform, today’s price for one pound of coffee is $2.75 (coffee prices are reported in US cents/lb.). Now, sugar prices have fallen significantly since touching their recent high of $0.35 a pound, so the relative price of sugar may have less impact than it did three months ago. Nevertheless, rising prices among these basic food-stuffs has caused many morning commuters to dole out additional funds for that energy-granting cup of coffee.

Note from Managing Editor Sara Nunnally: In response to Monday’s article on retirement and inflation, we received this letter from Smart Investing Daily reader N.H.

I was just reviewing some prices of a number of things circa 1934, when I was 5, and old enough to remember a number of them personally. By my reckoning, today’s dollar buys only about what six cents would buy then (on average). When it comes to hospitalization it’s about two cents, using comparable procedures, such as appendectomy or tonsillectomy. For those that are not concerned about inflation, pay attention.

Inflation is like another tax; one that many folks don’t even know they’re paying. It can takes years to see a big differences in prices. But lately, it seems like inflation is speeding up in certain areas. N.H. mentioned healthcare, where prices have certainly climbed out of control. But other areas are in food and energy prices — things that people buy every day.

Back in the 1930s, a dozen eggs went for 29 cents. Potatoes were a penny a pound, and a quart of milk cost you a dime. Today, those same items will cost you about $2 a dozen, 79 cents per pound, and about $1 per quart, respectively.

That’s some serious inflation, and things could get worse.

We’ve already seen governments overthrown because of skyrocketing food prices. This is the beginning of a global food crisis. That’s why I want to share with you part of Kent Lucas’ of Safe Haven Investor March Issue. He explains why food prices are so high, and what investors can do about it.

Read on…

Riots in the Streets! How the Global Food Crisis Could Feed You For Life

Are you prepared to pay three, four or even five dollars for a loaf of bread? How about five dollars for a box of cereal?

Better yet, is your portfolio prepared for the shake-up that lies ahead?

“The Great Food Crisis of 2011” is here. I did not invent that hyperbolic phrase. That is what the highly respected magazine Foreign Policy is calling the rampant food inflation that is causing problems worldwide.

The British government just completed a two-year study involving 400 experts from 35 countries to assess the global food situation. The results are scary. See for yourself:

By 2050 global food supplies will not be sufficient to feed an expanding population. The UN estimates that food production must rise by 70 percent to feed a world population of more than nine billion in 2050. [But] rising demand and surging global population coupled with increasing resource conflicts over land, water, and energy will hamper food production.

The United Nation’s Food and Agriculture Organization (FAO) states that the “double whammy of high food prices and the global economic slump pushed an additional 115 million people into poverty and hunger.” Over 1 billion people go hungry every day and the figure is rising.

Why? It is a combination of factors. In part, Mother Nature is to blame. Couple a handful of devastating floods and a widespread drought with rising demand and the problem grows exponentially. The result is higher food prices that fewer people can afford.

The supply-and-demand economics suggest long-term imbalances. We have a real crisis when we combine the dismal long-term outlook with short-term supply shocks caused by the forces of Mother Nature and, arguably, climate change. It is time to be prepared.

Food Inflation Is Everywhere

Wheat prices are nearing all-time highs in Britain and France. Governments around the world are stockpiling grains. They are stashing away millions of tons of essential commodities to prevent social unrest and to attempt to contain inflation.

This buying frenzy is adding to the pricing pressure.

Countries across the globe, including the major wheat exporter Russia, have banned exports to control prices. But that is causing prices to rise even further as businesses and consumers stock up.

China has implemented serious policy and pricing measures to keep inflation under control and to keep its suffering rural citizens at bay. But Chinese insiders tell me “the natives are getting restless.”

Last year, with floods in China and Pakistan, food prices in Asia surpassed the extremes of 2007-2008. For example, the critical food staple rice shot up from $300/metric ton to $1,100/metric ton — a surge of over 250%.

The shocking stories are everywhere.

Here at home, we’re just starting to feel the pinch. But for most of the world, the pain and suffering is at extreme levels.

In many developing countries, the high cost of basic food staples is exceptionally dangerous as the world’s poorest citizens spend close to 75% of their miniscule income on food! A 15% increase in food prices is flat-out devastating to these regions.

(Don’t forget, you can sign up for Smart Investing Daily and to recieve all of regular editors Sara Nunnally and Jared Levy’s easy-to-understand articles.)

Riots in the Streets

“Bring us sugar!” was the chant by thousands of Algerian rioters just a few weeks ago. Sugar is a cheap, popular source of calories in many developing countries and the price of sugar is now at 30-year highs.

When I mention rioting, Egypt immediately comes to mind. But that country isn’t the first. Actually, more than 60 food riots have occurred in more than 30 countries in the past several years! And in the past few weeks, there have been government protests in Tunisia, Algeria, Morocco and Yemen — all in part because of rising food prices.

But when severe riots and protests bring down a country as relevant as Egypt, that’s different. When the situation in Egypt threatens Mideast stability and consumes our daily news, we know we have a problem on our hands.

The recent riots were not only about dethroning Hosni Mubarak, the 30-year president. The real catalyst was the poor standard of living and the leader’s reluctance to improve Egyptians’ daily lives. At the core of that discontent is, of course, food inflation.

And the same kind of anger is brewing in many other Middle Eastern countries. Who knows how far social unrest will spread in the Middle East? But the unsettled political climate in Egypt and in many other countries is worrisome and is likely to continue this year.

No End in Sight

Prices will rise even further in 2011. There is no relief in sight for food inflation.

The bottom line is the demand for food is rising faster than food can be produced.

That’s where this month’s Safe Haven stock pick comes in. This leading company represents a safe harbor during a raging storm. Its agricultural products are critical to increasing the supply of key crops, and its seeds and biotech chemicals help farmers grow larger and better crops.

The company is DuPont, or officially E.I. du Pont de Nemours & Company (DD:NYSE). DuPont has been around since 1802 and has evolved into the leading global science and chemical company. In a nutshell, DuPont makes the world a better, healthier and safer place through science, innovation and chemistry.

When it comes to solving the needs of rapidly developing economies, DuPont is very well positioned. The company gets 40% of its revenues from developing countries and just 30% of its sales from North America. Better yet, in 2010, developing markets sales grew 24%.

DuPont Will End the Food Crisis

DuPont’s agriculture & nutrition segment is the largest and most important. Essentially DuPont focuses on improving “global nutrition through higher crop yields and healthier foods.”

In the context of the food crisis, this business has potential for double-digit sales growth.

Within this segment, there are three key businesses that are tied to the global food supply: crop protection, Pioneer seeds, and land management (i.e. herbicides).

Essentially, DuPont provides high-yielding hybrid seeds, herbicides, insecticides and fungicides for critical crops such as corn, soybeans, cotton and wheat. Sales for this division were up 13-14% in the fourth quarter of 2010 with seed volumes up 25%, indicating a strong start to 2011.

DuPont spends close to 60% of its R&D budget on the agricultural & nutrition segment, which represents just one-third of sales. Yes, the research is complex, dealing with seed genetics and plant DNA, yet the spending shows the company understands the importance and opportunity regarding the future of food and that its products are critical to global agricultural viability.

Management’s financial commitment to this division tells me DuPont knows global food shortage risks are real and the “the Great Food Crisis of 2011” is the start of a much bigger problem.

DuPont’s Critical Role

Weather plays a pivotal role in annual crop production, but it is also affected by fertilizers, biotech seeds and crop protection chemicals.

That’s where DuPont puts its focus.

Global product penetration is low and crop yields in the U.S. (where hybrids are commonly used) are usually much higher when compared to other countries. That tells us there is a lot of room for global yield gains through hybrid seeds and crop protection products.

As more farmers worldwide use these products global yields will rise. And as DuPont continually improves the effectiveness of these seeds, herbicides and insecticides, crop yields will rise.

That’s how the food crisis will get solved… eventually. Having fewer mouths to feed is out of our control in the short run. But using biotech seeds and certain chemicals is a proven (and safe) way to increase yields.

That is why I like DuPont as a global Safe Haven investment. It is at the center of the primary solution to the long-term food crisis. Demand for DuPont’s agricultural technologies will always be high.

Owning this stock is a great way to profit from the global food crisis, a serious problem that is getting worse, not better.

I hope you enjoyed this piece of Safe Haven Investor. The full issue is available online to subscribers.

Before I let you go, I wanted to tell you one other thing that Kent mentioned about DuPont…

He said, “The company has always paid a dividend — for 426 consecutive quarterly periods since 1904. And during the crisis of 2008, DuPont did not cut its dividend, which wasn’t the case for many other large, economically sensitive companies.”

Dividends are a big part of Kent Lucas’ investment philosophy. They are a great way to boost your portfolio gains just by being an investor.

Learn more about Kent Lucas and Safe Haven Investor.

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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.

By Russell Glaser

Over the previous two trading days markets were focused on the Greek debt crisis and tumbling commodity prices. After yesterday’s rebound in equity markets and commodity gains, economic data should be the driver for the remainder of the week with the highlight being US inflationary data on Thursday and Friday.

Today’s Economic Events:

GBP – UK Inflationary Report – 9:30 GMT
The Bank of England has practically done away with inflation targets as UK inflation has consistently been above the 4% level. Today the inflation projection will be formally announced and should come in near this level. A catalyst for Sterling would be any increase in the expected growth rate for the UK. Traders will also be following BOE Governor Mervyn King who will hold a press conference to discuss the report. To the upside for the GBP/USD, resistance is found at 1.4640 with support at 1.6290 off a trend line from the March low.

CAD – Trade Balance – 12:30 GMT
Expectations: 0.5B. Previous: 0.0B.
The Loonie came off of its recent lows versus the dollar yesterday and looks to continue to strengthen in turn with rising oil prices. A strong trade balance will help the Canadian dollar continue its appreciation versus the dollar. An initial target is found at the May low of 0.9445 with resistance above last week’s high at 0.9710.

USD – Trade Balance – 12:30 GMT
Expectations: -46.8B. Previous: -45.8B.
The US trade deficit is expected to have widened in March following sharp increases in commodity prices, specifically crude oil prices. But traders may be in for a surprise as a weakened dollar may have increased the competiveness of US exports due to a weak dollar. A better than expected trade balance may be a positive for the dollar. Resistance comes in at the January to May trend line at 1.4470, followed by 1.4650. To the downside, Monday’s low at 1.4250 could prove to be supportive as well as 1.4150, the 38.2% Fibonacci retracement level from the January to May move.

Crude Oil – Weekly Crude Oil Inventories – 14:30 GMT
Expectations: 1.1M. Previous: 3.4M.
Last week’s report showed a sharp increase in crude oil stocks that fed into the sell off of commodities. Following yesterday’s sharp appreciation in the price of crude oil, a better than expected result should boost crude oil prices.

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 EUR was able to hold its recent price against the US dollar as regional investors battled over the direction of the 17-nation common currency. The two ends of the spectrum were represented by those wanting to sell the EUR from weakened fundamentals connected with Greece’s downgrade and other debt concerns, and those wanting to hold the euro steady out of an expectation for monetary policy tightening in the ECB’s upcoming meeting in May.

Economic News

USD – USD Down Slightly vs. Majors on Tuesday

The US dollar experienced slightly bearish results yesterday as traders began to seek higher yields for their investments. The result has been for the EUR/USD and GBP/USD to consolidate near Monday’s closing price. Against the euro, the greenback was holding near a 3-week low of 1.4350 while against the pound the buck held close to 1.6360.

The US Bureau of Labor Statistics published its import price report yesterday showing healthy growth in goods purchased domestically and imported thereafter. Expectations were for an inflationary ascent of 1.8%, but the actual results came in at 2.2% signifying healthy demand and inflationary growth. Investor’s Business Daily (IBD) also released its TIPP Economic Optimism report which revealed movement towards an optimistic stance, but still slightly below the 50.0 reading necessary to signify optimism in business outlook.

For today, the US trade balance is set to be released and any movement deeper into deficit could weigh on the USD’s recent downtick, pulling the currency lower against its primary counterparts. The US federal government will also be publishing its budget balance today at 19:00 GMT and like the trade balance figure, a shift deeper into deficit will likely signal a sell-off in the USD later in the day.

EUR – EUR Stable, German Inflationary Reports on Tap

Monday’s downgrade of Greece by Standard and Poor’s ratings agency from B to BB- has put significant pressure on the euro zone’s common currency. The euro was holding near a three-week low versus its primary currency counterpart (USD) yesterday with today’s outlook appearing to favor a consolidation movement near the 1.4350 price level.

The EUR was able to hold its recent price against the US dollar as regional investors battled over the direction of the 17-nation common currency. The two ends of the spectrum were represented by those wanting to sell the EUR from weakened fundamentals connected with Greece’s downgrade and other debt concerns, and those wanting to hold the euro steady out of an expectation for monetary policy tightening in the upcoming meeting.

As for today, the euro zone will be largely absent from the economic calendar aside from two inflationary figures published out of Germany at 7:00 GMT. Germany’s Destatis will be publishing its final CPI reading as well as it wholesale price index (WPI), both of which are forecast to show stable growth. The common currency may gain a little support today, but forex traders are more tuned in to the US federal budget and trade balance.

JPY – JPY Dips against USD, Jumps vs. EUR

The Japanese yen (JPY) has been trading with somewhat mixed results since Friday, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to take losses today as investors appear to be seeking higher yields. The dominant stance of risk aversion overarching yesterday’s environment of optimism has many traders moving towards the yen against the higher yielding currencies like the euro, which dropped to a six-week low during yesterday’s afternoon sessions.

However, the yen was slightly lower versus the US dollar as the pair moved up from previous intervention levels near 80.00. The USD/JPY held steady at yesterday’s low, finding support near 80.30 and moving up towards 80.90 by today’s opening Asian sessions. Japan’s leading indicators were published at 6:00 GMT with little surprising information coming out of that report. But in Asian news, most traders will be focused on the slew of reports issued out of China this morning, the industrial production figure foremost among them.

Oil – Crude Oil Prices Higher after Mid-Day Slump

Oil prices rebounded yesterday with the New York Mercantile Exchange session closing just above the $103 price mark. The price for a barrel of Crude Oil felt a sharp sting last week as the US dollar surged against its main currency rival, the euro. The price for a barrel of oil saw its feet pulled out from underneath it and flopped heavily to as low as $94 a barrel by last week’s closing. Today’s bounce in price, however, may see the price returning to a mark approaching last week’s average.

The value of the US dollar versus the euro in recent trading has been holding steady near a three-day high near 1.4350, but oil prices continued to rebound strongly as traders price in an expected boost in consumption as the driving season kicks into high gear in the Northern Hemisphere. Should oil prices persist in their bullish uptick, traders may see some corrective resistance being met near the psychological barrier at $104. Rising USD strength could also help push the value back below $100 a barrel if today’s economic calendar events push the pair lower once more.

Technical News

EUR/USD

The pair has come off the 6 cent decline and has found support near a short term trend line from the late March lows. The daily stochastics are crossing indicating a bullish signal. Resistance comes in at the January to May trend line at 1.4470, followed by 1.4650. To the downside, Monday’s low at 1.4250 could prove to be supportive as well as 1.4150, the 38.2% Fibonacci retracement level from the January to May move.

GBP/USD

Monday’s price action took the pair close to the 61.8% Fibonacci retracement from the late-March low to the early high in May. Should this level be broken, Sterling could test the 1.6170 support, followed by the trend line rising off of the May 2010 lows which comes in today at 1.6005. To the upside, 1.6430 should serve as initial resistance followed by 1.6600.

USD/JPY

Yesterday the dollar bounced higher, only to find resistance near 81.10, a level that coincides with the falling trend line from the April high. Traders may find this a potential opportunity to enter short with stop above the trend line near 81.20 with a target of 78.20, the bottom of a falling wedge pattern on the monthly chart.

USD/CHF

Yesterday the pair made a close above the 20-day moving average. The last time the pair closed above this line was early April. Traders may find opportunities to short the pair near the 0.8900 resistance level with a target near the low of 0.8550.

The Wild Card

Oil

Spot crude oil prices have rebounded nicely from last week’s low of $94.67. The failure of the commodity to close below the $96.20 support level, combined with rising daily stochastics point to further price increases. Forex traders may want to target the initial resistance at $105.20 followed by the May high of $114.80.

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.

 Inflation Data Bank of England Wednesday could cause the market to think twice about their latest betting that interest      rates will remain on hold until 2012, despite the short-term outlook is likely to be grim. 

The market wants an increase in interest rates the Bank first since 2007 swinging from one extreme to another in the last three months. At the time of the February Inflation data see market opportunities 90 percent increase in interest rates in May. Now February 2012 is on ter early when they see the certainty of the Bank interest rates higher.

“The market seems to have gone too far,” said Jens Larsen, Economist of the Royal Bank of Canada. “Three months ago, I thought I was one of the few people who say that the rise in interest rates will not come until November Now my relative change more hawk.” 

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