InvestMacro FX

By Greg Holden

Little appears to be rumbling on the surface in the currency world of Scandinavia since last week. Sweden still dominates the forex market with record gains against all of its currency rivals. Norway has been growing steadily as oil prices surge and Denmark remains hesitantly linked to the debt fears of the euro zone.

What we can analyze for future currency moves, however, is the happenings among the banking world of these Norse giants. Business headlines across the region have loudly proclaimed the rise of banking profits since the start of 2011, primarily Sweden’s.

Nordea Bank, the largest bank in the Nordic region, recently posted a surprise 15% jump in Q1 profits with a $1.1 billion surge. The sudden influx of capital appears to be connected with recent optimism in Sweden regarding its position of working to tighten monetary policy and further enlarge bank capital requirements for loans, analysts have said. A 2011 study also suggests that Swedes are among the Nordic region’s best “savers.”

Leading news in Denmark is targeting the scandal of a transportation subsidiary, DSBFirst, which bilked the public coffers and failed to report on the reality of its own financial chaos, all while failing to produce results on effectively managing public transportation. The company also operates in Sweden which has recently threatened to strip DSBFirst of its operating license in Sweden should they fail to improve upon their current performance record. The impact of this scandal is not yet known for the Danish body politic.

In currency news, the Swedish krona (SEK) remains atop the ladder for best performers of FY 2010-2011 thus far. The Norwegian krone (NOK) experienced a short dip yesterday as oil prices fell due to a sudden surge in the US dollar brought about by the optimism which rocked markets after the announcement that Osama bin Laden had been killed by US commandos in Pakistan. The rise in USD values was short-lived, however, and Crude Oil looks to be finding support as of this morning.

Should the greenback persist in its recent bearishness, which appears to be supported by fundamentals and technical analysis, then the Scandinavian kroner should remain ahead of the crowd, remaining top performers among regional and global currencies.

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.

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.

The failure of the EUR/USD to advance above the 1.4900 level is beginning to slow momentum traders and profit taking in the pair has ensued. Versus the pound the euro is higher after weaker than expected UK manufacturing data. The USD/JPY is closing in on the 80 yen price, a level that could bring further intervention from the Japanese Ministry of Finance.

The euro is showing a sign of weakness as the EUR/USD treads water for the 4th day in a row. The pair has failed to move above yesterday’s high of 1.4900 and has encountered a bit of profit taking, trading as low as 1.4754 early in the morning before moving higher to 1.4780. European PPI m/m for March was in line with market expectations for an increase of 0.7%, but the reading is still the fastest increase in the past 2 ½ years. This should continue to pressure the ECB to raise interest rates again, perhaps in June or July. Currently the EUR/USD is caught in a consolidation pattern with support at 1.4750. A breach below this level could trigger stops and further selling to the 1.4650 – 1.4625 support level. The long term target remains at the 2009 high at 1.5140.

Following a disappointing Manufacturing PMI release, the pound tumbled versus both the dollar and the euro. March PMI fell to 54.6 from 57.0 on expectations for no change in the survey. The report’s negative tone was further emphasized with the previous month’s reading adjusted lower to 56.7. The GBP/USD fell to 1.6467 from 1.6616. Traders may look to reenter long on the cable at 1.6430, a support level from late April that coincides with a 38.2% retracement from the April move higher.

After the weak manufacturing number the EUR/GBP surged to a 13-month high at 0.8979, triggering stops above the 0.8940 resistance level. The next resistance on the weekly chart is found at 0.9150 off of the February 2010 high.

The USD/JPY has slipped below the 50% retracement level from the pre-intervention low to the April high, falling to 80.70 on the day from 81.03. The pair continues to inch closer to the 80 yen line in the sand. At this price level the Japanese Ministry of Finance may feel the need to step in and intervene in the forex market to help weaken the yen.

EURUSD is still in the consolidation on 4 hour chart, now EURUSD is on trend up line, break of this trend line at 1.4804, further going down side toward 1.4732 on intraday. In EURUSD strong support is at 1.4771 and resistance is at 1.4877, this is the range. EURUSD break of 1.4732 support, next will be 1.4640. If EURUSD will reverse from 1.4606, 1.4435 then extension at 1.5074, 1.5350 which is also 161.8% extension of 1.4288 to 1.2579. EURUSD reversed 78.6% (1.2984) extension 127.2% (1.4750), 161.8% (1.5350) of 1.4288 to 1.2579 still in progress.

New High:  1.4866, 1.4936, 1.4899.

New Low:  1.4726, 1.4796, 1.4759.

Pivot Point: R3-1.4970, R2-1.4917, R1-1.4884, PP-1.4830, S1-1.4777, S2-1.4744, S3-1.4691.

For more Analysis please visit ForexTradingEVO.com

AUD/JPY

Time: 22.20  Rate: 89.00

Strategy: long/short

Daily time frame

A retracement can be seen after a continuous upward movement (broken black) to the level of 86.00, the break out of the price of the last high at 90.00 and the price got to the level of 94.00. The break out of the level 86.00 will bring down the price to the level of 84.10 in the first stage and then from there to the level of 82.30.

As can be seen by the graph bellow:

4 hour time frame

Potential Trade

Long

Enter: 89.70

Stop: 88.50

Target: 90.70

Short

Enter: 88.50

Stop: 89.40

Target: 87.90

As can be seen by the graph bellow:

USD/CAD

Time: 22.30  Rate: 0.9500

Strategy: long

Daily time frame

The price created in this area a double bottom, while the break out of the level 0.9580 will lead it to the level of 0.9720 approximately – the pattern’s target “wolf waves”.

As can be seen by the graph bellow:

4 hour time frame

Potential trade

Long

Enter: 0.9560

Stop: 0.9445

Target: 0.9650

As can be seen by the graph bellow:

RISK DISCLAIMER

Forex trading involves high risk. Before any trade, you should consider carefully the investment objectives and the level of risk. The data sent by mail is not necessarily real-time data or precise. Real-Forex is not liable for the losses resulting from the utilization of the data. Real-Forex (Finnocorp Trading Solution Ltd

.) is not liable for losses or damages as a result of reliance on the information provided by e-mail or on the overall data, quotes, charts, signals buy / sell. It is hereby clarified that the investor must be aware of risks involved in trading in financial markets, which is a form of investment that may contain potential risks.

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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.

Source: ForexYard

The US dollar experienced a euphoric jump yesterday morning following an announcement from President Barack Obama that Osama bin Laden had been killed in a military raid in Pakistan. Dollar bears continued to move out of the greenback, however, in exchange for higher yielding currencies immediately following the surprise jump, as record low interest rates remain a prominent factor in America’s currency valuation.

Economic News

USD – Euphoria Over Bin Laden Death Not Enough to Sustain USD Gains

The US dollar experienced a euphoric jump yesterday morning following an announcement from President Barack Obama that Osama bin Laden had been killed in a military raid in Pakistan. Dollar bears continued to move out of the greenback, however, in exchange for higher yielding currencies immediately following the surprise jump, as record low interest rates remain a prominent factor in America’s currency valuation.

The EUR/USD rose to a three-and-a-half year high, reaching 1.4900 in Monday’s trading session, not long after it had initially fallen back towards 1.4805 amid triumphal celebrations across the US. Manufacturing pricing data released yesterday also revealed steady growth in US inflation, as construction spending appears to have also jumped 1.4% in April, beating out expectations for a 0.4% gain.

Osama bin Laden’s death may affect short-term outlook, with minor upticks in sentiment and optimism, but the news challenges much of the effort taking place in US policymaking circles as current missions get reevaluated following the conclusion of this 10-year manhunt. Will America face difficulties staying engaged in the region following the conclusion of this endeavor? As the US military pulls out of Iraq, how will this affect government spending towards future operations of this sort? How will market participants evaluate the effect this may have on future budgetary decisions? All such questions remain open to debate, but for the time being the dollar appears to still be losing ground against its currency rivals due to its low interest rates.

EUR – EUR Bullish as Investors Seek Higher Yields

Yesterday’s sudden drop in the EUR/USD appears to have been countered by investors seeking higher yields amid surging optimism. The pair dipped in early trading due to a strong rebound in the greenback brought about by a wave of optimism due to the report that Osama bin Laden was killed by a commando raid in small Pakistani town north of Islamabad.

With Europe and Great Britain on holiday Monday, currency traders witnessed a relatively thin trading environment with a sudden bounce back in US dollar values. The jump was short-lived; however, as investors took the news, coupled with bullish reports in the United States regarding inflation, and turned to riskier assets. The result was a temporary surge in the greenback followed by a resumption of last week’s weakness.

As for today, the euro looks to be gaining against the greenback as sentiment remains fixated on a capital shift to the higher yielding euro zone. The 17-nation economic bloc will be largely absent from today’s calendar, though, with only a minor PPI publication scheduled to be released at 10:00 GMT. Little news is expected out of any of the major economies today, meaning traders may end up being more focused on Australia and New Zealand today as both are set to publish a number of impactful data releases.

JPY – Japanese Holiday Continues, JPY Mixed

The JPY has been trading with mixed results recently as investors turn their focus elsewhere amid global reactions to the death of Osama bin Laden. After reaching upwards of 82.75 on Monday, the USD/JPY quickly dropped to a daily low of 81.61 Tuesday morning, and looks to fall farther in today’s sessions as investors remain bearish on the greenback.

With Japan celebrating Golden Week since last Friday (with the exception of Monday), liquidity throughout the region will be somewhat depressed. The JPY could gain from this absence as the rest of global traders shift towards Europe. Yesterday was the only lull in the Golden Week holiday celebrations and Japan released its Average Hourly Earnings index, which revealed significant contraction in the earnings across Japan as global industry continues to falter. As for today, the JPY will be absent from the market meaning global investors will continue to focus their attention elsewhere, creating mixed results for the yen.

Crude Oil – Crude Oil Price Dips on News of Bin Laden’s Death

Crude Oil prices ended Monday lower on the day as traders largely began to speculate a scaling back of US involvement in the region would affect oil prices over the long-term, pushing down on commodity values. After climbing towards $114 a barrel last Friday, the price of oil moved bearish today, declining to as low as $111.10 before finding mild support.

As for today, crude oil traders may want to consider that commodities, which are linked to the value of the US dollar, are likely going to continue receiving a boost in the immediate future due to recent monetary policy statements out of the US. Hawkish statements about economic growth may suffice to hold prices stable between $112 and $115, but many speculators are beginning to anticipate another bull run in commodity prices.

Technical News

EUR/USD

For the past several days the EUR/USD pair is trading within a restricted range, between the 1.4750 and the 1.4900 levels. The technical indicators on the daily chart continue to provide mixed signals, suggesting that the range-trading will proceed today as well. Buying in dips and selling on highs seems to be the right strategy for today.

GBP/USD

The GBP/USD pair saw a mild bearish correction over the past few days, and the cable is currently trading near the 1.6600 level. In addition, as a bearish cross takes place on the 4-hour chart’s MACD, it seems that another bearish session could be expected today, with a key-target level of 1.6450.

USD/JPY

The USD/JPY pair continues with the free-fall, and is currently trading near the 81.00 level. All the technical indicators on the daily chart continue to provide bearish signals, suggesting that the pair’s bearish momentum has more room to go. Going short appears to be the right choice today.

USD/CHF

There is a very distinct bearish channel formed on the daily chart and the pair is currently trading in the middle of it. Currently, as both the RSI and the MACD on the daily chart continue to point downwards, it seems that the pair’s bearish move is likely to proceed today, with potential to reach the 0.8560 level.

The Wild Card

Crude Oil

After about six weeks on which crude oil saw a rising trend, crude prices have stabilized for the past few days, and failed to cross the $115.00 resistance level. In addition, as a bearish cross takes place on the daily chart’s MACD and Slow Stochastic, it seems that a bearish correction might be impending. This might be a great opportunity for forex traders to catch the trend at its beginning.

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.

Little appears to be rumbling on the surface in the currency world of Scandinavia since last week. Sweden still dominates the forex market with record gains against all of its currency rivals. Norway has been growing steadily as oil prices surge and Denmark remains hesitantly linked to the debt fears of the euro zone.

What we can analyze for future currency moves, however, is the happenings among the banking world of these Norse giants. Business headlines across the region have loudly proclaimed the rise of banking profits since the start of 2011, primarily Sweden’s.

Nordea Bank, the largest bank in the Nordic region, recently posted a surprise 15% jump in Q1 profits with a $1.1 billion surge. The sudden influx of capital appears to be connected with recent optimism in Sweden regarding its position of working to tighten monetary policy and further enlarge bank capital requirements for loans, analysts have said. A 2011 study also suggests that Swedes are among the Nordic region’s best “savers.”

Leading news in Denmark is targeting the scandal of a transportation subsidiary, DSBFirst, which bilked the public coffers and failed to report on the reality of its own financial chaos, all while failing to produce results on effectively managing public transportation. The company also operates in Sweden which has recently threatened to strip DSBFirst of its operating license in Sweden should they fail to improve upon their current performance record. The impact of this scandal is not yet known for the Danish body politic.

In currency news, the Swedish krona (SEK) remains atop the ladder for best performers of FY 2010-2011 thus far. The Norwegian krone (NOK) experienced a short dip yesterday as oil prices fell due to a sudden surge in the US dollar brought about by the optimism which rocked markets after the announcement that Osama bin Laden had been killed by US commandos in Pakistan. The rise in USD values was short-lived, however, and Crude Oil looks to be finding support as of this morning.

Should the greenback persist in its recent bearishness, which appears to be supported by fundamentals and technical analysis, then the Scandinavian kroner should remain ahead of the crowd, remaining top performers among regional and global currencies.

By Jared Levy, Editor, Smart Investing Daily, taipanpublishinggroup.com

We have received a number of emails this week asking about Taipan’s trading services. A couple of readers wanted more information on my service, WaveStrength Options Weekly, so I thought I would take a couple minutes to explain what it is I do.

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A Little About Me

Before all this, my life was very different. I was a member of several stock exchanges, and it was my job to trade options and make lots of money for my company. I had huge monthly costs and even bigger expectations from my bosses to deliver serious results. At every turn, Wall Street’s best and brightest traders were breathing down my neck, waiting for me to make a mistake so they could take my place.

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(Sign up for Smart Investing Daily and let me and fellow editor Sara Nunnally simplify the market for you with our easy-to-understand articles.)

The Markets From My Eyes

My goal is to provide you with consistent, above-average returns using options. We focus on basic option strategies (long call, long put) that anyone can trade. I keep concepts as simple and straightforward as possible, so that there is minimal confusion.

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For example, I call upon other industry experts to give their opinion on a stock or on economic news. We usually have a guest expert each week.

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Obviously, there are no guarantees, but expert guidance can help avoid mistakes and improve results.

Getting Involved

Getting starting is literally a click away and you will begin receiving WOW briefs and alerts in your inbox ASAP.

There is no obligation, you are welcome to come and go as you please. Follow this link to subscribe to WaveStrength Options Weekly.

About the Author

Jared Levy is Editor of WaveStrength Options Weekly, our options trading research service and Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.

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At first glance, the latest manufacturing growth figures for the Eurozone paints a positive picture but strip away a couple of the layers, and there is reason for concern. First, the good news – manufacturing growth as measured by the Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 58 from 57.5 in March. Any result above 50 is an indication of growth.

But now for the not-so-good news. The uptick in the Eurozone PMI is almost entirely due to strong growth in France, the Netherlands, and, in particular, Germany. Greece actually suffered a contraction while Spain was basically unchanged from March. The remaining Eurozone countries recorded positive growth for the month, but for the most part, this growth remained muted and served to underscore the growing gap between the few strong Eurozone economies and the majority that continue to under-perform.

China is the main reason for Germany’s recent success and demand for goods produced in Germany continues to build each month. Germany’s all-important auto sector especially has been on the receiving end of China’s seemingly insatiable appetite for luxury autos and has resulted in the expanding of plants and hiring of additional workers to meet demand.

Despite these gains, there is cause for a fair bit of queasiness for Germany – and by extension, the Eurozone. Keep in mind that China is facing its own challenges with stubborn inflation rates that refuse to stay within the Bank of China’s prescribed range. Indeed, even after implementing several recent interest rates hikes and forcing banks to be more restrictive when lending money, inflation continues to surge.

At some point, officials in China will be forced to incorporate even more drastic efforts to reduce expansion. Get this wrong however, and China could face a prolonged period of weak growth that will dramatically cut into demand for trade with Eurozone countries.

Challenges Facing the European Central Bank

Across the Eurozone, price inflation continues to run well above 2 percent with preliminary estimates showing a further 2.8 percent increase in April, compared to March’s 2.7 percent increase. This is adding even more to the argument supporting further interest rate hikes following the ECB’s quarter-point rate hike last month. Some estimates suggest that the central bank will be forced to implement a series of rate hikes that will see the benchmark rate jump from the current 1.25 percent to at least 2 percent by the end of the year.

The difficulty facing the ECB that it is even more evident now that the countries comprising the Eurozone are facing wildly diverging economic realities. France and Germany are likely in need of a little cooling and could withstand the slowing effect of an interest rate hike –even an appreciation of the euro following a rate increase is not likely to hurt export sales too much. The weaker Eurozone states on the other hand must be paralyzed with fright at the prospect of more rate hikes.

This is especially true for countries desperately trying to borrow money and fend off insolvency. Already, Greece and Portugal are paying heavy premiums in the face of credit rating warnings and downgrades and a rate hike will only add to these expenses. These countries are also facing higher unemployment and there is a worry that interest rates will lead to further pain in the job market. At roughly 21 percent unemployment, Spain is already struggling with unemployment nearly four times higher than Germany.

In the end, the ECB may have no choice but to place the needs of the leading economies over the weaker countries. If something is to be sacrificed, you can bet it won’t be one of the few economies actually contributing to the region’s growth.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog