The European Central Bank hiked its key lending rate to 1.25% from 1% in a widely-anticipated move in order to prevent rising inflation pressures. President Jean Claude Trichet’s conference is scheduled to start at 8:30 AM ET. The move comes as European officials struggle with an ongoing debt crisis.
The Bank of England Kept Its Interest Rate At A Record Low
The Bank of England kept its benchmark interest rate at a record low as policy makers focus on the need to aid recovery, according to a Bloomberg report. The Monetary Policy Committee set the key rate at 0.5% for the 26th month and left its bond-purchase program at 200 billion pounds. Policy makers are under pressure to curb inflation that has soared to more than twice the central bank’s 2% target. Economists expect the ECB will announce its first rate increase since July 2008 later today.
EUR/JPY Update
By Russell Glaser
To continue with a previous analysis of the EUR/JPY, the pair continues to move higher prior to the release of the ECB interest rate announcement. Due to the sharp appreciation the pair, technicals show the pair may be overbought and faces a risk of a pull back on a buy the rumor, sell the fact.
Expectations for rising interest rates in the EU continue to support bids for the euro. Should ECB president Jean-Claude Trichet announce today the ECB’s intention to continue the tightening of EU monetary policy the euro will garner further support. However, the ECB says it never pre-commits to interest rate increases. Therefore, there is a risk of a buy the rumor of the interest rate hike and a sell the fact at the release which could hurt the euro in the short term and trigger profit taking on long EUR/JPY trades.
A resumption of the carry trade has the yen on its back foot both against not only the euro but also versus the pound, greenback, and Aussie dollar. The coordinated intervention by the G7 nations is not the only factor for the decline of the yen but it certainly was a trigger for the current deprecation of the yen versus the majors.
Looking at the technicals, the weekly chart shows the pair paused on Friday at the 119.60 resistance level only to charge higher this week to a high of 122.60. Stochastics on both the daily and the weekly show the pair is overbought but rising momentum hints at future gains in the pair.
As such, traders may want to raise their stop below last week’s high at 119.60 or take profit on profitable trades. For future trades, traders should be targeting a range between 127 and 128 which falls between the 2009 summer lows and the April 2010 high. Mid-term targets are 134.30 and 138.50. A breach of this level would target at the 2007 low/pre financial crisis near 150.00.
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.
Investors Eagerly Awaiting ECB Rate Decision
Source: ForexYard
The euro took some mild losses against the yen and US dollar during the Asian session ahead of today’s euro-zone Minimum Bid Rate, scheduled to be announced at 11:45 GMT. The European Central Bank is widely expected to raise interest rates, a move which will likely help the EUR turn bullish once again to close out the week.
Economic News
USD – Dollar Remains Bearish Against European Currencies
While the US dollar was able to eke out small gains against most of its main currency rivals in overnight trading, the currency remained bearish overall ahead of a key decision from the European Central Bank later this morning. It is widely assumed that the ECB will hike euro-zone interest rates up to 1.25%, a move which is likely to send the EUR/USD pair soaring. In addition, the dollar has recently taken losses against the UK pound, as positive US data has sent investors toward riskier assets.
Currently the EUR/USD is trading at1.4300, down about 50 pips from yesterday’s high but still very much bullish overall. Similarly the GBP/USD, currently trading close to 1.6300, dropped slightly during the overnight session, but is still well above levels seen at the beginning of the week. The yen appears to be the only currency the dollar has been able to consistently make gains on. The USD/JPY pair went up close to 60 pips yesterday before staging a mild correction, and is currently trading at 85.15.
Turning to today, in addition to the ECB rate decision, traders will also want to pay attention to the US Unemployment Claims figure, set to be released at 12:30 GMT. Following last week’s surprisingly positive Non-Farm Payrolls report, a low unemployment number today may help the dollar recoup some of its recent losses as we near the end of the week.
EUR – EUR Shrugs off Portugal Debt Worries Ahead of Rate Decision
Despite the news that Portugal would need further EU assistance to overcome its sovereign debt troubles, the euro remained bullish overall ahead of a key rate decision by the ECB. An expected hike in euro-zone interest rates has helped investors maintain their confidence in the euro. While the EUR/JPY dropped close to 70 pips during Asian trading, the pair remains close to its recent 11-month high. In addition, the EUR/USD appears to be trading steady around the 1.4300 level after dropping around 35 pips last night.
After the ECB decision is announced, it is widely expected that these pairs will turn bullish once again, providing traders with an excellent opportunity to make some short term profits. That being said, today’s US Unemployment Claims figure could still play a role in the markets today. The number of people seeking first time unemployment insurance in the US is expected to drop from last week. If true, the news may help blunt any gains the euro makes in afternoon trading.
JPY – Yen Remains Down As Japan Rebuilds
The Japanese yen remained bearish overall in overnight trading, as the Bank of Japan has signaled that it will keep its monetary policy on hold in light of efforts to rebuild the tsunami ravaged nation. Experts are warning that the full scope of the disaster is not yet known, and that the cost of rebuilding will likely be massive.
The USD/JPY remains close to its recent six month high, and is currently trading right around the 85.15 level. The EUR/JPY came off its recent 11-month high during the overnight session, but remains up overall. The pair is currently trading around the 121.80 level.
Today, the yen is unlikely to see any major gains, as the expected euro-zone interest rate hike is expected to drive investors to riskier currencies. Whether the euro will be able to exceed its recent 11-month high against the Japanese currency is yet to be seen, but analysts are warning that it may happen.
OIL – New Price High Despite Low Volatility
Crude oil prices moved higher yesterday despite low price volatility in the commodity. The price of spot crude oil climbed as high as $109.12 to close at $108.41 from an opening day price of $108.07. Yesterday traders shrugged off higher than expected US inventories as the weekly inventory report showed an increase of US stocks by 2.0M on expectations of 1.3M.
A noticeable decline in volatility has occurred this week as crude oil traders may need a new catalyst to send the commodity higher. The 20-day Average True Range has fallen to $2.10 from a high of $3.50 since the middle of March. Yesterday the commodity moved only $1.21.
Supply fears driven by the geopolitical events in the Middle East and Africa remain in the back of traders’ minds as increasing economic growth is providing a bulk of the support for the crude oil gains. Despite short term indicators showing crude prices are overbought, forecasts remain for rising crude oil prices with a near term target at $121. Support is found at $107 and $102.
Technical News
EUR/USD
The currency pair continues to perform well and yesterday put in a solid close above the 1.4280 resistance level off of the November high. Serious technical damage will be inflicted should the pair close on a weekly basis above this level as it also coincides with a long term trend line off of the July 2008 high. Traders will now target the January 2010 high at 1.4580 with a possible extension to 1.5140. To the downside, support comes in at 1.4280 and the 20-day moving average at 1.4120.
GBP/USD
Sterling remains well bid following a rebound near the 100-day moving average at 1.5950 and should continue to find buyers near this support level. The 50-day moving average at 1.6150 should also prove to be supportive. To the upside, the 1.6400 mark is in play today. Further resistance is found at 1.6460 followed by a target of 1.6880 off of the November 2009 high.
USD/JPY
Yesterday’s price decline of 14 pips, albeit a modest decline was the first price drop in 6 trading sessions and the pair failed to move above the trend line off of the 2007 high. However, momentum remains to the upside and traders should be targeting the mid-September high at 86 followed by 88.
USD/CHF
The franc rose sharply against the dollar yesterday and the USD/CHF traded as low as 0.9130, a level that coincides with the short term trend line from the pair’s all-time low in March. A move below 0.9100 would put the bears back in the driver’s seat and target the all-time low at 0.8904.
The Wild Card
Silver
Spot silver climbed higher yesterday to $39.74 from $39.36. The all-time high for spot silver at $48.70 was made on January 17th, 1980. As it stands now, the commodity looks on its way towards this level and forex traders should be targeting this price. Supports come in at $38.15, followed by $36.50 and $31.60.
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.
ForexCT afternoon thoughts 07-04-11
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.
Daily Market Review for the 07.04.2011
EUR-USD
Daily time frame
Time: 01:00 Rate: 1.4330
Strategy: long
In yesterday’s daily market review it was mentioned that the price broke out the level of 1.43 the uptrend will continue. Indeed the price broke out this resistance level with an impressive length of the candlestick. We believe that a further increase up to the level of 1.4475, with a possibility for inter daily retracement to approximately 1.43 level.
As can be seen by the graph bellow:
4 hour time frame
It can be seen an increase price structure, while each high that breaks out by the price was then served as a support level, and brought additional upward movement. Even now while the last high level 1.4250 broke out most likely that we will see an additional upward movement.
Potential Trade
Long
Enter: 1.4370
Stop: 1.4240
Target: 1.4475
As can be seen by the graph bellow:
GBP-USD
Daily time frame
Time: 01.00 Rate: 1.6327
Strategy: long
As was written in the daily market review yesterday, indeed the price continued in an upward position and got to the resistance level of 1.6345. The break out of the price at this level, and most probably will continue until the upper side of the parallel asymmetric triangle (increased red slope line connecting between the last highs).
As can be seen by the graph bellow:
4 hour time frame
After the break out of the upper level of the range 1.6200, the formation of the upward movement, one may see that the price stopped at the level of 1.6360. The new break out of the price by this level will bring in the first step to the target range, and in the second step the depth of the current retracement upward.
Potential Trade
Long
Enter: 1.6365
Stop:1.6255
First target: 1.64
Second target: 1.6470
As can be seen by the graph bellow:
Important News for the 07.04.2011
Time 14:00 GBP – official bank rate
Time: 14:45 EUR- Minimum bid rate
Time: 15:30 CAD- Building permits m/m
Time 15:30 EUR – ECB Press conference
Time 15:30 USD- Unemployment claims
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.
Real-Forex team 
Trade like the pro’s with a true ECN Forex broker
Euro-Zone Minimum Bid Rate Set to Dominate Markets Today
The euro-zone Minimum Bid Rate, scheduled to take place at 11:45 GMT, is likely to be the dominant force driving markets today. Analysts are unanimous in predicting that the European Central Bank will raise interest rates to 1.25%, a move which is likely to boost the euro above its recent highs against the Japanese yen and US dollar.
Here is a roundup of today’s other main economic indicators:
12:30 GMT- Canadian Building Permits
The monthly Building Permits figure has proven to be an effective gauge of Canadian economic growth and as such, tends to influence CAD pairs. The loonie turned bearish against the dollar yesterday. If today’s figure comes in at the predicted 1.6%, the USD/CAD could stage a downward reversal.
12:30 GMT- US Unemployment Claims
Following last week’s surprisingly positive US Non-Farm Payrolls figure, investors will be closely watching today’s unemployment number. Analysts are predicting a slight decrease in the number of people filing for first time jobless insurance. If the figure comes in at or below the expected 385K, it may help blunt the losses the dollar is expected to take following the euro-zone Minimum Bid Rate.
GBPUSD pulled back from 1.6363
Being contained by 1.6400 previous high resistance, GBPUSD pulled back from 1.6363, suggesting that a cycle top is being formed on 4-hour chart. Range trading between 1.6200 and 1.6363 would likely be seen in a couple of days. However, the fall from 1.6363 is treated as consolidation of uptrend from 1.5936, another rise towards 1.6600 is still possible after consolidation.
Live 1pm Afternoon Market Update (Wednesday 4/6/11 – Video)
Adam Hewison’s Live 1pm Video Market Update
Interested in learning more trading tips from Adam? Take his FREE course TODAY!
Who Else Wants a Share in the Most Stolen Commodity of 2010?
Who Else Wants a Share in the Most Stolen Commodity of 2010?
By Aaron Tyrrell
The South African Chamber of Commerce and Industry reports $36.7 million dollar’s worth of copper was flogged on the black market in South Africa last year…
Phil Locker wrote in the Santiago Times: ’842 miles of copper wire were stolen in Chile [in 2010], enough to stretch between Santiago and Montevideo, Uruguay’.
There was a case in Tweed Heads in March 2010 of one bloke stealing copper from Country Energy.
These two got pinched selling $100,000 worth of copper wiring for scrap…
And, Dan Denning wrote back in December:
“The one [crime] that has increased almost beyond belief is copper theft”.
You get the picture.
Crooks want copper. Because, for them, copper is as good as gold.
You can click the links to read more about copper thefts:
- In Manassas City (Virginia) and Brantford (Canada) on 4 April 2011…
- At a Canberra construction site in 2011…
- From Australian National University in 2011…
- Or similar stories from 2007, 2006, 2000… hell, even 1992…
Or you can skip them and read on…
Dan Denning wrote in the Daily Reckoningon Monday,
‘The Financial Times reports that copper prices are down 8% from their all-time high of $10,190 in February. “There’s no question that Chinese consumption has slowed and we are seeing a build-up of stocks in many of the warehouses in the region,” said one senior metals banker. “The copper market is getting a bit tired at the moment.”‘
It might be ‘looking tired’, but China’s Minmetals’ $6.5 billion bid for Equinox Minerals – a Sydney-listed copper producer – should tell you copper is still desirable as ever.
And that got me thinking.
Is now the right time for you to cash in on copper stocks?
I asked Diggers & Drillers editor, Dr Alex Cowie for his thoughts on copper this morning…
Here’s what he said:
‘Copper may as well be a precious metal. It ticks all the boxes I look for in a commodity.
‘Supply is inadequate. Not enough new major mines coming online. And demand from emerging economies (China in particular) is enormous. Testament to that, we’ve just seen China’s Minmetals make a bid for our biggest copper producer, Equinox.
‘The copper price is down two per cent in a month. It went up to just about $10,000 per tonne in February. And it’s down to $9,300 now…
‘I think it will struggle to get past $10,000 if only because it’s such a psychological barrier and it’s had a huge run already. This huge run is remarkable considering this is a huge market, which is now worth about $200 billion a year. That makes the copper market 50% bigger than the New Zealand economy.
‘I expect it to hover between $8500 and $10,000 for the rest of the year. (Though I hope to be proven wrong…)
‘But the fact is that even if the copper price was to fall to $6,000 a tonne, copper producers would still be laughing all the way to the bank.
‘If the copper price goes up 10 per cent, a good quality copper stock could go up 20 or 30 per cent – or more…
‘I’m actually going on a site visit to a copper company next week, as I’m looking to recommend another copper stock in the next couple of months.’
So that’s a tip for Diggers & Drillers readers to look forward to.
According to ANZ Commodity Research, high metal prices mean companies could spend an extra 40% on exploration in 2011.
More exploration might mean more discoveries.
And that could mean Mr Market gives copper shares a bit of a boost.
Now might not be the right time to buy. If the market is tired, as the FT reckons, you might want to wait for prices to lie down a bit longer before you invest.
But it could make now a good time to start investigating small-to-mid-cap miners who could make you big gains if and when the copper price starts to rise… which is exactly what Dr. Alex Cowie is doing for his readers.
Aaron Tyrrell
Money Morning
