International Trading

Showing posts with label gold invest. Show all posts
Showing posts with label gold invest. Show all posts

Weekly Technical Commentary

Posted by Usman Ali Minhas on Monday, October 18, 2010 , under , , , , , , , , , , , , |



International Trading



USD/JPY 

Chart Levels: 
Support 81.00..80.88..80.00..79.75. 
Resistance 81.65..82.20..83.00..84.00.
The Japanese authorities may protest but can expect little sympathy let alone help at this week’sG20 meeting hosted by South Korea. Generalised US dollar weakness has taken the yen almost to its record low of 79.75 of 1995, a multi-year low at 80.88. Other major currencies are doing something similar, Cable and the Euro among the weaker ones. The greenback is very oversold yet all elements of this weekly Ichimoku chart continue to suggest a short position. On balance volume may be at a record but futures open interest remains subdued. Proceed with caution.

EUR/USD 

Chart Levels: 
Support 1.3775..1.3700..1.3635..1.3550. 
Resistance 1.4030..1.4161..1.4200..1.4340.
Last week’s ‘spike high’ and ‘doji’ candle at the top of a narrow weekly Ichimoku ‘cloud’ suggests we will consolidate under 1.4161 this week and maybe until month-end. The overbought situation has already been corrected but bullish momentum has halved. First Fibonacci 38% retracement support lies close to a horizontal, widening weekly ‘cloud’ in December which will hopefully provide support for another rally at year-end. Note that in Q2 2010 the Euro saw one of its biggest quarterly rallies ever, both against the US dollar and as measured by the ECB’s Effective Exchange Rate.

EUR/JPY 

Chart Levels: 
Support 112.00..111.00..110.50..109.30. 
Resistance 113.75..114.00..114.75..115.75
Retreating from the upper edge of the range since May, as expected, but keep in mind that the formation could actually be a potential ‘broadening bottom’. We continue to favour a pullback into the middle of the range and the 26-week moving average at 110.50. Other yen crosses also retreated last week, though few have chart levels as clear as this pair. Momentum has switched from very bullish to marginally bearish, the RSI tumbling dramatically. Until year-end a case can be made for a series of random moves roughly between 105.00 and 115.00.

GBP/JPY

Chart Levels: 
Support 127.60..126.70..125.25..120.00. 
Resistance 131.35..133.05..134.55..135.05.
Though still holding above this year’s low at 126.70 set in May, which lies ahead of 2009’s record low at 118.80, this pair is trading well over two standard deviations below the mean of the last twenty years. Price action looks ‘heavy’ so we continue to favour another small notch lower some time this quarter. Momentum remains bearish, as it has been all this year, and sterling is not especially oversold against the yen. One-month at-the-money should hold around the 14.00%, where it has spent most of 2010. A daily close below 120.00 would set up for a rush to re-test the record low.

GBP/USD 

Chart Levels: 
Support 1.5750..1.5650..1.5500..1.5300. 
Resistance 1.6000..1.6110..1.6275..1.6335.
Cable continues to struggle with Fibonacci 61% retracement resistance while hovering above a large weekly Ichimoku ‘cloud’. Hopefully the rising 9-week moving average will add some much-needed bullish momentum. Until then conceivably it could drop all the way back down to 1.5350 prior to a rally to pivotal very long term resistance clustered between the 1.6800 and 1.7000 levels next year. Consensus opinion has it holding at current levels for the next twelve months, unlikely against a backdrop of generalised US dollar weakness, but a possibility. (It held 1.5700 to 1.6700 May-Dec09).

EUR/GBP 

Chart Levels: 
Support 0.8695..0.8625..0.8425..0.8200. 
Resistance 0.8805..0.8850..0.8910..0.9055.
Last week’s irregular ‘doji’ above 61% Fibonacci retracement resistance of the decline from March’s peak at 0.9150, just under a descending weekly Ichimoku ‘cloud’, adds fractionally to our view. We expect another new interim high to form, maintaining the succession of lower highs starting with January 2009’s peak, for a drop back down to what is in our opinion the pivotal 0.8400 area. Note how the lower edge of the weekly ‘cloud’ drops from 0.8800 to 0.8400 starting in November. Only when this pair starts holding clearly below 0.8400 can we be more confident that another bout of serious and sudden sterling weakness has been avoided.

Dollar sell−off slows, but global picture hasn't changed

Posted by Usman Ali Minhas on Tuesday, September 28, 2010 , under , , , , , , , , , , |



International Trading



On Monday, EUR/USD basically held a sideways trading pattern in the 1.34 big figure, digesting Friday’s steep gains. During the morning session in Europe, Moody’s downgrading some debt ratings of Anglo Irish turned the market focus again to the Irish government finances. Nevertheless, after all the damage for the euro was limited. The pair reached an intraday low at around 1.3425. Dollar weakness resurfaced once US traders came in. Decent European lending data might have lent the euro some support, too. EUR/USD even reached a minor new high just above the 1.35 mark. However, with no high profile eco data on the agenda, the 1.3510 resistance (50% retracement) perfectly played its role. EUR/USD settled again in the previous intraday sideways trading pattern. A moderate correction on the equity markets also prevented further EUR/USD gains. In an appearance before the European parliament, ECB President Trichet didn’t bring any high profile news on the Bank’s assessment of the economy or on monetary policy. The ECB President advocated the need for stricter rules on budgetary discipline, including penalties. EUR/USD closed the session at 1.3455, compared to 1.3492 on Friday evening.
Today, the calendar of eco data contains some interesting releases. German CPI and French spending are interesting, but probably no market movers. This might be different for the US CS house prices and the US consumer confidence. Disappointing US data might fuel the speculation on more QE in the near future and weigh on the US currency. Of course, one should also keep an eye on the European sovereign debt story. However, looking at yesterday’s price action the widening of the spreads in peripheral countries and especially the negative headlines on Ireland had remarkably little impact on the single currency. According the an article in the WSJ, the Fed is said to considering a smaller-scale bond buying program incase they would set up additional QE . However, at least for now this element of the QE debate didn’t give much support to the US dollar.
The Fed’s assessment on the economy and the potential consequences for monetary policy have changed the framework for trading on global markets. At first stage, the risk for more US QE (logically) is seen USD negative. In a longer term perspective, there is not only the issue/risk of more QE from the Fed. Other major economies face similar issues of deflationary risks or have their own specific problems that might undermine investor confidence at some point in the future. For example, any additional QE from the Fed at some point might force other central banks (like the BOJ, the BoE or the ECB) to take more ‘unconventional’ measures, too. In addition, slowing global growth and a weaker dollar might over time also be a negative scenario for (peripheral) European economies.
They desperately need (export-driven) growth to keep their government finances on a sustainable trajectory. So, in a long-term perspective a lot of different scenarios are still possible and markets refocusing on European sovereign risk at some point might obviously be one of them. However, in a short-term perspective, we continue to see the risk for more Fed easing as the dominant factor for currency trading. Dollar weakness is the name of the game and at least for now, any USD negative news still seems to attract additional USD selling. Recently we had a USD-negative (EUR/USD positive) bias. We maintain a buy-on-dips approach. The dollar negative trend looks quite strong. Nevertheless, we still hope for somewhat of a more pronounced correction to add to EUR/USD long exposure.
From a technical point of view, until mid September, EUR/USD was locked within a sideways trading pattern between 1.2923 (mid August high) and 1.2588 (24 August low). The break beyond this level improved the technical picture and opened the way for a retest of the early August high at 1.3334. This high profile level was easily cleared after the Fed meeting. The targets of this break are well beyond the 1.40 mark! In a day-to-day perspective, EUR/USD entered a consolidation pattern after last week’s rally. Nevertheless, the global picture remains EUR/USD positive (in fact dollar negative).
Absolutely no story to tell on USD/JPY price action on Monday. The pair was paralyzed in an extremely tight trading range in the lower half of the 84.00 big figure. Global dollar weakness is still perfectly counterbalanced by the fears for renewed BOJ interventions and ongoing market talk on the BOJ potentially engaging for further policy easing in the near future. Among other measures, the government continues to push the BOJ for raising its government bond buying. USD/JPY closed the session at 84.29 compared to 84.21 on Friday evening.
This morning, there were only some second tier eco data on the agenda in Japan. Markets are looking out for the key Tankan report scheduled for tomorrow morning. This report might be an important input for (monetary) policy going forward. Asian equities returned part of yesterday’s gains, but at least for now this is no big issue for USD/JPY trading.
Over the past two weeks, USD/JPY trading entered a new area as the BOJ on behalf of the Japanese Ministry of Finance stepped into the market to block the uptrend of the yen. In this context, the usual drivers for USD/JPY (global investor sentiment and to a lesser extend US and/or Japanese economic data) have lost most of their relevance for USD/JPY trading. Markets and the BOJ are now engaged in some kind of cat-and-mouse game. For now, it looks the BOJ has still the upper hand in this game. Of course, this balance can change over time (e.g. after the end of the quarter). In a longer term perspective, we hold on to our view that it will be difficult for the BOJ convince its trading partners on the need for a weaker yen. At best, they might get some kind of silent approval to slow a too sharp rise of its currency.
Short-term, we expect the tactical game between the Japanese authorities and the market to continue. In a day-to-day perspective, we still hold on to our view that the downside in this pair is rather well protected. Additional tactical waves of yen selling are still possible, but we expect the impact of further action to fade rather soon. Short-term players can look to join the BOJ for a next spike higher. Nevertheless, this remains a binary game and the fears for more QE after last week’s Fed statement haven’t increased the upside potential of the US currency overall. So tight stoploss protection remains warranted. One might also assume that ever more investors (e.g. Japanese exporters) will use a new spike in the wake of additional BOJ action to offload USD long exposure.
On Monday, cable slightly outperformed EUR/USD. So, EUR/GBP also returned a part of last week’s gains. The headlines on Anglo Irish triggered some stop-loss euro selling in this cross rate too and contrary to EUR/USD, this correction wasn’t reversed later in the session. A constructive IMF report on the fiscal consolidation in the UK might have been slightly sterling supportive, too. Nevertheless, with the pair still holding north of the 0.8500 mark, the global picture hadn’t changed. EUR/GBP closed the session at 0.8500, compared to 0.8525 on Friday.
Today, the UK calendar contains the final revision of the Q2 UK GDP. We consider this as outdated news. Later in the session the CBI reported sales will be published. Overt the previous months this indicator showed rather strong readings. A slightly less positive figure is expected. If so, this might be slightly negative for sterling.
EUR/GBP drifted lower from mid July to late August. Amongst others, this move was support by some encouraging eco data from the UK at that time. However, late August EUR/GBP showed some signs of bottoming out. The key 0.8066 support was never challenged. Since then a gradual rebound occurred. This move was both due to global euro strength but also mirrored investors’ disappointment on some poor UK eco data of late. In addition, the interest rate differentials (at the short end of the curve) moved slightly in favour of the euro. Earlier this month, the EUR/GBP pair tested several times the 0.8363/0.8400 resistance area. Last week, the pair did break this area in a convincing way. The Fed statement apparently made investors think that the BoE at some point might also consider more QE. Wednesday’s BoE minutes were seen as confirming this feeling on potential additional steps from the BoE and pulled the trigger for EUR/GBP to clear key 0.8532 level (July 19 high). At the end of last week, some consolidation/profit taking on the recent steep gains kicked in. However, as we expect any more disappointing UK data to keep speculation on more QE alive, we think that the upside for sterling (even against the euro) will be limited for now. So, we maintain a buy-on-dips approach.

USDCAD's downward move extended to 1.0191

Posted by Usman Ali Minhas on Saturday, September 25, 2010 , under , , , , , , , , , , , , |



International Trading



USDCAD's downward move from 1.0672 extended to as low as 1.0191. Key resistance is now at 1.0378, as long as this level holds, downtrend from 1.0672 is expected to continue and one more fall towards 1.0107 support is possible next week. On the other side, the pair may be forming a cycle bottom at 1.0191 level on daily chart, a break above 1.0378 key resistance will confirm the cycle bottom and indicate that the fall from 1.0672 has completed, then another rise to re-test 1.0676 resistance could be seen.

For long term analysis, USDCAD formed a cycle top at 1.0852 level on weekly chart. Rang trading between 0.9930 and 1.0852 would more likely be seen in next several weeks.
usdcad

EUR/GBP hits 2−month high on peripheral bond auction results

Posted by Usman Ali Minhas on Tuesday, September 21, 2010 , under , , , , , , , , , |




European Market Update: EUR/GBP hits 2-month high on peripheral bond auction results, as markets await FOMC decision

Economic Data

- (FI) Finland August Unemployment Rate: 7.3% V 7.5% PRIOR
- (JP) Japan Aug Final Machine Tool Orders Y/Y: 170.0% V 170.0% PRIOR
- (SZ) Swiss August Trade Balance (CHF): 570M V 2.8B PRIOR
- (SZ) Swiss August M3 Money Supply Y/Y: 6.6% V 6.5% PRIOR
- (UK) July Public Finances (PSNCR) £5.8B V £8.1BE; Public sector net borrowing: £15.3B V £12.5B
- (HK) Hong Kong August CPI Y/Y: 3.0% v 3.1%e
Fixed income
- (IR) Ireland Debt Agency (NTMA) Sells Total €1.5B in 2014 and 2018 bonds versus €1.5B indicated
-(SP) Spain Sells €7.0B in 12 and 18 months bills vs €7.0B expected
- (DE) Denmark sells DKK2.84B vs DKK5B in 2013 bonds; avg yield 1.25%; bid-to-cover 1.3X
- (GR) Greece Debt Agency (PDMA) sells €390M in 13-week bills v €300Me; avg yield 3.975% v 4.05% prior; bid-to-cover: 6.25x v 3.85x prior
- (HU) Hungary Debt Agency Sells HUF65b in 3-month bills; avg yield 5.43% v 5.48%

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities
- As of 06:08 DAX +0.39%. CAC40 +0.45%, FTSE100 +0.39%
- European equities opened negative but returned into positive territory during a choppy session as investors braced for the Fed's meeting and PIIGS auctions.
- In individual names, the news flow was light as sessions become quiet ahead of the 3rd quarter earnings season starting in mid-October. Among notable moves, Unicredit [UCG.IT] opened down by more than 3% following reports that the CEO Profumo, who has been on the job for 15 years and is one of the most influential bankers will resign today at the board's meeting. Resignation is reportedly linked to a board dispute after CEO allowed Libya to raise its stake to 2.59% from 2.1% and eroded his investors' support.
- French electrical company Legrand [LR.FR] opened down by 4% as reports circulated that Wendel [MF.FR] and Kohlberg Kravis Roberts would sell about 9% of the shares of the company. The proceeds for Wendel would be about €300M which would help the company's high level of debt. Wendel is trading up by approximately 3%.
- Swiss Gurit [GUR.SZ] published first half figures reporting an increase in EBIT over last year but a decrease in revenues. Company noted that a considerable level of uncertainty remains especially in Wind Energy market. Shares were down by almost 1% following report.
- Wellstream Holdings [WSM.UK] rose 25% after confirming that it had received a number of preliminary approaches regarding a possible bid.
- French bank BNP Paribas [BNP.FR] opened up by 1.8% following comments from the CEO who said that the company would not have to raise capital to meet the requirements of Basel rules. The statement and an upgrade at Goldman Sachs supported rally.

SPEAKERS

- (CH) Former IMF China chief Eswar Prasad: Internationalization of yuan currency has its limits
-(CH) China Foreign Min: It is inappropriate for Premier Wen to meet Japan PM at UN meeting
- (EU) ECB's Wellink: Would reconsider exit plans if were afraid of negative impact, would NOT forecast a sharp rise in market rates currently; US data suggests deterioration may have hit bottom
- (IR) European Financial Stability Facility (EFSF) CEO Regling: Ireland has not yet approached him regarding aid; Reiterates does not expect EFSF to be used.
- (IR) EU's Barroso: Ireland taking courageous measures on finances; Ireland can deal with more difficult situation.
- (IR) Citigroup's Buiter notes that Irish bond yields are good; high yield on Ireland 10-yr bonds are "ridiculous"
- (JP) Japan Bank Lobby chief: FX intervention by Japan was effective; new global bank capital requirements of 7% is harsh for banks in Japan; Sees no need for banks in Japan to raise more capital.
- (JP) Japan Former MoF official Sakakibara (aka Mr Yen): Expects yen to reach new record high against USD this year
- (JP) Fitch: New Basel III rules unlikely to affect Japanese banks' ratings
- (SP) Spain Fin Min Salgado not many changes regarding tax on FY11 budget; Convinced budget to pass
- (UK) UK Dep PM Clegg: Duty of the govt to minimize tax loopholes; Not in interest of banks to reward large bonuses.
Currencies/Fixed Income:
It's all about the Fed! Anticipation has supported the common currency across the session as traders await FOMC's meeting. Like weed, European debt woes have been growing back into the markets but that did little to temper EUR strength in today's session. Even the much awaited PIIGS auctions left little room for celebration; Spain and Ireland were expensive and unwanted, Greece was a happier surprise for the markets as the yield was lower and the bid-to-cover doubled from the prior but then again the 13-week maturity is too short to be notable. Meanwhile, EUR/USD tested session highs at 1.3150, EUR/GBP hit 2-month high at 0.8641 and EUR/JPY rallied to 112.40 from session lows of 111.43. Swissy extended declines against Euro as the sharp decline in Swiss trade balance cast a shadow over Swiss economic recovery which relies significantly on exports. Euro strength is possibly a result of the weak dollar ahead of Fed's meeting. Although few expect that the Fed will restart QE at today's meeting, traders are looking to see changes in language. The key words are changes to the 'extended period of time' phrase or an increase of balance sheets, which would indicate a possible restart of the QE operations, and hurt the greenback. Note that most of the other central banks are either turning hawkish (RBA) or standing still (ECB). The question is how more dovish can the Fed and the answer is not much.
UK public borrowing was worse than expected but the sterling did not move significantly. Gilts however fell lower but are still outperforming against the Bunds.
In the Papers-Geopolitical
- The Financial Times commented on earlier statements made by Irish Central Bank Governor Honohan suggesting the Irish government may need further cuts in the budget to reassure the markets. He also said the sentiment could add pressure for the Prime Minister to resign.
- The Telegraph's Evan-Pritchard noted that, according to Goldman Sachs, there is a measurable risk that Portugal and Ireland may have to use the €440 billion European Financial Stability Facility (EFSF). The investment banking firm said Portugal or Ireland might need to use the EFSF by early next year. Former Portugal Finance Minister Bagao said the current minority government could struggle to find the votes for further austerity. In terms of the EFSF, the facility has not yet been ruled on by Germany's constitutional court and if the court ruled against the EFSF, Germany would no longer be able to be the guarantor of the fund, which would limit the facility's lending capacity.
- British deputy prime minister Clegg said the duty of the government is to minimise tax loopholes. He also said that it is not in the interest of banks to reward large bonuses, though corporations are entitled to minimise tax payments.

Notes/Observations

- EUR/GBP hites 2-month high following EU bond auctions and UK public finance data.
- USD/CNY 3-month offshore forwards hit a record low as China continues to set the yuan stronger
- US 2-yr Treasury yield hits record low
- Gold in tight range ahead of FOMC meeting.
- EU periperal bond spreads continue to tighten following bond auctions.

Looking ahead

- 7:00 (CA) Canada Aug Consumer Price Index M/M: 0.0%e v 0.5% prior; Y/Y: 1.9%e v 1.8% prior
- 7:00 (CA) Canada Aug Core CPI M/M: 0.1%e v -0.1% prior; Y/Y: 1.6%e v 1.6% prior
- 7:00 (BR) Brazil FGV Inflation IGP-M: 1.1%e v 1.1% prior
- 7:45 (US) ICSC/GS weekly chain store sales
- 8:00 (BR) Brazil Sept IBGE CPI IPCA-15 M/M: 0.2%e v -0.1% prior
- 8:00 (PD) Poland Aug Core Inflation M/M: 0.0%e v 0.1% prior Y/Y: 1.2%e v 1.2% prior
- 8:30 (US) Aug Housing Starts: 550Ke v 546K prior; Building Permits: 560Ke v 565K (2nd revision)
- 8:55 (US) Redbook Retail Sales
- 9:00 (EU) ECB weekly Forex reserves
- 9:30 (BR) Brazil Aug Current Account: -$2.5Be v -$4.5B prior; Foreign Direct Investment (FDI): -$2.2Be v $2.6B prior
- 10:00 (MX) Mexico July Retail Sales: 2.2%e v 1.5% prior
- 14:15 (US) FOMC Rate Decision: Expected to maintain interest rates at 0.25%
- 16:30 (US) API Weekly energy Inventories
- 17:00 (US) ABC Consumer Confidence w/e Sept 19th: No est v prior
Fixed Income:
- 4:10 (DE) Denmark Debt Agency to sell Bonds
- 4:30 (SP) Spain Debt Agency to sell 12-month and 18-month Bills
- 5:00 (GR) Greece Debt Agency to sell Bills
- 5:15 (EU) ECB weekly allotments in main 7-day refi operation at fixed 1.00%
- 5:30 (HU) Hungary Debt Agency to sell 3-Month Bills
- 5:30 (IR) Ireland Debt Agency (NTMA) to sell up to €1.5B in Bonds
- 7:00 (EU) ECB Term Deposit Tender

Unemployment rate in Hong Kong retreats to the lowest in 20−months

Posted by Usman Ali Minhas on Thursday, September 16, 2010 , under , , , , , , , , , , |



International Trading



The Hong Kong economy released today its statement, showing that unemployment declined during the month of August to the lowest level in 20-months, reflecting that consumer spending increased, and helping the city to keep its recovery this period. 
Honk Kong's unemployment rate seasonally adjusted monthly reading reached 4.2% in August, while the analysts' expectations indicated that jobless rate in Hong Kong will stay at 4.3%, unchanged from May to July. 
On the other hand, Hong Kong city reported that the economy expanded for the third consecutive quarter, from a year earlier, while analysts noted the global demand for Hong Kong exports may decline in upcoming period, which has a negative effect on the nation's growth. 
Furthermore, Hong Kong announced that the nation's property market maybe facing worse threats than those in 1997, in case prices continue to rise alongside interest rates in the upcoming period. 
Analysts are cautious regarding an asset bubble formation, especially from main-land China, while the property markets increased during last period quite rapidly, which may drop if the prices are going to increase in upcoming period. The government pledged to raise land supply to curb house prices that surged about 47% since the start of 2009. 
The government said that the introduction of a minimum wage next year will push up costs for workers such as dairy farm international holding Ltd. (which is an operator of 7-elven convenience stores in Hong Kong), whereas anticipations show that the legislation may lead to job cuts, including for the unskilled and the elderly.  
Today's statement said the recently figures showed that graduates and school leavers had been able to secure jobs over the summer.

More On The ECRI Leading Indicator

Posted by Usman Ali Minhas on , under , , , , , , , , , , , |



International Trading



Last week, toward the end of our comment on consumer deleveraging, we mentioned that the year-over-year change in the ECRI Weekly Leading Indicator had strongly suggested the distinct possibility of recession. In answer to some questions about it, we would like to provide a bit more detail this week.
When we were writing last week the latest release showed the indicator declining 4.11% from a year earlier. We therefore searched the historical data to determine what happened to the economy at other times when the indicator had fallen by that amount or more. We found that over the last 42 years this has occurred seven times, and in all seven instances a recession started shortly before or after the signal. 
This week we re-examined the data, except that this time we looked for a decline of 3.50% or more, and found that the lead times were even better in four of the seven occurrences.
We can make a number of observations from the data. In all seven instances where the index fell 3.5% or more from a year earlier a recession occurred shortly before or after the signal. There were no occasions where the index declined 3.5% without a recession. In two cases the signal led the recession, in three cases it followed, and two times it occurred in the same month. It ranged between a five-month lead and four-month lag. The average and median lead times were zero. In all instances the market had peaked before the signal, anywhere from one to ten months, with an average of five and a median of two. We note again that ECRI Managing Director Lakshman Achuthan has not officially called a recession, although he has stated that, based on his indicator, there was more than a 50% chance of one.
Although we would not rely on any single indicator to form an opinion, the ECRI Leading Index strongly supports our view as discussed extensively in prior comments that the economy, at best is headed for a severe slowdown, and, at worst, another recession. It also makes it much more likely that the April peak in the S&P 500 will turn out to be the 2010 high, and that the performance of the economy in the period ahead will be highly disappointing to investors looking for a normal economic recovery.

Forex Trade Setups Commentary: AUDJPY inside bar 9−16−10

Posted by Usman Ali Minhas on , under , , , , , , , , , , |



International Trading



The AUDJPY formed a bullish inside bar today in the course of the recent bullish momentum. We can see price is currently hovering near resistance at 80.85. Beyond this level we don’t see much resistance until about 83.50.
The Australian dollar has been very strong recently as a result of continued demand of the country’s rich exports from China and other quickly expanding countries.
Yesterday’s foreign exchange market intervention by the Japanese government to help weaken the surging yen gave further support to this recent bullish push in the AUDJPY and the other Australian dollar crosses.
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For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.
Commentary:
The forex market was relatively quiet today as currencies took a breather after Wednesday volatile price movement after Japan intervened in the foreign exchange markets to weaken the yen.
The Dow added 22.10 points, or 0.21 percent, the S&P 500 lost 0.40 points, or 0.04 percent, and the Nasdaq gained 1.93 points, or 0.08 percent.

We continue to peg resistance for gold at the $1280 level

Posted by Usman Ali Minhas on , under , , , , , , , , , |



International Trading



Market Commentary

Key Notes: Economic data released yesterday highlighted that the economic recovery remains uneven. While U.S. initial jobless claims declined, manufacturing in the Philadelphia area contracted unexpectedly. The uncertain outlook boosted gold as an alternative asset and gold surged to another new record high. Spot gold reached an intra-day high of $1277.70, just below our established resistance of $1280. 
Ahead, the U.S. will release the University of Michigan consumer sentiment index for September. This may set the tone for the markets. Currently, the index is expected to inch up to 70.0 in September from 68.9 in August. A stronger than expected reading may ease investors’ worries of slowing consumer spending and lower expectations that the Fed may restart quantitative easing. This may limit gold’s upside for today. We continue to peg resistance for gold at the $1280 level. 

Market Summary

  • Precious Metals: Gold hit a new record high yesterday for the second time this week. Spot gold reached an intra-day high of $1277.70. Gold benefited from greater economic uncertainty as economic data was disappointing. British retail sales fell unexpectedly, for the first time in seven months. The Philly Fed index showed that factory activity in the U.S. mid Atlantic region contracted for the second straight month in September. Silver continued its rally to almost $21 an ounce, extending its winning streak to five days.
  • Crude Oil: Crude oil fell nearly 2%, sliding for a third day. U.S. Midwest supply anxieties were eased further on news that a major Canadian pipeline carrying crude to the region would be back in service by Friday. Crude dropped to a session low of $74.11. Prices were also pressured by mixed U.S. data that confirmed that the economy remains on a slow growth path. The Federal Reserve Bank of Philadelphia said its general economic index rose to minus 0.7 in September from minus 7.7 in August.
  • Currencies: The yen fell against the U.S. dollar on Thursday with the Bank of Japan silent after investors were reluctant to place bets against the yen, wary that the central bank may intervene again in the currency market. Prime Minister Naoto Kan reiterated on Thursday Japan would take decisive steps on yen strength, Jiji news agency reported, while Bank of Japan Governor Masaaki Shirakawa said he expected intervention would stabilize the forex market. The euro rose to its highest in more than a month against the dollar as strong demand at a Spanish bond auction reinforced confidence in Europe’s economic recovery.
  • Indices: The S&P 500 slipped 0.04%, paring an initial drop of as much as 0.6%. This was as FedEx Corp.’s profit forecast trailed estimates and U.K. retail sales unexpectedly decreased. Alcoa Inc. and Bank of America Corp. lost at least 1.2% for the biggest declines in the Dow Jones. The losses were tempered by Hewlett-Packard Co. and Cisco Systems Inc., which rose at least 1.5%, helping the Dow to gain 22.10 points to 10,594.83. 

Key Events/Data To Look Out For:

  • US: UOM sentiments. 
  • Euro: Germany Producer Prices.

The Trading Week: Sep. 13 − Sep. 17

Posted by Usman Ali Minhas on Saturday, September 11, 2010 , under , , , , , , , , , , , |



International Trading


Sep. 10, 2010 (Allthingsforex.com) – The consumer spending, industrial activity and inflation data from the world’s largest economy will guide the direction for equities, commodities and currencies in the week ahead.   

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that every currency trader should pay attention to.  

1.    EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Sep. 13, 5:00 am, ET.  

The industrial activity in the Euro-zone is expected to rise by 0.2% m/m in August from the 0.1% m/m decline in July. 

2.    GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Sep. 14, 4:30 am, ET. 

August could be the first month in a long time when we could see the U.K. inflationary pressures below the Bank of England’s 3.0% ceiling as the inflation gauge is forecasted to reach 2.9% y/y from 3.1% y/y in July. 

3.    EUR- Germany ZEW Economic Sentiment Index, a leading indicator of economic conditions and business expectations in the Euro-zone’s largest economy, Tues., Sep. 14, 5:00 am, ET.

The ZEW survey could provide an early warning sign of a slowdown in the largest economy in the Euro-zone with a reading of 10.0 compared with 14.0 in the previous month.  

4.    USD- U.S. Retail Sales, an important gauge of consumer spending measuring the total receipts at retail establishments, Tues., Sep. 14, 8:30 am, ET.

In light of some of the recent glimpses of hope from the labor market, the U.S. retail sales could instill optimism in the market after what is expected to be another positive month with sales at retail establishments up by 0.3% m/m in August following the 0.4% increase in July.

5.    EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation in the Euro-zone and the European Union’s equivalent to the CPI- Consumer Price Index, Wed., Sep. 15, 5:00 am, ET. 

Inflationary pressures in the Euro-zone are expected to remain subdued at 1.6% y/y in August, down from 1.7% y/y in July. 

6.    USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Wed., Sep. 15, 9:15 am, ET. 

Manufacturing activity, which has been a leader of the U.S. economic recovery, is forecasted to show a smaller rise in industrial output by 0.2% m/m, compared with the 1.0% m/m increase in the previous month. 

7.    NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., Sep. 15, 5:00 pm, ET.   

Due to the uncertain outlook and the threat of a global economic slowdown, the Reserve Bank of New Zealand could decide that it would be prudent to keep the current 3.0% benchmark interest rate level unchanged at this meeting, while still leaving the door open to further rate hikes in the months ahead. 

8.    CHF- Swiss National Bank Interest Rate Announcement, Thurs., Sep. 16, 8:00 am, ET. 

With inflation no longer a threat to the economy and the EUR lingering near all-time lows vs. CHF, the bank’s policy makers would be likely to keep monetary policy accommodative at the record low rate of 0.25%. Traders should keep an eye on any statements or remarks from the bank’s policy makers following the announcement for signs of the Swiss National Bank’s willingness to continue intervening in the currency market to curb the strength of the Swiss franc.   

9.    USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, Fri., Sep. 17, 8:30 am, ET.

The report could confirm the expectations for subdued inflationary pressures in the U.S. as the month-over-month index of consumer prices rises by 0.3% m/m and the Core CPI registers a small 0.1% m/m increase in August.   

10.   USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Sep. 17, 9:55 am, ET.

The outlook of U.S. consumers could show a slight improvement with consensus forecasts pointing to a reading of 69.5, up from 68.9 in the previous month. 

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