OctaFX_Farid Posted January 4, 2013 Author Share Posted January 4, 2013 OctaFX.Com -Forex Analysis: EUR/USD Classic Technical Report 01.04.2013 Prices have turned lower as expected after putting in a bearish Gravestone Doji candlestick. Sellers have now cleared support at the bottom of a rising channel set from mid-November (now at 1.3091) as well as the 38.2% Fibonacci retracement (1.3060), exposing the 50% level at 1.2983. A drop beneath that aims for the 61.8% Fib at 1.2907. The 1.3060 level has been recast as resistance. Jan 4, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 5, 2013 Author Share Posted January 5, 2013 OctaFX.Com -Forex: Japanese Yen Extremely Prone to Reversal With or Without Risk Japanese Yen Extremely Prone to Reversal With or Without Risk Experienced traders know that the probabilities in picking a major top or bottom in markets are exceptionally low - and therefore, the pursuit of timing exact turns is foolhardy. That said, extremes cannot last. And, the Japanese yen is certainly pushing the envelope. This past week, the yen crosses advanced another 1.3 (for CHFJPY) to 4.0 percent (NZDJPY) to ratchet fresh multi-month and multi-year highs. That is yet another incredible extension for a six-month run that has seen the yen drop between 12.8 (USDJPY) to 21.2 percent (EURJPY). A cross-the-board currency move of this magnitude is unusual enough, but it is the consistency of the drive that should really unnerve traders. The most important factor to consider for the yen moving forward is that there are both active and passive market forces that can spur the yen to change course and see a hearty rally (yen cross tumble). For a passive driver, there is the considerable influence of a natural correction. With a USDJPY climb of nearly 1100 pips in the span of 3 months without even a 2 percent pullback, we are faced with an extremely one-sided market with otherwise tepid supports for continued advance. Considering speculative participation (measured through open interest in S&P 500 futures) is just off 15-year lows and carry yields are at historically anemic levels, there is extreme dependency on a sustained rise in risk taking. If speculative appetites were to level out, it could be enough to spark profit taking or catalyze opportunistic bears to shake test convictions. A natural correction is highly probable. Though, alone it would likely be a restrained catalyst for a yen advance. To really add heat to a downturn on the crosses, the market needs an active catalyst. The most prolific and simultaneously concentrated spark for this particular currency would be a risk aversion move. Risk trends – measured through benchmarks like the S&P 500 – have maintained a persistent advance these past weeks and months, and the result for the yen has been clear. However, should we see the bite of panic start to seep into the speculative ranks – finding exceptional risk taking in for non-existent returns – the yen crosses would certainly be swept up in the move. Looking for an ignition point for fear, we have seen the greatest threats to global financial stability (the US Fiscal Cliff, Greece’s lead on the EU debt crisis, the possible exit of global central bank stimulus) back down one-by-one. Yet, each of these outcomes was expected by the market and the underlying issues of thin ‘return’ versus tremendously under-appreciated ‘risk’ remain. In the end, it is the catalyst that investors haven’t had time to prepare for that often carries the market furthest. The market bearing on whether USDJPY puts in for another 2 percent climb or dramatic reversal next week will no doubt rest with the more severe imbalances of risk trends, but it is important to also remember the underlying yen fundamentals to this picture as well. Yields on the 10-year JGB this past week hit their highest level since September 18 and the 30-year tagged a 13-month high. This isn’t a carry trade advantage (the carry differential with its counterparts is still growing). Rather, this shows a fading demand for the safe haven government debt that lasts only as Japanese investors are comfortable enough to hold risk. Stimulus is another, considerable factor in this multi-month move. New Finance Minister Aso has said the government will present its plan for further stimulus before the BoJ’s next meeting (January 22). And, speaking of the BoJ, Governor Shirakawa (resolutely pushing back against government involvement in monetary policy decision) will see his term end by the beginning of April. Given the precarious nature of all the factors necessary to maintain the yen’s current pace of decline, it is highly likely that we see a natural correction. However, to be clear, I am still a long-term USDJPY bull. Whether we look to financial and fiscal crisis or a return to risk with carry, the Japanese yen is still heavily over-valued against its benchmark counterpart. – JK Jan 5, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 5, 2013 Author Share Posted January 5, 2013 OctaFX.Com -Forex News: Dollar Posts Biggest Weekly Rally in 6 Months Dollar Posts Biggest Weekly Rally in 6 Months Euro Struggles Before ECB Adds Weight Japanese Yen Crosses Extend Rally to New Highs Canadian Dollar: FX Traders Pay Little Heed to Strong Jobs Numbers British Pound Excessive Tumble May Spur Rebound Swiss Franc: Safety Flows and SNB Reserves Still Issues Gold Drops For Sixth Week, Longest Slide in 8 Years Dollar Posts Biggest Weekly Rally in 6 Months Market conditions can supersede both fundamentals and technicals – a truism we witnessed this past week. Typically, the dollar’s position as the preferred reserve currency would have leveraged a selloff with the S&P 500 posting its biggest rally in 13 months. In fact, the Dow Jones FXCM Dollar Index (ticker = USDollar) enjoyed its strongest advance in six months over the same period and closed at its highest level since July 25. This unusual correlation between underlying risk trends and the safe haven dollar was facilitated by both the extremely low levels of speculative participation through the passage of the holiday period as well as an intense focus on the on the outcome of the US Fiscal Cliff. Though pushing the decision beyond the technical deadline, the US government managed to hammer out a solution to the impending doom of automatic tax hikes and spending cuts. Naturally, removing the risk of a sure push into recession for the world’s largest economy lifts a serious cloud of uncertainty and bolsters risk appetite – thereby driving equities and other ‘riskier’ assets higher. However, the dollar also benefits from this turn as the threat of a critical sovereign credit rating downgrade (a move that hits at the dollar’s core value as the benchmark currency) evaporates as well. That being said, the positive correlation between risk trends and greenback is unlikely to last for long. A relief rally for the dollar via reduced rate cut fears has an exceptionally short shelf life. That doesn’t mean we should expect the dollar to simply tumble into a new bear trend though. The ‘solution’ offered up for the Fiscal Cliff, was merely a band aid that carries us over to the bigger threat of a standoff on raising the debt ceiling. The Treasury runs out of extraordinary means for preventing the US to breaching its debt cap sometime in mid-February and the so-called ‘sequestration’ – or $110 billion in automatic spending cuts – is set for March 1. This can easily set risk trends on fire once again and thereby benefit the safe haven status of the dollar. The deciding factor is whether investors look ahead or enjoys the brief calm. As we establish the next phase of the US fiscal crisis, there are other considerations for risk and dollar traders to consider. Though not fully engaged, there is a shift in comfortable expectations for Fed stimulus to remain a driving force for years into the future. After the Fed minutes this past week showed growing support for the $85 billion-per-month QE purchases of MBS and Treasuries by or before the end of 2013, the tepid growth outlook and extreme lows in investment returns look far more daunting to the long-term investor. For a more concise time frame, we will watch the reaction to the beginning of the 4Q earnings season with Alcoa reporting on Tuesday and Wells Fargo on Friday. Euro Struggles Before ECB Adds Weight A rebound in risk appetite often has a forgiving influence for currencies or assets that maintain a questionable fundamental outlook. We have seen the general rise in sentiment tides lift the troubled euro numerous times in the past, but the currency showed little of that strength over the past week. Aside from EURJPY, the euro lost ground against all of its freely-floating, major counterparts. This may be a sign that the relief of Greece avoiding catastrophe has been spent. Another consideration that is often overlooked – the euro’s benchmark Libor and Treasury rates are lower than its US counterparts’, which may actually drive carry interests away from the euro. Looking to the week ahead, there is plenty of event risk in sentiment measures (investor, consumer, economy), an ESM bond sale, a number of meetings for officials and Greece unemployment. Most euro traders’ top concern though is the ECB rate decision Thursday. The risk is for further cuts to rates or growth forecasts. Japanese Yen Crosses Extend Rally to New HighsThe yen’s tumble continued with little check this past week. Though the foundation of risk trends were somewhat dubious, the safe haven and carry funding currency didn’t shy away from a hearty drop against all of its counterparts. Between a 1.3 percent drop against the Euro (a weakened currency) and 4.0 percent plunge versus the New Zealand currency, this tumble is extremely stretched. The implications of a natural correction would find serious leverage should a bout of risk aversion kick in. If fear rises, there isn’t much carry to in these crosses to buffer it. Canadian Dollar: FX Traders Pay Little Heed to Strong Jobs Numbers Once again, the Canadian docket would impress on employment. The payrolls figure roundly beat consensus with a 39,800- position increase and the jobless s rate unexpectedly dropped its lowest level since December 2008 (7.1 percent). However, this times, the Canadian dollar (‘loonie’) paid little mind to the positive report. The NFPs report at the same time offered some distraction, but there is further an issue that the market is growing acclimated to ‘beats’ by this data series. Once again, loonie traders must focus on risk trends and symbiotic USD trends. British Pound Excessive Tumble May Spur Rebound Over the past three days, the sterling has enjoyed the worst performance amongst the majors. Whether against high yielding counterparts or safe havens like the dollar, the pound was the most afflicted of its counterparts. This intense decline has some grounding in data (like the Services PMI) and the lagging pace of government bond yield growth; yet it is still arguably overdone. Be careful of a speculative reversal. Swiss Franc: Safety Flows and SNB Reserves Still Issues Though the panicked drive behind the flight to safety for European capital has let up, the franc is still a shining beacon for investors and citizens that realize the larger issues are far from resolved. The SNB’s report of its foreign currency reserves this coming week will be interpreted for its influence on keeping the franc suppressed. Traders should keep a vigilant eye on EURCHF for any serious changes in interpretations. Gold Drops For Sixth Week, Longest Slide in 8 Years Thanks to a late-day rebound this past Friday, gold closed out the week with a mere 0.01 percent decline. Nevertheless, that puts the metal in the red and notches up its consecutive bearish tally to six - its longest tumble in eight years. Futures volume behind the decline is still light, which means the move isn’t panicked (and thereby prone to reversal). The US dollar and debt ceiling will be necessary drivers moving forward. Jan 5, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 7, 2013 Author Share Posted January 7, 2013 OctaFX.Com - Forex Analysis: NZD/USD Classic Technical Report 01.07.2013 Prices are testing resistance in the 0.8317-55 area, with a break higher exposing the February 29 high at 0.8470.Near-term rising channel support is now at 0.8206. A drop below that aims for a horizontal pivot support level at 0.8052. Daily Chart - Created Using FXCM Marketscope 2.0 Jan 7, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 7, 2013 Author Share Posted January 7, 2013 OctaFX.Com - Forex Analysis: EUR/USD Classic Technical Report 01.07.2013 Prices put in a Hammer above rising trend line support set from late July, hinting a rebound may be ahead. Initial resistance is at 1.3150, marked by the 23.6% Fibonacci expansion. A break above that aims for the 38.2% level at 1.3244. Alternatively, a drop through the trend line (now at 1.2994) aims for the December 7 low at 1.2875. Daily Chart - Created Using FXCM Marketscope 2.0 Jan 7, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 7, 2013 Author Share Posted January 7, 2013 OctaFX.Com - Forex: Commodity Currencies, Yen Lead Against Weak Euro ASIA/EUROPE FOREX NEWS WRAP After Friday’s Nonfarm Payrolls report did little to support the US Dollar in the post-December Federal Reserve meeting Minutes trading world, risk-appetite has seemingly steadied if not contracted to start the first full week of the year. The Japanese Yen has posted a solid rebound versus the world’s reserve currency as well as the European currencies despite gapping lower to start the week, as news headlines over the weekend suggested that new Japanese Prime Minister Shinzo Abe was increasing pressure on the Bank of Japan to endorse a +2.0% yearly inflation target at its next meeting on January 22. Mainly, the Yen’s rebound can be credited to extremely oversold technical condition, with many Yen-crosses posting multi-month or multi-year highs in the past week. The market also remains biased short the Yen, with the most recent CFTC’s COT report showing net non-commercial futures positioning holding near its lowest levels since July 2007, despite short covering into the end of December. Fundamentally and psychologically speaking, any perceived shift in BoJ policy leading up to the meeting could lead to continued Yen weakness from now until then, whereas the Yen could strengthen once policy is solidified (similar to the US Dollar strengthening after the Fed announced QE3 in mid-September). Away from the safe havens, the commodity currencies remain well-supported with the New Zealand Dollar notably outperforming, while the Euro has led the European currencies lower (the Swiss Franc is a follower given the EURCHF floor). This more or less has to do with the expectation that the European Central Bank will not implement any new policies this week. As I expressed in the Euro’s Weekly Trading Forecast, each meeting following the initial OMT announcement has led to greater and greater weakness; and now that the market is no longer short the Euro versus the US Dollar, there is significantly more room for weakness in the EURUSD. Taking a look at European credit, weakness in peripheral bonds has weighed on the Euro today. The Italian 2-year note yield has increased to 1.687% (+4.9-bps) while the Spanish 2-year note yield has increased to 2.350% (+3.8-bps). Likewise, the Italian 10-year note yield has increased to 4.291% (+3.8-bps) while the Spanish 10-year note yield has increased to 5.044% (+2.8-bps); higher yields imply lower prices. Jan 7, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 8, 2013 Author Share Posted January 8, 2013 OctaFX.Com - Eurozone unemployment at record high Businesses in the eurozone may be feeling more confident but there's no sign of that translating into better employment prospects yet. Eurostat data published Tuesday showed unemployment in the 17-nation eurozone hit a record high of 11.8% in November, leaving 18.8 million people without work - two million more than a year ago. At nearly 27%, Spain has the highest unemployment rate in the European Union, and youth unemployment is more than twice as high at 56%. Thousands of Spanish bank employees will lose their jobs as a result of an EU-backed bailout of Spanish banks. Only Greece, which is facing a sixth year of recession, has a greater proportion of young people out of work. The latest unemployment figures coincided with the release of a survey of European Union businesses and consumers which showed sentiment in December picked up across all sectors of the eurozone economy, with the exception of retail. The Economic Sentiment Indicator hit its highest level since July. But the sentiment survey also suggested Europe's jobless blight will continue well into 2013. Industrial managers expect hiring to improve, but the retail, services and construction sectors could experience further declines in hiring. That's consistent with consumers' gloomy view about their chances of finding work. Recent data have suggested the region's purchasing managers are becoming less pessimistic though. Financial data firm Markit's index was at a 9-month high in December, although the reading still reflected declining activity in manufacturing and services rather than growth. The eurozone economy shrank in the second and third quarters of 2012, and official data due next month are expected to confirm a contraction in fourth quarter output. Forecasts for 2013 are not much better, ranging from stagnation to another year of recession as governments continue to grapple with the fallout of the credit crisis, cutting spending and raising taxes to rein in budget deficits. Eurozone consumers have become more cautious. Retail sales rose just 0.1% in November from the previous month, according to data published Tuesday, and were 2.6% lower than November 2011. Sales of food, drink and tobacco were particularly weak. Hopes that stronger growth in Asia and the U.S. could spark a eurozone recovery also took a knock, as Germany said its exports fell 3.4% in November, from the previous month, and were flat year over year. Jan 8, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 14, 2013 Author Share Posted January 14, 2013 OctaFX.Com - Forex: Euro Hit by Growth Fears, Pound to Rally on Sticky Inflation Talking Points Euro: ECB to Preserve ‘Wait-and-See’ Approach Despite Deepening Recession British Pound: Threatens Bullish Trend Ahead of U.K. Inflation Report U.S. Dollar: Fed Rhetoric on Tap, Chairman Bernanke in Focus Euro: ECB to Preserve ‘Wait-and-See’ Approach Despite Deepening Recession The EURUSD gave back the overnight advance to 1.3403 as industrial outputs in Europe fell 0.3% in November versus forecasts for a 0.2% print, and the short-term pullback in the exchange rate may turn into a larger correction as the deepening recession dampens the appeal of the single currency. As the debt crisis drags on the real economy, Fitch Ratings expects the euro-area to contract 0.1% in 2013, but we may see a more pronounced downturn in Europe amid record-high unemployment paired with the ongoing slack in private sector activity. Nevertheless, European Central Bank (ECB) board member Peter Praet talked down bets for a rate cut as he endorsed a ‘wait and see’ approach for monetary policy, but we may see the Governing Council keep the door open to lower the benchmark interest rate further as the economic downturn threatens price stability. In turn, the ECB’s monthly report on tap for later this week may continue to highlight the downside risks for growth and inflation, but we may see the central bank strike a more neutral tone for the policy horizon as European policy makers increase their efforts to address the debt crisis. As the relative strength index on the EURUSD falls back from a high of 66, the downward trend on the oscillator may foreshadow a bigger downturn in the exchange rate, and we may see the bearish divergence threaten the ascending channel carried over from the previous year as the fundamental outlook for the euro-area deteriorates. British Pound: Threatens Bullish Trend Ahead of U.K. Inflation Report The British Pound pared the rebound from the previous week, with the GBPUSD slipping to a low of 1.6036, but the sterling may regain its footing over the next 24-hours of trading as the economic docket is expected to show stick price growth in the U.K. Indeed, the headline reading for inflation is expected to increase an annualized 2.7% for the third month in December, but an unexpected uptick in the consumer price index may spark a sharp rally in the British Pound as the Bank of England (BoE) adopts a hawkish tone for monetary policy. As the central bank sees above-target inflation over the policy horizon, we anticipate the Monetary Policy Committee slowly move away from its easing cycle, and we may see the central bank start to discuss a tentative exit strategy as the U.K. emerges from the double-dip recession. However, as the GBPUSD comes up against the lower bounds of the upward trending channel dating back to June, a move back towards the 1.6000 figure would dampen our bullish forecast for the sterling, and we will keep a close eye on the inflation report as market participants weigh the outlook for monetary policy. U.S. Dollar: Fed Rhetoric on Tap, Chairman Bernanke in Focus The greenback extended the rebound from Friday, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) advancing to a high of 10,077, and the reserve currency may appreciate further during the North American trade should we see Fed officials scale back their dovish tone for monetary policy. As the economic docket remains fairly light throughout the U.S. session, we should see risk sentiment dictate price action for most of the day, but the fresh batch of central bank rhetoric may increase the appeal of the USD as the FOMC takes note of a more broad-based recovery. Indeed, all eyes will be on Fed Chairman Ben Bernanke as he’s scheduled to speak on the economylater today, and we may see the central bank head talk down speculation for more quantitative easing as the region gets on a more sustainable path. Jan 14, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 14, 2013 Author Share Posted January 14, 2013 OctaFX.Com - Forex Trading: Buying EUR/USD and EUR/AUD Dipsn Trading focus this week is on the EURUSD and EURAUD, specifically on identifying the end of corrective weakness (buying dips). Eventual EURUSD targets extend to 13800-13900 and 14400 and risk (for longs) is the 1/10 low at 13038. Former resistance at 13270-13308 is now estimated support. In Friday’s DailyFX PLUS video, I mentioned the 5 day average as a trigger point. The 5 day average is only at 13220 today but that level will increase quickly with each passing day. If 2013 is the ‘year of the breakout’, then the EURAUD is probably next in line. A late December break above the inverse head and shoulders neckline proved false and price is back testing the line again today. Near term support has been reached at 12626 (intraday Friday pivot). The decline from last night’s high is probably the first wave of a 3 wave corrective drop. 12530/70 would be an ideal level to look for a low if reached. I’ll be closely following the near term pattern and updating via Twitter @JamieSaettele. What many really care about I’m sure if the EURJPY. Those that wish to fight this (and I’m looking to do just that) may wish to do so on strength into 11967 with a stop above last night’s high and a 11760 target. --- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com Jan 14, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 14, 2013 Author Share Posted January 14, 2013 OctaFX.Com - FOREX Trading: EUR/USD and EUR/AUD Corrective Weakness Underway FOREX Trading and Technical Analysis Observations Trading focus this week is on the EURUSD and EURAUD, specifically on identifying the end of corrective weakness (buying dips). Eventual EURUSD targets extend to 13800-13900 and 14400 and risk (for longs) is the 1/10 low at 13038. Former resistance at 13270-13308 is now estimated support. In Friday’s DailyFX PLUS video, I mentioned the 5 day average as a trigger point. The 5 day average is only at 13220 today but that level will increase quickly with each passing day. If 2013 is the ‘year of the breakout’, then the EURAUD is probably next in line. A late December break above the inverse head and shoulders neckline proved false and price is back testing the line again today. Near term support has been reached at 12626 (intraday Friday pivot). The decline from last night’s high is probably the first wave of a 3 wave corrective drop. 12530/70 would be an ideal level to look for a low if reached. I’ll be closely following the near term pattern and updating via Twitter @JamieSaettele. What many really care about I’m sure if the EURJPY. Those that wish to fight this (and I’m looking to do just that) may wish to do so on strength into 11967 with a stop above last night’s high and a 11760 target. EURUSD - Daily Prepared by Jamie Saettele, CMT Jan 14, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 15, 2013 Author Share Posted January 15, 2013 OctaFX.Com - Forex Analysis: US Dollar Classic Technical Report 01.15.2013 Prices turned lower from resistance at the top of a rising channel set from mid-September, taking out near-term support at smaller channel bottom to expose the 50% Fibonacci retracement at 10038. A further push below that aims for the 61.8% level at 10009. Near-term resistance is at 10066, the 23.6% retracement, followed by the channel bottom at 10091. Daily Chart - Created Using FXCM Marketscope 2.0 --- Written by Ilya Spivak, Currency Strategist for Dailyfx.com Jan 15, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 15, 2013 Author Share Posted January 15, 2013 OctaFX.Com - Forex Analysis: EUR/USD Classic Technical Report 01.15.2013 Prices broke above 50% Fibonacci expansion resistance at 1.3320 to test the 61.8% level at 1.3397. A Star candle warns of a possible turn lower in the works but confirmation is lacking for now. The 1.3220 level has been recast as near-term support, with a drop below that aiming for the 38.2% expansion at 1.3244. Alternatively, a push through resistance targets the 76.4% Fib at 1.3492. Daily Chart - Created Using FXCM Marketscope 2.0 --- Written by Ilya Spivak, Currency Strategist for Dailyfx.com Jan 15, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 16, 2013 Author Share Posted January 16, 2013 OctaFX.Com - Forex Analysis: EUR/USD Classic Technical Report 01.16.2013 Prices turned lower as expected, completing a bearish Evening Star candlestick pattern. Initial support is at 1.3243, with a break below that targeting the 1.3119-29 area. Near-term resistance is at 1.3403, the January 14 high. Daily Chart - Created Using FXCM Marketscope 2.0 --- Written by Ilya Spivak, Currency Strategist for Dailyfx.com Jan 16, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 16, 2013 Author Share Posted January 16, 2013 OctaFX.Com - Guest Commentary: EUR/USD - Larger the Gap, Bigger the Profit * The Gap between Sentiment and Momentum continues to widen as the market becomes more and more bullish but the rally continues to slow. * This 'gap 'and the reversal from our 1.3400 target is encouraging for our view of a major 1996 style top. * A period now of 1.3250-1.34 consolidation would be perfect as it would increase the 'gap' even more and allow us to sell again for a much larger decline. So far so good for the bearish scenario as Euro-Dollar has rolled away from 1.3400-30 resistance. Since 1.3400-30 represented the both the projected and maximum target for a rising wedge from 1.2660 and therefore a correction from the 1.2045 low, there is a window for a collapse following the Pandora's box analogy with 1996. The current break back below the previous 1.3305 high is therefore encouraging and a significant blow for bulls…but doesn't necessarily mean immediate downside acceleration. Indeed as the initial s/t decline is limited to the area of the previous 1.3250 corrective low also 38.2% retracement from 1.30, then the Euro can set up a consolidation top similar to the previous year end top...and increase the loss of upward momentum and the growing gap between price and bullish sentiment. We are short and reducing slightly in the short term looking to sell 1.34 again for a break down through the pivotal 1.3140-70 to and beyond the previous 1.30 low. A break above 1.3430 however says it cannot Jan 16, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 18, 2013 Author Share Posted January 18, 2013 OctaFX.Com - FOREX ANALYSIS: US Dollar Strengthens on Europe an BOJ Meeting THE TAKEAWAY: After a volatile start to the week, the US Dollar ended higher as the Yen weakened and Euro-zone worries resurfaced. A resurfacing of US debt ceiling concerns on Monday saw a sharp fall in the S&P500 index, and a rally in the US Dollar as investors sought the safer asset. Asian stocks opened higher in Tuesday trading on the back of the China Securities Regulatory Commission Chairman implying that China could increase the quota for foreign investors to invest in domestic stocks. This saw the Greenback sell off in Asian trade as the main Asian Indexes surged higher. Tuesday saw increased volatility as newswires reported that markets were beginning to price in a potential Euro-zone break up which saw the Euro fall sharply forcing the USDOLLAR index higher. After a period of consolidation, the Euro was again in the spotlight as Germany cut its growth forecast citing Euro-zone worries and weak demand within the region as the catalyst. After these volatile moves higher, the Dollar started to trend upwards less aggressively toward the end of the week as the Yen weakened and the Australian Dollar lost ground. Australia’s relatively weak employment data saw the so called ‘Aussie’ fall and as trading comes to a close before the Bank of Japan’s meeting, the Yen lost ground potentially due to speculation that Tuesday could see aggressive monetary easing from the Bank. Jan 18, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 19, 2013 Author Share Posted January 19, 2013 OctaFX.Com - Forex: Australian Dollar May Struggle to Find Bid Despite Sticky Inflation Australian Dollar May Struggle to Find Bid Despite Sticky Inflation Fundamental Forecast for Australian Dollar: Bearish The Australian dollar struggled to maintain the rebound from the beginning of the year, with the AUDUSD slipping to a low of 1.0484, and the high-yielding currency may depreciate further in the week ahead as the weakening outlook for the $1T economy raises the scope for additional monetary support. Nevertheless, Australian Treasurer Wayne Swan tried to talk down the risks surrounding the region and said that the economic outlook remains strong, but we may see the Reserve Bank of Australia continue to carry out its easing cycle over the coming months in an effort to encourage a stronger recovery. Although Australian consumer prices are projected to expand at a faster pace in the fourth-quarter, the core rate of inflation is expected to hold steady at an annualized rate of 2.4%, and the data may fail to increase the appeal of the high-yielding currency should the print fall short of market expectations. Indeed, the recent weakness in the labor market along with the slowdown in private sector consumption may ultimately produce a weaker-than-expected inflation report, and a further slowdown in price growth is likely to fuel bets for more easing as the RBA Governor Glenn Stevens maintains a cautious tone for the region. According to Credit Suisse overnight index swaps, market participants still see the central bank lowering the benchmark interest rate by nearly 50bp over the next 12-months, and Governor Stevens may show a greater willingness to cut borrowing costs further at the February 4 meeting in an effort to stem the downside risks for growth and inflation. At the same time, Fitch Ratings continued to highlight the risk for a ‘hard landing’ in China – Australia’s largest trading partner – as the new government appears to be moving away from its export-driven market to a more consumer-based economy, and the shift in public policy is expected to have an adverse effect on the Australian economy as the resource boom comes to an end. As the relative strength index on the AUDUSD continues to find resistance around the 67 figure, the short-term pullback in the exchange rate may gather pace in the days ahead, and we are looking for a move back towards the 61.8% Fibonacci retracement from the 2011 high to low around 1.0430 as it carves out a lower top just below 1.0600. However, should Australia CPI disappoint, speculation for further rate cuts may threaten the upward trend carried over from 2012, and we may see the pair give back the rebound from earlier this year as interest rate expectations remain tilted to the downside Jan 19, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 22, 2013 Author Share Posted January 22, 2013 OctaFX.Com - Forex: Yen Rallies Post-BoJ - Strength Offers Opportunities to Sell ASIA/EUROPE FOREX NEWS WRAP I think I’m turning American, I really think so. That might be a slight alteration of what the song’s original lyrics are, but the Japanese are doubling down on fighting inflation by embracing ultra-dovish monetary policies up until recently only employed by the Federal Reserve. After two painstakingly long months of speculation, the Bank of Japan’s new stance is official: an aggressive +2.0% yearly inflation target to be reached “at the earliest possible time”; and a ¥13 trillion ($145 billion) per month in open-ended asset purchases beginning in 2014. While the Japanese Yen has reacted favorably to the news – a development we’ve been expecting to occur, as noted in this column for the past several weeks – we must consider the longer-term implications of the BoJ’s plan as to ascertain the validity of today’s Yen strength. First and foremost, the market remains extremely short the Yen: the most recent CFTC’s COT report for the week ended January 15 shows that net non-commercial futures positions remain heavily skewed short, the shortest since July 2007 still. If investors needed a reason to take profits, now would be the time, with policy solidified. But beyond positioning, there is little reason to think that this is the Yen bottom (or AUDJPY, EURJPY, USDJPY, etc. topping). Although the BoJ’s asset purchase program doesn’t begin for another year, it is significantly more aggressive than the Fed’s program: $145B/month by the BoJ versus $85B/month by the Fed. Thus, the BoJ is doing its best impersonation of the Fed – by one-upping it. But the BoJ and the Fed aren’t the only central banks actively trying to devalue their currency: the European Central Bank, the Bank of England, and the Swiss National Bank have all implemented policies similar to those of the BoJ and the Fed. If all of the major players are trying to devalue their currencies, we should thus expect other policies (like a 0.00% main rate) and new management at the BoJ (Governor Shirakawa’s term ends at the end of the quarter) to push the Yen down further. Taking a look at European credit, peripheral yields are lower, helping lift the Euro on Tuesday. The Italian 2-year note yield has decreased to 1.416% (-2.3-bps) while the Spanish 2-year note yield has decreased to 2.492% (-3.8-bps). Similarly, the Italian 10-year note yield has decreased to 4.191% (-2.4-bps) while the Spanish 10-year note yield has increased to 5.111% (-2.5-bps); lower yields imply higher prices. Jan 22, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 22, 2013 Author Share Posted January 22, 2013 OctaFX.Com - Eleven eurozone states to introduce Tobin tax European Union finance ministers have cleared the way for 11 members of the eurozone to introduce a tax on trading aimed at raising billions in euros from the financial services industry and deterring speculation. The countries planning to introduce the tax include the eurozone's top four economies, Germany, France, Italy and Spain. Austria, Estonia, Belgium, Greece, Portugal, Slovakia and Slovenia are also on board. The group of states decided to move ahead after attempts to adopt a trading tax at the EU and eurozone-wide level failed in 2011. The United Kingdom, Europe's leading financial center, will not adopt the new levy and abstained during the vote, along with Luxembourg, the Czech Republic and Malta. Many eurozone governments are desperate to identify new sources of revenue to plug holes in their budgets, made larger by the recession, without placing further burden on individuals. They also face popular pressure to ensure the banking industry pays a bigger share of the cost of dealing with the economic fallout of the financial crisis. The tax could raise more than ?37 billion, and up to ?57 billion if applied across the EU as a whole. Such levies are often dubbed "Tobin taxes" after Nobel Prize winning economist James Tobin, who proposed taxing foreign exchange transactions in the 1970s to curb speculation. But some nations are worried that the tax will drive investors away and act as a brake on economic growth. It also risks opening up new divisions in the EU just as the eurozone looks to cooperate more closely in fiscal, monetary and banking policy to build stronger foundations for the euro currency. Officials at the European Commission will now come up with ways of implementing the tax, based on a 2011 proposal that called for a minimum levy of 0.1% on trading in all financial instruments, except derivatives which would incur a rate of 0.01%. "Those who want to move ahead, and who appreciate the merits of working more closely on taxation at EU-level, can do so," said European tax commissioner Algirdas Semeta. "This is a highly significant and very welcome advance." Semeta hailed the first adoption of a financial transaction tax at a regional level. But it also marks the first time the EU has pushed ahead with a tax measure without the support of all its members. States can cooperate on legislation provided at least nine member states participate, the measure gains the support of a majority of states and others can join at a later date. Jan 22, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 23, 2013 Author Share Posted January 23, 2013 OctaFX.Com - Forex Analysis: US Dollar Chart Setup Warns of Weakness Ahead THE TAKEAWAY: US Dollar technical positioning is warning a turn lower may be ahead as prices reverse from resistance while the S&P 500 probes toward 1500. US DOLLAR TECHNICAL ANALYSIS– Prices put in a bearish Evening Star candlestick pattern below resistance at the top of a rising channel set from mid-September, hinting a move lower is ahead. Near-term support is at 10066, the 38.2% Fibonacci retracement. A break below that initially exposes the 50% level at 10038. Channel resistance is now at 10152. Read More Jan 23, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 24, 2013 Author Share Posted January 24, 2013 OctaFX.Com - Forex: Dollar, Risk Trends Steady Despite House Debt Approval Dollar, Risk Trends Steady Despite House Debt Approval Euro Shows Further Retreat from Crisis but EURUSD 1.3400 Top Remains British Pound: Drop in Jobless Claims, Cameron Referendum Elicit Little Trader Response Japanese Yen Advance Stalls at Critical Levels for Progress Canadian Dollar Unexpectedly Tumbles after Bank of Canada Cuts Growth Outlook Australian Dollar Sees Rate Forecast Ease after CPI, Chinese PMI Offers Little Volatility Gold Drops as House Delays Budget Crisis and Dollar Holds Steady Dollar, Risk Trends Steady Despite House Debt Approval The fundamental tide continues to grow, yet speculative trends refuse to be driven from their stubborn state of stasis. That is a burden for the US dollar which still plays a dominate role in the FX market as a safe haven and reserve currency. For the Dow Jones FXCM Dollar Index (ticker = USDollar), the detachment from the undercurrent of risk trends likely saved it from a serious extension of the reversal from six-month highs set at the end of last week. Instead, the Index closed virtually unchanged near 10,100. Across the majors, the lack of drive is less comforting for the greenback. EURUSD has turned to congestion at 11-month highs below 1.3400 and AUDUSD is stationed just below well-worn resistance at 1.0600 that defines 10-month highs. The market’s apathy will not last forever, and proximity to ‘risk on’ can encourage a bearish dollar trend. Looking over the event risk that crossed the wires this past session, it is remarkable that capital markets and the dollar would refuse a significant swell. A few of the developments on the day played directly to the market’s primary fixations of the past weeks and months. At the top of the list was the US House of Representatives’ vote to temporarily extend the deficit ceiling out to May 19. According to a Bloomberg survey, the ongoing US budget clash is the top concern for the greatest number of market participants (36 percent). That explains the rally from both the S&P 500 and US dollar following the Fiscal Cliff deal on January 2. Yet, this bid to buy another three months was met with little relief or rally from either. There may have been too much time still left on the clock to spur a risk rally or perhaps the investors are waiting on the Senate and White House to approve the bill. While this removes another major hurdle for risk trends, the lack of influence on price suggests it may be largely priced in. Yet, were we to think the market’s tepid response to a meaningful update on the deficit wrangling was a sign that bears were gaining a foothold, we would also witness a disregard of two events that would otherwise stoke risk and rally the dollar. Earlier in the US session, the IMF released its updates for worldgrowth forecasts. The downgrade for the global economy’s 2013 performance (3.5 from 3.6 percent) encompassed significant downgrades for the US, Eurozone, Japan and UK amongst others. Later on, the focus turned back to the earnings season as market leader Apple reported Q1 2013 earnings per share (EPS) that beat estimates. However, it was the revenue miss and weaker guidance for the following quarter that sent shares after hours tumbling the most since the peak of the financial crisis. Despite this, no dollar reaction. Euro Shows Further Retreat from Crisis but EURUSD 1.3400 Top Remains In the same Bloomberg survey mentioned above, the revival of the Eurozone crisis was the second greatest concern that investors foresaw (drawing 29 percent of votes). We have seen the reversal of ‘tail risk’ in the region leverage a considerable recovery for EURUSD since last July when the European Union (EU) and European Central Bank (ECB) vowed extraordinary steps to stabilize the region’s financial system. Nevertheless, we have seen some of the most at-risk members in the Eurozone show significant progress this week – yet another surprise for the market’s lack of reaction. Tuesday, Spain sold bonds to record demand; and this past session, Portugal reenteredthe market for the first time since being rescued to strong support as well. Meanwhile, the Bank of Spain took the occasion to downgrade 4Q GDP growth expectation to -0.6 percent as well as its 2013 forecast. The Eurozone economy is expected to suffer a recession through this year, and that fear can find more tangible grounding in the upcoming session when PMI figures are released. The monthly activity reads are timely proxies to GDP figures. British Pound: Drop in Jobless Claims, Cameron Referendum Elicit Little Trader ResponseThe British pound faced its heaviest docket in months, and the event risk barely stirred the currency. Much of the calendar fodder was disarmed well before hand. Prime Minister David Cameron’s speech on the UK-EU referendum (‘In/Out’) was defused with the market working through expectations through the end of last week. The Bank of England (BoE) minutes is habitually lacking for influence, but BoE Governor King gave a heads up on the disappointing growth outlook earlier this week and the openness to further easing surprised no one. The only genuine surprise was the 12,100-filing drop in jobless claims that lowered unemployment levels to the lowest since June 2011. And yet, no serious pound gains. Japanese Yen Advance Stalls at Critical Levels for Progress To fulfill a serious reversal and call a dramatic end to the USDJPY’s remarkable 10-consecutive week rally, the yen may need a catalyst. Having move so far, so quickly; a correction seems a serious risk. That inclination to take profit or speculate on a pullback has yet to take hold, however. With the Bank of Japan’s plan to introduce a major stimulus push at the beginning of next year, this is another currency that is lacking for a critical driver. What is the best, potential driver from here? Risk trends. But we are all too familiar with the state of speculative trends right now. Canadian Dollar Unexpectedly Tumbles after Bank of Canada Cuts Growth Outlook Remarkably, the most market-moving currency for the day through an otherwise loaded docket was the Canadian dollar. A reflection of what genuine surprise can accomplish in the market, there was little expectation for the Bank of Canada’s (BoC) policy decision. Yet, a downgrade in growth forecasts and language that extended the time to the first rate hike leveraged a market-wide drop for the Canadian currency. Australian Dollar Sees Rate Forecast Ease after CPI, Chinese PMI Offers Little Volatility Following up on the modest miss on the 4Q CPI figure from yesterday, we find 12-month interest rate forecasts for the Reserve Bank of Australia (RBA) have deteriorated to the lowest level since the beginning of the year – perhaps reversal the build in hawkishness since October. Meanwhile, the Aussie dollar’s tame slide found no further encouragement from the Chinese manufacturing PMI beat from this morning. Gold Drops as House Delays Budget Crisis and Dollar Holds Steady Progress on the US debt ceiling concern could have throttled gold higher this past session if risk trends were engaged. If sentiment were sensitive to the ebb and flow of fundamentals, the greenback would likely have dropped after such a prominent risk was tamed. Subsequently, gold would have gained on the currency’s pain. Instead, the reduced pressure on currencies in general weighed the precious metal. Read More Jan 24, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 24, 2013 Author Share Posted January 24, 2013 OctaFX.Com - FX Impact: Dollar Soft, But Not Vs. Yen The dollar lost ground around the globe in the week leading up to Barack Obama’s second inauguration. As a result, U.S. investors in foreign countries saw significant gains in equity markets as foreign currencies rallied against the greenback. The few notable exceptions this week were the South African rand, the Japanese yen and the Egyptian pound, which slid against the greenback amid a series of concerns and events. The impact from currency doesn’t actually become real until positions are sold. That said, changes in various currency crosses are a crucial factor that investors in globalized markets must increasingly take into account, as our weekly Currency Impact Report that’s based on MSCI data makes clear. Some of last week’s highlights include: The yen was notable last week, continuing its downfall against the greenback. As the Bank of Japan continues its monetary easing efforts through a massive asset purchase program, the yen has tumbled week after week. In the past three month, the yen’s depreciation has brought a significant difference in Japanese equity returns between U.S. and local investors, with U.S. investors up 11.16 percent in the last three months, while local investors have seen returns of 26.13 percent in the same period. This has resulted in huge asset inflows into funds like the WisdomTree Japan Hedged Equity Fund (DXJ). The South African rand also saw a significant pullback against the U.S. dollar this past week, as labor protests in mining and agriculture increased concerns that the commodity-rich nation might experience slower growth in exports. U.S. investors in South African equities saw returns of -2.77 percent in the past week, while local investors booked returns of 1.06 percent in the same period. The euro saw significant gains in the past week, as well as the last three months, with U.S. investors in European equities coming ahead of local investors by an average of 2 to 3 percent. European Central Bank President Mario Draghi has suggested that the worst of the sovereign debt crisis has passed, with the ECB’s bond-purchase plan still untouched. The Egyptian pound has been steadily losing ground against the greenback, as the Egyptian Central Bank held its third auction of the U.S. dollar in an effort to control its dwindling reserves. The pound saw significant depreciation after S'P lowered Egpyt’s credit rating to the same junk level as Greece and Pakistan. As a result, in the past three months, U.S investors in Egyptian equities have seen returns of -6.27 percent, while local investors have essentially seen flat returns in the same period. Jan 24, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 24, 2013 Author Share Posted January 24, 2013 OctaFX.Com - Forex: Commodity Currencies Soft, Yen Reverses on Strong Chinese Data ASIA/EUROPE FOREX NEWS WRAP Risk appetite has been put on hold overnight, with the S&P 500 (fair value) trading up towards key resistance at 1492/97, the 161.8% Fibonacci extension off of the November and December lows. There were two major catalysts since US cash equity trading closed on Wednesday: disappointing earnings from Apple; and a stronger than expected Chinese manufacturing reading. While Apple is likely to hurt US equity markets today, the Chinese data has provoked a very interesting response in FX. Usually when strong Chinese data comes out, there are three reactions: the Australian Dollar rallies; the New Zealand Dollar follows the Aussie, just not as great of a magnitude; and the Japanese Yen weakens. Yet neither the Australian Dollar nor the New Zealand Dollar are top performers today; in fact, they’re among the weakest. Rather, it is likely that the weak 4Q’12 inflation data we’ve seen out of both countries the past week are continuing to guide rate expectations; the strong Chinese HSBC Flash PMI Manufacturing for January did little to offset these concerns. Despite the tepid reaction in the commodity currencies, the Japanese Yen is very much playing the part of a weak safe haven in light of the strong Chinese data. But Yen weakness was accentuated overnight by further manipulative commentary from Japanese governmental leaders, with Deputy Economic Minister Yasutoshi Nishimura saying that “the current [uSDJPY] level around 90 can be said to be a correction of the strong Yen, but it isn’t over.” Mr. Nishimura continued to say that an acceptable level for the USDJPY would be 100.00. My yearend forecast for USDJPY remains105.00 to 110.00. Taking a look at European credit, peripheral yields are mostly lower, providing light support for the Euro again. The Italian 2-year note yield has decreased to 1.438% (-0.7-bps) while the Spanish 2-year note yield has decreased to 2.433% (-4.3-bps). Similarly, the Italian 10-year note yield has decreased to 4.165% (-1.8-bps) while the Spanish 10-year note yield has decreased to 4.998% (-4.1-bps); lower yields imply higher prices. Read More Jan 24, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 26, 2013 Author Share Posted January 26, 2013 OctaFX.Com - Forex: Dollar - Either Greenback or EUR/USD Rally Must Surrender Dollar: Either Greenback or EUR/USD Rally Must Surrender Fundamental Forecast for US Dollar: Bullish House of Representatives passes extension on US debt ceiling US Federal Reserve’s balance sheet overtakes $3 trillion for the first time Weekly technical patterns show a serious test of resistance above for EURUSD There was an unusual contrast this past week where the EURUSD advanced to its highest weekly close in 11 months at the same time that the Dow Jones FXCM Dollar Index (ticker = USDollar) ended the period at a 6-month high. A positive correlation between the world’s most liquid currency and most heavily traded pair is extraordinary. And, ‘extraordinary’ doesn’t last in the markets. Therefore, one of the critical questions facing FX traders is whether the dollar’s individual strength or the EURUSD’s striking rally will break first. Before wading into time frame and catalysts for the inevitable reconciliation, we should first understand how the positive correlation between EURUSD and the USDollar Index developed and why it is usual. EURUSD is the most heavily traded currency pair in the Forex market and naturally the euro is the dollar’s primary counterpart. Therefore, its advance speaks to a serious depreciation of the greenback. However, the USDollar Index is an equally-weighted measure of EURUSD, GBPUSD, AUDUSD and USDJPY. The blend is partially meant to expose the dollar’s various roles (safe haven, funding currency, financial appeal, etc). So, between these two, we see that the dollar is itself strong, but the euro happens to be just strong enough to outpace the reserve when set side-by-side. There are a few ways that this aberration is resolved. The most dramatic conciliation would be through a sudden shift in risk appetite trends. To this point, there seems to be rather solid evidence that investor optimism is humming. The benchmark S&P 500 US equity index advanced to a five-year high (by running an 8-day rally which itself is unseen since 2004) this past week. Meanwhile, the carry trade favorite yen crosses have surged to multi-year highs of their own. And all of this has occurred as volatility indexes (measures of ‘fear’) slid down to five-year lows of their own. Yet, in that assessment of strength, there are a number of unusual counterpoints. While equities have moved to new highs, participation – measured by volume – this past week was the lowest (excluding holiday periods) in over a decade. Carry trade interest outside of the yen crosses (such as AUDUSD) has proven remarkably lax. And, the balance between market-based yields and risk speaks suggest investors have to take a speculative leap to put their capital to work. Partly, this contrast exists because the influence of standard ‘risk appetite’ has eased – allowing other factors (like competitive stimulus efforts) take over. Yet, should conviction return to the balance of greed and fear, those correlations will snap back into place. We have a number of catalysts in the week ahead that we can look to for tangible influence over the dollar and broader investment trends. At the top of the list is the Federal Open Market Committee’s (FOMC) rate decision. The US central bank announced its plans for cumulative $85 billion-per-month purchases of Treasuries and mortgage backed securities (MBS) – cementing the US as the most pervasive and active stimulators in a market of easing. That said, we have heard from the group that the effort could be tapered or ended well before the end of the year. After the report of significantly LTRO repayments in the Eurozone (a reduction in stimulus), the market will be watching. More stimulus supports risk taking while simultaneously increasing the US money supply – a double blow for the dollar. The Fed’s policy bearing carries further repercussion as the market becomes more fully mindful of competitive easing (also termed ‘Currency Wars’) even if officials say this is not the objective. If the Fed takes a status quo approach, we may have to defer to other catalysts. The 4Q US GDP figure will be a big ticket item. The IMF downgrade not only US growth forecasts this past week, but those for much of the developed world as well. A significant miss here could bring an otherwise conveniently, overlooked problem to the forefront. January nonfarm payrolls (NFPs) carry a similar weight. As one of the key targets for policy moving forward (the Fed is targeting a 6.5 percent jobless rate), employment data can carry stir stimulus and thereby risk expectations on a substantive surprise. Jan 26, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 28, 2013 Author Share Posted January 28, 2013 OctaFX.Com - Euro, shares stall as investors turn cautious LONDON (Reuters) - Rallies in European shares and the single currency stalled on Monday after strong gains last week as investors awaited confirmation that financial market conditions and the outlook for the euro area have improved. Investor sentiment rose strongly on Friday after data showed European banks would repay more than expected of the emergency loans they borrowed from the European Central Bank (ECB) and that business sentiment in Germany was improving sharply. A solid start to the corporate earnings season has also helped send many equity indexes to pre-financial crisis highs, with the Standard & Poor's 500 index closing last week at its highest level in over five years. In the equity markets Europe's FTSEurofirst 300 index (.FTEU3) shed 0.1 percent in early trade to 1,173.87 points, leveling off near its highest level for almost two years, though traders said there was still strong underlying demand. "All European benchmarks are at their 2012-2013 highs. Every time there's even a slight pull-back, the buying pressure comes in," Aurel BGC chartist Gerard Sagnier said. The market's cautious mood on Monday also followed a weaker session in Asia, where falls in technology companies saw the MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> drop 0.4 percent. The euro held near an 11-month high against the dollar $1.3440 Meanwhile, German government bond futures, a key gauge of investor sentiment, continued to ease, slipping a further 7 ticks to 142.40 (FGBLc1) on Monday, and gold is languishing near a two-week low as hopes for an economic recovery worldwide dampen the metal's appeal as a safe haven. Investors are keenly awaiting the ECB's monthly data on bank lending to companies and consumers, due later, for confirmation that growth is returning to the economy. Italy will also provide a test of investor sentiment when it auctions almost 7 billion euros ($9.4 billion) of 2-year and 5-year bonds. However, the main focus for investors this week will be on the U.S., where the Federal Reserve's Open Market Committee meets on Tuesday and Wednesday, and where the nonfarm payrolls report is due out on Friday. Oil prices were being held in check by the events coming up in the U.S., with Brent crude unchanged at $113.28 a barrel, while U.S. crude rose 17 cents to $96.05 after seven straight weekly gains - the longest such streak since early 2009. Jan 28, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
OctaFX_Farid Posted January 28, 2013 Author Share Posted January 28, 2013 OctaFX.Com - Forex Analysis: British Pound Sinks as Carney Hints at More Easing The British Pound fell following comments from soon-to-be Bank of England Governor Mark Carney suggesting he will pursue further monetary easing. Talking Points British Pound Sinks as Carney Hints at Further Easing Ahead US Durable Goods Orders Data May Disappoint Expectations Caterpillar Q4 Report Headlines Corporate Earnings The British Pound broadly under-performed in overnight trade, down against its top counterparts. The sell-off followed comments from incoming Bank of England Governor Mark Carney, who is due to replace the current BOE chief Mervyn King in July. Carney said central banks have not “maxed out” the possibilities for further stimulus and may do more, stressing the need to achieve “escape velocity” as developed economies struggle to pick up pace in the aftermath of the Great Recession. The remarks hinted that Carney will pursue further accommodation when he takes the reins at Thread-needle Street. A quiet economic calendar in European hours is likely to see Forex traders looking ahead to the US data docket for directional guidance. December’s Durable Goods Orders report is in focus, with economists forecasting a 2 percent month-on-month increase, yielding the largest increase in three months. US releases have increasingly fallen short of expectations since late December (according to data from Citigroup) however, warning of a vulnerability to downside surprises as the markets’ outlook is adjusted lower. Pending Home Sales and the Dallas Fed’s Manufacturing Activity Survey are also on tap, with softer outcomes penciled in for both. On the corporate earnings front, cycle-sensitive Caterpillar Inc is due to report fourth-quarter results. Expectations suggest sales fell 2.3 percent compared with the third quarter while earnings declined from $2.260 to $1.703 per share. Traders are likely to be most concerned with the company’s guidance however as they continue to build the outlook for global growth against a backdrop of lingering uncertainty on the US fiscal policy front. Indeed, while forecasts from the IMF, the World Bank and private-sector economists (as polled by Bloomberg) argue for a modest pickup in 2013, a large dose of austerity from Washington DC may meaningfully change the landscape. Jan 28, 2013 OctaFX.Com News Updates Quote Link to comment Share on other sites More sharing options...
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