Key Overnight Developments Swiss Franc Underperforms as Korea Conflict Fears Subside Australian Dollar Weaker as Prices Retrace NY Session Gains Japan’s Trade Balance Surplus Widens as Imports Soften Critical Levels The Euro and the British Pound kept to narrow ranges in Asian trade, with sterling spiking higher only late into the session after the Bank of England’s Andrew Sentence – the standby hawk on the rate-setting MPC committee – said policymakers need to gradually raise interest rates. We remain long the US Dollar against the Euro, Japanese Yen and New Zealand Dollar. Asia Session Highlights Corporate Service Price (YoY) (OCT) Merchandise Trade Balance Total (Yen) (OCT) Adjusted Merchandise Trade Balance (Yen) (OCT) Merchandise Trade Exports (YoY) (OCT) Merchandise Trade Imports (YoY) (OCT) BOJ’s Nakamura Speaks on Japanese Economy Private Capital Expenditure (3Q) Currency markets saw quiet trade in overnight hours, with the Swiss Franc underperforming the majors having surged earlier in the week as geopolitical fears eased amid fading concerns about an escalation of violence between the Koreas. The Australian Dollar also tipped lower, retracing some of its recent gains having followed Wall Street higher in North American trade. Japan’s Merchandise Trade Balance surplus undershot expectations, printing at 821.9 billion yen in October. While this marks an improvement in the headline reading from the previous month, the outcome seems far from encouraging considering it comes courtesy of the weakest import growth in 10 months as opposed to robust overseas sales. Indeed, exports grew at an annual pace of just 7.8 percent, the weakest since November 2009. Given strongest Yen in over a decade, which ought to boost imports, such dismal figures seem to point to little more than the anemic state of Japanese domestic demand, reinforcing deflationary pressure and keeping the perennial low-yielder’s funding currency status firmly intact for the foreseeable future. Euro Session: What to Expect French Consumer Confidence Indicator (NOV) Italian Business Confidence (NOV) All eyes are focused on Ireland, with the ruling Fianna Fáil party expected to do poorly in a by-election in Donegal South West. This would reduce the government’s majority in the lower house of parliament (the Dáil) from three to two seats, making the possibility that the current administration will lose support before the budget vote on December 7 more likely. While the markets have arguably priced in the loss already considering it has been well-telegraphed in recent polls, a particularly skewed outcome in favor of the opposition may stoke risk aversion and compound selling pressure on the Euro. The data docket looks lackluster, with third-quarter Swiss Employment figures amounting to the only bit of notable event risk. Turning to sentiment, stock index futures tracking the major European bourses are ticking higher ahead of the opening bell, hinting risk-correlated currencies may find a bit of support, absent shocking news out of Ireland of course. For real time news and analysis, please visit http://www.dailyfx.com/real_time_news To receive future articles by email, please contact Ilya at ispivak@dailyfx.com
Thursday, 25 November 2010
Tuesday, 23 November 2010
Forex: Euro, British Pound To Face Headwinds As Risks For Contagion Intensify
By David Song, Currency Analyst Mon Nov 22 12:30:00 GMT 2010 
Talking Points
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Monday, 22 November 2010
Kiwi Stands Out in Early Monday Trade; Euro Bid on EU/IMF Bailout
An interesting and exciting start to the week, with currencies trading all over the place and in different directions on the back of varying market drivers. The Euro has jumped out to some early gains on Monday with the weekend news of an EU and IMF bailout for Ireland of some Eur80-90B helping to bolster sentiment in the region. However, there are those who feel that the need for the bailout should be viewed as more of a net negative, with fears now spreading to other beleaguered economies within the Eurozone. Much of the attention from those with such views has no shifted over to Portugal, and it will be interesting to see how things play out and if indeed the Euro can sustain the positive momentum from the bailout news. We continue to find it quite amusing that we now live in a world where news that recognizes major setbacks within the global economy is recognized with a positive sentiment reaction. Whether it is the latest bailout of Ireland, or the announcement from the Fed of more quantitative easing, the markets continue to translate these distressing actions as risk positive which continues to leave us highly concerned and distraught. Another big story on the day has come out of New Zealand, with Kiwi getting slammed across the board following the news that S&P has revised its foreign currency sovereign debt outlook from “stable” to “negative.” The rating agency cited New Zealand’s “vulnerability to external shocks, arising from its open and relatively undiversified economy” as the main source for its concern. Interestingly enough, we have gone ahead and initiated a position in the Kiwi, but our position is long Kiwi against the Australian Dollar. The Aud/Nzd cross has jumped well over 200 points on the day to more than double its average daily true range, leaving the hourly RSI above 80. This suggests that at a minimum we should see some form of a corrective move following the parabolic price action, and as such, the short trade makes sense. Fundamentally, New Zealand’s banking sector is largely owned by Australian banks and we contend that any fallout in New Zealand from the rating agencies could very well be a red flag for the Australian economy. Recent tightening actions in China should also not be ignored, and Australia is far more exposed to the fallout from such actions which ultimately will curb growth and force a material slowdown in the overdone Australian economy. This further supports our current Aud/Nzd short position. Looking ahead, the European session is very quiet on the economic release front, with the only noteworthy data series coming in the form of some Swiss money supply due at 8:00GMT. Eurozone consumer confidence (-10 expected) is due out in North American trade at 15:00GMT, but not before the release of the only US data in the form of the Chicago national Fed activity index at 13:30GMT. On the official circuit, ECB President Trichet delivers his annual report at 15:00GMT, while Fed Kocherlakota speaks in South Dakota at 18:30GMT. US equity futures and commodities prices are fairly well bid on the day. Written by Joel Kruger, Technical Currency Strategist If you wish to receive Joel’s reports in a more timely fashion, email jskruger@fxcm.com and you will be added to the distribution list. If you wish to discuss this or any other topic feel free to visit our Forum Page.
Friday, 19 November 2010
Gold - FOREX Correlations Strengthen as Ireland Fuels Risk Aversion
Gold has been receiving an increasing amount of attention recently as the metal soars to new record levels. But you don’t have to trade gold to benefit from the metal’s recent volatility. In fact, many of the popular currency pairs have been moving in tandem with gold, offering forex traders an opportunity to piggyback on the uptrend or bet against it, with the added benefit of trading within the world’s deepest and most liquid market. The following table includes the correlation between gold and the most popular currency pairs over various timeframes. A value close to +1 indicates a strong positive relationship between gold and the pair, while a value close to -1 indicates a strong negative relationship. --------------------------------------------------------------------------------------------------------------------------------- Weekly Commentary: Gold – Forex correlations strengthened across the board this week, with intraday correlations in particular making a huge comeback. News flow was dominated by developments in the Irish debt crisis, which led to risk aversion across all financial markets. Some readers may recall that the situation in Ireland began to impact markets as far back as last week, but at that time the damage was limited to the Euro. The U.S. dollar continued to fall against other currencies, while gold hit a new record high. Thus, we saw the correlation between gold and EUR/USD weakened significantly, while that between gold and the other pairs held firm. But that was last week. This week EUR/USD continued to fall, but this time other dollar-rivals joined in the declines. Gold fell sharply as well. That has allowed the correlation between EUR/USD and gold to rebound notably. At the same time, gold’s correlation between other pairs strengthened even further. That being said, now is probably not the time to jump into EUR/USD for proxy gold exposure. The long-term relationship between the Euro and gold is highly unstable, and the fundamentals do not support a strong positive correlation. Gold is garnering support from the view that it is a safe haven against the debauchment of fiat, or “paper,” currencies. Like in the United States, monetary policy in the Eurozone is extremely loose, which leads to a weaker currency all else equal. Instead, traders should continue to look to the commodity currencies which are benefitting from much tighter monetary conditions. AUD/USD in particular looks compelling as it is bolstered by the highest overnight interest rates of all the majors, as well as the prospect of further tightening of monetary conditions in the future. The pair saw its daily correlation with gold strengthen to 0.79 from 0.77 last week, while the 60-minute intraday correlation rose to 0.84 from 0.66. 
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Gold ETF holdings fell for the fourth time in five weeks, while gold tumbled almost $95 peak-to-trough from last week’s record level of $1424.60. Although prices have rebounded from the recent lows under $1330, we can’t help but wonder if the advance is getting long in the tooth. ETF holdings are near levels they were at back in July, but gold prices are $100 higher than they were at that time. Over the last several years we have observed an extremely strong relationship between these two variables, thus caution is warranted. Nevertheless, there is always the possibility that demand is coming from other segments of the gold market such as the physical investment side, which we cannot measure in real-time.
--------------------------------------------------------------------------------------------------------------------------------- Gold ETF holdings fell for the fourth time in five weeks, while gold tumbled almost $95 peak-to-trough from last week’s record level of $1424.60. Although prices have rebounded from the recent lows under $1330, we can’t help but wonder if the advance is getting long in the tooth. ETF holdings are near levels they were at back in July, but gold prices are $100 higher than they were at that time. Over the last several years we have observed an extremely strong relationship between these two variables, thus caution is warranted. Nevertheless, there is always the possibility that demand is coming from other segments of the gold market such as the physical investment side, which we cannot measure in real-time. Thursday, 18 November 2010
Greenback to Take A Hit on Friday As Investors Digest Latest Fed Speech
By Joel Kruger, Technical Strategist Fri Nov 19 06:36:00 GMT 2010 Fed Chair Bernanke has been under some intense scrutiny over the past several days, with pressure and criticisms on the latest injection of liquidity into the system coming both domestically and internationally. Most recently, a letter from the Republicans calling into question the current ultra-accommodative policy has been getting a lot of attention, and the Fed has been forced to step up and defend its actions. The Fed has released the prepared text of a speech the Fed Chair is set to deliver at the European Central Bank conference in Frankfurt today, and the message is clear. The central bank will continue with the current policy as it is the only way to help the economy recovery from the latest crisis. There are two key takeaways from the speech. The first is that the central bank will continue to lower long-term rates, and the second is that foreign central banks are interfering with the Fed’s current policy through intervention efforts to weaken their own currencies.
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Crude Oil Wipes Out November Rally Despite Plunge in Inventories, Gold Falls for a Fourth Day but Rebounds Overnight
Commodities – Energy Crude Oil Wipes Out November Rally Despite Plunge in Inventories Crude Oil (WTI) - $80.91 // $0.47 // 0.58% Commentary: Crude oil fell for a fourth day in a row despite a steep drop in U.S. crude oil inventories. The move in crude was interesting considering that U.S. equity markets were virtually flat the entire day. Crude was down between $0.50 and $1.00 before the inventory report, proceeded to rally up to unchanged after the numbers, and then sold off for the rest of the day to end down $1.90, or 2.31%, to $80.44. Crude has virtually wiped out this month’s entire run. We can only speculate as to why crude underperformed to such a degree on Wednesday. OPEC could be keeping a lid on prices by raising production, or the impact from the diesel-related spike in demand from China could be abating as imports make their way to the region. We have seen crude oil imports into the U.S. plunge in recent weeks, with distillate imports in particular virtually disappearing, which could be an indication that supply has simply been shifted from North America to Asia. As we said in our latest report on petroleum inventories: “Imports remain extremely depressed and fell further last week to the lowest since 1997. Such a low level of imports is likely a function of weak demand rather than tight supply. U.S. inventories were and still remain extremely elevated—especially on the product side. Thus, we have seen refineries cut production to bring stocks to more normal levels. Imports fell as refineries demanded less crude. Furthermore, a spike in diesel demand in China has led to premium pricing in that part of the globe, which is another factor that has led to reduced volumes coming into the U.S. Indeed, we have seen U.S. distillate imports completely evaporate, but even so, stocks remain more than ample.” Technical Outlook: Prices have continued to tumble, with the bears just a hair away from challenging the horizontal barrier at $79.49. A break below this boundary exposes a rising trend line set from May’s spike low, now at $77.04. Near-term resistance remains at $83.27. 
Commodities – Metals Gold Falls for a Fourth Day but Rebounds Overnight Gold - $1348.20 // $12.20 // 0.91% Commentary: It’s been awhile since gold fell four days in a row, but that was the case on Wednesday as the metal shed another $3.70, or 0.28%, to settle at $1336. It was a day of pause for the rally in the U.S. dollar as the currency fell just slightly versus most of its rivals. Tomorrow we will publish our weekly Gold – Forex Correlations report and all indications are that the numbers will show that this week was another in which gold and the dollar held true to their inverse relationship. Now that gold prices are $90 below last week’s all-time highs, some may be anxious to dip their toes into the water. We would be extremely cautious here, however, for the potential downside remains significant. Consider that it was less than two months ago that gold first surpassed $1300. Meanwhile, gold ETF holdings have risen only slight over the last five months. Technical Outlook: Prices have stalled above support at $1322.39, the 38.2% Fibonacci retracement for the 7/28-11/9 advance. Near-term resistance stands at a previously broken rising trend line set from late July, now at $1358.96. Alternatively, renewed selling pressure that takes prices through current support will target the 50% Fib at $1290.81. Silver - $26.18 // $0.54 // 2.11% Commentary: Silver again bucked the trend in gold prices to advance $0.16, or 0.62%, to settle at $25.63. From peak-to-trough silver had fallen from $29.36 to $24.99, or 15% in a little over one week. A bounce is to be expected, but given how frothy silver remains, it will likely be some time before prices make another significant run higher. The gold/silver ratio fell to 51.5, but remains higher than levels earlier this month near 50. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance while a lower ratio indicates silver outperformance). Technical Outlook: Prices are testing higher through resistance at 26.10, the 50% Fibonacci retracement of the 10/22-11/09 upswing. A daily close above this juncture exposes the 38.2% Fib at $26.87. Near-term support stands at $25.33, the 61.8% level, with a reversal lower through this boundary exposing the 76.4% Fib at $24.37. 
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Commodities – Metals Gold Falls for a Fourth Day but Rebounds Overnight Gold - $1348.20 // $12.20 // 0.91% Commentary: It’s been awhile since gold fell four days in a row, but that was the case on Wednesday as the metal shed another $3.70, or 0.28%, to settle at $1336. It was a day of pause for the rally in the U.S. dollar as the currency fell just slightly versus most of its rivals. Tomorrow we will publish our weekly Gold – Forex Correlations report and all indications are that the numbers will show that this week was another in which gold and the dollar held true to their inverse relationship. Now that gold prices are $90 below last week’s all-time highs, some may be anxious to dip their toes into the water. We would be extremely cautious here, however, for the potential downside remains significant. Consider that it was less than two months ago that gold first surpassed $1300. Meanwhile, gold ETF holdings have risen only slight over the last five months. Technical Outlook: Prices have stalled above support at $1322.39, the 38.2% Fibonacci retracement for the 7/28-11/9 advance. Near-term resistance stands at a previously broken rising trend line set from late July, now at $1358.96. Alternatively, renewed selling pressure that takes prices through current support will target the 50% Fib at $1290.81. Silver - $26.18 // $0.54 // 2.11% Commentary: Silver again bucked the trend in gold prices to advance $0.16, or 0.62%, to settle at $25.63. From peak-to-trough silver had fallen from $29.36 to $24.99, or 15% in a little over one week. A bounce is to be expected, but given how frothy silver remains, it will likely be some time before prices make another significant run higher. The gold/silver ratio fell to 51.5, but remains higher than levels earlier this month near 50. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance while a lower ratio indicates silver outperformance). Technical Outlook: Prices are testing higher through resistance at 26.10, the 50% Fibonacci retracement of the 10/22-11/09 upswing. A daily close above this juncture exposes the 38.2% Fib at $26.87. Near-term support stands at $25.33, the 61.8% level, with a reversal lower through this boundary exposing the 76.4% Fib at $24.37. For real time news and analysis, please visit http://www.dailyfx.com/real_time_news To receive future articles by email, please contact Ilya at ispivak@dailyfx.com FOREX: Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation
By John Kicklighter, Currency Strategist 18 November 2010 03:22 GMT Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation Euro Buys Time with Irish Bailout Rebuke but Region-Wide Troubles will Force the Issue British Pound Traders Find Little Confidence in Employment Figures, What about Deficit Progress? Canadian Dollar Prepares for Capital Flows, Growth Forecast and BoC Quarterly Review New Zealand Dollar Boosted by Accelerated Inflation and Improved Consumer Confidence Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation
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Nov, 17 02:36 GMT FOREX: Dollar Rally Fortified by Crucial Reversal in S&P 500, Risk AppetiteNov, 16 02:36 GMT FOREX: Dollar Index Scores a Meaningful Bullish Breakout but European Issues, Risk Trends Still BlurredNov, 13 04:27 GMT FOREX: Dollar Ready to Rally as Europe Devolves into Crisis, G20 Sanctions Speculative Capital CurbsNov, 12 02:36 GMT FOREX: Dollar Finds Traction but Momentum Requires Risk Trends, G20 Surprises or Euro WeaknessNov, 11 02:36 GMT FOREX: Dollar Climb Winded as Reserve Diversification Calls Grow ahead of G20, Fed Reminds of QE2// SET PAGE PROPERTIESvar sProperties = new Object();sProperties.server = '2.6';sProperties.channel = 'Fundamental: Daily Fundamentals'; // Pass page properties to Omnitureif (typeof sProperties != 'undefined') {for (var sProperty in sProperties) {s[sProperty] = sProperties[sProperty];}}var s_code=s.t(); if(s_code) document.write(s_code);
Wednesday, 17 November 2010
Crude Extends its Tumble as Growth Cools, Gold Stalls on Euro Troubles
By John Kicklighter, Currency Strategist Thu Nov 18 00:16:00 GMT 2010 North American Commodity Update
Chart generated using FXCM Strategy Trader Commodities - Metals Gold Little Moved After Critical Break as Investors Wait for the Next Shoe to Drop Spot Gold - $1,336.00 // -$3.70 // -0.28% Though it would put in for a fourth consecutive loss, gold was still looking at a far more reserved decline through Wednesday’s close. This tempered pace fits both a fundamental pause from the speculative ranks and a meaningful technical backdrop. For guidance on the supply and demand course, the ‘alternative asset’ value for the metal was little changed as other gauges for sentiment trends were similarly little changed for the day. From price action, the break of the three-and-a-half month rising trend channel yesterday doesn’t mean the market is in free fall. The past month, the metal has developed a frequented level of support around 1,320 and there is still a range of short-term term rising trendlines to fall back on. Yet, despite the technical levels that exist, fundamental and sentiment concerns can easily drive this market to resume its plunge or otherwise completely reverse the losses of the past week. There are many general financial and economic concerns that quickly puts the metal’s safe haven appeal and alternative asset value back to work. European developments are still at the forefront. However, with Ireland’s decision to not ask for financial aid at the monthly EU meeting, the region is floating in limbo. Nevertheless, EU, IMF and ECB members are scheduled to travel to Ireland and comb the nation’s finances to see if its banking system can stand up by itself. A passing or failing grade will be delivered soon. In the meantime, clearing housings for investors that are trading Ireland’s debt are boosting margin and there is concern that support for Greece’s bailout program is disintegrating. State-side, the US saw inflation trends cool to the lowest level on records going back half a century. This curbs the appeal of gold as an inflation hedge on the one hand but confirms the devaluing effects of Fed stimulus on the other hand. And, in Asia, investors are waiting to see what measures China will take towards cooling rampant inflation. This could curb speculative turnover globally and lower the risk of financial crisis from this particular region. In addition to the big, intangible themes, we can see there is still a supply and demand influence on price. The World Gold Council released its 3Q market outlook with projections for demand growing through jewelry use, institutions, central banks and industrial. At the same time, the supply trend is also seen rising in the months ahead. One highlight for demand however shows India’s imports have through the first three quarters already overtook the total consumption of 2009 at 624 tons. Meanwhile, total ETF demand was little changed for the day. Spot Silver - $26.17 // $0.53 // 2.07% Wednesday’s performance for silver was essentially a mirror of the previous day. There was little progress made as volume on the active December contract dropped to its lowest level since November 2nd. Momentum has slowed on this metal’s decline for a number of days; yet it is still early to say whether this is simply a reduction in speculative interests after the increase in margin by the CME or a shift back towards optimism. Spot Gold Chart (Daily) 
Chart generated using FXCM Strategy Trader Discuss gold and oil trading with other traders in the DailyFX Forum Written by John Kicklighter, Strategist To receive John’s reports via email or to submit Questions or Comments about an article; email jkicklighter@dailyfx.com DailyFX provides forex news on the economic reports and political events that influence the currency market.
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Tuesday, 16 November 2010
FOREX: Euro and Pound Brace for EU Summit, Bank of England Minutes
By Ilya Spivak, Currency Strategist Wed Nov 17 06:47:00 GMT 2010 Key Overnight Developments
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Will The British Pound Hold Above 1.60 Ahead of the U.K. Jobless Claims and BoE Minutes?
U.K. Jobless Claims Change Survey: 6.0K Prior: 5.3K Fundamental Outlook Jobless claims in the U.K. are expected to rise 6.0K in October after climbing 5.3K the in September. At the same time, the unemployment rate is forecasted to remain unchanged at 4.5 percent, while the ILO unemployment rate during the three months through September is expected to show no change from the month prior. As public sector jobs and private employment likely scaled back during the month of October, market participants should not rule out a rise in the unemployment component. It is worth noting that the jobs report may be overlooked as the Bank of England minutes will be released alongside the labor force change. The minutes are expected to display another three way split amongst committee members. Andrew Sentance will likely call for a twenty five basis point rate hike in interest rates, while Adam Posen will push for an extra 50 billion pounds in asset purchases as the U.K. economy will face increased major hurdles in the upcoming months amid tough austerity measures. With the split among committee members likely to widen in the upcoming months, the British pound may witness increased volatility, and additional calls for a rate hike will provide GBP support. Join me to cover both events live! Technical Outlook GBPUSD Daily Chart 
Charts Created Using Intellicharts – Prepared by Michael Wright GBPUSD: The pair has extended its two day decline during the overnight trade, but downside risks remain capped by the key 1.60 barrier. Meanwhile, technical indicators continue to point to further upside potential. The parabolic SAR signaled for gains on November 1st, and has yet to reverse course, while the MACD continues to point to further advancement in the pair. Indeed, our speculative sentiment index stands at 1.54 and signals for additional losses; however, I do not rule out a change sentiment in the near term as many traders as of late bet on a U.S. dollar rally. For More Technical Analysis Visit the DailyFX Technical Page.Written by Michael Wright, Currency Analyst To Receive Future Articles by Email, please contact me at mwright@fxcm.com Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Intraday Trading, Weekly Spotlight, and Forex Trading Weekly Forecast
Charts Created Using Intellicharts – Prepared by Michael Wright GBPUSD: The pair has extended its two day decline during the overnight trade, but downside risks remain capped by the key 1.60 barrier. Meanwhile, technical indicators continue to point to further upside potential. The parabolic SAR signaled for gains on November 1st, and has yet to reverse course, while the MACD continues to point to further advancement in the pair. Indeed, our speculative sentiment index stands at 1.54 and signals for additional losses; however, I do not rule out a change sentiment in the near term as many traders as of late bet on a U.S. dollar rally. For More Technical Analysis Visit the DailyFX Technical Page.Written by Michael Wright, Currency Analyst To Receive Future Articles by Email, please contact me at mwright@fxcm.com Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Intraday Trading, Weekly Spotlight, and Forex Trading Weekly Forecast Monday, 15 November 2010
Greenback Off to Solid Start in Early Week; Yen Extends Declines
By Joel Kruger, Technical Strategist Mon Nov 15 06:05:00 GMT 2010 Price action in the early week has been USD positive thus far, with most of the major currencies marginally extending declines against the Greenback on the back of weaker risk appetite, and ongoing concerns over Eurozone sovereign debt issues. The latest headlines have Germany pushing Ireland to accept a bail-out package and help avoid contagion to Portugal and Spain, and this will be a critical theme over the coming sessions.
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USD Graphic Rewind: Dollar Index Starts the Week Brightly As Ireland Remains Under the Cosh
The dollar index had a choppy day of trade Friday as fears of further Chinese tightening weighed heavily on the Shanghai Composite and dragged global equities lower. The dollar however, was not as broadly bid as one may have expected in such risk averse times as some investors took the change to book profit on recent euro short positions off recent highs. Despite the choppy trade the index managed to eke out a positive close capping its best week since early August. Over night the dollar has found itself happily bid as the yen weakens after Japan’s third-quarter GDP beat expectations lifting risk appetite. The euro also remains under mild pressure despite the fact that Ireland continues to refuse offers from the EU and IMF for financial aid. Concerns over EMU sovereign debt and fears surrounding potential Chinese tightening are likely to be the dominant themes early this week, both of which should be bullish for the dollar. Turning to technical’s for a moment, the fact that the index failed to close above 78.30 on Friday has us a little concerned that we may stall out around this level if dollar gains don’t get moving again. We remind readers we were looking for a close and break above 78.30 as a signal that a short-term double-bottom is in place and the index can/will accelerate gains, failure to do so would negate, or at least seriously question this outlook and further significant dollar gains. Written by Jonathan Granby, DailyFX Research Team If you wish to receive Joel’s reports in a more timely fashion email jskruger@fxcm.com and you will be added to the distribution list. If you wish to discuss this or any other topic feel free to visit our Forum Page. DailyFX provides forex news on the economic reports and political events that influence the currency market.
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Friday, 12 November 2010
Gold - FOREX Correlations Reveal a Startling Divergence
By Sumit Roy, Fri Nov 12 02:36:00 GMT 2010 Gold has been receiving an increasing amount of attention recently as the metal soars to new record levels. But you don’t have to trade gold to benefit from the metal’s recent volatility. In fact, many of the popular currency pairs have been moving in tandem with gold, offering forex traders an opportunity to piggyback on the uptrend or bet against it, with the added benefit of trading within the world’s deepest and most liquid market.
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Gold ETF holdings rose for the first time in four weeks, but just barely. Prices continued their ascent, surpassing $1400 for the first time ever as momentum established after last week’s Fed policy meeting continued to boost prices. In the short-term, it looks as if the correlation between gold ETF holdings and gold prices has completely broken down, but we would remind readers that over the longer-term, there is an extremely strong relationship between holdings and prices; caution is thus warranted. DailyFX provides forex news on the economic reports and political events that influence the currency market.
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Wednesday, 10 November 2010
Will A Disappointing Australian Employment Report Lead the AUDNZD To Test 1.28?
AUD Employment Change (00:30 GMT) Survey: 20.0K Prior: 49.5K Fundamental Outlook Employment in Australia is expected to rise 20.0K in October after advancing 49.5K the month prior. At the same time, the unemployment rate is forecasted to drop to 5.0 percent from 5.1 percent in September. Indeed, the labor force has added approximately 30.0K jobs since the beginning of the year, which is positive for growth. At the same time, the increase in help-wanted ads in the region provides signals that employment will unlikely lose momentum as employers add onto their payrolls to meet rising demand. The report is of great importance due to the fact that an advances in employment typically leads to increased household spending, which is indicative of inflationary pressures. The Reserve Bank of Australia recently raised its key overnight lending rate twenty five basis points to 4.75 percent as the central bank tackles rising inflationary threats. In turn, an employment report exceeding economists’ estimates of 20.0K may lead the Aussie to push higher against most of its counterparts, while a disappointing result will lead interest rates expectations to push lower, and at the same time validate my bearish bias for the AUDNZD. Technical Outlook AUDNZD Daily Chart 
Charts Created Using Intellicharts – Prepared by Michael Wright AUDNZD: The pair has halted its two day advance and now looks poised to retest 1.2800 in the upcoming days as technical indicators continue to point to further losses. The MACD has yet to reverse course, while upside risks remain capped by the 50-day moving average. Meanwhile, the parabolic stop and reverse signaled for losses on October 29th. Going forward, I do not rule out a test back towards 200-day moving average as the trend continues to the downside. For More Technical Analysis Visit the DailyFX Technical Page Written by Michael Wright, Currency Analyst To Receive Future Articles by Email, please contact me at mwright@fxcm.com Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Intraday Trading, Weekly Spotlight, and Forex Trading Weekly Forecast
Charts Created Using Intellicharts – Prepared by Michael Wright AUDNZD: The pair has halted its two day advance and now looks poised to retest 1.2800 in the upcoming days as technical indicators continue to point to further losses. The MACD has yet to reverse course, while upside risks remain capped by the 50-day moving average. Meanwhile, the parabolic stop and reverse signaled for losses on October 29th. Going forward, I do not rule out a test back towards 200-day moving average as the trend continues to the downside. For More Technical Analysis Visit the DailyFX Technical Page Written by Michael Wright, Currency Analyst To Receive Future Articles by Email, please contact me at mwright@fxcm.com Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Intraday Trading, Weekly Spotlight, and Forex Trading Weekly Forecast Thursday, 4 November 2010
Dollar steady but seen undermined by Fed QE
* Dollar steady but QE likely to lead to further selling * Open-ended approach from Fed the key to further weakness * Euro/dollar option expiries set to influence price action * United States set for political gridlock after midterms. (Releads, changes dateline, adds quotes, previous SYDNEY) By Neal Armstrong LONDON, Nov 3 (Reuters) - The dollar held steady on Wednesday as the Federal Reserve looked set to add more stimulus to spur a flagging recovery, a move analysts said would weigh on U.S. yields and ultimately put more pressure on the greenback. Traders said the market was unwilling to make new bets ahead of the U.S. central bank's policy decision due at around 1815 GMT, with option expiries expected to dictate price action. Markets are generally priced for the Fed initially to commit to buying at least $500 billion in Treasuries over five months, although much uncertainty surrounds the scope and pace of bond purchases. "There is uncertainty over the details of the Fed announcement but ultimately QE leads to lower yields and should mean the dollar goes down in the long-term," said Adrian Schmidt, currency strategist at Lloyds Banking Group. The dollar was flat versus a currency basket at 76.714. The euro was also steady around $1.4030, with traders highlighting option expiries at $1.3990, $1.4000 and $1.4050 which they said were likely to influence price action on the day. Against the yen, the dollar stood at 80.62 yen, unchanged on the day, as a Japanese holiday led to subdued trading, but the outlook was still skewed to the downside. "Irrespective of recent ratcheting down of Fed QE2 expectations from $1 trillion to $500 billion, a likely open-ended approach (of say $100 billion per month) should in our view keep (the dollar) on a depreciation path," said Tom Levinson, currency strategist at ING in a note to clients. "An absence of BOJ asset purchases of a similar scale together with USD/JPY's strong correlation with U.S. Treasury yields will keep the former biased lower." Dollar/yen hovered close to this week's 15-year low of 80.21, with all-time lows at 79.75 also close by, as the market stayed sensitive to potential for fresh Japanese intervention to stem the yen's rise. After a fall overnight, however, the U.S. dollar showed signs of steadying, with traders saying the Republicans' seizing control of the U.S. House of Representatives in midterm elections would provide some support. The Democrats were set to hang on to the Senate, according to television projections. Some analysts said a split Congress may act as a curb on government spending and lead to less government regulation. The high-flying Australian dollar retreated after a surprise 6.6 percent drop in building approvals, a day after the Reserve Bank lifted interest rates in a pre-emptive strike against inflation. The Aussie, which hit a 28-year high of $1.0025 on Tuesday, recoiled to $0.9979. Immediate support was seen at the $0.9910 area, Monday's high, a breach of which could see the currency back in consolidation mode between $0.9650 and $0.9850. (Additional reporting by Ian Chua in Sydney) 2010-11-03 11:19:23
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UPDATE 1-Egypt mulls U.S. dollar "century bonds" -minister
* Bonds would be denominated in dollars
* Would follow 30-year Eurobonds sold in April
By Patrick Werr
CAIRO, Nov 3 (Reuters) - Egypt is considering offers from international investment banks to launch 100-year "century bonds" that would help demonstrate appetite for longer-term Egyptian debt, the finance minister said on Wednesday.
Egypt has relied mainly on domestic debt to finance its budget deficit, which was equivalent to 8.1 percent of gross domestic product (GDP) in the financial year to end-June, but has occasionally dipped into international markets.
"I don't need the money, but we are thinking about it," Finance Minister Youssef Boutros-Ghali told Reuters by telephone.
He added that a number of investment banks had offered to manage the bond issue, which would be denominated in U.S. dollars.
The government has gradually been lengthening the maturity profile of its international debt, and in April sold $1.5 billion in Eurobonds with maturities of 10 and 30 years.
"Before, we couldn't issue a five-year note. In 2004, we tested the market and they said 'forget it'. Then we got a 10-year note, then a 30-year note," Boutros-Ghali said.
Egypt's reform-minded government has been working to reduce the country's budget deficit since it came into office in 2004, but was set back by the 2008 global economic crisis which prompted it to adopt a series of economic stimulus packages.
"We have a very careful borrowing policy that the government has set out," Boutros-Ghali said.
Egypt's economy, which was spared the worst of the global economic crisis that began in mid-2008, was buoyed last year by a resurgent tourism industry and Suez Canal receipts, along with resilient construction and gas exports. [ID:nLDE66J1R9] (Editing by Catherine Evans)
Rupee gains 0.10% against USD to 44.27
Rupee gains 0.10% against USD to 44.27
Source: IRIS (03-NOV-10) Indian rupee edged higher against the greenback in morning trade. Rupee was up 0.10% against USD to Rs 44.27 compared to previous close of 44.38. (09.37 a.m.)In the spot market, the Dollar Index increased 0.100% to 76.76. It touched a high of 76.81 and a low of 76.66 after opening at 76.69. (23:07 ET)Euro - USD was trading at 1.40 down 0.0017% while USD - Japanese Yen was trading at 80.66, up 0.0377%. (23:07 ET).
* Q - Quote , N - News , C - Chart , F - Financials
Source: IRIS (03-NOV-10) Indian rupee edged higher against the greenback in morning trade. Rupee was up 0.10% against USD to Rs 44.27 compared to previous close of 44.38. (09.37 a.m.)In the spot market, the Dollar Index increased 0.100% to 76.76. It touched a high of 76.81 and a low of 76.66 after opening at 76.69. (23:07 ET)Euro - USD was trading at 1.40 down 0.0017% while USD - Japanese Yen was trading at 80.66, up 0.0377%. (23:07 ET).
* Q - Quote , N - News , C - Chart , F - Financials
Wednesday, 3 November 2010
The Euro-Hollywood axis
VIENNA -- This summer, though it's my fifth in Europe, I have never felt closer to Hollywood. No, it's not the explosion of global day-and-date Hollywood releases.
It's not even the preponderance of Euro talent in the latest spate of summer B.O. behemoths, from the largely British lineup behind and in front of the cameras for the latest "Harry Potter," or the Teutonic helmers of "Troy" and "The Day After Tomorrow" or the many Brit/Euro voice talents in "Shrek 2."
It's one small, deceased Mittel-European thesp who would have been 100 on June 26: Peter Lorre.
This month, the Austrian Film Museum in Vienna is hosting a retrospective celebrating Lorre's birth in Ruzomberok, Slovakia, and his 30-plus years of film artistry, from his startling lead debut in Fritz Lang's German crime classic "M" (1931) to Jerry Lewis' antic Hollywood comedy "The Patsy" (1964).
Lorre's career reminds one that the importance of Europeans in the Hollywood filmmaking process is far from some new development of globalization. As historian Neil Gabler brilliantly explained in his tome "An Empire of Their Own," the town was invented by Jews from Eastern Europe, and it has always been enriched by the blending of Euro voices and visions into the Hollywood pic mix.
What would a Hollywood classic like "Casablanca" have been without the talents of its Hungarian helmer (Michael Curtiz), European cast (including Lorre, Ingrid Bergman, Conrad Veidt and Brits Claude Rains and Sydney Greenstreet) or composer Max Steiner and art director Carl Jules Weyl, to name a few?
Look at the Lorre filmography and you see an American/Euro mix of the greatest names in Hollywood helming: Huston, Hitchcock, Siegel, Negulesco, Walsh, Mamoulian, Borzage, Capra, Tourneur, Dieterle.
Ironically, in my search for someone to talk about the qualities that Europe's Lorre brought to his Hollywood projects, it is his American helmer/writer/co-star of "The Patsy," Jerry Lewis, who best articulates the Lorre touch.
That touch involved the ultimate European accessory: the cigarette.
"He was the immaculate professional," Lewis recalls. "He came prepared and gave you what you wanted. But he was a reclusive actor who worked behind a facade, and his cigarette was his greatest prop. Without it, he couldn't function."
Lewis says he conspired with other actors on the film to concoct a scene where one of the characters would grab the cigarette from Lorre's hand. "Lorre came to me in a panic and said, 'I will do anything you want, but please don't take my cigarette.' Everything was in that prop: how he lit it, when he lit it, how he smoked it and when. It was an adjunct of his personality."
With all of the actors at his disposal, why did Lewis hire Lorre? At that point in the thesp's career, personal problems had taken a severe toll on Lorre; he died shortly after completion of the film.
"The guy I wrote was Peter Lorre," Lewis says. "I needed this little obnoxious schmuck who showed as little emotion as possible while delivering a performance filled with emotion. If you didn't watch carefully, you didn't see it. I needed that guy from 'Casablanca.'?"
He meant that guy from Ruzomberok.
The Austrian Film Museum's Peter Lorre retrospective runs through June 20.
Asian stocks up, dollar on backfoot before Fed
LONDON (Reuters) - World stocks hit a fresh two-year high on Wednesday while emerging equities rose to their highest level since mid-2008 as investors anticipated further Federal Reserve monetary easing would support the global economy.
The Fed announces its monetary policy decision later on Wednesday. Markets are generally priced for the Fed to initially commit to buying at least $500 billion in Treasuries over five months.
MSCI world equity index .MIWD00000PUS rose as high as 320.05, bringing gains this year to nearly seven percent.
The MSCI emerging equities index .MSCIEF hit its highest since June 2008, as the prospect of further quantitative easing drives investors toward higher-yielding assets.
(Reporting by Natsuko Waki and Carolyn Cohn)
© Thomson Reuters 2010 All rights reserved.Rupee gains 12 paise against dollar in early trade
The Hindu : Business / Markets : Rupee gains 12 paise against dollar in early tradeArchivesSubscriptionsRSS FeedsSite MapePaperMobileSocialSEARCH
HomeNewsOpinionSportBusinessArtsLife & StyleS & TEducationHealthClassifiedsToday's PaperTopicsCompaniesEconomyIndustryMarketsStock Quotes Business» MarketsMumbai,November 3, 2010Rupee gains 12 paise against dollar in early tradePTIShare · print · The rupee strengthened by 12 paise to Rs 44.25 against the US currency at the Interbank Foreign Exchange market in the morning trade today, tracking dollar’s losses against other major currencies.Traders said besides dollar’s losses against the euro and other Asian currencies, fresh capital inflows into equities by foreign funds kept the rupee sentiment firm.The rupee had gained 10 paise to Rs 44.37/38 against the US currency in the previous session on dollar selling by banks and exporters as well as weak dollar overseas.Meanwhile, the Bombay Stock Exchange index Sensex rose by 175.23 points, or 0.86 per cent, to 20,520.92 in the opening trade today.
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HomeNewsOpinionSportBusinessArtsLife & StyleS & TEducationHealthClassifiedsToday's PaperTopicsCompaniesEconomyIndustryMarketsStock Quotes Business» MarketsMumbai,November 3, 2010Rupee gains 12 paise against dollar in early tradePTIShare · print · The rupee strengthened by 12 paise to Rs 44.25 against the US currency at the Interbank Foreign Exchange market in the morning trade today, tracking dollar’s losses against other major currencies.Traders said besides dollar’s losses against the euro and other Asian currencies, fresh capital inflows into equities by foreign funds kept the rupee sentiment firm.The rupee had gained 10 paise to Rs 44.37/38 against the US currency in the previous session on dollar selling by banks and exporters as well as weak dollar overseas.Meanwhile, the Bombay Stock Exchange index Sensex rose by 175.23 points, or 0.86 per cent, to 20,520.92 in the opening trade today. Keywords: Forex markets, Rupee, Dollar
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Kenyan shilling steady versus dollar, stocks down
NAIROBI (Reuters) - The Kenyan shilling held steady against the dollar on Wednesday, and traders said they expected it to firm in coming days, while most stocks on the Nairobi Stock Exchange's main share index were down. At 0855 GMT, commercial banks quoted the shilling at 80.45/55 to the dollar, unchanged from Tuesday's close. "There's not been much movement. Demand has remained light," said a senior trader at one commercial bank. The shilling is expected to trade in the 80.30-81.00 range in the next few days, traders said. The local currency is expected to get a further boost as the year draws to a close and importers demand fewer dollars. "We could see the local unit try to test new highs as importer appetite for the dollar diminishes," said Bank of Africa in a market report. "The local unit will continue being supported by strong inflows from tourism, tea and horticulture sectors, plus remittances from the diaspora and NGO (non governmental organisation) proceeds, all of which could give the local unit impetus to chart new levels." Latest central bank statistics show that in the first eight months of the year, total remittances stood at $402.9 million, up from $398.2 million in the same period in 2009. The government said last month that first half earnings from tourism rose 85 percent on last year, to 48.53 billion shillings, and that it was targeting earnings of 100 billion shillings for 2010, up from 62.46 billion shillings last year. On the Nairobi Stock Exchange, traders said share prices of most companies on the benchmark NSE-20 were down. "Most of the arrows are pointing downwards. There's a lot of profit taking," said Wycliffe Masinde, analyst at Kestrel Capital. The index closed 11.81 points, or 0.25 percent, higher at 4,686.98 on Tuesday. 2010-11-03 11:24:27
© 2010 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.
Philippines not going to fight peso's rise-official
MANILA, Nov 3 - The Philippines will not block the peso's strength even on concerns its surge to 2-? year highs against the dollar may undermine export competitiveness and remittances from Filipinos abroad, a government official said on Wednesday.
"The BSP is not going to fight the market," Ricky Carandang, one of President Benigno Aquino's spokesmen, told reporters.
"We know that the exporters are worried that it may have an impact. We know that overseas Filipinos are worried about that and we're starting to think of what can be done about it."
Last week, the central bank approved measures to encourage capital outflows and help temper peso's gains of more than 8 percent this year.
For a list of the changes in the foreign exchange rules approved on Thursday, click on [ID:nSGE69R0I4]
The central bank has said it was not considering capital controls, and said while the inflows could complicate policy settings it did not want to discourage investors as the country needs funds to upgrade infrastructure. [ID:nSGE69I0E6] There have been concerns the inflows, part of a global shift to emerging markets by investors, pose a risk by strengthening currencies and undermining export competitiveness and remittance inflows, a key driver of domestic consumption.
"The best that monetary officials can do is really to make sure that the fluctuations are not so violent or not so volatile," Carandang said.
"You cannot force your currency to where you want it to go. It's a function of market forces that are in many cases beyond our control. So maybe more coordination, more talks between central banks in the region and governments in the region."
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