Friday, November 28, 2008
Nov-28 World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Dollar reverses losses, euro falls broadly LONDON - The dollar gained traction against major currencies on Friday, rising as fears about the depth and breadth of a global recession reasserted influence on sentiment. Increased wariness of risk helped push European shares into negative territory , while the low-yielding yen gained ground. The euro faced broad pressure with tumbling euro zone inflation seen leaving the European Central Bank with room to cut interest rates more aggressively from the current benchmark rate of 3.25 percent. Provisional figures showed euro zone annual inflation plunged to 2.1 percent in November from 3.2 percent in October. "Shares are struggling and clearly this is related to risk aversion. Unless we get more durable equity support then the trend for dollar and yen gains will probably be the order for the day," Rabobank currency strategist Jeremy Stretch said. Traders also said talk of sizeable month-end dollar buy-orders at the London 1600 GMT currency fixing was adding support to the U.S. unit. By 1119 GMT, the dollar was 0.1 percent higher against a basket of six major currencies at 85.870 .DXY, while the euro fell 0.4 percent to $1.2834. The single currency dropped 0.7 percent to 122.22 yen, while the dollar dipped 0.1 percent to 95.21 yen. Activity was thinner ahead of the U.S. market open later in the day after the Thanksgiving holiday. Looking ahead to next week, market participants were bracing for interest rate decisions by several central banks next week, including the Bank of England, the European Central Bank, the Reserve Bank of Australia and the Reserve Bank of New Zealand. Calyon strategists said in a note to clients that while European sentiment continued to point to weak growth, the ECB might still opt for a more measured approach to monetary policy. "We still suspect that the Governing Council will plump for a 50 basis point cut next week, suggesting that policy disappointment could weigh on the euro toward the end of next week," they added. For the UK, economists polled by Reuters on Thursday expect the BoE will follow up November's shocking 150 basis point interest rate cut with at least a 50 point chop when it meets next week US Stocks at a Glance US STOCKS-Wall St opens lower on retail jitters, energy NEW YORK - U.S. stocks opened moderately lower in thin holiday trade on Friday after a streak of gains as investors nervously eyed post-Thanksgiving sales to gauge how retailers will fare this holiday season in a weak economy. The Dow Jones industrial average fell 46.35 points, or 0.53 percent, at 8,680.26. The Standard & Poor's 500 Index dropped 3.87 points, or 0.44 percent, at 883.81. The Nasdaq Composite Index slipped 12.42 points, or 0.81 percent, at 1,519.68. HEADLINE STOCKS-Some U.S. stocks on the move on Nov 28 ALCOA INC The aluminum company isn't planning to boost its stake in miner Rio Tinto, despite similar plans by its ally, Chinalco, according to sources. Shares of the Dow component slid 3.3 percent to $10.13. ELI LILLY AND CO The pharmaceutical company withdrew its supplemental New Drug Application for its product Cymbalta, which treats chronic pain. The stock rose 2.7 percent to $33.74. CHESAPEAKE ENERGY CORP The company filed an acquisition shelf to issue up to 50 million shares. The stock tumbled 14 percent to $17.38. TENET HEALTHCARE The stock was upgraded to neutral from sell at UBS. Shares of the company rose 6.8 percent to $1.26. CALLON PETROLEUM CO Jefferies downgraded the company two notches to underperform from buy. The stock plummeted 66 percent to $2.49. GOLAR LNG Jefferies slashed its price target on the company to $6 from $20. The stock fell 6.1 percent to $6.34 on Friday. European News European shares down at midday; autos, commods hit LONDON - European shares slipped by midday on Friday, hurt by weaker mining and energy stocks that tracked a drop in commodity prices, while persistent worries about a global economic downturn put pressure on automobiles and banks. At 1145 GMT, the FTSEurofirst 300 index of top European shares was 0.4 percent lower at 849.12 points after falling as low as 843.22. It has risen more than 11 percent this week and is on track for the third biggest weekly percentage gain on record. The index is still down 8.7 percent on the month and down 44 percent this year, however, reflecting a credit crisis that has hit banks and pushed the global economy towards a recession. Weaker metals prices put pressure on mining stocks. Anglo American, Vedan ta Resources, Lonmin, Kazakhmys, Xstrata, Antofagasta and Rio Tinto fell between 1.6 and 6.5 percent. Energy stocks followed crude prices, which fell below $54 a barrel. Total fell nearly 2 percent, BP was down 1 percent and Tullow Oil shed 2.3 percent. "Going into the weekend, one can't help but worry that we are only a heartbeat away from the next scare story," said Chris Hossain, senior sales manager at ODL Securities. "The markets appear to have been buoyed by the feeling that the U.S. will be bailing out the auto industry, but one has to wonder how much more the global governments can continue to support troubled industries," he added. The automobile sector took the most points off the index. Daimler AG fell 6 perc ent, Porsche was down 4.6 percent and Volkswagen shed 2.7 percent, on growing concerns about a global economic slowdown. Canada joined the growing number of nations officially in recession, with Japan, Germany, Italy and the euro zone as a whole already on the list and the United States and Britain expected to get there soon. Euro zone inflation plunged to 2.1 percent in November and unemployment rose faster than anticipated, data showed, boosting expectations of a deep interest rate cut by the ECB next week as the economy shrinks. "Interest rate cuts are not going to immediately impact on financial markets, as far as I'm concerned. Whether it's equity markets or other markets, it's going to take time," said Neil Parker, a strategist at Royal Bank of Scotland. bsp; Central banks have slashed interest rates to get credit flowing again and governments have pledged trillions of dollars in bank bailouts, extra spending and tax cuts to kick-start their economies and avoid massive job losses. Banks were also weaker. Barclays declined 1.3 percent, HSBC shed 1.4 percent, Royal Bank of Scotland fell 3.8 percent and UBS was down 3.8 percent Britain bought a 58 percent stake in Royal Bank of Scotland as the state picked up 15 billion pounds ($23 billion) of shares in the lender after investors shunned a rescue plan. Commerzbank shares surged 7 percent after it sealed its takeover of Dresdner Bank ahead of time late on Thursday, paying less than market participants had feared. German industrial conglomerate ThyssenKrup p posted better-than-expected full-year pretax profit, but declined to propose a higher dividend and gave no profit forecast for the current year. Its shares were up 0.3 percent. Across Europe, Britain's FTSE was up 0.1 percent, Germany's DAX fell 0.7 percent and France's CAC lost 1 percent. Asia at a Glance Hong Kong, Seoul Rise For Fourth Straight Session Most Asian markets advanced Friday, with Hong Kong and South Korean shares taking gains into a fourth straight session, paced by banks as investors snapped up beaten-down lenders such as Industrial Bank of Korea and HSBC Holdings. Japanese shares hovered around break-even Friday in the absence of indicators from Wall Street and on data showing the country's industrial production fell by a more-than-expected 3.1% in October. The Nikkei 225 Average rose 0.7% to 8,433.31 in the afternoon while the Topix index dropped 0.3% to 831.27. In Tokyo, shares of Panasonic Corp. (PC) tumbled 10.7% a day after the consumer electronics company slashed its annual net profit forecast, saying business conditions were "deteriorating sharply." In Hong Kong, the Hang Seng Index rose 2% to 13,820.81 and the Hang Seng China Enterprises Index climbed 2% to 7,263.95. China's Shanghai Composite slipped 1.2% to 1,894.36 as investors worried about the weakening economic conditions that forced the central bank to slash lending rates as well as banks' reserve requirements earlier this week. Australia's S&P/ASX 200 advanced 2.7% to 3,683.20, South Korea's Kospi rose 1% to 1,074.22 and New Zealand's NZX 50 index climbed 0.6% to 2,685.93. Singapore's Straits Times Index fell 1.2% to 1,690.64 and Taiwan's Taiex dipped 0.2% 4,444.70. Financial stocks broadly extended gains on bargain buying in the beaten-down sector, with Industrial Bank of Korea shares jumping 4.9% and KB Financial Group (KB) rising 2% in Seoul. In Hong Kong, shares of Industrial & Commercial Bank of China, or ICBC, climbed 1.8%, while market heavyweight HSBC Holdings (HBC) added 1.2%. Banking shares, however, skidded on mainland China, with ICBC dropping 2.8% and Bank of Communications sliding 4.9%. In Asian currency trading, the U.S. dollar bought 95.27 yen, compared with 95.04 yen late Thursday. In energy trading, January crude-oil futures slipped 64 cents to $53.80 a barrel in electronic trading from its previous close at $54.44 Wednesday on the New York Mercantile Exchange. Metals Gold little changed; traders eye OPEC meeting LONDON - Gold was steady in Europe on Friday in quiet trade after the U.S. Thanksgiving holiday, with traders eyeing the outcome of an OPEC meeting over the weekend. Softer oil prices are weighing on the market a touch, although a stable dollar and a lack of buying interest due to the U.S. holiday are keeping prices within a narrow range. Spot gold was quoted at $812.40/814.40 an ounce at 0924 GMT, little changed from $814.60 an ounce late on Thursday. Traders will closely watch OPEC's informal meeting on Saturday in Cairo, where ministers will discuss a possible cut in production. A sharp move in the oil price could drag gold in its wake. "Obviously there is still a correlation between oil and gold," said Wolfgang Wrzesniok-Rossbach, head of sales at precious metals group Heraeus. "If OPEC make a decision which might drive the oil price up, that would also be positive for gold." The precious metal tends to move in line with crude, both because it is bought as a hedge against oil-led inflation and because stronger oil prices tend to boost interest in commodities as an asset class. The other main external driver of gold, the dollar, was steady against the euro, though it slipped against a basket of currencies. A weaker dollar typically benefits gold, which is often bought as an alternative investment to the U.S. currency. In addition to the OPEC meeting, traders will be watching for a raft of economic data due out next week, which could have a significant impact on the dollar. "Next week, manufacturing indices for all major economies will be released," Standard Bank analyst Walter de Wet said. "This should indicate the speed at which manufacturing is contracting globally," he said. "On Tuesday, U.S. auto sales follow, and on Friday, U.S. non-farm payrolls." Dresdner Kleinwort said on Friday it now expects gold prices to average $870 an ounce this year, falling to $740 an ounce in 2009. For silver, it forecasts an average price of $15 an ounce in 2008 and $9.75 next year. Wrzesniok-Rossbach said delegates at a forum on Thursday organised by Heraeus expected gold prices to rise to new highs next year. "We do expect new all-time highs in gold within the next six to twelve months," he said. "Consensus was that in the long run all the bailouts we are seeing, whether in the car industry, the banking industry or others ... will end with inflation, and that would be positive for gold." Wrzesniok-Rossbach said the outlook for platinum group metals and silver, which have more industrial uses, was less rosy as recession was expected to curb demand. Spot platinum was quoted at $848.50/868.50 an ounce, slightly down from $853 an ounce late on Thursday. Palladium was at $185/193 an ounce against $187.50. Among the other precious metals, silver was at $10.25/10.33 an ounce against $10.31 an ounce. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, Moving Average, World Market |
Nov-28 Daily Forex Analysis
| by: Forexyard Headlines Markets Expecting Higher Volatility at the Start of the Xmas Shopping Season The day after Thanksgiving in the US is known as Black Friday, the beginning of the Christmas shopping season, and typically one the busiest day of the year for retail stores. It is on this day that many employees take off work, increasing the number of consumers in the market and therefore boosting sales. As a result, it is likely that markets will see a higher level of volatility and an increase in trading volume today. This may also help boost the global economy in the short-term as consumers begin unloading their savings to buy gifts for their loved ones. Economic News USD Black Friday Consumer Spending May Boost USD Volatility The USD was flat against the EUR and JPY yesterday for Thanksgiving, where a complete lack of US economic reports helped hold volatility to a minimum. During early trading hours, the greenback slipped to 94.95 against the JPY, and the EUR climbed to 1.2966, amid signs of worsening economic conditions and deterioration in investor confidence. However, the Dollar recovered this lost terrain and eased back against its rival currencies. Recently the USD has proven to be the beneficiary of risk aversion in spite of poor economic news since it has been seen as a relatively safe investment during the financial crisis. But the impact of fiscal stimulus is weighing on the nation's balance, and is beginning to raise concerns for the USD. This has begun pushing more investors to find refuge in the Japanese Yen, which is becoming the supplementary safe haven currency. Looking ahead, there is little news coming from the US market today, which is known as Black Friday in the US, the beginning of the Christmas shopping season. Markets are also following close developments about President-elect Barack Obama's meeting with former Federal Reserve chairman Paul Volcker to form a new council of advisers to guide the US economy back into good condition. Traders should keep a close look on the news coming from the Euro-Zone and Asia as both will be the deciding factors in the USD's movement today; however, the recent economic environment is suggesting that the appropriate conditions are for the Dollar to interact with heavy volatility throughout the day as a result of increased consumer spending on Black Friday. EUR Euro-Zone Economic Sentiment Lowest Since 1993 The EUR was unable to make any profit over its rival pairs after the recent announcement by the European Commission of a stimulus plan for 200 billion EUR ($259 billion) to be injected into the economy. The EUR initially gained ground versus the US Dollar following the rise in European stock markets, but issued a retreat after disappointing economic data put downward pressure on the 15-nation currency. The economic sentiment index for the region tumbled to 74.9 this month, from an expected 78.0. This marked its lowest reading since August 1993, reflecting growing pessimism in industry and service as weakness in the European economy continues unabated. The German Unemployment Change indicator registered a significant reduction in November, falling to 10k unemployed from 23k last month; its lowest reading since 1992. As a result, the head of the Federal Labour Office warned that labor markets would soon feel the impact of the economic downturn. On a different note, European Central Bank (ECB) President Jean-Claude Trichet declined to make any comments about a Euro-Zone Interest Rate cut after stating Wednesday that the bank would cut rates next week unless there was evidence that inflation pressures had eased. Many analysts expect the ECB to cut rates by 50 basis points to 2.75% on Dec.4, while some economists said an even deeper cut might be needed. News being released from the Euro-Zone today should provide little fluctuation in the market. However, while indicators have had less impact these past weeks due to the financial crisis, they nevertheless still carry weight in the confidence of investors. Any negative economic data will have the potential to cause harm to a currency's value if it has the power to sway speculators. JPY Japanese Recession May be Worse than Forecasted Yesterday, traders did not see much volatility in JPY currency pairs. With no economic news from the US as a result of the Thanksgiving holiday, and very few economic indicators from Europe, the JPY remained flat against both the USD and EUR, sticking near the 95.00 and 123.00 levels respectively. The recent economic data from Japan shows that the second largest economy is now heading into a deep recession. Recent reports show that industrial production is deteriorating faster than economist had expected, and consumers have been holding back their spending, surprising analysts. Many forecasters are now convinced that Japan's economy is in for a deeper and longer recession than was previously thought. Oil Oil Prices Expected to Continue Falling Through December The price of Crude Oil remained relatively flat on Thursday, hovering near 53.00 dollars a barrel. This came as U.S. stocks and data on Crude Oil demand increased worries over decreased consumption. However, Oil producers are hoping that Crude Oil prices will find support after OPEC's meeting tomorrow. OPEC is set to talk about whether or not they will reduce Oil production further. Some of OPEC's members, such as Venezuela, are backing the proposal to cut Oil production by about 1 million barrels per day in an effort to stop the price slide. They have also not ruled out the possibility of a further cut in the future. Russia, which is the largest oil producer outside of OPEC, and which produces around 11% of the world's oil, is beginning to look to closer cooperation with OPEC. Russia has presented an agreement on a joint Oil production cut which it hopes will be studied at the OPEC meeting next month in Algeria. Analysts are expecting Oil prices to continue heading downwards through the end of December despite the recent threat by OPEC and Russia to cut production. Technical News EUR/USD After several failed attempts to breach the1.3000 resistance level on the 4 hour chart, the pair is now consolidating around 1.2650 price level. The hourly studies show mixed signals, and the daily chart's Stochastic Slow is indicating a mild bearish direction. Waiting for a clearer signal on that pair appears to be a good decision today. GBP/USD The bullish move the pair is going through on the 4 hour level appears to have diminishing momentum, and lacks the ability to make a significant breach above the 1.5600 resistance level. The daily chart is showing flat consolidation around the 1.5430 level with no distinct price direction and the hourlies are dwelling in neutral territory as well. Traders are advised to wait for a clear signal on any direction or keep out of that one today. USD/JPY The daily chart is showing flat consolidation around the 95.00 level with no distinct price direction. The 4 hour chart is showing mixed signals, and on the hourlies the pair seem to be dwelling in neutral territory as well. Traders are advised to wait for a clear signal on any direction before entering the market today USD/CHF After a moderate bearish correction, a wide bullish channel on the daily chart continues with no signs of a stop. The 4 hour chart's Slow Stochastic is showing a double top formation with a positive slope, indicating the possible continuation of the upwards trend. Going long appears to be the right move today. The Wild Card Gold The daily chart implies on an upcoming bearish trend as the Slow Stochastic has just crossed above the 80 line. On the 4 hour chart the Bollinger Bands channel narrows which implies that a sharp volatile breach might be quite imminent. forex traders are advised to wait until a clear breach will take place and swing. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, World Market |
Nov-28 Market Commentary and Technical Levels
Fri, 28th of November, 2008 EURUSD Outlook
EURUSD Daily Supports and Resistances:
GBPUSD Outlook
GBPUSD Daily Supports and Resistances:
USDJPY Outlook USDJPY Daily Supports and Resistances:
USDCHF Outlook USDCHF Daily Supports and Resistances:
Have a great weekend! Labels: Forex Analysis, Forex Trend, FX Instructor, Market Analysis, money trading, World Market |
Thursday, November 27, 2008
Nov-27 Daily Forex Analysis
| by: Forexyard Headlines Dollar Traders Look to Next Week as they Respond to a Release of Global Economic Data The U.S. Dollar has been behaving bullish in recent trading days against the EUR and JPY. Nonetheless, traders expect the foreign exchange market to be quieter than usual today as the U.S. market is closed for holidays. Investors are advised however to pay close attention to the Fed, as analysts forecast Interest Rates may be slashed. As a result, this may help determine the strength of the Dollar today as the market is set for lower trading volume Economic News USD Dollar Expects Low Volatility During U.S Thanksgiving Holidays The USD has moderately strengthened against most of its major counterparts, continuing to prove that, for the time being, this is the solid currency that traders can rely on to provide them with steady profits. The EUR/USD stopped the upside move at a resistance level of 1.3080, and from then on it fell more than 150 pips back to the 1.29 level. The USD also gained steadily against the GBP and CHF on Wednesday. The U.S. Unemployment Claims data was released yesterday, providing better-than-expected figures. Analysts envisage that this adds extra support to the bullish trend that the USD has been experiencing in recent days. The number of U.S. workers filing new claims for jobless benefits fell by 14,000. Initial claims for state unemployment insurance benefits were a seasonally adjusted 529,000 in the week ended from an upwardly revised 543,000 the previous week. Moreover, the greenback has proven that it can rise despite release of negative economic data as well. Analysts say that the upwards trend may continue as long as the Dollar's major rivals are stuck in a similar predicament. For example, U.S. consumers cut spending during October at the steepest rate in more than 7 years. This was a 4th straight monthly fall in spending and underlined how a credit crunch, falling home prices and steady job losses were sapping consumers' will and ability to spend. Looking ahead, the Forex market is set to be relatively quiet as Americans celebrate Thanksgiving holidays. Nevertheless, with energy prices and the U.S. stock market driving much of the financial speculation worldwide, analysts predict the Dollar to contribute to at least some of today's market volatility. EUR EUR's Strength Likely to be Determined by Upcoming Economic Developments in Germany The EUR experienced a bearish trading session yesterday, losing ground against most of its currency crosses. The only major economic event that came out of the Euro-Zone yesterday was the German Prelim CPI, which was slightly lower than analysts had forecasted, helping to keep volatility to a minimum. The German data provided the first insight into inflation trends in the Euro-Zone. Germany's Price Index makes up close to 30% of the overall gauge for the single currency area. Slower German inflation could possibly encourage the European Central Bank (ECB) to loosen borrowing costs further, in order to counter the threat of a prolonged economic downturn. Germany's economy, Europe's largest; fell into recession in the third quarter after a global credit crunch and the EUR's gain to record levels stifled foreign demand. Gross Domestic Product (GDP) declined a seasonally adjusted 0.5% from the previous quarter, when it declined 0.4%. European economists are increasingly pessimistic about regional prospects. With the financial sector's problems weighing directly on the broader economy, many economists say Europe is already in recession, and is unlikely to recover until the third quarter of 2009 Looking ahead to today, the most important financial indicator scheduled to be released from Europe is German Unemployment Change. Analysts forecast the figure to decrease from its previous reading. Traders will be paying close attention to today's German Unemployment Change announcement, as a stronger than expected result may bolster the EUR. JPY Yen Experiences Mixed Results against Major World Currencies The JPY finished yesterday's trading session with mixed results versus the major world currencies. The JPY fell against the GBP, pushing the GBP/JPY level to 146.67. The Japanese Yen experienced similar behavior against the USD as the USD/JPY closed at 95.16. The JPY saw steady bullishness throughout yesterday's trading against the EUR, as EUR/JPY pair finished the day at 122.97. With the rise in the Yen Japanese products are less competitive abroad. Additionally, the value of overseas sales are hurt when converted back into the Japanese currency. Amid steady gains primarily against the Dollar, much of the Yen's bullish movement may possibly be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. On the other hand, the Yen's strength in recent months has had a positive effect on major JPY currency pairings, as the rising turmoil in the global market is leading to more investment in the Japanese currency. Looking ahead to today, Japan is expected to provide some significant economic news. Traders are advised to follow the release of the Retail Sales Report, which is set for release at 11:50pm GMT. This report is one of the most influential economic indicators in Japan and is forecasted by analysts to decrease by -0.9% this month, in comparison to a -0.4% drop in the month of October. Traders are strongly advised to pay attention to today's Japanese economic indicators, as a stronger than expected result may strengthen the JPY. OIL Will Crude Oil Continue its Slide? Crude Oil Prices fell in New York after the latest economic reports in the U.S. showed a deepening recession that may lead to a cut in fuel demand in the world's largest oil consumer. Much of the bearish movement in Crude Oil has been attributed to fears of a drop in fuel consumption due to poor economic outlook in the major world economies. With economic growth slowing in the U.S. and Europe, Crude Oil may continue depreciate. The Organization of the Petroleum Exporting Countries (OPEC) may cut output for the second time in recent months as OPEC ministers meet on November 29 in Cairo, Egypt. The OPEC ministers look ahead to find a solution to the continued drop in Oil prices, as the global economic recession in the U.S. has recently pushed Oil prices to below $50 a barrel. Last month, OPEC agreed to cut production by 1.5 million barrels a day. Technical News EUR/USD The pair has been traded in a range of 1.2880 to 1.3000 for a while now, while no distinct signals have been re  ceived by now on the hourly chart. The 4 hour chart is showing mixed signals yet the Bollinger Bands on the daily chart are getting much tighter which indicates that a volatile breach might be quite imminent. Traders are advised to wait for a significant breach and swing in on any direction.GBP/USD There is a wide opening bullish channel forming on the 4 hour chart as the pair now floats within its upper barrier. After breaching the key 1.5370 resistance level yesterday, the Slow Stochastic oscillator on the 4 hour chart shows that the momentum is bullish and a breach through the 1.5450 will probably validate a bigger bullish move into the 1.5900 levels again. USD/JPY The 4 hour chart shows that the pair continues its recent bearish correction within a wider flat channel on this chart. The Slow Stochastic on the 1 hour chart supports the recent bearish momentum. Next target price might be around 94.60, and if breached we should see a stronger bearish move being validated USD/CHF According to the hourly chart the pair is still in bearish configuration. The Slow Stochastic on the 4 hour chart implies that the bearish trend is likely to extend even further. However, on the 1 hour chart the same indicator suggests that the pair is headed towards a possible bullish correction. Therefore, in a short time frame, going long with tight stops appears to be the preferable strategy. The Wild Card AUD/USD There has been a very significant breach through the upper level of the channel on the 4 hour chart. On the daily chart the Slow Stochastic is moving above the 20 level and may ascend further. This could be a great opportunity of forex traders to take advantage of a strong technical indicator that implies a bullish momentum and holds a good profit potential. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, World Market |
Nov-27 Market Commentary and Technical Levels
Thu, 27th of November, 2008 EURUSD Outlook
EURUSD Daily Supports and Resistances:
GBPUSD Outlook
GBPUSD Daily Supports and Resistances:
USDJPY Outlook USDJPY Daily Supports and Resistances:
USDCHF Outlook USDCHF Daily Supports and Resistances:
Have a great day! Labels: Forex Analysis, Forex Trend, FX Instructor, Market Analysis, Market Trend, money trading, Moving Average, World Market |
Wednesday, November 26, 2008
N0v-26 World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Euro falls; EU stimulus package raises concerns LONDON - The euro fell against the yen and the dollar on Wednesday as investors were pessimistic about whether a European stimulus package will be sufficient to ease the financial crisis. Risk aversion kept hold in financial markets on fears about the looming global recession. This pushed European shares down 1.2 percent and boosted the low-yielding yen, while further dollar repatriation flows and deleveraging supported the U.S. currency. The draft proposal -- which is due to be debated by member states next month -- also said there is scope for further interest rate cuts by the European Central Bank. Analysts said that the plan marked a step in the right direction, but uncertainty about its efficacy, and general concerns about a deep slowdown in the global economy were keeping investors in the mood to sell risky assets. "The sentiment is one of high risk aversion. The stimulus packages are a first step and are welcome, but the fundamentals across the world are still negative and recession fears are not fading," said Commerzbank currency strategist Antje Prafcke said in Frankfurt. "There are still concerns about whether the measures will work and how they will be financed." The European plan follows the announcement on Tuesday of an $800 billlion U.S. plan to rescue its debt securities markets. The euro dropped 0.8 percent to 123.46 yen, while it slipped 0.7 percent against the dollar to $1.2969. The dollar slipped 0.1 percent to 95.16 yen. Analysts said that the U.S. currency was on the back foot against the yen as concerns remained about whether the Federal Reserve's plan would be effective. Some also worried about its impact on the nation's balance sheet. The yen has rallied in the past month as risk aversion has triggered a massive unwind of carry trades, in which investors have used the low-yielding yen to fund purchases of assets in higher-yielding currencies. The Japanese currency pared some gains, however, after China surprised markets with a 108 basis point rate cut, its largest since 1997. The yen is often used as a proxy for the Chinese yuan, which trades in a tight band against the dollar. "The China rate cut reinforces the notion of global coordinated action to counter the downside risks to the global economy, which will erode the attraction of the yen safe haven quality," said Lena Komileva, G7 market economist at Tullett Prebon. She added, however, that worries about the global economy will limit any downside for the Japanese currency.Investors awaited a raft of U.S. data due later Wednesday, including jobless claims and University of Michigan consumer confidence figures. Weak readings are likely to exacerbate worries about the health of the U.S. economy. US Stocks at a Glance US STOCKS-Mounting economic woes hit market at open NEW YORK - U.S. stocks slid at the open on Wednesday as bleak outlooks from jeweler Tiffany & Co and manufacturer Deere & Co fanned recession fears. The Dow Jones industrial average fell 143.61 points, or 1.69 percent, at 8,335.86. The Standard & Poor's 500 Index dropped 12.04 points, or 1.40 percent, at 845.35. The Nasdaq Composite Index slid 16.68 points, or 1.14 percent, at 1,448.05 US Jobless Claims -14K To 529K In Nov 22 Week; Survey -12K WASHINGTON - The number of U.S. workers filing new claims for unemployment benefits fell last week as expected but remained at very high levels consistent with steep job losses. Initial jobless claims fell 14,000 to a seasonally-adjusted 529,000 in the week ended Nov. 22, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had expected claims to drop 12,000. The previous week's level was the highest in 16 years. Yet the latest data don't signal any imminent recovery in the labor market. According to a Labor Department analyst, jobless claims tend to be high in November and December, and the government's seasonal adjustment process attempts to account for that cyclical increase. So last week unadjusted jobless claims actually rose quite sharply, just not as fast as government statisticians had expected, thus the decline in the seasonally-adjusted figure. The four-week average of new claims, which aims to smooth volatility in the data, rose another 11,000 to 518,000, the highest since January 1983 and well above recessionary levels typically associated with further increases in the unemployment rate. The four-week average was below 400,000 as recently as July. Nonfarm payrolls have fallen 10-straight months, pushing the unemployment rate to a 14-year high of 6.5% in October. The weekly claims data point to another sizable payroll drop this month in the 250,000 range and a further increase in the unemployment rate. Meanwhile, according to Thursday's report the tally of continuing claims, those drawn by workers collecting benefits for more than one week in the week ended Nov. 15, fell 54,000 to 3,962,000. However, the four-week average hit a fresh 25-year high, a sign of just how hard it is for the unemployed to find new work. The unemployment rate for workers with unemployment insurance was unchanged at 3%. Not adjusted to reflect seasonal fluctuations, Illinois reported the largest increase in new claims during the Nov. 15 week, 5,285, due to layoffs in construction, trade and manufacturing industries. California reported the largest decrease, 9,436. It didn't provide an industry breakdown. European News Shares in Europe decline as banks, oil weigh; Alcatel-Lucent up LONDON -- European shares snapped a two-session winning streak on Wednesday, as banks and oil majors gave back a portion of recent gains, although telecom equipment maker Alcatel-Lucent and caterer Compass Group managed to buck the lower trend. The pan-European Dow Jones Stoxx 600 index fell 0.9% to 196.99, paring gains made this week to just over 8%. Bank stocks and oil producers rallied in the last two sessions but gave back some of those gains on Wednesday, with Santander (STD) down 3.4% in Spain and Total (TOT) down 2.3% in Paris. Even with this week's gains, the Stoxx 600 index is down roughly 11% in November. National indexes were also lower, with the U.K. FTSE 100 index down 1.2% at 4,121.70, the French CAC-40 index down 1.2% to 3,172.55 and the German DAX 30 index down 0.8% at 4,522.35. Of European corporates updating on Wednesday, shares in insurer Swiss Life fell 3.6% after the firm said it will cut 200 positions in Switzerland as it moves to streamline its Zurich-based head office. "We want to achieve a clear separation of tasks between head office and the business units. The aim is to make the new corporate center as lean as possible and to concentrate on the essentials," said CEO Bruno Pfister. The insurer intends to considerably scale back its IT projects as it aims to trim its cost base by around 90 million Swiss francs by 2012. Other insurance firms were also lower, with Zurich Financial Services down 2.7% and AXA extending Tuesday's profit-warning-related losses to fall another 3.4%. However, it wasn't all gloom on the corporate front. Shares in telecom equipment maker Alcatel-Lucent (ALU) rose 1.8% after it said that Paul Tufano will become its new chief financial officer, effective Dec. 1. Tufano will succeed Hubert de Pesquidoux, who has decided to leave the company to pursue other opportunities. And caterer Compass Group climbed 5.2% after its fiscal-year sales rose 11.4% to 11.4 billion pounds and pretax profit climbed 29.8% to 566 million pounds. The firm said that it saw good levels of growth in all core sectors. The company said its new financial year has started well and that visibility on the sales pipeline is encouraging. Asia at a Glance Asian steelmakers rise after BHP pulls Rio bid HONG KONG -- Shares of Asian steelmakers were mostly higher Wednesday, as investors applauded the decision by miner BHP Billiton to drop its takeover bid for Rio Tinto, a tie-up that would have created the world's biggest miner with potentially greater sway in iron-ore contract negotiations. Shares of South Korea's Posco were up 4.8% in Seoul, while Angang Steel Co. climbed 7.6% in Shenzhen and 4.9% in Hong Hong. Wuhan Iron & Steel Co was up 7.3% in Shenzhen. Baoshan Iron & Steel, whose shares are listed in Shanghai, were down 1.4%. "Had the proposed bid gone through, the merged BHP/Rio Tinto outfit would have emerged as the world's biggest iron-ore supplier, allowing it to call the shots in the iron-ore talks with China, even in a depressed steel market," wrote UOB Kay Hian analysts headed by Foo Choy Peng in Hong Kong, in a note Wednesday. Foo said he expects contract negotiations between BHP Billiton (BHP) and Chinese steel mills for next year's prices will be difficult, matching the acrimonious tone last year. Those negotiations dragged on until midyear. The broker said iron-ore miners will likely try to stall contract talks in the hope of some recovery in global steel demand and firmer commodity prices. BHP will "want to hold out the talks with the Chinese mills for as long as possible to wait for an anticipated upturn in the Chinese steel market," Foo said. Analysts say iron-ore contract prices will fall as much as 50% for deliveries that begin in the year from April. UOB's Kay Hian said analysts it spoke with believe a 20% decline in iron-ore contract prices from current levels is more realistic. Output growth among Chinese steelmakers is forecast to slow to the mid-to-low single digits during the next two years. Metals Gold dips as risk appetite firms but oil supports LONDON - Gold edged lower in Europe on Wednesday as the dollar firmed and a sharper appetite for risk redirected investment to the equity markets, though rising oil prices lent support to the precious metal. Dealers are awaiting a raft of U.S. data due later in the session and a European Commission announcement on plans to stimulate the economy for clues to the next direction of trade. Spot gold was at $814.35/816.35 an ounce at 1055 GMT, against $819.85 an ounce late in New York on Tuesday. "It is surprising that gold is not stronger, given higher oil prices," said Commerzbank analyst Eugen Weinberg. "That is probably due to the fact that some risk aversion is coming out of the market, due to the new rescue package in the U.S. and the higher equity markets. These are probably pointing to some weaker demand for safe-haven gold." European shares turned positive in early trade on Wednesday after UK gross domestic product (GDP) data met expectations, and helped by news of an interest rate cut by China. The dollar, the main external driver of gold, firmed half a percent against the euro in early trade. A stronger dollar tends to pressure gold, which is often bought as an alternative investment to the U.S. currency. Oil climbed more than $1 a barrel, recovering from a near 7 percent decline on Tuesday. China's decision to cut interest rates by 1.08 percent boosted hopes a prolonged slowdown in oil demand can be avoided. Firmer crude prices increase interest in commodities as an asset class, and tend to boost gold's appeal as a hedge against oil-led inflation. Traders are awaiting the release of U.S. oil inventories data later in the session for clues as to the next direction for the market, analysts said. Investors are also turning their attention to the outlook for physical gold demand from jewellers as the festive season gets underway. Gold demand India, in the world's biggest bullion market, remains lacklustre as prices stay high, dealers said, while analysts said the impact of the credit crunch on consumer spending could keep gold sales low elsewhere. "Seasonally there is demand for the Christmas and New Year celebrations, although in light of the global economic slowdown we would expect jewellery sales to be more subdued this time," Fairfax analyst John Meyer said. Among other precious metals, spot silver was at $10.28/10.36 an ounce against $10.29. Spot platinum was little changed at $863/873 an ounce from $860 late in New York on Tuesday. Sister metal palladium was at $192.50/200.50 an ounce against $194.50. Both metals have slipped dramatically from the highs they hit earlier in the year, pressured by concern over the dire outlook for carmakers, the major consumer of the metals, which are used in catalytic converters. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, World Market |
Nov-26 Daily Forex Analysis
| by: Forexyard Headlines U.S. Economy Slides down a Rotten Path of Economic Recession According to the Federal Reserve report published on Tuesday the U.S. economy has contracted in the 3rd quarter as consumer spending plunged to a 28-year low, raising the specter of a deeper recession. The U.S government blames the contraction in the economy on the credit crisis that has emanated from the collapse of the U.S. housing market. Economic News USD Consumer Confidence Shaken; Fed Injects More Money The USD is falling on hard times, and right before the holiday season in the United States. During the week of Thanksgiving, an American holiday which falls on the fourth Thursday of November, the greenback has so far witnessed a sharp decrease in value against its currency counterparts. It could be that American consumers are having their first real gut check this week prior to Black Friday, the opening of the Christmas shopping season. Until now, the average consumer would stick to necessities, but during times of increased spending, such as gift-giving holidays like Christmas, consumers now have to check their budget and gauge whether or not such purchases are truly feasible. This sends a shockwave through consumer confidence and weakens economic outlook. This couldn't have come at a worse time. Take this blatant signal of economic weakness and couple it with an additional $800 billion bailout plan and a decrease in demand for safe haven assets like the USD and it may spell a disaster for investor confidence. These are strong signals that the U.S. economy is continuing down a rotten path of economic recession. The major world economies may not be too far behind, either. Looking ahead today, there will be a very significant batch of data coming from the American economy. With market-moving figures such as Unemployment Claims and New Home Sales being released, the market will likely see higher-than-usual volatility. Traders should wait to see which way the USD moves after the release of this data and enter the market accordingly. EUR EUR Appears to Make Gains but Actually Remains Flat The primary counterpart for the EUR is the USD. Glancing at this pair would lead one to believe that the EUR was gaining strength since it now sits near 1.3000. However, the market tells us something different. The EUR did in fact make strong gains against the Dollar, but it remained flat against every other currency counterpart. This signifies two important pieces of information. First, this means the EUR did not move the EUR/USD pair, the USD did the moving. Second, it tells us the EUR is not moving much at all. This means the Euro-Zone economies are not having much of an impact on the value of its currency. The EUR may in fact be waiting for clear signs of direction from the United States' economy before picking a direction. With the holiday season approaching, European countries are just as concerned about consumer confidence and spending levels as Americans. As such, confidence levels are playing an important role throughout the European economies. This factor alone seems to drive the Euro-Zone market more than actual economic indicators. Looking at today's news, investors are set to see the release of a less impactful piece of data from the German economy - Prelim CPI - which will likely not move the market of the EUR too much throughout the day. More importantly, there will be a speech from European Central Bank President Jean-Claude Trichet at 8:30 GMT. This may move the value of the EUR slightly, but not nearly as much as the news from the U.S. will. Traders should keep track of the economic data emanating from the American economy today as this will be the primary driving force in the market. JPY Japanese Yen Strengthening from Global Economic Weakness The JPY is currently experiencing appreciation across the boards. This bullish momentum is explained by most analysts as a result of unwinding carry trades. As the global economy weakens further, especially with signs such as the U.S. economy injecting another $800 billion into markets, major economies the world over are cutting interest rates and weakening their currencies to boost investment. This results in investors selling off their higher yielding assets which were funded with JPY and helping to boost the Japanese currency to new strengths. Looking at today's trading there will be very little news from Japan about the future of its economy. The most significant data will be released at 23:50 GMT as Japan releases the minutes from its Monetary Policy meeting. However, as already stated above, the factor moving the Yen may not be found in Japanese economic data, but rather in the strength of the global economy. As the world's economy weakens, the JPY may likely continue to gather momentum, possibly breaching the 92.00 level. OIL Oil Supply and Production Cuts Spark Increased Speculation The price of Crude Oil saw a rather sharp increase yesterday after investors began speculating on the possibility of a coordinated production cut between OPEC and Russia. However, with results not dissimilar from the piracy off the coast of Somalia, the price of Crude Oil continues to slide after a short-lived $5.00 increase in price proved to not be strong enough to reverse the downward trend. Starting today's trading near the $50 mark, the price of Oil appears to have leveled off and waits for further speculation about supply levels - with today's announcement of U.S. Crude Oil Inventories - as well as further information regarding this potential production cut from two giant Oil producing entities. Investors would be wise to pay close attention to the USD today as it will likely be the primary market mover. Technical News EUR/USD The pair is in the middle of an uptrend momentum, and the Slow Stochastic on the 4 hour chart shows that there is still more room to run. The very important key resistant level of 1.30 has been breached and the pair is likely to continue is bullish trend. Next target price might be around 1.3150. GBP/USD The 4 hour chart is showing that the pair is still floating within its bullish channel. On the hourlies the Slow Stochastic is also showing a bullish cross, suggesting that a bullish trend is likely to continue in nearest time frame. Going long with tight stops appears to be preferable USD/JPY The 4 hour chart shows that the bearish channel still remains intact, and the pair is now floating around 94.90 level. Both the RSI and the Slow Stochastic on the 4 hour chart are pointing towards bearish grounds, and no correction appears to be in sight. Going short seems to be a good strategy today. USD/CHF After showing a consistent bullish momentum for the past week, the hourlies are showing signals of a falling correction. The bearish breach on the hourly chart has created strong downwards momentum that might eventually carry the pair to the next target price of 1.1900. The daily Slow Stochastic is showing no crosses, which also indicate the continuation of the bearish trend. Going short appears to be preferable today. The Wild Card GOLD Gold prices have rose significantly in the past two days and peaked at $811 an ounce. However, a bearish cross on the 4-hour chart's Slow Stochastic suggests that a bearish correction is impending. This might be a great opportunity for forex traders to enter the trend at a very early stage. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, World Market |
Nov-26 Market Commentary and Technical Levels
Wed, 26th of November, 2008 EURUSD Outlook
EURUSD Daily Supports and Resistances:
GBPUSD Outlook
GBPUSD Daily Supports and Resistances:
USDJPY Outlook USDJPY Daily Supports and Resistances:
USDCHF Outlook USDCHF Daily Supports and Resistances:
Have a great day! Labels: Forex Analysis, Forex Trend, FX Instructor, Market Analysis, Moving Average, World Market |
Tuesday, November 25, 2008
Nov-25 Daily Forex Analysis
| by: Forexyard Headlines The U.S. Dollar is Expected to Slide Further against Major Currencies The Citigroup bailout plan helped correct the price of the Dollar against other major currencies as traders are keen in the short-term to make gains in more volatile currencies, such as the EUR and JPY. This has put downward pressure on the greenback in recent days as investors are seeking riskier day trades in other major currencies, rather than the safe haven U.S. Dollar. Economic News USD The release of Preliminary GDP Figures Today is expected to Add Downward Pressure to the Dollar Forex traders anticipate the U.S. Dollar to continue to drop vs. the EUR in response to the Citigroup bailout plan. Traders have boosted their money into more volatile currencies, such as the EUR and JPY as they see the safe haven Dollar less attractive. The Dollar extended its losses for a second day against the EUR and a basket of major currencies as Forex traders are anticipating a drop in the U.S. Preliminary GDP figures that will be released today at 1.30pm GMT time. On Monday the USD traded at $1.2953 per EUR at 4pm GMT time. This helped push the Dollar to the largest 2 day decline in a month of nearly 3%. The Citigroup bailout plan helped correct the price of the Dollar against other major currencies as traders are keen in the short-term to make gains in more volatile currencies, such as the EUR and JPY. This has put downward pressure on the greenback in recent days as investors are seeking riskier day trades in other major currencies, rather than the safe haven U.S. Dollar. The release of the U.S. Existing Home Sales Report yesterday also added to downward pressure of the USD. The report showed that sales of U.S. existing homes fell by 3.1% in October to a 4.98 million-unit annual rate. This data confirms that the U.S. housing market is still weak, and is consistent with the U.S. Federal Reserve's recent assessment that the U.S. housing market is not expected to finish contracting until 2010. Analysts anticipate the Dollar to slip further and to correct against the major currencies in the short-medium term as many Forex traders believe that the USD is overvalued. Traders may well expect the USD to drop by at least another 1.5 % today as they weigh in on the expected drop in the U.S. Preliminary GDP Rates, which will be released later today. This is likely point to signs of further weaknesses in the U.S. economy. EUR The European Currency is Expected to Make Further Inroads into the U.S. Dollar Analysts expect the EUR to continue its rally against the Dollar today, as the U.S. government's pledge to help Citigroup has in recent days drawn investors away from the safe haven USD. This is in order to make short-term gains in more volatile currencies, such as the EUR and JPY. The EUR rose 2.8% against the U.S. dollar to a 2 week high of $1.2929 on Monday. This was despite the release of a report in Germany on yesterday that showed business confidence slumping to its lowest level in almost 16 years in November. Analysts expect the negative data release to add additional pressure on the European Central Bank (ECB) to make another Interest Rate cut of at least 50 basis points in the near future. This may affect the EUR in the long-term, but in the short-term Forex traders are taking advantage of the EUR to make gains on the high yield currency. It is likely that the EUR will make more gains throughout today against the USD. This is as Forex traders foresee the European Currency to strengthen as traders react by going short on the USD as U.S. Consumer Confidence is set to remain unchanged. Thus investors are evaluating that inflation in Europe is higher than the United States. As a result, this is likely to make the EUR more attractive to investors than the Dollar. Additionally, day traders are likely to take advantage of the weak USD before the Thanksgiving Holidays in the United States on Thursday. JPY JPY Reacts Positively to Citigroup Bailout Plan The Japanese currency added to recent gains as investors continued to sell-off risky assets in response to the U.S. government bailout plan for Citigroup did little to convince the market that the end of the financial crisis is near. In the short-term the JPY continued to increase against the USD as Japan's Equities and Commodities markets acted positively to the Citigroup bailout plan. The Yen trimmed two days of losses against the Dollar and the EUR as investors took advantage of riskier currencies, reducing demand for carry trades. The JPY rose 0.6% yesterday to 96.88 Yen against the USD, as investors continued to flock to the low-yielding Japanese currency after discarding positions in higher-yielding currencies in an ongoing reversal of the carry trade. The JPY also strengthened to 124.94 per EUR from 126.08 yesterday. Analysts say that this is in response to the weak reading of the German business climate, which underlined weaknesses in the German economy. This in turn kept expectations high for cuts in Euro-Zone Interest Rates. Analysts believe that worries among investors about a deep and prolonged global recession will likely continue to support the Yen over the coming months. OIL Oil Soars as U.S. Dollar Slips and Global Equities Rise Crude Oil rose 9% to over $54 a barrel on Monday in response to the positive effects that the U.S. government bailout plan of Citigroup had on global markets. Oil has recently dived from a record high of $147 per barrel in July to a year low of $48.25 on Friday. The dive was in response to a deepening recession in the developed countries. Organization of the Petroleum Exporting Countries (OPEC) policy makers stated that a further output cut of more than 1 million barrels of oil per day would be necessary to support the Oil market in its current state. The dollar's decline against a basket of major currencies added to the rise in Oil prices yesterday. Analysts expect the dollar's weakness to increase the appeal of Oil and other commodities as attractive investments. OPEC Oil ministers are due to meet for informal talks in Cairo on November 29, though a cut in output is not expected to be announced until the next full policy meeting in December. Nevertheless, the recent gain in Crude Oil seems to be more of a simple correction than a steady momentum. Its rally seems to be unsustainable in the face of falling fuel demand and global economic recession. Technical News EUR/USD There is a very distinct bearish channel forming on the daily chart, as the pair now floats around the 1.2830 level. A bearish cross on the 4 hour chart's Slow Stochastic suggests that a bearish move is quite imminent. Going short with tight stops might be the right choice today. GBP/USD It seems that the cable has limited its bullish reversal after peaking at 1.5133. A bearish cross on the 4 hour chart's Slow Stochastic indicates that the pair could resume its bearish trend once again. Going short with tight stops might be the right strategy today. USD/JPY Lately, this pair has been going through a relatively choppy trading session and seems to be unable to pick up a sustained trend. The daily chart's Bollinger Bands are widened and its RSI flows in a neutral territory. Forex traders are advised to wait for a clearer signal before entering the market n this pair. USD/CHF The pair traded around the 1.20 levels during yesterday trading session, without making any significant breach. Now however, a bearish cross on the daily chart's Slow Stochastic indicates that a bearish move is forthcoming and the hourly chart supports that notion as well. Going short appears to be a right choice today. The Wild Card OIL There is a very distinct upward channel forming on the 4-hour charts. A fresh bullish cross on the daily chart's Slow Stochastic implies that the bullish correction is quite imminent. The RSI is floating in an oversold territory supporting the notion that there is still more room for the upwards correction. forex traders can maximize profits by buying on lows and taking advantage of a currently bullish trend. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, World Market |
Nov-25 World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Yen climbs, volatile shares keep risk aversion high LONDON - The yen gained broadly on Tuesday, while currencies with high yields fell as global recession fears returned to haunt financial markets, keeping stock markets volatile and risk demand low. Boosting the low-yielding yen was an early slide in European shares after optimism about news on Monday that the U.S. government would rescue Citigroup quickly dissipated. Analysts said the market remained jittery about ongoing problems in the banking sector, which kept demand high to unwind carry trades which use the yen to buy assets in higher-yielding currencies like the Australian and New Zealand dollars. "The market is still braced for more news on bank rescues, which could potentially be positive," said Michael Hart, currency strategist at Citigroup in London. "But the fact that we're still looking for new policy measures after all that has been done is a negative sign," he added. Ongoing signs of deep economic weakness also kept risk demand low, while comments from Bank of England Governor Mervyn King that he may need to cut UK interest rates more than expected reminded investors that more big rate cuts were in the pipeline. Meanwhile, media reports quoted European Central Bank Governing Council member Ewald Nowotny as saying that the central bank wants to keep some rate ammunition in reserve, bolstering the view that the ECB would refrain from aggressive cuts seen by the BoE. The dollar fell 0.8 percent to 96.23 yen, while the euro dropped 1.17 percent to 123.15 yen. Putting selling pressure on the single European currency was a 1 percent fall in European shares in early trade, reversing a near 9 percent rally on Monday. Stocks recovered to edge up 0.7 percent by 1138 GMT, with analysts citing month-end demand for stocks to rebalance investment portfolios, but gains were limited as few traders were interested in taking on significant risk. The euro fell 0.3 percent to $1.2868, extending losses after data released early in the European session confirmed that the German economy contracted by 0.5 percent in the third quarter. "The two former mainstays of the German upswing, investment in machinery and equipment and exports, have ... developed into handicaps -- hardly an encouraging omen for 2009," Commerzbank economist Christoph Weil said in a note to clients. Other surveys showed falls in confidence among French businesses and Italian consumers. The high-yielding Australian and New Zealand dollars lost more than 2 percent against the U.S. currency, while dropping more than 3 percent against the yen as investors continued to unwind carry trades. The dollar has also benefited from a sharp drop in risk appetite as positions in risky investments are closed out and their proceeds are converted back to the U.S. currency. The pound fell 0.6 percent to a session low of $1.5057, stung after the BoE's King said he may need to cut rates more than the central bank would otherwise as banks have been slow to pass on the effects of lower rates to customers. Traders also shed sterling positions after Monday's optimism about stimulatory measures announced in the UK government's Pre-Budget report gave way to renewed fears about the weak economic outlook and rising levels of debt. Investors awaited preliminary data on U.S. economic growth in the third quarter at 1330 GMT as evidence mounts that the U.S. economy is in a recession as the credit crisis continues to batter the financial and auto industries. U.S. consumer confidence numbers for November and the Richmond Fed index at 1500 GMT will also be closely eyed to better gauge the health of the U.S. economy. US Stocks at a Glance US STOCKS-Fed's consumer lending boosts Wall Street NEW YORK - U.S. stocks opened sharply higher on Tuesday after the Federal Reserve announced a program to bolster consumer lending, adding to optimism about government efforts aimed at averting a deep economic slump. The Dow Jones industrial average rose 110.23 points, or 1.31 percent, at 8,553.62. The Standard & Poor's 500 Index gained 12.80 points, or 1.50 percent, at 864.61. The Nasdaq Composite Index added 7.24 points, or 0.49 percent, at 1,479.26. US home prices plunge record 17.4 pct in September -S&P NEW YORK - Prices of U.S. single-family homes in September plunged a record 17.4 percent from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indices issued on Tuesday. The composite index of 20 metropolitan areas fell 1.8 percent in September from August, S&P said in a statement. S&P said its composite index of 10 metropolitan areas declined 1.9 percent in September from August for a 18.6 percent year-over-year drop, also a record. The rate of home price declines has accelerated on a quarterly basis too. In the third quarter, the decline in the S&P/Case-Shiller U.S. National Home Price Index -- which covers all nine U.S. census divisions -- remained in double digits, posting a record 16.6 percent decline versus the third quarter of 2007. This has worsened from the annual declines of 15.1 percent and 14.0 percent, reported for the second and first quarters of the year, respectively. The U.S. National Home Price Index dropped 3.5 percent in the third quarter from the second quarter. "The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals," David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, said in a statement. European News EUROPE MARKETS: Stocks In Europe Nudge Higher, Though Rio Tinto, AXA Slump LONDON - Stocks in Europe reversed early lows on Tuesday to nudge past the outsized gains made in the previous session, as gains for banks and oil and gas producers offset a slump in Rio Tinto shares. The pan-European Dow Jones Stoxx 600 index inched up 0.1% at 197.60. The index ended 8.4% higher in the previous session amid strong gains from oil and gas producers. Many firms in the oil and gas sector advanced again on Tuesday, with BG Group up 5.7% and Total (TOT) shares up 1.5%. Banks were also doing well, with HSBC Holdings (HBC) up 2.2% and Lloyds TSB (LYG) up 9.4%. Bank of England Gov. Mervyn King told a parliamentary committee on Tuesday that interest-rate cuts by the Bank of England as well as "very significant" fiscal-policy steps by the British government "will act to mitigate" the U.K. economic slowdown over the next year. Still, Rio Tinto (RTP) shares fell 365 to 1,567 pence after suitor BHP Billiton (BHP) said that it believes a bid for Rio Tinto is no longer in the best interests of its shareholders. Shares in BHP Billiton rose 14.9% in London. Overall, the U.K. FTSE 100 index advanced 0.6% to 4,176.02, the French CAC-40 index rose 0.2% to 3,179.86, while the German DAX 30 index fell 0.7% to 4,521.09 amid a 13.4% drop in Volkswagen shares. U.S. stock futures consolidated Tuesday after a banner two-session rally, with a cautious outlook from Starbucks a reminder of the economic turmoil that has jarred markets this year. Axa (AXA) shares fell 6.9% in Paris after the insurance giant cut its 2008 underlying earnings forecast, blaming the deepening financial crisis. "It should be pointed out that management stated in August that if no further deterioration is seen in markets, the 2008 dividend may be similar to that of 2007's 1.2 euros a share. In view of the performance of the group's profit, we expect to see the dividend cut back by at least 30%," said analysts at Ahorro. Axa is set to decide on its dividend payout in February. Skanska , the Stockholm construction major, fell 4.9%. It said it would cut 3,400, or about 5.7%, of its 60,000 jobs as residential and other building markets are weakening. Skanska said its fourth-quarter results would reflect a charge of 600 million Swedish kroner ($74.6 million) for severance costs. Telecom BT Group (BT) declined 2.2% after Merrill Lynch downgraded the firm to neutral from buy. "Despite BT's 50% decline this year and 12% underperformance relative to the FTSE 100, we think that the bounce off recent post-warning lows is overdone," the broker said. "We think that the market has become over excited about the Nov 13 headcount announcement, which we see are part of normal attrition," it added. Shares in French alcoholic drinks maker Remy Cointreau rose 5.3% as the group said that first-half net profit rose to 48.3 million euros, from 38.1 million euros. The first half of the year was marked by improved profitability in champagne, satisfactory growth of top-of-the-range cognacs, as well as strong sales growth in emerging markets, the firm said. Asia at a Glance CORRECTED-GLOBAL MARKETS-Asia shares rally on Citi rescue; risks remain HONG KONG- Asian shares rallied and bonds fell after the U.S. government rescued banking giant Citigroup in a bid to prevent further damage to the ailing global financial system. The yen edged up from sharp falls a day earlier and gained against major currencies, but some traders said the Japanese currency could stall in the near term if investors continued to return to battered equity markets and other riskier assets from so-called safe havens such as bonds. Oil prices retreated below $54 after surging more than 9 percent in the previous session, a rally that was big enough to send regional commodity-related stocks such as BHP Billiton sharply higher. But plenty of near-term risks remained, including whether other global lenders are in need of rescue, the fate of U.S. auto makers and indicators that continue to signal a rough road ahead for the global economy. China's growth could well slow to its weakest pace in almost two decades next year, the World Bank said, the latest grim prognosis for a global economy buckling despite the concerted efforts of policymakers. "What we are seeing is just short-term optimism and hope. Economic data from the U.S., Japan is not encouraging. So, the future is not promising," said Amitabh Chakraborty, president-equities at Religare Securities in India. The MSCI index of Asia-Pacific stocks excluding Japan rose 3.8 percent as of 0700 GMT, heading towards a third consecutive daily gain. Japan's Nikkei average jumped 5.2 percent, resuming trade after a public holiday on Monday. Shares in Australia and Hong Kong rallied 4-5 percent each, while markets in Taiwan, Singapore and India rose over 2 percent. The world's largest miner, BHP Billiton, ended 12.2 percent higher in Sydney, but after the market close it announced that it was pulling the plug on its long-standing $66 billion bid for rival Rio Tinto, citing worsening conditions in metals markets and demands for asset sales from European competition regulators. South Korea's KOSPI index advanced 1.4 percent, but Shanghai's index fell 0.4 percent. Gains in Asia were led in part by banks such as South Korea's KB Financial Group and Commonwealth Bank of Australia , which recovered from steep falls on Monday as worries about slowing economic growth and rising bad debts weighed on the battered financial sector. Investors went from buying assets perceived as safe havens during the uncertainty in the lead-up to Citigroup's rescue to shunning them on Tuesday. The question is how long it will last. Data continues to confirm the weakness of the global economy. South Korea on Tuesday said consumer confidence slumped to a four-month low in November, while in Germany, corporate sentiment plunged to its lowest level in nearly 16 years this month. and The World Bank also cut on Tuesday its 2009 growth forecast for China, which along with the United States, is a key export market for Asia. On the corporate front, Australia's Qantas Airways, and Japan's Honda Motor were among the latest companies in the region to warn of a toughening outlook. "Though U.S. shares may rise a bit more, these gains are likely to be limited by concern about more bad indicators that will show the poor state of the economy," said Yutaka Miura, senior technical analyst at Shinko Securities in Japan. Still, regional bonds largely fell. December 10-year Japanese government bonds (JGB) futures dropped by as much as 0.54 point before recovering to be down 0.26 from the prior close at 139.04. The benchmark 10-year JGB yield rose 1.5 basis points to 1.405 percent. Oil prices retreated 86 cents to $53.65 a barrel after surging more than 9 percent on Monday when OPEC President Chakib Khelil said a further cut in crude output would be necessary. Oil had tumbled to a 3-½ year low on Friday. Metals Gold dips 2 pct as dollar firms, oil weakens LONDON - Gold fell 2 percent in Europe on Tuesday as a firmer dollar and softer oil prices prompted profit taking after the previous session's near six-week highs. Spot gold was at $807.00/809.00 an ounce at 1056 GMT, down from $819.55 an ounce in New York late on Monday. Earlier it touched a session low of $801.80. The precious metal posted its biggest two-day gain since early 2000 that session as the dollar tumbled, with risk aversion easing after the U.S. government agreed to inject $20 billion to rescue Citigroup. The rally in commodities and stocks which followed pulled gold in its wake, but as the dollar recovers a touch on Tuesday and oil prices slip after gaining 10 percent in two days, the precious metal is easing. "We have seen some really strong gains over the last few days," BNP Paribas analyst Michael Widmer said. "Yesterday there were gains across most asset classes, as there was some relief over the news on Citigroup, and gold benefitted from that as well. So far this morning, we are seeing a bit of profit taking." A recovery in the dollar versus the euro is prompting some of this selling, analysts said. Gold is often bought as an alternative asset to the U.S. currency and tends to move in the opposite direction to it. The dollar firmed more than half a percent against the single currency in early trade, off a two-week low it hit on Monday. Other asset prices also gave up gains, weighing on gold. European stocks slipped after mining giant BHP Billiton said it was dropping its bid for rival Rio Tinto, and metals such as copper and nickel dipped. Oil prices also fell, with U.S. crude futures shedding more than $2 a barrel in early European trade after Monday's near 10 percent rally. Gold typically moves in line with crude prices, as it is often bought as a hedge against oil-led inflation. But while gold is slipping for the moment, analysts are confident that with interest rates easing around the world and the economic outlook uncertain, the precious metal will continue to be supported. "Gold's rally seems to be overextended and profit taking or slight reversal is necessary (for it) to continue its uptrend," Pradeep Unni at Richcomm Global Services said. "However, as long as it stays above $776, gold would be bullish," he added. Among other precious metals, spot silver tracked gold lower to $10.33/10.41 an ounce, against $10.47 in New York late on Monday. Spot platinum slipped to $845/865 an ounce from $856, while its sister metal palladium was little changed at $191/199 an ounce against $190.50. Both platinum group metals have suffered from fears over falling demand from the automotive sector, which accounts for around half of global platinum and palladium consumption. However, lower prices are causing producers to scale back output of the metals, potentially supporting prices, analysts said. "More and more mining companies are adjusting their production to the current market situation and are thereby contributing to a potential medium-term scarcity of metal and... higher prices," precious metals group Heraeus said in a weekly note. Labels: ADVFN NewsDesk, Forex Analysis, Market Analysis, Market Trend, money trading, World Market |
Nov-24 Daily Forex Analysis
| by: Forexyard Headlines CitiGroup Bailout and Economic Stimulus; Will they be Enough? The U.S. government is bailing out CitiGroup, a very large investment bank, with $306 billion, and President-elect Obama is hinting at a further $300-700 billion economic stimulus package. This either indicates a future strengthening of the USD or highlights the weakness of the U.S. economy. Traders should bear in mind that the last few weeks have shown that the U.S. Dollar seems to be strengthening as a result of negative U.S data and not the other way around, which results in a type of pricing bubble. At some point the USD will meet an end to its recent bullish run. Will these bailouts be enough to ward off this catastrophe? Economic News USD USD Stabilizes against Major Currencies The past week has proven that the greenback is consolidating at its current levels against the major currencies. However, the USD is constantly attempting to break through these current levels and it appears that a bullish breach seems far more likely than a bearish one. Last week was filled with negative data from the U.S economy. The Producer Price Index (PPI) dropped for a third month in a row, landing on -2.8%, proving that consumers in the U.S are in a slump. The Building Permits survey dropped to a mere 0.71 million new permits that were issued in October, dropping for the fifth consecutive month. The housing sector in the U.S is one of the best gauges of the deteriorating economic condition as fewer banks are willing to provide a new mortgage which means fewer citizens are purchasing new homes. Last but not least was the Unemployment Claims figure, which reached 542K individuals who filed for unemployment insurance for the first time during the past week. However, despite the unfortunate figures, the USD is refusing to slide. As stated here many times before, investors are currently seeing the negative data from the U.S as a pitfall for the leading economies, which will suffer greater from the ongoing decrease in U.S spending. As for the week ahead, a batch of data is expected from the U.S economy. Traders should keep a close eye on four different indicators. First is the Existing Home Sales, which will be published today and will provide additional information on the U.S housing sector. On Tuesday, consumer related data such as the Preliminary Gross Domestic Product (GDP) and Consumer Confidence report are scheduled and will likely provide a better landscape of the consumers' conditions in the U.S. Lastly, on Wednesday, the Unemployment Claims figure will be announced. Forex traders should bear in mind that the last few weeks have shown that the U.S Dollar seems to be strengthening as a result of negative U.S data and not the other way around, which results in a type of pricing bubble. At some point the USD will meet an end to its recent bullish run. EUR EUR Remains at Low Levels against the USD In the past week the EUR has retained its relatively low exchange rates against the major currencies, and forced most traders to go short. For now it is quite clear that the previous levels of the EUR, such as 1.5000 against the USD, are a thing of the past, and seem highly unlikely to resume in the near future. A few significant economic indicators were published from the Euro-Zone last week, but which only had a limited impact on the EUR as investors world-wide are focusing their attention to the U.S economic condition more than anything else. It can even be said that it appears that the EUR is mainly responding to the Dollar's movements. Looking ahead to this week, the most crucial Euro-Zone economic indicators will be given from Germany. The German economy is considered to be the strongest in the Euro-Zone. An improving condition in the German economy will probably be a landmark in the Euro-Zone's race out of its recent recession, and is one of the key factors which will elevate the EUR. Traders should follow the publications from the German economy and also watch out for any leading political announcements from the region that could have a great impact on the EUR. JPY Bank of Japan's Interest Rate Cut Proves Successful The past week has proven successful for the Bank of Japan's (BoJ) recent decision to cut Interest Rates to 0.30%. The JPY's intensive bullish trend was halted and the JPY is currently trading at the 95.00 level against the USD and at the 120.00 level against the EUR. The Japanese economic outlook seemed quite disturbing last week. The Preliminary Gross Domestic Product (GDP) dropped for the second month in a raw, confirming that Japanese consumers are being more careful with their spending these days. The Japanese Tertiary Industry Activity dropped for the second month in a row as well; pointing out that the Japanese economy has entered a phase of contraction. This week's leading data will be the Preliminary Industrial Production for October, which is expected to decrease by 2.5%, and the Retails Sales survey which is expected to decrease by 0.9%. These figures will act as another proof that the Japanese economy is contracting further and that the JPY might enter a bearish trend against the major currencies in the coming weeks. Oil Will Crude Oil Prices Drop to $40 a Barrel? Crude Oil prices are continuing to slide, breaking recent record lows on a daily basis. It appears that the psychological factor is the strongest reason for the constant drop in Oil prices. For a long time Oil prices were considered to be over-valued. Now Crude Oil seems be the biggest victim of the economic turmoil. Whereas the demand for Oil is only expected to decrease by 2.5%, Oil prices are dropping about 2.5% on a daily basis on average, and have fallen from over $147 a barrel to less than $50 a barrel in the past 5 months. Another reason for the ongoing depreciation of Crude Oil prices is the massive strengthening of the USD, and it has seemed quite clear that if the EUR/USD will drop to the 1.2000 level, Oil prices will probably drop towards $40 a barrel. This week traders should follow OPEC announcements in order to predict any price movements for Crude Oil, as production cuts may be in the works. Also, keep a close look on the EUR/USD as any deep changes in that pair will likely impact Oil prices this week. Technical News EUR/USD The 4-hour chart shows that the momentum is still bullish. However, its Relative Strength Index (RSI) floats near the upper line indicating that the current trend might be closing to its end. On the hourlies, the local bearish correction is already intact. A bearish cross of the Hourly chart's Slow Stochastic validates that correction as well. GBP/USD The daily chart is showing that the pair does not have a distinct direction, as the chart appears to be quite horizontal for the past 10 days. The Bollinger Bands are widened, and the 4-hour Slow Stochastic also provides no clear indication. On the hourlies, the pair has been range trading with high volatility for a while now. Waiting for a clearer sign before entering the market might be the smart move today. USD/JPY The typical range trading on the daily chart continues. Both the RSI and Slow Stochastic are floating in neutral territory. The hourlies are also providing mixed signals with no specific direction. Good strategy might be to wait for a clearer signal before entering the market n this pair. USD/CHF There is a very distinct bearish channel forming on the daily chart, as the pair now floats at the beginning of it. A fresh bearish cross on the daily chart's Slow Stochastic indicates that the bearish momentum will probably continue. The hourlies support the bearish notion as well, and it appears that the pair still has more room to run. Going short with tight stops is a preferred strategy today. The Wild Card Oil There is a very distinct upward channel forming on the 4-hour charts. A fresh bullish cross on the daily chart's Slow Stochastic implies that the bullish correction is quite imminent. The RSI is floating in an oversold territory supporting the notion that there is still more room for the upwards correction. Forex traders can maximize profits by buying on lows and taking advantage of a currently bullish trend. Labels: Forex Analysis, Forex Trend, m, Market Analysis, Market Trend, money trading, Moving Average, World Market |