Oil and gold stocks mortgage

Today's oil price

2012-10-13T21:40:00.002+03:00

$91.86 per barrel

Daily change of 10/12/12 ( 91.16% )

Oil Quote Updated Oct-13-12 1:30 PM

Oil Prices Set to Fall Through 2017

2012-10-13T21:39:00.004+03:00

Oil prices are expected to fall over the next five years as demand slumps and a ramp-up in production helps boost supplies, the International Energy Agency (IEA) said Friday.
The group, which represents the world’s 28 richest countries, said the combination will help “redefine the refining industry and transform global oil trade,” though it noted geopolitical risks will continue to loom over the oil supply chain.
The Paris-based IEA sees global oil product capacity growing to 101 million barrels of oil a day by 2017, above its earlier forecast of 95.7 million barrels.
Global demand is forecast to grow at an annual average of 1.1 million barrels a day over the next five years, compared with the IEA's earlier projection of 1.2 million barrels.
More of the growth in oil supply is expected to come from the Americas, buoyed by new drilling technologies in U.S. and Canadian oil sands. Growing output from reserves like the Bakken and Eagle Ford shales has helped propel U.S. domestic oil production to the highest level since 1995.
Looking to capitalize on the jump in production, oil major BP recently secured a license to ship U.S. crude oil to Canada and Royal Dutch Shell is reportedly applying for U.S. export licenses.
Oil production in Middle Eastern countries like Iraq is expected to continue ramping up despite diminishing appetite in North America, and that could help feed growing regional demand there.
“Iraq stands out as its production capacity is expected to enter a new growth phase, which may continue even beyond the forecast period,” the IEA said.
However, in other areas, such as Libya, security concerns may continue to constrain production growth over the next few years.
While some Western companies like BP (BP) have announced plans to return or ramp up production in Libya since the killing of long-time dictator Moammar Qaddafi a year ago,

the killing of a U.S. envoy there last month resurrected safety fears.
The IEA, though, said it expects new supply sources to more than offset any decline in rates or outages elsewhere in the world, as well as the tough international sanctions on Iran.
At the same time, the spreading of refining capacity to emerging regions like Asia is expected to help offset decreases in other areas of the world.
Internationally traded crude volumes are projected to decline sharply, but the IEA said product trade is forecast to growth in both volume and scope.
Sweet crude oil was down about 0.50% Friday afternoon to $91.52 and is down about 6.84% from the start of year. It’s still up about 9.3% from 12 months ago.

Today's oil price

2012-10-11T00:05:00.000+03:00

$91.36 per barrel

Daily change of 0.11 ( 0.12% )

Oil Quote Updated Oct-10-12 4:00 PM

Hotel REITs: Particularly Sensitive To Economic Concerns

2012-10-10T22:59:00.001+03:00

Hotel REITs are a deeply cyclical sector. In economic upswings, profits are great, but in downswings, occupancy, room rates, and RevPar all suffer greatly. This sensitivity is a result of the industry's short "lease" structure. Unlike retail, commercial or residential where leases span years, hotel leases are counted in days and therefore, must be constantly "renewed."

The positive effect of short leases is that hotels are an excellent inflation hedge. Average daily rate (ADR) can easily be adjusted and is highly correlated with inflation. In fact, over the past 20 years, annual nominal ADR growth rate has been around 3.5%, while annual CPI was roughly 3.1% (Source: 2010 Smith Travel Research, Inc., U.S. Bureau of Labor Statistics).

The negative effect is that if the economy goes south, visitors do not renew, and that makes hotel stock prices particularly sensitive to economic concerns. Therefore, when doom and gloom are predicted, hotels have often been an effective way to short the economy. An example of this occurring is the third quarter of 2011.

Leading into the second half of 2011, hotels were poised to continue a strong recovery. June 2011's RevPar at $68.90 was the highest since August 2008, driven by a 3.5% increase in ADR and a 4.2% increase in occupancy from June. This healthy growth was occurring despite an anemic first half year GDP growth of less than 1%.

But concerns about the economy tipped the market into a significant retraction, with the S&P 500 sliding 17.95% between July 1 and October 3, 2011. The bad news in July and August 2011 was wide ranging -- from the debt ceiling crisis, to the U.S. credit rating downgrade, to the increasing likelihood of countries like Italy joining the ranks of Greece and Portugal. Stocks were hit hard, REITs were hit even harder, sliding 21.23%, and hotels were hit almost twice as hard, falling 38.12%.

Hotel REITs are hit extra hard in times of economic concern because of the immediate affects a slow economy can have on this sector. Here's a sample of what REIT professionals were saying in 2011 about the dive:

"What's happened is that during the late summer [of 2011] when we had so much turbulence in the equity markets and in the financial markets in general, primarily because of what was happening in Europe, but also what was happening with the U.S. congress, there was a great deal of concern about where the economy was headed and a lot of that spilled over into lodging because everyone knows how sensitive we are to how the overall economy performs."

- Ed Walter, President and CEO of Host Hotels and Resorts

"There's been a huge disconnect between Wall Street and Main Street when it comes to hotel REITs,"

- Ken Cruse, President of Sunstone Hotel Investors

Commenting on how he did not think the drop in hotel stock prices had much to with hotel fundamentals, "It was just overall global markets, the impact of the European recession, and there was a broader pullback in the market," [Jay Shah] says. "I think hotels and real estate stocks took it may be worse than others because they are financials and highly volatile."

- Jay Shah, CEO of Hersha Hospitality Trust

The hotel's sector sensitivity to economic news has, in turn, made hotels more volatile. In the first half of 2012, the highs are higher, and lows are lower:

Hotels could not recover in 2011 after the extra severe slide in July and August:

This volatility has contributed to Hotel REITs either being a big leader or big loser over the past six years:

While the hotel sector has led the nosedive in dividends over the past four years:

Outlook

Fundamentals for hotels look great. Through August 2012 RevPAR is projected to grow by 7.2% for the year. The lack of near-term supply should help the industry continue to raise rates, with ADR predicted to grow by 4.6%, while hotel demand is surpassing its pre-recession peak. Construction of new hotels has historically grown at an average of approximately 2% per year, but growth has been less than 1% over each of the past two years, and that rate is expected to continue.

But as we saw in the third quarter of 2011, rosy fundamentals will only support hotel stocks to a point, so I may shift my "hold" to a "sell" in this sector within the next 60 days if we begin to see new cracks in the economy or the beginning of a market correction. I believe we are entering a particularly high risk three- to four-month period. Some of my concerns are: (1) a S&P 500 negative third quarter earnings season after 11 consecutive quarters of gains; (2) an unemployment surge after the recent, possibly too good to be true, drop to 7.8% -- the largest move since 1983; (3) an unresolved fiscal cliff; (4) a return of European debt crisis headlines; and (5) a post-election market slide. These are concerns that all market participants must be cognizant of -- and deserved or not -- that often have an amplified effect on hotel REIT stocks.

Preferred Alternative

An alternative to owning hotel REITs outright is to purchase preferreds. Preferreds have historically yielded between 6.3 and 9%, but most rates have recently dropped to a 5.6 to 6.5% range as investors' appetites for REITs grow.

There are solid hotel REITs with preferreds that have significantly higher yields. I like Chesapeake Lodging Trust's new preferred (CHSP-PA), with a coupon rate of 7.75%. CHSP is profitable with a healthy cash flow -- the most important factor to consider when purchasing preferreds. The trust's holdings consist of 14 upper-upscale hotels (a sector less prone to market swings). Additionally, the trust has a promising outlook, and has recently experienced significant insider buying.

Fed chose mortgage bonds to bolster housing gains

2012-10-08T23:01:00.000+03:00

The Federal Reserve structured its latest stimulus program around the purchase of mortgage bonds after members agreed that helping a nascent housing recovery was a good way to lift the broader economy.
Minutes of the Fed's Sept. 12-13 meeting released Thursday also show that most members now agree that tying a future increase in short-term interest rates to economic measures, such as a specific unemployment rate, could be effective. But members agreed to hold off on the change to work out the details.
After the meeting the Fed said it would keep buying mortgage bonds until the job market showed substantial improvement. The Fed also extended its plan to keep its benchmark short-term interest rate near zero until mid-2015 and left open the possibility of taking other steps.
The Fed has already purchased more than $2 trillion in bonds since the 2008 financial crisis. The latest program seeks to spend $40 billion a month to buy mortgage bonds without an end date set.
Many participants agreed at the meeting that more bond purchases would provide support to the economy by putting downward pressure on longer-term interest rates. That encourages more borrowing and spending, which drives growth.
According to the minutes, Fed members compared the effectiveness of buying Treasury bonds to that of mortgage-backed securities.
"Some participants suggested that, all else being equal, (mortgage bond) purchases could be preferable because they would more directly support the housing sector, which remains weak but has shown some signs of improvement of late," according to the minutes.
A few members expressed skepticism that additional bond purchases would help. And they raised concerns that more bond buying could increase the risk of higher inflation at a later time.
Mortgage rates have been below 4 percent all year. While home sales are rising, they remain well below healthy levels.
On Monday, Chairman Ben Bernanke defended the aggressive policies during a speech to the Economic Club of Indiana. The Fed needs to drive down long-term borrowing rates because the economy isn't growing fast enough to reduce high unemployment, Bernanke said.
He also sought to reassure investors about the Fed's timetable for keeping its short-term rate ultra-low. The plan doesn't mean the Fed expects the economy to be weak through 2015, he said, noting that policymakers plan to keep rates low well after the economy strengthens.

Dollar and precious metals at a glance

2012-10-08T22:58:00.004+03:00

Key currency exchange rates Monday, compared with late Friday in New York:
Dollar vs: Exchange Rate Pvs Day
Yen 78.34 78.69
Euro $1.2967 $1.3025
Pound $1.6036 $1.6140
Swiss franc 0.9330 0.9300
Canadian dollar 0.9766 0.9790
Mexican peso 12.8115 12.7968
Metal Price (troy oz.) Pvs Day
NY Merc Gold $1773.50 $1778.60
NY HSBC Bank US $1775.00 $1775.00
NY Merc Silver $33.982 $35.516

Today's oil price

2012-10-08T22:32:00.002+03:00

$89.46 per barrel

Daily change of 0.42 ( 0.47% )

Oil Quote Updated Oct-08-12 12:00 AM

Gold and Silver Prices – Daily Outlook for October 5

2012-10-05T22:55:00.001+03:00

The prices gold and silver rose again for the second consecutive day. The rally was plausibly fueled by the recent appreciation of the Euro against the USD. The ECB left its interest rate unchanged at 0.75%. Mario Draghi stated (again) that ECB is ready to start its bond purchase program that will help Spain. This news may have contributed to the recent recovery of the Euro. U.S jobless claims rose by 4k to reach 367k. Currently, the prices of gold and silver are falling. On today’s agenda include: U.S. Non-Farm Payroll ((Update: 114k jobs added in September) and Canada’s Employment Report.

Here is a short outlook for precious metals for Friday, October 5th:

Precious Metals –October Update

On Thursday, Gold rose again by 0.94% to $1,796.5; Silver also increased by 1.18% to $35.1. During the week, gold rose by 1.27%; silver, by 1.52%.

As seen below, the chart presents the changes of normalized prices of precious metals in the last several weeks (normalized to 100 as of September 13th). During the past several weeks the prices of gold and silver have moved with an unclear trend.

The ratio between the two precious metals slipped on Thursday to 51.18. During October, the ratio nearly didn’t change as gold performed much like silver.

Minutes of FOMC Meeting

The minutes of the FOMC meeting, which was held back in September 13-14 came out yesterday. The report showed the FOMC is considering continuing with its current monetary expansion plan even if the U.S economy will recover:

“To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

On Today’s Agenda

U.S. Non-Farm Payroll Report: in the recent report for August 2012, the labor market expanded by a lower than expected rate: the number of non-farm payroll employment rose by 96k; the U.S unemployment rate slipped to 8.1%; this report may affect not only the U.S dollar, but also commodities prices (see here my last review on the U.S employment report). The table below shows the relation among the prices of gold, silver and USD/YEN with the labor report. In the last report the prices of silver and gold hiked. My guess is that if the upcoming report will be positive and rise above the 120k mark, it is likely to pull up precious metals rates.

Canada’s Employment Report: In the recent employment report for August 2012, unemployment remained at 7.3%; the employment rose by 34k during the month. The upcoming report might affect the Canadian dollar and consequently the prices of bullion;

Currencies / Bullion Market – October Update

The Euro/ USD hiked on Thursday by 0.87% to 1.3017. During the month, the Euro/USD rose by 1.23%. Further, other currencies including Aussie dollar and Canadian dollar also appreciated yesterday against the USD by 0.24% and 0.73%, respectively. The correlation between gold and Euro and other “risk currencies” remains mid-strong and positive: during September/October, the linear correlation between the gold and EURO/USD was 0.66 (daily percent changes). If these currencies and the Euro will continue to rise against the USD, then they are likely to pull up gold and silver. Currently, the Euro/USD is trading up.

Current Gold and Silver Rates as of October 5th

Gold (November 2012 delivery) is traded at $1,794.9 per t oz. a $1.6 or 0.09% decrease as of 03:15*.

Silver (November 2012 delivery) is at $35.065 per t oz – a $0.036 or 0.1% decrease as of 03:15*.

(* GMT)

Daily Outlook for October 5th

The prices of precious metals rose on the second consecutive day. The recent minute of the FOMC meeting may have contributed to the rally of precious metals. The rise in the Euro and other “risk currencies” may have also helped pull up precious metals. The ongoing speculation around Spain’s next move could affect not only the Euro, but also bullion rates. Today’s publication of the U.S. jobs report could positively affect the USD, stocks and commodities if the report will show growth in jobs of above 120k. Finally, if the Euro and Canadian dollar will rise, then they could also rally precious metals.

U.S Employment Added by 114k Jobs in September | Gold and Silver Are Falling

2012-10-05T22:47:00.001+03:00

The U.S. employment rose by a lower rate than many had anticipated during August: according to the latest U.S. employment report, which was published today, October 5th by the Bureau of Labor Statistics the number of non-farm employees grew by 114,000. The main sectors that expanded during September were in health care and in transportation and warehousing. The rate of unemployment declined to 7.8%. Gold and Silver prices are falling along with other commodities rates.

The chart below shows the revised figures of the number of non-farm employees added to the labor market during recent years (up to September 2012). The change in non-farm payroll was revised up for July from +141k to +181k; For August it was revised from +96k to +142k. The revised up figures for July and August suggest the employment situation in the U.S has improved in recent months, so the situation might not be so dire as many stated in the past.

As I have calculated in the past, the number of non-farm payroll employment needed to be added to the U.S labor market on an average monthly scale to keep up with the growth of the U.S. civilian work force is at least 107k (see red line in the chart below). This means that the recent gain in employment in the past several months were higher than this number. Further, this also means that the number of jobs added in September just barley surpassed this figure.

The rate of U.S. unemployment declined in September to 7.8%. The rate of unemployment is at its lowest level in recent years. The current unemployment rate is 2 percent points lower than its rate in November 2010. This positive news for the decline in rate of unemployment was something that could help the President Obama in his future debates before the November elections.

Furthermore, the number of unemployed persons (12.1 million) declined by nearly 456,000 during September compared to the previous month.

Following this news currently, the Euro to US dollar exchange rate is slightly rising along with the GBP/USD; crude oil price is falling while the U.S stock market indexes are rising; gold price is falling.

Now let’s breakdown how this news might affect the direction of commodities prices, including the prices of gold and crude oil:

Gold Market

As I have already showed in the recent gold and silver prices monthly report, historically, as the non-farm payrolls expand by at least the population growth rate (roughly 107k), gold price tended to decline; this correlation was mostly due to the effect this news has had on the speculation of further stimulus by the Fed. On the other hand, the relation of the precious metals market with other markets including commodities and stocks may also play a role in this relation. I.e. as the prices of commodities (oil) and stocks rise, gold and silver also tend to increase. The rise in the Euro/USD is also contributing to the recovery of bullion rates.

The table below presents the correlation between the news of the U.S. non-farm payroll employment developments and the daily changes in gold and silver prices on the day of the U.S. labor report publication. The table shows the negative relation between the U.S employment and daily changes of precious metals.

Crude Oil Market

The recent rise in the non-farm employment is slightly lower than some had anticipated but is still above the 100k mark which is a positive sign for the recovery of the U.S. economy from the perspective of the U.S’s work force. These numbers might be a seasonal effect but if they will continue it could help with the recovery of the markets as it signals an expected rise in U.S. demand for crude oil, and consequently may continue to pressure up crude oil prices during today’s trading

Weekly Review and Open Book Roundup

2012-10-05T22:23:00.000+03:00

Investors’ worries over Spain once again controlled the week’s sentiment, with a continual ebb and flow depending on the news outcome. While Spain’s government is still holding out on an official request for financial aid from the E.U., ECB and IMF – collectively, the “Troika” – they have made inroads toward that day, with the presentation on Thursday of the 2013 budget and accompanying reforms. Markets viewed the budget in a positive light, and policy leaders praised the Rajoy government’s efforts for new necessary reforms as above and beyond the minimum requirements.

Spanish citizens were less enthused, however, and showed their displeasure with protests on the streets of Madrid. Spain’s key region, Catalonia, expressed their discontent to an even higher degree by announcing upcoming elections during which a secession vote will take place. Members of the Spanish government strongly voiced their opposition to Catalonia’s impending referendum and declared it unconstitutional. The region’s president Artur Mas’ has said that he would push for a referendum irrespective of its constitutionality.

Over the weekend, stress test results for Spain’s banks were released and while they were within the expected and acceptable limits, the government has said that they would not ask for the full amount. According to the results, some €59.3 billion is necessary for Spain’s banks to ride out the economic downtrend. As part of the bailout, the Troika had agreed to fund as much as €100 billion to the ailing banking sector, but the Spanish government has said that they will ask for only €40.0 billion.

Later today, Moody’s credit ratings agency is expected to announce their decision on Spanish debt, with a majority of analysts expecting a downgrade to below investment grade level. Spain’s borrowing costs have consistently been at high levels, though the stress test results helped to bring yields on 5-year debt down to 4.93%, but analysts don’t expect too much support in the near term unless and until the Spanish government officially seeks assistance which would trigger the ECB asset-purchase program.

The Social Trading Community at eToro

This week we look at OpenBook trader skanand9673 from India, a relatively new trader who is already included on the 3-month rankings board in position #27. As of this writing, the guru has 590 followers and 245 copiers. The high risk trader has a max drawdown of 9.8%, average exposure of 68.9% and profitable weeks ratio of 76.9% while realized equity is over 300% for the period and at 121.8% for the last month. With the exception of a brief and unprofitable foray into the EUR/USD pair early on in the trader’s history, the trader is now by and large a commodities trader, with 37.9% of the portfolio allocated to gold and 62.1% allocated to silver. The trader’s gold allocation has gained 6.7% while silver has earned 3.6%. Over the past three months, the trader has executed 222 trades, going long 98.5% of the time, no doubt taking into consideration the likely rise in commodity prices given the expected flood of liquidity from the world’s major central banks.

OpenBook trader aniindra7116 from Singapore is another high-risk commodities trader; like the previous guru, the trader is listed on the 3-month rankings board in position #42 with a max drawdown of 10.2%, average exposure of 14.9% and profitable weeks ratio of 76.9%. The trader’s realized equity was 6% for last week, 91.4% for last month more than 300% over the 3 and 6-month periods; out to 12-months the trader’s realized equity was reported at a still respectable 86.1%. The trader has had a 100% allocation in gold over the last quarter, which gained 26.6%; of the 107 trades executed, 83.2% were buys with an average hold time of 1½ days. As of this writing, the trader has 310 followers and 97 copiers, and is another good choice for those traders looking to diversify their own portfolios with established and successful commodities traders.

No Changes from Central Banks but Bank of Spain Surprises

2012-10-05T22:15:00.003+03:00

Yesterday was the day that financial markets heard from several of the world’s major banks, with policy and interest rate decisions from the Bank of England and the European Central Bank, and early today the Bank of Japan weighed in as well. As forecasters had anticipated, all of the central banks stood pat, generally in wait-and-see mode to assess previous easing efforts, but not discounting the possibility of more easing ahead. Of the central banks, only the ECB was able to offer markets anything of value, saying that they were prepared to buy up Spanish debt as and when Spain’s government made an official request.

But it was a statement made by Spain’s central bank which was most notable but seemed to have slipped past investors’ focus. Yesterday, the governor of the Bank of Spain, Luis Maria Linde, dismissed the Spanish government’s budget which was presented late last week as too optimistic and not in line with independent forecasts. According to him, Spain’s economy is set to contract by 1.5% next year, not the 0.5% projection that the Spanish government has forecast. Linde believes that the government must consider still more measures so that deficit targets can be met, even beyond those proposals made by the Mariano Rajoy government.

Markets had priced in those decisions well ahead of the actual announcement and there was little movement in equities though the Euro edged higher. The EUR/USD is currently trading at 1.3006, and sentiment on OpenBook is bearish with 59% of traders selling against 41% buying. OpenBook guru NMarijus leads the trend with several open short positions; the guru has had several short positions hitting their respective TPs over the course of the past several days, with the most recent earning a 6% return. The guru has a large allocation in the EUR/USD pair, ranging between 96% and 100% over the past six months. As of now, the guru, who has 22,577 followers and 1,539 copiers, has realized equity over the last quarter was 5.5%, over the last six months 105.7% and for the last 12-months was 47.4%

Google Too Rich for your Blood? Not with Fractional Shares

2012-10-05T22:10:00.002+03:00

One reason that investors tend to like mutual funds is because it allows them to buy a share of a stock that they’d like to own without having to fork over the whole amount at once. Let’s face it, the most popular and bluest of the blue chips are not cheap; take the two top tech stocks Apple and Google, for example, which is trading at $668 and $767, respectively. By the time an investor gets the money together to buy a share, well, if they’re lucky the price hasn’t gone up too much. But mutual funds also often have shares of stock that an investor might not be so interested in; here’s where fractional shares come in.

In the past, a corporation might be compelled to issue fractional shares as a result of a stock split or a dividend reimbursement and for the most part it was only an existing shareholder who could obtain the fractional shares. Now, fractional shares are being offered for trade by some online brokers, including eToro.

Why buy a fractional share? Why not? Analysts point out that one of the boons of fractional share purchases is that an investor can buy higher quality stocks which offer greater potential for profits. It allows an investor to buy a fraction of a single share, and the purchases are made in terms of dollars, not shares. That’s the way it’s done here at eToro, of course, with shares in several of the top corporations available, including Apple and Google, but also Microsoft, Facebook, Zynga, Yahoo and Amazon. The ability to invest in dollar terms and not shares means that an investor can put any amount they choose and it will be applied toward a full or fractional share of stock.

There is a key difference between an existing stockholder’s fractional share of stock and one that is obtained through a broker like eToro. For example, when you invest in a stock through eToro, you buy a CFD or Contract for Difference which reflects the ownership of that particular stock. eToro then is a counterpart to your CFD; you, as the investor, do no have the same rights that an actual shareholder would have as you don’t actually own the stock, only the CFD.

September Unemployment Rate Surprises while NFP Does Not

2012-10-05T21:59:00.002+03:00

Earlier, the U.S. Bureau of Labor Statistics announced that September’s non-farms payroll figures rose by only 114,000, generally in line with the consensus forecast. Of note, the previously reported data of 96,000 new jobs in August was revised upward to 142,000

The unemployment rate unexpectedly fell to 7.8% from 8.1%, while the forecasts called for a rise to 8.2%. Analysts had doubted that today’s data would sufficiently be able to notch the rate anywhere but higher; the rate has been continuously above 8% since February 2009.

Earlier in the week, ADP had reported that 162,000 new private sector jobs had been added last month, much better than the expected 143,000 but significantly fewer than even August’s revised figures of 189,000 (from 201,000). As markets have too often seen, the ADP numbers have failed to coincide with the NFP data on quite a few occasions and market players have thus been ultra wary of making large moves ahead of the data.

One research analyst in New York remarked that the labor situation isn’t going anywhere fast and that the meager gains were barely sufficient to absorb new workers, and not nearly enough for the masses who are still hoping to return to the workforce.

Wall Street had closed yesterday higher, with all of the major indices gaining; the DJ30 gained 80.75 points, the SPX500 gained 10.41 points and the NASDAQ gained 14.23 points. Today’s data is already positively impacting Wall Street futures.

Today's oil price

2012-10-05T21:20:00.000+03:00

$89.26 per barrel

Daily change of 2.45 ( 2.67% )

Oil Quote Updated Oct-05-12 12:30 AM

EUR / USD intraday: supported the upward trend line.

2012-10-05T15:28:00.000+03:00

Pivot (level of cancellation): 1.2955

Our preference : Long positions above 1.2955 with targets at 1.303 and 1.3075. Alternative scenario : Below 1.2955 look for further downside with 1.2925 and 1.2875 as targets. Comment : the break above 1.2955 is a positive signal opened the way to 1.303.

GBP / USD intraday: Siding conflict to climb above 1.6125.

Pivot (level of cancellation): 1.6125

Our preference : Long positions above 1.6125 with targets at 1.6215 and 1.6245. Alternative scenario : Below 1.6125 look for further downside with 1.61 and 1.6065 as targets. Comment : the RSI Alnspahely the rise of a new stage calls.

USD / JPY intraday: Siding conflict to climb above 78.3.

Pivot (level of cancellation): 78.30

Our preference : Long positions above 78.3 with targets at 78.7 and 78.85. Alternative scenario : Below 78.3 look for further downside with 78.05 and 77.95 as targets. Comment : the RSI momentum sagging missing.

EUR / JPY intraday: supported the upward trend line.

Pivot (level cancellation): 101.75

Our preference : Long positions above 101.75 with targets at 102.55 and 102.85. Alternative scenario : Below 101.75 look for further downside with 101.2 and 100.95 as targets. suspension technician : technical indicators in daily trading mixed and calls caution.

GBP / JPY intraday: warned.

Pivot (level cancellation): 126.60

Our preference : Long positions above 126.6 with targets at 127.55 and 127.85. Alternative scenario : Below 126.6 look for further downside with 126.4 and 126.05 as targets. suspension technician : technical indicators in daily trading mixed and calls caution.

AUD / USD intraday: Siding conflict to climb above 1.023.

Pivot (level of cancellation): 1.0230

Our preference : Long positions above 1.023 with targets at 1.029 and 1.032. Alternative scenario : Below 1.023 look for further downside with 1.02 and 1.018 as targets. Comment : the RSI is supported bullish trend line .

Cac 40 Oct 12 in intraday: targeted 3445.

Pivot (level of cancellation): 3387.

Our preference : Long positions above 3387 with targets at 3445 and 3476. Alternative scenario : under the 3387 look for further downside with 3339 and 3300 Vkohdav. Comment : the RSI is mixed to bats ascent.

Dax Dec 12 in intraday: warned.

Pivot (level cancellation): 7265.

Our preference : Long positions above 7265 with targets at 7375 and 7480. Alternative scenario : Below 7265 look for further downside with 7210 and 7130 Vkohdav. suspension technician : RSI mixed and calls for t .

Gold Silver and Oil Rose Again on Monday– Recap October 1st

2012-10-02T19:07:00.001+03:00

Many commodities trade up on the first day of the week: WTI oil increased again while Brent oil declined yesterday; gold and silver changed direction and rose on Monday; natural gas Henry Hub future (October delivery) and spot price continued their rally and hiked on Monday; the Euro changed direction and appreciated against the USD on Monday. Several other currency pairs including the Canadian dollar also rose again the USD.

Here is a summary of the daily developments of precious metals and energy commodities for October 1st, 2012:

Forex and Bullion Markets:

On Monday, gold increased by 0.53% to $1,783.3; Silver also rose by 1.08% to reach $34.95. During last month, gold increased by 5.11%; silver, by 9.97%.

On Monday, the Euro/USD also increased by 0.24% to 1.289; further, the U.S Dollar also depreciated against several other currencies including Canadian dollar by 0.12%.

Energy Commodities:

WTI oil price rose again yesterday by 0.31 % to $92.48 per barrel;

Brent oil on the other hand decreased by 0.99% to $112.14 per barrel;

Following these changes, the difference between Brent and WTI slipped to $19.66/bbl. During last month, WTI declined by 4.44%; Brent oil, by 1.9%.

Finally, the Henry Hub future (October delivery) hiked again by 4.82% to $3.48/mmbtu; the Henry Hub spot also rose to $3.19/mmbtu; the gap between the spot reached to $0.29, i.e. contango.

A Summary for October 1st:

The table below includes: closing prices, daily percent changes, and daily changes:

Gold and Silver Prices – Daily Outlook for October 2

2012-10-02T19:00:00.002+03:00

The prices gold and silver started off the week on positive note as both precious metals increased along with other commodities and stock prices. The unexpected rise in the U.S manufacturing PMI index to reach 51.5% may have contributed to the positive market sentiment. Further, Bernanke’s speech in which he promised to keep short term rates low even if the economy will strengthen may have also contributed to the rise of bullion rates. Currently, the prices of gold and silver are falling. Other items on today’s agenda include: Reserve Bank of Australia Cash Rate Statement (Update: RBA announced it decided to cut the cash rate again by 0.25pp to 3.25% to its lowest level since 2009 – this news is pulling down the Aussie dollar), Great Britain 10 Year Bond Auction and Australian Trade Balance.

Here is a short outlook for precious metals for Tuesday, October 2nd:

Precious Metals –October Update

On Monday, Gold rose by 0.53% to $1,783.3; Silver also increased by 1.08% to $34.95. During last week, gold decreased by 0.23%; silver, by 0.18%.

As seen below, the chart shows the changes of normalized prices of precious metals in the last couple of weeks (normalized to 100 as of August 31st). During recent weeks, following the launch of QE3 by the Fed, the prices of gold and silver moved with an unclear trend.

St. Deviation of Gold and Silver
The rise in the volatility in the bullion markets during September, compared to August, is also reflected in the
rise in the standard deviations of gold and silver (daily percent changes) that were slightly higher than the standard deviations in August.

The ratio between the two precious metals decreased on Monday to 51.02. During September, the ratio fell by 4.42% as gold under-performed silver.

Bernanke’s Speech

Bernanke gave a speech yesterday titled “Five Questions about the Federal Reserve and Monetary Policy”. In this speech Bernanke laid down his and the Fed’s monetary policy and referred, among other, to the recent steps the Fed has taken, the additional options the Fed has to take in the future, his take on the effect the Fed’s steps have on the inflation. It’s worth mentioning that he also stated that the Fed will keep the rates low even if the economy were to recover:

“…we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn’t mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens”.

Chairman of the Fed voiced again his concern over the “fiscal cliff” – in which the Congress will reduce spending and raise taxes – that should come into play at the beginning of year. I think this problem is another factor that could motivate the Fed to expand its monetary policy even further in the months to follow.

On Today’s Agenda

Reserve Bank of Australia – Cash Rate Statement: the overnight money market rate of Australia’s Reserve Bank remained unchanged at 3.5% – the lowest level since the end of 2009. If the RBA will decide to lower the rate again, this news may affect the Australian dollar that is strongly correlated with gold and silver prices;

Great Britain 10 Year Bond Auction: the British government will issue a bond auction; in the recent bond auction, which was held at the second week of September, the average rate reached 1.83%;

Australian Trade Balance: The upcoming report will refer to August. In the previous report, the seasonally adjusted balance of goods and services expanded its deficit to $556 million in July. The export of non-monetary gold fell by $420 million (25%); if the gold exports will continue to fall in August, it might suggest a decrease in demand for non-monetary gold (see here last report);

Currencies / Bullion Market – October Update

The Euro/ USD rose on Monday by 0.24% to 1.289. During last month, the Euro/USD rose by 2.23%. Alternatively, several other currencies including Aussie dollar appreciated yesterday against the USD by 0.16%. The correlation between gold and Euro remains mid-strong and positive: during September, the linear correlation between the gold and EURO/USD was 0.62 (daily percent changes); the relation between gold and USD/CAD is -0.75. This week the bullish market sentiment towards the Euro and other risk currencies is likely to pull up gold and silver. Currently, the Euro/USD is trading up.

Current Gold and Silver Rates as of October 2nd

Gold (November 2012 delivery) is traded at $1,780.7 per t oz. a $2.6 or 0.15% decrease as of 07:19*.

Silver (November 2012 delivery) is at $34.87 per t oz – a $0.082 or 0.23% decrease as of 07:19*.

(* GMT)

Daily Outlook for October 2nd

The prices of precious metals started off the week on a positive note, perhaps over the recent speech of Bernanke and the positive news of the growth in manufacturing PMI that pulled up commodities and stock prices.. Today’s publications of the RBA rate decision and Australian trade balance could affect the Aussie dollar, which is strongly linked with bullion rates. In Europe, Spain is still facing problems: The recent budget proposal helped rally the Euro but there are still perils Spain is facing. The country might need to bailout its commercial banks after German ministers stated that the bailout fund will only by applicable for new banking problems. Finally, if the Euro and Aussie dollar will continue to rally it could also pull up the prices of bullion.

Today's oil price

2012-10-02T17:59:00.003+03:00

$92.37 per barrel

Daily change of 0.11 ( 0.12% )

Oil Quote Updated Oct-02-12 10:30 AM

Forex Pros technical analyzes (on Monday, October 1, 2012 17:00:01 EDT)

2012-10-02T17:22:00.002+03:00

Below you will find insights and technical analyzes of the major stock indexes, commodities and currency pairs based on the performance of the market at the end of the session daily in the United States. This information is a comprehensive summary is derived from the simple moving averages and exponential along with key technical indicators displayed for specific periods of time.

Symbol	Type	5 minutes	10 minutes	15 minutes	Per hour	Daily
EUR / USD 1.2888	Moving Averages:	Neutral	Sale	Buy	Sale	Buy
	Indicators:	BUY	Buy	Neutral	Neutral	BUY
	Summary:	Sale	Neutral	Neutral	Neutral	Neutral

GBP / USD 1.6131	Moving Averages:	BUY	BUY	BUY	BUY	Neutral
	Indicators:	Sale	Buy	Buy	BUY	BUY
	Summary:	BUY	Neutral	Neutral	BUY	Sale

AUD / USD 1.0365	Moving Averages:	Sale	BUY	BUY	BUY	Sale
	Indicators:	BUY	BUY	BUY	Sale	BUY
	Summary:	BUY	BUY	BUY	BUY	BUY

Dow Jones 30 13515.11	Moving Averages:	Neutral	Sale	Sale	Buy	Neutral
	Indicators:	BUY	BUY	Sale	Neutral	Buy
	Summary:	Sale	BUY	Sale	Neutral	Neutral

Gold 1777.35	Moving Averages:	BUY	Sale	Sale	Buy	Neutral
	Indicators:	BUY	BUY	BUY	Buy	Neutral
	Summary:	BUY	BUY	BUY	Buy	Neutral

Silver 34.700	Moving Averages:	BUY	Sale	Sale	Buy	Neutral
	Indicators:	BUY	BUY	BUY	Buy	Neutral
	Summary:	BUY	BUY	BUY	Buy	Neutral

Crude Oil 92.30	Moving Averages:	Buy	Buy	Buy	Buy	Sale
	Indicators:	Buy	Sale	BUY	Buy	BUY
	Summary:	Buy	Neutral	Neutral	Buy	BUY

General Index 6882.12	Moving Averages:	Neutral	Buy	Sale	Sale	Sale
	Indicators:	Buy	Neutral	Buy	Neutral	BUY
	Summary:	Neutral	Neutral	Neutral	Neutral	BUY

EGX 30 Index 5,652.18	Moving Averages:	BUY	BUY	BUY	BUY	Neutral
	Indicators:	Sale	Sale	BUY	BUY	BUY
	Summary:	BUY	BUY	BUY	BUY	Sale

EUR / USD intraday: key resistance level in the short term at 1,294.

2012-10-02T17:03:00.000+03:00

Pivot (level of cancellation): 1.2940

Our preference : Short positions long maturity under 1,294 with goals at 1.284 and 1.28 in extension. Alternative scenario : Above 1,294 look for further upside with 1.2985 and 1.303 as targets. Comment : As long as the not exceeded the level of resistance at 1,294, remains a risk of fracture under 1.284 severe.

GBP / USD intraday: key resistance level in the short term at 1.616.

Pivot (level of cancellation): 1.6160

Our preference : Short positions long maturity under 1.616 with targets at 1.6105 and 1.607 in extension. Alternative scenario : Above 1.616 look for further upside with 1.621 and 1.6245 as targets. Comment : As long as the 1.616 resistance level Search for volatile share price with a bias to the conflicts on the landing.

USD / JPY intraday: continuation of the rebound.

Pivot (level of cancellation): 77.90

Our preference : Long positions above 77.9 with targets at 78.35 and 78.5. Alternative scenario : Below 77.9 look for further downside with 77.7 and 77.55 as targets. Comment : the RSI is supported bullish trend line .

EUR / JPY intraday: limited upside.

Pivot (level of cancellation): 100.40

Our preference : Long positions above 100.4 with targets at 101 and 101.25. Alternative scenario : Under 100.4 look for further downside with 100.2 and 99.75 as targets. Comment : the fraction above 100.4 is a positive signal opened the way to 101.

GBP / JPY intraday: key resistance level in the short term at 126.2.

Pivot (level of cancellation): 126.20

Our preference : Short positions long maturity under 126.2 with targets at 125.4 and 124.9 in extension. Alternative scenario : Above 126.2 look for further upside with 126.8 and 127.15 as targets. suspension technician : as long as 126.2 is the level of resistance Search for volatile share price with a bias to the conflicts on the landing.

AUD / USD intraday: key resistance level in the short term at 1.035.

Pivot (level of cancellation): 1.0350

Our preference : Short positions long maturity under 1.035 with targets at 1.03 and 1.027 in extension. Alternative scenario : Above 1.035 look for further upside with 1.0405 and 1.043 as targets. Comment : Led the break below the key support level at 1.035 accelerating downward to 1.027.

Cac 40 Oct 12 in intraday: rebound.

Pivot (level of cancellation): 3339.

Our preference : Long positions above 3339 with targets at 3468 and 3515. Alternative scenario : under the 3339 look for further downside with 3300 and 3260 Vkohdav. Comment : the RSI is mixed to bats ascent.

Dax Dec 12 in intraday: targeted 7350.

Pivot (level of cancellation): 7200.

Our preference : Long positions above 7200 with targets at 7350 and 7435. Alternative scenario : under the 7200 look for further downside with 7130 and 7100 Vkohdav. Comment : the RSI is mixed to bats ascent.

Trans-Caspian pipeline: the reach of reason

2012-10-01T18:41:00.000+03:00

Disagreement between Baku and Ashgabat on the ownership of hydrocarbon deposits in the Caspian shelf makes us take a fresh look at the efforts of the European Union, which is desperately promoting the Trans-Caspian pipeline. The Europeans are sure that they can persuade Azerbaijan and Turkmenistan to implement the realization of this mega-project as an ordinary business.

EU Ambassador to Azerbaijan Roland Kobia explicitly stated in an interview with VK that "Trans-Caspian pipeline is a commercial matter, not political one, and it applies only to countries that want to implement it." The rhetoric of the EU is based on the claim that Azerbaijan and Turkmenistan are two sovereign countries and have a right to decide if to create this facility or not.

Commission members’ trips to both capitals, but, above all, to Ashgabat are designed to influence the Turkmen authorities in terms of their compliancy with the Azerbaijani side on the same contentious issues which generally inhibit the negotiations of determining the legal status of the Caspian Sea.

Azerbaijan actively cooperates with Europe in energy sector and actually tends to prove its commitment to provide energy security of the EU. However, the calculation is based on the resources of Azerbaijan, which is going to significantly increase its gas production capacity in the next 5-7 years. As for creating Trans-Caspian pipeline and getting involved in gas supplies to Europe for Turkmenistan, the issue is not so simple.

Baku does not believe that Trans-Caspian pipeline which is proposed in order to transport Turkmen gas to Europe will be constructed in the near future; Azerbaijan is not interested in investing in this project. Such a statement was made last month by the Azerbaijani Industry and Energy Minister Natig Aliyev. "I do not think that the Trans-Caspian pipeline will be constructed in the near future. Who will construct it? Azerbaijan is not interested in this project, so either Turkmenistan or European companies should do it", - the minister told the reporters.

Trans-Caspian gas pipeline of not less than 400 km will be laid from the Turkmen coast of the Caspian Sea to Azerbaijan. There it can be connected to the existing pipeline infrastructure and, in particular, to "Southern Gas Corridor" which is being created by Azerbaijan, Georgia and Turkey,

At the same time, given the existing export potential of Azerbaijan, for Baku at the moment it is not so important to create Trans-Caspian pipeline, let alone the forcing of its construction. Azerbaijan does not intend in any case to upset relations with Russia and Iran, and it does not accept the rhetoric of the Europeans as the final and the only true one.

Speaking on the export potential of Azerbaijan, Natik Aliyev has noted that the country plans to increase its annual gas supplies to more than 30 billion cubic meters by 2030. According to him, the export of gas to be increased even up to 50 billion cubic meters. "I think if our programs can be successfully implemented... in 2030 we will be able to export over 30 billion cubic meters of gas per year," - Aliyev said. According to him, only in the second phase of the development of the field "Shah Deniz" Azerbaijan will be able to extract 30 billion cubic meters of gas. He added that the country is able to increase production at the expense of other fields.

The negotiations of Turkmenistan with the EU and other countries on the construction of the Trans-Caspian gas pipeline are underway since the late 1990s. There are not any direct arrangements for the implementation of this project yet. However, in September 2011, the European Union gave a mandate to start negotiations on the preparation of an agreement between the EU, Azerbaijan and Turkmenistan on the Trans-Caspian project to the European Commission; after that the process of negotiations began. The main obstacle to the implementation of the project is the unresolved legal status of the Caspian Sea. This argument is used by Russia and Iran in opposing the project. Another argument against it is the environmental risks that will supposedly arise in the case of laying pipe in a seismically active area of the sea with its active mud volcanoes.

Iran-Pakistan gas project: U.S. no, Russia yes

2012-10-01T18:35:00.002+03:00

Pakistan lives in an energy crisis. The country faces an acute shortage of energy resources which greatly hinders its economic development. Implementation of the Iran-Pakistan gas project could really help Pakistan's economy, but the question largely depends on the positions of the great powers.

According to the Pakistani newspaper The Express Tribune, Russian and Pakistani representatives discussed Russia's possible participation in the Iran-Pakistan gas pipeline construction project (Pakistan's section) during a meeting in Islamabad on the level of the joint intergovernmental commission. The Russian side expressed its desire to help Pakistan to overcome its energy crisis and stressed Russian Gazprom's readiness to participate in financing the project.

A meeting of the Russian-Pakistani commission was of a preparatory nature ahead of President Putin's visit to Pakistan in October. It is planned to sign a number of major agreements with Pakistan and it is assumed that the Iran-Pakistan gas pipeline project will be one of them.

Half the energy resources consumed by Pakistan fall to natural gas. So far, the country produced and consumed its own gas without importing it from other countries.

In 2011, Pakistan extracted 39 billion cubic meters of gas and consumed the same volume. However, the home grown amount is not enough to ensure the normal functioning of the Pakistani economy. According to Pakistani sources, at present, up to 10 billion cubic meters of gas per year are required now. In 2014-15, this figure will increase to 25.7 billion cubic meters a year. A year later, it will amount to 30.8 billion cubic meters and in 2017 the supply deficit will reach 36 billion cubic meters a year.

Besides the acute need for gas, Pakistan is in a position close to critical due to a lack of funds for the construction of its part of the project in terms of limited time. According to the contract, the Pakistani section worth $1.5 billion must be constructed and a full-scale exploitation of the gas pipeline must be launched by late 2014. If the terms are violated, Islamabad will have to pay huge fines to the Iranian side which is completing the construction of its section of the pipeline.

Everybody has an interest in this game.

Pakistan is trying to ensure gas supplies as soon as possible for the needs of its economy which is suffocating from a lack of energy resources. Pakistan's leadership stresses its firm determination to complete the construction of a pipeline from Iran by all means as the Iranian gas is much more accessible now, than the Turkmen (TAPI project). This does not mean that the Turkmen gas will be superfluous. These figures testify to the fact that Pakistan will need it in the short term prospect.

Taking into account the recently discovered huge gas reserves, Turkmenistan is trying to enter new markets. The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project looks very promising. Something was done to promote it. An inter-state agreement between the participating countries was signed in 2010. Turkmenistan signed a memorandum of understanding with Afghanistan in May 2012. The purchase-sale agreements of Turkmen gas were signed with the State Gas Systems of Pakistan and Indian GAIL ltd.

According to many experts, the main obstacle for the project is the security in the Afghan section of the route. Potential investors are hesitant to finance the construction without serious guarantees which no one can offer.

However, Turkmenistan is holding a series of world road-show business trips to attract investment for the TAPI project construction in the three largest financial centres of the world - New York, London, Singapore these days.

Many U.S. companies are very interested in participating in the TAPI project, U.S Assistant Secretary of State for South and Central Asia Robert Blake mentioned it during a visit to Central Asia in August. Blake stressed that progress on this issue depends on what will be offered.

"The participation in the construction of these pipelines is associated with many risks. In particular, firms will consider issues such as the incentives Turkmenistan is ready to offer to international companies to take part in the project. Let's wait for the road shows."
He said that concrete discussions about who will form and lead a consortium for the practical construction of the pipeline will begin after their completion.

The issue of diversification of export routes is important for Iran having more gas reserves than neighbouring Turkmenistan. However, as opposed to Ashgabat, a political aspect in the implementation of its own gas pipeline project is important for Tehran.

It is necessary for Tehran to demonstrate the failure of the sanctions regime, the presence of partners and allies and its international isolation, especially such as Pakistan, the U.S. old strategic partner in the region amid the US-Iranian confrontation.

It is important for the U.S. to ensure Iran's maximum isolation, especially its oil and gas potential to weaken the economy and at least force it to abandon its nuclear programme. Accordingly, Americans want to prevent the construction of a pipeline from Iran to Pakistan under any circumstances by putting pressure on Islamabad by persuasion and poorly hidden threats.

What does Russia want? As always, it has the most unpredictable plans. The idea of "what is good for the enemy of America is good for Russia" may have a right to exist. In the future, under any pretext it is possible to refuse an agreement to finance the Iran-Pakistan project, whilst demanding the U.S. offers concessions on other foreign policy issues. This action is allowed in politics.

However, Russia's attempt to establish its own interests including economic in Pakistan - one of the two largest countries in South Asia, having nuclear weapons, is still more real. It should be recalled that Putin's visit in October will be the first visit of a Russian president (USSR) to Pakistan, since 1948, that is during diplomatic relations between the two countries.

Ironically, or, if you like thanks to the principles of the free market heavily implicated in the geopolitics, there is such a situation that the U.S. and Russia seem to change their roles. The U.S. for the TAPI project, originating in Turkmenistan, a former Soviet republic, Russia's partners in the CIS, while Russia can finance the Iran-Pakistan project and therefore support Islamabad - the U.S. strategic partner in the South Asian region.

There is another important point in this story. According to the contract, Pakistan will initially import annually around eight to10 billion cubic meters of Iranian gas. Gas production in Iran in 2011 was 151.8 billion cubic meters, while consumption in the same year amounted to 153.3 billion.

The excess of the domestic consumption over the volume of production in Iran has recently become a trend. The country is short of gas given such a significant level of production and it imports gas from neighbouring Turkmenistan. Iran's Northern provinces have not yet been gasified and are suffering from the cold every winter. Where does Iran plan to take gas for export to Pakistan? Formally from the South Pars field, but in fact?

A Pakistani edition published sceptical comments of local experts that Russia's deal on financing the project or the participation of Russian companies in the construction of the Iran-Pakistan gas pipeline are unlikely to be concluded because of the U.S. position. This would put pressure on the Russian leadership as happened previously with China. It will become clear in October whether Pakistani sceptics are right or not following President Putin's visit to the country.

EUR / USD intraday: the downside prevails.

2012-10-01T18:29:00.001+03:00

Pivot (level of cancellation): 1.2900

Our preference : Short positions long maturity under 1.29 with targets at 1.275 and 1.2725 in extension. Alternative scenario : Above 1.29 look for further upside with 1.2925 and 1.296 as targets. Comment : Broke the Alnspahtan Strength Index trend line rackets on the ascent.

GBP / USD intraday: key resistance level in the short term at 1.616.

Pivot (level of cancellation): 1.6160

Our preference : Short positions long maturity under 1.616 with targets at 1.609 and 1.607 in extension. Alternative scenario : Above 1.616 look for further upside with 1.621 and 1.6245 as targets. Comment : the break below 1.616 is a negative signal opened the way to 1.609.

USD / JPY intraday: continuation of the rebound.

Pivot (level of cancellation): 77.70

Our preference : Long positions above 77.7 with targets at 78.1 and 78.2. Alternative scenario : Below 77.7 look for further downside with 77.35 and 77.1 as targets. Comment : the RSI broke above the trend line rackets on the landing.

EUR / JPY intraday: under pressure.

Pivot (level of cancellation): 100.05

Our preference : Short positions long maturity under 100.05 with targets at 99.65 and 99.5 in extension. Alternative scenario : Above 100.05 look for further upside with 100.35 and 100.65 as targets. Comment : the RSI rackets on landing and refers to the fall of more.

GBP / JPY intraday: key resistance level in the short term at 126.2.

Pivot (level of cancellation): 126.20

Our preference : Short positions long maturity under 126.2 with targets at 124.9 and 124.3 in extension. Alternative scenario : Above 126.2 look for further upside with 126.8 and 127.15 as targets. suspension technician : as long as 126.2 is the level of resistance Search for volatile share price with a bias to the conflicts on the landing.

AUD / USD intraday: under pressure.

Pivot (level of cancellation): 1.0380

Our preference : Short positions long maturity under 1.038 with targets at 1.031 and 1.027 in extension. Alternative scenario : Above 1.038 look for further upside with 1.0405 and 1.043 as targets. Comment : the RSI rackets on landing and refers to the fall of more.

Cac 40 Oct 12 in intraday: under pressure.

Pivot (level of cancellation): 3405.

Our preference : Short positions long maturity under 3405 with targets at 3300 and 3260 in extension. Alternative scenario : Above 3405 look for further upside with 3470 and 3515 as targets. Comment : the RSI rackets Alhbootooichir to further decline.

Dax Dec 12 in intraday: integration.

Pivot (level of cancellation): 7355.

Our preference : Short positions long maturity under 7355 with targets at 7180 and 7130 in extension. Alternative scenario : Above 7355 look for further upside with 7435 and 7480 as targets. Comment : the RSI rackets Alhbootooichir to further decline.

EU welcomes agreement on Caspian pipeline

2012-10-01T18:09:00.002+03:00

The EU energy commissioner said Friday he welcomed the political support given for the construction of the Trans-Adriatic Pipeline project.

Albanian, Greek and Italian governments confirmed political support for the regional natural gas pipeline by signing a memorandum of understanding on the sidelines of the U.N. General Assembly.

EU Energy Commissioner Gunther Oettinger said the MOU amounted to an in-principle agreement to build the pipeline.

"This is another important step toward our aim to get gas directly from the Caspian region," he said in a statement.

The planned 320-mile pipeline is designed to carry as much as 353 billion cubic feet of natural gas per year from the Azeri waters of the Caspian Sea to European consumers. Land and water surveys for the potential route were approved for the Italian section earlier this month.

By next year, the BP-led group controlling the Shah Deniz gas field in Azerbaijan should decide between Nabucco West and TAP as its transport artery.

Oettinger's office said that, no matter which project is supported, "one or more pipelines" will be part of "an unbroken system" that ties the Caspian Sea to Europe.

Azerbaijan eyes aiding Israel against Iran

2012-10-01T18:01:00.000+03:00

Israel's "go-it-alone" option to attack Iran's nuclear sites has set the Middle East on edge and unsettled its main ally at the height of a U.S. presidential election campaign.

Prime Minister Benjamin Netanyahu exudes impatience, saying Tehran is barely a year from a "red line" for atomic capacity. Many fellow Israelis, however, fear a unilateral strike, lacking U.S. forces, would fail against such a large and distant enemy.

But what if, even without Washington, Israel were not alone?

Azerbaijan, the oil-rich ex-Soviet republic on Iran's far northern border, has, say local sources with knowledge of its military policy, explored with Israel how Azeri air bases and spy drones might help Israeli jets pull off a long-range attack.

That is a far cry from the massive firepower and diplomatic cover that Netanyahu wants from Washington. But, by addressing key weaknesses in any Israeli war plan - notably on refueling, reconnaissance and rescuing crews - such an alliance might tilt Israeli thinking on the feasibility of acting without U.S. help.

It could also have violent side-effects more widely and many doubt Azeri President Ilham Aliyev would risk harming the energy industry on which his wealth depends, or provoking Islamists who dream of toppling his dynasty, in pursuit of favor from Israel.

Yet despite official denials by Azerbaijan and Israel, two Azeri former military officers with links to serving personnel and two Russian intelligence sources all told Reuters that Azerbaijan and Israel have been looking at how Azeri bases and intelligence could serve in a possible strike on Iran.

"Where planes would fly from - from here, from there, to where? - that's what's being planned now," a security consultant with contacts at Azeri defense headquarters in Baku said. "The Israelis ... would like to gain access to bases in Azerbaijan."

"ICEBERG" RELATIONSHIP

That Aliyev, an autocratic ally of Western governments and oil firms, has become a rare Muslim friend of the Jewish state - and an object of scorn in Tehran - is no secret; a $1.6-billion arms deal involving dozens of Israeli drones, and Israel's thirst for Azerbaijan's Caspian Sea crude, are well documented.

Israel's foreign minister visited Baku in April this year.

But a leaked U.S. diplomatic cable from 2009 quoted Aliyev, who succeeded his father in 2003, describing relations with Israel as "like an iceberg, nine tenths ... below the surface".

That he would risk the wrath of his powerful neighbor by helping wage war on Iran is, however, something his aides flatly deny; wider consequences would also be hard to calculate from military action in a region where Azerbaijan's "frozen" conflict with Armenia is just one of many elements of volatility and where major powers from Turkey, Iran and Russia to the United States, western Europe and even China all jockey for influence.

Nonetheless, Rasim Musabayov, an independent Azeri lawmaker and a member of parliament's foreign affairs committee, said that, while he had no definitive information, he understood that Azerbaijan would probably feature in any Israeli plans against Iran, at least as a contingency for refueling its attack force:

"Israel has a problem in that if it is going to bomb Iran, its nuclear sites, it lacks refueling," Musabayov told Reuters.

"I think their plan includes some use of Azerbaijan access.

"We have (bases) fully equipped with modern navigation, anti-aircraft defenses and personnel trained by Americans and if necessary they can be used without any preparations," he added.

U.S. CONCERNS

The administration of U.S. President Barack Obama has made clear it does not welcome Israel's occasional talk of war and that it prefers diplomacy and economic sanctions to deflect an Iranian nuclear program that Tehran denies has military uses.

Having also invested in Azerbaijan's defenses and facilities used by U.S. forces in transit to Afghanistan, Washington also seems unlikely to cheer Aliyev joining any action against Iran.

The Azeri president's team insist that that will not happen.

"No third country can use Azerbaijan to perpetrate an attack on Iran. All this talk is just speculation," said Reshad Karimov from Aliyev's staff. He was echoing similar denials issued in Baku and from Israel when the journal Foreign Policy quoted U.S. officials in March voicing alarm that Azeri-Israeli action could thwart U.S. diplomacy toward Iran and across the Caucasus.

Israeli officials dismiss talk of Azeri collaboration in any attack on Iran but decline public comment on specific details.

Even speaking privately, few Israeli officials will discuss the issue. Those who do are skeptical, saying overt use of Azeri bases by Israel would provoke too many hostile reactions. One political source did, however, say flying unmarked tanker aircraft out of Azerbaijan to extend the range and payloads of an Israeli bombing force might play a part in Israeli planning.

Though denying direct knowledge of current military thinking on Iran, the Israeli said one possibility might be "landing a refueling plane there, made to look like a civilian airliner, so it could later take off to rendezvous mid-air with IAF jets".

A thousand miles separates Tehran and Tel Aviv, putting much of Iran beyond the normal ranges of Israel's U.S.-made F-16 bombers and their F-15 escorts. So refueling could be critical.

INTELLIGENCE COOPERATION

There is far from unanimity among Israeli leaders about the likelihood of any strike on Iran's nuclear plants, whether in a wider, U.S.-led operation or not. Netanyahu's "red line" speech to the United Nations last week was seen by many in Israel as making any strike on Iran unlikely - for at least a few months.

Many, however, also assume Israel has long spied on and even sabotaged what the Western powers say are plans for atomic weapons which Israel says would threaten its very existence.

A second Israeli political source called the idea of Azerbaijan being either launch pad or landing ground for Israeli aircraft "ludicrous" - but agreed with the first source that it was fair to assume joint Israeli-Azeri intelligence operations.

The Azeri sources said such cooperation was established.

As part of last year's arms deal, Azerbaijan is building up to 60 Israeli-designed drones, giving it reconnaissance means far greater than many analysts believe would be needed just to guard oil installations or even to mount any operations against the breakaway, ethnic Armenian enclave of Nagorno-Karabakh.

"With these drones, (Israel) can indirectly watch what's happening in Iran, while we protect our borders," legislator Musabayov said - a view shared by Azeri former military sources.

Less reserved than Israeli officials, the sources in Azerbaijan and in Russian intelligence, which keeps a close eye on its former Soviet backyard, said Baku could offer Israel much more, however - though none believed any deal was yet settled.

The country, home to nine million people whose language is close to Turkish and who mostly share the Shi'ite Muslim faith of Iran, has four ex-Soviet air bases that could be suitable for Israeli jets, the Azeri sources said. They named central Kyurdamir, Gyanja in the west and Nasosny and Gala in the east.

The Pentagon says it helped upgrade Nasosny airfield for NATO use. It also uses Azeri commercial facilities in transit to Afghanistan. But U.S. military aid to Azerbaijan is limited by Washington's role as a mediator in its dispute with Armenia.

One of the sources with links to the Azeri military said: "There is not a single official base of the United States and even less so of Israel on the territory of Azerbaijan. But that is 'officially'. Unofficially they exist, and they may be used."

The source said Iran had been a main topic of talks in April with Israel's Soviet-born foreign minister, Avigdor Lieberman.

RECONNAISSANCE, RESCUE

Azeri tarmac, a shorter flight from key sites in northern Iran including the Fordow underground uranium enrichment plant and missile batteries at Tabriz, might feature in Israeli war planning in less direct ways, the former Azeri officers said.

With Israel wary of its vulnerability to pressure over air crew taken prisoner, plans for extracting downed pilots may be a key feature of any attack plan. Search and rescue helicopters might operate from Azerbaijan, the sources said - or planes that were hit or low on fuel could land at Azeri bases in extremis.

Such engagement carries risks for Azerbaijan and its oil platforms and pipelines operated with international companies.

Defending against Iran is part of public debate in Baku. The United States has provided Azerbaijan with three Coast Guard cutters and has funded seven coastal radar sites as well as giving Baku other help in protecting its oil installations.

Relations have long been strained between the former Soviet state and Iran, which is home to twice as many ethnic Azeris as Azerbaijan itself. Tehran beams an Azeri-language television channel over the border which portrays Aliyev as a puppet of Israel and the West, as well as highlighting corruption in Baku.

Azerbaijan sees Iranian hands behind its Islamist opposition and both countries have arrested alleged spies and agitators.

Faced with an uneven balance of force, Aliyev's government makes no bones about Israel being an ally. As one presidential aide, speaking on condition of anonymity, explained: "We live in a dangerous neighborhood; that is what is the most powerful driving force for our relationship with Israel."

However, Israel's confrontation with Iran may turn out, the arms build-up in Azerbaijan, including recent Israeli upgrades for its Soviet T-72 tanks, may have consequences for the wider region and for the stand-off with Armenia - consequences that would trouble all the powers with stakes in the Caspian region.

"We keep buying arms. On the one hand, it's a good strategy to frighten Armenia," one of the former Azeri officers said of the shaky, 18-year-old ceasefire over Nagorno-Karabakh. "But you don't collect weapons to hang on the wall and gather dust.

"One day, all these could be used."