ALL News Of Forex

Oil Pares Loss as German Confidence Tempers U.S.

2010-09-24T19:36:00.000-07:00

Sept. 24 (Bloomberg) -- Oil erased earlier losses as a jump in German business confidence tempered concerns that fuel demand in the U.S. remains constrained by slack economic growth.

Prices may drop next week on speculation that U.S. inventories will climb as fuel demand declines, a Bloomberg News survey showed. Yesterday the Labor Department reported claims unexpectedly increased by 12,000 to 465,000 in the week ended Sept. 18, as the unemployment rate holds near a 26-year high.

"We've got enough oil, we need to see more confidence going through the economy," said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney.

The November contract on the New York Mercantile Exchange was at $75.30 a barrel, 12 cents higher, at 9:08 a.m. London time after losing as much as 52 cents, or 0.7 percent, to $74.66 a barrel. Brent crude for November settlement gained 12 cents to $78.23 a barrel on the London-based ICE Futures Europe exchange.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 106.8 from 106.7 in August. That's the highest since June 2007. Economists had expected a drop to 106.4, according to the median of 36 forecasts in Bloomberg News survey.

Seventeen of 30 analysts, or 57 percent, forecast crude oil will decline through Oct. 1. Nine respondents, or 30 percent, predicted little change, and four estimated prices will rise. Last week, 52 percent said crude would decrease.

Tropical Storm

Tropical Storm Matthew formed in the Caribbean Sea east of Nicaragua and may grow into a hurricane by next week, as Tropical Storm Lisa re-emerged in the central Atlantic, the U.S. National Hurricane Center said yesterday.

Total consumption of petroleum products averaged 19.2 million barrels a day last week, down 1.8 percent from the seven days ended Sept. 10, the Energy Department reported Sept. 22. U.S. oil stockpiles rose 970,000 barrels to 358.3 million last week. They were forecast to drop 1.75 million barrels, according to the median of analyst estimates in a Bloomberg News survey.

Futures may drop as low as $71.50 a barrel in a short-term consolidation period, according to technical indicators used by traders to predict price movements.

Oil will fall toward intraday lows of $74.25 a barrel reached on Sept. 7 and $73.10 on Aug. 31, said Stephanie Aymes, a London-based cross-commodity technical analyst at Societe Generale SA. The top range of crude's consolidation is $76.25 a barrel, which is close to the 38.2 percent Fibonacci retracement of the contract's drop from its $83.91 high on Aug. 4 to $71.49 on Aug. 25.

German confidence and French growth ease and debt jitters ahead of Spanish budget

2010-09-24T19:34:00.002-07:00

Another hectic day in financial markets in spite of the near end to another clue added to the uncertain outlook. The sentiment in the market was negatively biased fueled by yesterday’s jitters over the outlook for recovery and downbeat US data, yet today’s early data from Europe helped the market unwind some of the tension.

Germany’s IFO reported an unexpected rise in businesses confidence in September as seemingly Europe’s largest economy continues its steady recovery path. The gauge of business sentiment, the business climate, rose marginally to 106.8 from 106.7 yet opposed to the projected drop to 106.4.

The stronger gain was seen in the perception of businesses to the current situation, where seemingly they are more confident than the market is; the current assessment gauge rose to 109.7 from 108.2 and beat the expected rise to 108.7.

Rising confidence in the near term is not of the base to market jitter, as they are constantly jittery over the coming period and the fourth quarter that we are about to start, especially as the main drivers to global growth start to wane. The US economy is a main piece it the puzzle, and its waning recovery will pressure highly adaptive and sensitive markets to follow like Canada, Mexico, Japan and other nations especially from the Pacific and that all will include Europe and a renewed relapse in the global recovery phase.

German businesses were as jittery as investors, were their expectations gauge fell strongly and with the biggest capacity among other to 103.9 from 105.2 worse than expectations assuring the lingering uncertainties over the outlook.

Good start, bad transition, and ugly ending to the year

The sentiment has been volatile and jittery throughout the year, especially if we recall the bad transitional phase in this recovery, which is the infamous debt cycle outbreak. Nonetheless, the euro area indeed assured it is stronger and in better shape that previously thought.

The French economy today assured its resilience by growing more than originally estimated in the second quarter by 0.7%. Insee reported rising exports and gross household income in the quarter which sustained growth in the area’s second largest economy.

Growth in the second quarter in particular was supported by the euro’s rapid and heavy deceleration, subdued inflation which supported disposable income, and as well as the strong inventory cycle which supported capital expenditure and contribution to growth.

Nonetheless, growth decelerated from that point forward, slowing in the third and expected to be trimmed further in the fourth quarter as many governments announced heavy austerity measures to contain the debt contagion and the global economy is pressured by slowing.

Financial markets entered into a new rout after the euphoria they experienced on measures adopted to contain the debt crisis and the positive data that was streaming then assuring that conditions are not as bad as presumed. The rout and pessimism was triggered on renewed fears over growth and the fear that the slow activity will even increase the hurdles for governments to meet their ambitious budgetary goals and pressure the debt contagion to spread and growth to remain weak as well.

In spite of this underlining sentiment, we see that the clouds are gradually starting to scatter as central banks and government pledges to sustain their support to the recovery and the general dovish stance eased investors’ woes.

Fiscal prudence and government pledged aim to restore confidence and today the focus is on Spain and Bernanke.

Surely the market is mixed and jittery today, especially with the week coming to an end, yet the session is still young and the focus is focus from Europe on Spain and the Budget which the Cabinet is expected to endorse today to be sent to parliament before the end of September.

Spanish Finance Minister Elena Salgado will be speaking at 13:45 in Madrid and she is not expected to add much to the budget and confirm their ability to contain the area’s third largest deficit. Spain adopted the deepest deficit cuts in three decades and attempts to contain its deficit without accessing the bailout fund set aside by EU-IMF help.

Zapatero already started the banking sector overhaul and intends to cut the deficit while help his economy recovery from the recession which started in second quarter of 2008 sending unemployment around 20% amid extended public dismay over his policies and the weak economy.

After Europe, eyes will be on the US for Bernanke’s speech as investors believe he might indicate when and how the Feds will move to support growth and weather more details will be provided on quantitative easing, especially as the downbeat data continue to confirm the slowing recovery in the world’s largest economy.

Capital Inflows Bolster Indian Rupee

2010-09-24T19:34:00.001-07:00

The Indian rupee, together with other Asian currencies, rose today on the speculation that the increasing capital inflows from the global funds in the region’s economy would allow the Asian countries to profit from Asia’s fast economic growth.

The rupee also gained after the Indian government allowed the foreign investors to double the holdings of the government bonds to $10 billion and increased the cap on investment in the corporate debt by the third to $20 billion. This measure may help India to decrease the nation’s growing current account deficit of $13 billion.

USD/INR fell from 45.475 to 45.310 as of 9:41 GMT today after it reached the intraday high of 45.660 and the intraday low of 45.250.

If you want to comment on the Indian rupee’s recent action or have any questions regarding this currency, please, feel free to reply below.

Yen Slumps on Talks About Another Intervention

2010-09-24T19:33:00.001-07:00

The Japanese yen is rising after it previously declined today on the speculation that Japan intervened to trim the currency’s gains in order to protect the nation’s exporters.

Japan perhaps sold the yen today after it intervened last week for the first time in six years. Yoshihiko Noda, the Minister of Finance, said that the government may perform the ”bold” actions to limit the excessive appreciation. The yen also fell on the rumors that the Bank of Japan Governor Masaaki Shirakawa may resign. The bank later denied these rumors.

USD/JPY is heading to its opening level of 84.37 as it trades near 84.58 as of 9:14 GMT today after it jumped as high as 85.37.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Energies Market Commentary – 9/24/10

2010-09-24T19:30:00.001-07:00

November crude oil closed up $0.21 at $74.92 a barrel yesterday. Prices closed nearer the session high yesterday and saw short covering after prices hit a fresh three-week low early on. Bulls and bears are on a level near-term technical playing field. The next near-term upside price objective for the bulls is producing a close above solid technical resistance at last week’s high of $78.86 a barrel. The next near-term downside price objective for the crude oil bears is to produce a close below solid technical support at the August low of $71.49. First resistance is seen at yesterday’s high of $75.61 and then at $76.00. First support is seen at $74.50 and then at $74.00.

Wyckoff’s Market Rating: 5.0.

November heating oil closed up 44 points at $2.1294 yesterday. Prices closed nearer the session high yesterday. Bulls still have the slight near-term technical advantage in “2 Oil.” Prices are in a four-week-old uptrend on the daily bar chart. The bulls’ next upside price objective is closing prices above solid technical resistance at $2.2000. Bears’ next downside price objective is producing a close below solid technical support at last week’s low of $2.0888. First resistance lies at $2.1500 and then at this week’s high of $2.1787. First support is seen at $2.1063 and then at $2.0888.

Wyckoff’s Market Rating: 5.5.

November unleaded gasoline closed up 73 points at $1.9086. Prices closed nearer the session high yesterday after hitting a fresh three-week low early on. Bulls and bears are on a level near-term technical playing field. The next upside price objective for the bulls is closing prices above solid technical resistance at last week’s high of $2.0014. Bears’ next downside price objective is closing prices below solid support at $1.8400. First resistance is seen at yesterday’s high of $1.9272 and then at $1.9500. First support is seen at $1.8825 and then at yesterday’s low of $1.8725.

Wyckoff’s Market Rating: 5.0.

November natural gas closed up 6.0 cents at $4.156 yesterday. Prices closed near mid-range yesterday and saw short covering in a bear market. The bears still have the overall near-term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at last week’s high of $4.298. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $3.971. First resistance is seen at yesterday’s high of $4.25 and then at $4.298. First support is seen at yesterday’s low of $4.094 and then at $3.971.

Growth concerns turn London stocks lower

2010-09-24T19:27:00.000-07:00

London equity indices moved lower, with almost all sectors contributing to the decline as economic concerns continued to drive the market.

In spite of opening gains, the market had struggled to find the momentum and fell back. AMEC was the top performer up just 0.7% to 962½p.

The FTSE 100 continued its decline from Wednesday and fell 50 points, or 0.9%, to 5503.30.

"The Fed promised us a second round of quantitative easing if warranted by the circumstances and pointed out the downside risk to the inflation outlook. By implicitly mentioning deflation, the uncertainty in the markets about the economic outlook has risen again," said Philip Marey at Rabobank.

The UK was seen to face head winds of its own as the latest data from the British Bankers' Association stated that mortgage approvals sank to a 16-month low in August. This was alongside another decline in overall lending to non-financial companies of £1 billion in August.

Banks came under pressure as doubts over the recovery weighted heavily on sentiment Lloyds Banking Group dropping 2.4% at 74p, Barclays fell 1.6% to 301.8p, and Standard Chartered drifting 1.3% to £18.50.

After strong gains on Wednesday Kazakhmys was also down 2% to £14.11 as investor confidence waned.

BHP Billiton lost 1% to £19.80 after the Australia-based mining group said it would "defend vigorously" a lawsuit drawn up by PotashCorp of Saskatchewan, which aims to block BHP's takeover of the Canadian company by accusing it of misleading shareholders.

BHP said claims that it had concealed a long-standing interest in buying the fertiliser manufacturer and had undermined the share price were "without merit".

Most miners were losing ground, with Rio Tinto down 1.2% to £36.09 and Antofagasta down 0.8% to £28.51.

Why Now Is The Time To Start Selling EURJPY

2010-09-24T19:16:00.000-07:00

Why Now Is The Time To Start Selling EURJPY
News and Events:

The suspicious 80-pip spike in USDJPY overnight is widely being written up as another slug of BoJ intervention after the pair once again looked threatened by yet more USD weakness. Of course, all Japanese officials quizzed on the price action have declined to comment, but really, FX traders looking for the relevant implications to draw from the episode can learn everything they need to without officials needing to say anything - this intervention strategy is not going to work. An 80-pip spike in a notoriously volatile pair like USDJPY is quickly dismissed and forgotten; and it was plain to see the massive supply waiting for the pair above 85.00 levels was quickly exploited by bears looking to take advantage of these allegedly central-bank sponsored freebies. With such unrelenting bearishness pervading the market, the BoJ have been drawn into a futile battle that echoes the SNB's attempts to stem CHF appreciation against the EUR over the past year. And we all know who triumphed in that battle of market vs. central bank. The best the BoJ can hope for is that the pace of USDJPY's decline can be tempered by the occasional burst of currency intervention - but in a market as huge as that for USDJPY, the cost implications of doing so are likely to eclipse those that the SNB faced.

The mass exodus from USD-longs is certainly a force to be reckoned with at present, as even yesterday's spate of poor Eurozone data was unable to effect a reversal in EURUSD - instead a temporary and shallow dip below 1.3300 has been followed up with fresh demand this morning which puts the focus back on the topside. FX markets seem all too willing to disregard that Eurozone spreads continue to widen in the bond space; there have been fresh all-time highs for Germany/Portugal 10 year yields (423bps this morning) and more worryingly, Germany/Italy spreads have also started widening too -suggesting contagion fears will spread and exacerbate the Euro-area's problems. Judging by the FX market reaction, today's mildly better than expected German IFO numbers it would seem, are sufficient evidence to dismiss such trifling events in the bond market. We are not so sure. Ireland's Q2 GDP figures released yesterday were well below consensus of +0.5%, registering a quarterly decline of -1.2%. If this isn't a hard and clear message about what challenges and struggles lie ahead for other EU members in the middle of implementing strict austerity measures, then what is? As such, we think the best play in FX markets right now is short EURJPY. Not only do the fundamental arguments line up in our minds (that JPY-strength is unavoidable in spite of the BoJ's efforts and that the EUR's day of reckoning is still in the pipeline), but the technical picture also reveals that the recent rally has brought us within close range of a major downtrend that has been in play since September 2009. For us, 114.00 is the absolute upper limit for EURJPY in this rally, and with the first decent support below eyed below 106, now is the time to start scaling into shorts and holding on for another dip lower.

Advanced Currency Markets - Forex Issues and Risks
Today Key Issues:

* 12:30 USD Durable goods orders (Aug), exp: -1.0% m/m, last +0.3%
* 12:30 USD New home sales (Aug), exp: 295k, last 276k

The Risk Today:

EurUsd The short-term symmetrical triangle pattern identified in yesterday's report eventually broke to the downside (activated by the move down through 1.3395) and overnight has proceeded to hit our downside target of 1.3300, coming to a halt at 1.3287 before rebounding today. Considering the poor PMI data and shocking Irish GDP yesterday, it's a miracle the damage wasn't worse for EURUSD, and really highlights to us that the markets is itching for any excuse to sell USDs and buy EURs. Expect resistance to come into play at 1.3441 (this week's high seen on Wednesday) - a level also backed up by 1.3450 (upper edge of 2-week uptrend channel) and 1.3466 (the 38.2% fibonacci retracement of the entire EURUSD sell-off from 1.6038 to 1.1876). 1.3500 still carries psychological importance just beyond, but above there we see clear skies until 1.3692 (12 Apr high). Expect dips to be shallow from here as the pair meanders along the 2-week uptrend (and looks comfortable above the 200-day moving average 1.3206). First area of demand will be the overnight lows of 1.3287, then 1.3110, 1.3030 and 1.2930.

GbpUsd GBPUSD has recovered strongly from its slump earlier this week, and nudged the range highs to 1.5741 - effectively negating the long-standing resistance at 1.5715 and even surpassing the 17 Sep high of 1.5730. We think it's only a matter of time before another push higher precipitates, and a close above the weekly cloud - which has capped the pair for the past 2 years (now at 1.5680) would be a profoundly bullish signal so hope for dips to allow us to get in on the long side. 1.5590 - 1.5600 looks like the first decent area of support (lower edge of 3-week uptrend channel and floor to the price action on 22-23 Sep), then 1.5560 (50-day moving average), the major 1.5490 level which has acted as a reliable pivot since the end of August, and 1.5450 (the 15 Sep low). Once the rally resumes, we'd look for a move to 1.5885 (upper edge of the 3-week uptrend channel) and perhaps a test of 1.5910 (10 Aug high) in extension. 1.6000 remains the formidable barrier on the topside.

UsdJpy Another round of intervention suspected last night as USDJPY suddenly spiked 80 pips in the Asian session, but the rally only got as far as 85.40 before supply once again drove it back down. This only serves to heighten our conviction that the bearish sentiment is unlikely to relent, so focus our attentions on the downside. The back side of the former 3-month downtrend channel (challenged a couple of times this week) is now 84.40; but should that level capitulate, the key level will be this week's double-low of 84.27 before we head straight back to 82.87 (2010 low). If the 3-month downtrend channel resists the attempts of the pair to break lower - or indeed the BoJ rears its head in the market to remind everyone who's boss again - expect 85.20 to be the first resistance level, followed by 85.90 (ceiling of supply since mid-August), 86.50 (5 Aug high), 86.90, and 88.07.

UsdChf Everything is still panning out nicely as USDCHF continues to trundle lower and rack up the open profit on our symmetrical triangle strategy. We are aiming for a target of 0.9730 (approximately calculated as the width of the triangle applied to the point of breakout), and thus far the low has been 0.9806 - over 200 pips from where the original break-out occurred (back at 1.0035). Just as we did for one half of our position yesterday, we adjust the stop on half our position now to 0.9900 (just above yesterday's peask of 0.9882) and the other half's stop to 0.9940 (anticipating that 0.9920 former support now turns resistance). Rallies are no doubt going to struggle against fierce selling ahead of both those levels, We would attempt to re-sell back up towards 1.0000 where our position would then be protected by resistance at 1.0120 (20 Sep high), 1.0185 (17 Sep ceiling), then 1.0278 (10 Sep high) and 1.0340 (last seen on 24 Aug).

Dollar Rede$ign project aims to revamp U.S. currency

2010-09-24T19:12:00.000-07:00

The U.S. dollar, as it appears now, may be about to face a change. Richard Smith, a creative strategy consultant and founder of the Dollar Rede$ign Project, has recently made the claim that the United States dollar is long past due for a new look. Smith’s Dollar Rede$ign Project aims to provide an avenue where designers may submit their vision of a new dollar. Entry into the Dollar Rede$ign Project has officially closed, but voting for the competing entries will continue until Sept. 30.

Smith hopes that through his project the dollar can be modernized for a future era. In fact, the Dollar Rede$ign Project’s official website reports that the dollar has not been altered in appearance since the 1930s. “If the Swiss can [alter their currency’s appearance] why can’t we North Americans too?” asks the official website. Competition with other major currencies, specifically the euro, is a point of interest for the Dollar Rede$ign Project as well. “Our great rival the euro looks so spanky in comparison [to the dollar],” states one post on their official website.

Another reason given for the Dollar Rede$ign Project’s creation was to “find a catalyst to restart our economy” says Smith. “It seems the only clear way to revive this global recession is to rebrand and redesign.” Enthusiasm for Smith’s vision has been expressed by many. In reference to the Dollar Rede$ign Project, one interviewee said recently in a Fox News report, “This has touched people’s hearts ... people feel the dollar touches their lives.”

Not everyone is as optimistic about the Dollar Rede$ign Project, however. “Count me among the skeptics,” says freshman student Katie Burkholder. “Me too,” chimes in freshman Ben Orlebeke. Sophomore Zack Waarsdorp provides one explanation for this skepticism by stating “I don’t think [changing the dollar’s appearance] is a smart use of money. There are other things to be reformed before the dollar needs to be changed.”

Others are concerned about the possible financial implications a switch in the dollar appearance could bring.

The dollar is the currency used in most international transactions and maintains the status of being a reserve currency around the world, as well as being legal tender in the United States, Puerto Rico, El Salvador, and 13 U.S. territories. Any sort of change in the dollar’s appearance could potentially impact each of these areas significantly.

“I tend to agree with the argument that part of the stability of the dollar over time is partly attributable to the physical appearance of cash.

I don’t think that something as iconic as our currency is really asking for a redesign,” comments University of Michigan student Ben Brelje.

Debate also exists over specific design plans submitted to the Dollar Rede$ign Project. The British duo Dowling Duncan, whose dollar design titled “Relative Value” has received the most votes so far in recent polls, is the most discussed of the groups presented. Dowling Duncan’s design features several bright colors with a vertical print. “You tend to hold a wallet or purse vertically when searching for notes. The majority of people hand over notes vertically when making purchases. All machines accept notes vertically. Therefore a vertical note makes more sense,” explains Dowling Duncan.

Freshman student Karis Roper responds to viewing “Relative Value” by proclaiming “Ha! Cool! It looks like Hong Kong money, which is sweet!” Waasdorp is less appraising, commenting that “I think it’s odd that there are two presidents and four non presidents included. I wish it was a little more consistent.” One of the more controversial aspects of Duncan Duo’s “Relative Value” appears to be the inclusion of President Barack Obama’s profile on the one dollar bill. Freshman student Linden Brinks says “Obama is still in office. Let’s wait for him to do something more substantial before we put him on the dollar. He’s not a founder. He’s not Lincoln. He’s just some president.”

Furthermore, whether or not the Dollar Rede$ign Project’s designs are eligible to be utilized as a legitimate replacement for the current dollar is still in question. One CNBC News report declared the enterprise to be “just a hoax.” Smith, along with the Dollar Rede$ign Project, disagrees, stating that they intend on petitioning to the federal government to use the new bill design upon completion of their site’s decision.

The dollar ends the week with a decline

2010-09-24T19:11:00.000-07:00

The greenback fell again versus its major counterparts, with continued expectations of a weaker US economic recovery during the upcoming period, which could lower demand on the dollar even more and give a chance to the rest of the majors to incline.

The euro rose against the dollar during the Asian session, trying to reach the 1.3400 level, recording a high of 1.3355 and a low of 1.3285, and now the pair trades around 1.3352. The daily momentum indicators show the pair is trading in an overbought area, while the four hours momentum indicators show the pair is trading in an oversold area, which determines the pair to move within limited ranges.

The British pound inclined against the dollar during the Asian session, trading below the 1.5700 level. The pound recorded a high of 1.5696 and a low of 1.5659. The pair now trades around 1.5687. The daily and four hours momentum indicators give neutral signs, which increases the chances of an upside movement.

The dollar against Japanese currency pair is trading in a narrow range, close to yesterday's closing. The pair’s volume was low today, recording a low of 84.45 and a high of 84.64, and now it trades around 84.52. The daily momentum indicators give selling signs, while the four hours momentum indicators show the pair is in an oversold area.