Monday, April 30, 2012

Monday Forex Chart Patterns

Interesting Chart Patterns that are developing as we start the new week

GBPUSD: Support Keeps Rising.  Technical indicators suggest that the GBPUSD should be bought on the dips with stop losses just below its previous support levels.

Forex Traders Await Spanish Budget News

Spanish GDP is due out today with expectations of a 0.4% drop in the economic activity.  The release will be followed by a press conference with Marta Fernandez, Spain’s deputy budget minister, and Antonio Beteta, deputy minister for public administration, who will discuss the country’s economy, its budget, and what will be down to cut its deficit.  Underpinning Spain’s problems is massive unemployment, with the figure hitting 24.4% last month, and a banking sector whose balance sheets are deteorating.

Wednesday, April 25, 2012

RBNZ Interest Rate Preview

We realize that today’s FOMC Meeting may be a little more important than tonight’s (tomorrow Morning) Reserve Bank of New Zealand Interest Rate Meeting.  Nonetheless, with 99% of Forex traders, analysts, etc focusing on the FOMC Meeting, we wanted to highlight a potential opportunity in the NZDUSD.  

Tuesday, April 24, 2012

Forex Today – Three Stories to Watch

GBPUSD Breakout Continues?
USDJPY Below 81.00
AUDUSD Falls on CPI – Poised to Recover?

GBPUSD Breakout Continues?

If you haven’t been watching the GBPUSD, than you may have missed a pretty impressive move higher in the pair.  The GBPUSD was stuck in a trading range between 1.56 and 1.60 for about two months.  However, earlier this month, the pair started to show a buildup of demand at 1.5800.  Since then, the combination of hawkish comments from the Bank of England as well as better than expected UK employment data has helped send the GBPUSD above 1.6000.  More importantly, after trading above its upper 1.6000 resistance, demand in the GBPUSD rose to 1.6000 to support the pair at that level.  Currently, support continues to rise, with any trading yesterday below 1.6100 being brief. As such, this brings us to today’s trading, where a move above last week’s resistance of 1.6150 could trigger a continuation of the GBPSUD’s breakout and put 1.6250 in play.

Friday, April 20, 2012

EURUSD Update - IMF & G20 In Focus

Fixing, containing, solving, ending (pick your adjective) the financial crisis is in center stage today as dual meetings among global leaders are taking place.  In Mexico, Foreign Ministers are gathered for G20 Meetings, while in Washington, the IMF is conducting its gathering.  The goal of both meetings is increasing funds towards the IMF’s Bailout Fund.  In Washington, IMF Leader Christine Legarde has set a $400 billion target of new funds.  Currently though, pledges of only around $300 billion have been raised which falls well below the IMF’s goal, and is nearly 50% less than Germany was hoping to raise.

Thursday, April 19, 2012

Gold Head & Shoulders

Traders of Gold should keep their eyes on the current Head and Shoulders pattern hitting the metal.  The pattern has occurred as prices have built up support at 1630 following an early fall this month, but have failed to hold retracement gains (see chart).  As such, today's US Data will be in focus today as the figures are expected to effect moves int the US dollar, which should result in increased Gold volatility.  Therefore, if the news triggers Gold prices to fall below its current 1630 support level, due to the bearish Head and Shoulder pattern, momentum could build up and push prices all the way down to 1600.  On the flip side, any break above 1662 will put this months 1690 highs back in play.

GBPUSD Breaks Above 1.6000

Not much is expected to be going on news wise today until later in the day when key US data is released.  US Initial Claims will be released before the start of trading in the US, followed by Philly Fed and Existing Homes Sales data.  Also, a three day G-20 Meeting begins today.  Proposals for boosting the IMF’s funds will be talked about at the meeting.  Overall though, the current session is a preparatory meeting for the June conference of G-20 leaders.

Wednesday, April 18, 2012

GBPUSD Nearing 1.6000 Following UK Data

A slew of UK economic  reports were just released and a rise of demand in the GBPUSD as it has rallied from its morning lows.  BoE MPC Minutes showed that the central bank will keep interest rates steady at 0.5%, but more importantly, voting was 8-1 to leave its QE program at 325 billion pounds.  The Minutes also showed that the BoE worrying about a risk of CPI growth. Overall, With the vote decidingly against raising its QE amount, and mentions of rising inflation, Forex traders were taking the news as indication that the BoE won’t be expanding its QE program anytime soon.

BoC Comments Send CAD Higher

The Bank of Canada surprised Forex traders on Tuesday as it stated that improved global and domestic economic trends may lead to reducing monetary easing.  Traders interpreted the news as a signal that the BoC is ready to raise interest rates sooner than later.  As expected, the Canadian dollar rallied on the comments with the USDCAD falling from just above parity to a low of 0.9865.  The Loonie outperformance also extended to its fellow commodity currencies as the AUDCAD fell to 1.0255 from 1.0335.

Tuesday, April 17, 2012

Tuesday’s Market Update

The EURUSD and GBPUSD are higher today as German ZEW Economic Sentiment figures were better than expected, while UK CPI was inline with 3.5% forecasts.  On the news, the EURUSD hit a high of 1.3170 and has continued to build on yesterday’ strength to trade at a current 1.3150.  Meanwhile, the GBPUSD is closing in again on the 1.6000 figure as it hit a 1.5968 high.

Monday, April 16, 2012

EURUSD Hits 1.3000 - Soros Bashes the EU

Well it didn’t take long for us to see if the EURUSD would break below 1.3000 support this week. Friday’s selling pressure is continuing this morning with the EURUSD briefly trading below 1.3000 to a low of 1.29996. Currently though the pair has bounced back above the 1.3000 figure to 1.3010.  The morning weakness comes as the overnight session was filled with talk of big buyers around 1.3050 which apparently were never there, or quickly backed off.

Tuesday, April 10, 2012

Bank of Japan Sits, Yen Rises

As expected, the Bank of Japan left interest rates unchanged at 0.1% during today’s Policy Meeting.  More importantly, they also stated that they will refrain from further monetary easing this month, on signs of improvement in Japan’s economy.  The decision to withhold monetary stimulus contrasts to the BoJ’s meeting in February when the central bank was worried about a Japanese recession and deflation.

Monday, April 9, 2012

US Equities Lower on NFP

US equities are lower today as they react to Friday’s Non Farm Payrolls jobs reports.  All three major indexes have fallen over 1.0%, with the Nasdaq leading the way down with a 1.3% loss.  The worse than expected NFP result on Friday contrasts to the previous figures this year which had shown employment growth easily surpassing forecasts.  Looking ahead, the question now for trades is whether the US will be able to continue with its slow and steady growth in the face of an apparent slowdown of Chinese growth, as well as the ongoing EU credit crunch.

Clouds of Uncertainty as Traders Return From Holiday

Last week was a holiday shortened trading week for many traders.  However, even with equity markets being closed on Friday (and some markets today as well), the futures  and Forex exchanges have remained open as usual.  As a result, rather than pushing back or forward the Non Farm Payrolls report, it was released as usual on Friday, even as few traders were around to trade on the news.

Thursday, April 5, 2012

ECB Intervention? Not anytime soon

The ECB didn’t do much yesterday at its monthly Interest Rate Meeting.  Even Mario Draghi in his accompanying press conference appeared to be pushing off making any formal statements about the future other than to say the the ECB’s LTRO was working.  The meeting which is usually delivered on a Thursday was pushed ahead to Wednesday due to the upcoming Good Friday holiday.  As such, many analysts were joking that the ECB’s lack of actions at the meeting indicated that they were already on vacation.

Swiss Franc in Focus

Forex traders are watching the Swiss franc this morning as Swiss CPI and the Swiss National Bank’s Foreign Currency Reserve data are out.  For those unfamiliar with trading the Swiss franc, the SNB has been aggressively intervening in the Forex markets and have placed a 1.2000 price floor in the EURCHF exchange rate.  The move was geared to protect Swiss exporters that are negatively impacted by a stronger franc. 

Wednesday, April 4, 2012

ECB Meeting Awaits Forex Traders

With the FOMC Minutes out yesterday, the Forex market now turns its attention on the ECB.  Yesterday, the FOMC Minutes showed little hints that the Fed was in any hurry to apply new monetary stimulus.  The minutes contrasted with Fed Chairman Ben Bernanke’s comments last week, and were closer to the opinion from Dallas Fed President Fisher.  On the news, the US dollar spiked higher across the board as the lack of imminent stimulus triggered a broad based risk selloff.

Tuesday, April 3, 2012

FOMC Minutes Preview

In early morning trading, the US dollar is unchanged after trading lower yesterday.  Yesterday’s dollar weakness occurred even as US ISM Manufacturing PMI data was better than expected.  Traders were especially noting to 3.0% in the employment component of the PMI survey.  On the news, US equities quickly moved higher, but the dollar was left out of the rally.  Looking ahead, Forex traders will be awaiting today’s FOMC Minutes release.  The FOMC data comes after traders have received mixed messages from FED members.  Last week saw Chairman Bernanke sounding dovish, and all but signifying that further easing was in the cards.  However, yesterday, Dallas Bank President Fisher stated that although tightening was a long time away, the Fed didn’t need to apply new stimulus at this time. 

Aussie Lower After RBA Meeting

In overnight trading, the AUDUSD fell after the Reserve Bank of Australia left interest rates unchanged.  While the lack of a change to the interest rate was expected, Forex traders reacted to the central bank’s comments that "The Board’s view was also that were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy." Forex traders interpreted that statement that another cut is probably in the cards for the May meeting as inflation remains low.  As a result, the AUDUSD fell to 1.0400 from an earlier high of 1.0460 before the news.  The Aussie weakness was especially seen against its fellow commodity currencies with the AUDCAD falling to a 2012 low of 1.0280.

Monday, April 2, 2012

Dallas Fed President Contradicts Bernanke

In an interview on CNBC today with Dallas Fed President Richard Fisher, henoted that “it's a little bit premature to talk about tightening.” But, although tightening was still a long time away, Fisher  stated that the FED should refrain from using further stimulus.  These statements suggested that the Fed was planning to sit pat for at least the short term.

Fisher’s words contrasted to last week’s speech from Fed Chairman Ben Bernanke were he said that unemployment levels remained high and that the Fed would need to apply new stimulus to speed up the US’s economic growth.

For traders, Fisher’s interview definitely added to the cloud of uncertainty in the Fed, and we may not get any clarity until the next FOMC Meeting as a result.