U.S. Dollar Trading (USD) opened the week strong in Asia but lost ground gradually across the day as sentiment improved and stocks rallied off lows around the world. Helping sentiment was the large jump in January ISM Manufacturing to 58.2 vs. 55.2 previously. DJIA +118 points closing at 10185, S&P +15 points closing at 1089 and NASDAQ +23 points closing at 2171. Looking ahead, December Pending Home Sales are forecast at 1% vs. -16% previously.
The Euro (EUR) bounced away from 1.3850 support to reclaim 1.3900 in the US session as EUR/JPY and EUR/GBP continued to rebound. Jan Manufacturing PMI was revised higher to 52.4 vs. 52.0 previously. Sentiment towards the Euro will be directly linked with the ongoing Greece saga. Overall the EUR/USD traded with a low of 1.3850 and a high of 1.3940 before closing at 1.3920.
The Japanese Yen (JPY) like the Dollar the Yen weakened across the board as risk appetite picked up off lows and USD/JPY ground higher. AUD/JPY reclaimed Y80 ahead of the RBA meeting today and was helped out by Chinese PMI remaining as fast expansionary pace. Overall the USDJPY traded with a low of 89.76 and a high of 90.97 before closing the day around 90.60 in the New York session.
The Sterling (GBP) trailed the recovery as Europe sold the pair below 1.5900 before strong US data and stocks helped the pair rebound. GBP/JPY tested Y143 but rallied in the US session to close just under the key Y145 level. January PMI forecast at 56.7 vs. 54 forecast. Overall the GBP/USD traded with a low of 1.5849 and a high of 1.5982 before closing the day at 1.5960 in the New York session.
The Australian Dollar (AUD) concerns that the RBA may not raise rates hurt the sentiment towards the AUD early in the day but as stocks around the world picked up and commodities staged major rallies the Aussie came back into demand and reclaimed the 0.8900 level. Overall the AUD/USD traded with a low of 0.8876 and a high of 0.8926 before closing the US session at 0.8915. Looking ahead, RBA Rate announcement forecast to hike 0.25% to 4.0% vs. 3.75% previously.
Oil & Gold (XAU) rallied sharply above $1000 in a very bullish move after weeks of testing the downside. Overall trading with a low of USD$1076 and high of USD$1108 before ending the New York session at USD$1106 an ounce. Crude Oil jumped $2 a barrel on bargain hunter demand. Crude Oil was up +$1.98 ending the New York session at $74.87.
Monday, February 1, 2010
USD/JPY Kilroy - Reverse Head and Shoulder
Daily: There was anticipation for bottoming action at the 88.30-88.80 level. In that post, a decline was projected after a completed bearish Gartley.
However, price action is telling us otherwise - that the market is already ready to continue the rally from the 89.10 area. A swing projection brings the pair to 98.00, which occur after breaking up above a “Kilroy” or an upside down head-and-shoulder pattern. The kilroy was a famous WWII cartoon that pictorially represents reversed head-and-shoulder.
4H: The first chart below is the original projection, for which there was no signals for.
The second one, is an adjustment due to the price action that established a kilroy in this time-frame. Remember the fractal nature of the market.
At the very least, the market is showing reversal readiness, which spells continuation rally.
However, price action is telling us otherwise - that the market is already ready to continue the rally from the 89.10 area. A swing projection brings the pair to 98.00, which occur after breaking up above a “Kilroy” or an upside down head-and-shoulder pattern. The kilroy was a famous WWII cartoon that pictorially represents reversed head-and-shoulder.
4H: The first chart below is the original projection, for which there was no signals for.
The second one, is an adjustment due to the price action that established a kilroy in this time-frame. Remember the fractal nature of the market.
At the very least, the market is showing reversal readiness, which spells continuation rally.
Saturday, January 30, 2010
Dollar Rallies to Six-Month High on Signs of U.S. Recovery
The dollar rose to a six-month high against the euro as reports showed the U.S. economy beat estimates by growing in the fourth quarter at the fastest pace since 2003 and consumer confidence improved in January.
The euro posted its biggest monthly drop against the yen in a year on concern Greece’s budget problems will spread. The franc fell from a 10-month high against the euro on speculation Switzerland’s central bank intervened in currency markets to curb its strength and support the nation’s economy.
“The dollar was strong already, and it’s continued the trend, senior market strategist at Brewer Investment Group in Chicago. “Any time the numbers beat expectations that significantly, it’s good news.
The euro posted its biggest monthly drop against the yen in a year on concern Greece’s budget problems will spread. The franc fell from a 10-month high against the euro on speculation Switzerland’s central bank intervened in currency markets to curb its strength and support the nation’s economy.
“The dollar was strong already, and it’s continued the trend, senior market strategist at Brewer Investment Group in Chicago. “Any time the numbers beat expectations that significantly, it’s good news.
Friday, January 29, 2010
U.S. Dollar Finishes the Month Sharply Higher
The U.S. Dollar closed out the month of January sharply higher as aggressive buyers helped the Greenback surge to the upside following Friday morning’s better than expected U.S. GDP report. The report which blew out forecasts encouraged traders to buy with both hands as investor sentiment turned more optimistic toward a strong U.S. economic recovery.
Weekly Technical Update: Greenback Strengthens Further, Yen Slows
The USD continued to strengthen this week, especially against the EUR, which has been declining broadly as well. There was still an air of risk aversion so the JPY started the week strong but did not have a significant push. The GBP/JPY for example showed ranging action, and the USD/JPY is already showing a possible reversal rally although there may be some short-term resistance. Let's take a look at the week's action, and outlook for the weeks ahead.
Thursday, January 28, 2010
Risk Off' As Stock Fall Continues
U.S. Dollar Trading (USD) spent most of the day on the back foot until weak US stocks sent the Dollar rallying against most pairs on renewed risk aversion. December Durable Goods missed at 0.3% vs. 2.0% forecast and Weekly Jobless Claims were at 470k vs. 450k forecast. DJIA -115 points closing at 10120, S&P -12 points closing at 1084 and NASDAQ -42 points closing at 2179. Looking ahead, Q4 GDP forecast at 4.6% vs. 2.2% Q/Q Annualized.
The Euro (EUR) continued to come under pressure as Greece debt returned to focus and EUR/JPY slumped in the US session. The Euro fell decisively through the 1.4000 level later in the day to test support at 1.3950. EUR/GBP rallied off fresh lows as Cable came under pressure on S&P banking downgrade news. Overall the EUR/USD traded with a low of 1.3936 and a high of 1.4054 before closing at 1.3950. Looking ahead, January Inflation forecast at 1.2% vs. 0.9% y/y.
The Japanese Yen (JPY) was weak on short covering in Asia before strength returned in New York on soft US data and safe haven flows. GBP/JPY fell over 2 Yen from Highs and EUR/JPY came close to Y125 supports. December Retail Sales -0.3% vs. 0.2% y/y. Overall the USDJPY traded with a low of 89.32 and a high of 90.57 before closing the day around 89.95 in the New York session. Update December Nationwide CPI at -1.7% vs. -1.9% previously y/y.
The Sterling (GBP) was strong until S&P stated they no longer classify UK among the most stable and low risk banking systems which sent Cable over 100 pips lower. Risk aversion then kept the pair under pressure with GBP/JPY selling constant. Overall the GBP/USD traded with a low of 1.6111 and a high of 1.6279 before closing the day at 1.6130 in the New York session.
The Australian Dollar (AUD) fortunes waxed and waned with investor sentiment with a major rally in Asia reversing quite aggressively in the US session. AUD/JPY was especially volatile as the pair rally off Y80 support to Y81.70 before giving up most of the gains. Overall the AUD/USD traded with a low of 0.8913 and a high of 0.9050 before closing the US session at 0.8925.
Oil & Gold (XAU) broke through support at $1080 only to reverses losses quickly late in the day. Overall trading with a low of USD$1074 and high of USD$1096 before ending the New York session at USD$1085 an ounce. Oil was lower but not as aggressively as the rest of the commodity space. Crude Oil was up -$0.30 ending the New York session at $73.70.
The Euro (EUR) continued to come under pressure as Greece debt returned to focus and EUR/JPY slumped in the US session. The Euro fell decisively through the 1.4000 level later in the day to test support at 1.3950. EUR/GBP rallied off fresh lows as Cable came under pressure on S&P banking downgrade news. Overall the EUR/USD traded with a low of 1.3936 and a high of 1.4054 before closing at 1.3950. Looking ahead, January Inflation forecast at 1.2% vs. 0.9% y/y.
The Japanese Yen (JPY) was weak on short covering in Asia before strength returned in New York on soft US data and safe haven flows. GBP/JPY fell over 2 Yen from Highs and EUR/JPY came close to Y125 supports. December Retail Sales -0.3% vs. 0.2% y/y. Overall the USDJPY traded with a low of 89.32 and a high of 90.57 before closing the day around 89.95 in the New York session. Update December Nationwide CPI at -1.7% vs. -1.9% previously y/y.
The Sterling (GBP) was strong until S&P stated they no longer classify UK among the most stable and low risk banking systems which sent Cable over 100 pips lower. Risk aversion then kept the pair under pressure with GBP/JPY selling constant. Overall the GBP/USD traded with a low of 1.6111 and a high of 1.6279 before closing the day at 1.6130 in the New York session.
The Australian Dollar (AUD) fortunes waxed and waned with investor sentiment with a major rally in Asia reversing quite aggressively in the US session. AUD/JPY was especially volatile as the pair rally off Y80 support to Y81.70 before giving up most of the gains. Overall the AUD/USD traded with a low of 0.8913 and a high of 0.9050 before closing the US session at 0.8925.
Oil & Gold (XAU) broke through support at $1080 only to reverses losses quickly late in the day. Overall trading with a low of USD$1074 and high of USD$1096 before ending the New York session at USD$1085 an ounce. Oil was lower but not as aggressively as the rest of the commodity space. Crude Oil was up -$0.30 ending the New York session at $73.70.
Sunday, January 24, 2010
RBNZ OCR Preview: Calm before the Storm
January 28 OCR Preview: RBNZ on hold at 2.50%
The RBNZ will reiterate that they expect the tightening cycle to begin around the middle of this year.
The timing of hikes is less significant than the extent of the tightening cycle. The economy has clearly moved into a recovery phase and short-term interest rates are a long way from normal.
Maybe it's just the usual listlessness around the Christmas/ New Year period, but there doesn't seem to be a great deal of anticipation around next Thursday's OCR review. Since the December Monetary Policy Statement the economic picture has generally panned out as the RBNZ expected, with no 'blockbuster' data that might warrant a change in view.
That suggests we should expect a fairly innocuous statement next week, with similar language to that used in December. But don't take that as a sign of complacency: the start of the OCR tightening cycle is drawing closer, and the RBNZ have already made it clear that once they have the confidence to begin, they will be doing a lot of work over the next couple of years to return policy to more normal settings.
The RBNZ will reiterate that they expect the tightening cycle to begin around the middle of this year.
The timing of hikes is less significant than the extent of the tightening cycle. The economy has clearly moved into a recovery phase and short-term interest rates are a long way from normal.
Maybe it's just the usual listlessness around the Christmas/ New Year period, but there doesn't seem to be a great deal of anticipation around next Thursday's OCR review. Since the December Monetary Policy Statement the economic picture has generally panned out as the RBNZ expected, with no 'blockbuster' data that might warrant a change in view.
That suggests we should expect a fairly innocuous statement next week, with similar language to that used in December. But don't take that as a sign of complacency: the start of the OCR tightening cycle is drawing closer, and the RBNZ have already made it clear that once they have the confidence to begin, they will be doing a lot of work over the next couple of years to return policy to more normal settings.
Saturday, January 23, 2010
Fall in Equities Boosts Government Bonds
Financial market review - foreign exchange
After a strong start to the week, sterling gave up much of last week's gains versus the dollar. Against the other G-10 currencies, however, sterling outperformed, registering gains of 2.5% versus the New Zealand dollar and 1.66% versus the Canadian dollar. EUR/GBP continued its descent, hitting a fivemonth low of 0.8651 following continued concerns over public finances in Greece and strong UK CPI data early in the week. The USD took another leg higher as equities moved lower during the course of the week on concern over the impact of Chinese tightening measures on global growth, banking sector reform proposals by the US government and weaker Q4 US corporate earnings. The Brazilian real dropped a further 2.4% versus the dollar and 1.7% versus sterling.
After a strong start to the week, sterling gave up much of last week's gains versus the dollar. Against the other G-10 currencies, however, sterling outperformed, registering gains of 2.5% versus the New Zealand dollar and 1.66% versus the Canadian dollar. EUR/GBP continued its descent, hitting a fivemonth low of 0.8651 following continued concerns over public finances in Greece and strong UK CPI data early in the week. The USD took another leg higher as equities moved lower during the course of the week on concern over the impact of Chinese tightening measures on global growth, banking sector reform proposals by the US government and weaker Q4 US corporate earnings. The Brazilian real dropped a further 2.4% versus the dollar and 1.7% versus sterling.
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
In just two days, most U.S. equity markets retraced a month's worth of gains on concerns that China will do more to cool its economy and proposals for stringent bank regulation in the United States.
Building on his plan to tax banks in the prior week, President Obama proposed a series of regulations that would cap individual bank sizes, and the amount of risk bank's can take.
U.S. housing starts were weaker than expected in December, falling 4.0% M/M to 557K units from 580K units. Despite the disappointing decline in starts, the surge in permit approvals suggests a future pick-up in residential building activity.
Bank of Canada holds overnight rate at 0.25% effective lower bound, reiterating conditional commitment to maintain present rate until Q2/2010.
In just two days, most U.S. equity markets retraced a month's worth of gains on concerns that China will do more to cool its economy and proposals for stringent bank regulation in the United States.
Building on his plan to tax banks in the prior week, President Obama proposed a series of regulations that would cap individual bank sizes, and the amount of risk bank's can take.
U.S. housing starts were weaker than expected in December, falling 4.0% M/M to 557K units from 580K units. Despite the disappointing decline in starts, the surge in permit approvals suggests a future pick-up in residential building activity.
Bank of Canada holds overnight rate at 0.25% effective lower bound, reiterating conditional commitment to maintain present rate until Q2/2010.
Friday, January 22, 2010
Euro Seen Falling Further Until Greece Shored Up
The euro is likely to remain under pressure until worries over the fiscal crisis in Greece subside and a credible solution to the country's woes is found, economists and traders say. There is general agreement that the euro has further to fall, though no clear consensus over how steep the drop will be. The single currency has declined steadily since hitting $1.51 in November last year, and was hovering just above $1.40 today -- though even at that level, it remains strong in historical terms.
Stocks, Commodities Fall on Obama, China; Emerging Markets Drop
Equities and commodities declined for a third day on concern President Barack Obama plan to rein in banks and a possible interest-rate increase in China will stifle the economic recovery. Oil and gold retreated and Treasuries headed for a third weekly gain.
The Standard & Poor’s 500 Index lost 0.3 percent at 11:43 a.m. in New York, extending its slide over the past three days to 3.3 percent and wiping out its gain for 2010.
The Standard & Poor’s 500 Index lost 0.3 percent at 11:43 a.m. in New York, extending its slide over the past three days to 3.3 percent and wiping out its gain for 2010.
GBP/USD Throwback Offers More Bearish Confirmation
The GBP/USD was showing strong reversal signals, yesterday breaking below 1.62. In the Asian session and early European session, the market had a throwback from 1.6130 to 1.6270 before a heavy drop leading into the US session.
The throwback confirms bearish mode, but we may end the week seeing support at the the channel support level near 1.6050. The stochastic might develop a bullish divergence if this area holds. The market is also at the 61.8%-78.6% retracement zone.
Daily: The daily shows three consecutive sessions of strong bearish action. It looks poised to continue next week.
The throwback confirms bearish mode, but we may end the week seeing support at the the channel support level near 1.6050. The stochastic might develop a bullish divergence if this area holds. The market is also at the 61.8%-78.6% retracement zone.
Daily: The daily shows three consecutive sessions of strong bearish action. It looks poised to continue next week.
Thursday, January 21, 2010
Daily Technical Analysis GBP/USD Outlook
The GBPUSD had a bearish momentum yesterday, bottomed at 1.6125 but closed higher at 1.6193. I believe that the false breakout from the trendline resistance as you can see on daily chart below should keep the Sterling under pressure targeting 1.6040 area. Immediate resistance at 1.6250 and the trendline resistance area. Break above that area should lead us into no trading zone as direction would become unclear.
Daily Technical Analysis EUR/USD Outlook
The EURUSD made indecisive movement yesterday. Price attempted to push lower, bottomed at 1.4029 but closed higher at 1.4085. Overall sentiment remains negative for the Euro but 1.4000 area could be a strong technical support at this phase. The bias is neutral in nearest term but I still prefer a bearish scenario with sell on rallies strategy. Immediate resistance at 1.4150. Break above that level could trigger further upside correction testing 1.4200 – 1.4250 area. Initial support at 1.4000. Break below that area should trigger further bearish scenario towards 1.3750.
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