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Euro advances ahead of ECB tender

admin — Sat, 03 Jul 2010 17:26:03 +0000

The European common currency gained against majors ahead of the ECB offering to loans to banks at 1.00% only after the expiry of the 12-month tender today which alleviated concerns that banks will face trouble in paying debt to the ECB.

European banks have to repay 442 billion euros this month, but the ECB mentioned yesterday that it would fund banks worth 131.9 billion euros for three months which was lower than analyst’s projections, thus worries that European banks are relying on ECB loans to restructure their impaired imbalances eased.

Conversely, the dollar fell against a basket of major currencies as seen by the dollar index which reversed its earlier gains as it fell to 85.84 after the breach of strong support at 85.96. The dollar is showing decline for the second day ahead of the release of important U.S. data, where ISM manufacturing is predicted to drop to 59.0 in June from 59.7.

With regard to the euro-dollar pair, it rebounded on the daily and 4-hour charts after approaching support at 1.2123 which helped the pair to surge to 1.2294, where the pair is currently trading. Earlier today, the pair recorded a high of 1.2310 and a low of 1.2191, whereas for the rest of the day the pair is predicted to move between support and resistance at 1.2150 and 1.2335 respectively.

The 16-nation currency dropped earlier today after Moody’s said it may downgrade Spain’s credit rating, and as China’s manufacturing eased expansion in May. Today, euro zone’ manufacturing halted at 55.6 in June but German manufacturing sector unexpectedly rose to 58.4 from 58.1 In May.

As for the sterling-dollar pair, it is moving to the downside for the third day after closing below 1.50 psychological level yesterday. The pair is doing a downside correction to the upside trend that started since mid May and was spurred by the drop in PMI manufacturing which slipped to 57.5 in June from 58.0. The pair is currently trading at 1.4912, recording a high of 1.4973 and a low of 1.4870, while it is expected to move between support at 1.49850 and resistance at 1.5070.

Relative to the dollar-yen pair, it is continuing its fall on the daily charts today but the pair is unable to remain below strong support at 88.20. Meanwhile, the pair is trading at 88.30, recording a high of 88.55 and a low of 88.06, whereas support is seen at 88.00 while resistance is at 89.55 then 89.30.

Published on Thu, Jul 1 2010, 10:27 GMT

fxstreet.com

USD strength determines market direction ahead of EU meeting

admin — Fri, 26 Mar 2010 16:42:07 +0000

Thu, Mar 25 2010, 08:54 GMT
The S&P 500 Index dropped 0.6% to 1,167.72 yesterday, its first decline in three days while the DJIA lost 52.68 points, or 0.5%, to 10,836.15 on concern government deficits will hamper a global recovery as Fitch cut Portugal’s credit rating and a UBS economist said Greece will default. The Nikkei rose 0.1% to 10,830.63 as Japanese stocks fluctuated as makers of cars and electronics rose after the JPY weakened to a two-month low against the USD 92.40, while commodity-linked shares fell after oil and metal prices dropped. The JPY rose from a 10-week low against the USD climbing to 91.78 earlier today on speculation Japanese exporters took advantage of its biggest slide this year to buy the currency before the fiscal year end next week. China’s stocks fell the most in a week as the Shanghai Composite Index lost 0.8% to 3,031.56 on concern the government will step up efforts to cool asset bubbles. The NZD rose 0.3% to 0.7039 from the lowest in more than a week as the GDP rose 0.8% in Q4 2009, spurring prospects for the RBNZ to raise interest rates. RBNZ’s Bollard kept the rate at a record low on March 11 and said monetary stimulus would likely be removed around the middle of 2010 amid higher bank funding costs and a “relatively sluggish” economic recovery with traders betting the RBNZ will increase its interest rate by 180 basis points over the next 12 months. AUD recovered some of yesterday’s biggest drop in seven weeks climbing 0.4% to 0.9114 as RBA’s Lowe said the mortgage rate “is still around 0.5% lower than the average of the last 15 years” and that the benchmark rate needed to move gradually toward “more normal levels” to contain inflation. The EUR was also close to a record low against the CHF trading at 1.4282 on speculation the EU will fail to agree on decisive measures to help Greece tackle its fiscal deficits at the meeting starting today in Brussels. EUR could see further downside to 1.3000 levels on speculations that Spain could be the next fiscal crisis in the EU. With Germany and France backing the help of IMF for Greece, while Greece wanting to go with the EU aid, a split in opinion on the bailout could be the focus of the meeting due to start today and continue till tomorrow while markets would be watching very closely on the developments with a bearish view on the EUR as Germany holds the key to the bailout, being the strongest member of the EU. The UK February retail sales report will be released today, forecasting a rise of 0.8% after a decline in January and a lower than estimate figure could be fatal for the GBP which is already reeling under pressure to bounce back amid pressure from inflation, housing as well as uncertainty over elections to reduce UK’s budget deficit.
R 2: 1.3530
R 1: 1.3425
CURRENT: 1.3330
S 1: 1.3280
S 2: 1.3200
R 2: 93.80
R 1: 92.45
CURRENT: 92.02
S 1: 90.80
S 2: 89.60
R 2: 1.5278
R 1: 1.5190
CURRENT: 1.4897
S 1: 1.4784
S 2: 1.4580
R 2: 0.9329
R 1: 0.9252
CURRENT: 0.9116
S 1: 0.9066
S 2: 0.8945
R 2: 1.0400
R 1: 1.0320
CURRENT: 1.0233
S 1: 1.0070
S 2: 1.0000
S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

fxstreet.com

Stocks advance, dollar steady ahead of Fed

admin — Mon, 15 Mar 2010 23:03:46 +0000

Stocks advance, dollar steady ahead of Fed
(Reuters) – World stocks climbed on Tuesday while the dollar was corralled as investors bet the U.S. central bank will repeat its vow of keeping interest rates low for an extended period after its monthly meeting.
The Federal Reserve is expected to leave benchmark rates near zero given lingering labor market weakness and nagging doubts about the solidity of the economic recovery.
“Given the market’s reaction to the surprise cut in the discount rate, we suspect that the FOMC will be cautious in their language,” said Mitul Kotecha, head of global FX strategy at Credit Agricole, referring to the policy setting arm of the Fed — the Federal Open Market Committee (FOMC).
“Policy will remain unchanged and we expect the majority of the FOMC to remain comfortable with the notion that rates will stay low for an ‘extended period’.”
Leaving out ‘extended period’ in the statement would likely cause U.S. Treasury yields to rise but may boost the dollar as it would be seen by the market as a further step toward normalizing ultra-loose monetary policy, analysts said.
MSCI’s all-country world index .MIWD00000PUS rose 0.3 percent, with the pan-European FTSEurofirst 300
gaining 0.7 percent. Japan’s Nikkei closed 0.3 percent .N225 lower as the market took a breather after having risen to a seven-week high in the previous session.
The Fed’s decision comes as investors braced for China to further tighten policy following a recent raft of strong economic data and inflation at a 16-month high in February.
This has been keeping equity investors cautious.
The Bank of Japan, which will announce the outcome of its meeting on Wednesday, is leaning toward easing monetary policy again, under pressure from a government calling for action to beat deflation, sources said, but the board is split on how to justify the move.
In the forex market, the dollar index .DXY, a gauge of its performance against six other currencies, slipped 0.1 percent to 80.18, but was still some way off a three-week low of 79.692 set on Friday.
“No one seriously expects much change in the Fed’s language, but the market thinks that if there is a risk it will be that they are more upbeat, which would benefit the dollar,” said Jeremy Stretch, currency strategist at Rabobank in London.
The euro also struggled and was little changed against the dollar and yen at $1.3677 123.84 yen.
Analysts said a rescue plan for Greece outlined by euro zone finance ministers on Monday lacked detail and was unlikely to provide the euro with firm support for now.
“Only a complete plan, which defines not just the aid payments but also the conditions it is linked to, the control mechanisms and the sanctions to be taken in case the conditions are breached, would have the potential of causing a sustainable correction in euro/dollar,” said Commerzbank forex analysts in a note.
Finance ministers from the 16-country euro zone agreed on Monday to mobilize financial aid for Greece rapidly if needed but revealed little of how their standby plan for the debt-stricken nation would work.
With stocks rising, demand for lower risk government debt eased, driving yields higher. The benchmark U.S. 10-year note yield climbed 1.1 basis points to 3.71 percent, while the euro zone benchmark German Bund yield edged up one basis point to 3.165 percent.
U.S. crude futures slipped 0.3 percent to $79.54 a barrel, still shaky after falling 1.8 percent to the lowest close in two weeks on Monday.
Spot gold rose to around $1,113 an ounce, up more than $4 from New York’s notional close, while copper prices gained one percent to $7,371 a tonne.
(Additional reporting by Jessica Mortimer, editing by Mike Peacock)

feeds.reuters.com

USD mixed ahead of Bernanke, China tightens

admin — Thu, 25 Feb 2010 18:44:22 +0000

USD mixed ahead of Bernanke, China tightens
Wed, Feb 24 2010, 14:39 GMT
The USD is trading mixed ahead of today’s testimony by Fed Chairman Bernanke before Congress with the commodity currencies pressured by report that China told its banks to restrict new lending to local governments, the EUR rebounded supported by report of better than expected EU industrial orders and speculation that Bernanke will confirm at today’s testimony that US interest rates to remain near zero, GBP underperforms pressured by a statement from the BOE’s Posen that he expects UK inflation to remain subdued and the BOE will expand quantitative ease if needed, JPY supported by safe haven flows as Asian equity markets decline
Japan’s January trade surplus at ¥85.2bln, exports rose by 40.9%, imports rose by 8.6%, January corporate service price index declined by 0.4%, JPY higher
Australia’s Q4 wage price index rose by 0.6%, Q4 construction work done rose by 2.6%, AUD lower
ECB’s Gonzalez–Paramo says EUR fall not totally unjustified, he does not see a contagion from Greece if the countries abide the rules of the stability pact, EU December industrial orders rose by 0.8%, German March GFK consumer sentiment came in at 3.2 compared to 3.3 last month, EUR higher
BOE’s Posen says the BOE will keep the door open for more QE if needed, GBP mixed
The Labor Department says that the number of mass layoffs edged up in January by 35 to 1,761, NYC to layoff 1k transit employees and San Francisco to lay off 1k employees, GM to add 1,200 jobs in Ohio
FDIC reports a 27% jump in problem banks, CNN reports that 702 banks are at risk of failing due to bad loans in commercial real estate, bank profits rose by $915mln in Q4 2009
Fed discount minutes show the Saint Louis and Kansas City Fed voted to increase the discount rate to 0.75%, the other members voted to leave the discount rate unchanged, the rational for the rate hike was to begin to normalize monetary policy as credit conditions improve
First American Core Logic says 11.3mln or 25% of all mortgages are underwater
CBO says the stimulus bill created 2.1mln jobs in the last three months of 2009, boosted the economy by 3.5% and lowered the unemployment rate by 2.1%
US equity markets set to open lower, European equities mixed, Nikkei closed 153 points lower
– Wednesday, January new home sales will be released expected at 360k compared to 342k last month
– Wednesday, no major Canadian economic data is due for release today

fxstreet.com

Majors consolidating ahead of the euro zone’s GDP

admin — Sun, 14 Feb 2010 20:40:12 +0000

Fri, Feb 12 2010, 07:02 GMT
by ecPulse.com analysis team
The euro and the pound are consolidating against the green currency ahead of the euro zone’s GDP that is on queue today with forecasts saying economic growth slowed in the fourth quarter of last year. The USDIX slightly gained in today’s Asian session to record a high of 80.14 and a low of 79.96, while it is currently trading around 80.05.
The currencies market still fluctuating despite the EU Economic Summit in Brussels carried good news for Greece issue, worth mentioning European Finance Ministers agreed to aid Greece to narrow its deficit that rose to 12.7% of the GDP, while the union’s limit is 3.0%.
The euro dollar pair is consolidating between 1.3700 levels and 1.3650 levels recording a high of 1.3688 and a low of 1.3652. The pair dropped yesterday despite the EU summit result was optimistic, but still the euro leaders waiting for another meeting to identify the form of aids to Greece. The pair is currently trading around 1.3675 and it is having a support at 1.3650 along with a resistance at 1.3810, while the four hour stochastic oscillator is supporting the upside.
Regarding the pound dollar pair, it is consolidating between a high of 1.5704 and a low of 1.5662, having the royal pound trading around 1.5705. The pair is having a support at 1.5580 along with a resistance at 1.5745, and the pair may incline today according to the daily stochastic oscillator. In case the pair breached the resistance, it will target 1.5785 levels, and if the support was breached, the pair will fall back to the 1.5510 levels.
Finally, the dollar yen pair recorded a low of 89.57 and a high of 89.82, and the pair is currently trading around 89.75. Today’s support could be found at 88.90, while the resistance could be found at 90.40. The green currency shall gains against the yen today according to the daily and four hour momentum indicators, and if the resistance was breached, the pair would climb to the 91.00 levels. Ye, the U.S Uni of Michigan Confidence is on queue and it tends to move the market on release.

fxstreet.com

Stocks, euro firmer ahead of EU Greek debate (Reuters)

admin — Fri, 12 Feb 2010 00:45:04 +0000

at a summit in Brussels.
are expected to take the lead in sending a message that the EU will help Greece tackle its debt and deficit problems. But the structure, size and any conditions attached to a deal may not be worked out until next week.
Concerns over the debt crisis in Greece and other highly-indebted euro zone nations, along with expectations that U.S. interest rates would rise at some point, had weighed on the euro and global stocks in recent sessions.
.
and Spanish debt rather than safer German bonds fell and the cost of insuring Greek debt against default also eased.
“All eyes on the EU meeting and what happens with the Greeks. It is all about a question of confidence today,” said Justin Urquhart Stewart, director at Seven
.
can stand up and have a clear path … We are looking for clarity of thought to stop any further worries that this is not just in the peripheral economies but other European areas.” MSCI world equity index (.MIWD00000PUS) rose 0.6 percent while the FTSEurofirst 300 index (.FTEU3) gained 0.9 percent. Rio Tinto (RIO.L) rose more than 4 percent after its second half profits beat analysts' forecasts.
The euro rose 0.2 percent to $1.3763 after hitting an 8-1/2 month low last week.
Emerging stocks (.MSCIEF) rose 1.1 percent.
U.S.
rose a third of a percent to $74.79 a barrel after the
U.S. Energy Information Administration
and world oil demand in 2010.
German government bond futures fell 40 ticks.
The dollar (.DXY) fell 0.2 percent against a basket of major currencies, erasing gains made after Bernanke's speech.
In his most comprehensive description to date of how the Fed aims to dismantle emergency economic support, Bernanke said the central bank could soon raise the
it charges banks for emergency loans, but stressed that would not be akin to a tightening in monetary policy.
“The U.S. is pointing toward normality. Thus it is no longer clear that the dollar is the most obvious funding currency for risky investment,” RBS said in a note to clients.

us.rd.yahoo.com

Currencies ahead of central banks rate decisions

admin — Sat, 06 Feb 2010 09:21:59 +0000

Thu, Feb 4 2010, 11:59 GMT
by ecPulse.com analysis team
The dollar is gaining massive grounds in markets, as investors are avoiding higher yielding assets, which once again supports the dollar to rise versus majors since once again there are worries in marketsregarding the global recovery taking longer than presumed to occur, especially since European economies are having a hard time to try and lower their deficits. The Dollar Index, which usually measures strength of the dollar versus six major currencies, is currently traded at 79.59 while recording a high of 79.70 and a low of 79.34.
Today is a big day in the euro zone,where the ECB will announce interest rates, whereexpectations show that they will remain steady at 1.00%; while later on in the day, President Jean-Claude Trichet will give speak at press conference stating the latest economic progress. Currently, we see that the EUR/USD is being traded at 1.3845 between the support of 1.3800 and the resistance of 1.3925, while so far recording a low of 1.3825 and a high of 1.3902. The momentum indicators on the one-hour charts are showing us a downwards trend, while the pair trades close to an oversold area.
The Bank of England today is scheduled to announce their rate decision, in which expectations show will leave them steady at 0.50 percent, the lowest since the bank’s foundation in 1694. Also, the pound like the euro is plummeting versus the federal currency based on the fears in markets; the pair is currently traded at 1.5847, while recording a high of 1.5917 and a low of 1.5822. For the GBP/USD we see that there is a support at 1.5800 and a resistance at 1.5910, while here also we see that the pair is being traded in an oversold area.
Turning to the yen, we see that it is a different story as it rises past the dollar especially after retail sales in Australia unexpectedly fell, while unemployment rates in New Zealand soared to the highest level since 1999; therefore increasing the appeal of the yen as a refuge. The USD/JPY is being traded at 90.59 between the support of 90.20 and the resistance of 91.30, while recording a high of 91.07 and a low of 90.58.

fxstreet.com

Currencies ahead of U.S. data

admin — Mon, 01 Feb 2010 04:47:48 +0000

Currencies ahead of U.S. data
Mon, Feb 1 2010, 11:29 GMT
by ecPulse.com analysis team
The U.S. dollar is mixed in markets ahead of a full economic day in the U.S. economy, while last week we saw the economy expand the most since six years, which supported the dollar to rise heavily in markets versus currencies. Currently the Dollar Index, which usually measures strength of the dollar versus six major currencies, andis currently traded at 79.39 while recording a high of 79.54 and a low of 79.30.
The euro zone PMI manufacturing for January final reading at 52.4 from preliminary 52.0 as the sector expanded beating estimates, which was supported by Germany’s manufacturing sector also expanding, increased the appeal of the euro versus the dollar especially since the dominate sectors support growth levels; meaning improved euro zone outlook. The EUR/USD is currently being traded at 1.3898 between the support of 1.3870 and the resistance of 1.3925 while recording a high of 1.3915 and a low of 1.3852. The volume indicator on the one-hour chart is showing us there is low volume in the markets.
The pound weakened in markets, as investors were disappointed by mortgage approvals lower than the revised prior reading while also the net lending secured on dwellings worse than the estimates and previous readings. As both readings gave us a view at the housing sector and as they both declined, meant that still the housing sector was not recovered yet. The GBP/USD pair is currently traded at 1.5862 between the support of 1.5850 and the resistance of 1.6055, as momentum indicators on the one-hour charts show us that the pair is being traded in an oversold area. The pair so far recorded a high of 1.5977 and a low of 1.5849.
For the dollar yen pair, we see there is volatility as the pair is currently traded at 90.20 above the support of 89.25 and below the resistance of 90.60; while recording a high of 90.46 and a low of 89.98, here the momentum indicators provide us with a downwards trend.

fxstreet.com

Europe Ahead: European inflation and unemployment will probably continue rising

admin — Sun, 31 Jan 2010 15:43:38 +0000

Fri, Jan 29 2010, 08:55 GMT
by ecPulse.com analysis team
As a consequence to the improvement witnessed since the third quarter, when the euro area left the recession by growing 0.4% from the previous contraction of 0.2%; theinflation rate shifted to positive areas in November, creeping up towards the bank’s 2% target.
Prices accelerated to 0.9% in December and are expected to continue its rally to 1.2% in January. According to the monthly bulletin for January; ECB members mentioned that “The current rates remain appropriate”, since “inflation is expected to remain moderate over the policy-relevant horizon.”
The euro zone will probably grow in the fourth quarter after impressive data released in the last three months in 2009. PMI manufacturing for December’s final reading rose to 51.6 from 51.2 in November; while PMI services climbed to 53.6 from 53.0 in November.
The economy showed remarkable advancement after the monetary measures adopted by the ECB to stop the economic deterioration. Trichet and his economic team lowered the cost of borrowing to 1%, and introduced 60 billion euros on purchasing bonds to revive growth. In addition, national European governments increased spending which gave another impetus to prices.
These measures boosted prices and removed deflationary pressures that were threatening the economy at the beginning of the crisis. However, there are some factors that may cause prices to ease in the coming period.
The rising unemployment, which jumped from 8.5% in January 2009 to 10.00%, the highest in more than 11 years, in December is perhaps the most challenging for the ECB. Jobless rate is predicted to incline to 10.1% in January, according to analyst forecasts.
Many European companies cut jobs to slash expenses to return to profitability. For instance, Siemens AG announced previously that it has slashed the number of workers from all its affiliates to 408,000 this year from roughlyabout420,000.
At 19.4%, Spain has the highest jobless rate in November across the 16 countries using the unified currency. Spain, which was once described as the catalyst of the euro area’s growth, was severely impacted by the recession that caused housing sector, which was responsible for the boom andshed of many employees.
However, the euro’s depreciation seen in December and January may help prices to edge up. The 16-nation currency dropped to more than five-month low against the dollar in January, after concerns regarding the swelling budget deficit in some European economies, more specifically Greece.
Moreover, analysts are expecting moderate recovery in the first half of the current year and volatility in the second half, after the ECB unwinds its stimulus measures. PMI manufacturing for January advanced reading inclined to 52.0 from 51.6 below estimates, while PMI services slipped to 52.3 from 53.6.
There might be sluggish recovery this year, since the ECB will probably hike interest rate and remove emergency measures in the second half of the year. Also, budget deficit problems in many European economies are raising concerns and are expected to cause recovery to slowdown as governments will be forced to cut spending to rein in budget deficit.
According to Fitch ratings announced on January 26; European governments may need to borrow 2.2 trillion euros from capital markets this year, in order to finance their deficits.
Greece was downgraded by S&P and Fitch and may be subject to further cuts if it could not adjust its deficit. The problem also is occurring in other economies such as Spain and Portugal; thus, the ECB has to take into consideration that recovery is still weak when exiting stimulus.

fxstreet.com

The U.S. dollar slightly changed ahead of important U.S. reports

admin — Sat, 30 Jan 2010 12:53:06 +0000

The U.S. dollar slightly changed ahead of important U.S. reports
Fri, Jan 29 2010, 12:11 GMT
by ecPulse.com analysis team
The green currency slightly changed on Friday before the release of GDP for the fourth quarter advanced reading in the U.S., Chicago PMI and confidence report. The U.S. economy is predicted to show expansion to 4.6% from 2.2%. The dollar is continuing its gains this week, where it is advancing for the fourth consecutive day. The dollar index, a gauge of the dollar’s movements versus a basket of six major currencies, inclined to 78.8 from the day’s opening at 78.91.
The euro-dollar pair is showing a slight decline on the daily and 4-hour charts, after dropping earlier today to a low of 1.3910. The pair is continuing its bearish pattern that started in December. Euro Zone’s unemployment inclined to 10.0% in December from 9.9%, while CPI flash estimate inched up to 1.0% from 0.9%; according to the data released today. Meanwhile, the pair is traded at 1.3958 after reaching a high of 1.3987, where the coming support is seen at 1.3900 and next resistance is at 1.4000.
The sterling-dollar pair is consolidating on the daily charts, but showing a slight decline on the 4-hour and 1-hour charts. Presently, sterling is traded at 1.6136, recording a high of 1.6177 and a low of 1.6107; while moving between support at 1.6105 and resistance at 1.6170.
The dollar-yen pair edged up on the daily and 4-hour charts. The pair is currently traded at 90.24 near resistance at 90.34, which represents 38.2% Fibonacci retracement to the upside trend that started at the beginning of December. Today, the pair reached a high of 90.30 and a low of 89.56, where it is expected to face the coming support level at 89.10, while the resistance is spotted at 90.55.

fxstreet.com