Euro Rises on Prospect for Greece to Receive Aid Soon

The euro gained today against most other major currencies on the speculation that Greece may accept to perform the budget cuts, which were requested by the European Union from Greece for the nation to receive the $159 billion financial aid.
The outlook for the euro improved on the prospect that Greece will receive the help soon as Jose Barroso, the President of the European Commission, expressed the certainty that Greece will get the aid ”in days”. This has brought some much-needed confidence in the markets and boosted the euro’s strength.
EUR/USD climbed to 1.3291 as of 14:05 GMT from its opening level of 1.3232. EUR/JPY rose to about 125.05 from the opening level of 124.44.

Consumers shine despite slower-than-expected GDP

While growth slowed from the fourth quarter's rapid 5.6 percent pace and was a touch weaker than economists expected, the details of the report from the Commerce Department on Friday were fairly upbeat.
"We continue to see a nice bounce back in output. We believe the second quarter is likely to be equally robust," said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 3.4 percent rate in the first three months of 2010.
U.S. stock index futures trimmed gains after the data, while prices for government debt were flat. The U.S. dollar was little changed at lower levels versus the euro.
The report showed consumer spending accelerating at a 3.6 percent rate in the January-March period, more than double the 1.6 percent pace in the fourth quarter and the biggest rise since the first quarter of 2007.
By Chris Reese , Reuters

Stocks Plunge as Dollar, Treasuries Gain on Europe Debt Concerns

Stocks tumbled, with Europe’s benchmark index sliding the most since November, while the dollar and Treasuries rallied, as credit-ratings cuts on Greek and Portugal spurred concern that indebted European nations are moving closer to default.

The Stoxx Europe 600 Index slid 2.7 percent at 11:33 a.m. in New York, while the Standard & Poor’s 500 Index lost 1.6 percent. Crude oil sank 1.7 percent, while copper plunged 2.7 percent. The yield on the 10-year Treasury note tumbled 13 basis points to 3.68 percent, while the Dollar Index rallied 0.5 percent to 81.881.

Equities, Commodities Slide As The U.S. Dollar Gains

Dollar Index
The dollar index is holding the April pattern of trade: if Greece appears in the headline, then buy the Usd and sell everything else. The Usd benefits from the Greek crisis, due to its status as a global re by backing the most liquid bond market in the world; U.S. Treasuries. Favor Straddle-Usd plays for the moment.
S&P Futures
Equities used the stairs to go up at a snail's pace in recent trade, and then came down in the elevator the moment that the Greek Fiscal imbalance headline hit. This was seen very well in the S/P futures, but more especially in the regional cash markets across Europe. Equity trade is expected to remain under pressure during the upcoming cash sessions, as investors readjust their risk-profiles, absorb earnings season results, and await the IMF and G20 headlines. 12-month 96% correlation to Aud and Cad
Crude Oil
Usd strength has dragged crude oil lower in global trade, forcing price action to test the $82.00 – 83.00 support area, and is oversold on the near-term timeframes. If the dollar continues to gain ground, which will probably happen unless global equities find buyers in very quick time, expect the energy market to push lower. 12-month 95% correlation to Aud and Cad.
Gold Bullion
Gold has simply followed the trend of the Usd over the last few days of trading, without interfering in any way. The value of the Usd seems to be the only thing that counts when valuing commodities at the moment. On the daily chart, Gold is trading just above the 20-day moving average, and near the $1140.00 swing point area. 12-month 85% correlation to dollar index. 12-month 85% correlation to dollar index.

Canadian Dollar Jumps Road to Rate Hike Open

The Bank of Canada didn’t move the rates, but removed the comment regarding no rate hike till the end of Q2. A rate hike in the next meeting looks very probable. USD/CAD is approaching parity once again. Update on this strong currency.

While Mark Carney’s BOC left the main interest rate, the Overnight Rate, unchanged, it removed its own strains regarding a move on the rates. Here’s a quote from the statement, emphasis mine:

    "…the Bank also provided exceptional guidance on the likely path of its target rate. This unconventional policy provided considerable additional stimulus during a period of very weak economic conditions and major downside risks to the global and Canadian economies. With recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus."

I read this statement and see a rate hike at the next meeting. The statement explains that the conditions have improved, expressing optimism. In the past, leaving the commitment to keep rates low hurt the loonie. Now the opposite happens.

GBP/USD Closes Gap and Pushes Higher On Inflation

The British Pound had a bad start to the week – it opened significantly lower than Friday’s close – it opened at 1.5293, about 70 pips lower and below the 1.5350 support line. It later fell as low as 1.5191, a safe distance from the 1.5120 support line.

The recovery already began earlier, but the gap was closed only after the inflation figures were released. GBP/USD jumped higher and peaked at 1.5418 at the moment before retreating just under 1.54.

The Pound is now trading between 1.5350 and 1.5520 – this was both last week’s peak and also a support and resistance line when the Pound traded at higher ranges. Above 1.5520, the next significant resistance line is at 1.5833, which worked as a support and resistance line. The last attempt to break this line failed and sent the Pound way down.

Financial Shares Tumble After Goldman Sachs Charged With Fraud

Financial shares tumbled after the Securities and Exchange Commission charged Goldman Sachs Group Inc. with fraud related to packaging and selling collateralized debt obligations linked to subprime mortgages.
Goldman Sachs, the most profitable firm in Wall Street history, tumbled 10 percent to $165.02 in New York Stock Exchange composite trading at 11:12 a.m. in New York for the biggest intraday decline in a year.
A gauge of banks and brokerages in the Standard & Poor’s 500 Index sank 4.3 percent for its biggest decline since February 4 and the top loss among 24 groups. Bank of America Corp., Morgan Stanley and JPMorgan Chase & Co. lost at least 4.3 percent as all 27 companies in the S&P 500 Diversified Financial Index declined at least 1.7 percent after the SEC announced its action. Berkshire Hathaway Inc. Class A shares tumbled 5.1 percent.
Goldman Sachs misstated and omitted key facts about a CDO as the U.S. housing market was beginning to falter, the Securities and Exchange Commission said in a statement today. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president.
“I wouldn’t want to own Goldman stock right now,” said Keith Goddard, president of Capital Advisors, which oversees $810 million in Tulsa, Oklahoma. “If this turns out to be remotely true, do you want to be doing business with someone who doesn’t have your best interests in mind? That’s the accusation here.”

U.S. Stocks Fluctuate Near 18-Month High as Jobless Claims Rise

U.S. stocks fluctuated, with benchmark indexes hovering near 18-month highs, as a jump in jobless claims and concern the market has risen too far, too fast tempered growing optimism about earnings and the economy.
Hewlett-Packard Co., Coca-Cola Co. and Wal-Mart Stores Inc. led declines in the Dow Jones Industrial Average. United Parcel Service Inc. climbed 5.9 percent after the world’s largest package-delivery company raised its earnings forecast. Mariner Energy Inc. surged 39 percent after Apache Corp. agreed to buy the company.
The Standard & Poor’s 500 Index gained less than 0.1 percent to 1,211 at 10:31 a.m. in New York after the benchmark gauge for U.S. equities jumped 1.1 percent yesterday, its biggest gain in six weeks. The Dow Jones Industrial Average fell 5.06 points, or 0.1 percent, to 11,118.05 today.
“Seeing companies guide higher on earnings, like UPS, is very positive but on the job claims those are numbers we don’t want to see,” said Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York. “We don’t want this to be a jobless recovery and we want people to be working again because this is still a consumer-based economy.”
The S&P 500 threatened to snap a five-day rally after the Labor Department said initial jobless claims rose to 484,000 last week, an increase of 24,000 from the previous week and above the 440,000 estimated by economists in a Bloomberg survey.
RSI Climbs
The S&P 500’s relative strength index, a gauge of stock- market momentum, has been above 65 for 29 straight days, the longest stretch since 1986, according to Bloomberg data. A reading above 70 is a signal to sell for many technical analysts. The S&P 500’s RSI has been above 70 for five straight days and reached 78.34 today.

Oil Surges to 17-Month High

Crude oil surged to the highest level in 17 months as growth in American jobs and service industries signaled that the economy is recovering from the worst recession since the 1930s.
Oil climbed as much as 2.4 percent amid optimism that fuel demand will increase with an economic rebound. The U.S. is the world’s largest energy-consuming country. The Standard & Poor’s 500 Index climbed to an 18-month high.
“The market is in full embrace of the recovery thesis and is pricing it in accordingly,” said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy commodities. “It’s enthusiasm that we’re coming out of this recession.”
Crude oil for May delivery increased $1.74, or 2.1 percent, to $86.61 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier, futures touched $86.90, the highest intraday price since Oct. 9, 2008. Crude has climbed 65 percent in the past year.
Oil traded within a range of $68 to $84 a barrel in the six months ended March 31. Prices rose the past two months as improved investor confidence boosted world equity markets.
The S&P 500 gained 0.7 percent to 1,186.56, also on the jobs report.U.S. payrolls rose by 162,000 last month, the Labor Department reported April 2, when U.S. financial markets were closed for the Good Friday holiday. The report included 48,000 temporary workers hired by the government to conduct the Census.
Service Industries
U.S. service industries in March also expanded at the fastest pace since May 2006, according to the Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy. The index rose to 55.4 from 53 in the prior month, exceeding the median forecast of 54 in a Bloomberg News survey of economists.
“The recovery is upon us,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. He said a rebound in manufacturing and transportation is spurring demand for diesel fuel, which supports heating oil prices.
Heating oil for May delivery gained 4.9 cents, or 2.2 percent, to $2.2657 a gallon, and gasoline for May delivery increased 2.46 cents, or 1.1 percent, to $2.3483 a gallon.