Forex Currency Converter

Thursday, March 25, 2010

EURUSD: Set To Target The 1.3211 Level


The pair has reversed its intraday strength and is weakening with eyes on its Jun 03’09 low at 1.3211. With EUR now holding firmly below its break out point at 1.3433 and maintaining a strong downside momentum, a break through the 1.3211 level will clear the way for a run at its big psycho level located at 1.3000. We expect this level to provide a considerable support on initial test and force the pair back up but if that fails, further weakness will target its April’09 low at 1.2884. Its daily studies are bearish and pointing lower suggesting more weakness. Alternatively, if the pair triggers a recovery, its intraday high at 1.3384 will serve as the next target ahead of its Mar 02’10 low at 1.3433 where a reversal of roles is expected to turn the pair lower again. Beyond there if seen will expose the 1.3568 level, its Mar 22’10 high. In a nutshell, EUR’s medium term downtrend looks to test the 1.3211 level and beyond.

Canadian Dollar Retrieves Bullish Path


The Canadian dollar advanced for the first time this week this Tuesday, as markets with strong correlation with the loonie provided support for the currency to gain specially versus its U.S. counterpart, but as well as important currencies globally.
After the loonie traded near parity with the greenback last week, the currency experienced a considerable fall as traders considered the rally excessive, specially after the crude oil ended the strongest rally in 2010 towards the end of last week’s session, affecting Canada’s dollar performance as it accounts for a good percentage of the Canadian exports’ revenues. Pessimism in Europe regarding a week economic performance in Norway and Greece’s budget deficit also contributed for the loonie’s advance today.
The loonie seems to be have found its way back towards parity once again, as commodities as stocks rebounded today. European markets are, for the moment, unattractive, and, as the Fed signaled that rate hikes aren’t coming so soon, the Canadian dollar is one of the best bets for the moment in forex markets.
USD/CAD traded at 1.0170 as of 04:01 GMT from as high as 1.0225 during Tuesday’s session.

Thursday, March 18, 2010

Euro Couldn’t Sustain Gains on Budget Concerns Return

The euro lost versus against most of the main traded currencies this Wednesday as Greek budget deficit was once again hitting the headlines of European news, decreasing appetite for the bloc’s single currency, as currencies tied to growth topped the performance rank in forex markets today.
A combination of European pessimism with a global appetite for risk made the perfect receipt for the Euro to slash yesterday’s gains, posting a considerable decline even against a weaker dollar, before a report to be released in the U.S. this week which is likely to set risk appetite levels even high among currencies. German Chancellor Angela Merkel’s party affirmed that Greece should start talks with the International Monetary Fund to adjust its national accounts, bringing uncertainty to European markets once again and striking optimism that had been building up since last week.
The situation in Europe, apart from Greece, is quite disappointing and with low growth forecasts and no expectations of interest rate hikes in the region, it seems hard to imagine that the euro will make its way back to levels beyond $1.40 anytime soon.
EUR/USD traded at 1.3721 as of 01:54 GMT from a previous intraday rate of 1.3783.

Canadian Dollar Flirts with Greenback Parity on Commodities

The Canadian dollar gained for another session, in a rally that seems to be endless, as the Federal Reserve ratified its dovish position on its interest rates, allowing the strong flow of capital from the U.S. towards north to continue for another day.
The crude oil, one of Canada’s notably known commodity export, advanced this Wednesday, and for another day, more than 1 percent, allowing attractiveness for assets in the Toronto Stock Exchange to advance even further, which helped the loonie to hit the highest rate versus its U.S. counterpart since July 2008, in a rally which, according to analysts, will set the Canadian dollar to reach parity with the greenback in the following months.
The fact that interest rate hikes expectations for the short term were frustrated in the U.S. is really helping its Canadian neighbor to become more attractive, as well as a positive market confidence towards the economic in both Asia and North America. It is indeed possible to see both the greenback and the loonie trading in equality anytime soon.
USD/CAD traded as low as 1.0068 this Wednesday, and climbed slightly to 1.0109 as of 02:31 GMT.

Tuesday, March 16, 2010

U.K. Housing Data Boosts Pound’s Rally

The British pound had a positive performance before the weekend as both domestic and international scenario brought favorable news and consequently traders to purchase assets in the country, as a real estate report revived confidence towards U.K.’s economy.
The pound pared some of the past weeks’ losses versus important currencies, specially the U.S. dollar after a report showed this Friday that house prices increased considerably in the monthly comparison, being that positively interpreted by analysts as the British real estate sector was one of the most affected by the credit crunch during the global slump. Internationally, the pound advanced as a positive retail sales in the U.S. allowed risk appetite to grow o a global scale, bringing investors back to assets in London markets, which had been quite abandoned this year so far.
A good amount of traders considered the pound’s decline this year as too sharp, and today’s news allowed the pound to gain for the session straight session, as confidence surges in England, after several consecutive weeks of drops.
GBP/USD closed at 1.5201 from an intraday rate of 1.5070.

Friday, March 12, 2010

China Recovery Heats Up

Asian markets were mixed today as more data out of China suggests the economy may be 'overheating,' fueling concerns that the government may begin scaling back stimulus measures. With better than expected reports on GDP, CGPI, and inflation, investors fear increasing pressures for the government to slow growth by possibly raising reserve requirements for the third time this year, or even raising rates. Concerns about possible monetary tightening spurred risk aversion trades, putting a halt to the euro's 100 pip rally yesterday.

Euro Drifts

The euro was slightly softer after testing the 1.3660 resistance level early in New York trading yesterday. The single currency has been in consolidation for the past 2 weeks as easing worries about the sovereign debt crisis provided some support. Although a successful bond auction last week improved economic sentiment , public and private unions are planning a nationwide strike today to protest the government's recent austerity measures. The protests are expected to disrupt travel and close schools and other public services. The euro has dropped more than 4.5% year to date on concerns that national deficits may derail recovery from the region's worst recession on record. Resistance holds at 1.3660 with key resistance resting at 1.3750. Here the 61.8% Fibonacci extension taken from the Dec 18th and Nov 25th highs, converges with the upper bound of the downward channel dating back to Dec 3rd. A break above 1.3830, signals a possible trend reversal with targets at 1.4015 and 1.4170. Support sits at 1.3540 followed by the 1.35 handle. A move below 1.3450 could open the door to considerable looses for the single currency, with demand seen at   
1.3330.
by Michael Boutros

Thursday, March 11, 2010

Gold close to even at $1,108.00

(Barcelona) – Bearing in mind gold lost nearly $30 on a heavy fall on March 10, investors along the market behaved undecided on overextending the price further down, perhaps not yet fully convinced on putting their money off to riskier assets. Gold traded in a $10 range today although is now close to opening price at 1,108.00 zone.

Today, holders of gold resisted to let the price drop further down. On the Asian bell, price stagnated on a tight range bound between 1,107.00-1,110 levels. In Europe, the yellow metal slowly drifted lower towards 1,105.00. As soon as the US season opened, gold whipsawed $10.00 as some major inflows led the price to fall at 1,100.30 area (intra-day low) and back up to recover all the ground to reach 1,108.00 area (current price at 20:30 GMT).

EUR range trading, still wobbly

(London) - Euro has traded a tight range of 15 pips since the US open, largely unmoved by the disappointing jobs release earlier today. EUR/USD currently quotes at 1.3677 and is trading sideways bounded between 1.3679 and 1.3663.

Little in the way of solid developments in terms of the Greece situation, and a growing nervousness over other fiscally stretched Eurozone states has limited upside for the pair.

Monday, March 8, 2010

Market Review: Wall Street Cash Fails To Follow Through- Again

EUR/USD – The Euro is trading slightly higher against the US Dollar since trading resumed after the weekend break; however, it has yet to recapture the high seen very early in the European trading session.

There were a couple of mid-level reports out of the Euro area today which has helped bring back some Euro risk appetite. The first was Sentix Investor Confidence which was still showing a great deal of pessimism was better than expected at -7.5. The next Euro impacting report was released by Destatis and showed that German Industrial Production had grown by 0.6%. This was not quite the growth that was expected; however, the mood of Euro optimism was definitely bolstered by the previous month’s revision from a loss of 2.6% to a contraction of only 1.0%.

GBP/USD – So far it has been a pretty uneventful day of trading for the Pound, Dollar pair. There have been a few swings back and forth but no advantage for either side has been gained since trading resumed after the weekend. The total range encompassing all of the swings has been less than 80 pips and it appears that with a lack of fundamental data out of both economies today market participants are preferring to wait until they receive some type of indication that will help them pick a side.
The next scheduled data is set to be released at 12:01 AM (UK) when the British Retail Consortium provides Year-over-year Retail Sales Monitor data and the Royal Institution of Chartered Surveyors (RICS) provide House Price Balance information.
USD/JPY – After back to back days to close last week which saw the Dollar rally against the Yen, it seems that like many of the other pairs, traders are content to step back and take a pause so far today.

There were several reports out of Japan which kicked off their trading week, though none of them have seemed to even be noticed. Year-over-year Bank Lending fell by 1.5%, the Current Account Balance was better than expected at 1.71 Trillion Yen and the M2 Money Stock (y/y) was slightly worse than expected at 2.7%. The mixed results posted in these reports only seemed to confuse a market that had already expressed a strong opinion last Thursday and Friday and which may be wondering at what level the value actually belongs.
One somewhat bright spot we did see could be found in the Economy Watchers Sentiment report which while still a reading that indicates pessimism once again continued to improve, this time to 42.1. Even so, it was not enough to provide any type of sustained move in this pair.

From ForexTv.com


Currency Currents: The Race To The Currency Bottom Is On

Today, the dollar is testing the uptrend line going back to early December ’09; that’s when this rally began, says Jack Crooks from Black Swan Capital. No doubt near-term the risk appetite train, and all its tight correlations strapped to it, may hit the buck. But the game may have changed on the correlation front.  Already we have seen a bit of breakdown between the dollar and the stock market.  Interestingly, given the big run up in stocks on Friday, gold prices were flat.  Maybe Mr. Market is telling us he isn’t going to make it so “easy” for us to discern tight correlations going forward.
From a currency perspective, we think now many competitors are in the race to the bottom.  We think these competitors are in a position now to race faster than the buck and then take the crown the US dollar has so consistently defended since the bear market began in 2002.
Overriding reason why the competition wants to run weaker than the dollar: despite the trend of improving manufacturing and order books globally, there is still a huge question about the sustainability of final demand for these goods.  
Europe: Final demand will likely be soft given austerity ... and will plunge if the “accident in the making” happens.
Japan: They continue to make it clear to the market their economy is in trouble and they will provide liquidity and lower rates as far as the eye can see.
UK: They look to be the sleeper in this race to the bottom.  The case is built by the experts why it makes sense for the pound to jump out into the lead.  The below excerpt is from a piece written by Anatole Kaletsky, “Rejoice—the pound is down again;” it appeared in the TimesOnline today:

A weakening pound is good for Britain at present, not only because it tends to boost economic growth by making British goods and services more competitive on world markets, but also because it will help to rebalance the structure of the economy. If Britain has become overly-dependent on consumption, housing and government spending, then a weaker currency is one of the most effective ways of redirecting resources towards exports and manufacturing. And manufacturing is not the only sector that benefits from a weaker currency. Financial and business services will also enjoy a boost from the weakness of the pound. The City of London mostly bills its customers in dollars and euros, but pays costs denominated in sterling. As the pound has fallen, therefore, Britain’s financial and business services have become much more profitable, helping to offset the increased taxes and regulatory costs and discouraging the exodus of business from London to Geneva or Singapore.
The first qualification to the general rule that a weak currency is good for the economy is that, while a weak currency helps businesses and boosts profits, it hurts the purchasing power of the British people who want to spend their money on foreign goods, holidays abroad or villas in Spain.
The second, more substantial, objection to a weak currency is what it can do to interest rates, if the Bank of England reacted to the falling pound by raising short-term interest rates or if investors responded by selling British government bonds and thus driving up long-term rates.
This is what often happened in “sterling crises” in the bad old days when Britain’s economic managers were obsessed with trying to fight off the speculators attacking various artificial currency regimes, most recently the European exchange-rate mechanism, which blew up in 1992.
Since 1992, however, neither the Bank of England nor the Treasury has made any effort to “defend” any particular value of sterling — and the chances of the British authorities suddenly deciding to do so in the future are virtually nil. And as long as the Bank keeps short-term rates near zero, long-term bond yields will also remain very low, as they have in Japan. This will remain true, almost regardless of how much money the Government needs to borrow, for the simple reason that banks will continue to be guaranteed an enormous profit if they can borrow for next to nothing from the Bank of England and then lend-on the proceeds to the British Government at interest rates of 3 or 4 per cent.
Anyone who believes, therefore, that a weakening pound will somehow force British interest rates to move sharply higher has not been paying attention to the changes in economic management, not only in Britain but around the world, since the early 1990s. In this new philosophy, a weak currency is something to be desired and encouraged during periods of recession, when employment and output need additional stimulus.
Europe wants a weaker euro.  Japan wants a weaker yen.  Switzerland wants a weaker franc.  The UK wants a weaker pound.  China wants to export.  Ditto the rest of the Asian block; a group that has tried hard to keep a lid on their currency values having to compete against the Chinese trade juggernaut.
Commodity currencies look fairly valued.  But the buck looks increasingly undervalued given the needs of the rest of the world.  And this goes to the point we made a few weeks back -- it behooves the global economy for the dollar to rally; these are the potential benefits:
1. Increases purchasing power of the world’s largest pocket of consumers to take all the goods others wish to export
2. A stronger dollar could likely improve the sentiment regarding the Treasury market quality, the world’s premier “risk free” asset class
3. Pressure valve opens for Europe if the dollar rallies
4.  China can maintain its peg and point to its acceptance of a strong domestic currency as a result; this may help blunt protectionist pressures
5. A rising dollar and stock market has the possibility to create a positive self-reinforcing flow of much needed capital for real infrastructure build within the US
So, no doubt it seems a dollar correction, or at least consolidation, may be due.  But longer-term, unless the US government decides to get in the way (which we can’t underestimate those chances), it would seem a rising dollar may be just what is needed by the major players.
Of course, all bets are off given a major accident occuring out there.
We don’t think the dollar rally bet is off because any type of major risk event (European default or China contraction on credit troubles are just two that seem in the mind of the market) will likely rally the dollar on safe haven.  But said accident would likely be incredibly damaging to the global economy growth momentum underway and enough to drive that double-dip recession many are still so worried about.  That would change the dynamics for all the competing currency classes ... and a new race begins.

From ForexTv.com

Sunday, February 28, 2010

Lower Dollar To Drive Equity Moves


Stock traders ignored the weaker existing home sales report and turned its focus on the U.S. Dollar which weakened because of increased demand for higher risk assets. This week’s testimony by Fed Chairman Bernanke may have set the tone for today’s rally. Earlier in the week, Bernanke said that interest rates would remain low for a prolonged period of time which may have triggered demand for higher yielding stocks.
The rally on Friday put the March E-mini S&P 500 in a position to take out the recent main top at 1112.75. This breakout will turn the main trend to up on the daily chart.
Treasury markets traded higher on Friday which was a surprise since the tone of the day seemed to be demand for risky assets. Today’s weaker than expected U.S. existing homes report provided much of the intra-day support. Investors gained more confidence in holding long positions this week after Fed Chairman Bernanke said interest rates would remain low for “an extended period”.
The weaker Dollar helped to support both April Gold and April Crude Oil. Upside momentum is building in gold which could provide this market with enough strength to test the last main top at $1131.50. A trade through this level will turn the main trend up on the daily chart.
The Euro rallied on Friday after Bloomberg reported that Germany may buy Greek bonds. Shorts read this as a potential vote of confidence for Greece and used the news as an excuse to cover positions. The strong rally put the March Euro in a position to turn the main trend to up on a rally through the last main top at 1.3692.
Despite a rise in Fourth Quarter GDP, the March British Pound finished lower on Friday, but off its low. Friday’s action was an indication of just how weak the U.K. economy is. Traders still feel economic problems, political woes and the possibility of more quantitative easing by the Bank of England may be too much to overcome in the short run. The weak close put this market slightly under a key 50% level at 1.5271.
Greater demand for higher risk assets helped to underpin the March Japanese Yen, but the break stalled after a penetration of a 50% level at 1.1227 and just below the main top at 1.1295. A break through this price will turn the main trend to up.
This week’s action indicates that the stock market rally and demand for commodities is still alive which could rally the March Japanese Yen further. The current administration in Japan is not expected to intervene unless they feel the current strength in the Japanese Yen is being triggered by speculation and volatility. Look for an acceleration to the upside if the main top at 1.1295 and the .618 level at 1.1227 fail to broken on this current rally.
Risk sentiment appears to be shifting once again toward demand for higher yielding assets. This helped to boost gold, crude oil and stock prices, sending the March Canadian Dollar higher. The recent break did not change the trend to down and appears to have been a retracement into a support zone at .9459 to .9415. Look for more upside pressure next week, but for this market to remain inside the main range of .9780 to .9274.
The improving Euro helped to ease the possibility of an intervention by the Swiss National Bank. This triggered the strength in the March Swiss Franc. Friday’s rally through .9334 turned the main trend to up, setting up the possibility of a rally to .9526 to .9608 over the near-term.

Saturday, February 27, 2010

Friday, February 26, 2010

Usd/Cad Correction


Usd/Cad reached new highs around 1.0680 after the pair broke through the 1.0592 area. The price action from the 1.0369 lows was clearly made by a five wave move, which means that a near-term Short correction is expected.
This correction looks to be already developing after a Short turning point seen during the last Wall Street session. The price action now signals for a near-term decline towards the 1.0500 region with a three wave move expected in a corrective wave 2, before the pair becomes bullish again.

British Pound Falls Despite Better Fourth Quarter GDP


British Pound Falls Despite Better Fourth Quarter GDP
Concerns about sovereign debt issues in Greece eased overnight helping to increase demand for higher risk assets, says Brewer Futures Group. Catch Brewer Futures, and TheLFB trade team on ForexTV Live.
In addition, good economic news from Japan and higher stock markets in Asia helped increase optimism over the global economic recovery.
With tensions easing regarding the sovereign debt problems in some of the European Union nations, Forex trader focus will be on U.S. economic reports.
Out of the box first this morning will be the final U.S. Fourth Quarter GDP Report. The consensus range is 5.4% to 6.0%. The preliminary estimate at 5.7% is today’s target. With demand for higher risk assets higher this morning, a better than expected GDP number may pressure the Dollar. Some feel however that a better number will send the Dollar higher because the improving economy will indicate the Fed may have to raise interest rates sooner than expected.
The Chicago Purchasing Manager’s Index due out at 8:45 CT is projected to be in a range of 55.8 to 64.3 with the consensus at 60. Traders want to see continued strength in this index as it indicates an improving economy. Like the GDP figure, it difficult to project at this time how the Dollar will react. It will either go up because of the improving economy or down because of increased appetite for risky assets.
The University of Michigan Consumer Sentiment figure is expected to come in at 73.7, inside the range of 73.0 to 75.0. Investors will be watching the expectations component of this index for clues as to how consumers feel about the economy. High unemployment and worries over jobs may have a negative influence on this month’s index.
Finally, Existing Home Sales should come in at 5.5 million. A weaker than expected number should help to drive investors into the U.S. Dollar.
The EUR USD is up overnight but trading inside Thursday’s range. In fact, Wednesday’s range of 1.3692 to 1.3497 has held this market in check for two days. This formation indicates impending volatility. Watch for a break-out on either side of the market. Traders are likely to chase the market once it commits to a direction. Overnight, Euro Zone consumer inflation was 1% as predicted. On Thursday, the Euro firmed after reports of a Greek bond issuance next week surfaced. Traders feel that strong support for this bond issuance will indicate the European Union is close to a solution for Greece’s deficit problems. The rally took place despite reports that the S&P Corp. was poised to cut Greece’s debt rating.