May 6, 2010

Forex Crunch Updates on the Roaring Markets, Further Euro drops and more on Forex TV

Forex Crunch Updates on the Roaring Markets, Further Euro drops and more on Forex TV

Updates on the Roaring Markets, Further Euro drops and more on Forex TV

Posted: 05 May 2010 04:05 PM PDT


On a review on Forex TV, I spoke about the pause that the Euro is having in its fall, new fuel for dropping, British optimism, of course, the Non-Farm Payrolls. Enjoy the video:

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Forex Daily Outlook – May 6 2010

Posted: 05 May 2010 02:00 PM PDT


British voters go to the polls. This election is expected to deny all three major parties an outright majority which may bring uncertainty to the markets, US unemployment claims are dropping, US, Federal Reserve Chairman Ben Bernanke delivers a speech at the 46th Annual Conference on Bank Structure and Competition, in Chicago, US Treasury Secretary Timothy Geithner testifies before the Financial Crisis Inquiry System, in Washington DC and Federal Reserve Bank of St Louis President James Bullard delivers a speech at the Century Club CEO Breakfast Speaker Series, in St Louis. This is an exciting and influential day for the major economies. Let us see what awaits us today.

In the US, A drop of 6000 in the number of new unemployment claims filed during the past week after a steady drop in the last two weeks which is a hopeful sign for the market’s recovery and will also provide a hint towards tomorrow’s big event – Non-Farm Payrolls.

Later in the US, Federal Reserve Chairman Ben Bernanke delivers a speech titled “Supervisory Capital Assessment Program” at the 46th Annual Conference on Bank Structure and Competition, in Chicago. Currency value may be affected.  US Treasury Secretary Timothy Geithner testifies on the shadow banking system before the Financial Crisis Inquiry System, in Washington DC. Could give clues about possible economic policies,  and Federal Reserve Bank of St Louis President James Bullard delivers a speech titled “Assessing the Strength of the US Economic Recovery” at the Century Club CEO Breakfast Speaker Series, in St Louis will provide insight on future monetary policy.

More from the US, Preliminary Nonfarm Productivity is expected to decrease from 6.9% to 2.4% in the 4th quarter following the continuous rise in the previous quarters, this means that employers are getting less production out of their employees while Prelim Unit Labor Costs are expected to rise by 5.5% from -5.9% to -0.4%.

Finally in the US, Natural Gas Storage is expected to remain around 83B.

In Canada, Building Permits show a positive change of 0.4% in the total value of new building permits issued after a drop in the previous report.

More in Canada, Ivey PMI measuring the Level of a diffusion index based on surveyed purchasing managers is expected to rise by 1.5 points from 57.8 points in the last report bringing encouraging news for the Canadian market.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, Also in Europe, Minimum Bid Rate is expected to stay 1.0% which will probably leave the short term interest rates unchanged.

More in Europe, European Central Bank holds a Press Conference with the President and Vice President will speak. The impact on monetary policy and future monetary policy is high.

Finally in Europe, German Factory Orders are expected a nice rise of 1.4% from 0.0% in the previous month signaling a rise in production and market activity and Switzerland’s Consumer Price Index is also expected a rise from 0.1% to 0.8%.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Election Day arrives; Britain is seeking for a strong leadership with a plan to nurse the economy back to health. Major changes are expected in the market.

More in Great Britain, Britain Halifax Bank of Scotland (HBOS) House price index is expected to go down from 1.1% to 0.6%.

Services PMI is expected to rise in 0.6 points.

Read more about the Pound in the GBP/USD forecast.

In Australia, Retail Sales are expected to edge up from -1.4% to 0.8% shows a positive direction for the Australian economy and on the other hand, Australia increases its negative Trade Balance to -2.02B from -1.92B in the previous month, which only increases the government debt.

Finally in Australia, AIG Construction Index is expected to remain around 48.7 points.

For more on the Aussie, read the AUD/USD forecast.

In Japan, Monetary Base released monthly indicated Change in the total quantity of domestic currency in circulation and current account deposits held at the BOJ is expected to rise from 2.1% to 2.4% an increase in short term rates is expected.

That’s it for today. Happy forex trading!

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EUR/USD Breaks Down on Contagion

Posted: 05 May 2010 06:44 AM PDT


Yesterday it was Spain and today its Portugal – EUR/USD broke below another important technical barrier and continues the free-fall. An update on European events and on technical levels for EUR/USD.

Moody’s put Portugal on review for a credit downgrade. This took EUR/USD to the next level – the 1.2886 support line, which was the low point in April 2009, held strong for only a few hours. Moody’s decision sent the pair below this level. The pair is now trading at 1.2820. That’s not the only event:

The news

This comes after this rating agency declared that Spain’s credit rating will stay unchanged. Also Fitch was quick to say that Spain’s AAA rating won’t be hurt. This was a response to the big rumor.

Yesterday’s rumor of a Spanish 280 billion euro aid request was denied by the Spanish prime minister, José Luis Rodríguez Zapatero. He called it madness and said there is no such plan. The rumor about this possible aid request sent the Euro below 1.3080 and sent the stock markets down. The dollar enjoyed strength against other currencies.

While we’re dealing with the Iberian countries of Spain and Portugal, the Greek crisis is far from over. The coalition of Angela Merkel isn’t too keen on giving Greece the needed help. Also other European countries aren’t too eager. Also here in Forex Crunch, the news about the possible Spanish aid request generated references from German, Austrian and Finnish sites.

Further reading: Kathy Lien says that bailouts don’t prevent contagion and explains this point. Now let’s look at the technicals:

EUR/USD technical levels

EUR/USD broke 1.3080 and 1.2886 within  24 hours. These lines now provide immediate resistance for a recovery of EUR/USD. But let’s look down.

The next line of support is at 1.2707, a low point in February 2009. But this is only a minor support line. 1.2560 already provides stronger support – it was a support line more than once at the end of 2008 and the beginning of 2009.

Even lower, 1.2460 is another line of minor support and its followed by the ultimate line – 1.2330. This was the bottom for the Euro in October 2008, at the height of the financial crisis. EUR/USD didn’t trade below this point since April 2006.

More reasons for dollar strength

Also the release of the American ADP Non-Farm Payrolls assists the dollar – ADP not only showed a gain in jobs, but also last month’s report, was revised to the upside. Last month originally saw a drop of jobs, contradicting the government’s Non-Farm Payrolls that showed a gain in the private sector.

Now, ADP has aligned with the government, not in the numbers, but in the direction. We have a fresh NFP release in two days. Here’s my Non-Farm Payrolls preview.

It certainly looks like the dollar’s storm will continue.

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