Forex technikal and fundamental analysis: February 2010

Feb 28, 2010

Daily Markets - Financial News And Opinions

Another Trade Re-Write: U.S. Consumers, American Companies Slammed With New Steel Taxes
4 Factors That Influence Metals ETFs
It Won’t Be Long
The Case For A Secular Bull Market In Precious Metals
Crude Oil Price Hits Ceiling As Hedge Funds Attack The Euro
Chile, No Cause To Tremor.
Suddenly Seeing Double
The Enthusiasm Gap
Singapore Stock Market Update For Friday 26 February

Another Trade Re-Write: U.S. Consumers, American Companies Slammed With New Steel Taxes

Posted: 28 Feb 2010 06:01 PM PST

Business Insider: “U.S. Steel Unions Score American Consumers and Steel-Using Companies Dealt Yet Another Huge Victory Loss As China They Are Slammed With New Steel Tariffs Taxes”

One has to envy pity the insignificant amount of pull U.S. steel workers consumers and steel-using companies have. The majority of U.S.-China trade agitation is caused by imposes signifcant costs on this one relatively tiny huge part of the U.S. economy.

From China Daily:

“The United States … [visit site to read more]

4 Factors That Influence Metals ETFs

Posted: 28 Feb 2010 05:01 PM PST

Metal prices and exchange traded funds (ETFs) have been on a roller coaster ride lately. Regardless of performance, stories about the dollar, China’s demand and homebuilding reports have put metals firmly on center stage.

Don Dion for The Street notes that several factors play into performance of industrial and base metals:

Speed and extraction of the metal in the production and mining process.
Individual, company or sovereign inventory levels; low levels stoke demand, high levels … [visit site to read more]

It Won’t Be Long

Posted: 28 Feb 2010 04:16 PM PST

Amid mounting concerns about the deteriorating state of public finances, a growing number of countries — including Greece, Spain, the United Kingdom, France, Australia, and Lithuania — are weighing increases in the retirement age.
With that in mind, I reckon it won’t be long before we see a chorus of politicians and policymakers joining the likes of former Federal Reserve Chairman Paul Volker, Deficit Reduction Commission Co-Chairmen Alan Simpson and Erskine Bowles, and Newsweek … [visit site to read more]

The Case For A Secular Bull Market In Precious Metals

Posted: 28 Feb 2010 04:01 PM PST

The world is currently in the eye of an economic hurricane. The leading edge of the storm, which made landfall in the second quarter of 2008, raged until the first quarter of 2009, and nearly demolished the world’s financial system. By sand-bagging with trillions of freshly-printed paper currencies, fudging accounting rules, subsidizing key financial houses and markets, and calming the masses with half-baked rhetoric, a worldwide collapse was averted.

But the calm is deceptive.

Because of … [visit site to read more]

Crude Oil Price Hits Ceiling As Hedge Funds Attack The Euro

Posted: 28 Feb 2010 02:01 PM PST

Crude oil broke through the $80 a barrel ceiling repeatedly during the week but kept falling back as hedge funds placed big bets on the Euro’s decline.

The fiscal drama in Greece held global markets hostage much of the week as worries about the impact of the Greek crisis on the euro outweighed comments from Federal Reserve chairman Ben Bernanke about continued low interest rates in the U.S., pushing the euro down against the dollar and damping crude prices.

The euro recovered some … [visit site to read more]

Chile, No Cause To Tremor.

Posted: 28 Feb 2010 01:50 PM PST

The devastation of wide areas within Chile may give investors pause. The Bolsa de Commercio de Santiago will likely expect some selling pressure as the country sorts out the damage from the powerful earthquake Saturday. As the market has been one of the best performers in thew world over the past year, this expected pullback may give investors an opportunity to selectively enter and wait for this resilient country to come back.

Fortunately, Chile has positive investing attributes such as … [visit site to read more]

Suddenly Seeing Double

Posted: 28 Feb 2010 01:01 PM PST

(Image source: Neatorama)
Although U.S. Treasury Secretary Timothy Geithner has assured us otherwise –

The risk of a “double-dip” recession is “much lower” now, U.S. Treasury Secretary Tim Geithner said [earlier this month].
Speaking on ABC’s “This Week,” Geithner said that with the recent ongoing economic growth, a second recession has become less likely.
“We have much, much lower risk of that today than at any time over the last 12 months or so,” Geithner said. “Again just think of where … [visit site to read more]

The Enthusiasm Gap

Posted: 28 Feb 2010 11:27 AM PST

I had dinner the other night with a Democratic pollster who told me Dems are heading toward next fall's mid-term elections with a serious enthusiasm gap: The Republican base is fired up. The Dem base is packing up.

The Dem base is lethargic because congressional Democrats continue to compromise on everything the Dem base cares about. For a year now it's been nothing but compromises, watered-down ideas, weakened provisions, wider loopholes, softened regulations. Health care went from what … [visit site to read more]

Singapore Stock Market Update For Friday 26 February

Posted: 25 Feb 2010 05:29 PM PST

Morning Highlights
There Are No Quick Picks For Today

Singapore market started little changed, with STI up 7.13 points to open at 2756.28.

Sembcorp Marine resistance at 3.75 (Short at 3.72, Stop Loss at 3.78 and Take profit at 3.66 (small risk) – PROFIT, CLOSED at 3.69

Genting broke down 0.9 (New Trade Opportunity, to short at 0.885, Stop Loss at 0.905 and Take profit at 0.865) – Triggered, Current Price at 0.895

Corporate Announcements

Tiger Airways reported 3Q09 net profit of … [visit site to read more]

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Daily Markets - Financial News And Opinions

Why You Should Be Worried About China
Seeds Of War
Market Review For February 2010

Why You Should Be Worried About China

Posted: 28 Feb 2010 08:01 AM PST

Toward the end of last year, many market followers were speculating on a Fed hike as early as the first half of 2010. Global stock markets had experienced explosive bounces, commodity prices had surged from the crisis lows, and risk spreads and market volatility had all subsided.

In short, markets were pricing in a very optimistic outlook for global economic recovery - a return to normalcy.

But just two short months into 2010, the exuberance about recovery has deflated. As I’ve … [visit site to read more]

Seeds Of War

Posted: 28 Feb 2010 07:00 AM PST

A while back, our colleague, Chris Mayer, employed a wonderful analogy to illustrate the passage of time from the roaring twenties through to the dustbowl thirties. The former decade, Chris explained, was captured in essence by F. Scott Fitzgerald's The Great Gatsby. It was a period ripe with wild speculation, fueled by an explosion in EZ money, and of reckless excesses in general. (If any of this sounds familiar, you can probably already guess the point at which Chris was driving.)
Then, … [visit site to read more]

Market Review For February 2010

Posted: 28 Feb 2010 05:01 AM PST

An interesting month both on our global economic landscape and in the markets.

Risks remain high and in large measure presented themselves in abundant fashion in the Euro-zone, but markets rebounded. What gives?

Let’s review the market moves for February. The figures provided for the respective markets are: year-end 2009; month-end statistics; month-to-date % change; and year-to-date % change.

CURRENCIES

The U.S. dollar continued its positive trend. The greenback benefited … [visit site to read more]

Forex Crunch EUR/USD Outlook – March 1-5 2010

EUR/USD Outlook – March 1-5 2010
GBP/USD Outlook – March 1-5 2010
AUD/USD Outlook – March 1-5 2010
USD/CAD Outlook – March 1-5 2010

EUR/USD Outlook – March 1-5 2010

Posted: 27 Feb 2010 07:04 AM PST

EUR/USD finally had a positive week and gained some ground. It’s now facing a very busy week, with the rate decision being the climax. Here’s the outlook for the European events, and an updated technical analysis for EUR/USD.

EUR/USD chart with support and resistance lines marked. Click to enlarge:

Even though this week is crowded with economic indicators, the news about possible resolutions to the Greek crisis and their failures will continue to move the Euro. OK, Let’s start the review:

German Import Prices: Published on Monday at 7:00 GMT. As German prices are “back to normal”, not moving, import prices are expected to rise – by 0.8% this time, more than last month’s 0.5% rise. This will be a prelude for more inflation figures on the road ahead.
Final Manufacturing PMI: Published on Monday at 9:00 GMT. Purchasing managers were optimistic according to the initial release, moving this index up to 54.1, a relatively high number. This is expected to be confirmed now.
Unemployment Rate: Published on Monday at 10:00 GMT. Europe suffers from a double digit unemployment rate, exactly 10%, for already two months. The weight is expected to become heavier, with the figure rising to 10.1%. Spain has about 20% unemployment, with almost 50% of young people “employment challenged”. Without a change in employment, the Euro is stuck.
CPI Flash Estimate: Published on Tuesday at 10:00 GMT. Also prices are weighing on the Euro. Although they are off the bottom, an annual inflation rate of 1% is too little, especially for a rate hike. This level is expected to continue in the upcoming initial release.
PPI: Published on Tuesday at 1000 GMT and overshadowed by the CPI release. Similar to consumer prices, also producer prices are low, but an acceleration is predicted this time, from 0.1% to 0.7%.
German Retail Sales: Published on Wednesday at 7:00 GMT. The continent’s largest economy sees many mood changes in the consumer’s spending appetite. Last month was positive, with a rise of 0.9%, so this month might see a small dip.
Final Services PMI: Published on Wednesday at 9:00 GMT. The services sector isn’t doing as well as the manufacturing one. It dipped from 52.5 to 52 according to the first release. Although it dropped, it’s still above 50. This will probably be confirmed in the final release.
Retail Sales: Published on Wednesday at 10:00 GMT. All-European retail sales are released after the major data from Germany and France is already out, but it still has an impact on trading and has a tendency to fall short of expectations. Last month saw a small rise of 0.1%, but a drop is predicted this time – 0.3%.
Revised GDP: Published on Thursday at 10:00 GMT. According to the first flash release, the continent slowed down in Q4, growing by only 0.1% after growing by 0.4% in Q3. Germany fell to 0% growth. This figure will probably be repeated in the second release. There are doubts about growth in the next quarters.
Rate decision: Published on Thursday at 12:45 GMT. Jean-Claude Trichet is expected to leave the European Minimum Bid Rate at 1%, continuing the ritual from previous months. Spain and especially Greece will continue to be a burden on the Euro zone, and this will probably be the focus of the press conference, held 45 minutes after the announcement. Trichet might also hint about future policy, but it will probably remain unchanged.
German Factory Orders: Published on Friday at 11:00 GMT. The German economy is stagnant, and the industry is squeezing as well. A big drop of 2.3% was seen last month in factory orders. A correction is predicted this time, with a rise of 1.6%. This comes just before the American Non-Farm Payrolls, and could shape the Euro’s reaction to the NFP.

EUR/USD Technical Analysis

EUR/USD traded in a range in the past week, moving between 1.3450 and 1.3690, eventually higher in this range, at 1.3628.

Initial resistance appears at 1.3690, which was tested twice in the past week. This is a minor resistance line. Above, 1.3850 continues to be a strong barrier that the Euro will have a hard time to break. The lines have marginally changed from last week’s outlook.

Even higher, 1.40 and 1.42 are the next lines of resistance, but only a major event will send EUR/USD to those levels.

Looking down, 1.3530 continues to supply minor support. The more important line appears at 1.3423, a line that supported the Euro way back in the past and twice in recent weeks.

If EUR/USD breaks 1.3423, the next line of support appears only at 1.3080, the area from which it began the long term rally of 2009.

I’m bearish on EUR/USD.

European troubles are far from being resolved, and also the big countries can’t pull the zone on their own – even the German economy stopped growing.

This pair receives many excellent reviews on the web. Here are my favorites:

Casey Stubbs reviews the week using his 4 hour charts.
The Geek Knows brings his own review and looks forward.

I’ll add more later on.

Further reading:

For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
For GBP/USD, look into the British Pound forecast.
For the Australian dollar, read the AUD/USD forecast.
For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

GBP/USD Outlook – March 1-5 2010

Posted: 27 Feb 2010 07:03 AM PST

The Pound lost another technical level and looks down. The upcoming week is very busy, with eight important events, with the rate decision being the climax. Here’s the weekly outlook for the British events, and an updated technical analysis for GBP/USD.

GBP/USD chart with support and resistance lines marked. Click to enlarge:

BOE governor Mervyn King is very dominant in the Pound’s trading. He wants and gets a weak Pound. He’ll have another opportunity this week, but also the numbers will speak. Let’s start:

Halifax HPI: Publication time unknown at the moment. This is one of the more accurate reports out there, as it relies on the internal data that HBOS possesses. Prices of homes have risen in the past 7 months, but the rise is becoming slower. Last month’s 0.6% will probably be followed by a 0.3% rise this time.
Manufacturing PMI: Published on Monday at 9:30 GMT. This important indicator of the economy surprised last month with a strong rise to 56.7 points, the highest in 3 years. A similar number is predicted this time, helping the Pound.
Net Lending to Individuals: Published on Monday at 9:30 GMT. More borrowing by customers means more spending and more economic activity. Lending has risen to 1.2 billion last month, the highest in 8 months. It’s now expected to drop back to 0.7 billion.
Construction PMI: Published on Tuesday at 9:30 GMT. Contrary to the prices of homes and PMI in manufacturing, purchasing managers in the construction sector are still pessimistic. The figure is expected to edge up from 48.6 to 48.9 points, still under 50.
Nationwide Consumer Confidence: Published on Wednesday at midnight GMT. Consumer confidence has gradually risen in the UK after the outbreak of the crisis. This survey of of 1000 consumers reached a peak of 73 points and is now predicted to drop back to 71, as jobs fell again.
Services PMI: Published on Wednesday at 9:30 GMT. The last PMI release this week is an important one. The services sector, which includes the financial services sector, has seen improvement, rising above 56 points but then dropping to 54.5 last month. It’s predicted to edge up to 55 points, showing stability.
Rate decision: Published on Thursday at 12:00 GMT. Mervyn King has at least one opportunity every week to weaken the Pound. This time it will be in the decision about the Official Bank Rate. Needless to say, it isn’t expected to move from 0.5% – same as last month. The focus will be on the MPC rate statement, which might hint about future policy, especially regarding the QE program, also known as the Asset Purchase Facility. The program ran out of 200 billion pounds allocated to it, and Mervyn King didn’t rule out an option to pump more money into it, weakening the Pound. Will it be renewed now? Probably not, but King may surprise us once again.
PPI: Published on Friday at 9:30 GMT. Britain’s producer prices are expected to calm down after rising by 2% last month (PPI Input). Given the rise in consumer prices, the expected rise of 0.1% in the upcoming decision could be exceeded with a higher number. Also note the PPI Output figure, which is predicted to rise by 0.2%.

GBP/USD Technical Analysis

GBP/USD had a good start to the week, going above 1.5530, but this was only temporary. It later fell and made a break through 1.5350, bottomed out at 1.5150 and couldn’t get back over the important 1.5350 line.

So, 1.5350 provides an initial and strong resistance. The Pound failed to break this line a few weeks ago, and now it made. It’s also a historic line. Above that, 1.5530 is a minor line of resistance that served the Pound in recent weeks.

Note that some of the support and resistance line were modified from last week’s outlook. Further above, 1.5770 is another minor resistance line, followed by 1.5833, which is already a strong line of resistance.

Looking down, 1.5150 provides immediate support, being the bottom this week. This is a minor line. Further below, 1.50 is already a very strong line. It’s a round number and also worked as a resistance line in the past.

If 1.50 is breached, the next line of support appears at 1.4770. A continued fast deterioration will send the Pound there. It’s unlikely to happen this week.

I continue the strong bearish sentiment on GBP/USD.

As long as Mervyn King heads the British central bank, the Pound will suffer, even if Britain is really out of recession. Also technically, the break of 1.5350 shows that the bears are in control.

Further reading:

For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
For the Euro, read the EUR USD Forecast.
For the Australian dollar, read the AUD/USD forecast.
For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

AUD/USD Outlook – March 1-5 2010

Posted: 27 Feb 2010 07:02 AM PST

The Aussie finished lower this week, suffering from risk aversive trading. The upcoming week is busy also in Australia, with a rare combination of a rate decision and GDP day after day. Here’s an outlook for the 13 Australian events, and an updated technical analysis for AUD/USD.

AUD/USD chart with support and resistance lines marked. Click to enlarge:

At first, the Aussie weathered Bernanke’s move, but fresh fear caused traders to flock the US dollar. Note that the all-important American Non-Farm Payrolls will naturally move the dollar as well. Let’s start the review:

HIA New Home Sales: Publication time unknown at the moment. The Housing Industry Association showed a big drop in house sales last month – 4.6%. The housing sector is doing better according to other figures. A rise is predicted this time.
AIG Manufacturing Index: Published on Sunday at 22:30 GMT. The Australia Industry Group publishes its own purchasing managers’ index according to a survey of 200 manufacturers. This indicator went above 50 last month, to 51 points, indicating economic expansion. It’s predicted to remain above 50 for another month.
Glenn Stevens talks: Starts talking on Sunday at 22:45 GMT. The governor of the RBA will make a public appearance a little more than 24 hours before the rate decision. This speech, so early in the week will provide a strong start for the Aussie, especially if Stevens talks hints something about the interest rate.
MI Inflation Gauge: Published on Sunday at 23:30 GMT. The Melbourne Institute supplies an independent consumer price index estimate. After last month’s gauge rose by 0.8%, higher than previous months, it’s expected to edge higher once again. As Australian CPI is published only once a quarter, this unofficial figure can move the Aussie.
Current Account: Published on Monday at 00:30 GMT. This is a quarterly release. Australia’s overall balance has been negative in the past years. It has grown to 16.2 billion in the previous quarter and is predicted to further expand in Q4.
Commodity Prices: Published on Monday at 5:30 GMT. Roughly half of the Australian economy is based on export of commodities, so this figure is important. This year over year indicator showed a drop of 11.7% in prices compared last month. A smaller drop is predicted this time.
Retail Sales: Published on Tuesday at 00:30 GMT. Australian consumer disappointed by buying less last time – a squeeze of 0.7%. A correction is predicted this time – 1% rise. Note that these fluctuations go on for quite some time. Note that the tension towards the rate decision will make the impact of this important figure somewhat muted.
Building Approvals: Published on Tuesday at 00:30 GMT and somewhat overshadowed by retail sales. Last month saw another strong rise in approvals – 2.2%. A third month of rises is predicted this time, but in a smaller scale – 0.6%.
Rate decision: Published on Tuesday at 3:30 GMT. After three consecutive rate hikes, Glenn Stevens took a break and left the Cash Rate unchanged at 3.75% last month. This is still the highest in the Western hemisphere. According to some of the hints, the rises are expected to resume, with another 0.25% rise to 4%. It’s also important to note the tone of the accompanying RBA Rate Statement.
AIG Services Index: Published on Tuesday at 22:30 GMT. AIG provides a second PMI-like figure this week, this time for the services sector. Here, the number stands at 47.4, below 50. This means that lower economic activity is expected. It should improve this time.
GDP: Published on Wednesday at 00:30 GMT. The Australian economy disappointed in the previous quarter with a small rise of 0.2% in the overall activity. Australia never fell into recession. This time, the excellent job market is expected to be felt also in the GDP, with a rise of 0.9% in GDP.
Trade Balance: Published on Thursday at 00:30 GMT. Australia’s trade balance release relates to January, contrary to the current account which relates to Q4 of 2009. The deficit of 2.25 billion is expected to be followed by a significantly smaller one – 1.57 billion this time.
AIG Construction Index: Published on Thursday at 22:30 GMT. The third release by AIG is also the third housing figure. The construction sector showed a leap last month, from 49.3 to 57.7 points. A score above 50 will probably be seen this time.

AUD/USD Technical Analysis

The Aussie shot up at the beginning of the week, and couldn’t break the 0.9090 resistance line. It later fell, and went as low as 0.88 before closing at 0.8950, a loss of about 60 pips in the week.

Immediate support appears at 0.8850, a minor line that provided support. Below, 0.8735 was December’s low and provides and additional line of support. Some lines have been modified since last week’s outlook.

The biggest support line appears at 0.8567. This was a support line before the Aussie went higher to the 90s, and also the current year-to-date low.

Looking up, 0.9090 is now a stronger resistance line, successfully serving as such just now. Above, 0.9170 worked as a support line and is now a resistance line.

Further above, 0.9327 continues to be a strong and distant resistance line. The line was tested 4 times in 2009, and only breached once.

I remain bullish on AUD/USD

Despite the bad week, I believe that the fundamental strength of the economy and the high interest rate will push the Aussie higher.

Further reading:

For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
For the Euro, read the EUR USD Forecast.
For GBP/USD, look into the British Pound forecast.
For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

USD/CAD Outlook – March 1-5 2010

Posted: 27 Feb 2010 07:01 AM PST

The Canadian dollar retreated this week but didn’t lose too much. The week ahead contains the GDP release, a rate decision and a few more important events. Here’s the outlook for the Canadian events and an updated technical analysis for USD/CAD.

USD/CAD chart with support and resistance lines marked. Click to enlarge:

One figure is missing from this week’s calendar: the all-important job figures that will be release only next week. I’ll just remind that last month’s job figures were superb. OK, let’s start the review:

GDP: Published on Monday at 13:30 GMT. A strong start for the loonie this week. This monthly GDP release closes the fourth quarter of 2009. Last month’s 0.4% growth is predicted to be repeated with the same number this time, completing a good Q4 for Canada. Given the good numbers from the US in Q4, also Canada should enjoy strong growth.
RMPI: Published on Monday at 13:30 GMT and overshadowed by the GDP release. Raw materials are important for the commodity-oriented Canadian economy. Last month, prices disappointed with a fall of 1.7%. A rise of 1.9% is predicted this time, and will support the loonie.
Rate decision: Published on Tuesday at 14:00 GMT. As in previous months, the focus is on the wording of the BOC Rate Statement. Despite improving economic conditions, Mark Carney and his colleagues haven’t changed their clear declaration not to raise the rates before June 2010. The rate isn’t expected to move from the rock-bottom level of 0.25%.
Building Permits: Published on Thursday at 13:30 GMT. Canadian permits saw a huge leap three months ago, and have relaxed since then. Growth of 1.1% is predicted to follow last month’s 2.4% rise. This is an important figure, no matter the outcome.
Ivey PMI: Published on Thursday at 15:00 GMT. The Richard Ivey Business School has a highly regarded purchasing managers’ index. After some weak months, this figure aligned with the other Canadian figures and rose above 50, indicating expansion. A jump to 55.1 is expected this time, getting closer to the levels seen in the fall.
Annual Budget Release: Published on Thursday. The government’s budget contains an important release – the growth forecast for 2010. This is expected to be revised to the upside, given the improving data. The predictions and the overview should supply shaky trading for USD/CAD.

USD/CAD Technical Analysis

USD/CAD began the week with an attempt to break below 1.04. When the attempts failed, it shot up, breaking the minor resistance line of 1.0530 (that appeared last week), reached 1.0680 before closing at 1.0514.

I’ve now marked 1.0680 as a minor resistance line, after its role in the past week. Above, 1.0780 continues to be the upper limit of big range that USD/CAD is trading in: 1.04 to 1.0780.

Above, 1.0850 was a peak before the pair entered this range, and 1.1130 remains a distant but strong resistance line that a role many months ago.

Looking down, 1.04 provides very strong support, followed by 1.02, the 2009. USD/CAD got close to 1.02 also in 2010.

Even lower, the ultimate resistance line is 1.0000 – USD/CAD parity, but a breach of 1.04 must be seen beforehand.

I am bearish on USD/CAD.

The Canadian economy is in a good shape, according to most parameters, and this should be seen again this week.

Further reading:

For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
For the Euro, read the EUR USD Forecast.
For GBP/USD, look into the British Pound forecast.
For the Australian dollar, read the AUD/USD forecast.
For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.